S-11

As filed with the Securities and Exchange Commission on November 15, 2021.

Registration No. 333-​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM S-11

FOR REGISTRATION UNDER
THE SECURITIES ACT OF 1933 OF SECURITIES
OF CERTAIN REAL ESTATE COMPANIES

FOUR SPRINGS CAPITAL TRUST

(Exact name of registrant as specified in governing instruments)

1901 Main Street
Lake Como, New Jersey 07719
877-449-8828

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

William P. Dioguardi
Chief Executive Officer
Four Springs Capital Trust
1901 Main Street
Lake Como, New Jersey 07719
877-449-8828

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Nanette C. Heide, Esq.
Richard A. Silfen, Esq.
Justin A. Santarosa, Esq.
Duane Morris LLP
1540 Broadway New York
New York 10036 Phone: (212) 692-1003
Facsimile: (212) 202-5334 Jason A. Friedhoff, Esq.
Bartholomew A. Sheehan, Esq.
Sidley Austin LLP
787 Seventh Avenue
New York, New York 10019
Phone: (212) 839-5300
Facsimile: (212) 839-5599

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)			Amount of Registration Fee(1)(3)
Common Shares, $0.001 par value per share	​	$	100,000,000	​	$	9,270

(1)

Estimated solely for the purpose of determining the registration fee in accordance with Rule 457(o) of the Securities Act of 1933, as amended (the “Securities Act”).

(2)

Includes the offering price of common shares that may be purchased by the underwriters upon the exercise of their option to purchase additional shares.

(3)

Pursuant to Rule 457(p), this amount is being offset in its entirety with $13,435.13 of unused fees that were previously paid in connection with the registrant’s filing of its Registration Statement on Form S-11, as amended (File No. 333-218205), initially filed with the Securities and Exchange Commission (the “Commission”) by the registrant on May 24, 2017.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until this registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion,
Preliminary Prospectus Dated November 15, 2021

           Common Shares

Four Springs Capital Trust

Four Springs Capital Trust is a self-administered and self-managed real estate company, formed on July 6, 2012. Since our inception, we have focused on acquiring, owning and actively managing a diversified portfolio of single-tenant, income producing commercial properties throughout the United States that are subject to long-term net leases.

We are offering           common shares, $0.001 par value per share. All of the common shares offered by this prospectus are being sold by us. This is our initial public offering and no public market exists for our common shares. We expect the initial public offering price to be between $      and $      per share.

We are an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act, and, as such, we will be subject to reduced public company reporting requirements. See “Prospectus Summary—Emerging Growth Company Status.”

We have elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2012. To assist us in complying with certain federal income tax requirements applicable to REITs, our charter contains certain restrictions relating to the ownership and transfer of our common shares, including an ownership limit of 9.8% of our outstanding common shares. See “Description of Securities—Restrictions on Ownership and Transfer” for a detailed description of the ownership and transfer restrictions applicable to our common shares.

We expect to have our common shares listed on the New York Stock Exchange (“NYSE”) under the symbol “FSPR.”

Investing in our common shares involves risks. See “Risk Factors” beginning on page 28 for factors you should consider before investing in our common shares.

​	Per Share			Total
Public offering price	​	$		​	$
Underwriting discounts and commissions(1)	​	$		​	$
Proceeds, before expenses, to us	​	$		​	$	​

(1)

See “Underwriting” for additional information regarding underwriting compensation.

To the extent that the underwriters sell more than           common shares, the underwriters have the option to purchase up to an additional           common shares from us at the initial public offering price less the underwriting discounts and commissions, solely to cover overallotments, if any. We expect to deliver the common shares to the purchasers on or about      , 2021.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

JOINT BOOK-RUNNING MANAGERS

MORGAN STANLEYGOLDMAN SACHS & CO. LLCWELLS FARGO SECURITIES

BOOK-RUNNERS

MIZUHO SECURITIES SCOTIABANK

Wolfe | Nomura Alliance BERENBERG

CO-MANAGER

R. SEELAUS & CO., LLC

The date of this prospectus is      , 2021.

(1)

Based on our leasable square footage.

(2)

Weighted by annual base rent on an expected post-syndication pro rata share basis.

(3)

Tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major credit rating agency or have a senior unsecured obligation that have been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB- or above from one or all of Moody’s Investor Service, Inc. Standard & Poor’s Rating and AM Best. See “Risk Factors—Risks related to Our Business. Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(4)

Based on the later of year built or year of last major renovation.

TABLE OF CONTENTS

​	Page
PROSPECTUS SUMMARY	​	1
RISK FACTORS	​	28
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	​	58
USE OF PROCEEDS	​	59
DISTRIBUTION POLICY	​	60
CAPITALIZATION	​	63
DILUTION	​	65
UNAUDITED PRO FORMA FINANCIAL INFORMATION	​	67
SELECTED CONSOLIDATED FINANCIAL DATA	​	79
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	​	82
OUR BUSINESS	​	114
MANAGEMENT	​	141
EXECUTIVE COMPENSATION	​	147
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	​	157

​	Page
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES	​	159
PRINCIPAL SHAREHOLDERS	​	161
DESCRIPTION OF SECURITIES	​	165
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS	​	172
THE OPERATING PARTNERSHIP AND THE PARTNERSHIP AGREEMENT	​	177
SHARES ELIGIBLE FOR FUTURE SALE	​	183
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS	​	185
UNDERWRITING	​	203
LEGAL MATTERS	​	211
EXPERTS	​	211
WHERE YOU CAN FIND MORE INFORMATION	​	211
INDEX TO FINANCIAL STATEMENTS	​	F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by us. We have not, and the underwriters have not, authorized anyone to provide you with different or inconsistent information. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the cover page of this prospectus or such other dates as are specified herein. Our business, financial condition, liquidity, results of operations and prospects may have changed since those dates.

Explanatory Notes

Unless otherwise indicated, the information contained in this prospectus assumes: (1) the initial public offering price of the common shares offered hereby is $      per share (the midpoint of the price range set forth on the cover page of this prospectus); (2) no exercise by the underwriters of their option to purchase additional shares; (3) the automatic conversion of all of our 200,015 outstanding non-participating common shares, $0.001 par value per share (“non-participating common shares”) into 200,015 of our common shares at a rate of one common share for every one non-participating common share, upon the listing of our common shares on the NYSE; (4) the automatic conversion of all of our           outstanding preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus); and (5) the adoption of our Amended and Restated Declaration of Trust (“charter”) and Second Amended and Restated Bylaws (“bylaws”) upon the completion of this offering.

In this prospectus, “ABR” refers to “annualized base rent” calculated as the monthly base rent pursuant to leases that were in effect as of November 15, 2021 multiplied by 12. ABR (1) excludes tenant reimbursements, (2) excludes any amounts due per percentage rent lease terms, (3) is calculated on a cash basis and differs from how we calculate rent in accordance with U.S. generally accepted accounting principles (“GAAP”) for purposes of our financial statements and (4) excludes any ancillary income at a property.

“CPI” refers to the Consumer Price Index, which is a measure published by the United States Department of Labor Bureau of Labor Statistics of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. CPI is a widely used measure of inflation and some of our leases provide for CPI-based contractual increases in base rent.

Trademarks

This prospectus contains references to our copyrights, trademarks, trade names and service marks and to those belonging to other entities. Solely for convenience, copyrights, trademarks, trade names and service marks referred to in this prospectus may appear without the © or ® or ™ or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these copyrights, trademarks, trade names and service marks. We do not intend our use or display of other companies’ copyrights, trademarks, trade names or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

Information About Properties Held Through Delaware Statutory Trusts

As of November 15, 2021, we had indirect interests in 34 properties held through 20 Delaware Statutory Trusts (“DSTs”) that we control and in which we owned equity interests ranging from 5.0% to 100.0%. These 34 properties contributed $24.8 of our $57.4 million of ABR on a consolidated basis.

Because we have a controlling interest in the DSTs, the DSTs and the properties the DSTs own are consolidated in our financial statements in accordance with GAAP. However, while such properties are presented in our financial statements on a consolidated basis, we are only entitled to our pro rata share of the net cash flows generated by such properties and certain related fees in accordance with the provisions of the documents governing each DST and related agreements. As a result, we have presented certain property information in this prospectus (including data presented with reference to ABR) based on our pro rata ownership interest as of the applicable date in properties included in DSTs and not on a consolidated basis. In such instances, information is noted as being presented on a “pro rata share” basis. We believe this presentation is useful to investors, as it conveys our economic interest in properties included in DSTs.

When we establish a DST, we generally initially own 100% of the equity interests in the DST and typically offer 85% to 95% of the equity interests of each DST to third-party investors, with the remaining equity interests retained by us. As of November 15, 2021, we owned an average of approximately 14.3% of the equity of the 20 DSTs that had completed syndication or are in-process syndications as of such date. For each of the 12 most recent DSTs that have completed syndication (i.e., the DSTs that have completed syndication since March 2018), we owned approximately 5.0% of the equity interests as of November 15, 2021. Because the

i

syndication of the equity interests in a DST typically takes place over several months, we often own a higher percentage of a DST (particularly a newly formed DST) at a given point in time than we expect to own when syndication of the DST is complete. In addition, certain investors in three of our DSTs, in which we owned approximately 25.0%, 5.0% and 5.0% of the equity interests, respectively, as of November 15, 2021, have agreed to exchange, upon the completion of this offering, their interests in such DSTs for Series U2 limited partnership units in our operating partnership such that we expect to own 38.0%, 35.4% and 32.6% of the equity interests in such DSTs, respectively, upon completion of this offering. As a result, we have presented certain property information in this prospectus (including data presented with reference to ABR) on a pro rata basis based on our expected ownership interest in (1) the DSTs that are actively being syndicated once the syndication of such DSTs is complete and (2) the DSTs where investors are exchanging their interests upon completion of this offering. In such instances, information is noted as being presented on an “expected post-syndication pro rata share” basis. We believe this presentation is useful to investors, as it conveys our expected approximate economic interest in DSTs that are actively being syndicated once syndication is complete.

The ownership interest used for property information presented on an expected post-syndication pro rata share basis is calculated (1) for properties in a DST that has not completed syndication, by assuming we will own 5.0% of the equity interests in such DSTs upon completion of syndication (which is consistent with our percentage ownership in our 10 most recent DSTs), (2) for properties in the three DSTs where investors are exchanging their interests upon completion of this offering, by assuming we will own 38.0%, 35.4% and 32.6% of the equity interests in such DSTs, respectively, upon completion of this offering and (3) for properties in a DST that has completed syndication (other than those described in (2) above), by using our actual pro rata share of such DST as of November 15, 2021. For any DST that has not completed syndication, we can give no assurance that such syndication will be completed or that our ultimate ownership percentage of such DST will not be materially higher or lower than 5.0%. Our completion of a particular DST syndication and our post-syndication percentage ownership of a particular DST will depend on various factors, many of which are not in our control. See “Risk Factors—Information that we present on a “expected post-syndication pro rata share” basis with respect to DSTs that have not been syndicated fully to third party investors reflect the percentage of equity interest we expect to own after completion of syndication and, accordingly, may not reflect our actual equity ownership of these DSTs for particular future periods.”

As of November 15, 2021, 18 of our DSTs were fully syndicated, and we were actively syndicating two DSTs. The following table provides summary information on the two DSTs that were under active syndication as of November 15, 2021.

Name of DST	Number of Properties		Tenant	Pro Rata Share		Expected Post- Syndication Pro Rata Share		Purchase Price– Consolidated			Purchase Price–Pro Rata Share			Purchase Price– Expected Post- Syndication Pro Rata Share			ABR– Consolidated			ABR–Pro Rata Share			ABR– Expected Post- Syndication Pro Rata Share
FSC Diversified 1, DST	​	5	Batchelor & Kimball, Inc., Fresenius Medical Care Capital City, LLC, P-Cor, LLC, d/b/a Henry Ford OptimEyes, CSL Plasma, Inc. and BioLife Plasma Services LP	​	7.0%	​	5.0%	​	$	46,718,725	​	$	2,989,261	​	$	2,335,936	​	$	2,643,154	​	$	171,004	​	$	132,158
FSC Healthcare 7, DST	​	7	Blue Cross and Blue Shield of South Carolina, St. Francis Physician Services, Inc. and Prisma Health –  Upstate	​	100.0%	​	5.0%	​	$	33,037,383	​	$	33,037,383	​	$	1,651,869	​	$	1,744,714	​	$	1,744,714	​	$	87,236

ii

Statement Regarding Industry and Market Data

Market and industry data contained in this prospectus is based on a variety of sources, including internal data and estimates, independent industry publications, government publications, reports by market research firms or other published independent sources. Industry publications and other published sources generally state that the information they contain has been obtained from third-party sources believed to be reliable. Our internal data and estimates are based upon our analysis of our target markets and the properties in which we invest, as well as information obtained from trade and business organizations and other industry participants without independent verification.

iii

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and does not include all of the information that you should consider before investing in our common shares. Before making an investment decision, you should read this entire prospectus carefully, including the sections captioned “Risk Factors,” “Unaudited Pro Forma Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the notes to those statements included elsewhere in this prospectus.

Except where the context requires otherwise, references in this prospectus to “Four Springs Capital Trust,” the “company,” “we,” “our” and “us” refer to Four Springs Capital Trust, a Maryland real estate investment trust, together with our consolidated subsidiaries, including Four Springs Capital Trust Operating Partnership, L.P., a Delaware limited partnership, which we refer to as the “Operating Partnership.” References to “common shares” refer to the common shares, par value $0.001 per share, of Four Springs Capital Trust.

Our Company

We are an internally managed REIT focused on acquiring, owning and actively managing a portfolio of single-tenant, income producing industrial, medical, service/necessity retail and office properties throughout the United States that are subject to long-term net leases. As of November 15, 2021, we wholly owned, or had ownership interests in, 154 properties located in 32 states that were 99.8% leased (based on our leasable square footage) to 68 tenants operating in 37 different industries. As of such date, approximately 43.3% of our ABR on an expected post-syndication pro rata share basis was from leases with tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major rating agency or have a senior unsecured obligation that has been so rated. Additionally, based on ABR on an expected post-syndication pro rata share basis, approximately 81.3% of our leases provide for fixed contractual increases in future base rent and an additional 8.1% of our leases provide for CPI-based contractual increases in future base rent. On a portfolio wide basis based on ABR on an expected post-syndication pro rata share basis, the average annual contractual base rent increase was approximately 1.5% (excluding CPI-based rent increases). As of November 15, 2021, our portfolio had a weighted average remaining lease term of 10.1 years (based on ABR on an expected post-syndication pro rata share basis).

We seek to acquire single-tenant net lease properties with a focus on real estate attributes that we believe can provide superior long-term prospects for rental rate increases, occupancy and re-leasing performance. We seek buildings that are not only leased to high quality tenants with attractive lease term and rent escalation provisions, but also exhibit characteristics that we believe protect value in the event of a vacancy, including strong locations, flexible layouts and physical attributes that permit alternative uses and appeal to a wide range of tenants. We believe these properties offer benefits as compared to other types of commercial real estate due to the relative stability of the cash flows from long-term leases, as well as reduced property level expenses and capital expenditures resulting from the net lease structure. We generally target properties with purchase prices ranging from $5 million to $25 million, as we believe there is less competition from larger institutional investors that typically target larger properties. Our portfolio is diversified not only by tenant, industry and geography, but also by property type, which we believe differentiates us from certain other net lease REITs and further reduces risk and enhances cash flow stability. We are an active asset manager and regularly review each of our properties for changes in the credit of the tenant, business performance at the property, industry trends and local real estate market conditions.

Our senior management team has extensive net lease real estate and public and private REIT management experience. In November 2008, William P. Dioguardi, our Chairman and Chief Executive Officer, founded Four Springs Capital, L.L.C. (“FSC LLC”), an affiliated organization that prior to our formation was a sponsor of single-tenant net lease investment programs, all but one of which were acquired by us after our formation. Subsequent to our formation, FSC LLC has assisted in marketing and distributing our securities and the ownership interests in our DST offerings. Mr. Dioguardi has led the acquisition and asset management of all of the properties in our portfolio. Coby R. Johnson, our President and Chief Operating Officer, joined FSC LLC as a Managing Director in October 2010 and co-founded us with Mr. Dioguardi in July 2012 to continue and expand the net lease investment activities of FSC LLC. Other members of our senior management team previously served in senior management roles at public net lease REITs. Since our inception,

1

our management team has developed and implemented internal processes, procedures and controls to establish a scalable infrastructure that we believe will allow us to grow efficiently.

Portfolio Summary

As of November 15, 2021, we wholly owned 120 properties and had ownership interests in 34 additional properties, over which we exercise full management and disposition authority. The following table sets forth information on an expected post-syndication pro rata share basis relating to our portfolio as of November 15, 2021.

(1)

Based on our leasable square footage.

(2)

Weighted by ABR on an expected post-syndication pro rata share basis.

(3)

Tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major credit rating agency or have a senior unsecured obligation that have been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB- or above from one or all of Moody’s Investor Service, Inc., Standard & Poor’s Rating Services, and AM Best. See “Risk Factors—Risks related to Our Business. Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(4)

Based on the later of year built or year of last major renovation.

2

The following table sets forth information on an expected post-syndication pro rata share basis relating to our portfolio diversification by property type and tenant industry as of November 15, 2021.

Tenants

Our portfolio of properties has a stable and diversified tenant base. As of November 15, 2021, our properties were 99.8% leased (based on our leasable square footage) to 68 tenants operating in 37 different industries, with approximately 43.3% of our ABR on an expected post-syndication pro rata share basis from leases with tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major rating agency or have a senior unsecured obligation that has been so rated. We intend to maintain a diversified mix of tenants to limit our exposure to any one tenant or industry.

The following tables sets forth information about the 10 largest tenants in our portfolio based on ABR on an expected post-syndication pro rata share basis and on a consolidated basis as of November 15, 2021.

3

Expected Post-Syndication Pro Rata Share Basis

Tenant

Property Type

ABR (Expected Post- Syndication Pro Rata Share)

Percentage of ABR (Expected Post- Syndication Pro Rata Share)

Leased Square Feet (Expected Post- Syndication Pro Rata Share)

Percentage Of Leased Square Feet (Expected Post- Syndication Pro Rata Share)

Investment Grade Rated (Tenant/​ Guarantor/​ Parent)(1)

Blue Cross Blue Shield of South Carolina(2)

Medical

​

$

1,926,045

​

5.6%

​

94,450

​

2.8%

​

✓

Caliber Collision(2)

Retail

​

​

1,830,145

​

5.3%

​

100,629

​

3.0%

​

​

Discovery Behavioral Health(2)

Medical

​

​

1,753,653

​

5.1%

​

71,859

​

2.1%

​

​

BioLife(2)

Medical

​

​

1,732,838

​

5.0%

​

50,120

​

1.5%

​

✓

Zips Car Wash(2)

Retail

​

​

1,679,969

​

4.9%

​

16,319

​

0.5%

​

​

Performance Food Group

Industrial

​

​

1,622,280

​

4.7%

​

165,200

​

4.9%

​

​

GPM Investments(2)

Retail

​

​

1,502,319

​

4.4%

​

31,557

​

0.9%

​

​

Horizon Healthcare

Office

​

​

1,338,138

​

3.9%

​

87,460

​

2.6%

​

✓

CVS/Caremark

Office

​

​

1,200,401

​

3.5%

​

123,118

​

3.6%

​

✓

Dollar General(2)

Retail

​

​

1,103,864

​

3.2%

​

95,280

​

2.8%

​

✓

Total

​

​

$

15,689,652

​

45.6%

​

835,992

​

24.7%

​

​

(1)

Tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major credit rating agency or have a senior unsecured obligation that have been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB− or above from one or all of Moody’s Investor Service, Inc., Standard & Poor’s Rating Services, and AM Best. See “Risk Factors—Risks related to Our Business. Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(2)

Tenant leases more than one of our properties.

Consolidated Basis

Tenant

Property Type

ABR (Consolidated)

Percentage of ABR (Consolidated)

Leased Square Feet (Consolidated)

Percentage Of Leased Square Feet (Consolidated)

Investment Grade Rated (Tenant/​ Guarantor/​ Parent)(1)

Amazon.com(2)

Industrial

​

$

7,591,185

​

23.1%

​

1,380,865

​

13.2%

​

✓

Biolife(2)

Medical

​

​

2,696,864

​

1.3%

​

79,108

​

4.7%

​

✓

Blue Cross Blue Shield of South Carolina(2)

Medical

​

​

2,487,608

​

2.1%

​

123,478

​

4.3%

​

✓

Fresenius Medical(2)

Medical

​

​

2,447,760

​

1.6%

​

97,486

​

4.3%

​

✓

GAF

Industrial

​

​

2,280,249

​

3.4%

​

201,153

​

4.0%

​

​

Caliber Collision(2)

Retail

​

​

2,115,989

​

2.2%

​

133,245

​

3.7%

​

​

Discovery Behavioral Health(2)

Medical

​

​

1,753,653

​

1.2%

​

71,859

​

3.1%

​

​

University of Iowa

Medical

​

​

1,680,522

​

1.0%

​

61,067

​

2.9%

​

✓

Zips Car Wash(2)

Retail

​

​

1,679,969

​

0.3%

​

16,319

​

2.9%

​

​

Performance Foods Group

Industrial

​

​

1,622,280

​

2.8%

​

165,200

​

2.8%

​

​

Total

​

​

$

26,356,079

​

39.0%

​

2,329,780

​

45.9%

​

​

(1)

Tenant or lease guarantor, or parent of tenant or lease guarantor has an investment grade credit rating from a major rating agency

4

or has a senior unsecured obligation that has been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB− or above from one or both of Moody’s Investors Service, Inc. Standard & Poor’s Ratings and AM Best. See “Risk Factors—Risks Related to Our Business—Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(2)

Tenant leases more than one of our properties.

Lease Expirations

As of November 15, 2021, our weighted average in-place remaining lease term was 10.1 years (based on ABR on an expected post-syndication pro rata share basis). None of our leases expire in 2021, only one lease will expire in 2022, and only 21.5% of our leases (based on ABR on an expected post-syndication pro rata share basis) will expire during the next five calendar years. The following table sets forth a summary schedule of our lease expirations for leases in place as of November 15, 2021 (based on ABR on an expected post-syndication pro rata share basis). The information set forth in the table assumes that tenants exercise no renewal options and no early termination rights.

Competitive Strengths

We believe that we distinguish ourselves from other investors in single-tenant net lease real estate in the United States through the following competitive strengths:

•

High Quality, Diversified Portfolio.   As of November 15, 2021, we wholly owned, or had ownership interests in, 154 properties located in 32 states that were 99.8% leased (based on our leasable square footage) to 68 tenants under 157 leases operating in 37 different industries. We believe our rigorous property underwriting has resulted in a high quality portfolio with locations and demographics that we

5

believe attract strong tenants and provide for alternative uses, enhancing our ability to re-lease our properties. Our portfolio is diversified not only by tenant, industry and geography, but also by property type, which we believe differentiates us from certain other net lease REITs and further reduces risk and enhances cash flow stability. As of November 15, 2021, our portfolio contained 39 industrial properties that generated 39.6% of our ABR, 52 medical office properties that generated 22.2% of our ABR, 61 retail properties that generated 30.8% of our ABR and two single-tenant office properties leased to healthcare tenants that generated 7.4% of our ABR, in each case on an expected post-syndication pro rata basis. Approximately 43.3% of our ABR on an expected post-syndication pro rata share basis was from leases with tenants or lease guarantors, or parents of such tenants or lease guarantors, that have an investment grade credit rating from a major rating agency or have a senior unsecured obligation that has been so rated. As of November 15, 2021, no single property in our portfolio represented more than 5.0% of our ABR on an expected post-syndication pro rata share basis. We believe that the high quality and diversification of our portfolio reduces the risks associated with adverse developments affecting any particular tenant, industry, geography or property type.

•

Stable and Predictable Cash Flows with Embedded Contractual Rent Growth.   As of November 15, 2021, our properties were 99.8% leased (based on our leasable square footage) and had a weighted average remaining lease term of 10.1 years (based on ABR on an expected post-syndication pro rata share basis). We have no lease expirations through 2021 and only 21.5% of our leases (based on ABR on an expected post-syndication pro rata share basis) will expire during the next five calendar years. Additionally, all of our leases are structured as net leases, which generally require our tenants to pay substantially all of the operating expenses related to the property, including real estate taxes, utilities, maintenance and insurance, as well as certain capital expenditures. Commercial properties that are not subject to net leases generally are subject to greater volatility in operating results due to unexpected changes in operating costs or unforeseen capital expenditures. As a result, our net leases reduce the impact of potential inflation on property-level operating expenses and our exposure to significant capital expenditures, which we believe provides us with a strong, stable source of recurring cash flows from which to grow our portfolio. Furthermore, based on ABR on an expected post-syndication pro rata share basis, approximately 81.3% of our leases provide for fixed contractual increases in future base rent and an additional 8.1% of our leases provide for CPI-based contractual increases in future base rent. On a portfolio wide basis, as of November 15, 2021, the average annual contractual base rent increase was approximately 1.5% (excluding CPI-based rent increases).

The following tables sets forth a summary of certain information with respect to our portfolio’s contractual rent increases as of November 15, 2021 (on an expected post-syndication pro rata share basis).

Lease Escalation Frequency(1)(2)	% of ABR (Expected Post- Syndication Pro Rata Share Basis)		Weighted Average Annual Escalation Rate
Annually	​	61.2%	​	1.8%
Every 2 Years	​	0.8%	​	2.3%
Every 3 Years	​	3.7%	​	0.6%
Every 5 Years	​	20.0%	​	1.2%
Other Escalation Frequencies	​	3.8%	​	2.3%
Flat	​	10.5%	​	—
Total/Weighted Average	​	100.0%	​	1.5%

(1)

Leases with CPI-based rental rate increases are included in the Lease Escalation Frequency category that corresponds to the frequency of rental rate escalations under such leases. For our CPI-based leases, we have assumed that rental rate increases in the future will be 0.0%. As of November 15, 2021, we had fifteen leases that included CPI-based rental rate increases, and those leases represented 8.1% of our ABR on an expected post-syndication pro rata share basis.

(2)

As of November 15, 2021, there were seven leases included in the “Flat” category representing 4.6% of our ABR on an expected post-syndication pro rata basis with 1.9, 3.0, 3.4, 4.0, 4.5, 4.9 and 4.9 year remaining lease terms, respectively, that had rent escalations in the primary term but have no further rent escalations provisions during their remaining terms. There is an additional one parking lot lease included in the “Flat” category representing 0.2% of our ABR on an expected post-syndication pro rata basis with 7.5 year remaining lease term.

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(1)

As of November 15, 2021, there were seven leases included in the “No Increases” category representing 4.6% of our ABR on an expected post-syndication pro rata basis with 1.9, 3.0, 3.4, 4.0, 4.5, 4.9 and 4.9 year remaining lease terms, respectively, that had rent escalations in the primary term but have no further rent escalations provisions during their remaining terms. There is an additional one parking lot lease included in the “No Increases” category representing 0.2% of our ABR on an expected post-syndication pro rata basis with 7.5 year remaining lease term.

•

Demonstrated Acquisition Track Record with Robust Pipeline.   We have been actively investing in single-tenant net lease real estate since 2012, having acquired 182 net lease properties in 96 transactions through November 15, 2021. We believe we have developed a reputation as a credible and active buyer of single-tenant net lease real estate within the industry, and we believe such reputation provides us access to acquisition opportunities that may not be available to our competitors. Historically, our senior management team has been able to leverage our extensive network of long standing relationships with owners, operators, tenants, developers, advisors (including strategic business consultants, accountants and lawyers), brokers, lenders, private equity firms and other participants in the real estate industry to access a wide variety of acquisition opportunities, which has often resulted in the acquisition of properties that were not broadly marketed. From January 1, 2021 through November 15, 2021, 46.3%, 13.6%, 21.2% and 18.9% of our acquisitions based on original purchase prices were sourced from developers, advisors, owners and/or operators and brokers, respectively. In 2020, we sourced more than 700 single-tenant net lease properties that we identified as warranting investment consideration after an initial review. From November 2020, when we accessed additional institutional capital, through November 15, 2021, we acquired 65 properties and our average quarterly acquisition activity has been approximately $100.7 million on a consolidated basis ($41.5 million on an expected post-syndication pro rata share basis). We believe that our knowledge of the net lease market, reputation as a credible and active buyer and extensive network of long standing relationships will provide us access to a pipeline of attractive investment opportunities, which will enable us to continue to grow and further diversify our portfolio.

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The following chart shows our growth from our inception in 2012 to November 15, 2021 on an expected post-syndication pro rata share basis.

(1)

Net acquisitions represent the acquisitions made during the applicable period less property dispositions for such period.

The following chart shows our acquisitions in 2021 on a quarterly basis.

(1)

Excludes expected post-syndication pro rata share of DST properties owned by us.

(2)

Includes expected post-syndication pro rata share of DST properties owned by us.

(3)

Includes (a) $31.4 million for Real Estate Syndication that has closed as of November 15, 2021, (b) $34.9 million for REIT that has closed as of November 15, 2021, (c) $15.4 million for REIT in connection with the acquisition of certain beneficial

8

interests in three of our DSTs that is subject to the completion of the offering (see “—Recent Developments—Pending Acquisitions”) and (d) $25.2 million for REIT that is under contract and scheduled to close in the fourth quarter of 2021 (see “—Recent Developments—Pending Acquisitions”). While we regard the completion of the $25.2 of acquisitions under contract to be probable, these transactions are subject to customary closing conditions, including the completion of due diligence, and there can be no assurance that these acquisitions will be completed on the timeline or terms described above or at all.

•

Disciplined Investment Approach and Rigorous Underwriting Processes to Enhance Our Portfolio.   Our primary investment strategy is to acquire, own and actively manage a diversified portfolio of single-tenant, income producing industrial, medical, service/necessity retail and office properties throughout the United States that are subject to long-term net leases. In order to reduce the risks associated with adverse developments affecting a particular tenant, industry, geography or property type, we have assembled, and will seek to maintain, a portfolio that is diversified accordingly. We believe that the market knowledge, systems and analyses that we employ in our underwriting process allow us to efficiently analyze the risks associated with each property’s ability to produce cash flow going forward. We blend real estate analysis with tenant credit and lease analysis to make an assessment of expected cash flows to be realized in future periods.

For each property, our analysis primarily focuses on evaluating the following:

•

Real Estate.   Within the context of the relevant market and submarket, we evaluate the expected rents from a property relative to market rents, the purchase price per foot relative to the cost to replace the property, alternative uses for the property, as well as other potential users, and estimated replacement rents. We also evaluate the suitability of the property for the specific business conducted there and the industry in which the tenant operates, the prospect for re-tenanting or selling the property if it becomes vacant, and whether or not the property has expansion potential.

•

Tenant Credit.   We evaluate the tenant’s credit profile by focusing on data and information specific to the tenant’s financial status and the industry in which it operates. For the tenant’s financial status, we evaluate, to the extent available, the tenant’s current and historical financial statements, capital sources, earnings expectations, operating risks and general business plan. For the tenant’s industry, we evaluate, among other things, relevant industry trends and the tenant’s competitive market position.

•

Lease Structure.   We evaluate the tenant and landlord obligations contained within the existing or proposed lease as well as the remaining lease term, any contractual annual or periodic rent escalations and the existence of any termination or assignment provisions.

•

Tenant Retention.   We assess the tenant’s use of the property and the degree to which the property is strategically important to the tenant’s ongoing operations, the tenant’s potential cost to relocate, the supply/demand dynamic in the relevant submarket and the availability of suitable alternative properties. We believe tenant retention tends to be greater for properties that are strategically important to the tenant’s business and where the potential costs to relocate are high.

•

Unit-Level Profitability:   We analyze each property’s operations individually (i.e., on a unit-level) to determine the likelihood of each property generating consistent profits for the tenant.

•

Active Management of the Portfolio.   We believe our proactive approach to asset management and property management helps enhance the performance of our portfolio through risk mitigation strategies and opportunistic sales. Our proactive approach was critical to our performance during the COVID-19 pandemic. During the year ended December 31, 2020, on an expected post-syndication pro rata share basis, we collected 99.4% of rents, with collections of 99.6% for the second quarter of 2020 and 99.4% for the third quarter of 2020. From January 1, 2021 through November 15, 2021, we collected 100.0% of rents. We believe our collection rates are an example of how our proactive management is a competitive strength when compared with other owners of net leased real estate. As part of our proactive approach, we (1) regularly review each of our properties for changes in unit performance, tenant credit and local real estate conditions, (2) identify properties that no longer meet our disciplined underwriting strategy, diversification objectives or risk management criteria (including likelihood of non-renewal upon lease expiration) and (3) opportunistically dispose of those properties. Since our inception through November 15, 2021, we disposed of 28 properties for aggregate gross

9

proceeds of approximately $61.3 million and for an aggregate gain of approximately $7.6 million on a consolidated basis. We seek to reinvest net disposition proceeds in single-tenant net lease properties that improve our portfolio by enhancing diversification and improve key metrics such as tenant credit quality, weighted average remaining lease term and property age. The following table shows our rent collections per quarter during the year ended December 31, 2020 by industry on an expected post-syndication pro rata share basis.

•

Growth-Oriented, Flexible Balance Sheet Positioned for Growth.   Upon completion of this offering and the application of the net proceeds therefrom, we believe we will have a strong, flexible balance sheet that positions us for growth. We will use a portion of the net proceeds from this offering to repay amounts outstanding under our current credit facility (the “M&T Credit Facility”) and our mezzanine loan with Magnetar Capital (the “Mezzanine Loan”). Following these repayments, we expect to have $      million of indebtedness on a consolidated basis and $      million of indebtedness on an expected post-syndication pro rata share basis; representing, a pro forma debt-to-capitalization ratio of    % and    % on a consolidated and an expected post-syndication pro rata share basis, respectively (based on the midpoint of the price range set forth on the cover page of this prospectus). Additionally, following these repayments, we will have no debt maturities prior to February 2022, and the weighted average maturity of our indebtedness will be      years and      years on a consolidated and an expected post-syndication pro rata share basis, respectively. Upon completion of this offering, we expect to have a new undrawn $300 million credit facility (the “New Credit Facility”). Accordingly, we expect to have approximately $      million of total liquidity, consisting primarily of a portion of the net proceeds from this offering and borrowing capacity under the New Credit Facility. We believe this liquidity and our ability to use limited partnership units in the Operating Partnership (“OP units”) as acquisition currency will provide us with financial flexibility to make opportunistic investments and fund future growth.

•

Experienced Management Team with Strong Sponsorship.   Our senior management team has extensive net lease real estate and public and private REIT management experience. In November 2008, William P. Dioguardi, our Chairman and Chief Executive Officer, founded FSC LLC and has led the acquisition and asset management of all of the properties in our portfolio. Coby R. Johnson, our President and Chief Operating Officer, joined FSC LLC as a Managing Director in October 2010 and co-founded us with Mr. Dioguardi in July 2012 to continue and expand the net lease investment activities of FSC LLC. Other members of our senior management team, including John E. Warch, our Senior Vice President, Chief Financial Officer, Jared W. Morgan, our Senior Vice President, Head of Acquisitions, and Cynthia M. Daly, our Senior Vice President, Head of Underwriting, previously served in senior management roles at public net lease REITs prior to joining us. Mr. Warch previously served as Senior Vice President and Chief Accounting Officer of CapLease, Inc. (previously NYSE: LSE), Mr. Morgan previously served as Vice President of Acquisitions at Spirit Realty Capital, Inc. (NYSE: SRC), and

10

Ms. Daly previously served as Executive Vice President and a member of the Board of Directors of Monmouth Real Estate Corporation (NYSE: MNR).

Our resources are further strengthened by our association with The Carlyle Group (“Carlyle”), a global investment firm which had approximately $293 billion of assets under management as of September 30, 2021 across Global Private Equity, Credit and Investment Solutions, and Goldman Sachs Asset Management (“GSAM”), the primary investing arm of The Goldman Sachs Group, Inc. (NYSE: GS), which provides investment and advisory services for institutions, financial advisors and individuals. We believe Carlyle’s and GSAM’s deep knowledge and relationships across a range of industries in which our current and future tenants conduct their business will enhance our underwriting and access to acquisition opportunities. Between November 2020 and May 2021, affiliates of Carlyle and GSAM invested $200 million in equity capital in our business to facilitate our growth. Upon completion of this offering, we expect that affiliates of Carlyle and GSAM will own approximately    % and    %, respectively, of our outstanding common shares.

Business Objectives and Strategies

Our objective is to own and manage a diversified portfolio of single-tenant net lease properties that maximizes cash available for distribution and delivers sustainable long-term risk adjusted returns to our shareholders. We believe we can achieve our objective through the following strategies:

•

Capitalize on Contractual Rent Increases.   We plan to continue to purchase properties with leases that provide for contractual rent increases. As of November 15, 2021, based on ABR on an expected post-syndication pro rata share basis, approximately 81.3% of our leases provide for fixed contractual increases in future base rent and an additional 8.1% of our leases provide for CPI-based contractual increases in future base rent. On a portfolio wide basis based on ABR on an expected post-syndication pro rata share basis, as of November 15, 2021, the average annual contractual base rent increase was approximately 1.5% (excluding CPI-based rent increases).

•

Utilize Our Experienced Team and Scalable Platform to Grow Our Portfolio in a Disciplined Manner. We intend to continue to leverage the experience of our team and our fully built, scalable platform to grow our portfolio of single-tenant net lease real estate by making disciplined acquisitions, including sale-leaseback transactions, that enhance our portfolio’s diversification by tenant, industry, geography and property type. We intend to utilize our network of owners, operators, tenants, developers, advisors (including strategic consultants, accountants and lawyers), brokers, lenders, private equity firms and other participants in the real estate industry to source our acquisitions, and we believe that our relationships will continue to provide access to a pipeline of attractive investment opportunities. We plan to continue to acquire single-tenant properties with purchase prices generally ranging from $5 million to $25 million that are net leased on a long-term basis with contractual rent increases to investment grade and other tenants that we determine to be creditworthy.

•

Utilize Our Rigorous Underwriting Process, Disciplined Investment Approach and Sourcing Channels to Enhance Our Portfolio.   We have developed and implemented rigorous processes and procedures that integrate the analysis of the real estate attributes, tenant credit and lease structure of each property that we consider acquiring, which we believe allows us to acquire properties that provide attractive risk adjusted returns. Key components of our analysis include assessing the probability of tenant retention upon lease expiration, understanding alternative uses and users of each property, and evaluating replacement rents on the basis of in-place rents versus estimated market rents. We seek to mitigate investment risks through intensive real estate, credit and lease structure analysis, as well as ongoing monitoring of tenants, tenant business performance at the property, industry trends and local real estate markets. Our rigorous underwriting process allows us to make the most of our sourcing channels to find attractive acquisition opportunities. Approximately 48.8% and 91.1% (in each case, based on purchase prices on an expected post-syndication pro rata share basis) of our 2020 acquisitions and our acquisitions from January 1, 2021 through November 15, 2021, respectively, were sourced in transactions that were not broadly marketed, including direct sale-leaseback transactions. In 2020, we evaluated approximately $17.4 billion (based on asking or estimated purchase prices) of potential single-tenant net lease property acquisitions, and through our disciplined investment process we submitted non-binding letters of intent on approximately $2.4 billion of these properties, representing

11

less than 15% of the properties we evaluated, and approximately $77.7 million of these properties were acquired. As of November 15, 2021, we were evaluating approximately $1.1 billion (based on asking or estimated purchase prices) of potential acquisitions, of which approximately $805.4 million was under prescreening or under review, approximately $206.6 million related to pending non-binding letters of intent, approximately $35.2 million related to signed non-binding letters of intent and approximately $28.6 million was under contract.

The following chart depicts the scope of our underwriting and acquisition activity on a consolidated basis from January 1, 2021 through November 15, 2021.

•

Execute on Our Differentiated Real Estate Syndication Business.   Since 2014, through a wholly-owned taxable REIT subsidiary (“TRS”), we have been active in syndicating ownership in net lease properties through a program that we developed to provide financing for properties in which we allow third-party investors who are seeking to reinvest the proceeds from sales of investment property in transactions that are eligible for favorable tax treatment under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”), to acquire ownership interests in certain of our properties (the “Section 1031 Exchange Program”). Under the Section 1031 Exchange Program, we establish DSTs that each own one or more properties. We typically offer up to 95% of the equity interests of each DST to qualified investors with the remaining equity interests held by us. A typical 1031 exchange transaction takes several months from acquisition of the property to full syndication of interests. We jointly own 34 of our properties through 20 DSTs in which we owned equity interests ranging from 5.0% to 100.0% as of November 15, 2021.

12

As of November 15, 2021, 18 of our DSTs were fully syndicated, and we were actively syndicating the remaining two DSTs. See “Explanatory Notes—Information About Properties Held Through Delaware Statutory Trusts.” These DSTs are included in our consolidated financial statements prepared in accordance with GAAP. We plan to continue to expand the Section 1031 Exchange Program, as these activities generate revenue for us in the form of acquisition fees and annual asset management fees, as well as provide us a pipeline of properties that we have the right, but not the obligation, to acquire.

We believe that the Section 1031 Exchange Program compliments our wholly-owned investment activity and provides key benefits to us including the following:

•

Acquisition and Asset Management Fee Income.   We receive a nonrecurring acquisition fee from each DST for identifying, acquiring and financing the DST property or properties and an ongoing management fee for managing the DST and its property or properties, which fees contribute to our cash flows.

•

Increased Acquisition Market Presence.   The Section 1031 Exchange Program offers us access to attractive equity capital that allows us to leverage our scalable investment platform by considering a broader range of attractive investment opportunities, including those with pricing that would initially be less attractive in our wholly-owned portfolio. See “Business—Allocation Policies.” Through the Section 1031 Exchange Program, we acquired $57.0 million of assets on a consolidated basis during the year ended December 31, 2020 and $260.5 million on a consolidated basis from January 1, 2021 through November 15, 2021. Our 1031 Exchange Program allows us to actively participate in a larger portion of the net lease market, develop relationships that we believe will facilitate future investment activity and build our reputation and brand awareness in the industry.

•

Potential to Acquire 100% Ownership of Properties Held in DSTs For OP Units at Premium Valuation.   Since we control the disposition of properties held in the DSTs, we can acquire 100% ownership of these properties. If we choose to acquire a property held by a DST, the property’s value is generally set through an appraisal process. We can acquire the property for cash or offer the third-party DST investors the opportunity to elect to receive OP units that would allow the transaction to qualify for certain tax deferral benefits. In addition, such units would allow investors to participate in the operating partnership’s diversified pool of assets and offer enhanced liquidity, as the units would typically be redeemable at the investors election for cash or, at our option, exchangeable for our common shares. Because of the tax efficiency relative to a cash transaction and the increased diversity and liquidity, we believe DST investors may be willing to accept OP units at a premium to the value of our common shares, which would enhance our ability to grow our wholly-owned portfolio on attractive terms.

We recently offered investors in three of our DSTs the opportunity to exchange the beneficial interests they own in their respective DSTs for Series U2 OP units, with such exchange subject to, and effective upon, the completion of this offering. Investors holding approximately $10.3 million of beneficial interests in the subject DSTs have agreed to exchange, upon the completion of this offering, their DST beneficial interests for an aggregate number of Series U2 OP units equal to such amount divided by 120% of the initial public offering price of our common shares in this offering (or           Series U2 OP units, based on the midpoint of the price range set forth on the cover page of this prospectus). The value of the real estate to be acquired from the investors in the exchange of the DST interests will have a value of approximately $15.4 million (inclusive of the equity value and debt associated with such real estate). We owned approximately 25.0%, 5.0% and 5.0% of the equity interests in these three DSTs, respectively, as of November 15, 2021, and, as a result of this exchange, we expect to own 38.0%, 35.4% and 32.6% of the equity interests in such DSTs, respectively, upon completion of this offering. The Series U2 OP units will rank on parity with our common OP units, and the holders of Series U2 OP units will receive distributions at an annual rate equal to 5.5% of the Series U2 OP unit issue price unless the distribution rate on the common OP units exceeds such distribution rate, at which point, the distribution rate on the Series U2 OP units will be equal to the distribution rate on the common OP units for all future

13

distributions on the Series U2 OP units. See “The Operating Partnership and the Partnership Agreement—Series U2 OP Units.”

The following table set forth information on an expected post-syndication pro rata share basis relating to our DST portfolio as of November 15, 2021.

(1)

Weighted by ABR on an expected post-syndication pro rata share basis.

(2)

Tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major credit rating agency or have a senior unsecured obligation that have been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB- or above from one or all of Moody’s Investor Service, Inc., Standard & Poor’s Rating Services, and AM Best. See “Risk Factors—Risks related to Our Business. Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(3)

Based on the later of year built or year of last major renovation.

(4)

Represents the pro rata portion of ABR of our DSTs based on the percentage beneficial interests in our DSTs that we do not own.

•

Employ Active Asset Management.   We are an active asset manager and regularly review each of our properties for changes in the credit of the tenant, business performance at the property, industry trends and local real estate market conditions. We monitor market rents relative to in-place rents and the amount of tenant capital expenditures in order to refine our tenant retention and alternative use assumptions. Our management team utilizes our internal credit diligence to monitor the credit profile of each of our tenants on an ongoing basis. We believe that this proactive approach enables us to identify and address issues expeditiously and to determine whether there are properties in our portfolio that are appropriate for disposition. Since our inception through November 15, 2021, we disposed of 28 properties for aggregate gross proceeds of approximately $61.3 million and for an aggregate gain of approximately $7.6 million on a consolidated basis.

•

Maintain a Flexible Capital Structure.   We believe our pro forma capital structure will provide the financial flexibility and capacity to implement our growth strategies. We intend to maintain a prudent capital structure and balance our use of various forms of equity and debt financing. Over the long term, we will target a net debt (total liabilities less cash and cash equivalents) to Adjusted EBITDA—​pro rata (as defined in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non GAAP Financial Measures—EBITDA and Adjusted EBITDA”) leverage ratio of 4.5x to 5.5x to position us for growth. Our pro forma net debt to Adjusted EBITDA—pro rata ratio as of December 31, 2020 was      . To the extent practicable, we will also seek to maintain a debt profile with manageable near-term maturities. We believe that becoming a publicly-traded company will

14

enhance our access to multiple forms of capital, including common and preferred equity, mortgage debt, revolving credit facilities, term loans and company-issued debt securities.

Our Target Market

Based on historical transactions and market participants, Rosen Consulting Group (“RCG”) estimates the value of existing net lease properties to be in the range of a few trillion dollars. RCG utilizes an estimate of corporate-owned real estate as a proxy for potential expansion of the net lease property universe. RCG estimates this segment of corporate-owned and occupied real estate ranges in value between $1.5 trillion to more than $2 trillion, as of September 30, 2021.

In 2020, single tenant transaction volume decreased, according to Real Capital Analytics, as the COVID-19 pandemic impacted investment activity and property values. According to Real Capital Analytics, 2020 transaction volume in the single tenant property types that we primarily target was approximately $52 billion consisting of $31 billion of industrial, $6 billion of retail, and $15 billion of office, including medical office, versus $68 billion across the same property types in 2019.

In the first three quarters of 2021, transaction volume reached nearly $49 billion. If annualized, this would equate to investment volume of over $65 billion, a potential increase of approximately 25% from 2020. We believe that based on this volume, there will continue to be substantial investment opportunities for us to further grow and diversify our portfolio.

Recent Developments

Pending Acquisitions

As of November 15, 2021, our acquisition pipeline consisted of 24 properties with an aggregate expected purchase price of approximately $270.4 million that are either under contract, subject to non-binding letters of intent or for which we have delivered a non-binding letter of intent for execution by the seller but has not yet been executed.

15

The following table sets forth a summary of our pending acquisitions that are either under contract or subject to non-binding letters of intent as of November 15, 2021 (“the 2021 Pending Acquistions”) (dollars in millions).

​	Wholly-Owned					DST					Consolidated
Status of Acquisitions	Number of Properties		Expected Purchase Price			Number of Properties		Expected Purchase Price			Number of Properties		Expected Purchase Price
Purchase and Sale Agreements(1)	​	5	​	$	28.6	​	—	​	$	—	​	5	​	$	28.6
Signed Letters of Intent(2)	​	3	​	​	16.0	​	1	​	​	19.2	​	4	​	​	35.2
Total	​	8	​	$	44.6	​	1	​	$	19.2	​	9	​	$	63.8

(1)

While we regard the completion of these pending acquisitions to be probable, these transactions are subject to customary closing conditions, including the completion of due diligence, and there can be no assurance that these acquisitions will be completed on the terms described above or at all.

(2)

These acquisitions are subject to negotiation and execution of definitive agreements and, if entered into, will be subject to customary closing conditions, including the completion of due diligence. As a result, we do not deem any of these potential acquisitions probable at this time and there can be no assurance that these acquisitions will be completed on the terms described above or at all.

We recently offered investors in three of our DSTs the opportunity to exchange the beneficial interests they own in their respective DSTs for Series U2 OP units, with such exchange subject to, and effective upon, the completion of this offering. Investors holding approximately $10.3 million of beneficial interests in the subject DSTs have agreed to exchange, upon the completion of this offering, their DST beneficial interests for an aggregate number of Series U2 OP units equal to such amount divided by 120% of the initial public offering price of our common shares in this offering (or           Series U2 OP units, based on the midpoint of the price range set forth on the cover page of this prospectus). We owned approximately 25.0%, 5.0% and 5.0% of the equity interests in these three DSTs, respectively, as of November 15, 2021, and, as a result of this exchange, we expect to own 38.0%, 35.4% and 32.6% of the equity interests in such DSTs, respectively, upon completion of this offering. The Series U2 OP units will rank on parity with our common OP units, and the holders of Series U2 OP units will receive distributions at an annual rate equal to 5.5% of the Series U2 OP unit issue price unless the distribution rate on the common OP units exceeds such distribution rate, at which point, the distribution rate on the Series U2 OP units will be equal to the distribution rate on the common OP units for all future distributions on the Series U2 OP units. See “The Operating Partnership and the Partnership Agreement—Series U2 OP Units.”

Our Structure

We were formed as a Maryland real estate investment trust (“Maryland REIT”) on July 6, 2012 and elected to be treated as a REIT under the Code beginning with our taxable year ended December 31, 2012. We are structured as an umbrella partnership REIT, commonly called an UPREIT, and own all of our assets and conduct substantially all of our business through the Operating Partnership and its subsidiaries. We are the sole general partner of the Operating Partnership, and as of September 30, 2021, we owned a 93.6% limited partnership interest in the Operating Partnership.

On October 23, 2020, we completed a restructuring of our then outstanding beneficial interests. As a result of the restructuring and related transactions: (1) our then existing common shares were exchanged for non-participating common shares at a ratio of 9.3091650 to 1; (2) our then outstanding Series A preferred shares, Series B preferred shares, Series C preferred shares, Series D preferred shares and Series DRIP 1 preferred shares were converted to common shares at various conversion ratios reflecting the relative values of the securities based on such factors as relative seniority and the then current value of our portfolio; and (3) we redeemed all of our then outstanding Series E preferred shares. Immediately following the restructuring, our capitalization consisted solely of common shares and non-participating common shares. On November 20, 2020, we issued 2,500,000 Series A-1 preferred shares, and, on May 4, 2021 and August 11, 2021, we issued an aggregate of 7,500,000 Series A-2 preferred shares.

The following diagram depicts our organizational structure and equity ownership immediately following this offering. This diagram reflects (1) the automatic conversion of all of our 200,015 outstanding non-participating common shares into 200,015 common shares, (2) the automatic conversion of all of our        

16

  outstanding preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) and (3) the exchange, upon the completion of this offering, of approximately $10.3 million of the DST interests held by investors for an aggregate number of Series U2 OP units equal to such amount divided by 120% of the initial public offering price of our common shares in this offering (or           Series U2 OP units, based on the midpoint of the price range set forth on the cover page of this prospectus). The diagram does not reflect (1) 11,747 common shares issuable upon exercise of outstanding options held by our trustees, officers and employees, (2) 474,851 common shares issuable upon exercise of outstanding warrants held by certain of our shareholders, (3) 10,743 warrants for common shares issuable upon exercise of outstanding options held by our trustees with a weighted average price of $186.18 per share and (4) 895,500 common shares issuable upon exchange of 895,500 long-term incentive units (“LTIP Units”).

Emerging Growth Company Status

We currently qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy or information statements, exemptions from the requirements of holding a non-binding advisory vote on executive compensation and seeking shareholder approval of any golden parachute payments not previously approved and not being required to adopt certain accounting standards until those standards would otherwise apply to private companies.

17

Although we are still evaluating our options under the JOBS Act, we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an “emerging growth company.” At this time, we have elected to take advantage of the extended transition period to comply with new or revised accounting standards and to adopt certain of the reduced disclosure requirements available to emerging growth companies. because we have taken advantage of certain of these exemptions, some investors may find our common shares less attractive, which could result in a less active trading market for our common shares, and our share price may be more volatile.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We could remain an “emerging growth company” until the earliest to occur of: (1) the last day of the fiscal year following the fifth anniversary of this offering; (2) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion; (3) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter; or (4) the date on which we have issued more than $1 billion in non-convertible debt securities during the preceding three-year period.

Executive Offices

Our offices are located at 1901 Main Street in Lake Como, New Jersey 07719. Our telephone number is 877-449-8828. Our internet website is https://fsctrust.com. The information contained in, or that can be accessed through, our website is not incorporated by reference in or otherwise a part of this prospectus.

Corporate Responsibility—Environmental, Social, and Governance (ESG)

Corporate responsibility, including environmental, social and governance (“ESG”) efforts, has been one of our cornerstones since our inception. We believe that our corporate responsibility and ESG initiatives are key to our performance, and we are focused on efforts and changes designed to have long-term, positive impacts for our shareholders, employees, tenants, other stakeholders and the communities where we live, work and own our properties. We are committed to our ESG efforts not just because we believe it is the right thing to do but also because it is good for our business. Our mission is to operate our business in a way that honors and advances our guiding values: performance excellence, integrity, respect, leadership, humility, partnership and transparency.

Environmental

As a real estate owner, we are aware of the need to develop and implement environmentally sustainable practices within our business and are committed to doing so. Our efforts in this area are primarily undertaken in partnership with our tenants due to the nature of our business model. We acquire, own and actively manage a diversified portfolio of single-tenant, income producing industrial, medical, service/necessity retail, and office properties throughout the United States that are subject to long-term net leases. In our portfolio, we have a building with a solar photovoltaic (“PV”) system installed pursuant to a solar equipment lease. The PV equipment generates electricity for use at the property. We also have a property that has a LEED (Leadership in Energy and Environmental Design) certification.

Our acquisition process generally includes a robust environmental assessment of every property we acquire, including obtaining a Phase I environmental site assessment based on current industry standards and best practices. We carefully review any recognized environmental conditions identified as a result of the assessment and work with the tenant and nationally recognized environmental experts to implement our forward looking strategy, including any required governmental reporting or remediation action.

Social

Our commitment to our employees is central to our ability to continue to deliver strong performance and financial results for our shareholders and other stakeholders. We are as passionate about our people as we are about real estate. We seek to create and cultivate an engaging work environment for our employees which allows us to attract, retain and develop top talent to manage our business. We are committed to providing our

18

employees with an environment that is free from discrimination and harassment, that respects and honors their differences and unique life experiences and that enables every employee the opportunity to develop and excel in their role and reach their full potential.

Governance

We are committed to conducting our business in accordance with corporate governance best practices. Our reputation is one of our most important assets and each trustee, officer and employee must contribute to the care and preservation of that asset. We have structured our corporate governance in a manner we believe closely aligns our interests with those of our shareholders.

Notable features of our corporate governance structure include the following:

•

our board of trustees is not classified, with each of our trustees subject to election annually, and we may not elect to be subject to the elective provision of the Maryland General Corporation Law (“MGCL”) that would classify our board of trustees without the affirmative vote of a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees;

•

upon the completion of this offering, six out of nine trustees will be independent;

•

we have a fully independent Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee;

•

at least one of our trustees qualifies as an “audit committee financial expert” as defined by the U.S. Securities and Exchange Commission (the “SEC”); and

•

we do not have a shareholder rights plan, however, our board of trustees may adopt a shareholder rights plan in the future without the approval of our shareholders, but in such case it must seek ratification from our shareholders within 12 months of adoption of the plan for the plan to remain in effect.

Summary Risk Factors

An investment in our common shares involves risks. You should consider carefully the risks discussed below and described more fully along with other risks under “Risk Factors” in this prospectus before investing in our common shares.

Risks Related to Our Business

•

Global market and economic conditions may materially and adversely affect us and our tenants.

•

Our business depends on our tenants successfully operating their businesses and satisfying their obligations to us.

•

Each of our properties except for three is leased to a single tenant; therefore, we could be adversely affected by the failure of a single tenant to perform under its lease with us due to a downturn in its business, bankruptcy or insolvency.

•

We own properties that depend upon discretionary spending by consumers; a reduction in discretionary spending could adversely affect our tenants, their ability to meet their obligations to us and reduce the demand for and value of our properties.

•

Our financial monitoring, periodic site inspections and selective property sales may fail to mitigate the risk of tenant defaults, and if a tenant defaults, we may experience difficulty or a significant delay in re-leasing or selling the property.

•

Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.

•

We may be unable to identify and complete acquisitions of suitable properties which may impede our growth and our ability to further diversify our portfolio. Future acquisitions may not yield the returns we expect.

•

We may not acquire the properties that are in our pipeline.

19

•

As we continue to acquire properties, we may decrease or fail to increase the diversity of our portfolio.

•

We have recorded net losses in the past and we may experience net losses in the future.

•

Our operating results will be affected by economic and regulatory changes that have an adverse impact on the real estate market in general, which may prevent us from being profitable or from realizing growth in the value of our properties.

•

Our participation in the Section 1031 Exchange Program may limit our ability to borrow funds in the future.

•

Changes in the Code may impair our ability to sell properties that are, or were, in the Section 1031 Exchange Program.

•

Participation in co-ownership arrangements, including DSTs, joint ventures, partnerships or otherwise, may subject us to risks that otherwise may not be present in other real estate investments.

•

We may have increased exposure to litigation as a result of the Section 1031 Exchange Program.

•

Eminent domain could lead to material losses.

Risks Related to Environmental and Compliance Matters and Climate Change

•

Complying with environmental laws and regulations may be costly.

•

Our operations and financial condition may be adversely affected by climate change, including possible changes in weather patterns, weather-related events, government policy, laws, regulations and economic conditions.

Risks Related to Our Indebtedness

•

Our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing.

•

Secured indebtedness exposes us to the possibility of foreclosure on our ownership interests in pledged properties.

•

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Risks Related to Our Organization and Structure

•

We have identified a material weakness in internal control over financial reporting, which could, if not remediated, materially and adversely affect us.

•

We are a holding company with no direct operations and will rely on funds received from the Operating Partnership to pay liabilities and make any distributions declared by our board of trustees.

•

Conflicts of interest could arise between the interests of our shareholders and the interests of holders of OP units, which may impede business decisions that could benefit our shareholders.

•

Our charter permits our board of trustees to issue shares with terms that may subordinate the rights of shareholders.

•

Our board of trustees may change our investment and financing policies without shareholder approval.

•

Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may limit your ability to dispose of your shares.

•

Our board of trustees may enact certain anti-takeover measures under Maryland law.

Risks Related to this Offering and Ownership of Our Common Shares

•

The cash available for distribution to shareholders may not be sufficient to pay distributions at expected levels, nor can we assure you of our ability to make, maintain or increase distributions in the future.

•

There is no existing market for our common shares, an active trading market for our common shares may not develop and the market price for our common shares may decline substantially and be volatile.

20

•

A substantial portion of our total outstanding common shares may be sold into the market at any time following this offering.

•

If you purchase our common shares in this offering, you will suffer immediate and substantial dilution.

•

If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade the outlook of our common shares, the price of our common shares could decline.

Risks Related to Our Tax Status and Other Tax Related Matters

•

We would incur adverse tax consequences if we fail to qualify as a REIT.

•

Complying with REIT requirements may cause us to liquidate or forgo otherwise attractive investment opportunities.

•

Dividends paid by REITs generally do not qualify for reduced tax rates.

•

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

•

Legislative or other actions affecting REITs could materially and adversely affect us and our investors as well as the Operating Partnership.

General Risk Factors

•

The requirements of being a public company may strain our resources, result in more litigation, and divert the attention of our management.

•

We face risks relating to cybersecurity attacks that could cause loss of confidential information and other business disruptions.

Distribution Policy

We intend to pay cash distributions to our common shareholders on a monthly basis. We intend to make a pro rata distribution with respect to the period commencing upon completion of this offering and ending on            based on a distribution rate of $      per common share for a full month. On an annualized basis, this would be $      per common share, or an annual distribution rate of approximately    %, based on the $      midpoint of the price range set forth on the cover page of this prospectus. We intend to make distributions that will enable us to meet the distribution requirements applicable to REITs. Any distributions will be at the sole discretion of our board of trustees, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations; our debt service requirements; our liquidity and cash flows; our capital expenditures; our REIT taxable income; the annual distribution requirement under the REIT provisions of the Code; restrictions in any current or future debt agreements; any contractual limitations; and any other factors that our board of trustees may deem relevant. Although we intend to make regular distributions, there is no guarantee that we will make distributions to our shareholders. See “Distribution Policy.”

REIT Qualification

We have elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2012. We believe that we have been organized and have operated in a manner that has allowed us to qualify as a REIT for U.S. federal income tax purposes commencing with such taxable year, and we intend to continue operating in such a manner. To maintain REIT status, we must meet various organizational and operational requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distributions to our shareholders and the concentration of ownership of our equity shares. See “Certain U.S. Federal Income Tax Considerations.”

Restriction on Ownership of Our Shares

Subject to certain exceptions, our charter provides that no person may (1) beneficially own more than 9.8% in value or in number, whichever is more restrictive, of (a) our outstanding common shares or (b) our aggregate

21

outstanding shares of beneficial interest or (2) constructively own more than 9.8% in value or in number, whichever is more restrictive, of any class or series of our outstanding shares of beneficial interest.

Our charter also provides the following:

•

No person shall beneficially or constructively own our shares of beneficial interest to the extent such beneficial or constructive ownership would result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise fail to qualify as a REIT (including, but not limited to, beneficial ownership or constructive ownership that would result in us actually or constructively owning an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by us from such tenant would cause us to fail to satisfy the gross income requirement of either Section 856(c)(2) or 856(c)(3) of the Code (i.e., the annual 75% or the 95% gross income tests)).

•

Any transfer of our shares of beneficial interest that, if effective, would result in our shares of beneficial interest being owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code) shall be prohibited.

•

No person may beneficially or constructively own shares of beneficial interest to the extent that such beneficial or constructive ownership would cause us to constructively own 10% or more of the ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property within the meaning of Section 856(d)(2)(B) of the Code.

If any person would otherwise beneficially own or constructively own our shares of beneficial interest in violation of one or more of the ownership and transfer restrictions described above, then that number of our shares of beneficial interest the beneficial or constructive ownership of which otherwise would cause such person to violate such restriction shall be automatically transferred to a charitable trust for the benefit of one or more charitable beneficiaries. If the transfer to the charitable trust would not prevent the violation of the applicable ownership or transfer restriction, then, in the case where the beneficial ownership or constructive ownership that would otherwise be in violation of the ownership or transfer restrictions described above arises from a transfer, the transfer of that number of our shares of beneficial interest that otherwise would cause any person to violate an ownership or transfer restriction shall be void ab initio, and the intended transferee shall acquire no rights in such shares of beneficial interest. In addition, our board of trustees is authorized to take such action as it deems advisable to refuse to give effect to or to prevent any transfer or other event which the board of trustees determines in good faith is in violation of the restrictions set forth above. These actions, include without limitation, causing us to redeem or repurchase shares, refusing to give effect to a transfer on our books or instituting proceedings to enjoin a transfer or other event.

These restrictions, including the ownership limit, are intended to assist with our REIT compliance under the Code and otherwise to promote our orderly governance, among other purposes. These restrictions will remain in place until our board of trustees determines it is no longer in our best interest to qualify as REIT, or that the restrictions are no longer required for us to qualify as a REIT. See “Description of Securities—Restrictions on Ownership and Transfer.”

22

The Offering

Common shares we are
offering

       common shares

Common shares to be outstanding immediately after
this offering

      common shares (        common shares if the underwriters exercise their option to purchase additional shares in full)

Use of proceeds

We estimate that the net proceeds to us from this offering will be approximately $      million, or approximately $      million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $      per share (the midpoint of the price range set forth on the cover page of this prospectus). We intend to use a portion of the net proceeds from this offering to (1) consummate the 2021 Pending Acquisitions and (2) repay amounts outstanding under the M&T Credit Facility and the Mezzanine Loan, including a prepayment fee of $     . The remaining net proceeds will be used for general corporate purposes, including potential future acquisitions. See “Use of Proceeds.”

Listing

We expect to have our common shares listed on the NYSE, under the symbol “FSPR.”

Risk factors

Investing in our common shares involves risks. You should carefully consider the matters discussed under the caption “Risk Factors” beginning on page 28 prior to investing in our common shares.

Distribution policy

We intend to make regular monthly distributions to holders of our common shares as required to maintain our REIT qualification for U.S. federal income tax purposes. See “Distribution Policy.”

U.S. federal income tax considerations

For the material U.S. federal income tax consequences of holding and disposing of our common shares, see “Certain U.S. Federal Income Tax Considerations.”

The number of common shares outstanding immediately after this offering gives effect to (1) the automatic conversion of all of our 200,015 outstanding non-participating common shares into 200,015 common shares and (2) the automatic conversion of all           outstanding preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus). The number of common shares outstanding immediately after this offering excludes:

•

11,747 common shares issuable upon exercise of outstanding options held by our trustees, officers and employees with a weighted average exercise price of $37.94 per share;

•

474,851 common shares issuable upon exercise of outstanding warrants held by certain of our shareholders with exercise prices ranging from $20.00 to $31.16 per share, with a weighted average exercise price of $23.31 per share (see “Description of Securities—Warrants”);

•

10,743 warrants for common shares issuable upon exercise of outstanding options held by our trustees with a weighted average price of $186.18 per share;

•

895,500 common shares issuable upon exchange of 895,500 LTIP Units held by certain of our employees and trustees;

•

2,104,500 common shares available for future grants under our 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”) (see “Executive Compensation—2021 Equity Incentive Plan”);

•

65,636 common shares that may be issued in exchange for 65,636 OP units;

•

181,116 common shares that may be issued in exchange for 181,116 Series U1 OP units; and

23

•

           common shares that may be issued in exchange for           Series U2 OP units that will be issued upon the completion of this offering in exchange for approximately $10.3 million of the DST interests held by investors, which such number of Series U2 OP units is equal to approximately $10.3 million divided by 120% of the initial public offering price of our common shares in this offering (based on the midpoint of the price range set forth on the cover page of this prospectus).

24

SUMMARY CONSOLIDATED FINANCIAL DATA

The following summary consolidated historical financial and operating data as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 is derived from our audited consolidated financial statements included elsewhere in this prospectus. The following summary consolidated historical financial and operating data as of September 30, 2021 and for the nine months ended September 30, 2021 and 2020 is derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited financial statements were prepared on a basis consistent with our audited financial statements and include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, that we consider necessary for a fair presentation of the financial position and results of operations for those periods. Operating results for the nine months ended September 30, 2021 are presented for illustrative purposes only and are not necessarily indicative of the results that may be expected for the entire year. The data is only a summary and should be read together with the consolidated financial statements, the related notes and other financial information included in this prospectus.

The unaudited summary consolidated pro forma financial data gives pro forma effect to the Pro Forma Transactions (as defined in “Unaudited Pro Forma Financial Information”). The Pro Forma Transactions assume that each transaction was completed as of January 1, 2020 for purposes of the unaudited pro forma condensed consolidated statements of operations data for the nine months ended September 30, 2021 and the year ended December 31, 2020 and as of September 30, 2021 for purposes of the unaudited pro forma condensed consolidated balance sheet data as of September 30, 2021. The following unaudited summary consolidated pro forma statement of operations and balance sheet data is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the date indicated, nor is it indicative of future operating results.

Because the information presented below is only a summary and does not provide all of the information contained in our historical consolidated financial statements, including the related notes, you should read it in conjunction with “Unaudited Pro Forma Financial Information,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements, including the related notes, included elsewhere in this prospectus.

25

​

Nine Months Ended September 30, (unaudited)

Year Ended December 31,

​

Pro Forma

Historical

Pro Forma

Historical

(In thousands, except share and per share data)

2021

2021

2020

2021 (unaudited)

2020

2019

Statement of Operations Data:

​

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total revenue

​

$

​

$

38,967

​

$

25,955

​

$

​

$

35,737

​

$

30,744

Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property operating

​

​

​

​

​

5,458

​

​

3,144

​

​

​

​

​

4,705

​

​

3,557

General and administrative

​

​

​

​

​

11,729

​

​

3,844

​

​

​

​

​

5,151

​

​

5,363

Professional fees

​

​

​

​

​

2,120

​

​

390

​

​

​

​

​

902

​

​

627

Depreciation and amortization

​

​

​

​

​

15,725

​

​

10,059

​

​

​

​

​

13,562

​

​

10,630

Interest

​

​

​

​

​

17,878

​

​

7,598

​

​

​

​

​

12,597

​

​

9,568

Acquisition costs

​

​

​

​

​

41

​

​

195

​

​

​

​

​

236

​

​

56

Provision for impairment

​

​

​

​

​

335

​

​

535

​

​

​

​

​

535

​

​

—

Total expenses

​

​

​

​

​

53,286

​

​

25,765

​

​

​

​

​

37,688

​

​

29,801

Change in fair value of compound embedded derivative and warrant liability

​

​

​

​

​

(416)

​

​

(209)

​

​

​

​

​

355

​

​

(98)

Loss on extinguishment of debt

​

​

​

​

​

(310)

​

​

—

​

​

​

​

​

​

​

​

​

Gain on sale of real estate

​

​

​

​

​

2,431

​

​

401

​

​

​

​

​

409

​

​

2,698

Income tax benefit (provision for income taxes)

​

​

​

​

​

(1,996)

​

​

(47)

​

​

​

​

​

(29)

​

​

(308)

Net income (loss)

​

​

​

​

​

(14,610)

​

​

335

​

​

​

​

​

(1,216)

​

​

3,235

Net (income) loss attributable to noncontrolling interests in consolidated subsidiaries

​

​

​

​

​

6,280

​

​

(758)

​

​

​

​

​

76

​

​

(949)

Net income (loss) attributable to Four Springs Capital Trust

​

​

​

​

​

(8,330)

​

​

(423)

​

​

​

​

​

(1,140)

​

​

2,286

Preferred share and Series U1 Accretion

​

​

​

​

​

(2,590)

​

​

(541)

​

​

​

​

​

(2,790)

​

​

(573)

Preferred share dividends and Series U1 Distributions

​

​

​

​

​

(10,090)

​

​

(14,618)

​

​

​

​

​

(19,705)

​

​

(19,247)

Net income (loss) attributable to common shareholders

​

$

​

​

$

(21,010)

​

$

(15,582)

​

$

​

​

$

(23,635)

​

$

(17,534)

Income (Loss) Per Common Share–Basic and Diluted:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income (loss) per common share

​

$

​

​

$

(3.24)

​

$

(8.37)

​

$

​

​

$

(8.58)

​

$

(9.42)

Weighted average shares

​

(1)

​

​

6,533,284

​

​

1,861,833

​

(1)

​

​

2,755,280

​

​

1,861,833

Balance Sheet Data (at period end):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Real estate investments, net(2)(3)

​

$

​

$

781,383

​

$

372,712

​

​

​

​

$

424,637

​

$

360,845

Cash and cash equivalents

​

​

​

​

​

32,795

​

​

9,053

​

​

​

​

​

10,324

​

​

11,361

Accounts receivable and other assets(4)

​

​

​

​

​

25,606

​

​

15,631

​

​

​

​

​

14,433

​

​

12,153

Total assets

​

$

​

​

$

839,784

​

$

397,396

​

$

​

​

$

449,394

​

$

384,359

Notes payable, net

​

$

​

$

280,288

​

$

133,864

​

$

​

$

161,591

​

$

125,726

Lines of credit, net

​

​

​

​

​

42,807

​

​

66,878

​

​

​

​

​

14,180

​

​

66,180

Mezzanine note payable, net

​

​

​

​

​

86,412

​

​

—

​

​

​

​

​

83,068

​

​

—

Accounts payable accrued expenses and other liabilities(5)(6)

​

​

​

​

​

37,030

​

​

14,535

​

​

​

​

​

14,054

​

​

10,305

Total liabilities

​

$

​

$

446,537

​

$

215,277

​

$

​

$

272,893

​

$

202,211

Total contingently redeemable interests

​

$

​

$

194,933

​

$

64,092

​

$

​

$

51,780

​

$

52,478

Total shareholders’ equity

​

​

27,892

​

​

64,085

​

​

54,089

​

​

72,541

Noncontrolling interests

​

​

​

​

​

170,422

​

​

53,942

​

​

​

​

​

70,632

​

​

57,129

Total equity

​

$

​

​

$

198,314

​

$

118,027

​

$

​

​

$

124,721

​

$

129,670

26

​	Nine Months Ended September 30, (unaudited)									Year Ended December 31,
​	Pro Forma			Historical						Pro Forma			Historical
(In thousands, except share and per share data)	2021			2021			2020			2021 (unaudited)			2020			2019
Other Data:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net cash provided by operating activities	​	​	​	​	$	13,790	​	$	11,246	​	​	​	​	$	13,186	​	$	11,708
Net cash used in investing activities				​	$	(367,516)	​	$	(22,320)				​	$	(77,368)	​	$	(74,723)
Net cash provided by (used in)financing activities				​	$	377,823	​	$	8,687				​	$	61,924	​	$	69,493
Cash NOI–consolidated(7)	​	$		​	$	31,827	​	$	21,827	​	$		​	$	29,716	​	$	26,137
Cash NOI–pro rata(7)	​	$		​	$	20,497	​	$	15,972	​	$		​	$	21,702	​	$	18,936
EBITDA–consolidated(8)	​	$		​	$	20,989	​	$	18,040	​	$		​	$	24,972	​	$	23,742
Adjusted EBITDA–consolidated(8)	​	$		​	$	26,008	​	$	17,282	​	$		​	$	23,920	​	$	22,802
Adjusted EBITDA–pro rata(8)	​	$		​	$	23,265	​	$	12,019	​	$		​	$	17,940	​	$	16,852
FFO attributable to Four Springs Capital Trust(9)	​	$		​	$	(823)	​	$	7,355	​	$		​	$	9,157	​	$	7,660
AFFO attributable to Four Springs Capital Trust(9)	​	$		​	$	10,299	​	$	7,932	​	$		​	$	10,766	​	$	8,197
Number of investment property locations (at period end)	​	​	​	​	​	136	​	​	99	​	​	​	​	​	101	​	​	96
% of properties subject to a lease (at period end)	​	​	%	​	​	99.8%	​	​	100%	​	​	%	​	​	100%	​	​	100%

(1)

Includes the           common shares to be issued in this offering, the net proceeds of which will be used to consummate the 2021 Pending Acquisitions and repay the M&T Credit Facility and the Mezzanine Loan, including a prepayment fee of $     . Including all           common shares to be issued in this offering as well as preferred shares that will convert into common shares upon completion of this offering, we will have           common shares outstanding.

(2)

Includes $3.3 million and $2.9 million of investments held for sale as of September 30, 2021 and 2020, respectively. Includes $0.7 million and no investments held for sale as of December 31, 2020 and 2019, respectively.

(3)

Includes origination value of acquired in-place leases, net and acquired favorable leases, net.

(4)

Includes receivable from affiliate and deferred rent receivable.

(5)

Includes liabilities related to real estate investments held for sale.

(6)

Includes acquired unfavorable leases, net.

(7)

Cash NOI—consolidated and Cash NOI—pro rata are non-GAAP financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—Cash Net Operating Income” for a discussion of why we consider Cash NOI to be important and how we use this measure, as well as for a reconciliation of net income (loss) to Cash NOI.

(8)

EBITDA—consolidated, Adjusted EBITDA—consolidated and Adjusted EBITDA—pro rata are non-GAAP financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA” for a discussion of why we consider EBITDA and Adjusted EBITDA to be important and how we use these measures, as well as for a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA.

(9)

FFO attributable to Four Springs Capital Trust and AFFO attributable to Four Springs Capital Trust refer to “funds from operations” and “adjusted funds from operations,” respectively. FFO and AFFO are non-GAAP financial measures that are often used by analysts and investors to compare the operating performance of REITs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—FFO and AFFO” for a discussion of why we consider FFO and AFFO to be important and how we use these measures, as well as for a reconciliation of net income (loss) to FFO and AFFO.

27

RISK FACTORS

Investing in our common shares involves risks. Before you invest in our common shares, you should carefully consider the risk factors below together with all of the other information included in this prospectus. The occurrence of any of the following risks could materially and adversely affect our business, financial condition, liquidity, cash flows, results of operations, prospects and our ability to implement our investment strategies and to make or sustain distributions to our shareholders. The market price of our common shares could decline due to any of these risks, and you may lose all or a portion of your investment. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, liquidity, cash flows, results of operations and prospects. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

Global market and economic conditions may materially and adversely affect us and our tenants.

Changes in global or national economic conditions, such as a global economic and financial market downturn, including as a result of COVID-19 (as discussed below) or another pandemic in the future, may cause, among other things, a tightening in the credit markets, lower levels of liquidity, increases in the rate of tenant default and bankruptcy, and lower consumer and business spending, which could materially and adversely affect us. Potential consequences of changes in economic and financial conditions include: changes in the performance of our tenants, which may result in lower rent and lower recoverable expenses than the tenant can afford to pay and tenant defaults under the lease; current or potential tenants may delay or postpone entering into long-term leases with us; a reduction or elimination in our ability to borrow on terms and conditions that we find to be acceptable, which could reduce our ability to pursue acquisition opportunities or increase future interest expense; and the recognition of impairment charges on or reduced values of our properties, which may adversely affect our results of operations or limit our ability to dispose of assets at attractive prices and may reduce the availability of buyer financing. We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs and commitments associated with our operations. Accordingly, a decline in economic conditions could materially and adversely affect us.

Our business depends on our tenants successfully operating their businesses and satisfying their obligations to us.

We depend on our tenants to operate the properties they lease from us in a manner that generates revenues sufficient to allow them to meet their obligations to us, including their obligations to pay rent, maintain specified insurance coverage, pay real estate taxes and maintain the leased properties. While a tenant may have multiple sources of funds to meet its obligations to us, its ability to meet these obligations depends significantly on the success of the business it conducts at the property it leases from us. Our tenants may be adversely affected by many factors beyond our control that might render one or more of their locations uneconomic. These factors include poor management, changes in demographics, a downturn in general economic conditions or changes in consumer trends that decrease demand for our tenants’ products or services. In addition, factors that are not within the control of the tenant, such as a pandemic, may also adversely affect our tenants and their respective ability to satisfy their obligations to us. The occurrence of any of these factors could cause our tenants to fail to meet their obligations to us, including their obligations to pay rent, maintain specified insurance coverage, pay real estate taxes or maintain the leased property, or could cause our tenants to declare bankruptcy.

Each of our properties except for three is leased to a single tenant; therefore, we could be adversely affected by the failure of a single tenant to perform under its lease with us due to a downturn in its business, bankruptcy or insolvency.

Each of our properties except for three is leased to a single tenant, and our investment strategy focuses on, among other things, acquiring properties that are leased to a single tenant. The success of single tenant properties depends on the ability of the tenant to conduct profitable operations at the property and the tenant’s financial stability. Our tenants face competition within their industries and other factors that could reduce

28

their ability to make rent payments. For example, our retail tenants face competition from other retailers, as well as competition from other retail channels, such as internet sales, factory outlet centers, wholesale clubs, mail order catalogs, television shopping networks and various developing forms of e-commerce. In addition, our retail, medical and other office properties are located in public places, where crimes, violence and other incidents may occur. Such incidents could reduce the amount of business conducted by the tenants at our properties, thus reducing the tenants’ abilities to pay rent. Additionally, any such incidents could also expose us to civil liability as the property owner.

At any given time, a tenant may experience a downturn in its business that may significantly weaken its operating results, financial condition and ability to meet its obligations to us. In addition to general downturns in business, a tenant may experience a downturn at one or more properties that it leases from us that could adversely affect its ability to meet its lease obligations to us and result in a loss of value relating to the relevant property or properties. As a result, a tenant may delay lease commencement, fail to make rental payments when due, decline to extend a lease upon its expiration, become insolvent or declare bankruptcy.

We own properties that depend upon discretionary spending by consumers; a reduction in discretionary spending could adversely affect our tenants, their ability to meet their obligations to us and reduce the demand for and value of our properties.

As of November 15, 2021, approximately 30.8% of our ABR on an expected post-syndication pro rata share basis is attributable to tenants operating in the retail industry. For example, our portfolio includes sporting goods stores, dollar and other general merchandise stores, auto parts and repair stores, and home furnishing stores. Some of our top tenants include, Caliber Collision, Zips Car Wash, and GPM Investments. The success of most of these businesses depends on the willingness of consumers to use discretionary income to purchase their products or services. A downturn in the economy could cause consumers to reduce their discretionary spending, which may have a material adverse effect on our tenants, their ability to meet their obligations to us and reduce the demand for and value of our properties.

Our financial monitoring, periodic site inspections and selective property sales may fail to mitigate the risk of tenant defaults, and if a tenant defaults, we may experience difficulty or a significant delay in re-leasing or selling the property.

Our active asset management strategies, which include regular reviews of each of our properties for changes in the credit of the tenant, business performance at the property, industry trends and local real estate market conditions, may be insufficient to predict tenant defaults. If a tenant defaults, it will likely eliminate all of, or significantly reduce, our revenue from the affected property for some time. If a defaulting tenant is unable to recover financially, we may have to re-lease or sell the property. Re-leasing or selling properties may take a significant amount of time, during which the property might have a negative cash flow to us and we may incur other related expenses. We may also have to renovate the property, reduce the rent or provide an initial rent abatement or other incentive to attract a tenant or buyer. During this period, we likely will incur ongoing expenses for property maintenance, taxes, insurance and other costs. Moreover, a property which has become vacant may lead to reduced rental revenue and result in less cash available for distribution to our shareholders. In addition, because a property’s value depends principally upon its lease, leasing history and prevailing market rental rates, the value of a property with a prolonged vacancy could decline.

Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.

A key element of our underwriting process is evaluating tenant creditworthiness. When available, we consider any relevant rating assigned by a major rating agency. Additionally, when we underwrite a tenant’s credit we generally review financial statements or other financial data and, if available, property-level operating information. In many instances there will be no rating to consider and financial information may be limited. Underwriting credit risk in the absence of a credit rating or based upon limited financial information could cause us to improperly assess tenant credit risk and the potential for tenant defaults. In addition to considering any rating that is available for a tenant or a lease guarantor, we also consider any rating assigned to an affiliate of a tenant as an indication of the credit of the overall enterprise of which our tenant is a part. However, a tenant affiliate that is not a guarantor under a lease with us is not contractually obligated to meet

29

our tenant’s obligations to us under such lease. Accordingly, our consideration of a credit rating assigned to a non-guarantor tenant affiliate could cause us to underestimate the credit risk posed by a particular tenant.

Credit ratings may prove to be inaccurate.

When available, we consider credit ratings assigned by major rating agencies to our tenants or, where applicable, their guarantors when making investment and leasing decisions. A credit rating is not a guarantee and only reflects the rating agency’s opinion of an entity’s ability to meet its financial commitments, such as its payment obligations to us under the relevant lease, in accordance with their stated terms. A rating may ultimately prove not to accurately reflect the credit risk associated with a particular tenant or guarantor. Ratings are generally based upon information obtained directly from the entity being rated, without independent verification by the rating agency. If any such information contained a material misstatement or omitted a material fact, the rating based upon such information may not be appropriate. Ratings may be changed, qualified, suspended, placed on watch or withdrawn as a result of changes in, additions to or the accuracy of information, the unavailability of or inadequacy of information or for any other reason. No rating agency guarantees a tenant’s or, where applicable, its guarantor’s obligations to us. If a tenant’s or, where applicable, its guarantor’s rating is changed, qualified, suspended, placed on watch or withdrawn, such tenant or guarantor may be more likely to default in its obligations to us, and investors may view our cash flows as less stable.

We may be unable to identify and complete acquisitions of suitable properties which may impede our growth and our ability to further diversify our portfolio. Future acquisitions may not yield the returns we expect.

Our ability to grow through acquisitions requires us to identify and complete acquisitions that are compatible with our growth strategy and to successfully integrate newly acquired properties into our portfolio. Our ability to acquire properties on favorable terms and successfully integrate them may be constrained by the following significant risks:

•

We target investments that have a difference, or spread, between our cost of capital and the lease rate of the properties we acquire. If that spread decreases, our ability to profitably grow the company will decrease;

•

We compete with numerous investors, including traded and non-traded public REITs, private REITs, private equity investors, institutional investment funds, individuals, banks and insurance companies, some of whom have greater financial resources and a lower cost of capital than we do for acquisitions. This competition may increase the demand for the types of properties that we seek to acquire and increase the purchase price for properties that we acquire;

•

We may fail to maintain sufficient capital resources to acquire new properties;

•

After beginning to negotiate a transaction we may be unable to reach an agreement with the seller or during our due diligence review we may discover previously unknown matters, conditions or liabilities, either of which could force us to abandon a transaction after incurring significant costs and diverting management’s attention;

•

Our cash flow from an acquired property may be insufficient to meet our required principal and interest payments with respect to any debt used to finance the acquisition of such property;

•

Since many enterprises we approach concerning sale-leaseback transactions have a historic preference to own, rather than lease, their real estate, our ability to facilitate sale-leaseback transactions requires that we overcome those preferences and convince enterprises that it is more favorable for them to lease, rather than own, their properties, and we may be unable to do so; and

•

We may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners and others indemnified by the former owners of the properties.

30

We may not acquire the properties that are in our pipeline.

An important element of our strategy is to grow our portfolio through attractive acquisitions. Our pipeline of potential investment opportunities includes not only properties that are subject to purchase agreements or non-binding letters of intent, but also a significant number of properties that are in the early stages of evaluation, many of which we may determine not to pursue. Accordingly, our pipeline is only indicative of the number of investment opportunities that we are reviewing and is not indicative of the amount of investments that we will ultimately make. Generally, our purchase agreements contain customary closing conditions, and properties that are the subject of binding purchase agreements may fail to close for a variety of reasons, including the discovery of previously unknown liabilities or other items uncovered during our diligence process. Additionally, we may not execute binding purchase agreements with respect to properties that are currently the subject of non-binding letters of intent, and we may not execute non-binding letters of intent with respect to properties that are currently the subject of active negotiations. For many other reasons, we may not ultimately acquire the remaining properties currently in our pipeline. Accordingly, you should not place undue reliance on the pipeline information that we have disclosed in this prospectus.

As we continue to acquire properties, we may decrease or fail to increase the diversity of our portfolio.

While our portfolio is currently diversified by tenant, industry, geography and property type, and our investment strategy contemplates maintaining and growing a well-diversified portfolio, we have broad authority to invest in any property that we may choose, and it is possible that future investment activity could result in a less diverse portfolio. In the event that we become significantly exposed to any one tenant, a downturn in that tenant’s business or creditworthiness could adversely affect us. Similarly, if we develop a concentration of properties in any geographic area or used in a particular industry, any situation adversely affecting that area or industry would have a magnified adverse effect on our portfolio.

We have significant exposure to our largest tenants.

As of November 15, 2021, our 10 largest tenants contributed approximately 45.6% of our ABR on an expected post-syndication pro rata basis. See “Business—Our Portfolio—Tenants.” Accordingly, we have significant exposure to our largest tenants, and the failure of any of these tenants to meet its obligations to us under its lease could adversely affect us.

If a tenant declares bankruptcy we may be unable to collect balances due under relevant leases.

We may experience concentration in one or more tenants across several of the properties in our portfolio. Any of our tenants, or any guarantor of one of our tenant’s lease obligations, could be subject to a bankruptcy proceeding pursuant to Title 11 of the United States Code (the “Bankruptcy Code”). If a tenant becomes a debtor under the Bankruptcy Code, federal law prohibits us from evicting such tenant based solely upon the commencement of such bankruptcy. Further, such a bankruptcy filing would prevent us from attempting to collect pre-bankruptcy debts from the bankrupt tenant or take other enforcement actions, unless we receive an enabling order from the bankruptcy court. Generally, post-bankruptcy debts are required by statute to be paid currently, which would include payments on our leases that come due after the date of the bankruptcy filing. Such a bankruptcy filing also could cause a decrease or cessation of current rental payments, reducing our operating cash flows and the amount of cash available for distributions to shareholders. Prior to emerging from bankruptcy, the tenant will need to decide whether to assume or reject its leases. Generally, and unless otherwise agreed to by the tenant and the lessor, if a tenant assumes a lease, all pre-bankruptcy balances and unpaid post-bankruptcy amounts owing under it must be paid in full. If a given lease or guaranty is not assumed, our operating cash flows and the amount of cash available for distribution to shareholders may be adversely affected. If a lease is rejected by a tenant in bankruptcy, we are entitled to general unsecured claims for damages. If a lease is rejected, it is questionable whether we would receive any amounts from the tenant, and our general unsecured claim would be capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid. We would only receive recovery on our general unsecured claim in the event funds or other consideration was available for distribution to general unsecured creditors, and then only in the same percentage as that realized on other general unsecured claims. We may also be unable to re-lease a terminated or rejected property or to re-lease it on comparable or more favorable terms.

31

A sale-leaseback transaction could be recharacterized in a tenant bankruptcy proceeding.

We may enter into sale-leaseback transactions, where we purchase a property and lease it back to the seller. In the event of the bankruptcy of such a tenant, a transaction structured as a sale-leaseback may be re-characterized as a financing or a joint venture, either of which could adversely affect us. If the sale-leaseback were re-characterized as a financing, we would not be considered the owner of the property, and as a result would have the status of a creditor in relation to the tenant. In that event, we would no longer have the right to sell or encumber the property. Instead, we would have a claim against the tenant for the amounts owed under the lease, with the claim arguably secured by the property, but subject to the risk that the claim is unsecured. The tenant/debtor might have the ability to propose a plan restructuring the terms of its lease, which may result in changes to the lease term or the amount of rent payable to us. If confirmed by the bankruptcy court, we could be bound by the new terms and prevented from foreclosing our lien (assuming we are found to have such a lien) on the property. If the sale-leaseback were recharacterized as a joint venture, our lessee and we could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property.

We have recorded net losses in the past and we may experience net losses in the future.

We have recorded net losses attributable to common shareholders of approximately $21.0 million and $15.6 million, for the nine months ended September 30, 2021 and 2020, respectively, and $23.6 million and $17.5 million for the years ended December 31, 2020 and 2019, respectively. These net losses were inclusive in each period of significant non-cash charges, consisting primarily of depreciation and amortization expense. We expect such non-cash charges to continue to be significant in future periods and, as a result, we may continue to record net losses in future periods.

Our operating results will be affected by economic and regulatory changes that have an adverse impact on the real estate market in general, which may prevent us from being profitable or from realizing growth in the value of our properties.

Our operating results will be subject to risks generally incident to the ownership of real estate, including:

•

inability to collect rents from tenants due to financial hardship, including bankruptcy;

•

changes in the general economic or business climate;

•

changes in local real estate conditions in the markets in which we operate, including the availability of and demand for single-tenant commercial space;

•

changes in consumer trends and preferences that affect the demand for products and services offered by certain of our tenants;

•

inability to lease or sell properties upon expiration or termination of existing leases;

•

changes in interest rates and availability of permanent mortgage financing that may render the sale of a property difficult or unattractive;

•

the subjectivity of real estate valuations and changes in such valuations over time;

•

the illiquidity of real estate investments generally;

•

changes in tax, real estate, environmental and zoning laws; and

•

periods of rising interest rates or high interest rates and tight money supply.

These risk and other factors may prevent us from being profitable or from maintaining or growing the value of our properties.

We are exposed to risks related to increases in market lease rates and inflation, as income from long-term leases is our primary source of cash flows from operations.

We are exposed to risks related to increases in market lease rates and inflation, as income from long-term leases is the primary source of our cash flows from operations. Leases of long-term duration, or which include renewal options that specify a maximum rental rate increase, may result in below-market lease rates over time

32

if we do not accurately estimate inflation or increases in market lease rates. Provisions of our leases designed to mitigate the risk of inflation and unexpected increases in market lease rates, such as periodic rental rate increases, may not adequately protect us from the impact of inflation or unexpected increases in market lease rates.

Our assets will be subject to the risks typically associated with real estate investments.

Our assets will be subject to the risks typically associated with real estate investments. The value of real estate may be adversely affected by a number of risks, including:

•

the impact of pandemics such as COVID-19 or other sudden or unforeseen events that disrupt the economy;

•

natural disasters such as hurricanes, earthquakes and floods;

•

acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001;

•

adverse changes in national and local economic and real estate conditions;

•

an oversupply of (or a reduction in demand for) space in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants;

•

changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance and the potential for liability under applicable laws;

•

costs of remediation and liabilities associated with environmental conditions affecting properties; and;

•

the potential for uninsured or underinsured property losses.

The value of real estate properties is typically affected significantly by their ability to generate cash flow and net income, which in turn depends on the amount of rental or other income that can be generated net of expenses required to be incurred with respect to the property. Many expenditures associated with properties (such as operating expenses and capital expenditures) cannot be reduced when there is a reduction in income from the properties. While we typically allocate property-level expenses (such as property taxes, insurance and maintenance) to our tenants through triple net leases, we would be required to pay these expenses if a tenant defaults on its obligations to us or a property is vacant. These factors may have a material adverse effect on the value that we can realize from our assets and our business, financial condition and results of operations and our ability to make distributions on, and the value of, our common shares could be adversely affected.

Actual or threatened epidemics, pandemics, outbreaks, or other public health crises may have an adverse impact on our tenants, our tenants’ ability to pay rent pursuant to their leases and the profitability of the properties in our portfolio.

Our tenants and our business could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the COVID-19 pandemic. As a result of shutdowns, quarantines, actual viral health issues or high levels of employment, tenants at our properties may experience reduced or no revenues for a prolonged period of time, may file for bankruptcy, or may experience other hardships that affect their ability or willingness to make their rental payments. In the event our tenants are unable or unwilling to make their rental payments to us, in addition to lost rent, we would incur property-level expenses that otherwise would be borne by our tenants pursuant to triple net leases (such as property taxes, insurance and maintenance), and we may incur costs in protecting our investment and re-leasing our property. Additionally, local and national authorities may expand or extend certain measures imposing restrictions on our ability to enforce tenants’ contractual rental obligations. Local and national authorities may also reduce or discontinue stimulus and relief programs, implemented in response to such events, which may be providing benefits to our tenants which may impact their ability to make their rental payments. We have not elected in response to the COVID-19 pandemic to discount rent or offer forbearance plans to tenants, but we may do so in the future which may in the future result in rent collections that are less than the amounts contractually provided for in our leases.

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Increases in interest rates can negatively impact us.

We are exposed to financial market risks, especially interest rate risk. Interest rates and other factors, such as occupancy, rental rates and the financial condition of our tenants, influence our performance more so than does inflation. Our leases often provide for payments of base rent with scheduled increases, based on a fixed amount or the lesser of a multiple of the increase in the CPI over a specified period term or a fixed percentage to help mitigate the effect of inflation. Changes in interest rates, however, do not necessarily correlate with inflation rates or changes in inflation rates and are highly sensitive to many factors, including governmental monetary policies, domestic and global economic and political conditions, and other factors which are beyond our control. Additionally, any increase in the target federal funds rate individually or in the aggregate is likely to increase interest rates. Our operating results will depend heavily on the difference between the rental revenue from our properties and the interest expense incurred on our borrowings. Rising interest rates could increase our interest expense which, without a corresponding increase in our revenue, would have a negative impact on our operating results.

We could be subject to increased property-level operating expenses.

Our properties are subject to property-level operating expenses, such as tax, utility, insurance, repair and maintenance and other operating costs. Though our properties are generally leased under net leases that obligate tenants to pay for all or a significant portion of these expenses, we may be required to pay some of these costs or we may become obligated to pay all of these costs if a tenant defaults on its obligation to pay these expenses. Additionally, we will be responsible for these costs at any vacant property. Property-level operating expenses may increase, and the likelihood of our need to fund these expenses may increase if property-level expenses exceed the level of revenue a tenant is able to generate at a particular property. Additionally, we may be unable to lease properties on terms that require the tenants to pay all or a significant portion of the properties’ operating expenses or property-level expenses that we are obligated to pay may exceed our expectations.

Real estate taxes may increase, and any such increases may not be paid for by our tenants.

Tax rates or the assessed values of our properties may increase, which would result in increased real estate taxes. Although tenants at most of our properties are obligated to pay these taxes (including any increases thereto) pursuant to net leases, we may be responsible for some or all of these taxes related to certain of our properties. In addition, if a tenant does not meet its obligation to pay real estate taxes or if a property is vacant we likely will be required to pay such taxes to preserve the value of our investment.

Our revenues and expenses are not directly correlated, and because a large percentage of our expenses are fixed, we may not be able to lower our cost structure to offset declines in our revenue.

Most of the expenses associated with our business, such as our office rent, certain acquisition costs, insurance costs, employee wages and benefits, and other general corporate expenses are relatively fixed and generally will not decrease with any reduction in our revenue. Also, many of our expenses will be affected by inflation, and certain expenses may increase more rapidly than the rate of inflation in any given period. Additionally, expense increases may exceed the rent escalation provisions contained in many of our leases. By contrast, our revenue, which primarily comes from long-term leases, is affected by many factors beyond our control, such as tenant creditworthiness, lease term and the economic conditions in the markets where our properties are located. As a result, we may not be able to fully offset rising costs by increasing our rents.

We face significant competition for tenants, which may decrease the occupancy and rental rates of our properties.

We compete for tenants with numerous traded and non-traded public REITs, private REITs, private equity investors, institutional investment funds, individuals, banks and insurance companies, many of which own properties similar to ours in the same markets in which our properties are located. If our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates or to offer more

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substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our leases expire. Competition for tenants could decrease the occupancy and rental rates of our properties.

Challenging economic conditions could increase vacancy rates.

Challenging economic conditions, the availability and cost of credit, turmoil in the mortgage market and declining real estate markets have contributed to increased vacancy rates in the commercial real estate sector. If we experience higher vacancy rates, we may have to offer lower rental rates or increase tenant improvement allowances or concessions. Increased vacancy may have a greater impact on us, as compared to REITs with other investment strategies, as our investment approach relies on long-term leases in order to provide a relatively stable stream of rental income. Increased vacancy could reduce our rental revenue and the values of our properties, possibly below the amounts we paid for them. Any such reduced revenues could make it more difficult for us to meet our payment obligations with respect to any indebtedness associated with the affected properties or limit our ability to refinance such indebtedness.

As leases expire, we may be unable to renew those leases or re-lease the space on favorable terms or at all.

Our success depends, in part, upon our ability to cause our properties to be occupied and generating revenue. As of November 15, 2021, leases representing approximately 21.5% of our ABR on an expected post-syndication pro rata share basis will expire prior to 2027. Current tenants may decline, or may not have the financial resources available, to renew current leases, and we cannot guarantee you that we will be able to renew leases or re-lease space (1) without an interruption in the rental revenue from those properties, (2) at or above our current rental rates or (3) without having to offer substantial rent abatements, tenant improvement allowances, early termination rights or below-market renewal options. The difficulty, delay and cost of renewing leases, re-leasing space and leasing vacant space could materially and adversely affect us.

In addition, as of November 15, 2021, leases representing 72.0% of our ABR on an expected post-syndication pro rata share basis contain provisions giving the tenant the right to extend the term of the lease at a rental rate specified in the lease. If such rent is below the level of rent that the property could otherwise be leased for at the termination of the lease and the tenant exercises its right to extend the lease, we will be obligated nevertheless to lease the property for the rent specified in the lease.

Loss of our key personnel could materially impair our ability to operate successfully.

We are dependent on the performance and continued efforts of our senior management team, and our future success is dependent on our ability to continue to attract and retain qualified executive officers and senior management. We rely on our management team to, among other things, identify and consummate acquisitions, design and implement our financing strategies, manage our investments and conduct our day-to-day operations. In particular, our success depends upon the performance of Mr. William P. Dioguardi, our Chairman and Chief Executive Officer, Coby R. Johnson, our President, Chief Operating Officer and Secretary, John E. Warch, our Senior Vice President, Chief Financial Officer, Jared W. Morgan, our Senior Vice President, Head of Acquisitions, Cynthia M. Daly, our Senior Vice President, Head of Underwriting, and other members of our management team. We currently maintain a $2 million life insurance policy on Mr. Dioguardi.

We cannot guarantee the continued employment of any of the members of our management team, who may choose to leave us for any number of reasons, such as other business opportunities, differing views on our strategic direction or personal reasons. We rely on the experience, efforts, relationships and abilities of these individuals, each of whom would be difficult to replace. The employment agreements we have entered into with each of these executives do not guarantee their continued service to us. The loss of services of one or more members of our management team, or our inability to attract and retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships with lenders, business partners, existing and prospective tenants and industry participants.

Our growth strategy depends on external sources of capital which may not be available to us on commercially reasonable terms or at all.

We expect that over time we will seek additional sources of capital to fund our business. We may not be able to obtain such financing on favorable terms or at all. Any additional debt we incur will increase our leverage and likelihood of default. Our access to third-party sources of capital depends, in part, on:

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general market conditions;

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the market’s perception of our creditworthiness and growth potential;

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our current debt levels and our ability to satisfy financial covenants;

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our current and expected future earnings;

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our cash flow and cash distributions; and

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the market price of our common shares.

If we cannot obtain capital from third-party sources, we may not be able to acquire properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our shareholders necessary to maintain our qualification as a REIT.

Information that we present on a “expected post-syndication pro rata share” basis with respect to DSTs that have not been syndicated fully to third party investors reflect the percentage of equity interest we expect to own after completion of syndication and, accordingly, may not reflect our actual equity ownership of these DSTs for particular future periods.

When we establish a DST, we generally initially own 100% of the equity interests in the DST and typically offer 85% to 95% of the equity interests of each DST by syndicating them to third-party investors, with the remaining equity interests retained by us. When we present “expected post-syndication pro rata share” information with respect to these DSTs, the information we present assumes that we have fully syndicated 95% of the equity interests of each of these DSTs to third-party investors, though we may not have done so by the date of such information and may not ever be able to do so. Accordingly, we may own a higher percentage of a DST (particularly a newly formed DST) at a given point in time than we expect to own when syndication of the DST is complete. In addition, for any DST that has not completed syndication, we can give no assurance that such syndication will be completed or that our ultimate ownership percentage of such DST will not be materially higher or lower than the percentage ownership we have assumed.

Our completion of a particular DST syndication and our post-syndication percentage ownership of a particular DST is impacted by various factors, many of which are not in our control, including changes in the economic or regulatory environment that may make investing in DST equity less attractive to third-party investors, adverse development affecting the property held by the DST (e.g., property damage or destruction) and the stability of the related tenants. As a result, our “expected post-syndication pro rata share” information, which assumes we successfully sell 95% of the equity interests in DSTs being actively syndicated to third parties, could understate our exposure to the property owned by the DST and any risks relating to the tenant of that property as well as the contribution of that property to our operating results and other financial and statistical information.

Our participation in the Section 1031 Exchange Program may limit our ability to borrow funds in the future.

Institutional lenders may view any obligations we may have from time to time under agreements to acquire interests in properties as a contingent liability, which may limit our ability to borrow funds in the future. Further, before DSTs are fully syndicated, we are required to carry the full amounts of debt associated with such properties, which may adversely affect the ratios or covenants imposed by our lenders. Lenders providing lines of credit may restrict our ability to draw on our lines of credit by the amount of our potential obligations under these agreements. Further, our lenders may view such obligations in such a manner as to limit our ability to borrow funds based on regulatory restrictions on lenders that limit the amount of loans they can make to any one borrower.

Changes in the Code may impair our ability to sell properties that are, or were, in the Section 1031 Exchange Program.

On April 28, 2021, President Biden proposed a series of tax reforms (“Biden Tax Reform”), one of which would limit 1031 exchanges to real estate profits of $500,000 or less. The Biden Tax Reform, if passed by Congress and signed into law, could limit our ability to raise capital in the Section 1031 Exchange Program.

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Under the Section 1031 Exchange Program, we may acquire the properties included in the DSTs for cash or offer the third-party DST investors the opportunity to elect to receive OP units that would allow the transaction to qualify for certain tax deferral benefits. If an investor elects to receive OP units and the property that was formerly in the applicable DST is subsequently sold, such investor will be taxed on its built-in-gain unless we effectuate a like-kind exchange under Section 1031 of the Code. Although we are not contractually obligated to do so, we intend to execute 1031 exchanges in such situations rather than trigger gain. The Biden Tax Reform, if passed by Congress and signed into law, would limit 1031 exchanges to real estate profits of $500,000 or less. As a result of these factors the Section 1031 Exchange Program may limit our ability to sell the properties in such program without triggering taxes for the investors in such program. Such reduced liquidity could impair our ability to utilize cash proceeds from sales for other purposes such as paying down debt, distributions or additional investments.

We may be unable to secure funds for future tenant improvements or other capital needs.

When tenants do not renew their leases or otherwise vacate their space, it is common that, in order to attract replacement tenants, we will be required to expend substantial funds for tenant improvements to the vacated space. In addition, although our leases generally require tenants to pay for routine property maintenance costs, we are often responsible for any major structural repairs, such as repairs to a property’s foundation, exterior walls or roof. In general, we expect to use a significant portion of our cash to invest in additional properties and fund distributions to our shareholders. Accordingly, if we need significant additional capital to improve or maintain our properties or for any other reason, we will likely be required to obtain funds from other sources, such as cash flow from operations, borrowings, property sales or future offerings of our securities. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for tenant improvements or other capital needs, our properties may be less attractive to future tenants or purchasers, generate lower cash flows and/or decline in value.

REIT distribution requirements limit our ability to retain cash.

As a REIT, we are subject to annual distribution requirements, which limit the amount of cash we can retain for other business purposes, including to fund our growth. We generally must distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, in order for our distributed earnings not to be subject to corporate income tax. We intend to make regular monthly distributions of 100% of our REIT taxable income to holders of our common shares out of assets legally available therefore to comply with the REIT distribution requirements of the Code and avoid U.S. federal income tax and the 4% excise tax. However, timing differences between the recognition of taxable income and the actual receipt of cash could require us to sell assets or borrow funds to distribute 100% of our REIT taxable income, even if the prevailing market conditions are not favorable for these dispositions or borrowings. Additionally, to the extent that we do not distribute all of our net capital gain, or distribute at least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will be required to pay tax on the undistributed amount at the corporate tax rate and will be required to pay the 4% excise tax, and our taxable REIT subsidiaries will be subject to tax as regular corporations.

Because we may pay distributions from sources other than our cash flows from operations, any distributions may not reflect the performance of our properties or our operating cash flows.

Our organizational documents permit us to make distributions from any source, including borrowed funds, proceeds from asset sales or proceeds from securities offerings. Because we may make distributions in excess of our cash flow from operations, distributions may not reflect the performance of our properties or our operating cash flows. To the extent distributions exceed our current and accumulated earnings and profits, distributions may be treated as a return of capital and could reduce a shareholder’s basis in our common shares, but not below zero. A reduction in a shareholder’s basis in our common shares could result in the shareholder recognizing more gain upon the disposition of such shares, which could result in greater taxable income to such shareholder. Distributions in excess of our current and accumulated earnings and profits and in excess of a U.S. shareholder’s adjusted tax basis in its shares will be taxable as capital gain.

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Illiquidity of real estate investments and restrictions imposed by the Code could significantly impede our ability to respond to adverse changes in the performance of our properties.

Relative to many other types of investments, real estate in general, and our properties in particular, are difficult to sell quickly. Therefore, our ability to promptly sell one or more properties in response to changing property or tenant specific events, economic, financial or investment conditions is limited. In particular, our ability to sell a property could be adversely affected by a weaknesses in or even the lack of an established market for a property, changes in the condition of the tenant leasing a property, changes in local market conditions, changes in the financial condition or prospects of prospective purchasers or changes in national or international economic conditions (such as the most recent economic downturn), and changes in laws, regulations or fiscal policies of the jurisdiction in which the property is located.

In addition, the Code imposes restrictions on a REIT’s ability to dispose of properties, which are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, in order to avoid paying a 100% prohibited transaction tax on the gain from the disposition, which may cause us to forgo or defer sales of properties that otherwise would be in our best interest. Also, we are generally unable to dispose of properties acquired by our DSTs for a period of one to two years. Therefore, we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms.

We may be unable to sell a property when we desire to do so.

The real estate market is affected by many factors that are beyond our control, such as general economic conditions, the availability of financing, interest rates, and supply and demand. We cannot predict whether we will be able to sell a property for a price or on other terms that we determine to be acceptable. In connection with selling a property, we may determine that it is necessary to make significant capital expenditures to correct defects or to make improvements in order to facilitate a sale. We may not have the ability to fund these expenditures, which could prevent us from selling the property or adversely affect any selling terms. Additionally, in acquiring a property, we may agree to restrictions that prohibit the sale of that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on such property. Additionally, certain provisions of the Code and our DSTs may prevent use from disposing of properties until certain time frames are satisfied. To the extent we determine to sell a property, we cannot predict the length of time needed to find a willing purchaser and to close the sale of the property or that any sale will result in the receipt of net proceeds in excess of the amount we paid for the property.

We may acquire properties with lock-out provisions, which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.

A lock-out provision is a provision that prohibits the prepayment of a loan during a specified period of time. Lock-out provisions may include terms that provide strong financial disincentives for borrowers to prepay their outstanding loan balance and exist in order to protect the yield expectations of investors. Several of our properties secure loans that include lock-out provisions. Lock-out provisions could materially restrict us from selling or otherwise disposing of or refinancing properties when we may desire to do so. Lock-out provisions may prohibit us from reducing the outstanding indebtedness, refinancing such indebtedness on a non-recourse basis or increasing the amount of indebtedness with respect to such properties. Lock-out provisions could impair our ability to take other actions during the lock-out period that we might otherwise choose to pursue. In particular, lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control even though that disposition or change in control might be in the best interests of our shareholders.

We may only obtain limited warranties when we purchase a property and may only have limited recourse in the event our due diligence did not identify any issues that lower the value of the property.

The seller of a property often sells such property in its “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications (including those relating to construction of the building and environmental issues) that will only survive for a limited period after the closing. The purchase of properties with limited warranties, representations or

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indemnifications increases the risk that we may lose some or all of our invested capital in the property, as well as the loss of rental income from that property.

CC&Rs may restrict the uses of our properties.

Some of our properties are contiguous to other parcels that comprise a single retail center or a business or industrial park. In connection with such properties, we are often subject to significant covenants, conditions and restrictions (“CC&Rs”) that limit the use and operation of such properties. Moreover, the operation and management of the contiguous properties may adversely affect the value of our properties. Compliance with CC&Rs or the presence of contiguous businesses may make the affected property less attractive to potential tenants and adversely affect the property’s value.

Participation in co-ownership arrangements, including DSTs, joint ventures, partnerships or otherwise, may subject us to risks that otherwise may not be present in other real estate investments.

As of November 15, 2021, we jointly owned 34 properties with third parties through DSTs under the Section 1031 Exchange Program, and we may enter into additional co-ownership arrangements with respect to other properties through additional DSTs, joint ventures, partnerships or otherwise. Our current co-ownership arrangements provide us with the exclusive right to make all decisions with respect to the management and disposition of such jointly owned properties and do not require us to purchase the interests of our co-owners, however, we may enter into co-ownership arrangements in the future that do not provide us with such control rights and may require us to purchase the co-owners’ interests.

Co-ownership arrangements involve risks generally not present when an asset is owned by a single party, such as the following:

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the risk that a co-owner may at any time have economic or business interests or goals that are or become inconsistent with our business interests or goals;

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the risk that a co-owner may be in a position to take action contrary to our instructions or requests or our policies or objectives;

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the possibility that a co-owner might become insolvent or bankrupt, or otherwise default on its obligations under any applicable mortgage loan financing documents, which may result in a foreclosure and the loss of all or a substantial portion of the investment made by the co-owner or allow the bankruptcy court to reject the agreements entered into by the co-owners owning interests in the property;

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the possibility that a co-owner might not have adequate liquid assets to make cash advances that may be required in order to fund the operations or maintenance and other expenses related to the property, which could result in the loss of current or prospective tenants and otherwise adversely affect the operation and maintenance of the property, cause a default under any mortgage loan financing documents applicable to the property and result in late charges, penalties and interest, and could lead to the exercise of foreclosure and other remedies by the lender;

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the risk that a co-owner could breach agreements related to the property, which may cause a default under, and possibly result in personal liability in connection with, any mortgage loan financing documents, violate applicable securities law, result in a foreclosure or otherwise adversely affect the property and the co-ownership arrangement;

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the risk that we could have limited control rights, with management decisions made entirely by a third-party; and

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the possibility that we will not have the right to sell the property at a time that otherwise could result in the property being sold for its maximum value.

In the event that our interests become adverse to those of the other co-owners, we may not have the contractual right to purchase the co-ownership interests from the other co-owners. Even if we are given the opportunity to purchase such co-ownership interests in the future, we cannot guarantee that we will have sufficient funds available at the time to purchase co-ownership interests from the co-owners.

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We might want to sell our co-ownership interests in a given property at a time when the other co-owners in such property do not desire to sell their interests. Therefore, because we anticipate that it will be much more difficult to find a willing buyer for our co-ownership interests in a property than it would be to find a buyer for a property we owned outright, we may not be able to sell our interest in a property at the time we would like to sell.

Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect us.

From time to time, we may acquire multiple properties in a single transaction. Portfolio acquisitions are more complex and may be more expensive than single property acquisitions, and the risk that a multi-property acquisition does not close may be greater than in a single-property acquisition. Portfolio acquisitions may also result in us owning investments in geographically dispersed markets, placing additional demands on our ability to manage the properties in the portfolio. In addition, a seller may require that a group of properties be purchased as a package even though we may not want to purchase one or more properties in the portfolio. In these situations, if we are unable to identify another party to acquire the unwanted properties, we may be required to hold such properties and seek to dispose of them at a later time. Acquiring multiple properties in a single transaction may require us to accumulate a large amount of cash, and holding large cash balances for significant periods of time could reduce our returns, as returns on cash are substantially lower than the returns we target from our investments in properties.

If we purchase an option to acquire a property but do not exercise the option, we likely would forfeit the amount we paid for such option.

In determining whether to purchase a particular property, we may obtain an option to purchase such property. The amount paid for an option, if any, normally is forfeited if the property is not purchased within the option exercise period and normally is credited against the purchase price if the property is purchased. If we purchase an option to acquire a property but do not exercise the option, we likely would forfeit the amount we paid for such option.

If we sell properties and provide financing to purchasers we will be subject to the risk of default by the purchasers.

In some instances we may sell a property and provide financing to the purchaser for a portion of the purchase price. Though we do not expect to provide a significant amount of financing to purchasers relative to the overall size of our portfolio, we are not precluded from doing so. If we provide financing to purchasers, we will bear the risk that the purchaser may default on its obligations to us, including payment obligations, under the financing arrangement. Even in the absence of a purchaser default, we will not receive the full cash proceeds from such a sale until such time as our loan is repaid by the purchaser or sold by us, which will result in a delay in our ability to distribute such sales proceeds or reinvest them in other properties.

We are and in the future may be subject to litigation, which could materially and adversely affect us.

We are and in the future may be subject to litigation, including claims relating to our operations, properties, security offerings or other aspects of our business. Some of these claims may result in significant investigation, defense or settlement costs and, if we are unable to successfully defend against or settle such claims, may result in significant fines or judgments against us. These costs may not be covered by insurance or may exceed insured amounts. We cannot be certain of the outcomes of any claims that may arise in the future. Certain litigation or the resolution of certain litigation may limit the availability or significantly increase the cost of insurance coverage, which could expose us to increased risks.

We may have increased exposure to litigation as a result of the Section 1031 Exchange Program.

We have developed the Section 1031 Exchange Program to raise capital from third-party investors who are seeking to reinvest the proceeds from sales of investment property in transactions that are eligible for favorable tax treatment under Section 1031 of the Code. See “Our Business—Section 1031 Exchange Program.” The Section 1031 Exchange Program involves a private offering of co-tenancy or other interests in real estate. There are significant tax and securities risks associated with these private offerings. For example, if the Internal Revenue Service (“IRS”) were to successfully challenge the tax treatment of the Section 1031 Exchange

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Program with respect to third-party investors who purchased interests in these offerings, such purchasers may file a lawsuit against us. Additionally, we have certain rights to acquire interests in the properties that we jointly own with third parties, and in future offerings we may have certain obligations to acquire interests in co-owned properties. We could be named in or otherwise required to defend against lawsuits for exercising or failing to exercise such purchase rights and obligations. Any amounts we are required to expend investigating, defending or settling a claim, or in satisfaction of an adverse judgment relating to, the Section 1031 Exchange Program could be substantial. In addition, disclosure of any such litigation may limit our future ability to raise additional capital through the Section 1031 Exchange Program or otherwise.

Eminent domain could lead to material losses.

Governmental authorities may exercise eminent domain to acquire the land on which our properties are built in order to build roads and other infrastructure. Any such exercise of eminent domain would allow us to recover only the fair value of the affected properties. In addition, “fair value” could be substantially less than the real market value of the property, and we could effectively have no profit potential from properties acquired by the government through eminent domain.

Risks Related to Environmental and Compliance Matters and Climate Change

Complying with environmental laws and regulations may be costly.

All real property and the operations conducted thereon are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of hazardous materials, and the remediation of contamination associated with disposals. These laws or the interpretations thereof may become more stringent over time and compliance therewith may involve significant costs. Additionally, the cost of defending against claims of liability, complying with environmental requirements, remediating any contaminated property or paying personal injury claims could be substantial. Some of these laws and regulations impose joint and several liability on tenants and current or previous owners or operators of real estate for the costs of investigation and remediation of contaminated properties, regardless of fault or whether the acts causing the contamination were legal. This liability could be substantial. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell or rent a property or to use such property as collateral for future borrowing. Moreover, if contamination is discovered at any of our properties, environmental laws may impose restrictions on the manner in which the affected properties may be used or the businesses that may be operated thereon or give rise to personal injury claims. We typically obtain a third-party environmental site assessment for properties we acquire, however, we may not obtain such an assessment for every property we acquire, and when we do obtain such an assessment it is possible that it will not reveal all environmental liabilities.

Although our leases generally require our tenants to operate in compliance with all applicable laws and to indemnify us against any environmental liabilities arising from a tenant’s activities on the property there can be no assurance that our tenants will be able to meet these obligations. It is possible that we could incur substantial expenditures to remediate environmental conditions at our properties or become subject to liability for environmental liabilities by virtue of our ownership of the property. Furthermore, the discovery of environmental liabilities on any of our properties could lead to significant remediation costs or other liabilities for our tenant, which may affect such tenant’s ability to make rental payments to us.

From time to time, we may invest in properties with known adverse environmental conditions where we believe that the environmental liabilities associated with these conditions are quantifiable and that the acquisition will yield an appropriate risk-adjusted return. In such an instance, we will estimate the costs of environmental investigation, clean-up and monitoring when negotiating the purchase price. To the extent we underestimate the costs of environmental matters we could incur substantial losses. Further, in connection with property dispositions, we may agree to remain responsible for, and to bear the cost of, remediating or monitoring certain environmental conditions.

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Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make significant unanticipated expenditures.

Some of our properties are subject to the Americans with Disabilities Act of 1990, as amended (the “ADA”). Under the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. Compliance with the ADA could require costly modifications at our properties to make them readily accessible to and usable by disabled individuals. In addition, failure to comply with the ADA could result in the imposition of fines or an award of damages to private litigants. Our tenants are generally obligated to maintain and repair the properties they lease from us and to comply with the ADA and other similar laws and regulations. However, if a tenant is unwilling or unable to meet its obligation to comply with the ADA, we may incur significant costs in modifying the property to achieve compliance. Additionally, as the owner of the property we could be liable for failure of one of our properties to comply with the ADA or other similar laws and regulations.

Similarly, our properties are subject to various laws and regulations relating to fire, safety and other regulations, and in some instances, common-area obligations. While our tenants are generally obligated to comply with these laws and regulations at the properties they lease from us, it is possible that our tenants will not have the financial ability to meet these obligations. If a tenant is unwilling or unable to meet its obligation to comply with these laws and regulations, we may incur significant costs to achieve compliance, that we may not be able to recover from the tenant. We may also face owner liability for failure to comply with these laws and regulations, which may lead to the imposition of fines or an award of damages to private litigants.

Our operations and financial condition may be adversely affected by climate change, including possible changes in weather patterns, weather-related events, government policy, laws, regulations and economic conditions.

In recent years, the assessment of the potential impact of climate change has begun to impact the activities of government authorities, the pattern of consumer behavior and other areas that impact the business environment in the U.S., including, but not limited to, energy-efficiency measures, water use measures and land-use practices. The promulgation of policies, laws or regulations relating to climate change by governmental authorities in the U.S. and the markets in which we own properties may require us to invest additional capital in our properties. In addition, the impact of climate change on businesses operated by our tenants is not reasonably determinable at this time. While not generally known at this time, climate change may impact weather patterns or the occurrence of significant weather events which could impact economic activity or the value of our properties in specific markets. The occurrence of any of these events or conditions may adversely impact our ability to lease our properties, including our or our tenants’ ability to obtain property insurance on acceptable terms, which would materially and adversely affect us.

We may suffer losses that are not covered by insurance or that are in excess of insured amounts.

Generally, each of our tenants is responsible for the cost of insuring the property it leases from us against customary losses (such as casualty, liability, fire and extended coverage) at a specified level or required to reimburse us for a portion of the cost of acquiring such insurance. However, it is possible that we will incur losses in excess of insured amounts. Additionally, there are types of losses, generally of a catastrophic nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, that are either uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. It is possible that mortgage lenders may require us to purchase additional insurance covering acts of terrorism and additional costs associated therewith may be significant and likely would not be paid for by our tenants. Additionally, to the extent such insurance is either unavailable or prohibitively expensive it could inhibit our ability to finance or refinance our properties. In these instances, we may be required to provide other financial support, either through financial assurances or self-insurance.

Inflation, changes in building codes and ordinances, environmental considerations and other factors may make any insurance proceeds we receive insufficient to repair or replace a property if it is damaged or destroyed. In that situation, the insurance proceeds received may not be adequate to restore our economic position with respect to the affected property. Furthermore, in the event we experience a substantial or comprehensive loss at one of our properties, we may not be able to rebuild such property to its pre-loss

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specifications without capital expenditures in excess of any insurance proceeds, as repair or reconstruction of the property may require significant upgrades to meet current zoning and building code requirements.

Risks Related to Our Indebtedness

Our cash flows and operating results could be adversely affected by required payments of debt or related interest and other risks of our debt financing.

We are generally subject to risks associated with debt financing. These risks include: (1) our cash flow may not be sufficient to satisfy required payments of principal and interest; (2) we may not be able to refinance existing indebtedness or the terms of the refinancing may be less favorable to us than the terms of existing debt; (3) required debt payments are not reduced if the economic performance of any property declines; (4) debt service obligations could reduce cash available for distribution to our shareholders and funds available for investment; (5) any default on our indebtedness could result in acceleration of those obligations and possible loss of property to foreclosure; and (6) the risk that necessary capital expenditures cannot be financed on favorable terms. If a property is pledged to secure payment of indebtedness and we cannot make the applicable debt payments, we may have to surrender the property to the lender with a consequent loss of any prospective income and equity value from such property.

We may incur substantial indebtedness.

Our organizational documents do not place any limitation on the amount of indebtedness that we may incur, and it is possible that we could incur substantial indebtedness in the future. Upon completion of this offering and the application of a portion of the net proceeds to repay amounts outstanding under the M&T Credit Facility and the Mezzanine Loan, we expect to have $      of total consolidated indebtedness, or $      on an expected post-syndication pro rata basis, resulting in a pro forma consolidated debt-to-capitalization ratio of    %, or    % on an expected post-syndication pro rata basis (based on the midpoint of the price range set forth on the cover page of this prospectus). However, we expect to borrow funds to acquire additional properties and we may borrow for other purposes, such as financing distributions (including those necessary to satisfy the REIT distribution requirements under the Code) or capital expenditures. Such borrowings may be secured or unsecured, and there is no limitation on the amount we may borrow in the aggregate or against any individual property. We expect to have the undrawn $300 million New Credit Facility that we may use to, among other things, fund additional acquisitions.

Additionally, we may provide full or partial guarantees of mortgage debt incurred by our subsidiaries that own the mortgaged properties. Under these circumstances, we will be responsible to the lender for satisfaction of the debt if it is not paid by our subsidiary. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.

Our use of indebtedness could have important consequences to us. For example, it could: (1) result in the acceleration of a significant amount of debt for non-compliance with the terms of such debt or, if such debt contains cross-default or cross-acceleration provisions, other debt; (2) result in the loss of assets, including individual properties or portfolios, due to foreclosure or sale on unfavorable terms, which could create taxable income without accompanying cash proceeds; (3) materially impair our ability to borrow unused amounts under existing financing arrangements or to obtain additional financing or refinancing on favorable terms or at all; (4) require us to dedicate a substantial portion of our cash flow to paying principal and interest on our indebtedness, reducing the cash flow available to fund our business, to make distributions, including those necessary to maintain our REIT qualification, or to use for other purposes; (5) increase our vulnerability to an economic downturn; (6) limit our ability to withstand competitive pressures; or (7) reduce our flexibility to respond to changing business and economic conditions.

Secured indebtedness exposes us to the possibility of foreclosure on our ownership interests in pledged properties.

Incurring mortgage and other secured indebtedness increases our risk of loss of our ownership interests in the pledged property because defaults thereunder, and the inability to refinance such indebtedness, may result in foreclosure action initiated by lenders. As of November 15, 2021, 117 of our 154 properties were encumbered with mortgages. Incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the

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property securing the loan that is in default, thus reducing the value of your investment. For tax purposes, a foreclosure on any of our properties will be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the loan secured by the mortgage exceeds our tax basis in the property, we will recognize taxable income on foreclosure, but we would not receive any cash proceeds. We may give full or partial guarantees to lenders of mortgage loans to the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the loan if it is not paid by such entity. If any mortgage contains cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. If any of our properties are foreclosed upon due to a default, our ability to pay cash distributions to our shareholders may be adversely affected.

Covenants in our credit facility and our mortgages may restrict our operating activities and adversely affect our financial condition.

The New Credit Facility will contain, our mortgages currently contain and future debt agreements may contain, financial and/or operating covenants, including, among other things, certain coverage ratios, borrowing base requirements, net worth requirements and limitations on our ability to make distributions. These covenants may limit our operational flexibility and acquisition and disposition activities. Moreover, if any of the covenants in these debt agreements are breached and not cured within the applicable cure period, we could be required to repay the debt immediately, even in the absence of a payment default.

High interest rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire and the amount of cash distributions we can make to our shareholders.

We may be unable to finance or refinance our properties on favorable terms or at all. If interest rates are higher when we desire to mortgage a property or when existing loans mature we may not be able to obtain suitable mortgage financing or refinance existing indebtedness. If we are unable to refinance existing indebtedness with replacement debt we may be required to repay a portion of the maturing indebtedness with cash. Our inability to access debt capital on attractive terms to finance new investments or to refinance maturing indebtedness could reduce the number of properties we can acquire and our cash flows. Higher costs of capital also could negatively impact cash flows and returns on our investments.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Upon completion of this offering, we expect to have a $300 million New Credit Facility. Amounts outstanding under the New Credit Facility will bear interest at variable rates. Variable rate borrowings expose us to increased interest expense in a rising interest rate environment. Additionally, in the future, we may incur substantial additional indebtedness that bears interest at variable rates. If interest rates were to increase, our debt service obligations on variable rate indebtedness would increase even though the amount borrowed remained the same, and our cash flows would correspondingly decrease.

Interest-only indebtedness may increase our risk of default and ultimately may reduce our cash available for distribution.

We may finance our property acquisitions using interest-only mortgage indebtedness. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest-only period, we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum or “balloon” payment at maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan.

Our ability to make a balloon payment at maturity is uncertain and may depend upon our ability to obtain additional financing or our ability to sell the property. At the time the balloon payment is due, we may or may not be able to refinance the loan on terms as favorable as the original loan or sell the property at a price sufficient to make the balloon payment.

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Offerings of debt securities or equity securities that rank senior to our common shares may adversely affect the market price of our common shares.

If we decide to issue debt securities or equity securities that rank senior to our common shares in the future, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Any debt or equity securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common shares and, if such securities are convertible or exchangeable, the issuance of such securities may result in dilution to owners of our common shares. We and, indirectly, our shareholders, will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common shares will bear the risk of our future offerings reducing the market price of our common shares and diluting the value of their shareholdings in us.

To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly.

We currently use derivative instruments to hedge our exposure to changes in interest rates, and we may choose to do so in the future. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Future hedging decisions will depend of prevailing facts and circumstances and at any point in time we may choose to hedge some, all or none of our variable interest rate exposure.

To the extent that we choose to use derivative financial instruments to hedge against interest rate fluctuations in the future, we will be exposed to credit risk, basis risk and legal enforceability risks. Credit risk refers to the potential failure of our counterparty to perform its obligations under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty generally owes us a payment, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby potentially making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract.

Making bridge and other loans subjects us to credit risk and could adversely affect us.

We may make bridge and other loans related to net lease properties. However, these loans will subject us to credit risk and there could be defaults under these loans. Defaults may be caused by many factors beyond our control, including local and other economic conditions affecting real estate values, interest rate changes, rezoning and the failure by the borrower to develop the property. If there is a default under one of these loans, the value of our investment in the loan could be impaired or lost in its entirety. In addition, if such a loan is secured by a mortgage on the related property, we may be delayed in a foreclosure action and any sale of the mortgaged property may generate less net proceeds than we were owed under the defaulted loan.

Risks Related to Our Organization and Structure

We have identified a material weakness in internal control over financial reporting, which could, if not remediated, materially and adversely affect us.

In connection with its audit of our financial statements for the year ended December 31, 2020, BDO USA, LLP, our independent registered public accounting firm, identified a material weakness in internal control over financial reporting. Under the standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The identified material weakness related to insufficient internal controls and oversight of the processes and procedures over the accounting treatment of non-routine transactions and application of guidance for complex financial instruments, due to the lack of sufficient number of accounting personnel with an appropriate level of expertise in the complex accounting matters. While we have begun remedial measures, including recently hiring new accounting

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personnel who bring additional technical expertise in complex accounting transactions, we cannot assure you if the remediation will be effective, and there can be no guarantee that we will not identify material weaknesses in the future.

In connection with our ongoing monitoring of our internal control over financial reporting or audits of our financial statements, we or our auditors may identify additional deficiencies in our internal control over financial reporting that may be significant or rise to the level of material weaknesses. Any failure to maintain effective internal control over financial reporting or to timely effect any necessary improvements to such controls could harm our operating results or cause us to fail to meet our reporting obligations (which could affect the listing of our common shares on the NYSE). Additionally, ineffective internal control over financial reporting could also adversely affect our ability to prevent or detect fraud, harm our reputation and cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our common shares.

We are a holding company with no direct operations and will rely on funds received from the Operating Partnership to pay liabilities and make any distributions declared by our board of trustees.

We are a holding company and conduct substantially all of our operations directly and indirectly through the Operating Partnership. We will not have any significant operations or, apart from our interest in the Operating Partnership, any significant assets. As a result, we will rely on distributions from the Operating Partnership to pay any distributions that our board of trustees declares on our common shares. We will also rely on distributions from the Operating Partnership to meet any of our obligations, including any tax liability on taxable income allocated to us from the Operating Partnership. In addition, because we are a holding company, your claims as shareholders will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) or any preferred equity of the Operating Partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of the Operating Partnership and its subsidiaries will be able to satisfy the claims of our shareholders only after all of our and the Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.

We own 93.6% of the interests in the Operating Partnership as of September 30, 2021. However, in connection with our future acquisition of properties or otherwise, we may issue OP units to third parties. Such issuances would reduce our ownership in the Operating Partnership. Because you will not directly own OP units, you will not have any voting rights with respect to any such issuances or other partnership level activities of the Operating Partnership.

Conflicts of interest could arise between the interests of our shareholders and the interests of holders of OP units, which may impede business decisions that could benefit our shareholders.

Conflicts of interest could arise as a result of the relationships between us, on the one hand, and the Operating Partnership or any limited partner thereof, on the other. Our trustees and officers have duties to us and our shareholders under applicable Maryland law in connection with their management of the company. At the same time, we, as the sole general partner of the Operating Partnership, have fiduciary duties and obligations to the Operating Partnership and its limited partners under Delaware law and the Partnership Agreement (as defined herein) of the Operating Partnership in connection with the management of the Operating Partnership. Our duties as the sole general partner to the Operating Partnership and its partners may come into conflict with the duties of our trustees and officers to the company and our shareholders. These conflicts may be resolved in a manner that is not in the best interests of our shareholders.

The limit on the number of shares a person may own may discourage a takeover that could otherwise result in a premium price to our shareholders.

Our charter, with certain exceptions, authorizes our trustees to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exception is granted by our board of trustees, no person may (1) beneficially own more than 9.8% in value or in number, whichever is more restrictive, of (a) our outstanding common shares or (b) our aggregate outstanding shares of beneficial interest, or (2) constructively own more than 9.8% in value or in number, whichever is more restrictive, of any class or series of our outstanding shares of beneficial interest. These restrictions may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or

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substantially all of our assets) that might provide a premium to the purchase price of our shares for our shareholders. See the “Description of Securities—Restrictions on Ownership and Transfer” section of this prospectus.

Our charter permits our board of trustees to issue shares with terms that may subordinate the rights of shareholders or discourage a third-party from acquiring us in a manner that might result in a premium price to our shareholders.

Our charter permits our board of trustees to issue up to 600,000,000 shares of beneficial interest, including 87,547,309 preferred shares. In addition, our board of trustees, without any action by our shareholders, may amend our charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series of shares of beneficial interest that we have authority to issue. Our board of trustees may classify or reclassify any unissued common shares or preferred shares and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of any such shares of beneficial interest. See “Description of Securities—Shares of Beneficial Interest.” As a result, we may issue one or more series or classes of common shares or preferred shares with preferences, dividends, powers and rights, voting or otherwise, that are senior to the rights of our common shareholders. Although our board of trustees has no such intention at the present time, it could establish a class or series of common shares or preferred shares that could, depending on the terms of such series, delay, defer or prevent a transaction or a change of control that might involve a premium price for our common shares or otherwise be in the best interest of our shareholders. We do not have a shareholders rights plan but our board of trustees could adopt one without the approval of our shareholders. If our board of trustees adopts a shareholder rights plan in the future, it must seek ratification from our shareholders within 12 months of adoption of the plan for the plan to remain in effect. Adoption of such a shareholder rights plan could delay, defer or prevent a transaction or a change of control that might involve a premium price for our common shares or otherwise be in the best interest of our shareholders.

Our board of trustees may change our investment and financing policies without shareholder approval, and we may become more highly leveraged, which may increase our risk of default under our debt obligations.

Our investment and financing policies are exclusively determined by our board of trustees. Accordingly, our shareholders do not control these policies. Further, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our board of trustees may adopt, alter or eliminate leverage policies at any time without shareholder approval. We could become more highly leveraged, which could result in an increase in our debt service. Higher leverage also increases the risk of default on our obligations. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk. Changes to our policies with regards to the foregoing could materially and adversely affect us.

We are an emerging growth company, and the reduced reporting requirements applicable to emerging growth companies may make our common shares less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. We will remain an “emerging growth company” until the earliest to occur of:

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the last day of the fiscal year during which our total annual revenue equals or exceeds $1.07 billion (subject to adjustment for inflation);

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the last day of the fiscal year following the fifth anniversary of this offering;

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the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; or

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the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value of our common shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.

We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including but not limited to, not being required to comply

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with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy or information statements, exemptions from the requirements of holding a non-binding advisory vote on executive compensation and seeking shareholder approval of any golden parachute payments not previously approved and an extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our per share trading price may be adversely affected and more volatile.

Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may limit your ability to dispose of your shares.

Under the Maryland Business Combinations Act, “business combinations” between a Maryland trust and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified under Maryland Law, an asset transfer or issuance or reclassification of equity securities. An interested shareholder is defined as:

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any person who beneficially owns 10% or more of the voting power of the Maryland trust’s shares; or

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an affiliate or associate of the Maryland trust who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting shares of the Maryland trust.

A person is not an interested shareholder under the statute if the board of trustees approved in advance the transaction by which he or she otherwise would have become an interested shareholder. However, in approving a transaction, the board of trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of trustees.

After the five-year prohibition, any business combination between the Maryland trust and an interested shareholder generally must be recommended by the board of trustees of the trust and approved by the affirmative vote of at least:

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80% of the votes entitled to be cast by holders of outstanding shares of beneficial interest of the trust; and

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two-thirds of the votes entitled to be cast by holders of voting shares of beneficial interest other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.

These super-majority vote requirements do not apply if the trust’s shareholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested shareholder for its shares. The business combination statute permits various exemptions from its provisions, including business combinations that are exempted by the board of trustees prior to the time that the interested shareholder becomes an interested shareholder. The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

As permitted by Maryland law, our board of trustees has adopted a resolution exempting any business combinations between us and any other person or entity from the Maryland Business Combinations Act, and we may not opt in to the provisions of the Maryland Business Combinations Act without the approval of our shareholders. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Business Combinations.”

Maryland law also limits the ability of a third-party to buy a large percentage of our outstanding shares and exercise voting control in electing trustees.

The Maryland Control Share Acquisition Act provides that “control shares” of a Maryland trust acquired in a “control share acquisition” have no voting rights except to the extent approved by the trust’s disinterested

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shareholders by a vote of two-thirds of the votes entitled to be cast on the matter. Shares of beneficial interest owned by interested shareholders, that is, by the acquirer, or officers of the trust or employees of the trust who are trustees of the Maryland trust, are excluded from shares entitled to vote on the matter. “Control shares” are voting shares of beneficial interest that would entitle the acquirer, except solely by virtue of a revocable proxy, to exercise voting control in electing trustees within specified ranges of voting control. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. Except as otherwise specified in the statute, a “control share acquisition” means the acquisition of issued and outstanding control shares. The control share acquisition statute does not apply (1) to shares acquired in a merger, consolidation or share exchange if the trust is a party to the transaction or (2) to acquisitions approved or exempted by the charter or bylaws of the trust. This statute could have the effect of discouraging offers from third parties to acquire us and increasing the difficulty of successfully completing this type of offer by anyone. Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any acquisition by any person of our shares of beneficial interest. We may not opt in to the provisions of the Maryland Control Share Acquisition Act without the approval of our shareholders. For a more detailed discussion on the Maryland laws governing control share acquisitions, see “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Control Share Acquisitions.”

Our board of trustees may enact certain anti-takeover measures under Maryland law, subject to the approval of our shareholders.

Maryland law permits a board of trustees of a REIT to implement certain takeover defenses, including increasing the vote required to remove a trustee. Our board of trustees may implement such defenses only with the affirmative vote of a majority of the votes cast on the matter by our shareholders entitled to vote generally in the election of trustees. Additionally, Maryland law allows a REIT’s board of trustees to adopt a shareholder rights plan without the approval of its shareholders. We currently do not have a shareholder rights plan, however, our board of trustees could adopt one without the approval of our shareholders. If our board of trustees adopts a shareholder rights plan in the future, it must seek ratification from our shareholders within 12 months of adoption of the plan for the plan to remain in effect. If implemented, these provisions may have the effect of inhibiting a third-party from making an acquisition proposal for the company or of delaying, deferring or preventing a change in control of the company under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-current market price of such common shares. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Subtitle 8.”

Our rights and the rights of our shareholders to recover claims against our officers and trustees are limited.

Maryland law provides that a trustee has no liability in that capacity if he or she performs his or her duties in good faith, acts without willful misfeasance, is not grossly negligent and has not acted with reckless disregard of his or her duties. Our charter requires us, subject to certain exceptions, to indemnify and advance expenses to our trustees and officers. Our charter also permits us to provide such indemnification and advance for expenses to our employees and agents. Additionally, our charter limits, subject to certain exceptions, the liability of our trustees and officers to us and our shareholders for monetary damages. Although our charter does not allow us to indemnify our trustees for any liability or loss suffered by them or hold harmless our trustees for any loss or liability suffered by us to a greater extent than permitted under Maryland law, we and our shareholders may have more limited rights against our trustees, officers, employees and agents, than might otherwise exist under common law, which could reduce your and our recovery against them. In addition, we may be obligated to fund the defense costs incurred by our trustees, officers, employees and agents.

Termination of the employment agreements with certain members of our senior management team could be costly, and the terms of the employment agreements may make a change in control of the company less attractive.

We are party to an employment agreement with each of Messrs. Dioguardi, Johnson, Warch and Morgan and Ms. Daly. These agreements provide that if the employment of these individuals is terminated under certain circumstances (including in connection with a change in control of the company), we may be required to pay them significant amounts of severance compensation. Furthermore, these provisions could delay or prevent a transaction or a change in control of the company that might involve a premium over the then-prevailing market price of our common shares or otherwise be in the best interests of our shareholders.

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Risks Related to this Offering and Ownership of Our Common Shares

The cash available for distribution to shareholders may not be sufficient to pay distributions at expected levels, nor can we assure you of our ability to make, maintain or increase distributions in the future. We may pay distributions from sources other than cash flow from operations, including borrowed funds, proceeds from asset sales or net proceeds from securities offerings.

Our expected annual distributions for the 12 months ending September 30, 2022 of $      per common share are expected to be approximately    % of estimated cash available for distribution (or    % of estimated cash available for distribution if the underwriters exercise their option to purchase additional shares in full). Because our estimated annual distribution to common shareholders for the 12 months ending September 30, 2022 exceeds our estimated cash available for distribution, if our operating cash flow does not increase we may have to fund distributions from borrowings under the New Credit Facility or other loans, selling certain of our assets or using a portion of the net proceeds from this offering or reduce such distributions. To the extent we use funds from these sources to fund our distributions, our financial condition and our ability to access these funds for other purposes, such as for the acquisition of properties or future distributions, could be adversely affected. See “Distribution Policy.” All distributions will be made at the discretion of our board of trustees and will depend on our earnings, cash flows, liquidity, financial condition, capital requirements, contractual prohibitions or other limitations under our indebtedness, the annual distribution requirements under the REIT provisions of the Code, state law and such other factors as our board of trustees considers relevant. With limited prior operating history, we cannot assure you that we will be able to pay our expected annual distribution or that any distribution rate will increase over time. In addition, some of our distributions may include a return of capital. To the extent that we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in their shares. A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. To the extent that distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such shares. See “Certain U.S. Federal Income Tax Considerations—Taxation of Shareholders.” If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. In addition, we may make distributions with proceeds from asset sales or the net proceeds from securities offerings, which may reduce the amount of capital we have available to invest in our business and adversely affect us.

There is no existing market for our common shares, an active trading market for our common shares may not develop and the market price for our common shares may decline substantially and be volatile.

Prior to this offering, there has been no public market for our common shares. Although we expect to have our common shares listed on the NYSE, under the symbol “FSPR,” we cannot predict the extent to which a trading market will develop or how liquid that market will become. An active trading market may not develop upon completion of this offering and, if it does develop, it may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The initial public offering price of our common shares will be determined by negotiation among us and the representatives of the underwriters and may not be representative of the price that will prevail in the open market after this offering. See “Underwriting” for a discussion of the factors that were considered in determining the initial public offering price.

The market price of our common shares after this offering may be significantly affected by factors including, among others:

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actual or anticipated variations in our results of operations;

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changes in government regulations;

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changes in laws affecting REITs and related tax matters;

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the announcement of new contracts by us or our competitors;

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general market conditions specific to our industry;

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•

changes in general economic conditions;

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unanticipated increases in interest rates;

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volatility in the financial markets;

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actions by institutional shareholders;

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general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate-based companies);

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additions or departures of key management personnel;

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differences between our actual financial and operating results and those expected by investors and analysts;

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changes in analysts’ recommendations or projections; and

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the realization of any of the other risk factors presented in this prospectus.

As a result, our common shares may trade at prices significantly below the public offering price.

Furthermore, in recent years, the stock market in general, securities listed on the NYSE and securities issued by REITs in particular have experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industry. The changes frequently appear to occur without regard to the operating performance of the affected companies. Hence, the price of our common shares could fluctuate based upon factors that have little or nothing to do with us in particular, and these fluctuations could materially reduce the price of our common shares and materially affect the value of your investment.

Because we have not identified any specific properties to acquire with the net proceeds from this offering remaining after repaying amounts outstanding under the M&T Credit Facility and the Mezzanine Loan, you will be unable to evaluate the economic merits of investments we may make with such net proceeds before deciding to purchase our common shares.

We will have broad authority to invest the net proceeds from this offering not used to repay amounts outstanding under the M&T Credit Facility and the Mezzanine Loan in any property investments that we may identify in the future, and we may make investments with which you do not agree. You will be unable to evaluate the economic merits of any such investments before we make them and will be relying on our ability to select attractive investment properties. We also will have broad discretion in implementing policies regarding tenant creditworthiness, and you will not have the opportunity to evaluate potential tenants. In addition, our investment policies may be amended or revised from time to time at the discretion of our board of trustees, without a vote of our shareholders. These factors will increase the uncertainty and the risk of investing in our common shares.

We intend to use a portion of the net proceeds from this offering to, among other things, acquire properties and lease them on a long-term net lease basis; we cannot assure you that we will be able to do so on a profitable basis. Our failure to apply such net proceeds effectively or to find suitable properties to acquire in a timely manner or on acceptable terms could result in losses or returns that are substantially below expectations.

A substantial portion of our total outstanding common shares may be sold into the market at any time following this offering. This could cause the market price of our common shares to drop significantly, even if our business is doing well, and make it difficult to for us to sell equity securities in the future.

The market price of our common shares could decline as a result of sales of a large number of common shares or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it difficult for us to sell equity securities in the future at times or prices that we deem appropriate. After the consummation of this offering, we will have           common shares outstanding. See “Shares Eligible for Future Sale” and “Certain Relationships and Related Party Transactions” for a more detailed description of the common shares that will be available for future sale upon completion of this offering.

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Subject to certain exceptions, we, our executive officers, trustees, GSAM and Carlyle have agreed that, without the prior written consent of the representatives on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus: (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any common shares or any securities convertible into or exercisable or exchangeable for common shares; (2) file any registration statement with the SEC relating to the offering of any common shares or any securities convertible into or exercisable or exchangeable for common shares; or (3) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common shares, whether any such transaction described above is to be settled by delivery of common shares or such other securities, in cash or otherwise. In addition, our shareholders holding substantially all of our other common shares outstanding immediately prior to the completion of this offering may not to effect any offer, sale or distribution of any common shares or any option or right to acquire common shares, for 180 days after the date of this prospectus, without first obtaining our consent. We have agreed not to provide this consent without first obtaining the written consent of the representatives. When this lock-up period expires, our locked-up security holders will be able to sell our common shares in the public market. Sales of a substantial number of such shares upon expiration of this lock up, or the perception that such sales may occur, could cause our per share trading price to fall or make it more difficult for you to sell your common shares at a time and price that you deem appropriate.

If you purchase our common shares in this offering, you will suffer immediate and substantial dilution.

The initial public offering price of our common shares is expected to be substantially higher than the pro forma net tangible book value per share immediately after this offering. Therefore, if you purchase common shares in this offering, your interest will be diluted immediately to the extent of the difference between the initial public offering price per common share and the pro forma net tangible book value per common share after this offering. See “Dilution.”

If we raise additional capital through the issuance of new equity securities, your interest in us will be diluted.

We may have to issue additional equity securities periodically to finance our growth. If we raise additional capital through the issuance of new equity securities, your interest in us will be diluted, which could cause you to lose all or a portion of your investment. In addition, any new securities we may issue, such as preferred shares, may have rights, preferences or privileges senior to those securities held by you.

If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade the outlook of our common shares, the price of our common shares could decline.

The trading market for our common shares will depend, in part, on the research and reports that third-party securities analysts publish about us and our industry. One or more analysts could downgrade the outlook of our common shares or issue other negative commentary about us or our industry. In addition, we may be unable to obtain or slow to attract research coverage. As a result of one or more of these factors, the trading price of our common shares could decline.

Legislative or regulatory action could adversely affect purchasers of our common shares.

In recent years, numerous legislative, judicial and administrative changes have been made in the provisions of the federal income tax laws applicable to investments similar to an investment in our common shares. Changes are likely to continue to occur in the future, and these changes could adversely affect our shareholders’ investment in our common shares. These changes include but are not limited to the reduction or elimination of the corporate income tax under the Code or repeal or revisions to the tax exemptions provided by Section 1031 under the Code, which would adversely affect the Section 1031 Exchange Program. Any of these changes could have an adverse effect on an investment in our common shares or on the market price or resale potential of our common shares. Shareholders are urged to consult with their own tax advisor with respect to the impact that recent legislation may have on their investment and the status of legislative, regulatory or administrative developments and proposals and their potential effect on their investment in our shares.

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Participants in our directed share program must hold their shares for a minimum of 180 days following the date of this prospectus and, accordingly, will be subject to market risks not imposed on other investors in the offering.

At our request, the underwriters have reserved    % of the common shares to be issued by us and offered by this prospectus for sale, at the initial public offering price, to trustees, officers, employees, business associates and related persons. If purchased by these persons, these shares will be subject to a 180-day lock-up restriction. As a result of the lockup restriction, these purchasers may face risks not faced by other investors who have the right to sell their shares at any time following the offering. These risks include the market risk of holding our shares during the period that such restrictions are in effect. In addition, the price of our common shares may decrease following the expiration of the lockup period if there is an increase in the number of shares for sale in the market.

Risks Related to Our Tax Status and Other Tax Related Matters

We would incur adverse tax consequences if we fail to qualify as a REIT.

We have elected to be taxed as a REIT under the Code. Our qualification as a REIT requires us to satisfy numerous requirements, some on an annual and quarterly basis, established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and which involves the determination of various factual matters and circumstances not entirely within our control. We expect that our current organization and methods of operation will enable us to continue to qualify as a REIT, but we may not so qualify or we may not be able to remain so qualified in the future. In addition, U.S. federal income tax laws governing REITs and other corporations and the administrative interpretations of those laws may be amended at any time, potentially with retroactive effect. Future legislation, new regulations, administrative interpretations or court decisions could adversely affect our ability to qualify as a REIT or adversely affect our shareholders.

If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax on our taxable income at regular corporate rates, and would not be allowed to deduct dividends paid to our shareholders in computing our taxable income. Also, unless the IRS granted us relief under certain statutory provisions, we could not re-elect REIT status until the fifth calendar year after the year in which we first failed to qualify as a REIT. The additional tax liability from the failure to qualify as a REIT would reduce or eliminate the amount of cash available for investment or distribution to our shareholders. This would likely have a significant adverse effect on the value of our securities and our ability to raise additional capital. In addition, we would no longer be required to make distributions to our shareholders. Even if we continue to qualify as a REIT, we will continue to be subject to certain federal, state and local taxes on our income and property.

Complying with REIT requirements may cause us to liquidate or forgo otherwise attractive investment opportunities.

To qualify as a REIT, we must ensure that, at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and “real estate assets” ​(as defined in the Code), including certain mortgage loans and securities. The remainder of our investments (other than government securities, qualified real estate assets and securities issued by a TRS) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our total assets (other than government securities, qualified real estate assets and securities issued by a TRS) can consist of the securities of any one issuer, and no more than 20% of the value of our total assets can be represented by securities of one or more TRSs. See “Certain U.S. Federal Income Tax Considerations.” If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate or forgo otherwise attractive investment opportunities. These actions could have the effect of reducing our income and amounts available for distribution to our shareholders.

In addition to the asset tests set forth above, to qualify as a REIT we must continually satisfy tests concerning, among other things, the sources of our income, the amounts we distribute to our shareholders and the

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ownership of our shares. We may be unable to pursue investment opportunities that would be otherwise advantageous to us in order to satisfy the source-of-income or asset-diversification requirements for qualifying as a REIT. We also may be required to make distributions to shareholders at disadvantageous times or when we do not have funds readily available for distribution. As a result, having to comply with the distribution requirement could cause us to: (1) sell assets in adverse market conditions; (2) borrow on unfavorable terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. Thus, compliance with the REIT requirements may materially adversely affect us and hinder our ability to make certain attractive investments.

To continue to qualify as a REIT, we generally must distribute to our shareholders at least 90% of our REIT taxable income each year, determined without regard to the dividends-paid deduction and excluding any net capital gains, and we will be subject to corporate income tax on our undistributed taxable income to the extent that we distribute less than 100% of our REIT taxable income, determined without regard to the dividends-paid deduction and including any net capital gains, each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.

Re-characterization of sale-leaseback transactions may cause us to lose our REIT status.

We may purchase real properties and lease them back to the sellers of such real properties. The IRS could challenge our characterization of certain leases in any such sale-leaseback transactions as “true leases,” which allows us to be treated as the owner of the property for federal income tax purposes. In the event that any sale-leaseback transaction is challenged and re-characterized as a financing transaction or loan for federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed, which could affect the calculation of our REIT taxable income and could cause us to fail the REIT distribution test that requires a REIT to distribute at least 90% of its REIT taxable income, determined without regard to the dividends-paid deduction and excluding any net capital gain. In this circumstance, we may elect to distribute an additional dividend of the increased taxable income so as not to fail the REIT distribution test. This distribution would be paid to all shareholders at the time of declaration rather than the shareholders existing in the taxable year affected by the re-characterization. If a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT qualification “asset tests” or the “income tests” and, consequently, lose our REIT status effective with the year of re-characterization.

Dividends paid by REITs generally do not qualify for reduced tax rates.

In general, the maximum U.S. federal income tax rate for dividends that constitute “qualified dividend income” paid to individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for this reduced rate. Under the Tax Cuts and Jobs Act of 2017 (the “TCJA”), however, domestic shareholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026. To qualify for this deduction, the domestic shareholder receiving such dividends must hold the dividend-paying REIT stock for at least 46 days (taking into account certain special holding period rules) of the 91-day period beginning 45 days before the stock becomes ex-dividend and cannot be under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to a position in substantially similar or related property. Although this deduction reduces the effective U.S. federal income tax rate applicable to such dividends paid by REITs (generally to 29.6% assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Although these rules do not adversely affect the taxation of REITs or dividends payable by REITs, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the shares of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of our common shares.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code substantially limit our ability to hedge our assets and liabilities. Any income from a hedging transaction that we enter into to manage the risk of interest rate changes with respect to

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borrowings made or to be made to acquire or carry real estate assets, or from certain terminations of such hedging positions, does not constitute “gross income” for purposes of the 75% or 95% gross income tests that apply to REITs, provided that certain identification requirements are met. To the extent that we enter into other types of hedging transactions or fail to properly identify such transaction as a hedge, the income is likely to be treated as non-qualifying income for purposes of both of the gross income tests. See “Certain U.S. Federal Income Tax Considerations.” As a result of these rules, we may be required to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRSs may be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRSs will generally not provide any tax benefit, except that such losses could theoretically be carried back or forward against past or future taxable income in the TRS.

Certain property transfers may generate prohibited transaction income, resulting in a penalty tax on gain attributable to the transaction.

From time to time, we may transfer or otherwise dispose of some of our properties. Under the Code, any gain resulting from transfers of properties that we hold as inventory or primarily for sale to customers in the ordinary course of business would be treated as income from a prohibited transaction and subject to a 100% penalty tax. Since we acquire properties for investment purposes, we do not believe that our occasional transfers or disposals of property are prohibited transactions. However, whether property is held for investment purposes is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. The IRS may contend that certain transfers or disposals of properties by us are prohibited transactions. If the IRS were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, then we would be required to pay a 100% penalty tax on any gain allocable to us from the prohibited transaction and we may jeopardize our ability to retain future gains on real property sales.

We could face possible state and local tax audits and adverse changes in state and local tax laws.

As discussed in the risk factors above, because we are organized and qualify as a REIT, we are generally not subject to federal income taxes, but we are subject to certain state and local taxes. From time to time, changes in state and local tax laws or regulations are enacted, which may result in an increase in our tax liability. A shortfall in tax revenues for states and municipalities in which we own properties may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional state and local taxes. These increased tax costs could adversely affect our financial condition and the amount of cash available for the payment of distributions to our shareholders. In the normal course of business, entities through which we own real estate may also become subject to tax audits. If such entities become subject to state or local tax audits, the ultimate result of such audits could have an adverse effect on our financial condition.

Legislative or other actions affecting REITs could materially and adversely affect us and our investors as well as the Operating Partnership.

The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. Changes to the tax laws (including in the context of a fundamental U.S. income tax reform), with or without retroactive application, could materially and adversely affect us and our investors as well as the Operating Partnership. We cannot predict how changes in the tax laws might affect it or its investors. New legislation, U.S. Department of Treasury regulations (“Treasury Regulations”), administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT or the federal income tax consequences of such qualification. In addition, changes to the tax laws may reduce the attractiveness of REITs as investment vehicles relative to other investment vehicles.

If the Operating Partnership fails to maintain its status as a partnership, we would cease to qualify as a REIT and suffer other adverse consequences.

We intend to maintain the status of the Operating Partnership as a partnership for federal income tax purposes. However, if the IRS were to successfully challenge the status of the Operating Partnership as an entity taxable

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as a partnership, the Operating Partnership would be taxable as a corporation. In such event, this would reduce the amount of distributions that the Operating Partnership could make to us. This would also cause us to fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, we would likely lose our REIT status, and becoming subject to a corporate level tax on our income. This would substantially reduce the cash available to us to make distributions to you and the return on your investment and potentially change the character of our distributions to you. In addition, if any of the partnerships or limited liability companies through which the Operating Partnership owns its properties, in whole or in part, loses its characterization as a partnership for federal income tax purposes, it would be subject to taxation as a corporation, thereby reducing distributions to the Operating Partnership. Such a re-characterization of an underlying property owner also could threaten our ability to maintain REIT status.

Qualifying as a REIT involves highly technical and complex provisions of the Code.

Our qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Moreover, new legislation, court decisions or administrative guidance, in each case possibly with retroactive effect, may make it more difficult or impossible for us to qualify as a REIT. Our qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. Our ability to satisfy the REIT income and asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination and for which we will not obtain independent appraisals, and upon our ability to successfully manage the composition of our income and assets on an ongoing basis. In addition, our ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

General Risk Factors

The requirements of being a public company may strain our resources, result in more litigation, and divert the attention of our management.

As a public company with listed equity securities, we will be required to comply with new laws, regulations and requirements, including the requirements of the Exchange Act, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” related regulations of the SEC, and requirements of the NYSE, with which we were not required to comply as a private company. The Exchange Act will require us to file annual, quarterly and current reports and other information with respect to our business and financial condition with the SEC. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting.

Section 404 of the Sarbanes-Oxley Act requires our management and independent auditors to report annually on the effectiveness of our internal control over financial reporting. However, we are an “emerging growth company,” as defined in the JOBS Act, and, so for as long as we continue to be an emerging growth company, we intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including, but not limited to, exemption from compliance with the auditor attestation requirements of Section 404. Once we are no longer an emerging growth company or, if prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include in our annual reports that we file with the SEC an opinion from our independent auditors on the effectiveness of our internal control over financial reporting.

These reporting and other obligations will place significant demands on our management, administrative, operational and accounting resources and will cause us to incur significant expenses. We may need to upgrade our systems or create new systems, implement additional financial and management controls, reporting systems and procedures, create or outsource an internal audit function, and hire additional accounting and finance staff. If we are unable to accomplish these objectives in a timely and effective fashion, our ability to comply with the financial reporting requirements and other rules that apply to reporting companies could be

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impaired, which could result in fines, delisting of our common shares or other disciplinary action from the SEC, the NYSE or other regulatory bodies.

Changes in accounting standards may materially and adversely affect us.

From time to time the Financial Accounting Standards Board (“FASB”) or the SEC may change financial accounting and reporting standards or the interpretation and application thereof. These changes could materially and adversely affect our reported financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in revising prior period financial statements. Similarly, these changes could materially and adversely affect our tenants’ reported financial condition and results of operations and affect their willingness to lease as opposed to own real estate.

We face risks relating to cybersecurity attacks that could cause loss of confidential information and other business disruptions.

We rely extensively on computer systems to process transactions and manage our business, and our business is at risk from and may be impacted by cybersecurity attacks. These could include attempts to gain unauthorized access to our data and computer systems. Attacks can be both individual and/or highly organized attempts organized by very sophisticated hacking organizations. We employ a number of measures to prevent, detect and mitigate these threats, which include password protection, firewall protection systems, frequent backups, and a redundant data system for core applications; however, there is no guarantee such efforts will be successful in preventing a cybersecurity attack. A cybersecurity attack could compromise our confidential information as well as that of our employees, tenants and vendors. A successful attack could disrupt and affect our business operations.

The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.

We intend to diversify our cash and cash equivalents among several banking institutions in an attempt to minimize exposure to any one of these entities. However, the Federal Deposit Insurance Corporation only insures amounts up to $250,000 per depositor per insured bank. We likely will have cash (including restricted cash) and cash equivalents deposited in certain financial institutions in excess of federally insured levels. If any of the banking institutions in which we deposit funds ultimately fails, we may lose our deposits over $250,000. The loss of our deposits could reduce the amount of cash available for distribution to our shareholders or investment in new or existing properties.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. In particular, statements pertaining to our business and growth strategies, investment and leasing activities and trends in our business, including trends in the market for long-term, net leases of freestanding, single-tenant properties contain forward-looking statements. When used in this prospectus, the words “estimate,” “anticipate,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters, are intended to identify forward-looking statements. You can also identify forward-looking statements by discussions of strategy, plans or intentions of management.

Forward-looking statements involve numerous risks and uncertainties, and you should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data or methods that may be incorrect or imprecise, and we may not be able to realize them. We do not guarantee that the transactions and events described in forward-looking statements will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:

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general business and economic conditions;

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the impact of pandemics such as the recent outbreak of COVID-19 or other sudden or unforeseen events that disrupt the economy;

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the performance and creditworthiness of our tenants;

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availability of qualified personnel and our ability to retain our key management personnel;

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availability of suitable properties to acquire and our ability to acquire and lease those properties on favorable terms;

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the degree and nature of our competition;

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volatility and uncertainty in the credit markets and broader financial markets, including potential fluctuations in the CPI;

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other risks inherent in the real estate business, including tenant defaults or bankruptcies, potential liability relating to environmental matters, illiquidity of real estate investments, fluctuations in real estate values and the general economic climate in local markets, competition for tenants in such markets and potential damages from natural disasters;

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ability to renew leases, lease vacant space or re-lease space as existing leases expire or are terminated;

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our failure to generate sufficient cash flows to service our outstanding indebtedness;

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our ability to access to debt and equity capital markets on attractive terms;

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fluctuating interest rates;

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changes in, or the failure or inability to comply with, government regulation, including Maryland laws;

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failure to maintain our status as a REIT;

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changes in the U.S. tax law and other U.S. laws, whether or not specific to REITs; and

•

additional factors discussed in the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Our Business” in this prospectus.

You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this prospectus. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events, except as required by law. In light of these risks and uncertainties, the forward-looking events discussed in this prospectus might not occur as described, or at all.

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USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be approximately $      million after deducting the underwriting discounts and commissions and our other estimated offering expenses (assuming an initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus). If the underwriters exercise their option to purchase additional shares in full, we estimate the net proceeds to us will be approximately $      million. We will contribute the net proceeds from this offering to the Operating Partnership in exchange for a number of OP units that is equal to the number of common shares that we issue to investors in this offering.

The Operating Partnership will use a portion of the net proceeds from this offering to (1) consummate the 2021 Pending Acquisitions, (2) repay amounts outstanding under the M&T Credit Facility and (3) repay amounts outstanding under the Mezzanine Loan. The remaining net proceeds will be used to acquire additional properties and for general corporate purposes.

As of November 15, 2021, we had approximately $70.0 million outstanding under the M&T Credit Facility. The M&T Credit Facility matures on October 30, 2022. The M&T Credit Facility bears interest based on, at our option, (1) LIBOR, with a LIBOR floor of 1% on unhedged LIBOR, plus 2.50% to 2.75% per annum, or (2) the base rate plus 1.50% to 1.75% per annum, with the interest rate spread determined based on, at our election, LIBOR or base rate borrowings and the ratio of debt to value (2.58% as of November 15, 2021). As of November 15, 2021, we had approximately $89.0 million outstanding under the Mezzanine Loan. The Mezzanine Loan matures on October 30, 2025. The Mezzanine Loan bears interests at 11.5% per annum, of which 7.0% is to be paid in cash and 4.5% is capitalized.

Pending the use of the net proceeds from this offering as described above, we intend to invest such proceeds in interest-bearing, short-term investment-grade securities, money-market accounts or other investments that are consistent with our intention to maintain our qualification as a REIT for federal income tax purposes.

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DISTRIBUTION POLICY

Following completion of this offering, we intend to make regular monthly distributions to holders of our common shares, as more fully described below. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at the regular corporate rate to the extent that it annually distributes less than 100% of its REIT taxable income. In addition, a REIT will be required to pay a 4% nondeductible excise tax on the amount, if any, by which the distributions it makes in a calendar year are less than the sum of 85% of its ordinary income, 95% of its capital gain net income, and 100% of its undistributed income from prior years. For more information, see “Certain U.S. Federal Income Tax Considerations.” As a result, in order to satisfy the requirements for us to qualify and maintain our qualification as a REIT for U.S. federal income tax purposes and generally not be subject to U.S. federal income and excise tax, we intend to make regular monthly distributions of 100% of our REIT taxable income to holders of our common shares out of assets legally available therefor.

Although we anticipate initially making monthly distributions to our common shareholders, the timing, form and amount of distributions, if any, to our common shareholders, will be at the sole discretion of our board of trustees and will depend upon a number of factors, including:

•

our actual and projected results of operations;

•

our debt service requirements;

•

our liquidity and cash flows;

•

our capital expenditures;

•

our operating expenses;

•

our REIT taxable income;

•

the annual distribution requirement under the REIT provisions of the Code;

•

restrictions in any current or future debt agreements;

•

any contractual limitations;

•

applicable law, including restrictions on distributions under Maryland law; and

•

other factors that our board of trustees may deem relevant.

For more information regarding risk factors that could materially and adversely affect us and our ability to make cash distributions, see “Risk Factors—The cash available for distribution to shareholders may not be sufficient to pay distributions at expected levels, nor can we assure you of our ability to make, maintain or increase distributions in the future.” If our operations do not generate sufficient cash flow to enable us to pay our intended or required distributions, we may be required either to fund distributions from working capital, borrow or raise equity or reduce such distributions. In addition, our charter allows us to issue preferred shares that could have a preference on distributions and could limit our ability to make distributions to our shareholders.

While we intend to make regular monthly distributions to holders of our common shares any distributions will be at the sole discretion of our board of trustees, and we cannot guarantee that we will make distributions at the rate described below or at all. If our operations do not generate sufficient cash flow to allow us to satisfy the REIT distribution requirements, we may be required to fund distributions from working capital, borrow funds, sell assets or reduce such distributions. Our actual results of operations will be affected by a number of factors, including the revenues we receive from our properties, our operating expenses, interest expense and unanticipated expenditures, among others. For more information regarding risk factors that could materially and adversely affect our actual results of operations, please see “Risk Factors.”

Our estimate of cash available for distribution for the twelve months ending September 30, 2022 has been calculated based on adjustments to the pro forma net income attributable to Four Springs Capital Trust for the twelve months ended September 30, 2021. This estimate was based on our pro forma operating results and does not take into account our growth strategy or intended use of proceeds to acquire rent-generating, net

60

lease properties, nor does it take into account any unanticipated expenditures we may have to make or any debt we may have to incur. In estimating our cash available for distribution for the twelve months ending September 30, 2022, we have made certain assumptions as reflected in the table and footnotes below. Our estimate of cash available for distribution does not include the effect of any changes in our working capital. Our estimate also does not reflect the amount of cash estimated to be used for investing activities, including for acquisition and other activities. It also does not reflect the amount of cash estimated to be used for financing activities, other than scheduled debt principal payments on mortgage indebtedness that will be outstanding upon completion of this offering. Any such investing and/or financing activities may have a material effect on our estimate of cash available for distribution. Because we have made the assumptions set forth above in estimating cash available for distribution, we do not intend this estimate to be a projection or forecast of our actual results of operations or our liquidity, and we have estimated cash available for distribution for the sole purpose of determining our initial annual distribution rate. Our estimate of cash available for distribution should not be considered as an alternative to cash flow from operating activities (computed in accordance with GAAP). In addition, the methodology upon which we made the adjustments described below is not necessarily intended to be a basis for determining future dividends or other distributions.

We intend to make a pro rata distribution with respect to the period commencing upon completion of this offering and ending on December 31, 2021 based on a distribution rate of $      per common share for a full month. On an annualized basis, this would be $      per common share, or an annual distribution rate of approximately % based on the midpoint of the price range set forth on the cover page of this prospectus. We estimate that this initial annual distribution rate will represent approximately       % of our estimated cash available for distribution to shareholders for the twelve months ending September 30, 2022, based on the midpoint of the price range set forth on the cover of this prospectus. We do not intend to reduce the annualized distribution per share if the underwriters exercise their option to purchase additional shares. Our intended initial annual distribution rate has been established based on our estimate of cash available for distribution for the twelve months ending September 30, 2022, which we have calculated based on adjustments to our pro forma net income for the twelve months ended September 30, 2021. We believe that our estimate of cash available for distribution constitutes a reasonable basis for setting the initial distribution rate. However, we cannot assure you that our estimate will prove accurate, and actual distributions may therefore be significantly below the expected distributions. We intend to maintain our initial distribution rate for the 12-month period following the completion of this offering unless our actual or anticipated results of operations, cash flows or financial position, economic or market conditions or other factors differ materially from the assumptions used in our estimate.

The following table describes the pro forma net income attributable to Four Springs Capital Trust for the twelve months ended December 31, 2020, and the adjustments we have made thereto in order to estimate our initial cash available for distribution to the holders of our common shares for the twelve months ending September 30, 2022 ($ in thousands), and such information is provided solely for the purpose of illustrating the estimated initial distribution and is not intended to be a basis for future distributions.

Pro forma net income attributable to Four Springs Capital Trust for the year ended December 31, 2020	$
Less: Pro forma net income attributable to Four Springs Capital Trust for the nine months ended September 30, 2020	​	​
Add: Pro forma net income attributable to Four Springs Capital Trust for the nine months ended September 30, 2021	​	​
Pro forma net income attributable to Four Springs Capital Trust for the twelve months ended September 30, 2021	$
Add: estimated net increases in contractual rental revenue(1)	​	​
Add: real estate depreciation and amortization	​	​
Add: Non-cash impairment charges	​	​
Add: amortization of debt discount and deferred financing costs(2)	​	​
Less: net effect of non-cash rental revenue(3)	​	​
Less: Gain on sale of real estate	​	​

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Less: net increases in general and administrative expenses after giving effect to offering(4)	​	​
Estimated cash flows from operating activities attributable to Four Springs Capital Trust for the twelve months ending September 30, 2022	​	​
Less: capital expenditures reserve(5)	​	​
Less: scheduled principal payments on mortgages and notes payable(6)	​	​
Estimated cash available for distribution attributable to Four Springs Capital Trust for the twelve months ending September 30, 2022	$
Total estimated initial annual distribution to Four Springs Capital Trust common shareholders and OP unit holders(7)	$
Estimated initial annual distribution per common share and per common OP unit	$
Estimated initial annual distribution per Series U1 OP units(8)	​
Estimated initial annual distribution per Series U2 OP units(9)	​
Payout ratio(10)		%

(1)

Represents annualized contractual increases in rental revenue:

•

scheduled fixed rent increases;

•

contractual increases based on changes in the CPI (including actual increases that have occurred from October 1, 2020 to
September 30, 2021); and

•

net increases from new leases or renewals that were not in effect for the entire twelve months ended September 30, 2021 or that will go into effect during the twelve months ending September 30, 2022 based upon leases entered into through           , 2021.

(2)

Represents non-cash interest expense included in pro forma net income attributable to Four Springs Capital Trust for the twelve months ended September 30, 2021 associated with:

•

the amortization of the debt premiums and discounts on our mortgage notes payable; and

•

the amortization of deferred financing costs on our mortgage notes payable and lines of credit.

(3)

Represents net non-cash rental revenues associated with the straight-line adjustment to rental revenue, and the amortization of favorable and unfavorable lease intangibles included in the pro forma net income attributable to Four Springs Capital Trust for the twelve months ended September 30, 2021.

(4)

We expect to incur incremental general and administrative expenses in connection with becoming a public reporting company. These expenses include expenses associated with compensation, annual and quarterly reporting, compliance expenses, expenses associated with listing on the NYSE and investor relations expenses.

(5)

Represents reserves for replacements estimated at $      per square foot at Four Springs Capital Trust’s share of leasable area of      square feet. This estimate is based on Four Spring Capital Trust’s due diligence review of historical levels of such expenditures, the age and condition of its properties, and its obligation to make such expenditures under the terms of the lease agreements.

(6)

Represents scheduled principal amortization during the twelve months ending September 30, 2022 for pro forma indebtedness outstanding as of September 30, 2021.

(7)

Based on a total of      common shares and        of OP units expected to be outstanding upon completion of this offering. This total is based on           shares outstanding as of September 30, 2021, after giving effect to the automatic conversion of all (a) 200,015 outstanding non-participating common shares into      common shares at a rate of one common share for every one non-participating common share and (b)      outstanding preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus). This total also includes (a) 181,116 Series U1 OP units and (b)           Series U2 OP units that will be issued upon the completion of this offering in exchange for approximately $10.3 million of the DST interests held by investors, which such number of Series U2 OP units is equal to approximately $10.3 million divided by 120% of the initial public offering price of our common shares in this offering (based on the midpoint of the price range set forth on the cover page of this prospectus).

(8)

Based on 181,116 Series U1 OP units expected to be outstanding upon completion of this offering.

(9)

Based on a total of            Series U2 OP units that will be issued upon the completion of this offering in exchange for approximately $10.3 million of the DST interests held by investors, which such number of Series U2 OP units is equal to approximately $10.3 million units equal to $10.3 million divided by 120% of the initial public offering price of our common shares in this offering (based on the midpoint of the price range set forth on the cover page of this prospectus).

(10)

Calculated as t otal estimated initial annual distribution to common shareholders and OP unit holders divided by estimated cash available for distribution for the twelve months ending September 30, 2022. If the underwriters exercise their option to purchase additional shares in full, our total estimated initial annual distribution to common shareholders and OP unit holders would be $      million and our payout ratio would be     %. Because our estimated annual distribution to common shareholders and OP unit holders for the twelve months ending September 30, 2022 exceeds our estimated cash available for distribution, if our operating cash flow does not increase we may have to fund distributions from borrowings under the New Credit Facility or other loans, selling certain of our assets or using a portion of the net proceeds from this offering or reduce such distributions.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2021:

•

on an actual basis; and

•

on a pro forma basis giving effect to the Pro Forma Transactions as defined in “Unaudited Pro Forma Financial Information.”

You should read this table together with the other information contained in this prospectus, including “Use of Proceeds,” “Selected Consolidated Financial Data,” “Unaudited Pro Forma Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and related notes that appear elsewhere in this prospectus.

​	September 30, 2021
(In thousands, except share and per share data)	Actual			Pro Forma
Cash and cash equivalents	​	$	32,795	​	$
Debt:	​	​	​	​	​	​
Notes payable, net	​	$	280,288	​	$
Line of credit, net(1)	​	​	42,807	​	​	​
Mezzanine notes payable, net(2)	​	​	86,412	​	​	​
Total debt	​	​	409,507	​	​	​
Commitments and Contingencies:	​	​	​	​	​	​
Temporary Equity:	​	​	​	​	​	​
Contingently redeemable Series A-1 preferred shares, $0.001 par value, 10,000,000 shares designated, 2,550,730 and no shares issued and outstanding (convertible to common shares) at September 30, 2021 and on a pro forma basis, respectively(3)	​	​	50,581	​	​	​
Contingently redeemable Series A-2 preferred shares, $0.001 par value, 15,000,000 shares designated, 7,500,000 shares and no shares issued and outstanding (convertible to common shares) at September 30, 2021 and on a pro forma basis, respectively(3)	​	​	139,994	​	​	​
Contingently redeemable Series U1 OP units, $4,323,239 and $          liquidation preference; 181,116 units issued and outstanding (convertible to 181,116) at September 30, 2021 and on a pro forma basis, respectively	​	​	4,358	​	​	​
Total Temporary Equity	​	​	194,933	​	​	​
Shareholders’ Equity:	​	​	​	​	​	​
Common shares, $0.001 par value per share; 504,671,451 shares authorized; 223,203 of which have been designated; 6,533,284 and         shares issued and outstanding at September 30, 2021 and on a pro forma basis, respectively(3)(4)(5)	​		6	​	​	​
Non-participating common shares, $.001 par value per share; 223,203 shares designated, 200,015 and no shares issued and outstanding (convertible to 200,015 common shares) at September 30, 2021 and on a pro forma basis, respectively(5)	​	​	—	​	​	​
Additional paid-in capital	​	​	137,544	​	​	​
Accumulated other comprehensive loss	​	​	(1,004)	​	​	​
Cumulative dividends in excess of net income	​	​	(108,654)	​	​	​
Total shareholders’ equity	​	​	27,892	​	​	​
Noncontrolling interests(6)	​	​	170,422	​	​	​
Total Equity	​	​	198,314	​	​	​
Total capitalization	​	$	802,754	​	$	​

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(1)

The outstanding balance under the M&T Credit Facility was approximately $45.0 million as of September 30, 2021.

(2)

The outstanding balance under the Mezzanine Loan was approximately $88.6 million as of September 30, 2021.

(3)

Upon the listing of our common shares on the NYSE, the Series A-1 and A-2 preferred shares will automatically convert into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus), and all accrued and unpaid dividends thereon to and including the date of such conversion will be paid in cash.

(4)

The common shares outstanding actual do not include: (a) 11,747 common shares issuable upon exercise of outstanding common share options held by our trustees, officers and employees with a weighted average exercise price of $37.94 per share; (b) warrants to purchase 474,851 common shares held by certain of our shareholders with exercise prices ranging from $20.00 to $31.16 per share, with a weighted average exercise price of $23.31 per share; (c) 10,743 warrants for common shares issuable upon exercise of outstanding options held by our trustees with a weighted average price of $186.18 per share; (d) 895,500 common shares issuable upon exchange of 895,500 LTIP Units; (e) 2,104,500 common shares available for future grants under the 2021 Equity Incentive Plan; (f) 65,636 common shares that may be issued in exchange for 65,636 OP units; (g) 181,116 common shares that may be issued in exchange for 181,116 Series U1 OP units; and (h)            common shares that may be issued in exchange for           Series U2 OP units.

(5)

Upon the listing of our common shares on the NYSE, the non-participating common shares will automatically convert into common shares at a rate of one common share for every one non-participating common share.

(6)

Pro forma noncontrolling interests include Series U2 OP units.          Series U2 OP units will be issued upon completion of this offering in exchange for approximately $10.3 million of the DST interests held by investors, which such number of Series U2 OP units is equal to approximately $10.3 million divided by 120% of the initial public offering price of our common shares in this offering (based on the midpoint of the price range set forth on the cover page of this prospectus).

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DILUTION

If you invest in our common shares, you will experience dilution to the extent of the difference between the public offering price per share you pay in this offering and the pro forma net tangible book value per common share immediately after this offering.

Our pro forma net tangible book value as of September 30, 2021 was approximately $      , or approximately $      per common share. Pro forma net tangible book value consists of our pro forma total assets less pro forma deferred rent receivable and pro forma origination value of acquired in-place leases, acquired favorable leases, pro forma prepaid expenses, and pro forma deferred tax assets minus total liabilities excluding our pro forma intangible lease liabilities, pro forma deferred financing costs, pro forma unamortized debt premiums, and pro forma noncontrolling interests of $      million before the offering and $      million after the offering. The pro forma net tangible book value and pro forma net tangible book value per common share provided in the immediately preceding sentence were calculated after giving effect to the Pro Forma Transactions other than the consummation of this offering.

After giving effect to the Pro Forma Transactions, including the sale of           common shares in this offering at an assumed initial public offering price of $      per share (the midpoint of the initial public offering price range set forth on the cover page of this prospectus), and after deducting underwriting discounts and commissions and our other estimated offering expenses, our pro forma net tangible book value as of September 30, 2021 would have been approximately $      million, or approximately $      per share. This represents an immediate increase in net tangible book value of approximately $      per share to existing shareholders and an immediate dilution of approximately $      per share to new investors. The following table illustrates this calculation on a per share basis:

Assumed public offering price per share	$
Pro forma net tangible book value per share as of September 30, 2021	​	​
Increase in pro forma net tangible book value per share attributable to the offering	​	​
Pro forma net tangible book value per share immediately after this offering	​	​
Dilution in pro forma net tangible book value per share to new investors	$	​

The following table summarizes, on an adjusted pro forma basis as of September 30, 2021, after giving effect to the Pro Forma Transactions, including the consummation of this offering, the total number of common shares purchased from us and the total consideration and average price per share paid by existing shareholders and by investors in this offering.

​	Shares Purchased from Us			Total Consideration to Us					Average Price per Share
	Number	Percent		Amount			Percent
Existing shareholders		​	%	​	$		​	%	​	$
Investors in this offering(1)	​	​	%	​	​	​	​	%	​	$	​
Total	​	​	%	​	$		​	%	​	​	​

(1)

The investors in this offering will contribute $      million to us and, assuming that our existing shareholders exercise all the outstanding options, warrants LTIP Units, OP units and Series UI OP units, they will contribute $      .

The preceding paragraph and above table, and the bullet points immediately below, do not give effect to any shares that our existing shareholders may purchase in this offering. If the underwriters exercise their option to purchase additional shares in full, the following will occur:

•

the as adjusted percentage of our common shares held by existing shareholders will decrease to approximately    % of the total as adjusted number of common shares outstanding as of September 30, 2021; and

•

the as adjusted number of our common shares held by new investors will increase to      , or approximately    % of the total as adjusted number of common shares outstanding as of September 30, 2021.

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The tables and calculations above are based on         common shares outstanding as of September 30, 2021, after giving effect to the Pro Forma Transactions, and exclude: (1) 11,747 common shares issuable upon exercise of outstanding options a weighted average exercise price of $37.94 per share; (2) 474,851 common shares issuable upon exercise of outstanding warrants with exercise prices ranging from $20.00 to $31.16 per share, with a weighted average exercise price of $23.31 per share; (3) 10,743 warrants for common shares issuable upon exercise of outstanding options held by our trustees with a weighted average price of $186.18 per share; (4) 895,500 common shares issuable upon exchange of 895,500 LTIP Units; (5) 2,104,500 common shares available for future grants under the 2021 Equity Incentive Plan; (6) 65,636 common shares that may be issued in exchange for 65,636 OP units; (7) 181,116 common shares that may be issued in exchange for 181,116 Series U1 OP units; and (8)           common shares that may be issued in exchange for           Series U2 OP units that will be issued upon the completion of this offering in exchange for approximately $10.3 million of the DST interests held by investors, which such number of Series U2 OP units is equal to approximately $10.3 million divided by 120% of the initial public offering price of our common shares in this offering (based on the midpoint of the price range set forth on the cover page of this prospectus).

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UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma consolidated balance sheet as of September 30, 2021 and the unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020 reflect our pro forma financial condition and results of operations after giving effect to: (1) the Fourth Quarter 2021 Completed Acquisitions (as defined below) and the 2021 Pending Acquisitions; (2) the 2021 Equity Transactions (as defined below); and (3) the Offering Related Transactions (as defined below). The unaudited pro forma consolidated statement of operations for the year ended December 31, 2020 also gives pro forma effect to the 2020 Acquisitions (as defined below) and the Pre-Fourth Quarter 2021 Completed Acquisitions (as defined below). The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2021 also gives pro forma effect to the Pre-Fourth Quarter 2021 Completed Acquisitions. We refer to the transactions described in the immediately preceding three sentences collectively as the “Pro Forma Transactions.” The unaudited pro forma consolidated financial statements are derived from our consolidated financial statements and are presented as if this offering, along with the other applicable Pro Forma Transactions, were completed as of September 30, 2021 for purposes of the unaudited pro forma consolidated balance sheet as of September 30, 2021 and as of January 1, 2020 for purposes of the unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020.

Our unaudited pro forma consolidated financial statements are presented for informational purposes only and are based on information and assumptions that we consider appropriate and reasonable. These unaudited pro forma consolidated financial statements do not purport to (1) represent our financial position had this offering and the other Pro Forma Transactions occurred on September 30, 2021, (2) represent the results of our operations for the nine months ended September 30, 2021 or the year ended December 31, 2020 had this offering and the other Pro Forma Transactions occurred on January 1, 2020 or (3) project or forecast our financial position or results of operations as of any future date or for any future period, as applicable.

You should read the information below along with all other financial information and analysis presented in this prospectus, including the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our historical consolidated financial statements and related notes included elsewhere in this prospectus.

2020 Transactions

During 2020, we completed the acquisition of eight properties (collectively, the “2020 Acquisitions”). These eight properties were acquired for an aggregate purchase price of $82.1 million and contributed $1.6 million of our rental revenue for the period from the respective acquisition dates through December 31, 2020.

On October 30, 2020, we entered into our $100,000,000 Mezzanine Loan secured by a pledge of our equity interest in the Operating Partnership. The loan requires (1) monthly interest only payments at 7% per annum plus (2) interest capitalized quarterly as additional principal at a rate of 4.5% per annum. The Mezzanine Loan provides that upon repayment a minimum of $23,000,000 in aggregate interest through the earlier of the loan’s full satisfaction or maturity on October 30, 2025 is payable, However, from and after the date of the initial public offering, the additional amount payable shall be equal to the lesser of (1) the yield maintenance amount and (2) if prior to the second anniversary of the initial public offering date, 2% of the prepaid amount, and if at any time time thereafter, 1% of the prepaid amount.

2021 Acquisitions

During the nine months ended September 30, 2021, we completed the acquisition of 42 properties (the “Pre-Fourth Quarter 2021 Completed Acquisitions”). The Pre-Fourth Quarter 2021 Completed Acquisitions were acquired for an aggregate purchase price of $381.4 million.

During the quarter ending December 31, 2021, we completed the acquisition of 19 properties. These properties were acquired for an aggregate purchase price of $66.3 million (the “Fourth Quarter 2021 Completed Acquisitions”).

As of November 15, 2021, we have entered into purchase agreements to acquire single tenant, net lease real estate properties for approximately $28.6 million. Consummation of each of the acquisitions under a purchase

67

agreement or letter of intent, which we refer to as the 2021 Pending Acquisitions, are subject to customary closing conditions, including completion of our due diligence, and no assurance can be given that we will complete any or all of these acquisitions on the terms described above or at all.

2021 Equity Transactions

2021 Series A-2 Preferred Share Issuances

On May 4, 2021 and August 11, 2021, we issued an aggregate of 7,500,000 convertible Series A-2 preferred shares, $0.001 par value per share, resulting in $147.8 million in gross proceeds at a 1.5% discount to the $20.00 per share initial stated value. The Series A-2 preferred shares rank senior to our common shares and non-participating common shares with respect to payment of dividends and distributions upon our liquidation.

The Series A-2 preferred shares automatically convert upon a qualifying listing event into a number of common shares based on our option of either (1) the Series A-2 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by 90% of the per common share listing event price or (2) the Series A-2 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by the undiscounted price per common share at the listing event plus a cash fee to holders of Series A-2 preferred shares at 10% of the Series A-2 preferred shares’ stated value. In the event that the holders of Series A-2 preferred shares would own 25% or more of our outstanding shares of beneficial interest following a qualifying listing event, the holders of the Series A-2 preferred shares may elect to cause the company to either (1) redeem from the holders of Series A-2 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-2 preferred shares so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following the qualifying listing event or (2) permit the holders of Series A-2 preferred shares to include in the qualifying listing event a number of common shares (into which the Series A-2 preferred shares convert) for sale so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following the qualifying listing event; provided, however, that if the holders of the Series A-2 preferred shares elect pursuant to clause (2) above to cause the company to permit the holders of the Series A-2 preferred shares to include in the qualifying listing event any common shares for sale, then the company, in its sole discretion, will have the right to redeem from the holders of the Series A-2 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-2 preferred shares so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following a qualifying listing event. The Series A-2 preferred shares redeemed in this event will be redeemed in cash at a per share price equal to the greater of (a) the amount such holders of Series A-2 preferred shares would have received as if such Series A-2 preferred shares were automatically converted in connection with a qualifying listing event (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-2 preferred shares or, in certain cases, an independent expert) or (b) A-2 Trust Redemption Price (as defined below).

We have an option to redeem all of the Series A-2 preferred shares with a payment providing the holders with an amount equal to the greater of (1) a 15% internal rate of return on such holder’s Series A-2 preferred shares and (2) the amount the holders of the Series A-2 preferred shares would have received as if such Series A-2 preferred shares were converted into a number of common shares based on the stated value of $20.00 per share, adjusted for additional issuances of common shares and instruments convertible into common shares of the company, plus accretion dividends and unpaid dividends (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-2 preferred shares or, in certain cases, an independent expert) (the “Series A-2 Trust Redemption Price” and such option to redeem, the “Series A-2 preferred share call option”). At any time, including upon the company’s exercise of the Series A-2 preferred share call option, (1) any holder of Series A-2 preferred shares may elect to convert all or any portion of such holder’s Series A-2 preferred shares into common shares and (2) the majority of holders of Series A-2 preferred shares may elect to convert all of the Series A-2 preferred shares into common shares of the company.

Holders of Series A-2 preferred shares are entitled to the number of votes on an as converted basis as to any matters together as a single class with holders of common shares. Dividends on Series A-2 preferred shares are

68

cumulative at 11.5% per annum (7% cash, 4.5% accretion dividend added to the Series A-2 preferred shares’ stated value) on the stated value per share through April 19, 2022, 12% (7% cash, 5% accretion dividend) commencing on April 20, 2022, 13% (8% cash, 5% accretion dividend) commencing on November 20, 2022 and 15% (9% cash, 6% accretion dividend) commencing on November 20, 2023.

The Series A-2 preferred shares provide for contingent conversion and redemption features that may be exercisable by either us or the holder and may result in conversion into a variable number of common shares upon a qualified listing event. The Series A-2 preferred shares are presented as temporary equity in an account presented between liabilities and equity on the consolidated balance sheets because they contain redemption and conversion features outside of our control. The contingently redeemable preferred shares are reduced by the initial fair value of the compound embedded derivative and unaccreted offering costs and issuance discount.

2021 Investment Management Program

During the nine months ended September 30, 2021, we issued beneficial interests in our DSTs (representing 39.5% to 95.0% of the equity interests in such DSTs) for gross proceeds of $116 million. Subsequent to September 30, 2021, we issued beneficial interests in one DST for gross proceeds of $15.2 million.

LTIP Units

On April 29, 2021, our board of trustees adopted a resolution to authorize and approve the 2021 Equity Incentive Plan and reserved 3,000,000 shares of previously authorized but unissued common shares to be available to the 2021 Equity Incentive Plan. Our board of trustees granted to our executives and employees 895,500 LTIP Units as profits interests in the Operating Partnership that provide for the following: two-thirds vested upon granting; one-sixth vests over two years from the grant date; and one-sixth vests over three years from grant date.

We refer to the foregoing transactions as the “2021 Equity Transactions.”

Offering Related Transactions

Offering Proceeds and Use of Proceeds

We estimate that the net proceeds to us from this offering will be approximately $      million, or approximately $      million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $      per share (the midpoint of the price range set forth on the cover page of this prospectus). We intend to use a portion of the net proceeds from this offering to (1) consummate the 2021 Pending Acquisitions and (2) repay amounts outstanding under the M&T Credit Facility and the Mezzanine Loan, including a prepayment fee of $ . The remaining net proceeds will be used for general corporate purposes, including potential future acquisitions.

Preferred Share Conversion

Upon the listing of our common shares on the NYSE, the Series A-1 and A-2 preferred shares (      preferred shares in aggregate, convertible into           common shares) will automatically convert into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus), and all accrued and unpaid dividends thereon to and including the date of such conversion will be paid in cash.

Non-participating Common Share Conversion

Upon the listing of our common shares on the NYSE, all 200,015 non-participating common shares will automatically convert into common shares at a rate of one common share for every one Non-participating common share.

We refer to the foregoing transactions as the “Offering Related Transactions.”

69

Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2021

(In thousands, except share and per share data)

Historical(A)

2021 Acquisitions(B)

2021 Equity Transactions(C)

Offering Related Transactions(D)(E)

Pro Forma

Assets:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Real estate, net

​

$

686,217

​

$

81,381

​

$

​

$

​

$

Cash and cash equivalents

​

​

32,795

​

​

(41,734)

​

​

15,188

​

​

​

Accounts receivable and other assets

​

​

17,638

​

​

—

​

​

​

​

​

​

​

​

Receivable from affiliate

​

​

1

​

​

—

​

​

​

​

​

​

​

​

Deferred rent receivable

​

​

7,967

​

​

—

​

​

​

​

​

​

​

​

Origination value of acquired in-place leases, net

​

​

77,596

​

​

13,287

​

​

​

​

​

​

​

​

Acquired favorable leases, net

​

​

14,253

​

​

712

​

​

​

​

​

​

​

​

Real estate and other assets classified as held for sale

​

​

3,317

​

​

—

​

​

​

​

​

​

​

​

Total Assets

​

$

839,784

​

$

53,646

​

$

15,188

​

$

​

$

​

Liabilities and Equity:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Notes payable, net

​

$

280,288

​

$

18,171

​

$

—

​

$

​

$

​

Lines of credit, net

​

​

42,807

​

​

35,000

​

​

​

​

​

​

​

​

Mezzanine note payable, net

​

​

86,412

​

​

—

​

​

​

​

​

​

​

​

Accounts payable, accrued expenses and other liabilities

​

​

31,508

​

​

—

​

​

​

​

​

​

​

​

Acquired unfavorable leases, net

​

​

5,522

​

​

475

​

​

​

​

​

​

​

​

Total Liabilities

​

​

446,537

​

​

53,646

​

​

​

​

​

​

​

​

Commitments and Contingencies

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Temporary Equity:

​

​

​

​

​

Contingently redeemable Series A-1 preferred shares, $0.001 par value, 10,000,000 shares designated, 2,550,730 and no shares issued and outstanding (convertible to common shares) at September 30, 2021 and on a pro forma basis, respectively.

​

​

50,581

​

​

—

​

​

​

​

​

​

(F)

Contingently redeemable Series A-2 preferred shares, $0.001 par value, 15,000,000 shares designated, 7,500,000 shares and no shares issued and outstanding (convertible to common shares) at September 30, 2021 and on a pro forma basis.

​

​

139,994

​

​

—

​

​

​

​

​

​

(F)

Contingently redeemable Series U1 OP units, $4,323,239 and $4,147,805 liquidation preference; 181,116 units issued and outstanding (convertible to 181,116 common shares) at September 30, 2021 and on a pro forma basis.

​

​

4,358

​

​

—

​

​

​

​

​

​

(F)

Total Temporary Equity

​

​

194,933

​

​

—

​

​

​

​

​

​

​

​

Permanent Equity:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Shareholders’ Equity:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Common shares, $0.001 par value per share, 504,671,451 shares authorized, 223,203 shares designated, 6,533,284 and      shares issued and outstanding at September 30, 2021 and on a pro forma basis, respectively

​

​

6

​

​

—

​

​

​

​

​

​

(F)

70

(In thousands, except share and per share data)

Historical(A)

2021 Acquisitions(B)

2021 Equity Transactions(C)

Offering Related Transactions(D)(E)

Pro Forma

Non-participating common shares, $.001 par value per share, 223,203 shares designated, 200,015 and no shares issued and outstanding at September 30, 2021 and on a pro forma basis, respectively.

​

​

—

​

​

—

​

​

​

​

​

​

​

(F)

Additional paid-in capital

​

​

137,544

​

​

—

​

​

​

​

​

​

​

​

​

Accumulated other comprehensive loss

​

​

(1,004)

​

​

—

​

​

​

​

​

​

​

​

​

Cumulative dividends in excess of net income

​

​

(108,654)

​

​

—

​

​

​

​

​

​

​

​

​

Total shareholders’ equity

​

​

27,892

​

​

—

​

​

​

​

​

​

​

​

​

Noncontrolling interests

​

​

170,422

​

​

—

​

​

15,188

​

​

​

​

​

​

Total equity

​

​

198,314

​

​

—

​

​

​

​

​

​

​

​

​

Total Liabilities, Contingently Redeemable Interests and Equity

​

$

839,784

​

$

53,646

​

$

15,188

​

$

​

$

​

(A)

Represents our historical consolidated balance sheet as of September 30, 2021.

(B)

Represents the Fourth Quarter 2021 Completed Acquisitions and the 2021 Pending Acquisitions. The acquisitions reflect the allocated purchase price of acquired or to be acquired properties accounted for as asset acquisitions to tangible and identifiable intangible assets or liabilities based on their relative fair values. This preliminary purchase price allocation has been used to prepare pro forma adjustments in the unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations. The final purchase price allocation will be determined when we have completed our valuations and calculations. The final allocation could differ from the preliminary allocation used in the pro forma adjustments.

On November 10, 2021, we entered into a mortgage note payable for an aggregate of $18.2 million in loan proceeds. The note requires monthly interest-only payments at a rate of 2.95% for the first five years and monthly principal and interest thereafter based on a thirty year amortization period until maturity in 2028. We drew a net $25 million on our M&T Credit Facility and anticipate an additional draw down for $10 million. The adjustment assumes the completion of these borrowings and the related acquisitions had occurred on September 30, 2021 for the purposes of the unaudited pro forma consolidated balance sheet.

The Fourth Quarter 2021 Completed Acquisitions and 2021 Pending Acquisitions that were not purchased with loans were purchased or are anticipated to be purchased via proceeds from the equity transactions described in Note C or from cash on hand.

In 2021, the company acquired two properties which were under common control from one seller. The first acquisition was of a newly constructed property purchased on March 12, 2021 (the “GAF Property”) and the second acquisition was of a one-story industrial building and an adjacent parking lot purchased on May 18, 2021 (the “Amazon Property”). The seller is not affiliated with us. The total consideration, inclusive of debt, to this seller was approximately $107 million. These acquisitions of the properties under common control exceed the 20% “significance” threshold under Rule 3-14 of Regulation S-X. The statements of revenues and certain operating expenses for the Amazon Property are included herein. The respective statements for the GAF Property are not included because the GAF Property is newly constructed and had a leasing history less than three months prior to the acquisition by us. Pursuant to Section 2330.10 of the SEC’s Financial Reporting Manual, the statements are not required for acquired properties that have less than three months of leasing history.

(C)

Represents the $15.2 million of cash contributions received from DST syndications through November 15, 2021 for syndications of our DST. The adjustment assumes the completion of these transactions had occurred on September 30, 2021 for the purposes of the unaudited pro forma consolidated balance sheet.

(D)

Reflects aggregate gross proceeds from this offering of $       million (based on the midpoint of the price range set forth on the cover page of this prospectus), which will be reduced by the underwriting discounts and commissions and other offering expenses payable by us, resulting in net proceeds to us of approximately $      million. These costs will be charged against the gross offering proceeds upon completion of this offering. A summary is as follows:

Gross Proceeds from this offering	$
Less: Underwriting discounts and commissions	​	​
Less: Other offering expenses	​	​
Net proceeds	$	​

(E)

Reflects the use of a portion of the net proceeds from this offering to repay amounts outstanding under the M&T Credit Facility and Mezzanine Loan , including a prepayment fee of $ .

71

​	Historical			Use of a Portion of the Net Proceeds from This Offering			Pro Forma
M&T Credit Facility	​	$	45,000	​	$		​	$
Deferred financing costs(1)	​	​	(2,193)	​	​	​	​	​	​
Mezzanine Loan	​	​	88,639	​	​	​	​	​	​
Deferred financing costs	​	​	(2,227)	​	​	​	​	​	​
Total	​	$	129,219	​	$		​	$	​

(1)

Net deferred financing costs of the M&T Credit Facility are reclassified to accounts receivable and other assets to the extent the unamortized deferred financing cost exceed the M&T Credit Facility balance.

(F)

The following is a reconciliation of the historical number of preferred shares, common shares and non-participating common shares to the pro forma presentation.

​	Historical		Non-Participating Common Shares Converted into Common Shares in Connection with this Offering		Preferred Shares Converted into Common Shares in Connection with this Offering		Common Shares Issued in Connection with this Offering		Pro Forma
Authorized	​	​	​	​	​	​	​	​	​	​
Preferred shares	​	87,547,309	​	—	​	—	​	—	​	​
Common shares	​	504,671,451	​	—	​	—	​	—	​	​
Issued and Outstanding	​	​	​	​	​	​	​	​	​	​
Preferred shares–temporary equity	​	10,050,730	​	—	​	(1)	​	—	​	—
Preferred shares–permanent equity	​	—	​	—	​	—	​	—	​	—
Common shares	​	6,533,284	​	200,015	​	(1)	​	​	​	​
Non-participating common shares	​	200,015	​	(200,015)	​	—	​	—	​	—

(1)

Reflects the effects of the preferred shares, including the compound embedded derivative, converting into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus).

72

Unaudited Pro Forma Consolidated Statement of Operations For the Nine Months Ended September 30, 2021

(In thousands, except share and per share data)

Historical(AA)

2021 Acquisitions(BB)

2021 Equity Transactions

Offering Related Transactions

Pro Forma

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Revenue

​

$

38,967

​

$

11,833

​

$

​

$

—

​

$

Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property Operating

​

​

5,458

​

​

1,743

​

​

​

​

​

​

​

​

​

General and administrative

​

​

11,729

​

​

—

​

​

425(CC)

​

​

​

​

​

​

Professional fees

​

​

2,120

​

​

—

​

​

​

​

​

​

​

​

​

Depreciation and amortization

​

​

15,725

​

​

9,198

​

​

​

​

​

​

​

​

​

Interest

​

​

17,878

​

​

1,852

​

​

​

​

(DD)

​

​

​

Acquisition costs

​

​

41

​

​

​

​

​

​

​

​

​

​

​

​

Provision for impairment

​

​

335

​

​

​

​

​

​

​

​

​

​

​

​

Total Expenses

​

​

53,286

​

​

12,793

​

​

425

​

​

—

​

​

​

Change in fair value of compound embedded derivative and warrant liability

​

​

(416)

​

​

—

​

​

—

​

​

—

​

​

​

Loss on extinguishment of debt

​

​

(310)

​

​

—

​

​

​

​

​

​

​

​

​

Gain on sale of real estate

​

​

2,431

​

​

—

​

​

​

​

​

​

​

​

​

Income tax benefit

​

​

(1,996)

​

​

—

​

​

​

​

​

​

​

​

​

Net (loss) / pro forma net income

​

​

(14,610)

​

​

(960)

​

​

(425)

​

​

—

​

​

​

Net loss (income) attributable to noncontrolling interests in consolidated subsidiaries

​

​

6,280

​

​

547(EE)

​

​

(42)(EE)

​

(EE)

​

​

​

Net (loss) / pro forma net income attributable to Four Springs Capital Trust

​

​

(8,330)

​

​

(413)

​

​

(467)

​

​

—

​

​

​

Preferred share and Series U1 OP unit accretion

​

​

(2,590)

​

​

—

​

​

(6,930)(CC)

​

(FF)

​

​

​

Preferred share dividends and Series U1 distributions

​

​

(10,090)

​

​

—

​

​

(8,206)(CC)

​

(FF)

​

​

​

Net (loss) / pro forma net income attributable to common shareholders

​

$

(21,010)

​

​

(413)

​

$

(15,603)

​

$

—

​

$

Loss Per Common Share−Basic and Diluted:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net (loss) / pro forma net income per common share

​

$

(3.24)

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average shares

​

​

6,533,284

​

​

​

​

​

​

​

(FF)

​

​

​

(AA)

Represents our historical consolidated statement of operations for the nine months ended September 30, 2021.

(BB)

Represents pro forma adjustments for the acquisitions defined as the Pre-Fourth Quarter 2021 Completed Acquisitions, Fourth Quarter 2021 Completed Acquisitions and 2021 Pending Acquisitions as if they occurred on January 1, 2020.

Depreciation and amortization expense has been calculated on a straight-line basis based on the estimated useful lives of 40 years for buildings, 12 years for site improvements and the shorter of the remaining lease term or useful life for tenant improvements and, with respect to acquired in-place leases, the remaining terms of the respective leases.

Interest expense has been calculated based on debt entered into for 2021 Pending Acquisitions with rates ranging from 2.86% to 2.95% as well as debt entered into for Pre-Fourth Quarter 2021 Completed Acquisitions as if they occurred on January 1, 2020. A change in the interest rate by 1/8% (12.5 basis points) is not expected to be material.

73

The following summarizes the pro forma adjustments by acquisition:

​	Rental Revenue			Property Expenses			Depreciation and Amortization Expense			Interest
Pre-Fourth Quarter 2021 Completed Acquisitions	​	$	7,553	​	$	1,682	​	$	6,566	​	$	1,450
Fourth Quarter 2021 Completed Acquisitions	​	​	2,731	​	​	61	​	​	2,017	​	​	402
2021 Pending Acquisitions	​	​	1,549	​	​	—	​	​	615	​	​	—
​	​	$	11,833	​	$	1,743	​	$	9,198	​	$	1,852

(CC)

Represents pro forma adjustments for the preferred share dividends and accretion for the Series A-2 preferred shares for the nine months ended September 30, 2021 as if the Series A-2 transaction occurred on January 1, 2020.

Also represents pro forma adjustments for the LTIP amortization as if the transaction occurred on January 1, 2020.

(DD)

A portion of the net proceeds from this offering will be used to repay amounts outstanding under the M&T Credit Facility and Mezzanine Loan. Interest expense includes the effect of amortization of deferred financing costs, which are recorded as an increase to interest expense, and the M&T Credit Facility unused fees that are increased as a result of higher unused balance on the credit facility.

Interest on M&T Credit Facility	$
Interest on Mezzanine Loan	​	​
Amortization expense on M&T Credit Facility	​	​
Amortization expense on Mezzanine Loan	​	​
Increase in unused fee	​	​
​	$

(EE)

Reflects adjustments to net income attributable to noncontrolling interests as a result of the following pro forma adjustments:

2021 Acquisitions, note(BB)	$	547
Issuances of interests in our DSTs after September 30, 2021	​	(42)
Decrease in interest expense	​	​
​	$	​

(FF)

All of our outstanding preferred shares convert into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus). Approximately $10.3 million of the DST interests held by investors will be exchanged, upon completion of this offering, for an aggregate number of Series U2 OP units equal to such amount divided by 120% of the initial public offering price of our common shares in this offering (or         Series U2 OP units, based on the midpoint of the price range set forth on the cover page of this prospectus).

Pro forma basic earnings per common share is computed by dividing pro forma net income attributable to common shareholders by the pro forma number of outstanding common shares. Diluted earnings per common share reflects the potential dilution of the conversion of obligations and the assumed exercises of warrants, LTIP Units and share option awards. Presented below is earnings per share (“EPS”) calculated reflecting common shares to be sold in this offering. The number of common shares issued in this offering used to consummate the 2021 Pending Acquisitions and to repay the M&T Credit Facility and Mezzanine Loan and number of common shares to be sold in this offering reflected below is calculated based on the midpoint price of the common shares in this offering net of underwriting discounts and commissions and other offering costs.

74

​	Pro forma based on shares issued to consummate the 2021 Acquisitions and repay selected debt			Pro forma supplemental: based on shares to be sold in this offering
Numerator:	​	​	​	​	​	​
Pro forma net income	​	$		​	$
Less: pro forma net income attributable to noncontrolling interests in consolidated subsidiaries	​	​	​	​	​	​
Pro forma net income attributable to common shareholders for basic earnings per common share	​	​	​	​	​	​
Add: pro forma net income attributable to exchangeable OP units	​	​	​	​	​	​
Pro forma net income attributable to common shareholders for diluted earnings per common share	​	$		​	$	​
Denominator:	​	​	​	​	​	​
Common shares outstanding at September 30, 2021 preferred shares converting to     common shares upon the listing of our common shares on the NYSE in connection with this offering	​	​	​	​	​	​
Common shares issued in this offering used to consummate the 2021 Pending Acquisitions and to repay the M&T Credit Facility and Mezzanine Loan	​	​	​	​	​	​
Total common shares to be sold in this offering	​	​		​	​
Pro forma denominator for basic earnings per common share	​	​	​	​	​	​
Effect of potentially dilutive securities:	​	​	​	​	​	​
common share options exercisable for     common shares	​	​	​	​	​	​
In-the-money warrants under the treasury method	​	​	​	​	​	​
Exchangeable OP units	​	​	​	​	​	​
Pro forma denominator for diluted earnings per common share	​	​	​	​	​	​
Pro forma basic earnings per common share	​	$		​	$
Pro forma diluted earnings per common share	​	$		​	$	​

75

Unaudited Pro Forma Consolidated Statement of Operations For the Year Ended December 31, 2020

(In thousands, except share and per share data)

Historical(AA)

2020 Acquisitions(BB)

2021 Acquisitions(CC)

2021 Equity Transactions

Offering Related Proceeds

Pro Forma

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Revenue

​

$

35,737

​

$

4,019

​

$

29,153

​

$

—

​

$

—

​

$

Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property operating

​

​

4,705

​

​

202

​

​

5,022

​

​

​

​

​

​

​

​

​

General and administrative

​

​

5,151

​

​

—

​

​

—

​

​

7,102(GG)

​

​

​

​

​

​

Professional fees

​

​

902

​

​

—

​

​

—

​

​

—

​

​

​

​

​

​

Depreciation and amortization

​

​

13,562

​

​

2,230

​

​

17,131

​

​

​

​

​

​

​

​

​

Interest

​

​

12,597

​

​

9,377

​

​

4,271

​

​

​

​

(DD)

​

​

​

Acquisition costs

​

​

236

​

​

—

​

​

​

​

​

​

​

​

​

​

​

​

Provision for impairment

​

​

535

​

​

—

​

​

​

​

​

​

​

​

​

​

​

​

Total Expenses

​

​

37,688

​

​

11,809

​

​

26,424

​

​

7,102

​

​

—

​

​

​

Change in fair value of compound embedded derivative and warrant liability

​

​

355

​

​

—

​

​

—

​

​

—

​

​

—

​

​

​

Gain on sale of real estate

​

​

409

​

​

—

​

​

—

​

​

​

​

​

​

​

​

​

Provision for Income taxes

​

​

(29)

​

​

—

​

​

—

​

​

​

​

​

​

​

​

​

Net (loss) / pro forma net income

​

​

(1,216)

​

​

(7,790)

​

​

2,729

​

​

(7,102)

​

​

—

​

​

​

Net loss (income) attributable to noncontrolling interests in consolidated subsidiaries

​

​

76

​

​

(7)(EE)

​

​

2,354(EE)

​

​

143(EE)

​

(EE)

​

​

​

Net (loss) / pro forma net income attributable to Four Springs Capital Trust

​

​

(1,140)

​

​

(7,797)

​

​

5,083

​

​

(6,959)

​

​

—

​

​

​

Preferred share and Series U1 OP unit accretion

​

​

(2,790)

​

​

—

​

​

—

​

​

(4,174)(GG)

​

(FF)

​

​

​

Preferred share dividends and Series U1 distributions

​

​

(19,705)

​

​

—

​

​

—

​

​

(17,610)(GG)

​

(FF)

​

​

​

Net (loss) / pro forma net income attributable to common shareholders

​

$

(23,635)

​

$

(7,797)

​

​

5,083

​

$

(28,743)

​

$

—

​

$

Loss Per Common Share−Basic and Diluted:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net (loss) / pro forma net income per common share

​

$

(8.58)

​

​

​

​

​

​

​

​

​

​

​

​

​

$

Weighted average shares

​

​

2,755,280

​

​

​

​

​

​

​

​

​

​

(FF)

​

​

​

(AA)

Represents our historical consolidated statement of operations for the year ended December 31, 2020.

(BB)

Represents pro forma adjustments for the 2020 Acquisitions as if they occurred on January 1, 2020. The pro forma adjustments to rental revenue, property expenses, interest and depreciation and amortization expense include only the portion of the period prior to the closing of each of the 2020 Acquisitions and the acquisition of properties by newly formed DSTs of the company acquired from wholly-owned subsidiaries of the Operating Partnership. Rental revenue includes the effects of straight-line rent calculated based on the amount of base rents contractually due over the initial term of the lease and amortization of acquired favorable and unfavorable leases which are recorded as an increase to rental revenue over the initial term of the lease.

Depreciation and amortization expense has been calculated on a straight-line basis based on the estimated useful lives of 40 years for buildings, 12 years for site improvements and the shorter of the remaining lease term or useful life for tenant improvements and, with respect to acquired in-place leases, the remaining terms of the respective leases. The following summarizes the pro forma adjustments by acquisition:

76

​

Rental Revenue

Property Expenses

Depreciation and Amortization Expense

Interest

Ferguson Enterprises, Cincinnati, OH(2)

​

$

51

​

$

8

​

$

23

​

$

11

BioLife, Tucson, AZ(1)

​

​

343

​

​

—

​

​

130

​

​

—

Columbia Gas, Athens, OH(1)

​

​

205

​

​

—

​

​

125

​

​

—

West Tennessee Health, Jackson, TN(1)

​

​

251

​

​

—

​

​

118

​

​

—

Fresenius, Brownsville, TX(2)

​

​

195

​

​

17

​

​

74

​

​

55

Amazon, Grand Rapids, MI(2)

​

​

2,281

​

​

166

​

​

1,238

​

​

676

Melitta, Clearwater, FL(2)

​

​

693

​

​

11

​

​

522

​

​

202

​

​

$

4,019

​

$

202

​

$

2,230

​

$

944

(1)

These properties were acquired with borrowings under the M&T Credit Facility.

(2)

These properties obtained separate mortgages secured by each property in aggregate of $33.9 million, with various interest rates. A change in the interest rates by 1/8% (12.5 basis points) is not expected to be material. The remaining interest of $8.4 million relates to the Mezzanine Loan interest as if the transaction occurred on January 1, 2020.

(CC)

Represents pro forma adjustments for the Pre-Fourth Quarter 2021 Completed Acquisitions, Fourth Quarter 2021 Completed Acquisitions and 2021 Pending Acquisitions as if they occurred on January 1, 2020.

Depreciation and amortization expense has been calculated on a straight-line basis based on the estimated useful lives of 40 years for buildings, 12 years for site improvements and the shorter of the remaining lease term or useful life for tenant improvements and, with respect to acquired in-place leases, the remaining terms of the respective leases.Interest expense has been calculated based on debt entered into for Fourth Quarter 2021 Completed Acquisitions and 2021 Pending Acquisitions with rates ranging from 2.86% to 2.95% as well as debt entered into for Pre-Fourth Quarter 2021 Completed Acquisitions as if they occurred on January 1, 2020. A change in the interest rate by 1/8% (12.5 basis points) is not expected to be material.

The following summarizes the pro forma adjustments by acquisitions:

​	Rental Revenue			Property Expenses			Depreciation and Amortization Expense			Interest
Pre-Fourth Quarter 2021 Completed Acquisitions	​	$	23,446	​	$	4,941	​	$	13,518	​	$	3,735
Fourth Quarter 2021 Completed Acquisitions	​	​	3,641	​	​	81	​	​	2,776	​	​	536
2021 Pending Acquisitions	​	​	2,066	​	​	—	​	​	837	​	​	—
​	​	$	29,153	​	$	5,022	​	$	17,131	​	$	4,271

(DD)

A portion of the net proceeds from this offering will be used to repay amounts outstanding under the M&T Credit Facility and Mezzanine Loan. Interest expense includes the effect of amortization of deferred financing costs, which are recorded as an increase to interest expense, and M&T Credit Facility unused fees that are increased as a result of higher unused balance on the M&T Credit Facility.

Interest on M&T Credit Facility	$
Interest on Mezzanine Loan	​	​
Amortization expense on M&T Credit Facility	​	​
Amortization expense on Mezzanine Loan	​	​
Increase in unused fee	​	​
​	$

(EE)

Reflects adjustments to net income attributable to noncontrolling interests as a result of the following pro forma adjustments:

2020 Acquisitions	$	(7)
2021 Acquisitions, note (CC)	​	2,354
Issuances of interests in our DSTs from January 1, 2021 to September 30, 2021	​	143
Decrease in interest expense	​	​
​	$	​

(FF)

All of our outstanding preferred shares convert into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus). Approximately $10.3 million of the DST interests held by investors will be exchanged, upon completion of this offering, for an aggregate number of Series U2 OP units equal to such amount divided by 120% of the initial public offering price of our common shares in this offering (or         Series U2 OP units, based on the midpoint of the price range set forth on the cover page of this prospectus).

Pro forma basic earnings per common share is computed by dividing pro forma net income attributable to common shareholders by the pro forma number of outstanding common shares. Diluted earnings per common share reflects the potential dilution of the conversion of obligations and the assumed exercises of warrants, LTIP Units and share option awards. Presented below is EPS calculated reflecting common shares to be sold in this offering. The number of common shares issued in this offering used to consummate the 2021 Pending Acquisitions and to repay the M&T Credit Facility and Mezzanine Loan and number of common

77

shares to be sold in this offering reflected below is calculated based on the midpoint price of the common shares in this offering net of underwriting discounts and commissions and other offering costs.

(GG)

Represents pro forma adjustments for the preferred share dividends and accretion for the Series A-2 preferred shares for the year ended December 31, 2020 as if the Series A-2 transaction occurred on January 1, 2020.

Also represents pro forma adjustments for the LTIP amortization as if the transaction occurred on January 1, 2020.

​	Pro forma based on shares issued to consummate the 2021 Acquisitions and repay selected debt			Pro forma supplemental: based on shares to be sold in this offering
Numerator:	​	​	​	​	​	​
Pro forma net income	​	$		​	$
Less: pro forma net income attributable to noncontrolling interests in consolidated subsidiaries	​	​	​	​	​	​
Pro forma net income attributable to common shareholders for basic earnings per common share	​	​	​	​	​	​
Add: pro forma net income attributable to exchangeable OP units	​	​	​	​	​	​
Pro forma net income attributable to common shareholders for diluted earnings per common share	​	$		​	$
Denominator:	​	​	​	​	​	​
Common shares outstanding at December 31, 2020 preferred shares converting to     common shares upon the listing of our common shares on the NYSE in connection with this offering	​	​	​	​	​	​
Common shares issued in this offering used to consummate the 2021 Pending Acquisitions and to repay the M&T Credit Facility and Mezzanine Loan	​	​	​	​	​	​
Total common shares to be sold in this offering	​	​	​	​	​	​
Pro forma denominator for basic earnings per common share	​	​	​	​	​	​
Effect of potentially dilutive securities: common share options exercisable for        common shares	​	​	​	​	​	​
In-the-money warrants under the treasury method	​	​	​	​	​	​
Exchangeable OP units	​	​	​	​	​	​
Pro forma denominator for diluted earnings per common share	​	​	​	​	​	​
Pro forma basic earnings per common share	​	$		​	$
Pro forma diluted earnings per common share	​	$		​	$	​

78

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated historical financial and operating data as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 is derived from our audited consolidated financial statements included elsewhere in this prospectus. The following selected consolidated historical financial and operating data as of September 30, 2021 and for the nine months ended September 30, 2021 and 2020 is derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited financial statements were prepared on a basis consistent with our audited financial statements and include, in the opinion of management, all adjustments, consisting of normal recurring adjustments, that we consider necessary for a fair presentation of the financial position and results of operations for those periods. Operating results for the nine months ended September 30, 2021 are presented for illustrative purposes only and are not necessarily indicative of the results that may be expected for the entire year. The data is only a summary and should be read together with the consolidated financial statements, the related notes and other financial information included in this prospectus.

The unaudited consolidated pro forma financial data gives pro forma effect to the Pro Forma Transactions (as defined in “Unaudited Pro Forma Financial Information”). The Pro Forma Transactions assume that each transaction was completed as of January 1, 2020 for purposes of the unaudited pro forma condensed consolidated statements of operations data for the nine months ended September 30, 2021 and the year ended December 31, 2020 and as of September 30, 2021 for purposes of the unaudited pro forma condensed consolidated balance sheet data as of September 30, 2021. The following unaudited consolidated pro forma statement of operations and balance sheet data is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the date indicated, nor is it indicative of future operating results.

Because the information presented below is only a summary and does not provide all of the information contained in our historical consolidated financial statements, including the related notes, you should read it in conjunction with “Unaudited Pro Forma Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical consolidated financial statements, including the related notes, included elsewhere in this prospectus.

​

Nine Months Ended September 30, (unaudited)

Year Ended December 31,

​

Pro Forma

Historical

Pro Forma

Historical

(In thousands, except share and per share data)

2021

2021

2020

2021 (unaudited)

2020

2019

Statement of Operations Data:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total revenue

​

$

​

$

38,967

​

$

25,955

​

$

​

$

35,737

​

$

30,744

Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property operating

​

​

​

​

​

5,458

​

​

3,144

​

​

​

​

​

4,705

​

​

3,557

General and administrative

​

​

​

​

​

11,729

​

​

3,844

​

​

​

​

​

5,151

​

​

5,363

Professional fees

​

​

​

​

​

2,120

​

​

390

​

​

​

​

​

902

​

​

627

Depreciation and amortization

​

​

​

​

​

15,725

​

​

10,059

​

​

​

​

​

13,562

​

​

10,630

Interest

​

​

​

​

​

17,878

​

​

7,598

​

​

​

​

​

12,597

​

​

9,568

Acquisition costs

​

​

​

​

​

41

​

​

195

​

​

​

​

​

236

​

​

56

Provision for impairment

​

​

​

​

​

335

​

​

535

​

​

​

​

​

535

​

​

—

Total expenses

​

​

​

​

​

53,286

​

​

25,765

​

​

​

​

​

37,688

​

​

29,801

Change in fair value of compound embedded derivative and warrant liability

​

​

​

​

​

(416)

​

​

(209)

​

​

​

​

​

355

​

​

(98)

Loss on extinguishment of debt

​

​

​

​

​

(310)

​

​

—

​

​

​

​

​

​

​

​

​

Gain on sale of real estate

​

​

​

​

​

2,431

​

​

401

​

​

​

​

​

409

​

​

2,698

Income tax benefit (provision for income taxes)

​

​

​

​

​

(1,996)

​

​

(47)

​

​

​

​

​

(29)

​

​

(308)

Net income (loss)

​

​

​

​

​

(14,610)

​

​

335

​

​

​

​

​

(1,216)

​

​

3,235

79

​

Nine Months Ended September 30, (unaudited)

Year Ended December 31,

​

Pro Forma

Historical

Pro Forma

Historical

(In thousands, except share and per share data)

2021

2021

2020

2021 (unaudited)

2020

2019

Net (income) loss attributable to noncontrolling interests in consolidated subsidiaries

​

​

​

​

​

6,280

​

​

(758)

​

​

​

​

​

76

​

​

(949)

Net income (loss) attributable to Four Springs Capital Trust

​

​

​

​

​

(8,330)

​

​

(423)

​

​

​

​

​

(1,140)

​

​

2,286

Preferred share and Series U1 Accretion

​

​

​

​

(2,590)

​

(541)

​

​

​

​

(2,790)

​

(573)

Preferred share dividends and Series U1 Distributions

​

​

​

​

​

(10,090)

​

​

(14,618)

​

​

​

​

​

(19,705)

​

​

(19,247)

Net income (loss) attributable to common shareholders

​

$

​

$

(21,010)

​

$

(15,582)

​

$

​

$

(23,635)

​

$

(17,534)

Income (Loss) Per Common Share−Basic and Diluted:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income (loss) per common share

​

$

​

$

(3.24)

​

$

(8.37)

​

$

​

$

(8.58)

​

$

(9.42)

Weighted average shares

​

(1)

​

​

6,533,284

​

​

1,861,833

​

(1)

​

​

2,755,280

​

​

1,861,833

Balance Sheet Data (at period end):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Real estate investments, net(2)(3)

​

$

​

$

781,383

​

$

372,712

​

​

​

​

$

424,637

​

$

360,845

Cash and cash equivalents

​

​

​

​

​

32,795

​

​

9,053

​

​

​

​

​

10,324

​

​

11,361

Accounts receivable and other assets(4)

​

​

​

​

​

25,606

​

​

15,631

​

​

​

​

​

14,433

​

​

12,153

Total assets

​

$

​

​

$

839,784

​

$

397,396

​

$

​

​

$

449,394

​

$

384,359

Notes payable, net

​

$

​

​

$

280,288

​

$

133,864

​

$

​

​

$

161,591

​

$

125,726

Lines of credit, net

​

​

​

​

​

42,807

​

​

66,878

​

​

​

​

​

14,180

​

​

66,180

Mezzanine note payable, net

​

​

​

​

​

86,412

​

​

—

​

​

​

​

​

83,068

​

​

—

Accounts payable accrued expenses and other liabilities(5)(6)

​

​

​

​

​

37,030

​

​

14,535

​

​

​

​

​

14,054

​

​

10,305

Total liabilities

​

$

​

$

446,537

​

​

215,977

​

$

​

​

$

272,893

​

$

202,211

Total contingently redeemable interests

​

$

​

​

$

194,933

​

$

64,092

​

$

​

​

$

51,780

​

$

52,478

Total shareholders’ equity

​

​

​

​

​

27,892

​

​

64,085

​

​

​

​

​

54,089

​

​

72,541

Noncontrolling interests

​

​

​

​

​

170,422

​

​

53,942

​

​

​

​

​

70,632

​

​

57,129

Total equity

​

$

​

$

198,314

​

$

118,027

​

$

​

​

$

124,721

​

$

129,670

Other Data:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net cash provided by operating activities

​

​

​

​

$

13,790

​

$

11,246

​

​

​

​

$

13,186

​

$

11,708

Net cash used in investing activities

​

​

​

​

$

(367,516)

​

$

(22,320)

​

​

​

​

$

(77,368)

​

$

(74,723)

Net cash provided by (used in)financing activities

​

​

​

​

$

377,823

​

$

8,687

​

​

​

​

$

61,924

​

$

69,493

Cash NOI−consolidated(7)

​

$

​

​

$

31,827

​

$

21,827

​

$

​

​

$

29,716

​

$

26,137

Cash NOI−pro rata(7)

​

$

​

​

$

20,497

​

$

15,972

​

$

​

​

$

21,702

​

$

18,936

EBITDA−consolidated(8)

​

$

​

​

$

20,989

​

$

18,040

​

$

​

​

$

24,972

​

$

23,742

Adjusted EBITDA−consolidated(8)

​

$

​

​

$

26,008

​

$

17,282

​

$

​

​

$

23,920

​

$

22,802

Adjusted EBITDA−pro rata(8)

​

$

​

​

$

23,265

​

$

12,019

​

$

​

​

$

17,940

​

$

16,852

FFO attributable to Four Springs Capital Trust(9)

​

$

​

​

$

(823)

​

$

7,355

​

$

​

​

$

9,157

​

$

7,660

AFFO attributable to Four Springs Capital Trust(9)

​

$

​

​

$

10,299

​

$

7,932

​

$

​

​

$

10,766

​

$

8,197

Number of investment property locations (at period end)

​

​

​

​

​

136

​

​

99

​

​

​

​

​

101

​

​

96

% of properties subject to a lease (at period end) %

​

​

%

​

​

99.8%

​

​

100%

​

​

%

​

​

100%

​

​

100%

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(1)

Includes the           common shares to be issued in this offering, the net proceeds of which will be used to consummate the 2021 Pending Acquisitions and repay the M&T Credit Facility and the Mezzanine Loan, including a prepayment fee of $       . Including all           common shares to be issued in this offering as well as preferred shares that will convert into common shares upon completion of this offering, we will have           common shares outstanding.

(2)

Includes $3.3 million and $2.9 million of investments held for sale as of September 30, 2021 and 2020, respectively. Includes $0.7 million and no investments held for sale as of December 31, 2020 and 2019, respectively.

(3)

Includes origination value of acquired in-place leases, net and acquired favorable leases, net.

(4)

Includes receivable from affiliate and deferred rent receivable.

(5)

Includes liabilities related to real estate investments held for sale.

(6)

Includes acquired unfavorable leases, net.

(7)

Cash NOI—consolidated and Cash NOI—pro rata are non-GAAP financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—Cash Net Operating Income” for a discussion of why we consider Cash NOI to be important and how we use this measure, as well as for a reconciliation of net income (loss) to Cash NOI.

(8)

EBITDA—consolidated, Adjusted EBITDA—consolidated and Adjusted EBITDA—pro rata are non-GAAP financial measures. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA” for a discussion of why we consider EBITDA and Adjusted EBITDA to be important and how we use these measures, as well as for a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA.

(9)

FFO attributable to Four Springs Capital Trust and AFFO attributable to Four Springs Capital Trust refer to “funds from operations” and “adjusted funds from operations,” respectively. FFO and AFFO are non-GAAP financial measures that are often used by analysts and investors to compare the operating performance of REITs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures—FFO and AFFO” for a discussion of why we consider FFO and AFFO to be important and how we use these measures, as well as for a reconciliation of net income (loss) to FFO and AFFO.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with the sections captioned “Selected Consolidated Financial Data,” “Unaudited Pro Forma Financial Information” and “Our Business” sections in this prospectus, as well as our consolidated financial statements and related notes that are included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should read the sections captioned “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.

Overview

We are an internally managed REIT focused on acquiring, owning and actively managing a portfolio of single-tenant, income producing industrial, medical, service/necessity retail and office properties throughout the United States that are subject to long-term net leases. As of September 30, 2021, we wholly owned, or had ownership interests in, 136 properties located in 32 states that were 99.8% leased (based on our leasable square footage) to 65 tenants operating in 37 different industries. As of such date, approximately 39.4% of our ABR on an expected post-syndication pro rata share basis was from leases with tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major rating agency or have a senior unsecured obligation that has been so rated. Additionally, based on ABR on an expected post-syndication pro rata share basis, approximately 79.7% of our leases provide for fixed contractual increases in future base rent and an additional 8.5% of our leases provide for CPI-based contractual increases in future base rent. On a portfolio wide basis based on ABR on an expected post-syndication pro rata share basis, the average annual contractual base rent increase was approximately 1.5% (excluding CPI-based rent increases). As of September 30, 2021, our portfolio had a weighted average remaining lease term of 10.1 years (based on ABR on an expected post-syndication pro rata share basis).

We have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, commencing with our taxable year ended December 31, 2012.

Factors That May Influence Future Results of Operations

Business and Strategy

We intend to continue to grow our portfolio in a manner consistent with our diversification strategy and acquire single-tenant net lease properties throughout the United States with purchase prices generally ranging from $5 million to $25 million per property. We believe that the disciplined acquisition of these types of properties will allow us to further diversify our portfolio and produce attractive risk-adjusted returns. Future results of our operations may be impacted, either positively or negatively, by our ability to execute our acquisition strategy and deploy the portion of the net proceeds from this offering that we intend to use to acquire additional properties.

Rental Revenue

Our revenues are derived principally from rents we earn pursuant to the leases with the tenants occupying our properties. The capacity of our tenants to pay our rents owed to us depends upon their ability to conduct their operations at profitable levels. We believe that the business environment of the industry segments in which our tenants operate is generally positive for efficient operators, and we actively monitor our tenants, their operations and creditworthiness in an effort to identify conditions that may adversely affect our rental revenue. However, our tenants’ operations are subject to economic, regulatory and market conditions that may adversely affect their operations, which, in turn, could adversely impact our results of operations.

Property Operating Expenses

Our property operating expenses generally consist of taxes, utility costs, insurance costs, repair and maintenance costs, administrative costs and other operating expenses. As of September 30, 2021 and

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December 31, 2020, all of our leases were either “triple net” or “double net.” Triple net means that our tenants are responsible for all of the maintenance, utilities, insurance and property taxes associated with the properties they lease from us, including any increases in those costs that may occur as a result of inflation. Double net means we have certain responsibilities as landlord, generally related to maintenance and structural component replacement that may be required on such properties in the future. Although these landlord responsibilities have not historically resulted in significant costs to us, an increase in costs related to these responsibilities could negatively influence our operating results. Also, we may occasionally incur nominal property-level expenses that are not paid by our tenants.

General and Administrative

Upon completion of this offering, as a public company with shares listed on the NYSE, we expect that our general and administrative expenses will increase due to legal, accounting, insurance and other expenses related to corporate governance, public reporting and other compliance matters.

Interest Expense

We expect future changes in interest rates will impact our overall performance. In order to limit interest rate risk, we may enter into interest rate swap agreements or similar instruments, subject to maintaining our qualification as a REIT for U.S. federal income tax purposes. Although we may seek to cost-effectively manage our exposure to future rate increases through such means, a portion of our overall debt may at various times be subject to interest rates that float at then current rates.

As of September 30, 2021 and December 31, 2020, all of our outstanding debt, including the M&T Credit Facility, carried a fixed interest rate either embedded or as a result of an interest rate hedge.

Acquisition Costs

As we continue to make acquisitions, we may incur transaction costs on failed deals that we are required to expense.

Inflation

Our leases typically contain provisions designed to mitigate the adverse impact of inflation on our results of operations. Since our tenants are typically required to pay all property-level operating expenses, increases in property-level expenses at our leased properties generally do not adversely affect us. However, increased operating expenses at any of our properties that become vacant in the future and our properties that are not subject to full triple net leases could cause us to incur additional operating expense. Additionally, many of our leases provide for rent escalations designed to mitigate the effects of inflation over the term of a lease. However, since some of our leases do not contain rent escalations and many that do limit the amount by which rent may increase, any increase in our rental revenue may not keep up with the rate of inflation.

Critical Accounting Policies and Estimates

Our discussion and analysis of our historical financial condition and results of operations is based upon our consolidated financial statements which are prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ materially from those estimates. The accounting policies discussed below are considered critical because changes to certain judgments and assumptions inherent in these policies could affect the financial statements. For more information on our accounting policies, please refer to the notes to consolidated financial statements included elsewhere in this prospectus.

As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies.

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Principles of Consolidation

The consolidated financial statements include the accounts of Four Springs Capital Trust and its controlling investments in subsidiaries. Results of operations of properties acquired are included in the consolidated statements of operations from the date of acquisition. All intercompany transactions, balances and accounts have been eliminated in consolidation. The company determines whether it has a controlling interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”) under GAAP.

Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and which provide the equity holders with the obligation to absorb losses, the right to receive residual returns and the right or power to make decisions about or direct the entity’s activities that most significantly impact the entity’s economic performance. Voting interest entities, where the company has a majority interest, are consolidated in accordance with GAAP. The guidance states that the usual condition for a controlling financial interest in an entity is ownership of a majority voting interest. Accordingly, the company consolidates voting interest entities in which it has a majority of the voting interests.

VIEs are entities that lack one or more of the characteristics of a voting interest entity. The primary beneficiary of a VIE is required to consolidate the VIE. The company determines whether it is the primary beneficiary of a VIE by performing a qualitative analysis of the VIE that includes, among other factors, an evaluation of which enterprise has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the VIE. The company identified the Operating Partnership as a VIE that continues to be consolidated by the company as the primary beneficiary because the company has a controlling financial interest in this VIE. We evaluated the DSTs and determined they are VIEs. We evaluated the company’s interests in the DSTs and determined we have the power to direct activities that most significantly impact these VIEs and are the primary beneficiary of these VIEs.

A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to us. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheets and the presentation of net income was modified to present earnings and other comprehensive income attributed to controlling and noncontrolling interests.

Accounting for Real Estate Investments

Real estate properties comprise all tangible assets we hold for rent or for administrative purposes. Real property is recognized at cost less accumulated depreciation. Betterments, major renovations and certain costs directly related to the improvement of real properties are capitalized. Direct costs incurred in acquiring completed properties that meet the classification of a business for accounting purposes are charged to expense as incurred. Acquired completed properties that do not meet the classification of a business are accounted for as asset acquisitions with direct costs of the acquisitions capitalized and allocated to acquired tangible and intangible assets on a relative fair value basis. Accordingly, asset acquisitions are recorded on a relative fair value basis. Maintenance and repair expenses are charged to expense as incurred.

Depreciation of an asset begins when it is available for use and is calculated using the straight-line method over the estimated useful lives. Each period, depreciation is charged to expense and credited to the related accumulated depreciation account. A used asset acquired is depreciated over its estimated remaining useful life, not to exceed the life of a new asset. The range of useful lives for depreciable assets are as follows:

Category	Term
Buildings	19 – 50 years
Building and site improvements	5 – 40 years
Tenant improvements	Shorter of remaining life of the lease or useful life
Furniture and equipment	3 – 20 years

Tenant improvements are capitalized in real property when we own the improvement. If the improvements are deemed to be owned by the tenant and we assume its payments (such as an upfront cash payment to the lessee

84

or by assuming the payment or reimbursement of all or part of those costs) then we recognize the inducements as a deferred lease incentive.

Assets and liabilities of properties that meet various held-for-sale criteria, including that it is probable that a sale will occur within 12 months, are presented separately in the consolidated balance sheets, with assets and liabilities being separately stated. Properties that the company has determined are held for sale cease depreciating and are also required to be simultaneously reviewed for impairment and carried on the company’s consolidated balance sheets at the lower of net carrying value or estimated fair value less costs to sell.

Acquisitions of rental real estate that meet the definition of a business are accounted for as business combinations and the purchase price is allocated among the above components based on their estimated fair values at the date of acquisition and all transaction costs are expensed as incurred. Acquisitions of rental real estate not meeting the definition of a business are accounted for as asset acquisitions and the purchase price and direct costs are allocated among the below components based on their relative fair values at the date of acquisition. The company’s acquisitions of rental real estate are generally accounted for as asset acquisitions. For real estate assets acquired through a sale-leaseback transaction and subject to a lease contract which contains a purchase option, the company will account for such acquisition as a financing arrangement and record the investment in the consolidated balance sheets.

The company allocates the purchase price of rental real estate acquired to the following:

•

acquired tangible assets, consisting of land, building and improvements; and

•

identified intangible assets and liabilities, consisting of favorable and unfavorable leases, in-place leases, tenant relationships and debt premiums and discounts

In estimating the fair value of the tangible and intangible assets acquired, the company considers information obtained about each property as a result of its due diligence activities and other market data, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and the value of favorable and unfavorable leases. For real estate acquired subject to existing leases, in-place lease values are based on our estimate of costs related to tenant acquisition and carrying costs during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of acquisition. The value assigned to in-place leases is amortized as a component of depreciation and amortization in the accompanying consolidated statements of operations on a straight-line basis over the remaining initial term of the related lease. Factors considered by us in our analysis of in-place lease intangibles include market rents, real estate taxes, insurance, and other operating expenses and costs to execute similar leases during the expected lease-up period. The value of tenant relationship intangibles, if any, is amortized as a component of depreciation and amortization expense over the anticipated life of the relationships.

Favorable lease values, including premium on at-the-money contracts, and unfavorable lease values are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to in-place leases at the time of acquisition and our estimate of current market lease rates for each corresponding in-place lease or the estimated return on cost for at-market leases, measured over a period equal to the remaining initial term of the lease. Capitalized favorable lease values are amortized over the remaining term of the respective leases as a decrease to rental revenue. Unfavorable lease values are amortized as an increase in rental revenue over the remaining term of the respective leases.

Assessment of the recoverability by us of lease intangibles must be made when we have reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs. Should a lease terminate early, the unamortized portion of any related lease intangible is immediately recognized in our consolidated statements of operations.

For property acquisitions where the company assumes existing mortgage debt, the debt is recorded at its estimated fair value, based on management’s estimate of current borrowing rates available to the company for

85

comparable financing. The company amortizes any discount or premium as part of interest expense on the related debt using the effective interest method.

Impairment

The company reviews its owned real properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If impairment indicators are present, the evaluation may include estimating and reviewing anticipated future undiscounted cash flows to be derived from the asset. Estimating future cash flows is highly subjective and includes an evaluation of factors such as the anticipated cash flows from the property, which may include rent from current leases in place and projected future leases, estimated capital expenditures, and an estimate of proceeds to be realized upon sale of the property. If such cash flows are less than the asset’s net carrying value, an impairment charge is recognized to earnings to the extent by which the asset’s carrying value exceeds the estimated fair value. The company’s estimates could differ materially from actual results.

Revenue Recognition

Rental revenues are recorded as income when earned and when they can be reasonably estimated. The company recognizes the effects of any scheduled rent increases and rent abatements on a straight-line basis over the term of the lease. This requires that rental income be recognized in equal annual amounts over the term of the lease. Deferred rent receivable represents the cumulative effect of straight-lining leases and is computed as the difference between income accrued on a straight-line basis and contractual rent payments. The company reviews its straight-line operating lease receivables for collectability on a contract by contract basis and any amounts not considered substantially collectible are written off against rental revenues. Leases generally require tenants to reimburse the company for certain operating expenses applicable to their leased premises. These lessee-reimbursed costs and lessee reimbursements are recorded as incurred and earned, respectively, and have been included in property operating expenses and rental revenues, respectively, in the accompanying consolidated statements of operations. Lessor costs paid by lessees directly to third parties are not recognized in the consolidated statements of operations. Rental income also includes the amortization of favorable and unfavorable leases as an adjustment to rental income over the terms of the respective leases.

Noncontrolling Interests

Due to the company’s control through its general partner interest in the Operating Partnership and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, is consolidated with the company and the limited partner interests, other than those held by the company, are reflected as noncontrolling interests on the accompanying consolidated balance sheets and statements of operations.

The beneficial ownership interests in the DSTs, excluding beneficial ownership by the company’s wholly-owned subsidiaries and the Operating Partnership, are reflected as noncontrolling interests on the accompanying consolidated balance sheets and statements of operations.

The company evaluates individual noncontrolling interests for the ability to recognize the noncontrolling interests as permanent equity on the consolidated balance sheets at the time such interests are issued and on a continual basis. We report such noncontrolling interests within equity in the consolidated balance sheets, but separate from total shareholders’ equity. Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount or (2) its redemption value as of the end of the period in which the determination is made.

The limited partners of the Operating Partnership that held Series A preferred OP units, other than the company, had the right to cause the Operating Partnership to redeem their OP units for cash or, at the sole option of the company, the company had a right to exchange the OP units by issuing one share of the company’s Series A preferred shares for each Series A preferred OP unit. These redemption rights may not be exercised under certain circumstances which would cause the company to lose its REIT status. The Series A preferred OP units, other than those held by the company, were included in noncontrolling interests in the accompanying consolidated balance sheets, statements of operations and statements of changes in contingently redeemable preferred shares and OP units and changes in equity.

86

The limited partners of the Operating Partnership holding Series U1 OP units have the right to cause the Operating Partnership to redeem their OP units for cash. This redemption right may be exercised only from May 31, 2026 through November 30, 2026. The Series U1 OP units are classified as temporary equity in the accompanying consolidated balance sheets. This classification is appropriate because the instruments are contingently redeemable based on events outside the company’s control. This accounting treatment is in accordance with Accounting Standards Codification 480-10-S99, “Distinguishing Liabilities from Equity.” Redeemable noncontrolling interests are accreted for the excess of accreted redemption value over the initial carrying value adjusted for distributions and their allocable share of net income and other comprehensive losses over the period from the date of issuance to the first date on which the put option is exercisable.

Share-Based Compensation

The 2021 Equity Incentive Plan is designed to promote the success and enhance the value of the company by providing select company leaders and trustees equity in order to (1) foster an “ownership mentality” and re-align interests with the shareholders, (2) promote retention of key members of the management team and (3) motivate company leaders to effectively manage the portfolio and continue to deliver strong results. The 2021 Equity Incentive Plan is further intended to provide flexibility to the company in its ability to motivate, attract and retain the services of employees, officers, trustees and consultants upon whose judgment, interest and special effort the successful conduct of the company’s operation is largely dependent. Accordingly, the 2021 Equity Incentive Plan permits the grant of options, share appreciation rights, restricted shares, restricted share units, LTIP Unit awards, performance awards and other awards from time to time to selected employees, officers, trustees and consultants of the company and its subsidiaries. LTIP Units are OP units and are also subject to provisions of the Partnership Agreement. Each LTIP Unit awarded under the 2021 Equity Incentive Plan shall reduce the number of shares available for issuance under the 2021 Equity Incentive Plan on a one-for-one basis.

The company uses the Black-Scholes option pricing model to estimate the fair value of a share-based award. This model requires inputs such as expected term, expected volatility, and risk-free interest rate, which are highly complex and subjective and generally require significant analysis and judgment to develop. Upon completion of this offering, we expect that the grant date value of share-based awards, if any, will be determined based on the market price of our common shares on the NYSE and will no longer require estimates of fair value.

Income Taxes

The company has made an election to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. As such, we will generally not be subject to federal income tax on that portion of our taxable income that is distributed to shareholders if we distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain to our shareholders by prescribed dates and comply with various other requirements of the Code. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates. Under certain circumstances, federal income and excise taxes may be due with respect to certain portions of the company’s net income and/or undistributed taxable income.

The company has elected, and may elect in the future, to treat certain of its existing or newly-created corporate subsidiaries as TRSs. In general, a TRS may perform non-customary services for the tenants of the company, hold assets that the company cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in federal and state income tax liability for these entities. The company does not expect to incur any corporate federal income tax liability outside of the TRSs, as we believe we have maintained our qualification as a REIT and we intend to distribute 100% of our REIT taxable income.

Uncertain tax positions are assessed by the company to determine whether a tax position of the company is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit with a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing

87

authority. We have assessed the federal and state tax positions and have concluded that we have no material uncertain tax liabilities to be recognized or disclosed.

Derivative Instruments and Hedging Activities

We may enter into derivative contracts as part of our overall financing strategy to manage our exposure to changes in interest rates associated with current and/or future debt issuances. We do not use derivatives for trading or speculative purposes. These derivative instruments are measured on a recurring basis and recorded on the consolidated balance sheets at fair value as either an asset or liability. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the earnings effect of the hedged forecasted transactions in a cash flow hedge.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or the SEC. We adopt the new pronouncements as of the specified effective date, or earlier when both early adoption is permitted by the FASB or the SEC and when practicable. Unless otherwise discussed, these new accounting pronouncements include technical corrections to existing guidance or introduce new guidance related to specialized industries or entities and therefore will have minimal, if any, impact on our financial position or results of operations upon adoption.

During June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019 for public reporting entities except for those meeting the definition by the SEC of a smaller reporting company. For other entities, this guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, as amended by ASU 2019-10. The amendments in ASU 2016-13 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. In November 2018, the FASB issued ASU 2018-19, Codification of Topic 326, Financial Instruments—Credit Losses, to amend the effective date requirements and to clarify the scope of the guidance in the ASU 2016-13. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. Management does not believe the guidance will have a significant impact on the company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date. The guidance was adopted in 2020 and did not have an impact on the company’s consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), Targeted Improvements for Related Party Guidance for Variable Interest Entities, to improve consideration of indirect interests held through related parties under common control in order to align determining whether fees paid to decision makers and service providers are variable interests and determining whether a reporting entity within a related

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party group is the primary beneficiary of a VIE. ASU 2018-17 is effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this update are effective for a private company or emerging growth company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted. The ASU is required to be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. We are currently evaluating the impact of the adoption of ASU 2018-17 on our consolidated financial statements, including the timing of adopting this standard.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. Election to apply the amendments for contract modifications and eligible hedging relationships may be made as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of the guidance on our LIBOR-based debt and derivative contracts and the timing of adopting this standard.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in the ASU are effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Management does not believe the guidance will have a significant impact on the company’s consolidated financial statements.

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Results of Operations

Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

(In thousands)	Nine Months Ended September 30, 2021			Nine Months Ended September 30, 2020			Increase (Decrease)
Revenues:	​	​	​	​	​	​	​	​	​
Total Revenue	​	$	38,967	​	$	25,955	​	$	13,012
Expenses:	​	​	​	​	​	​	​	​	​
Property operating	​	​	5,458	​	​	3,144	​	​	2,314
General and administrative	​	​	11,729	​	​	3,844	​	​	7,885
Professional fees	​	​	2,120	​	​	390	​	​	1,730
Depreciation and amortization	​	​	15,725	​	​	10,059	​	​	5,666
Interest	​	​	17,878	​	​	7,598	​	​	10,280
Acquisition costs	​	​	41	​	​	195	​	​	(154)
Provision for impairment	​	​	335	​	​	535	​	​	(200)
Total expenses	​	​	53,286	​	​	25,765	​	​	27,521
Change in fair value of compound embedded derivative and warrant liability	​	​	(416)	​	​	(209)	​	​	(207)
Loss on extinguishment of debt	​	​	(310)	​	​	—	​	​	(310)
Gain on sale of real estate	​	​	2,431	​	​	401	​	​	2,030
Income tax benefit (provision for income taxes)	​	​	(1,996)	​	​	(47)	​	​	(1,949)
Net loss	​	​	(14,610)	​	​	335	​	​	(14,945)
Net (income) loss attributable to noncontrolling interests in consolidated subsidiaries	​	​	6,280	​	​	(758)	​	​	7,038
Net loss attributable to Four Springs Capital Trust	​	$	(8,330)	​	$	(423)	​	$	(7,907)

Total Revenue

Total revenue increased by 50% to $39.0 million for the nine months ended September 30, 2021 from $26.0 million for the nine months ended September 30, 2020, driven primarily by the net growth in the size of our real estate portfolio which generated additional rental revenues, as well as from an increase in tenant reimbursements and other revenues driven by such growth. Our real estate portfolio, including real estate investments held for sale and lease intangibles grew from $372.6 million in real estate representing 99 properties as of September 30, 2020 to $781.3 million in real estate representing 136 properties as of September 30, 2021. The increase in rental revenue was attributed to the four properties we purchased for approximately $58.2 million during the fourth quarter of 2020, which were owned by us for the entire nine months ended September 30, 2021, as well as forty-two properties we purchased for approximately $381.4 million during the nine months ended September 30, 2021. Our properties were 99.8% and 100% occupied at all times during the nine months ended September 30, 2021 and 2020, respectively.

Property Operating Expenses

Property operating expenses include real estate taxes, utility costs, insurance costs, repairs and maintenance costs, administrative costs and other operating expenses. Property expenses totaled $5.5 million for the nine months ended September 30, 2021 as compared to $3.1 million for the nine months ended September 30, 2020. This increase was driven primarily by the net growth in the size of our real estate portfolio, an increase in repair and maintenance costs and an increase in general corporate insurance expenses.

General and Administrative Expenses

General and administrative expenses include compensation and benefits, marketing costs and general office expenses such as insurance, office rent, travel expenses and other expenses. General and administrative expenses totaled $11.7 million for the nine months ended September 30, 2021 as compared to $3.8 million for the nine months ended September 30, 2020. During the nine months ended September 30, 2021 the primary

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driver of the increase in general and administrative expenses was a recognition of higher compensation expenses of $1.1 million as a result of an increase in bonuses and wages as well as $6.6 million from the issuance of LTIPs. We also expect that general and administrative expenses will increase over time as our business grows; however, we expect that such expenses as a percentage of our revenue will decrease over time due to efficiencies and economies of scale.

Professional Fees

Professional fees expense increased from $0.4 million for the nine months ended September 30, 2020 to $2.1 million for the nine months ended September 30, 2021. The increase was mainly attributable to expenses relating to the acquisitions made during the nine months ended September 30, 2021.

Depreciation and Amortization Expense

Depreciation and amortization expense generally rises in proportion to the increase in the size of our real estate portfolio and, accordingly, such expense rose from $10.1 million for the nine months ended September 30, 2020 to $15.7 million for the nine months ended September 30, 2021.

Interest Expense

Interest expense increased to $17.9 million for the nine months ended September 30, 2021 from $7.6 million for the nine months ended September 30, 2020 due primarily to an increase in long-term non-recourse borrowings, as well as an increase in short-term borrowings used to partially fund the acquisition of properties during the nine months ended September 30, 2021 for our growing real estate portfolio. We funded the growth in our real estate investment portfolio with additional preferred equity and a combination of the M&T Credit Facility and the Mezzanine Loan. The average debt outstanding on the M&T Credit Facility decreased to $38.5 million during the nine months ended September 30, 2021 from $68.3 million during the nine months ended September 30, 2020 at a weighted average interest rate of 7.01% during the nine months ended September 30, 2021 as compared to 4.84% during the nine months ended September 30, 2020, inclusive of interest rate hedges and unused fees.

The average debt outstanding on the Mezzanine Loan increased to $87.3 million during the nine months ended September 30, 2021 from $0 million during the nine months ended September 30, 2020 at a weighted average interest rate of 11.6% during the nine months ended September 30, 2021. The average debt outstanding on our non-recourse debt obligations increased to $222.4 million during the nine months ended September 30, 2021 from $132.3 million during the nine months ended September 30, 2020 at a weighted average interest rate of 3.71% during the nine months ended September 30, 2021 as compared to 4.2% during the nine months ended September 30, 2020. The following table summarizes our interest expense.

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​	Nine Months Ended September 30,
(In thousands)	2021			2020
Interest expense−M&T Credit Facility (includes unused fees)	​	$	2,021	​	$	2,480
Interest expense−Mezzanine Loan	​	​	7,585	​	​	—
Interest expense−non-recourse mortgage notes payable of consolidated special purpose entities	​	​	6,190	​	​	4,166
Amortization of deferred financing costs and other	​	​	2,152	​	​	1,020
Amortization of debt (premium) discount, net	​	​	(70)	​	​	(69)
Total interest expense	​	$	17,878	​	$	7,597
M&T Credit Facility:	​	​	​	​	​	​
Average debt outstanding	​	$	38,470	​	$	68,332
Average interest rate during period (includes unused fees)	​	​	7.01%	​	​	4.84%
Mezzanine Loan:	​	​	​	​	​	​
Average debt outstanding	​	$	86,997	​	$	—
Average interest rate during period	​	​	11.63%	​	​	—%
Non-recourse mortgage notes payable of consolidated special purpose entities:	​	​	​	​	​	​
Average debt outstanding	​	$	222,358	​	$	132,276
Average interest rate during period	​	​	3.71%	​	​	4.20%

Acquisition Costs

Acquisition costs incurred in acquiring completed properties that meet the classification of a business for accounting purposes are charged to operations as incurred, as well as failed acquisition costs. For the nine months ended September 30, 2021 and 2020, we incurred acquisition costs of $0.04 million and $0.2 million in connection with failed acquisitions, respectively.

Provision for Impairment

The provision for impairment for the nine months ended September 30, 2021 was $0.3 million due to an impairment loss related to one property. The provision for impairment for the nine months ended September 30, 2020 was $0.5 million due to an impairment loss on a property subsequently sold in December 2020.

Change in Fair Value of Compound Embedded Derivative and Warrant Liability

The change in fair value of compound embedded derivative and warrant liability for the nine months ended September 30, 2021 decreased by $0.2 million compared to the nine months ended September 30, 2020. The decrease was due to a change in the estimates for expected exercise timing and volatility and expiration of warrants.

Loss on extinguishment of debt

Loss on extinguishment of debt for the nine months ended September 30, 2021 was $0.3 million related to the prepayment of a mortgage loan during the sale of a property. There was no gain or loss on extinguishment of debt during the nine months ended September 30, 2020.

Gain on Sale of Real Estate

Gain on sale of real estate for the nine months ended September 30, 2021 was $2.4 million related to the sale of seven properties. There was a $0.4 million gain on the sale of one property during the nine months ended September 30, 2020.

Provision for Income Taxes

The provision for income taxes for the nine months ended September 30, 2021 and 2020, was $2.0 million and $0.05 million, respectively. The increase in income tax expense was primarily due to the increased DST acquisition income in one of our TRSs.

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Noncontrolling Interests in Consolidated Subsidiaries

Noncontrolling interests in consolidated subsidiaries represents the net revenues and expenses allocated to the limited partners in the Operating Partnership, as well as the allocation to the noncontrolling beneficial interest holders in our DSTs in connection with the Section 1031 Exchange Program. The components of the noncontrolling interests in consolidated subsidiaries are allocations of rental revenue, acquisition fee revenue, management fee revenue, general and administrative expenses, property expenses, depreciation and amortization, interest expense and acquisition costs. In connection with the Section 1031 Exchange Program, we receive an annual asset management fee of approximately 0.35% of the portion of the purchase price of the related property that is syndicated to third parties and acquisition and finance fees of approximately 3% of the portion of the purchase price of the related property that is syndicated to third parties. Net loss of the noncontrolling interests increased by $7.0 million from the nine months ended September 30, 2020 to the nine months ended September 30, 2021 primarily due to an increase in acquisition and finance fees due to an increase in DST syndications.

The following table summarizes our noncontrolling interests in consolidated subsidiaries for the nine months ended September 30, 2021 and 2020.

​	Nine Months Ended September 30,
(In thousands)	2021			2020
Rental revenue of noncontrolling interests and tenant reimbursements, net of property expenses	​	​	12,262	​	​	6,082
Acquisition fee expense of noncontrolling interests, net	​	$	(7,310)	​	$	(156)
Management fee expense of noncontrolling interests, net	​	​	(516)	​	​	(281)
General and administrative expenses of noncontrolling interests	​	​	(595)	​	​	(131)
Professional fees of noncontrolling interests	​	​	(166)	​	​	(24)
Depreciation and amortization of noncontrolling interests	​	​	(6,218)	​	​	(2,808)
Interest expense of noncontrolling interests	​	​	(3,574)	​	​	(1,897)
Other	​	​	(163)	​	​	(27)
Net (loss) income attributable to noncontrolling interests in consolidated subsidiaries	​	$	(6,280)	​	$	758

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Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019

​	Year Ended December 31,						Increase (Decrease)
(In thousands)	2020			2019
Revenues:	​	​	​	​	​	​	​	​	​
Rental	​	$	35,737	​	$	30,744	​	$	4,993
Expenses:	​	​	​	​	​	​	​	​	​
Property operating	​	​	4,705	​	​	3,557	​	​	1,148
General and administrative	​	​	5,151	​	​	5,363	​	​	(212)
Professional fees	​	​	902	​	​	627	​	​	275
Depreciation and amortization	​	​	13,562	​	​	10,630	​	​	2,932
Interest	​	​	12,597	​	​	9,568	​	​	3,029
Acquisition costs	​	​	236	​	​	56	​	​	180
Provision for impairment	​	​	535	​	​	—	​	​	535
Total expenses	​	​	37,688	​	​	29,801	​	​	7,887
Change in fair value of conversion feature liability and warrant liability	​	​	355	​	​	(98)	​	​	453
Gain on sale of real estate	​	​	409	​	​	2,698	​	​	(2,289)
Income tax benefit (provision for income taxes)	​	​	(29)	​	​	(308)	​	​	279
Net (loss) income	​	​	(1,216)	​	​	3,235	​	​	(4,451)
Net (income) loss attributable to noncontrolling interests in consolidated subsidiaries	​	​	76	​	​	(949)	​	​	1,025
Net (loss) income attributable to Four Springs Capital Trust	​	$	(1,140)	​	$	2,286	​	$	(3,426)

Rental Revenues

Rental revenues increased by 16% to $35.7 million for the year ended December 31, 2020 from $30.7 million for the year ended December 31, 2019, driven primarily by the net growth in the size of our real estate portfolio which generated additional rental revenues, as well as from an increase in tenant reimbursements and other revenues driven by such growth. Our gross real estate portfolio, including real estate investments held for sale and lease intangibles grew from $360.9 million in real estate representing 96 properties as of December 31, 2019 to $424.6 million in real estate representing 101 properties as of December 31, 2020. During 2020, we purchased seven properties for approximately $78.1 million. Our real estate investments were made on various dates during 2020 and 2019 and were not all owned by us during the entirety of each year; accordingly, approximately 20% of the increase in rental revenue for 2020 as compared to 2019 is related to recognizing a full year of rental revenue from acquisitions that were completed during 2019 and approximately 4% of the increase represents a partial year of revenue from assets that were acquired during 2020, partially offset by properties sold during 2020 that were held during 2019 for the full year. The full-year revenue impact of 2019 acquisitions will be reflected in 2020. The full-year revenue impact of 2020 acquisitions will be seen in 2021. The tenant reimbursement recovery rate for the year ended December 31, 2020 of 91% increased from the 79% rate during the year ended December 31, 2019 principally due to an increase in recoverable expenses that are reimbursable by the tenants under their lease agreements. All of our properties were 99.7% and 100% occupied at all times during the years ended December 31, 2020 and 2019, respectively.

Property Operating Expenses

Property operating expenses include real estate taxes, utility costs, insurance costs, repairs and maintenance costs, administrative costs and other operating expenses. Property expenses totaled $4.7 million for the year ended December 31, 2020 as compared to $3.6 million for the year ended December 31, 2019. This increase was driven primarily by the net growth in the size of our real estate portfolio, an increase in repair and maintenance costs and an increase in general corporate insurance expenses.

General and Administrative Expenses

General and administrative expenses include compensation and benefits, marketing costs and general office expenses such as insurance, office rent, travel expenses and other expenses. General and administrative

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expenses decreased to $5.2 million for the year ended December 31, 2020 as compared to $5.4 million for the year ended December 31, 2019, primarily due to a reduction in our staff, decreased travel and entertainment, decreased conference expenses, as well as decreased general office expenses totaling $0.4 million for the year ended December 31, 2020 compared to December 31, 2019, and an increase in marketing costs of $0.2 million for the year ended December 31, 2020 compared to December 31, 2019. Two employees left the company during 2020 and the reduction of other expenses was primarily due to travel restrictions related to the COVID-19 Pandemic. We also expect that general and administrative expenses will increase over time as our business grows; however, we expect that such expenses as a percentage of our revenue will decrease over time due to efficiencies and economies of scale.

Professional Fees

Professional fees expense increased from $0.6 million for the year ended December 31, 2019 to $0.9 million for the year ended December 31, 2020. The increase was mainly attributable to an increase in consulting fees, as well as an increase in legal fees due to TRS credit facilities that did not close.

Depreciation and Amortization Expense

Depreciation and amortization expense generally rises in proportion to the increase in the size of our real estate portfolio and, accordingly, such expense rose from $10.6 million for the year ended December 31, 2019 to $13.6 million for the year ended December 31, 2020.

Interest Expense

Interest expense increased to $12.6 million for the year ended December 31, 2020 from $9.6 million for the year ended December 31, 2019 due primarily to an increase in long-term borrowings including a Mezzanine Loan, used to fund the acquisition of properties for our growing real estate portfolio. We funded the growth in our real estate investment portfolio with added equity and a combination of non-recourse mortgage notes payable, M&T Credit Facility and a Mezzanine Loan. The average debt outstanding on the M&T Credit Facility decreased to $63.5 million during 2021 from $68.7 million during 2020 at a weighted average interest rate of 4.87% in 2020 as compared to 5.19% 2019. The average debt outstanding on the Mezzanine Loan increased to $14.7 million during 2020 from $0 million during 2019 at a weighted average interest rate of 11.69% in 2020. The average debt outstanding on our non-recourse debt obligations increased to $136.4 million in 2020 from $110.6 million in 2019 at a weighted average interest rate of 4.17% in 2020 as compared to 4.41% in 2019. The following table summarizes our interest expense.

​	Year Ended December 31,
(In thousands)	2020			2019
Interest expense−M&T Credit Facility (includes unused fees)	​	$	3,092	​	$	3,563
Interest expense−Mezzanine Loan	​	​	1,714	​	​	—
Interest expense−non-recourse mortgage notes payable of consolidated special purpose entities	​	​	5,689	​	​	4,877
Amortization of deferred financing costs and other	​	​	2,193	​	​	1,219
Amortization of debt (premium) discount, net	​	​	(91)	​	​	(91)
Total interest expense	​	$	12,597	​	$	9,568
M&T Credit Facility:	​	​	​	​	​	​
Average debt outstanding	​	$	63,473	​	$	68,686
Average interest rate during period (includes unused fees)	​	​	4.87%	​	​	5.19%
Mezzanine Loan:	​	​	​	​	​	​
Average debt outstanding	​	$	14,662	​	$	—
Average interest rate during period	​	​	11.69%	​	​	—%
Non-recourse mortgage notes payable of consolidated special purpose entities:	​	​	​	​	​	​
Average debt outstanding	​	$	136,351	​	$	110,612
Average interest rate during period	​	​	4.17%	​	​	4.41%

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Acquisition Costs

Acquisition costs incurred in acquiring completed properties that meet the classification of a business for accounting purposes are charged to operations as incurred, as well as failed acquisition costs. For the year ended December 31, 2020 and 2019, we incurred acquisition costs of $0.2 million and $0.1 million in connection with failed acquisitions, respectively.

Provision for Impairment

The provision for impairment for the year ended December 31, 2020 was $0.5 million due to an impairment loss on a property sold in December 2020. There was no provision for impairment for the year ended December 31, 2019.

Change in Fair Value of Conversion Feature Liability and Warrant Liability

The change in fair value of conversion feature liability and warrant liability for the year ended December 31, 2020 increased by $0.5 million compared to the year ended December 31, 2019. The increase was due to a change in the estimates for expected exercise timing and volatility.

Gain on Sale of Real Estate

Gain on sale of real estate for the year ended December 31, 2020 and 2019, was $0.4 million on the sale of three properties and $2.7 million on the sale of eleven properties, respectively.

Provision for Income Taxes

The provision for income taxes for the year ended December 31, 2020 was $0.03 million compared to the provision for income taxes for the year ended December 31, 2019 of $0.3 million. The income tax expense was primarily due to gains on sales of properties and the allocation of general and administrative expenses to our TRSs, which were primarily offset by state and local tax payments we made in various locations.

Noncontrolling Interests in Consolidated Subsidiaries

Noncontrolling interests in consolidated subsidiaries represents the net revenues and expenses allocated to the limited partners in the Operating Partnership, as well as the allocation to the noncontrolling beneficial interest holders in our DSTs in connection with the Section 1031 Exchange Program. The components of the noncontrolling interests in consolidated subsidiaries are allocations of rental revenue, acquisition fee revenue, management fee revenue, general and administrative expenses, property expenses, depreciation and amortization, interest expense and acquisition costs. In connection with the Section 1031 Exchange Program, our company receives an annual asset management fee of approximately 0.35% of the portion of the purchase price of the related property that is syndicated to third parties and an acquisition fee of 2% of the portion of the purchase price of the related property that is syndicated to third parties. Net income of the noncontrolling interests decreased by $1.0 million from 2019 to 2020 primarily due to an increase in DST syndications in 2020 compared to 2019 resulting in an increase in acquisition fee expense from $0.7 million in 2019 to $1.4 million in 2020 and an increase in depreciation and amortization of noncontrolling interests of $0.9 million from 2019 to 2020, partially offset by an increase in net rental revenue from $7.5 million in 2019 to $8.3 million in 2020 due to an increase in noncontrolling interests in DSTs.

The following table summarizes our noncontrolling interests in consolidated subsidiaries for the years ended December 31, 2020 and 2019.

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​	Year Ended December 31,
(In thousands)	2020			2019
Rental revenue of noncontrolling interests and tenant reimbursements, net of property expenses	​	$	8,333	​	$	7,495
Acquisition fee expense of noncontrolling interests, net	​	​	(1,408)	​	​	(667)
Management fee expense of noncontrolling interests, net	​	​	(378)	​	​	(366)
General and administrative expenses of noncontrolling interests	​	​	(188)	​	​	(178)
Professional fees of noncontrolling interests	​	​	(61)	​	​	(41)
Depreciation and amortization of noncontrolling interests	​	​	(3,782)	​	​	(2,835)
Interest expense of noncontrolling interests	​	​	(2,569)	​	​	(2,446)
Other	​	​	(23)	​	​	(13)
Net (loss) income attributable to noncontrolling interests in consolidated subsidiaries	​	$	(76)	​	$	949

Liquidity and Capital Resources

Our primary expected sources and uses of capital are as follows:

Sources

•

cash and cash equivalents;

•

operating cash flow;

•

available borrowings under the M&T Credit Facility prior to the completion of this offering and under the New Credit Facility after the completion of this offering;

•

secured loans collateralized by individual properties;

•

issuance of long-term debt;

•

issuance of equity; and

•

asset sales.

Uses

Short-term:

•

maintenance and other property level expenditures;

•

debt repayment requirements;

•

distribution payments; and

•

corporate and administrative costs.

Long-term:

•

acquisitions;

•

debt maturities;

•

capital expenditures; and

•

tenant improvement allowances and leasing costs.

Distributions

In order to qualify as a REIT for federal income tax purposes, we generally are required to distribute to our shareholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, and to pay tax at the regular corporate rate to the extent that we annually distribute less than 100% of our REIT taxable income. In addition, a REIT will be

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required to pay a 4% nondeductible excise tax on the amount, if any, by which the distributions it makes in a calendar year are less than the sum of 85% of its ordinary income, 95% of its capital gain net income, and 100% of its undistributed income from prior years. As a result, in order to satisfy the requirements for us to qualify and maintain our qualification as a REIT and generally not be subject to U.S. federal income and excise tax, we intend to make regular monthly distributions of at least 100% of our REIT taxable income to holders of our common shares out of assets legally available therefor. We expect to make monthly distributions to our shareholders in a manner intended to satisfy this requirement. Prior to making any distributions for U.S. federal tax purposes or otherwise, we must first satisfy our operating and debt service obligations. It is possible that it would be necessary to utilize cash from operating activities, cash on hand and borrowings from the M&T Credit Facility in order to make the required distributions. For the nine months ended September 30, 2021, distributions of $19.2 million were funded by cash from operations and borrowings under the M&T Credit Facility. For the year ended December 31, 2020, distributions of $15.2 million were funded by cash from operations and borrowings under the M&T Credit Facility.

M&T Credit Facility and Mezzanine Loan

Typically, we use the M&T Credit Facility to acquire properties. Our revolving line of credit with Citizens Bank, National Association (“Citizens”) and other participating lenders (the “Citizens Facility”) originally provided the company with up to a $125 million borrowing capacity with an additional $75 million expansion feature. The Citizens Facility bore interest based on our option of LIBOR plus 2.5% to 3% per annum or the base rate plus 1.50% to 2% per annum, with the interest rate spread determined based on our election of LIBOR or base rate borrowings and the ratio of debt to value. The base rate was the greater of Citizens’ prime rate, the average Federal Reserve Bank of Cleveland’s overnight rate, or the one-month LIBOR plus 1%. The Citizens Facility also required an unused fee of 0.25% per annum and was schedule to mature on October 23, 2021. Pursuant to the terms of the Citizens Facility, the company was required to comply with covenants including those to maintain a minimum fixed charge coverage ratio of 1.50 to 1.00, maintain minimum borrowing base and net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield, maintain a diversified portfolio, and maintain distribution rates.

On October 30, 2020, the company amended and restated the Citizens Facility with M&T Bank, a participating lender under the former-Citizens Facility. Citizens resigned as agent and lender and M&T Bank replaced Citizens as the agent on the facility. The M&T Credit Facility provides the company with a $100 million borrowing capacity with an additional $50 million expansion feature. The M&T Credit Facility redefined certain terms and covenants including providing for covenants relating to a Mezzanine Loan of up to $100 million. The M&T Credit Facility bears interest based on our option of LIBOR, with a LIBOR floor of 1% on unhedged LIBOR, plus 2.50% to 2.75% per annum or the base rate plus 1.50% to 1.75% per annum, with the interest rate spread determined based on our election of LIBOR or base rate borrowings and the ratio of debt to value (2.86% as of September 30, 2021, inclusive of the M&T Credit Facility interest rate swaps). The base rate for the M&T Credit Facility is the greatest of (1) the fluctuating annual rate of interest or “prime rate,” ​(2) 0.5% above the Federal Funds Effective Rate for the day and (3) 1.0% plus the greater of one month LIBOR or 1.0% of unhedged borrowing. The loan matures on October 30, 2022 and maturity may be extended to October 30, 2023 with a 0.25% extension fee on the total commitment and the company meeting certain conditions including completing a qualified listing event. Pursuant to the terms of the M&T Credit Facility, the company shall comply with covenants including those to maintain a minimum fixed charge coverage ratio of 1.50 to 1.00, maintain minimum borrowing base and net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield of 9%, maintain a diversified portfolio, and maintain distribution rates. The M&T Credit Facility is secured by mortgages/deeds of trust and assignments of rents and leases on 52 properties having real estate net book value of approximately $123.7 million as of September 30, 2021 and 50 properties having real estate book value of approximately $96.4 million as of December 31, 2020. As a result of Citizens National Association exiting the line of credit, the company exited its interest rate swap with Citizens National Association with a payment of $1.3 million recognized in other comprehensive loss in October 2020 of which $0.9 million was reclassified from other comprehensive loss as an increase to interest expense during the nine months ended September 30, 2021. As of and for the nine months ended September 30, 2021 and for the year ended December 31, 2020, the company was compliant with the M&T Credit Facility covenants. As of September 30, 2021 and December 31, 2020 the M&T Credit Facility had an outstanding balance of $45.0 million and $17.4 million, respectively. Deferred financing costs,

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net, of $2.2 million and $3.2 million are presented as deductions of the lines of credit balances as of September 30, 2021 and December 31, 2020, respectively, in the consolidated balance sheets.

On October 30, 2020, the company entered into the Mezzanine Loan secured by a pledge of our equity interest in the Operating Partnership. The loan requires (1) monthly interest only payments at 7% per annum plus (2) interest capitalized quarterly as additional principal at a rate of 4.5% per annum. The Mezzanine Loan provides that upon repayment a minimum of $23 million in aggregate interest through the earlier of the loan’s full satisfaction or maturity on October 30, 2025 is payable. However, from and after the date of the initial public offering, the additional amount payable shall be equal to the lesser of (1) the yield maintenance amount and (2) if prior to the second anniversary of the initial public offering date, 2% of the prepaid amount, and if at any time thereafter, 1% of the prepaid amount. The Mezzanine Loan provides for adjustments to interest payments due in order to not be treated as an applicable high yield discount obligation under the Code. A portion of the Mezzanine Loan may be prepaid with a minimum principal payment of $10 million. Pursuant to the terms of Mezzanine Loan, the company shall comply with covenants including those to maintain a minimum fixed charge coverage ratio of 1.50 to 1.00, maintain net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield of 9%, and maintain a diversified portfolio. The Mezzanine Loan is subordinate to the M&T Credit Facility. The company borrowed $85 million at closing of the Mezzanine Loan. As of September 30, 2021 and December 31, 2020, the Mezzanine Loan had an outstanding balance of $88.6 million and $85.7 million, respectively. Deferred financing costs, net, of $2.2 million and $2.6 million are presented as deductions of the Mezzanine Loan as of September 30, 2021 and December 31, 2020, respectively, in the consolidated balance sheets.

New Credit Facility

Concurrently with completion of this offering, we expect to enter into the New Credit Facility with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of banks, financial institutions and institutional lenders from time to time party thereto.

The New Credit Facility will consist of a $200 million revolving credit facility available for a 4-year period from the closing date, and a $100 million delayed draw term loan facility, which is available in a maximum of three draws during the 1-year period following the closing date. The revolving credit facility will mature four years from the closing date, with the option to extend for an additional 1-year period. The delayed draw term loan facility will mature five years from the closing date. The Operating Partnership will be the borrower under the New Credit Facility.

Interest Rate and Fees

Borrowings under the New Credit Facility will bear interest at a rate equal to a margin over LIBOR (or a customary benchmark replacement rate) or the prime rate based on a leverage grid or, at the option of the Operating Partnership after obtaining investment grade ratings, based on the investment grade ratings. Initially, we expect the leverage-grid based margin for the New Credit Facility will range from 1.10% to 2.05%.

In addition to paying interest on outstanding principal under the New Credit Facility, the Operating Partnership will be required to pay a facility fee to the lenders under the New Credit Facility in respect of the revolving commitments thereunder. The facility fee rate will be based on the total amount of the revolving commitments (whether or not utilized) in the New Credit Facility and will range from 0.10% to 0.30% based on the leverage grid or the investment grade ratings.

Prepayments

Loans under the revolving facility will be prepayable at any time without premium or penalty and will be required to be prepaid if the aggregate amount borrowed under the revolving facility exceeds the aggregate commitments thereunder. No mandatory prepayments will be required with respect to the term loan facility under the New Credit Facility and amounts outstanding under the term loan facility are prepayable at any time without premium or penalty.

Amortization

The New Credit Facility will have no amortization payments.

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Guarantees and Security

The obligations under the New Credit Facility will be guaranteed, subject to certain exceptions for excluded subsidiaries, (1) on a joint and several basis by the us and any subsidiary of ours that from time to time owns, directly or indirectly, any equity interests of the Operating Partnership, (2) each subsidiary that owns unencumbered assets, (3) all existing and future subsidiaries the assets of which exceed 5% of the total value of the Operating Partnership’s assets and any existing or future subsidiary that owns the equity interests of any such subsidiary, (4) each subsidiary of the Operating Partnership that owns, directly or indirectly, any equity interests in any subsidiary that is described in clauses (2) or (3) above, (5) any wholly-owned subsidiary of ours that is a borrower or a guarantor, or otherwise has a payment obligation in respect of, any unsecured indebtedness and (6) any non-wholly-owned subsidiary of ours that is a borrower or a guarantor, or otherwise has a payment obligation in respect of, any unsecured indebtedness of ours or any wholly-owned subsidiary of ours.

The New Credit Facility will be collateralized by first priority or equivalent security interests in all the capital stock of, or other equity interests in the Operating Partnership and any direct or indirect subsidiary of ours that owns unencumbered assets. The security interests to be granted under the New Credit Facility will be automatically released upon the occurrence of certain events, including (1) the unencumbered assets exceed $500 million in value, (2) the unencumbered assets attributable to a single tenant does not exceed 10% of the total value of the unencumbered assets and (3) there are at least a total of 75 unencumbered assets.

Conditions Precedent

The closing of the New Credit Facility will be conditioned on the execution and delivery of definitive loan documentation, certain corporate deliverables and the completion of this offering.

Certain Covenants and Events of Default

The New Credit Facility will contain certain customary affirmative and negative covenants and events of default. Such covenants will, among other things, restrict, subject to certain exceptions, the ability of the Operating Partnership, the subsidiary guarantors and their respective subsidiaries to:

•

incur liens or negative pledges on unencumbered assets;

•

engage in certain mergers, consolidations or liquidations;

•

sell, lease or transfer all or substantially all of their respective assets;

•

engage in certain transactions with affiliates;

•

make changes to our fiscal year; and

•

make changes in the nature of the business of the Operating Partnership and its subsidiaries.

Additionally, the New Credit Facility will restrict us from making any cash dividends, except for cash dividends in an amount not to exceed the greater of (1) the amount required to be distributed to maintain our status as a REIT, (2) 95% of our FFO generally for the four fiscal quarter period most recently ended and (3) the amount necessary for us to avoid income or excise tax under the Code, in each case, so long as no default or event of default would result from the payment of such dividend and we are in pro forma compliance with all other covenants after giving effect to the payment of such dividend.

The New Credit Facility will also require the Operating Partnership, on a consolidated basis with its subsidiaries, to maintain certain financial covenants, including:

•

minimum leverage ratio of 0.60 to 1.00;

•

minimum fixed charge coverage ratio of 1.50 to 1.00;

•

maximum secured leverage ratio of 0.40 to 1.00;

•

maximum secured recourse leverage ratio of 0.10 to 1.00;

•

maximum unencumbered leverage ratio of 0.60 to 1.00;

100

•

minimum unsecured interest coverage ratio of 2.00 to 1.00;

•

minimum tangible net worth of          plus 75% of the net proceeds of all equity issuances effected at any time after the date of the New Credit Facility by us, the Operating Partnership or any of our subsidiaries to any person other than us, the Operating Partnership or any of our subsidiaries; and

•

minimum liquidity of $10,000,000 at any time.

If an event of default occurs, the lenders under the New Credit Facility will be entitled to take various actions, including the acceleration of amounts due under the New Credit Facility and all actions permitted to be taken by a secured creditor.

DST Management Fees

In connection with the establishment of each DST, the company utilizes its form of amended and restated trust agreement and form of DST manager operating agreement. Pursuant to the terms of the form of amended and restated trust agreement, the company is entitled to receive an annual trust management fee payable in equal monthly installments and is entitled to reimbursement of expenses incurred in performing its duties as manager. The company operates as manager through its wholly-owned subsidiaries that are created in connection with the establishment of each DST.

Contingently Redeemable Series A-1 Preferred Shares

On November 20, 2020, we issued 2,500,000 convertible Series A-1 preferred shares, $0.001 par value per share, resulting in $49.3 million in gross proceeds at a 1.5% discount from the $20.00 per share initial stated value. On May 4, 2021, the terms of the Series A-1 preferred shares were amended to replace the paid-in-kind dividends with accretion dividends that are no longer issued in the form of additional Series A-1 preferred shares and instead added to the Series A-1 preferred shares’ stated value at the same yield terms as the former paid-in-kind dividends and to revise the certain other terms. The Series A-1 preferred shares rank senior to our common shares and non-participating common shares with respect to payment of dividends and distributions upon our liquidation. The Series A-1 preferred shares’ liquidation value as of September 30, 2021 and December 31, 2020 was $53.1 million and $50.4 million, respectively.

The Series A-1 preferred shares automatically convert upon a qualifying listing event into a number of common shares based on our option of either (1) the Series A-1 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by 90% of the per common share listing event price or (2) the Series A-1 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by the undiscounted price per common share at the listing event plus a cash fee to holders of Series A-1 preferred shares at 10% of the Series A-1 preferred shares’ stated value. In the event that the holders of Series A-1 preferred shares would own 20% or more of our outstanding shares of beneficial interest following a qualifying listing event, the holders of the Series A-1 preferred shares may elect to cause the company to either (1) redeem from the holders of Series A-1 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-1 preferred shares so that the holders of the Series A-1 preferred shares hold 19.9% of our outstanding shares of beneficial interest following the qualifying listing event or (2) permit the holders of Series A-1 preferred shares to include in the qualifying listing event a number of common shares (into which the Series A-1 preferred shares convert) for sale so that the holders of the Series A-1 preferred shares hold 19.9% of our outstanding shares of beneficial interest following the qualifying listing event; provided, however, that if the holders of the Series A-1 preferred shares elect pursuant to clause (2) above to cause the company to permit the holders of the Series A-1 preferred shares to include in the qualifying listing event any common shares for sale, then the company, in its sole discretion, will have the right to redeem from the holders of the Series A-1 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-1 preferred shares so that the holders of the Series A-1 preferred shares hold less than 19.9% of our outstanding shares of beneficial interest following a qualifying listing event. The Series A-1 preferred shares redeemed in this event will be redeemed in cash at a per share price equal to the greater of (a) the amount such holders of Series A-1 preferred shares would have received as if such Series A-1 preferred shares were automatically converted in connection with a qualifying listing event (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-1 preferred shares or, in certain cases, an independent expert) or (b) the Series A-1 Trust Redemption Price (as defined below).

101

We have an option to redeem all of the Series A-1 preferred shares with a payment providing the holders with an amount equal to the greater of (1) a 15% internal rate of return on such holder’s Series A-1 preferred shares and (2) the amount the holders of the Series A-1 preferred shares would have received as if such Series A-1 preferred shares were converted into a number of common shares based on the stated value of $20.00 per share, adjusted for additional issuances of common shares and instruments convertible into common shares of the company, plus accretion dividends and unpaid dividends (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-1 preferred shares or, in certain cases, an independent expert) (the “Series A-1 Trust Redemption Price” and such option to redeem, the “Series A-1 preferred share call option”). At any time, including upon the company’s exercise of the Series A-1 preferred share call option, (1) any holder of Series A-1 preferred shares may elect to convert all or any portion of such holder’s Series A-1 preferred shares into common shares and (2) the majority of holders of Series A-1 preferred shares may elect to convert all of the Series A-1 preferred shares into common shares of the company.

Holders of Series A-1 preferred shares are entitled to the number of votes on an as converted basis as to any matters together as a single class with holders of common shares. Dividends on Series A-1 preferred shares are cumulative at 11.5% per annum (7% cash, 4.5% accretion dividend added to the Series A-1 preferred shares’ stated value) on the stated value per share through April 19, 2022, 12% (7% cash, 5% accretion dividend) commencing on April 20, 2022, 13% (8% cash, 5% accretion dividend) commencing on November 20, 2022 and 15% (9% cash, 6% accretion dividend) commencing on November 20, 2023.

There were no unpaid dividends on Series A-1 preferred shares as of September 30, 2021 and December 31, 2020. The outstanding balance of contingently redeemable Series A-1 preferred shares as of September 30, 2021 and December 31, 2020 was $53.1 million and $50.3 million less the compound embedded derivative of $1.8 million and $1.7 million, respectively. Unaccreted offering costs and unaccreted issuance discount of $0.8 million and $0.9 million as of September 30, 2021 and December 31, 2020, respectively, are presented as reductions of the Series A-1 preferred shares presented as temporary equity in the consolidated balance sheets.

The holders of a majority of the outstanding Series A-1 preferred shares have the right to designate a trustee to our board of trustees and a board observer, and such holders have designated Elliot Chovev as their observer. The holders of Series A-1 preferred shares have the right to approve certain of the company’s actions.

Contingently Redeemable Series A-2 Preferred Shares

On May 4, 2021 and August 11, 2021, we issued an aggregate of 7,500,000 convertible Series A-2 preferred shares, $0.001 par value per share, resulting in $147.8 million in gross proceeds at a 1.5% discount to the $20.00 per share initial stated value. The Series A-2 preferred shares rank senior to our common shares and non-participating common shares with respect to payment of dividends and distributions upon our liquidation. The Series A-2 preferred shares’ liquidation value as of September 30, 2021 was $153.0 million.

The Series A-2 preferred shares automatically convert upon a qualifying listing event into a number of common shares based on our option of either (1) the Series A-2 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by 90% of the per common share listing event price or (2) the Series A-2 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by the undiscounted price per common share at the listing event plus a cash fee to holders of Series A-2 preferred shares at 10% of the Series A-2 preferred shares’ stated value. In the event that the holders of Series A-2 preferred shares would own 25% or more of our outstanding shares of beneficial interest following a qualifying listing event, the holders of the Series A-2 preferred shares may elect to cause the company to either (1) redeem from the holders of Series A-2 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-2 preferred shares so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following the qualifying listing event or (2) permit the holders of Series A-2 preferred shares to include in the qualifying listing event a number of common shares (into which the Series A-2 preferred shares convert) for sale so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following the qualifying listing event; provided, however, that if the holders of the Series A-2 preferred shares elect pursuant to clause (2) above to cause the company to permit the holders of the Series A-2 preferred shares to include in the qualifying listing event any common shares for sale, then the company, in its sole discretion, will have the right to redeem from the holders of the Series A-2 preferred shares, concurrently with the closing of

102

the qualifying listing event, such number of Series A-2 preferred shares so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following a qualifying listing event. The Series A-2 preferred shares redeemed in this event will be redeemed in cash at a per share price equal to the greater of (a) the amount such holders of Series A-2 preferred shares would have received as if such Series A-2 preferred shares were automatically converted in connection with a qualifying listing event (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-2 preferred shares or, in certain cases, an independent expert), or (b) the Series A-2 Trust Redemption Price.

We have an option to redeem all of the Series A-2 preferred shares with a payment providing the holders with an amount equal to the greater of (1) a 15% internal rate of return on such holder’s Series A-2 preferred shares and (2) the amount the holders of the Series A-2 preferred shares would have received as if such Series A-2 preferred shares were converted into a number of common shares based on the stated value of $20.00 per share, adjusted for additional issuances of common shares and instruments convertible into common shares of the company, plus accretion dividends and unpaid dividends (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-2 preferred shares or, in certain cases, an independent expert). At any time, including upon the company’s exercise of the Series A-2 preferred share call option, (1) any holder of Series A-2 preferred shares may elect to convert all or any portion of such holder’s Series A-2 preferred shares into common shares and (2) the majority of holders of Series A-2 preferred shares may elect to convert all of the Series A-2 preferred shares into common shares of the company.

Holders of Series A-2 preferred shares are entitled to the number of votes on an as converted basis as to any matters together as a single class with holders of common shares. Dividends on Series A-2 preferred shares are cumulative at 11.5% per annum (7% cash, 4.5% accretion dividend added to the Series A-2 preferred shares’ stated value) on the stated value per share through April 19, 2022, 12% (7% cash, 5% accretion dividend) commencing on April 20, 2022, 13% (8% cash, 5% accretion dividend) commencing on November 20, 2022 and 15% (9% cash, 6% accretion dividend) commencing on November 20, 2023.

The outstanding balance of contingently redeemable Series A-2 preferred shares of $153.0 million as of September 30, 2021, reduced by the initial fair value of the compound embedded derivative of $10.0 million and unaccreted offering costs and unaccreted issuance discount of $3.0 million, is presented as temporary equity in the consolidated balance sheets.

The holders of a majority of the outstanding Series A-2 preferred shares have the right to designate a trustee to our board of trustees, and such holders have designated Matthew Settle as their trustee. The holders of Series A-2 preferred shares have the right to designate an observer to our board of trustees. The holders of Series A-2 preferred shares have the right to approve certain of the company’s actions.

Historical and Pro Forma Indebtedness

The following is a summary of certain of the terms of the company’s indebtedness as of September 30, 2021 and December 31, 2020 and pro forma basis as of September 30, 2021 after giving effect to the completion of this offering and the application of the net proceeds as described in “Use of Proceeds.”

103

​

​

​

​

​

​

​

Principal Balance

(In thousands) Property/ Borrower

Location

Lender

Maturity Date

Periodic Payment

Interest Rate

Pro Forma 9/30/21

9/30/21

12/31/20

Monsanto

Morton, IL

Heartland Bank & Trust Co.

​

2/8/2022

Principal and Interest

4.15%

​

$

​

$

2,639

​

$

2,692

BJ’s Wholesale Club

Tilton, NH

Deutsche Mortgage & Asset Receiving Corp. J.P. Morgan Chase

​

1/6/2023

Interest Only

4.75%

​

​

​

​

4,444

​

​

4,446

Academy Sports

Jonesboro, AR

Comm. Mortgage Securities Trust

​

11/6/2022

Interest Only

4.85%

​

​

​

​

5,492

​

​

5,516

Academy Sports

Mt. Juliet, TN

Deutsche Mortgage & Asset Receiving Corp. J.P. Morgan Chase

​

12/6/2022

Interest Only

5.00%

​

​

​

​

6,047

​

​

6,080

Dollar General

Middleburg, FL

Comm. Mortgage Securities Trust

​

5/6/2022

Interest Only

5.35%

​

​

​

​

866

​

​

869

Dollar General

Yulee, FL

Ladder Capital Finance, LLC

​

8/6/2022

Interest Only

5.25%

​

​

​

​

881

​

​

887

Gander Mountain

Lebanon, IN

J.P. Morgan Chase Bank

​

11/1/2024

Interest Only

4.30%

​

​

​

​

6,229

​

​

6,229

CVS/Caremark

Mt. Prospect, IL

UBS Real Estate Securities Inc.

​

1/6/2025

Interest Only

4.15%

​

​

​

​

8,580

​

​

8,580

Domino’s Pizza

Odenton, MD

J.P. Morgan Chase Bank

​

6/1/2025

Interest Only

3.77%

​

​

​

​

6,215

​

​

6,215

Cathedral Energy Svcs.

Oklahoma City, OK

J.P. Morgan Chase Bank

​

6/1/2025

Interest Only First 5 Years

4.02%

​

​

​

​

—

​

​

2,159

McJunkin Red Man

Odessa, TX

Deutsche Mortgage & Asset Receiving Corp.

​

9/6/2025

Principal and Interest

4.74%

​

​

​

​

6,266

​

​

6,411

Illinois Tool Works

St. Charles, MO

Simmons Bank

​

11/5/2022

Principal and Interest

4.25%

​

​

​

​

3,608

​

​

3,692

Fresenius Medical Care

Lubbock, TX

KeyBank National Assoc.

​

8/1/2026

Interest Only First 3 Years

4.60%

​

​

​

​

2,768

​

​

2,802

Fresenius Medical Care

Carbondale, IL

KeyBank National Assoc.

​

8/1/2026

Interest Only First 3 Years

4.60%

​

​

​

​

2,264

​

​

2,293

Horizon Blue Cross Blue Shield of NJ

Mt. Laurel, NJ

Wells Fargo Bank Northwest N.A.

​

12/15/2026

Interest Only First 5 Years

3.41%

​

​

​

​

11,750

​

​

11,750

Biolife Pharma Services

Riverton, UT

UBS AG

​

11/6/2027

Interest Only First 5 Years

4.96%

​

​

​

​

4,300

​

​

4,300

Board of Regents, State of Iowa

Iowa City, IA

GreenState Credit Union

​

7/15/2028

Interest Only First 2 Years

4.70%

​

​

​

​

13,052

​

​

13,185

GPM

Colony, TX

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

2,152

​

​

2,169

GPM

Elkhart, IN

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

1,479

​

​

1,491

GPM

Eufaula, OK

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

1,250

​

​

1,259

GPM

Granger, IL

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

1,337

​

​

1,347

GPM

Irving, TX

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

1,247

​

​

1,257

GPM

Michawaka, IN

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

2,014

​

​

2,030

GPM

Richland Hills, TX

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

804

​

​

810

GPM

Utica, MI

Capital One, N.A.

​

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

​

​

982

​

​

989

International Paper Company

Omaha, NE

Provident Bank

​

6/1/2026

Interest Only First 4 Years

4.16%

​

​

​

​

3,575

​

​

3,575

New York State Electric & Gas

Plattsburgh, NY

People’s United Bank, N.A.

​

9/18/2029

Interest Only First 5 Years

L + 1.70%

​

​

​

​

2,568

​

​

2,568

Goodwill of Central and Southern Indiana, Inc.

Greenwood, IN

Provident Bank

​

8/1/2026

Interest Only First 4 Years

3.98%

​

​

​

​

4,754

​

​

4,754

104

​

​

​

​

​

​

​

Principal Balance

(In thousands) Property/ Borrower

Location

Lender

Maturity Date

Periodic Payment

Interest Rate

Pro Forma 9/30/21

9/30/21

12/31/20

Caliber

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Collision/ABRA Auto Body

Blaine, MN

M&T Bank

​

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

​

​

​

2,691

​

​

2,691

Caliber Collision

Brighton, CO

M&T Bank

​

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

​

​

​

3,010

​

​

3,017

Caliber Collision

Middletown, WI

M&T Bank

​

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

​

​

​

2,744

​

​

2,750

A. Stucki Company

North Canton, OH

Chemical Bank

​

8/22/2024

Interest Only First 3 Years

L + 2.10%

​

​

​

​

​

4,839

​

​

4,839

Caliber Collision

Bordentown, NJ

M&T Bank

​

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

​

​

​

3,084

​

​

3,091

Ferguson Enterprises, LLC

Cincinnati, OH

Provident Bank

​

2/1/2027

Interest Only First 3 Years

3.60%

​

​

​

​

​

2,500

​

​

2,500

Goodwill of Central and Southern Indiana, Inc.

Muncie, IN

Oceanfirst Bank N.A

​

3/1/2030

Interest Only First 5 Years

L + 2%

​

​

​

​

​

1,469

​

​

1,469

Goodwill of Central and Southern Indiana, Inc.

Greenwood, IN

Oceanfirst Bank N.A

​

3/1/2030

Interest Only First 5 Years

L + 2%

​

​

​

​

​

1,282

​

​

1,282

Fresenius Kidney Care

Brownsville, TX

Provident Bank

​

7/1/2027

Interest Only First 4 Years

3.50%

​

​

​

​

​

3,320

​

​

3,320

Amazon

Grand Rapids, MI

Oceanfirst Bank N.A

​

11/10/2027

Interest Only First 5 Years

3.05%

​

​

​

​

​

22,550

​

​

22,550

Melitta

Clearwater, FL

Provident Bank

​

1/1/2028

Interest Only First 2 Years

3.50%

​

​

​

​

​

5,500

​

​

5,500

GAF Materials, LLC

Michigan City, IN

Oceanfirst Bank N.A

​

3/12/2028

Interest Only First 5 Years

3.10%

​

​

​

​

​

20,392

​

​

—

Amazon

Oklahoma City, OK

Oceanfirst Bank N.A

​

3/12/2028

Interest Only First 5 Years

3.15%

​

​

​

​

​

24,360

​

​

—

Amazon

Austin, TX

Sun Life Assurance Company of Canada

​

6/10/2026

Interest Only

2.31%

​

​

​

​

​

37,100

​

​

—

Fresenius Kidney Care

Houston, TX

Provident Bank

​

5/1/2028

Interest Only First 5 Years

3.25%

​

​

​

​

​

2,810

​

​

—

Fresenius Kidney Care

Albany, OR

Provident Bank

​

5/1/2028

Interest Only First 5 Years

3.25%

​

​

​

​

​

4,950

​

​

—

University of North Carolina Health Care

Chapel Hill, NC

Provident Bank

​

5/1/2028

Interest Only First 5 Years

3.25%

​

​

​

​

​

7,970

​

​

—

Batchelor & Kimball, Inc

Conyers, GA

Provident Bank

​

10/1/2028

Interest Only First 5 Years

2.95%

​

​

​

​

​

8,720

​

​

—

Biolife Plasma Services LP

Dallas, TX

Provident Bank

​

10/1/2028

Interest Only First 5 Years

2.95%

​

​

​

​

​

4,350

​

​

—

CSL Plasma Inc

Allentown, PA

Provident Bank

​

10/1/2028

Interest Only First 5 Years

2.95%

​

​

​

​

​

2,490

​

​

—

Fresenius Medical Care

Baton Rouge, LA

Provident Bank

​

10/1/2028

Interest Only First 5 Years

2.95%

​

​

​

​

​

3,135

​

​

—

Henry Ford OptimEyes

Baton Rouge, LA

Provident Bank

​

10/1/2028

Interest Only First 5 Years

2.95%

​

​

​

​

​

6,305

​

​

—

Total Mortgage Debt

​

​

​

​

—

—

​

​

​

​

​

283,134

​

​

163,364

Four Springs Capital

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Trust OP (M&T Credit Facility)

​

M&T Bank

​

10/30/22

Variable

​

​

​

—

​

​

45,000

​

​

17,381

Four Springs Capital Trust (Mezzanine Loan)

​

Magnetar

​

10/30/25

Variable

​

​

​

—

​

​

88,639

​

​

85,670

Total Debt

​

​

​

​

​

​

​

$

​

$

416,773

​

$

266,415

Pro Rata Share of Debt

​

​

​

​

​

​

​

$

​

$

107,584

​

$

88,640

105

Pro Forma Contractual Obligations

The following table provides information with respect to our contractual obligations as of September 30, 2021, on a pro forma basis giving effect to the completion of this offering and the application of the net proceeds as described in “Use of Proceeds.”

​

Payment Due by Period

(In thousands)

Total

1 year (2021)

2 – 3 years (2022−2023)

4 – 5 years (2024−2025)

More than 5 years (after 2026)

Mezzanine Loan

​

​

​

​

​

​

​

​

​

​

​

​

Interest(1)

​

​

​

​

​

​

​

​

​

​

​

​

M&T Credit Facility

​

​

​

​

​

​

​

​

​

​

​

​

Non-recourse long-term debt obligations:

​

​

​

​

​

​

​

​

​

​

​

​

Principal

​

​

​

​

​

​

​

​

​

​

​

​

Interest

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

$

​

$

​

$

​

$

​

$

(1)

Includes 2% prepayment fee, cash interest and paid-in-kind interest

Historical Contractual Obligations

The following table provides information with respect to our contractual obligations as of September 30, 2021.

​

Payment Due by Period

(In thousands)

Total

1 year (2021)

2 – 3 years (2022−2023)

4 – 5 years (2024−2025)

More than 5 years (after 2026)

Mezzanine Loan

​

$

88,639

​

$

—

​

$

—

​

$

88,639

​

$

—

Interest(1)

​

​

46,346

​

​

2,615

​

​

21,849

​

​

21,882

​

​

​

M&T Credit Facility

​

​

45,000

​

​

—

​

​

45,000

​

​

—

​

​

—

Interest(2)

​

​

1,432

​

​

333

​

​

1,099

​

​

​

​

​

​

Non-recourse long-term debt obligations:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Principal

​

​

282,952

​

​

404

​

​

27,147

​

​

55,518

​

​

199,883

Interest

​

​

48,063

​

​

2,437

​

​

18,487

​

​

15,042

​

​

12,097

Total

​

$

512,432

​

$

5,789

​

$

113,582

​

$

181,081

​

$

211,980

(1)

Includes cash interest and paid-in-kind interest

(2)

Includes interest and unused fees

The following table provides information with respect to our contractual obligations as of December 31, 2020.

106

​

Payment Due by Period

(In thousands)

Total

1 year (2021)

2 – 3 years (2022−2023)

4 – 5 years (2024−2025)

More than 5 years (after 2026)

Mezzanine Loan

​

$

85,670

​

$

—

​

$

—

​

$

85,670

​

$

—

Interest(1)

​

​

53,850

​

​

10,119

​

​

21,849

​

​

21,882

​

​

​

M&T Credit Facility

​

​

17,381

​

​

—

​

​

17,381

​

​

—

​

​

—

Interest(2)

​

​

1,239

​

​

676

​

​

563

​

​

​

​

​

​

Non-recourse long-term debt obligations:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Principal

​

​

163,111

​

​

1,049

​

​

27,230

​

​

57,562

​

​

77,270

Interest

​

​

31,545

​

​

6,447

​

​

11,412

​

​

8,598

​

​

5,088

Total

​

$

352,796

​

$

18,291

​

$

78,435

​

$

173,712

​

$

82,358

(1)

Includes cash interest and paid-in-kind interest

(2)

Includes interest and unused fees

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of September 30, 2021, December 31, 2020 or December 31, 2019.

Cash Flows

The following table summarizes our cash flows for the nine months ended September 30, 2021 and 2020 and for the years ended December 31, 2020 and 2019:

​	Nine Months Ended September 30,						Year Ended December 31,
(In thousands)	2021			2020			2020			2019
Net cash provided by operating activities	​	$	13,790	​	$	11,246	​	$	13,186	​	$	11,708
Net cash used in investing activities	​	​	(367,516)	​	​	(22,320)	​	​	(77,368)	​	​	(74,723)
Net cash provided by financing activities	​	​	377,823	​	​	8,687	​	​	61,924	​	​	69,493
Net increase (decrease) in cash and cash equivalents	​	$	24,097	​	$	(2,387)	​	$	(2,258)	​	$	6,478

Management believes that the cash generated by our operations, together with our cash and cash equivalents at September 30, 2021, our current borrowing capacity on the M&T Credit Facility and our access to mortgage financing, will be sufficient to fund our near-term operations.

Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

Operating Activities

Our cash flows provided by operating activities depend on numerous factors, including the occupancy level of our portfolio, the rental rates stated in our leases, the collection of rent from our tenants and the amount of our operating and other expenses. Net cash provided by operating activities was $13.8 million and $11.2 million for the nine months ended September 30, 2021 and 2020, respectively. The increase was primarily driven by the net growth in the size of our real estate portfolio, which generated additional rental revenues. We utilize our operating cash flows to fund our dividends and for certain investing activities.

Investing Activities

Our net cash used in investing activities is generally used to fund property acquisitions and, to a limited extent, capital expenditures. Net cash provided by investing activities generally relates to the disposition of real estate and other assets. Net cash used in investing activities was $367.5 million and $22.3 million for the nine months

107

ended September 30, 2021 and 2020, respectively. The increase was due to acquisition volume of $381.6 million for the nine months ended September 30, 2021 compared to $27.4 million for the nine months ended September 30, 2020, partially offset by proceeds from disposition of real estate of $14.2 million and $5.1 million during the nine months ended September 30, 2021 and 2021, respectively.

Financing Activities

Our net cash provided by financing activities is generally impacted by our issuance of preferred shares, net proceeds of debt instruments, and net cash flow from the Section 1031 Exchange Program. Net cash provided by financing activities was $377.8 million and $8.7 million for the nine months ended September 30, 2021 and 2020, respectively. The increase in net cash provided by financing activities was primarily driven by an increase in net cash flow from the Section 1031 Exchange Program of $103.1 million, a net increase in notes payable proceeds of $111.7 million, an increase in net borrowing from the M&T Credit Facility of $26.6 million, an increase in proceeds from Series A-2 preferred shares of $146.7 million, partially offset by prior year issuances of preferred shares of $10.1 million and an increase in dividends and distributions of $10.3 million.

Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019

Operating Activities

Our cash flows provided by operating activities depend on numerous factors, including the occupancy level of our portfolio, the rental rates stated in our leases, the collection of rent from our tenants and the amount of our operating and other expenses. Net cash provided by operating activities was $13.2 million and $11.7 million for the years ended December 31, 2020 and 2019, respectively. The increase was primarily driven by the net growth in the size of our real estate portfolio, which generated additional rental revenues. We utilize our operating cash flows to fund our dividends and for certain investing activities.

Investing Activities

Our net cash used in investing activities is generally used to fund property acquisitions and, to a limited extent, capital expenditures. Net cash provided by investing activities generally relates to the disposition of real estate and other assets. Net cash used in investing activities was $77.4 million and $74.7 million for the years ended December 31, 2020 and 2019, respectively. The increase in net cash used in investing activities was primarily driven by a decrease in acquisition activity of approximately $9.3 million during 2020 compared to 2019, partially offset by a decrease in disposition proceeds of $12.0 million during 2020 as compared to 2019.

Financing Activities

Our net cash provided by financing activities is generally impacted by our issuance of preferred shares, borrowings, net proceeds of debt instruments, and net cash flow from the Section 1031 Exchange Program. Net cash provided by financing activities was $61.9 million and $69.5 million for the years ended December 31, 2020 and 2019, respectively. The decrease in net cash provided by financing activities was primarily driven by the redemption of the Series E preferred shares of $63.0 million, increase in net repayments on the M&T Credit Facility of $63.3 million, a reduction of net borrowings from our notes payable of $2.2 million, decrease in net proceeds from issuance of Series D and Series DRIP 1 preferred shares of $13.0 million, an increase of dividends and distributions paid of $1.8 million, costs related to an interest rate hedge payoff of $1.3 million, an increase in payments to acquire beneficial interest from noncontrolling interest of $1.7 million, restructuring costs of $0.8 million and an increase in debt issuance costs of $4.6 million during 2020. This was offset by an increase in net borrowings from the Mezzanine Loan of $85.0 million as well as proceeds for the issuance of the Series A-1 preferred shares of $49.3 million and additionally by the increase in net proceeds from the Section 1031 Exchange Program of $10.5 million during 2020.

Non-GAAP Financial Measures

Our reported results are presented in accordance with GAAP. We also disclose FFO and AFFO, consolidated Cash NOI and consolidated EBITDA and Adjusted EBITDA all of which are non-GAAP financial measures. We believe these non-GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and

108

AFFO, Cash NOI and EBITDA and Adjusted EBITDA do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as reported on our consolidated statements of operations and statements of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

FFO and AFFO

We consider FFO as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be an appropriate supplemental disclosure of operating performance for an equity REIT due to its widespread acceptance and use within the REIT and analyst communities. FFO is commonly used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. Consistent with the NAREIT definition, we define FFO attributable to Four Springs Capital Trust, and therefore pro-rata, as net income (loss) attributable to Four Springs Capital Trust (computed in accordance with GAAP), excluding gains (losses) from sales of depreciated property and impairment of depreciable real estate, plus depreciation and amortization.

We believe that AFFO is an additional useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by other non-cash revenues or expenses. AFFO is FFO as adjusted for straight-line rental revenue, amortization of financing costs and debt premiums, non-cash compensation expense, amortization of the net favorable in-place leases, acquisition costs and other non-cash items. While we do not label acquisition costs as nonrecurring, infrequent or unusual, management believes that it is helpful to adjust for these expenses when they do occur to allow for comparability of results between periods because each acquisition is of varying size and complexity and may involve different types of expenses depending on the type and location of the property being acquired and the party from whom it is acquired. All adjustments made to the net income (loss) attributable to Four Springs Capital Trust to arrive at both FFO and AFFO are adjusted for the noncontrolling interests included within the captions on the consolidated statements of operations for the applicable period. The company’s method of calculating FFO and AFFO may be different from methods used by other REITs and, accordingly, may not be comparable to such other REITs. FFO and AFFO do not represent cash generated from operations as defined by GAAP and are not indicative of cash available to fund cash needs, including distributions. They should not be considered as alternatives to net income for the purpose of evaluating the company’s performance or to cash flows as a measure of liquidity.

The following table reconciles our net income (loss) to FFO and AFFO.

109

​

Nine Months Ended September 30, (unaudited)

Year Ended December 31,

​

Pro Forma

Historical

Pro Forma

Historical

(In thousands)

2021

2021

2020

2020 (unaudited)

2020

2019

Net (loss) income attributable to Four Springs Capital Trust

​

$

​

$

(8,330)

​

$

(423)

​

$

​

$

(1,140)

​

$

2,286

Depreciation and amortization of real estate assets

​

​

​

​

​

9,507

​

​

7,252

​

​

​

​

​

9,780

​

​

7,795

Gain on dispositions of real estate, net of tax

​

​

​

​

​

(2,320)

​

​

—

​

​

​

​

​

(7)

​

​

(2,421)

Provision for impairment

​

​

​

​

​

320

​

​

526

​

​

​

​

​

524

​

​

—

FFO attributable to Four Springs Capital Trust

​

​

​

​

​

(823)

​

​

7,355

​

​

​

​

​

9,157

​

​

7,660

Straight-line rent, net

​

​

​

​

​

(914)

​

​

(971)

​

​

​

​

​

(1,268)

​

​

(1,026)

Acquisition costs

​

​

​

​

​

(98)

​

​

188

​

​

​

​

​

227

​

​

54

Share-based compensation expense

​

​

​

​

​

6,660

​

​

31

​

​

​

​

​

29

​

​

54

Non-cash interest expense

​

​

​

​

​

4,894

​

​

910

​

​

​

​

​

2,698

​

​

1,088

Change in fair value of compound embedded derivative and warrant liability

​

​

​

​

​

416

​

​

205

​

​

​

​

​

(348)

​

​

98

Amortization of lease-related intangibles and costs

​

​

​

​

​

164

​

​

214

​

​

​

​

​

271

​

​

269

AFFO attributable to Four Springs Capital Trust

​

$

​

$

10,299

​

$

7,932

​

$

​

$

10,766

​

$

8,197

Cash Net Operating Income

We consider Cash NOI to be an appropriate supplemental performance measure to net income because we believe it assists investors and management understand the operations of our portfolio. Cash NOI is defined as rental revenue, including reimbursements, less property operating expenses, real estate taxes, insurance and straight-line rent. Cash NOI is used by management internally to evaluate and compare the operating performance of the company’s properties. We believe Cash NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those cash income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the company’s properties as this measure is not affected by non-cash revenue and expense recognition items, the cost of our funding, the impact of depreciation and amortization expenses that, because of historical cost accounting and useful life estimates, may distort operating performance at the property level, gains or losses from the acquisition and sale of operating real estate assets, and general and administrative expenses and professional fees not incurred directly from property operations. We also believe that Cash NOI is a widely accepted measure of comparative operating performance in the real estate community. Cash NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Additionally, our Cash NOI may not be comparable to that of other real estate companies, as they may use different methodologies in calculating Cash NOI.

110

The following table reconciles net income (loss) to Cash NOI:

​

Nine Months Ended September 30, (unaudited)

Year Ended December 31,

​

Pro Forma

Historical

Pro Forma

Historical

(In thousands)

2021

2021

2020

2020 (unaudited)

2020

2019

Net income (loss) before allocation to noncontrolling interests

​

$

​

$

(14,610)

​

$

335

​

$

​

$

(1,216)

​

$

3,236

Add: General and administrative expenses

​

​

​

​

​

11,729

​

​

3,843

​

​

​

​

​

5,151

​

​

5,363

Add: Professional fees

​

​

​

​

​

2,120

​

​

390

​

​

​

​

​

902

​

​

627

Add: Depreciation and amortization expense

​

​

​

​

​

15,725

​

​

10,059

​

​

​

​

​

13,562

​

​

10,630

Add: Interest expense

​

​

​

​

​

17,878

​

​

7,598

​

​

​

​

​

12,597

​

​

9,568

Less: Straight-line rent adjustment

​

​

​

​

​

(1,800)

​

​

(1,215)

​

​

​

​

​

(1,609)

​

​

(1,336)

Add: Amortization of acquired favorable leases, net

​

​

​

​

​

118

​

​

231

​

​

​

​

​

293

​

​

286

Add: Acquisition costs

​

​

​

​

​

41

​

​

195

​

​

​

​

​

236

​

​

56

Add (Less): Income tax provision (benefit)

​

​

​

​

​

1,996

​

​

48

​

​

​

​

​

29

​

​

308

Add (Less): Change in fair value of compound embedded derivative and warrant liability

​

​

​

​

​

416

​

​

209

​

​

​

​

​

(355)

​

​

98

Add: Loss on extinguishment of debt

​

​

​

​

​

310

​

​

—

​

​

​

​

​

—

​

​

—

Less: Gain on sale

​

​

​

​

​

(2,431)

​

​

(401)

​

​

​

​

​

(409)

​

​

(2,698)

Add: Provision for Impairment

​

​

​

​

​

335

​

​

535

​

​

​

​

​

535

​

​

​

Cash NOI−consolidated

​

​

​

​

​

31,827

​

​

21,827

​

​

​

​

​

29,716

​

​

26,137

Adjustments for Cash NOI allocation to noncontrolling interests

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less: Rental revenue of noncontrolling interests

​

​

​

​

​

(12,344)

​

​

(6,262)

​

​

​

​

​

(8,514)

​

​

(7,976)

Add: Straight-line rent adjustment of noncontrolling interests

​

​

​

​

​

886

​

​

244

​

​

​

​

​

340

​

​

310

Less: Amortization of acquired favorable leases of noncontrolling interests

​

​

​

​

​

46

​

​

(17)

​

​

​

​

​

(21)

​

​

(17)

Less: Tenant reimbursements and other revenue of noncontrolling interests

​

​

​

​

​

(1,777)

​

​

(397)

​

​

​

​

​

(716)

​

​

(407)

Add: Property expenses of noncontrolling interests

​

​

​

​

​

1,859

​

​

577

​

​

​

​

​

897

​

​

888

Cash NOI−pro rata

​

$

​

$

20,497

​

$

15,972

​

$

​

$

21,702

​

$

18,936

EBITDA and Adjusted EBITDA

We define EBITDA as net income (loss) computed in accordance with GAAP adjusted for depreciation and amortization expense, interest expense and net income tax provisions or benefits. We define Adjusted EBITDA as EBITDA further adjusted for straight-line rent, amortization of acquired favorable leases, net, severance payments, acquisition costs and share-based compensations. While we do not label acquisition costs as nonrecurring, infrequent or unusual, management believes that it is helpful to adjust for these expenses when they do occur to allow for comparability of results between periods because each acquisition is of varying size and complexity and may involve different types of expenses depending on the type and location of the property being acquired and the party from whom it is acquired.

We use EBITDA and Adjusted EBITDA to evaluate our performance because EBITDA and Adjusted EBITDA allow us to evaluate the operating performance of the company by measuring the core operations of property performance and administrative expenses available for debt service. We also believe that these measures provide useful information and operating perspectives to current and potential investors and creditors to compare our core operating results and our ability to service debt not immediately apparent from GAAP operating income or net income. Other REITs may use different methodologies for calculating

111

EBITDA and Adjusted EBITDA, and accordingly, our EBITDA and Adjusted EBITDA may not be comparable to other REITs.

The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA:

​

Nine Months Ended September 30, (unaudited)

Year Ended December 31,

​

Pro Forma

Historical

Pro Forma

Historical

(In thousands)

2021

2021

2020

2020 (unaudited)

2020

2019

Net income (loss) before allocation to noncontrolling interests

​

$

​

$

(14,610)

​

$

335

​

$

​

$

(1,216)

​

$

3,236

Add: Depreciation and amortization expense

​

​

​

​

​

15,725

​

​

10,059

​

​

​

​

​

13,562

​

​

10,630

Add: Interest expense

​

​

​

​

​

17,878

​

​

7,598

​

​

​

​

​

12,597

​

​

9,568

Add: (Income tax benefit) provision for income taxes

​

​

​

​

​

1,996

​

​

48

​

​

​

​

​

29

​

​

308

EBITDA−consolidated

​

​

​

​

​

20,989

​

​

18,040

​

​

​

​

​

24,972

​

​

23,742

Less: Straight-line rent adjustment

​

​

​

​

​

(1,800)

​

​

(1,215)

​

​

​

​

​

(1,609)

​

​

(1,336)

Add: Amortization of acquired favorable leases, net

​

​

​

​

​

118

​

​

231

​

​

​

​

​

292

​

​

286

Add: Acquisition costs

​

​

​

​

​

41

​

​

195

​

​

​

​

​

236

​

​

56

Add: Share-based compensation

​

​

​

​

​

6,660

​

​

31

​

​

​

​

​

29

​

​

54

Adjusted EBITDA−consolidated

​

​

​

​

​

26,008

​

​

17,282

​

​

​

​

​

23,920

​

​

22,802

Adjustments for Adjusted EBITDA allocation to noncontrolling interests

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Less: Rental revenue of noncontrolling interests

​

​

​

​

​

(12,344)

​

​

(6,262)

​

​

​

​

​

(8,514)

​

​

(7,976)

Add: Straight-line rent adjustment of noncontrolling interests

​

​

​

​

​

886

​

​

244

​

​

​

​

​

340

​

​

310

Less: Amortization of acquired unfavorable leases of noncontrolling interests

​

​

​

​

​

46

​

​

(17)

​

​

​

​

​

(21)

​

​

(17)

Less: Tenant reimbursements and other revenue of noncontrolling interests

​

​

​

​

​

(1,777)

​

​

(397)

​

​

​

​

​

(716)

​

​

(407)

Add: Acquisition fee revenue from noncontrolling interests

​

​

​

​

​

7,310

​

​

156

​

​

​

​

​

1,407

​

​

667

Add: Management fee revenue from noncontrolling interests

​

​

​

​

​

516

​

​

281

​

​

​

​

​

378

​

​

366

Add: Property expenses of noncontrolling interests

​

​

​

​

​

1,859

​

​

577

​

​

​

​

​

897

​

​

888

Add: General and administrative expenses of noncontrolling interests

​

​

​

​

​

595

​

​

131

​

​

​

​

​

188

​

​

178

Add: Professional fees of noncontrolling interests

​

​

​

​

​

166

​

​

24

​

​

​

​

​

61

​

​

41

Adjusted EBITDA−pro rata

​

$

​

$

23,265

​

$

12,019

​

$

​

$

17,940

​

$

16,852

Quantitative and Qualitative Disclosures About Market Risk

We seek to match the cash inflows from our long-term leases with the expected cash outflows on our long-term debt. To achieve this objective, our consolidated subsidiaries primarily borrow on a fixed-rate basis for longer-term debt issuances while contemporaneously managing our debt maturities. At September 30, 2021 and

112

December 31, 2020, all of our long-term debt outstanding either carried a fixed interest rate or carried a variable rate and was hedged to fix the interest rate for the duration of the debt. We are exposed to interest rate risk between the time we enter into an acquisition and the time we finance the related real estate with long-term fixed-rate debt. In addition, when that long-term fixed-rate debt matures, we may have to refinance the real estate at a higher interest rate. Market interest rates are sensitive to many factors that are beyond our control. Our interest rate risk management objective is to balance the risk of future interest rate increases impacting our earnings and cash flows while achieving benefits from short-term interest rate decreases.

To address the risk of future interest rate increases, we seek to minimize the time period between acquisition of the real estate and the ultimate financing of that real estate with long-term fixed-rate debt. A portion of our long-term debt provides for some amortization of the principal balance over the term of the debt, which serves to reduce the amount of refinancing risk at debt maturity. In addition, we may use various financial instruments designed to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies, depending on our analysis of the interest rate environment and the costs and risks of such strategies. We do not use derivative instruments for trading or speculative purposes. By utilizing a combination of credit facilities bearing interest at variable terms and securing longer-term non-recourse debt at fixed rates, we believe we achieve these objectives. We actively monitor market interest rates, and we have the ability to fix the M&T Credit Facility interest rate for a period of up to six months without the use of any derivative instruments.

Impact of Inflation

We are exposed to inflation risk as rents from long-term leases are our main source of cash flows from operations. Historically, inflation has had a minimal impact on the operating performance of our properties. A substantial number of our lease agreements contain provisions designed to mitigate the adverse impact of inflation. These provisions include clauses that enable us to receive payment of increased rent pursuant to escalation clauses which generally increase rental rates during the terms of the leases. These escalation clauses often provide for fixed rent increases or indexed escalations (based upon CPI or other measures). However, some of these contractual rent increases may be less than the actual rate of inflation. Most of our lease agreements require the tenant to pay all, substantially all or an allocable share of operating expenses relating to the respective property, real estate taxes and insurance. These requirements reduce our exposure to increases in these costs and operating expenses resulting from inflation. Although the impact of inflation has been relatively insignificant in recent years, it does remain a factor in the U.S. economy and could increase the cost of acquiring or replacing properties in the future.

113

OUR BUSINESS

Our Company

We are an internally managed REIT focused on acquiring, owning and actively managing a portfolio of single-tenant, income producing industrial, medical, service/necessity retail and office properties throughout the United States that are subject to long-term net leases. As of November 15, 2021, we wholly owned, or had ownership interests in, 154 properties located in 32 states that were 99.8% leased (based on our leasable square footage) to 68 tenants operating in 37 different industries. As of such date, approximately 43.3% of our ABR on an expected post-syndication pro rata share basis was from leases with tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major rating agency or have a senior unsecured obligation that has been so rated. Additionally, based on ABR on an expected post-syndication pro rata share basis, approximately 81.3% of our leases provide for fixed contractual increases in future base rent and an additional 8.1% of our leases provide for CPI-based contractual increases in future base rent. On a portfolio wide basis based on ABR on an expected post-syndication pro rata share basis, the average annual contractual base rent increase was approximately 1.5% (excluding CPI-based rent increases). As of November 15, 2021, our portfolio had a weighted average remaining lease term of 10.1 years (based on ABR on an expected post-syndication pro rata share basis).

We seek to acquire single-tenant net lease properties with a focus on real estate attributes that we believe can provide superior long-term prospects for rental rate increases, occupancy and re-leasing performance. We seek buildings that are not only leased to high quality tenants with attractive lease term and rent escalation provisions, but also exhibit characteristics that we believe protect value in the event of a vacancy, including strong locations, flexible layouts and physical attributes that permit alternative uses and appeal to a wide range of tenants. We believe these properties offer benefits as compared to other types of commercial real estate due to the relative stability of the cash flows from long-term leases, as well as reduced property level expenses and capital expenditures resulting from the net lease structure. We generally target properties with purchase prices ranging from $5 million to $25 million, as we believe there is less competition from larger institutional investors that typically target larger properties. Our portfolio is diversified not only by tenant, industry and geography, but also by property type, which we believe differentiates us from certain other net lease REITs and further reduces risk and enhances cash flow stability. We are an active asset manager and regularly review each of our properties for changes in the credit of the tenant, business performance at the property, industry trends and local real estate market conditions.

Our senior management team has extensive net lease real estate and public and private REIT management experience. In November 2008, William P. Dioguardi, our Chairman and Chief Executive Officer, founded FSC LLC, an affiliated organization that prior to our formation was a sponsor of single-tenant net lease investment programs, all but one of which were acquired by us after our formation. Subsequent to our formation, FSC LLC has assisted in marketing and distributing our securities and the ownership interests in our DST offerings. Mr. Dioguardi has led the acquisition and asset management of all of the properties in our portfolio. Coby R. Johnson, our President and Chief Operating Officer, joined FSC LLC as a Managing Director in October 2010 and co-founded us with Mr. Dioguardi in July 2012 to continue and expand the net lease investment activities of FSC LLC. Other members of our senior management team previously served in senior management roles at public net lease REITs. Since our inception, our management team has developed and implemented internal processes, procedures and controls to establish a scalable infrastructure that we believe will allow us to grow efficiently.

Portfolio Summary

As of November 15, 2021, we wholly owned 120 properties and had ownership interests in 34 additional properties, over which we exercise full management and disposition authority. The following table sets forth information on an expected post-syndication pro rata share basis relating to our portfolio as of November 15, 2021.

114

(1)

Based on our leasable square footage.

(2)

Weighted by ABR on an expected post-syndication pro rata share basis.

(3)

Tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major credit rating agency or have a senior unsecured obligation that have been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB- or above from one or all of Moody’s Investor Service, Inc., Standard & Poor’s Rating Services, and AM Best. See “Risk Factors—Risks related to Our Business. Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(4)

Based on the later of year built or year of last major renovation.

115

Geographic Diversification

The following table and map set forth information on an expected post-syndication pro rata share basis relating to the geographic diversification of our portfolio as of November 15, 2021.

Property Type

The following table sets forth information on an expected post-syndication pro rata share basis relating to our portfolio diversification by property type and tenant industry as of November 15, 2021.

116

The following tables sets forth information relating to our portfolio by property type as of November 15, 2021 on an expected post-syndication pro rata share basis and on a consolidated basis.

Expected Post-Syndication Pro Rata Share Basis

Property Type	Leasable Square Feet (Expected Post- Syndication Pro Rata Share)		Percentage of Leasable Square Feet (Expected Post- Syndication Pro Rata Share)		ABR Per Leased Square Feet (Expected Post- Syndication Pro Rata Share)			ABR (Expected Post- Syndication Pro Rata Share)			Percentag eof ABR (Expected Post- Syndication Pro Rata Share)
Industrial	​	2,272,656	​	66.8%	​	$	5.98	​	$	13,585,429	​	39.6%
Medical	​	312,672	​	9.2%	​	$	24.42	​	​	7,636,285	​	22.2%
Retail	​	607,338	​	17.8%	​	$	17.42	​	​	10,579,739	​	30.8%
Office	​	210,578	​	6.2%	​	$	12.06	​	​	2,538,539	​	7.4%
Total / Weighted Average	​	3,403,244	​	100.0%	​	$	10.09	​	$	34,339,992	​	100.0%

Consolidated Basis

Property Type	Leasable Square Feet (Consolidated)		Percentage of Leasable Square Feet (Consolidated)		ABR Per Leased Square Feet (Consolidated)			ABR(1) (Consolidated)			Percentage of ABR (Consolidated)
Industrial	​	4,323,091	​	72.5%	​	$	6.19	​	$	26,740,331	​	46.6%
Medical	​	626,507	​	10.5%	​	$	24.97	​	​	15,642,761	​	27.2%
Retail	​	807,213	​	3.5%	​	$	15.52	​	​	12,524,844	​	21.8%
Office	​	210,578	​	13.5%	​	$	12.06	​	​	2,538,539	​	4.4%
Total / Weighted Average	​	5,967,389	​	100.0%	​	$	9.63	​	$	57,446,475	​	100.0%

(1)

Includes all ABR attributable to each property. We own interests in 34 of our properties ranging from 5.0% to 100.0% as of November 15, 2021. Although the percentage of ABR for these properties is presented on a consolidated basis, we are only entitled to our pro rata share of net cash flows generated by these properties.

Industries

The following tables sets forth information relating to our portfolio by industry as of November 15, 2021 on an expected post-syndication pro rata share basis and on a consolidated basis.

Expected Post-Syndication Pro Rata Share Basis

Industry Name	Leased Square Feet (Expected Post- Syndication Pro Rata Share)		Percentage of Leased Square Feet (Expected Post- Syndication Pro Rata Share)		ABR (Expected Post- Syndication Pro Rata Share)			Percentage of ABR (Expected Post- Syndication Pro Rata Share)
Healthcare Services	​	224,741	​	6.6%	​	$	5,163,172	​	15.0%
Automotive Service	​	188,297	​	5.5%	​	​	4,694,335	​	13.7%
Strategic Operations	​	210,578	​	6.2%	​	​	2,538,539	​	7.4%
Cold Storage	​	242,775	​	7.2%	​	​	2,496,444	​	7.3%
Manufacturing — Plastics & Chemicals	​	456,528	​	13.4%	​	​	1,822,944	​	5.3%
General Merchandise	​	151,700	​	4.5%	​	​	1,763,401	​	5.1%
Plasma	​	50,720	​	1.5%	​	​	1,744,628	​	5.1%
Gas & Convenience stores	​	31,557	​	0.9%	​	​	1,502,319	​	4.4%

117

Industry Name	Leased Square Feet (Expected Post- Syndication Pro Rata Share)		Percentage of Leased Square Feet (Expected Post- Syndication Pro Rata Share)		ABR (Expected Post- Syndication Pro Rata Share)			Percentage of ABR (Expected Post- Syndication Pro Rata Share)
Express Delivery Services	​	252,908	​	7.5%	​	​	1,031,728	​	3.0%
Utilities	​	86,314	​	2.6%	​	​	945,618	​	2.7%
Equipment Rental	​	85,716	​	2.5%	​	​	913,896	​	2.7%
Distribution — Auto Parts	​	210,840	​	6.2%	​	​	904,683	​	2.6%
Home & Garden	​	94,597	​	2.8%	​	​	886,585	​	2.6%
Manufacturing — Capital Equipment	​	116,856	​	3.4%	​	​	854,409	​	2.5%
Food Processing	​	112,249	​	3.3%	​	​	755,943	​	2.2%
Manufacturing — Transportation Equipment	​	119,856	​	3.5%	​	​	712,525	​	2.1%
Manuafacturing — Abrasive Products	​	126,408	​	3.7%	​	​	635,360	​	1.8%
Manufacturing — Iron & Steel	​	113,763	​	3.4%	​	​	550,613	​	1.6%
Animal Health Services	​	112,331	​	3.3%	​	​	443,707	​	1.3%
Distribution — Paper/Cardboard	​	80,000	​	2.4%	​	​	416,048	​	1.2%
Online Retailer and Fulfillment	​	69,043	​	2.0%	​	​	379,559	​	1.1%
Dialysis	​	15,157	​	0.5%	​	​	374,340	​	1.1%
Sporting Goods	​	36,725	​	1.1%	​	​	350,448	​	1.0%
Dental	​	21,500	​	0.6%	​	​	341,131	​	1.0%
Equipment Services	​	44,425	​	1.3%	​	​	337,136	​	1.0%
Plumbing Supply	​	15,000	​	0.5%	​	​	300,416	​	0.9%
Automotive parts	​	19,315	​	0.6%	​	​	297,088	​	0.9%
Manufacturing — Machine Tools	​	32,000	​	0.9%	​	​	264,960	​	0.8%
Quick Service Restaurant	​	3,718	​	0.1%	​	​	198,539	​	0.6%
Manufacturing — Building Materials	​	15,078	​	0.4%	​	​	164,815	​	0.5%
Wholesale clubs	​	17,515	​	0.5%	​	​	160,714	​	0.5%
Automotive Tire Services	​	8,122	​	0.2%	​	​	124,000	​	0.3%
Manufacturing — Energy	​	10,074	​	0.3%	​	​	104,391	​	0.3%
Consumer Product Rental	​	7,000	​	0.2%	​	​	84,000	​	0.2%
Distribution — General Merchandise	​	7,050	​	0.2%	​	​	34,898	​	0.1%
Manufacturing — Food Products	​	5,242	​	0.2%	​	​	33,647	​	0.1%
Physical Therapy	​	554	​	0.0%	​	​	13,013	​	0.0%
Total / Weighted Average	​	3,396,252	​	100.0%	​	$	34,339,992	​	100.0%

Consolidated Basis

Industry Name	Leased Square Feet (Consolidated)		Percentage of Leased Square Feet (Consolidated)		ABR(1) (Consolidated)			Percentage of ABR (Consolidated)
Healthcare Services	​	405,338	​	6.8%	​	$	9,660,943	​	16.8%
Online Retailer and Fulfillment	​	1,380,865	​	23.2%	​	​	7,591,185	​	13.2%
Automotive Service	​	228,893	​	3.8%	​	​	5,138,809	​	8.9%
Manufacturing — Building Materials	​	301,553	​	5.1%	​	​	3,296,297	​	5.7%
Cold Storage	​	386,701	​	6.5%	​	​	3,145,570	​	5.5%

118

Industry Name	Leased Square Feet (Consolidated)		Percentage of Leased Square Feet (Consolidated)		ABR(1) (Consolidated)			Percentage of ABR (Consolidated)
Plasma	​	91,108	​	1.5%	​	​	2,932,664	​	5.1%
Strategic Operations	​	210,578	​	3.5%	​	​	2,538,539	​	4.4%
Dialysis	​	97,486	​	1.6%	​	​	2,447,760	​	4.3%
Manufacturing — Plastics & Chemicals	​	456,528	​	7.7%	​	​	1,822,944	​	3.2%
General Merchandise	​	151,700	​	2.5%	​	​	1,763,401	​	3.1%
Gas & Convenience stores	​	31,557	​	0.5%	​	​	1,502,319	​	2.6%
Sporting Goods	​	143,458	​	2.4%	​	​	1,368,938	​	2.4%
Manufacturing — Energy	​	100,738	​	1.7%	​	​	1,043,914	​	1.8%
Express Delivery Services	​	252,908	​	4.2%	​	​	1,031,728	​	1.8%
Utilities	​	86,314	​	1.5%	​	​	945,618	​	1.7%
Equipment Rental	​	85,716	​	1.5%	​	​	913,896	​	1.6%
Distribution — Auto Parts	​	210,840	​	3.5%	​	​	904,683	​	1.6%
Home & Garden	​	94,597	​	1.6%	​	​	886,585	​	1.5%
Manufacturing — Capital Equipment	​	116,856	​	2.0%	​	​	854,409	​	1.5%
Food Processing	​	112,249	​	1.9%	​	​	755,943	​	1.3%
Manufacturing — Transportation Equipment	​	119,856	​	2.0%	​	​	712,525	​	1.2%
Manufacturing — Food Products	​	104,840	​	1.8%	​	​	672,941	​	1.2%
Wholesale clubs	​	70,061	​	1.2%	​	​	642,854	​	1.1%
Manuafacturing — Abrasive Products	​	126,408	​	2.1%	​	​	635,360	​	1.1%
Distribution — General Merchandise	​	125,000	​	2.1%	​	​	618,750	​	1.1%
Manufacturing — Iron & Steel	​	113,763	​	1.9%	​	​	550,613	​	1.0%
Animal Health Services	​	112,331	​	1.9%	​	​	443,707	​	0.8%
Distribution — Paper/Cardboard	​	80,000	​	1.3%	​	​	416,048	​	0.7%
Dental	​	21,500	​	0.4%	​	​	341,131	​	0.6%
Equipment Services	​	44,425	​	0.7%	​	​	337,136	​	0.6%
Plumbing Supply	​	15,000	​	0.3%	​	​	300,416	​	0.5%
Automotive parts	​	19,315	​	0.3%	​	​	297,088	​	0.5%
Manufacturing — Machine Tools	​	32,000	​	0.5%	​	​	264,960	​	0.5%
Physical Therapy	​	11,075	​	0.2%	​	​	260,262	​	0.5%
Quick Service Restaurant	​	3,718	​	0.1%	​	​	198,539	​	0.3%
Automotive Tire Services	​	8,122	​	0.1%	​	​	124,000	​	0.2%
Consumer Product Rental	​	7,000	​	0.1%	​	​	84,000	​	0.1%
Total / Weighted Average	​	5,960,397	​	100.0%	​	$	57,446,475	​	100.0%

(1)

Includes all ABR attributable to each property. We own interests in 34 of our properties ranging from 5.0% to 100.0% as of November 15, 2021. Although the percentage of ABR for these properties is presented on a consolidated basis, we are only entitled to our pro rata share of net cash flows generated by these properties.

Tenants

Our portfolio of properties has a stable and diversified tenant base. As of November 15, 2021, our properties were 99.8% leased (based on our leasable square footage) to 68 tenants operating in 37 different industries, with approximately 43.3% of our ABR on an expected post-syndication pro rata share basis from leases with tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major rating agency or have a senior unsecured obligation that has been so rated. We intend to maintain a diversified mix of tenants to limit our exposure to any one tenant or industry.

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The following tables sets forth information about the 10 largest tenants in our portfolio based on ABR on an expected post-syndication pro rata share basis and on a consolidated basis as of November 15, 2021.

Expected Post-Syndication Pro Rata Share Basis

Tenant	Property Type	(ABR (Expected Post- Syndication Pro Rata Share)			Percentage of ABR (Expected Post- Syndication Pro Rata Share)	Leased Square Feet (Expected Post- Syndication Pro Rata Share)		Percentage Of Leased Square Feet (Expected Post- Syndication Pro Rata Share)		Investment Grade Rated (Tenant/​ Guarantor/​ Parent)(1)
Blue Cross Blue Shield of South Carolina(2)	Medical	​	$	1,926,045	5.6%	​	94,450	​	2.8%	​	✓
Caliber Collision(2)	Retail	​	​	1,830,145	5.3%	​	100,629	​	3.0%	​	​
Discovery Behavioral Health(2)	Medical	​	​	1,753,653	5.1%	​	71,859	​	2.1%	​	​
BioLife(2)	Medical	​	​	1,732,838	5.0%	​	50,120	​	1.5%	​	✓
Zips Car Wash(2)	Retail	​	​	1,679,969	4.9%	​	16,319	​	0.5%	​	​
Performance Food Group	Industrial	​	​	1,622,280	4.7%	​	165,200	​	4.9%	​	​
GPM Investments(2)	Retail	​	​	1,502,319	4.4%	​	31,557	​	0.9%	​	​
Horizon Healthcare	Office	​	​	1,338,138	3.9%	​	87,460	​	2.6%	​	✓
CVS/Caremark	Office	​	​	1,200,401	3.5%	​	123,118	​	3.6%	​	✓
Dollar General(2)	Retail	​	​	1,103,864	3.2%	​	95,280	​	2.8%	​	✓
Total	​	​	$	15,689,652	45.6%	​	835,992	​	24.7%	​	​

(1)

Tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major credit rating agency or have a senior unsecured obligation that have been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB- or above from one or all of Moody’s Investor Service, Inc., Standard & Poor’s Rating Services, and AM Best. See “Risk Factors—Risks related to Our Business. Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(2)

Tenant leases more than one of our properties.

Consolidated Basis

Tenant

Property Type

ABR (Consolidated)

Percentage of ABR (Consolidated)

Leased Square Feet (Consolidated)

Percentage Of Leased Square Feet (Consolidated)

Investment Grade Rated (Tenant/​ Guarantor/​ Parent)(1)

Amazon.com(2)

Industrial

​

$

7,591,185

​

23.1%

​

1,380,865

​

13.2%

​

✓

Biolife(2)

Medical

​

​

2,696,864

​

1.3%

​

79,108

​

4.7%

​

✓

Blue Cross Blue Shield of South Carolina(2)

Medical

​

​

2,487,608

​

2.1%

​

123,478

​

4.3%

​

✓

Fresenius Medical(2)

Medical

​

​

2,447,760

​

1.6%

​

97,486

​

4.3%

​

✓

GAF

Industrial

​

​

2,280,249

​

3.4%

​

201,153

​

4.0%

​

​

Caliber Collision(2)

Retail

​

​

2,115,989

​

2.2%

​

133,245

​

3.7%

​

​

Discovery Behavioral Health(2)

Medical

​

​

1,753,653

​

1.2%

​

71,859

​

3.1%

​

​

University of Iowa

Medical

​

​

1,680,522

​

1.0%

​

61,067

​

2.9%

​

✓

Zips Car Wash(2)

Retail

​

​

1,679,969

​

0.3%

​

16,319

​

2.9%

​

​

Performance Foods Group

Industrial

​

​

1,622,280

​

2.8%

​

165,200

​

2.8%

​

​

Total

​

​

$

26,356,079

​

39.0%

​

2,329,780

​

45.9%

​

​

(1)

Tenant or lease guarantor, or parent of tenant or lease guarantor has an investment grade credit rating from a major rating agency

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or has a senior unsecured obligation that has been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB− or above from one or both of Moody’s Investors Service, Inc., Standard & Poor’s Ratings and AM Best. See “Risk Factors—Risks Related to Our Business—Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(2)

Tenant leases more than one of our properties.

Lease Expirations

As of November 15, 2021, our weighted average in-place remaining lease term was 10.1 years (based on ABR on an expected post-syndication pro rata share basis). None of our leases expire in 2021, only one lease will expire in 2022, and only 21.5% of our leases (based on ABR on an expected post-syndication pro rata share basis) will expire during the next five calendar years. The following tables sets forth a summary schedule of our lease expirations for leases in place as of November 15, 2021 (based on ABR on an expected post-syndication pro rata share basis and on a consolidated basis). The information set forth in the tables assumes that tenants exercise no renewal options and no early termination rights.

Expected Post-Syndication Pro Rata Share Basis

For the Year Ending December 31,	Number of Leases		Expiring Leasable Square Feet (Expected Post Syndication Pro Rata Share)		Percentage of Leasable Square Feet (Expected Post- Syndication Pro Rata Share)		ABR (Expected Post- Syndication Pro Rata Share)			Percentage of ABR (Expected Post- Syndication Pro Rata Share)		ABR Per Leased Square Feet (Expected Post- Syndication Pro Rata Share)			ABR at Expiration (Expected Post- Syndication Pro Rata Share)			ABR Per Leased Square Foot at Expiration (Expected Post- Syndication Pro Rata Share)
2021	​	—	​	—	​	—	​	$	—	​	—	​	$	—	​	$	—	​	$	—
2022	​	1	​	7,104	​	0.2%	​	​	93,850	​	0.3%	​	$	13.2	​	​	93,850.32	​	$	13.2
2023	​	7	​	157,055	​	4.6%	​	​	1,201,528	​	3.5%	​	$	7.7	​	​	1,222,192.00	​	$	7.8
2024	​	3	​	439,748	​	12.9%	​	​	2,514,683	​	7.3%	​	$	5.7	​	​	2,657,878.16	​	$	6.0
2025	​	4	​	144,271	​	4.2%	​	​	941,571	​	2.7%	​	$	6.5	​	​	941,570.88	​	$	6.5
2026	​	16	​	143,653	​	4.2%	​	​	2,665,467	​	7.7%	​	$	18.6	​	​	2,806,264.55	​	$	19.5
2027	​	6	​	97,220	​	2.9%	​	​	1,005,215	​	2.9%	​	$	10.3	​	​	1,071,634.00	​	$	11.0
2028	​	6	​	91,667	​	2.7%	​	​	847,675	​	2.5%	​	$	9.2	​	​	921,420.38	​	$	10.1
2029	​	10	​	295,129	​	8.7%	​	​	2,122,487	​	6.2%	​	$	7.2	​	​	2,387,877.99	​	$	8.1
2030	​	16	​	349,876	​	10.3%	​	​	3,734,639	​	10.9%	​	$	10.7	​	​	4,191,402.84	​	$	12.0
2031	​	22	​	318,430	​	9.4%	​	​	3,500,832	​	10.2%	​	$	11.0	​	​	4,198,626.25	​	$	13.2
2032	​	15	​	88,269	​	2.6%	​	​	2,079,664	​	6.1%	​	$	23.6	​	​	2,370,594.64	​	$	26.9
2033	​	9	​	92,474	​	2.7%	​	​	1,331,991	​	3.9%	​	$	14.4	​	​	1,625,891.51	​	$	17.6
2034	​	19	​	285,011	​	8.4%	​	​	4,428,556	​	12.9%	​	$	15.5	​	​	5,000,302.36	​	$	17.5
2035	​	4	​	256,736	​	7.6%	​	​	1,124,108	​	3.3%	​	$	4.4	​	​	1,395,553.90	​	$	5.4
2036	​	7	​	269,232	​	7.9%	​	​	2,680,973	​	7.8%	​	$	10.0	​	​	3,502,127.30	​	$	13.0
2037	​	1	​	70,000	​	2.1%	​	​	840,000	​	2.4%	​	$	12.0	​	​	1,151,827.34	​	$	16.5
2038	​	3	​	16,609	​	0.5%	​	​	941,465	​	2.7%	​	$	56.7	​	​	1,215,522.15	​	$	73.2
2039	​	3	​	13,851	​	0.4%	​	​	994,669	​	2.9%	​	$	71.8	​	​	1,217,213.06	​	$	87.9
2040	​	—	​	—	​	—	​	​	—	​	—	​	$	—	​	​	—	​	$	—
Thereafter	​	5	​	259,917	​	7.7%	​	​	1,290,618	​	3.8%	​	$	5.0	​	​	1,807,778.46	​	$	7.0
Total / Weighted Average	​	157	​	3,396,252	​	100.0%	​	$	34,339,992	​	100.0%	​	$	10.1	​	$	39,779,528	​	$	11.7

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Consolidated Basis

For the Year Ending December 31,	Number of Leases		Expiring Leasable Square Feet (Consolidated)		Percentage of Leasable Square Feet (Consolidated)		ABR (Consolidated)			Percentage of ABR (Consolidated)		ABR Per Leased Square Feet (Consolidated)			ABR at Expiration (Consolidated)			ABR Per Leased Square Foot at Expiration (Consolidated)
2021	​	—	​	—	​	—	​	$	—	​	—	​	$	—	​	$	—	​	$	—
2022	​	1	​	7,104	​	0.1%	​	​	93,850	​	0.2%	​	$	13.2	​	​	93,850.32	​	$	13.2
2023	​	7	​	157,055	​	2.6%	​	​	1,201,528	​	2.1%	​	$	7.7	​	​	1,222,192.00	​	$	7.8
2024	​	3	​	439,748	​	7.4%	​	​	2,514,683	​	4.4%	​	$	5.7	​	​	2,657,878.16	​	$	6.0
2025	​	4	​	144,271	​	2.4%	​	​	941,571	​	1.6%	​	$	6.5	​	​	941,570.88	​	$	6.5
2026	​	16	​	143,653	​	2.4%	​	​	2,665,467	​	4.6%	​	$	18.6	​	​	2,806,264.55	​	$	19.5
2027	​	6	​	97,220	​	1.6%	​	​	1,005,215	​	1.8%	​	$	10.3	​	​	1,071,634.00	​	$	11.0
2028	​	6	​	106,763	​	1.8%	​	​	1,119,606	​	1.9%	​	$	10.5	​	​	1,227,409.43	​	$	11.5
2029	​	10	​	376,307	​	6.3%	​	​	4,210,290	​	7.3%	​	$	11.2	​	​	5,568,900.17	​	$	14.8
2030	​	16	​	1,767,924	​	29.7%	​	​	10,764,231	​	18.7%	​	$	6.1	​	​	12,201,302.69	​	$	6.9
2031	​	22	​	688,803	​	11.6%	​	​	9,628,600	​	16.8%	​	$	14.0	​	​	10,224,253.86	​	$	14.8
2032	​	15	​	294,510	​	4.9%	​	​	4,837,788	​	8.4%	​	$	16.4	​	​	5,495,808.42	​	$	18.7
2033	​	9	​	92,474	​	1.6%	​	​	1,331,991	​	2.3%	​	$	14.4	​	​	1,625,891.51	​	$	17.6
2034	​	19	​	398,670	​	6.7%	​	​	5,734,861	​	10.0%	​	$	14.4	​	​	6,716,028.41	​	$	16.8
2035	​	4	​	459,231	​	7.7%	​	​	3,514,355	​	6.1%	​	$	7.7	​	​	4,524,949.55	​	$	9.9
2036	​	7	​	282,361	​	4.7%	​	​	3,166,561	​	5.5%	​	$	11.2	​	​	4,060,298.14	​	$	14.4
2037	​	1	​	70,000	​	1.2%	​	​	840,000	​	1.5%	​	$	12.0	​	​	1,151,827.34	​	$	16.5
2038	​	3	​	160,535	​	2.7%	​	​	1,590,590	​	2.8%	​	$	9.9	​	​	2,106,631.76	​	$	13.1
2039	​	3	​	13,851	​	0.2%	​	​	994,669	​	1.7%	​	$	71.8	​	​	1,217,213.06	​	$	87.9
2040	​	—	​	—	​	—	​	​	—	​	—	​	$	—	​	​	—	​	$	—
Thereafter	​	5	​	259,917	​	4.4%	​	​	1,290,618	​	2.3%	​	$	5.0	​	​	1,807,778.46	​	$	7.0
Total / Weighted Average	​	157	​	5,960,397	​	100.0%	​	$	57,446,475	​	100.0%	​	$	9.6	​	$	66,721,683	​	$	11.2

(1)

Includes all ABR attributable to each property. We own interests in 34 of our properties ranging from 5.0% to 100.0% as of November 15, 2021. See “—Business Objectives and Strategies—Execute on Our Differentiated Real Estate Syndication Business.” Although the percentage of ABR for these properties is presented on a consolidated basis, we are only entitled to our pro rata share of net cash flows generated by these properties.

(2)

Includes fixed contractual rent escalations.

Competitive Strengths

We believe that we distinguish ourselves from other investors in single-tenant net lease real estate in the United States through the following competitive strengths:

•

High Quality, Diversified Portfolio.    As of November 15, 2021, we wholly owned, or had ownership interests in, 154 properties located in 32 states that were 99.8% leased (based on our leasable square footage) to 68 tenants under 157 leases operating in 37 different industries. We believe our rigorous property underwriting has resulted in a high quality portfolio with locations and demographics that we believe attract strong tenants and provide for alternative uses, enhancing our ability to re-lease our properties. Our portfolio is diversified not only by tenant, industry and geography, but also by property type, which we believe differentiates us from certain other net lease REITs and further reduces risk and enhances cash flow stability. As of November 15, 2021, our portfolio contained 39 industrial properties that generated 39.6% of our ABR, 52 medical office properties that generated 22.2% of our ABR, 61 retail properties that generated 30.8% of our ABR and two single-tenant office properties leased to healthcare tenants that generated 7.4% of our ABR, in each case on an expected post-syndication pro rata basis. Approximately 43.3% of our ABR on an expected post-syndication pro rata share basis

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was from leases with tenants or lease guarantors, or parents of such tenants or lease guarantors, that have an investment grade credit rating from a major rating agency or have a senior unsecured obligation that has been so rated. As of November 15, 2021, no single property in our portfolio represented more than 5.0% of our ABR on an expected post-syndication pro rata share basis. We believe that the high quality and diversification of our portfolio reduces the risks associated with adverse developments affecting any particular tenant, industry, geography or property type.

•

Stable and Predictable Cash Flows with Embedded Contractual Rent Growth.   As of November 15, 2021, our properties were 99.8% leased (based on our leasable square footage) and had a weighted average remaining lease term of 10.1 years (based on ABR on an expected post-syndication pro rata share basis). We have no lease expirations through 2021 and only 21.5% of our leases (based on ABR on an expected post-syndication pro rata share basis) will expire during the next five calendar years. Additionally, all of our leases are structured as net leases, which generally require our tenants to pay substantially all of the operating expenses related to the property, including real estate taxes, utilities, maintenance and insurance, as well as certain capital expenditures. Commercial properties that are not subject to net leases generally are subject to greater volatility in operating results due to unexpected changes in operating costs or unforeseen capital expenditures. As a result, our net leases reduce the impact of potential inflation on property-level operating expenses and our exposure to significant capital expenditures, which we believe provides us with a strong, stable source of recurring cash flows from which to grow our portfolio. Furthermore, based on ABR on an expected post-syndication pro rata share basis, approximately 81.3% of our leases provide for fixed contractual increases in future base rent and an additional 8.1% of our leases provide for CPI-based contractual increases in future base rent. On a portfolio wide basis, as of November 15, 2021, the average annual contractual base rent increase was approximately 1.5% (excluding CPI-based rent increases).

The following tables sets forth a summary of certain information with respect to our portfolio’s contractual rent increases as of November 15, 2021 (on an expected post-syndication pro rata share basis).

Lease Escalation Frequency(1)(2)	% of ABR (Expected Post-Syndication Pro Rata Share Basis)		Weighted Average Annual Escalation Rate
Annually	​	61.2%	​	1.8%
Every 2 Years	​	0.8%	​	2.3%
Every 3 Years	​	3.7%	​	0.6%
Every 5 Years	​	20.0%	​	1.2%
Other Escalation Frequencies	​	3.8%	​	2.3%
Flat	​	10.5%	​	—
Total/Weighted Average	​	100.0%	​	1.5%

(1)

Leases with CPI-based rental rate increases are included in the Lease Escalation Frequency category that corresponds to the frequency of rental rate escalations under such leases. For our CPI-based leases, we have assumed that rental rate increases in the future will be 0.0%. As of November 15, 2021, we had fifteen leases that included CPI-based rental rate increases, and those leases represented 8.1% of our ABR on an expected post-syndication pro rata share basis.

(2)

As of November 15, 2021, there were seven leases included in the “Flat” category representing 4.6% of our ABR on an expected post-syndication pro rata basis with 1.9, 3.0, 3.4, 4.0, 4.5, 4.9 and 4.9 year remaining lease terms, respectively, that had rent escalations in the primary term but have no further rent escalations provisions during their remaining terms. There is an additional one parking lot lease included in the “Flat” category representing 0.2% of our ABR on an expected post-syndication pro rata basis with 7.5 year remaining lease term.

123

(1)

As of November 15, 2021, there were seven leases included in the “No Increases” category representing 4.6% of our ABR on an expected post-syndication pro rata basis with 1.9, 3.0, 3.4, 4.0, 4.5, 4.9 and 4.9 year remaining lease terms, respectively, that had rent escalations in the primary term but have no further rent escalations provisions during their remaining terms. There is an additional one parking lot lease included in the “No Increases” category representing 0.2% of our ABR on an expected post-syndication pro rata basis with 7.5 year remaining lease term.

•

Demonstrated Acquisition Track Record with Robust Pipeline.   We have been actively investing in single-tenant net lease real estate since 2012, having acquired 182 net lease properties in 96 transactions through November 15, 2021. We believe we have developed a reputation as a credible and active buyer of single-tenant net lease real estate within the industry, and we believe such reputation provides us access to acquisition opportunities that may not be available to our competitors. Historically, our senior management team has been able to leverage our extensive network of long standing relationships with owners, operators, tenants, developers, advisors (including strategic business consultants, accountants and lawyers), brokers, lenders, private equity firms and other participants in the real estate industry to access a wide variety of acquisition opportunities, which has often resulted in the acquisition of properties that were not broadly marketed. From January 1, 2021 through November 15, 2021, 46.3%, 13.6%, 21.2% and 18.9% of our acquisitions based on original purchase prices were sourced from developers, advisors, owners and/or operators and brokers, respectively. In 2020, we sourced more than 700 single-tenant net lease properties that we identified as warranting investment consideration after an initial review. From November 2020, when we accessed additional institutional capital, through November 15, 2021, we acquired 65 properties and our average quarterly acquisition activity has been approximately $100.7 million on a consolidated basis ($41.5 million on an expected post-syndication pro rata share basis). We believe that our knowledge of the net lease market, reputation as a credible and active buyer and extensive network of long standing relationships will provide us access to a pipeline of attractive investment opportunities, which will enable us to continue to grow and further diversify our portfolio.

The following chart shows our growth from our inception in 2012 to November 15, 2021 on an expected post-syndication pro rata share basis.

124

(1)

Net acquisitions represent the acquisitions made during the applicable period less property dispositions for such period.

The following chart shows our acquisitions in 2021 on a quarterly basis.

(1)

Excludes expected post-syndication pro rata share of DST properties owned by us.

(2)

Includes expected post-syndication pro rata share of DST properties owned by us.

(3)

Includes (a) $31.4 million for Real Estate Syndication that has closed as of November 15, 2021, (b) $34.9 million for REIT that has closed as of November 15, 2021, (c) $15.4 million for REIT in connection with the acquisition of certain beneficial interests in three of our DSTs that is subject to the completion of the offering (see “Prospectus Summary—Recent Developments—Pending Acquisitions”) and (d) $25.2 million for REIT that is under contract and scheduled to close in the fourth quarter of 2021 (see “Prospectus Summary—Recent Developments—Pending Acquisitions”). While we regard

125

the completion of the $25.2 of acquisitions under contract to be probable, these transactions are subject to customary closing conditions, including the completion of due diligence, and there can be no assurance that these acquisitions will be completed on the timeline or terms described above or at all.

•

Disciplined Investment Approach and Rigorous Underwriting Processes to Enhance Our Portfolio.   Our primary investment strategy is to acquire, own and actively manage a diversified portfolio of single-tenant, income producing industrial, medical, service/necessity retail and office properties throughout the United States that are subject to long-term net leases. In order to reduce the risks associated with adverse developments affecting a particular tenant, industry, geography or property type, we have assembled, and will seek to maintain, a portfolio that is diversified accordingly. We believe that the market knowledge, systems and analyses that we employ in our underwriting process allow us to efficiently analyze the risks associated with each property’s ability to produce cash flow going forward. We blend real estate analysis with tenant credit and lease analysis to make an assessment of expected cash flows to be realized in future periods.

For each property, our analysis primarily focuses on evaluating the following:

•

Real Estate.   Within the context of the relevant market and submarket, we evaluate the expected rents from a property relative to market rents, the purchase price per foot relative to the cost to replace the property, alternative uses for the property, as well as other potential users, and estimated replacement rents. We also evaluate the suitability of the property for the specific business conducted there and the industry in which the tenant operates, the prospect for re-tenanting or selling the property if it becomes vacant, and whether or not the property has expansion potential.

•

Tenant Credit.   We evaluate the tenant’s credit profile by focusing on data and information specific to the tenant’s financial status and the industry in which it operates. For the tenant’s financial status, we evaluate, to the extent available, the tenant’s current and historical financial statements, capital sources, earnings expectations, operating risks and general business plan. For the tenant’s industry, we evaluate, among other things, relevant industry trends and the tenant’s competitive market position.

•

Lease Structure.   We evaluate the tenant and landlord obligations contained within the existing or proposed lease as well as the remaining lease term, any contractual annual or periodic rent escalations and the existence of any termination or assignment provisions.

•

Tenant Retention.    We assess the tenant’s use of the property and the degree to which the property is strategically important to the tenant’s ongoing operations, the tenant’s potential cost to relocate, the supply/demand dynamic in the relevant submarket and the availability of suitable alternative properties. We believe tenant retention tends to be greater for properties that are strategically important to the tenant’s business and where the potential costs to relocate are high.

•

Unit-Level Profitability:   We analyze each property’s operations individually (i.e., on a unit-level) to determine the likelihood of each property generating consistent profits for the tenant.

•

Active Management of the Portfolio.   We believe our proactive approach to asset management and property management helps enhance the performance of our portfolio through risk mitigation strategies and opportunistic sales. Our proactive approach was critical to our performance during the COVID-19 pandemic. During the year ended December 31, 2020, on an expected post-syndication pro rata share basis, we collected 99.4% of rents, with collections of 99.6% for the second quarter of 2020 and 99.4% for the third quarter of 2020. From January 1, 2021 through November 15, 2021, we collected 100.0% of rents. We believe our collection rates are an example of how our proactive management is a competitive strength when compared with other owners of net leased real estate. As part of our proactive approach, we (1) regularly review each of our properties for changes in unit performance, tenant credit and local real estate conditions, (2) identify properties that no longer meet our disciplined underwriting strategy, diversification objectives or risk management criteria (including likelihood of non-renewal upon lease expiration) and (3) opportunistically dispose of those properties. Since our inception through November 15, 2021, we disposed of 28 properties for aggregate gross proceeds of approximately $61.3 million and for an aggregate gain of approximately $7.6 million on a consolidated basis. We seek to reinvest net disposition proceeds in single-tenant net lease properties

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that improve our portfolio by enhancing diversification and improve key metrics such as tenant credit quality, weighted average remaining lease term and property age. The following table shows our rent collections per quarter during the year ended December 31, 2020 by industry on an expected post-syndication pro rata share basis.

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Growth-Oriented, Flexible Balance Sheet Positioned for Growth.   Upon completion of this offering and the application of the net proceeds therefrom, we believe we will have a strong, flexible balance sheet that positions us for growth. We will use a portion of the net proceeds from this offering to repay amounts outstanding under the M&T Credit Facility and the Mezzanine Loan. Following these repayments, we expect to have $      million of indebtedness on a consolidated basis and $      million of indebtedness on an expected post-syndication pro rata share basis; representing, a pro forma debt-to-capitalization ratio of    % and    % on a consolidated and an expected post-syndication pro rata share basis, respectively (based on the midpoint of the price range set forth on the cover page of this prospectus). Additionally, following these repayments, we will have no debt maturities prior to February 2022, and the weighted average maturity of our indebtedness will be      years and      years on a consolidated and an expected post-syndication pro rata share basis, respectively. Upon completion of this offering, we expect to have the undrawn $300 million New Credit Facility, subject to certain conditions. Accordingly, we expect to have approximately $      million of total liquidity, consisting primarily of a portion of the net proceeds from this offering and borrowing capacity under the New Credit Facility. We believe this liquidity and our ability to use OP units as acquisition currency will provide us with financial flexibility to make opportunistic investments and fund future growth.

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Experienced Management Team with Strong Sponsorship.   Our senior management team has extensive net lease real estate and public and private REIT management experience. In November 2008, William P. Dioguardi, our Chairman and Chief Executive Officer, founded FSC LLC and has led the acquisition and asset management of all of the properties in our portfolio. Coby R. Johnson, our President and Chief Operating Officer, joined FSC LLC as a Managing Director in October 2010 and co-founded us with Mr. Dioguardi in July 2012 to continue and expand the net lease investment activities of FSC LLC. Other members of our senior management team, including John E. Warch, our Senior Vice President, Chief Financial Officer, Jared W. Morgan, our Senior Vice President, Head of Acquisitions, and Cynthia M. Daly, our Senior Vice President, Head of Underwriting, previously served in senior management roles at public net lease REITs prior to joining us. Mr. Warch previously served as Senior Vice President and Chief Accounting Officer of CapLease, Inc. (previously NYSE: LSE), Mr. Morgan previously served as Vice President of Acquisitions at Spirit Realty Capital, Inc. (NYSE: SRC), and Ms. Daly previously served as Executive Vice President and a member of the Board of Directors of Monmouth Real Estate Corporation (NYSE: MNR).

Our resources are further strengthened by our association with Carlyle, a global investment firm which had approximately $293 billion of assets under management as of September 30, 2021 across Global

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Private Equity, Credit and Investment Solutions, and GSAM, the primary investing arm of The Goldman Sachs Group, Inc. (NYSE: GS), which provides investment and advisory services for institutions, financial advisors and individuals. We believe Carlyle’s and GSAM’s deep knowledge and relationships across a range of industries in which our current and future tenants conduct their business will enhance our underwriting and access to acquisition opportunities. Between November 2020 and May 2021, affiliates of Carlyle and GSAM invested $200 million in equity capital in our business to facilitate our growth. Upon completion of this offering, we expect that affiliates of Carlyle and GSAM will own approximately    % and    %, respectively, of our outstanding common shares.

Business Objectives and Strategies

Our objective is to own and manage a diversified portfolio of single-tenant net lease properties that maximizes cash available for distribution and delivers sustainable long-term risk adjusted returns to our shareholders. We believe we can achieve our objective through the following strategies:

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Capitalize on Contractual Rent Increases.   We plan to continue to purchase properties with leases that provide for contractual rent increases. As of November 15, 2021, based on ABR on an expected post-syndication pro rata share basis, approximately 81.3% of our leases provide for fixed contractual increases in future base rent and an additional 8.1% of our leases provide for CPI-based contractual increases in future base rent. On a portfolio wide basis based on ABR on an expected post-syndication pro rata share basis, as of November 15, 2021, the average annual contractual base rent increase was approximately 1.5% (excluding CPI-based rent increases).

•

Utilize Our Experienced Team and Scalable Platform to Grow Our Portfolio in a Disciplined Manner. We intend to continue to leverage the experience of our team and our fully built, scalable platform to grow our portfolio of single-tenant net lease real estate by making disciplined acquisitions, including sale-leaseback transactions, that enhance our portfolio’s diversification by tenant, industry, geography and property type. We intend to utilize our network of owners, operators, tenants, developers, advisors (including strategic consultants, accountants and lawyers), brokers, lenders, private equity firms and other participants in the real estate industry to source our acquisitions, and we believe that our relationships will continue to provide access to a pipeline of attractive investment opportunities. We plan to continue to acquire single-tenant properties with purchase prices generally ranging from $5 million to $25 million that are net leased on a long-term basis with contractual rent increases to investment grade and other tenants that we determine to be creditworthy.

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Utilize Our Rigorous Underwriting Process, Disciplined Investment Approach and Sourcing Channels to Enhance Our Portfolio.   We have developed and implemented rigorous processes and procedures that integrate the analysis of the real estate attributes, tenant credit and lease structure of each property that we consider acquiring, which we believe allows us to acquire properties that provide attractive risk adjusted returns. Key components of our analysis include assessing the probability of tenant retention upon lease expiration, understanding alternative uses and users of each property, and evaluating replacement rents on the basis of in-place rents versus estimated market rents. We seek to mitigate investment risks through intensive real estate, credit and lease structure analysis, as well as ongoing monitoring of tenants, tenant business performance at the property, industry trends and local real estate markets. Our rigorous underwriting process allows us to make the most of our sourcing channels to find attractive acquisition opportunities. Approximately 48.8% and 91.1% (in each case, based on purchase prices on an expected post-syndication pro rata share basis) of our 2020 acquisitions and our acquisitions from January 1, 2021 through November 15, 2021, respectively, were sourced in transactions that were not broadly marketed, including direct sale-leaseback transactions. In 2020, we evaluated approximately $17.4 billion (based on asking or estimated purchase prices) of potential single-tenant net lease property acquisitions, and through our disciplined investment process we submitted non-binding letters of intent on approximately $2.4 billion of these properties, representing less than 15% of the properties we evaluated, and approximately $77.7 million of these properties were acquired. As of November 15, 2021, we were evaluating approximately $1.1 billion (based on asking or estimated purchase prices) of potential acquisitions, of which approximately $805.4 million was under prescreening or under review, approximately $206.6 million related to pending non-binding letters of intent, approximately $35.2 million related to signed non-binding letters of intent, and approximately $28.6 million was under contract.

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The following chart depicts the scope of our underwriting and acquisition activity on a consolidated basis from January 1, 2021 through November 15, 2021.

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Execute on Our Differentiated Real Estate Syndication Business.   Since 2014, through a wholly-owned TRS, we have been active in syndicating ownership in net lease properties through a program that we developed to provide financing for properties in which we allow third-party investors who are seeking to reinvest the proceeds from sales of investment property in transactions that are eligible for favorable tax treatment under Section 1031 of the Code to acquire ownership interests in certain of our properties. Under the Section 1031 Exchange Program, we establish DSTs that each own one or more properties. We typically offer up to 95% of the equity interests of each DST to qualified investors with the remaining equity interests held by us. A typical 1031 exchange transaction takes several months from acquisition of the property to full syndication of interests. We jointly own 34 of our properties through 20 DSTs in which we owned equity interests ranging from 5.0% to 100.0% as of November 15, 2021.

As of November 15, 2021, 18 of our DSTs were fully syndicated, and we were actively syndicating the remaining two DSTs. See “Explanatory Notes—Information About Properties Held Through Delaware Statutory Trusts.” These DSTs are included in our consolidated financial statements prepared in accordance with GAAP. We plan to continue to expand the Section 1031 Exchange Program, as

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these activities generate revenue for us in the form of acquisition fees and annual asset management fees, as well as provide us a pipeline of properties that we have the right, but not the obligation, to acquire.

(1)

The Operating Partnership contributes cash to a depositor entity (a subsidiary of Four Springs TEN31 Xchange, LLC), which contributes cash to the DST.

We believe that the Section 1031 Exchange Program compliments our wholly-owned investment activity and provides key benefits to us including the following:

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Acquisition and Asset Management Fee Income.   We receive a nonrecurring acquisition fee from each DST for identifying, acquiring and financing the DST property or properties and an ongoing management fee for managing the DST and its property or properties, which fees contribute to our cash flows.

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Increased Acquisition Market Presence.   The Section 1031 Exchange Program offers us access to attractive equity capital that allows us to leverage our scalable investment platform by considering a broader range of attractive investment opportunities, including those with pricing that would initially be less attractive in our wholly-owned portfolio. See “—Allocation Policies.” Through the Section 1031 Exchange Program, we acquired $57.0 million of assets on a consolidated basis during the year ended December 31, 2020 and $260.5 million on a consolidated basis from January 1, 2021 through November 15, 2021. Our 1031 Exchange Program allows us to actively participate in a larger portion of the net lease market, develop relationships that we believe will facilitate future investment activity and build our reputation and brand awareness in the industry.

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Potential to Acquire 100% Ownership of Properties Held in DSTs For OP Units at Premium Valuation.   Since we control the disposition of properties held in the DSTs, we can acquire 100% ownership of these properties. If we choose to acquire a property held by a DST, the property’s value is generally set through an appraisal process. We can acquire the property for cash or offer the third-party DST investors the opportunity to elect to receive OP units that would allow the transaction to qualify for certain tax deferral benefits. In addition, such units would allow investors to participate in the operating partnership’s diversified pool of assets and offer enhanced liquidity, as the units would typically be redeemable at the investors election for cash or, at our option, exchangeable for our common shares. Because of the tax efficiency relative to a cash transaction

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and the increased diversity and liquidity, we believe DST investors may be willing to accept OP units at a premium to the value of our common shares, which would enhance our ability to grow our wholly-owned portfolio on attractive terms.

We recently offered investors in three of our DSTs the opportunity to exchange the beneficial interests they own in their respective DSTs for Series U2 OP units, with such exchange subject to, and effective upon, the completion of this offering. Investors holding approximately $10.3 million of beneficial interests in the subject DSTs have agreed to exchange, upon the completion of this offering, their DST beneficial interests for an aggregate number of Series U2 OP units equal to such amount divided by 120% of the initial public offering price of our common shares in this offering (or           Series U2 OP units, based on the midpoint of the price range set forth on the cover page of this prospectus). The value of the real estate to be acquired from the investors in the exchange of the DST interests will have a value of approximately $15.4 million (inclusive of the equity value and debt associated with such real estate). We owned approximately 25.0%, 5.0% and 5.0% of the equity interests in these three DSTs, respectively, as of November 15, 2021, and, as a result of this exchange, we expect to own 38.0%, 35.4% and 32.6% of the equity interests in such DSTs, respectively, upon completion of this offering. The Series U2 OP units will rank on parity with our common OP units, and the holders of Series U2 OP units will receive distributions at an annual rate equal to 5.5% of the Series U2 OP unit issue price unless the distribution rate on the common OP units exceeds such distribution rate, at which point, the distribution rate on the Series U2 OP units will be equal to the distribution rate on the common OP units for all future distributions on the Series U2 OP units. See “The Operating Partnership and the Partnership Agreement—Series U2 OP Units.”

The following table set forth information on an expected post-syndication pro rata share basis relating to our DST portfolio as of November 15, 2021.

(1)

Weighted by ABR on an expected post-syndication pro rata share basis.

(2)

Tenants or lease guarantors, or parents of tenants or lease guarantors, that have an investment grade credit rating from a major credit rating agency or have a senior unsecured obligation that have been so rated. An investment grade credit rating refers to a published long-term credit rating of Baa3/BBB- or above from one or all of Moody’s Investor Service, Inc., Standard & Poor’s Rating Services, and AM Best. See “Risk Factors—Risks related to Our Business. Some of our properties are leased to tenants or have lease guarantors that are not rated by a major rating agency.”

(3)

Based on the later of year built or year of last major renovation.

(4)

Represents the pro rata portion of ABR of our DSTs based on the percentage beneficial interests in our DSTs that we do not own.

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•

Employ Active Asset Management.   We are an active asset manager and regularly review each of our properties for changes in the credit of the tenant, business performance at the property, industry trends and local real estate market conditions. We monitor market rents relative to in-place rents and the amount of tenant capital expenditures in order to refine our tenant retention and alternative use assumptions. Our management team utilizes our internal credit diligence to monitor the credit profile of each of our tenants on an ongoing basis. We believe that this proactive approach enables us to identify and address issues expeditiously and to determine whether there are properties in our portfolio that are appropriate for disposition. Since our inception through November 15, 2021, we disposed of 28 properties for aggregate gross proceeds of approximately $61.3 million and for an aggregate gain of approximately $7.6 million on a consolidated basis.

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Maintain a Flexible Capital Structure.   We believe our pro forma capital structure will provide the financial flexibility and capacity to implement our growth strategies. We intend to maintain a prudent capital structure and balance our use of various forms of equity and debt financing. Over the long term, we will target a net debt (total liabilities less cash and cash equivalents) to Adjusted EBITDA—pro rata leverage ratio of 4.5x to 5.5x to position us for growth. Our pro forma net debt to Adjusted EBITDA—pro rata ratio as of December 31, 2020 was      . To the extent practicable, we will also seek to maintain a debt profile with manageable near-term maturities. We believe that becoming a publicly-traded company will enhance our access to multiple forms of capital, including common and preferred equity, mortgage debt, revolving credit facilities, term loans and company-issued debt securities.

Allocation Policies

We view our wholly-owned portfolio and the Section 1031 Exchange Program as complementary aspects of our business that, among other things, have allowed us to participate more broadly in the net lease market and to seek increased revenues and returns. Our acquisition criteria for our wholly-owned portfolio and the Section 1031 Exchange Program are substantially the same, except for the ranges of acquisition capitalization rates and investment size. Generally, we allocate investment opportunities to our wholly-owned portfolio unless (1) the acquisition would not be attractive when taking into consideration the acquisition capitalization rate and our then cost of capital, (2) we do not have the capacity to make the investment after considering our current and/or anticipated cash needs or (3) the size of the investment in relation to single-property concentration or tenant, industry or geography concentration issues causes us to consider the acquisition to be more appropriate for the Section 1031 Exchange Program. Historically, the cost of capital in the Section 1031 Exchange Program was lower than our cost of capital, so we allocated investments with lower acquisition capitalization rates to the 1031 Exchange Program that would not be attractive to us.

We may pursue investment opportunities for our wholly-owned portfolio or the Section 1031 Exchange Program that do not meet any or all of the foregoing characteristics. There may be circumstances where a potential investment is suitable for our wholly-owned portfolio and the Section 1031 Exchange Program. When this has occurred in the past, we generally allocated the investment for inclusion in our wholly-owned portfolio, subject to availability of sufficient capital to fund the investment. Otherwise, we may have determined to allocate the investment to the Section 1031 Exchange Program. Following completion of this offering, we expect to continue to evaluate allocation of investments between our wholly-owned portfolio and the Section 1031 Exchange Program, based on several factors, including capitalization rates, relative cost of capital, the amount of capital required to make the investment, our current and anticipated cash needs and capacity for investing, the impact on our wholly-owned portfolio’s tenant, industry and geographic diversity and other factors we consider relevant. Though we expect to allocate suitable properties to our wholly-owned portfolio, we retain the ability to allocate investments to the Section 1031 Exchange Program in our sole discretion.

Our Investment Guidelines

Primary Investment Type

Our primary focus is to acquire, own and actively manage properties with the following characteristics:

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Single-tenant net lease properties with high quality tenants contributing to a diversified portfolio. Consistent with our acquisition strategy to date, we expect to acquire single-tenant properties that are

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net leased to tenants that we determine are creditworthy. We believe these properties offer benefits as compared to other types of commercial real estate due to the relative stability of cash flows from long-term leases as well as reduced property-level expenses and capital expenditures as a result of the net lease structure. In addition, in order to reduce the risks associated with adverse developments affecting a particular tenant, industry, geography or property, we plan to acquire properties that enhance the diversification of our portfolio.

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Purchase price from $5 million to $25 million.   We generally focus on pursuing acquisitions in our target purchase price range because we believe there is less competition from larger institutions which typically target larger properties and portfolios. We have built an acquisition team that has significant experience negotiating, underwriting and acquiring these types of properties, which we believe gives us a competitive advantage over the local and regional investors we typically compete with for acquisitions. Furthermore, acquisitions in this size range allow us to minimize our portfolio’s individual property concentration.

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Long-term leases with contractual rental increases.   We focus on acquiring properties that have well-structured leases with remaining terms greater than 10 years at the time of acquisition, which we believe positively contributes to the long-term stability of our properties’ cash flows. In addition, we continue to focus on acquiring properties with leases that have contractual base rent increases, which contributes to ABR growth in future periods.

•

Industrial, medical, retail and office properties.   We pursue the acquisition of the various industrial, medical, retail and office property types shown below. We believe our strategy to acquire multiple property types allows for (1) balanced exposure to additional industries and tenants thereby enhancing the diversification of our portfolio and (2) the acquisition of higher quality properties with stronger real estate fundamentals for tenants who lease multiple property types in their operations. For example, a retailer who leases not only retail locations but distribution facilities and office buildings.

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Industrial

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General distribution.   Large, single floor structures typically including modern characteristics such as ceiling heights in excess of 24 feet and cross dock capabilities. These properties are primarily used for warehousing, product fulfillment and distribution.

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Specialty distribution.   Well located and easily accessible properties primarily used for warehousing and distribution servicing industries such as cold storage, food and beverage distribution and last mile, urban distribution.

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Light manufacturing.   Large, single floor structures with ceiling heights in excess of 22 feet, which typically include production lines that assemble components produced elsewhere.

•

Flex/office.   Versatile building type with ceiling heights typically under 18 feet and used for office space, light manufacturing, research and development or warehousing.

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Medical

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Physician clinics.   Freestanding healthcare facilities that are primarily devoted to the care of patients by physician groups, including specialists in cardiology, orthopedic, neurology and physical rehabilitation, which are often associated with major hospital systems.

•

Ambulatory, emergency and urgent care centers.   Freestanding healthcare facilities where surgical procedures and general care not requiring an overnight hospital stay are performed.

•

Radiology and oncology facilities.   Freestanding outpatient medical facilities with operators typically associated with major hospital systems.

•

Kidney dialysis and blood plasma clinics.   Freestanding outpatient medical facilities typically operated by large corporate tenants.

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Retail

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Specialty retail.   Freestanding single floor box properties focusing on specific product categories, such as automotive parts and home furnishing stores.

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•

Special use retail.   Freestanding properties typically designed to accommodate a particular business, such as automotive related services including oil change facilities and auto repair shops.

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Quick service and casual dining restaurants.   Quick service restaurants are typically smaller units and are characterized both by their fast food cuisine and minimal table service. Casual dining restaurants are typically larger format properties that offer full table service at mid-level price points.

•

General and discount retail.   Freestanding properties that are generally smaller single-floor structures with minimal specialized build out, such as dollar and convenience stores.

•

Office

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Corporate and regional headquarters.   Properties used by companies as their national or regional headquarters.

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Mission critical offices in core markets.   Properties that serve primary operational functions for companies.

•

Research and development offices.   Properties that house a company’s research and development activities.

Other Investment Types

While we generally plan to make acquisitions pursuant to our primary investment type guidelines, in the past we have opportunistically made investments that do not meet one or more of these criteria, and we may make additional investments that do not meet one or more of these criteria if we believe the opportunity will generate sufficient risk adjusted returns. Specifically, we may enter into sale-leaseback arrangements or make loans to real estate developers with respect to a specific net lease property that we plan to acquire upon completion of construction. We may acquire properties under development or that require substantial refurbishment or renovation. We also may acquire properties with shorter lease terms or no contractual rental escalations if the property is in an attractive location, the property is difficult to replace or the property has other significant upside real estate attributes. Furthermore, we may acquire majority or minority interests in other entities (or business units of such entities) with investment objectives similar to ours or with management, investment or development capabilities that we deem desirable or advantageous to acquire. Our board of trustees has broad discretion to modify our investment policies in order for us to achieve our investment objectives.

Our Target Market

Based on historical transactions and market participants, RCG estimates the value of existing net lease properties to be in the range of a few trillion dollars. RCG utilizes an estimate of corporate-owned real estate as a proxy for potential expansion of the net lease property universe. RCG estimates this segment of corporate-owned and occupied real estate ranges in value between $1.5 trillion to more than $2 trillion, as of September 30, 2021.

In 2020, single tenant transaction volume decreased, according to Real Capital Analytics, as the COVID-19 pandemic impacted investment activity and property values. According to Real Capital Analytics, 2020 transaction volume in the single tenant property types that we primarily target was approximately $52 billion consisting of $31 billion of industrial, $6 billion of retail, and $15 billion of office, including medical office, versus $68 billion across the same property types in 2019.

In the first three quarters of 2021, transaction volume reached nearly $49 billion. If annualized, this would equate to investment volume of over $65 billion, a potential increase of approximately 25% from 2020. We believe that based on this volume, there will continue to be substantial investment opportunities for us to further grow and diversify our portfolio.

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Regulation

General

Our properties are subject to various laws, regulations, including regulations relating to fire and safety requirements, ordinances and affirmative and negative covenants and in some instances, common area obligations. Our tenants have primary responsibilities for compliance with these requirements pursuant to our lease agreements. We believe that each of our properties has the necessary permits and approvals to operate and conduct its business.

Americans With Disabilities Act

Under Title III of the ADA, and rules promulgated thereunder, in order to protect individuals with disabilities, public accommodations must remove architectural and communication barriers that are structural in nature from existing places of public accommodation to the extent “readily achievable.” In addition, under the ADA, alterations to a place of public accommodation or a commercial facility are to be made so that, to the maximum extent feasible, such altered portions are readily accessible to and usable by disabled individuals. The “readily achievable” and the standard take into account, among other factors, the financial resources of the affected site and the owner, lessor or other applicable person.

Compliance with the ADA, as well as other federal, state and local laws, may require modifications to properties we currently own or may purchase, or may restrict renovations of those properties. Failure to comply with these laws or regulations could result in the imposition of fines or an award of damages to private litigants, as well as the incurrence of the costs of making modifications to attain compliance, and future legislation could impose additional obligations or restrictions on our properties. Although our tenants and borrowers are generally responsible for all maintenance and repairs of the property pursuant to our lease and other financing agreements, including compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with these laws or regulations.

Environmental Matters

General

All real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to human health and the environment. Certain of these laws and regulations may impose

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joint and several liabilities on certain statutory classes of persons, including owners or operators, for the costs of investigation or remediation of contaminated properties, regardless of fault or the legality of the original disposal. These laws and regulations apply to past and present business operations of our tenants and borrowers and the use, storage, handling and contracting for recycling or disposal of hazardous substances or wastes. Our tenants and borrowers are obligated to comply with environmental laws. Our leases and loans typically impose obligations on our tenants and borrowers to indemnify us from all or most compliance costs we may experience as a result of the environmental conditions on our properties. If a tenant or borrower fails to, or cannot comply, we may be required to pay such costs. We are not aware of any environmental condition with respect to any of our properties which would have a material adverse effect on our business, financial condition, liquidity or results of operations. We cannot predict whether new or more stringent laws relating to the environment will be enacted in the future or how such laws will impact the operations of businesses at our properties. Costs associated with an environmental event could be substantial.

Superlien Laws

Under the laws of many states, contamination on a site may give rise to a lien on the site for clean-up costs. In several states, such a lien has priority over all existing liens, including those of existing mortgages. In these states, the lien of a mortgage may lose its priority to such a “superlien.”

CERCLA

The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), imposes strict liability on present and past “owners” and “operators” of a contaminated site for the costs of clean-up. A secured lender may be liable as an “owner” or “operator” of a contaminated site if agents or employees of the lender have participated in the management of such site or in the operations of the tenant. Excluded from CERCLA’s definition of “owner” or “operator” however, is a person “who without participating in the management of the facility, holds indicia of ownership primarily to protect his security interest.” This is the so called “secured creditor exemption.” With respect to most of the assets in our investment portfolio, we are the owner of the real property. In both instances, we believe we meet the secured creditor exemption.

Liability is not limited to the original or unamortized principal balance of a loan or to the value of the site securing a loan. CERCLA provides substantial protection to lenders by defining the activities in which a lender can engage and still have the benefit of the secured creditor exemption. In order for a lender to be deemed to have participated in the management of a site, the lender must actually participate in the operational affairs of the site or our tenant or borrower. CERCLA provides that “merely having the capacity to influence, or unexercised right to control” operations does not constitute participation in management. A lender may lose the protection of the secured creditor exemption only if it exercises decision-making control over our tenant’s or borrower’s environmental compliance and hazardous substance handling and disposal practices, or assumes responsibility for substantially all operational functions at the site or overall management encompassing day-to-day decision making with regard to environmental compliance. CERCLA also provides that a lender will continue to have the benefit of the secured creditor exemption even if it forecloses on a site, purchases it at a foreclosure sale or accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell the site at the earliest practicable commercially reasonable time on commercially reasonable terms.

Certain Other Federal and State Laws

Many states have statutes similar to CERCLA, and not all of those statutes provide for a secured creditor exemption. In addition, under federal law, there is potential liability relating to hazardous wastes and underground storage tanks under the Federal Resource Conservation and Recovery Act (“RCRA”). The definition of “hazardous substances” under CERCLA specifically excludes petroleum products. Subtitle I of RCRA governs underground petroleum storage tanks. The protections accorded to lenders under CERCLA are also accorded to the holders of security interests in underground petroleum storage tanks if the lender does not participate in management of the underground storage tanks and is not otherwise engaged in petroleum production, refining or marketing. It should be noted, however, that liability for cleanup of petroleum contamination may be governed by state law, which may not provide for any specific protection for secured creditors.

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In a few states, transfers of some types of sites are conditioned upon cleanup of contamination prior to transfer. In these cases, a lender that becomes the owner of a site through foreclosure, deed in lieu of foreclosure or otherwise, may be required to clean up the contamination before selling or otherwise transferring the site.

Also, certain federal, state and local laws govern the removal, encapsulation or disturbance of asbestos-containing materials (“ACMs”), in the event of the remodeling, renovation or demolition of a building. Such laws, as well as common law standards, may impose liability for re-leases of ACMs and may provide for third parties to seek recovery from owners or operators of sites for personal injuries associated with such re-leases.

Beyond statute-based environmental liability, there exist common law causes of action (for example, actions based on nuisance or on toxic tort resulting in death, personal injury or damage to site) related to hazardous environmental conditions on a site. While it may be more difficult to hold a lender liable in such cases, unanticipated or uninsured liabilities of our tenant or borrower may jeopardize the tenant’s or borrower’s ability to meet its lease or loan obligations.

Additional Considerations

The cost of remediating hazardous substance contamination at a site can be substantial. If a lender becomes liable, it can bring an action for contribution against the owner or operator who created the environmental hazard, but that individual or entity may be without substantial assets.

If a lender forecloses on a mortgage secured by a site on which business operations are subject to environmental laws and regulations, the lender will be required to operate the site in accordance with those laws and regulations. Such compliance may result in substantial expense.

In addition, a lender may be obligated to disclose environmental conditions on a site to government entities and/or to prospective buyers (including prospective buyers at a foreclosure sale or following foreclosure). Such disclosure may decrease the amount that prospective buyers are willing to pay for the affected site, sometimes substantially, and thereby decrease the ability of the lender to recoup its investment in a loan upon foreclosure.

Insurance

Our leases and loan agreements typically provide that our tenants and borrowers will maintain insurance of the type and in the amounts that are usual and customary for similar types of commercial property, including adequate commercial general liability, fire, flood and extended loss insurance provided by reputable companies, with commercially reasonable exclusions, deductibles and limits. Under certain circumstances, however, we may permit certain tenants and borrowers to self-insure. Pursuant to such leases, our tenants are required to name us (and any of our lenders that have a mortgage on the property leased by the tenant) as additional insurers on their liability policies and additional named insured or loss payee (or mortgagee, in the case of our lenders) on their property policies. Depending on the location of the property, losses of a catastrophic nature, such as those caused by earthquakes and floods, may be covered by insurance policies that are held by our tenant with limitations such as large deductibles or co-payments that a tenant may not be able to meet.

In addition to being a named insured on our tenants’ liability policies, we separately maintain commercial general liability coverage in the event our tenants or borrowers do not obtain their required insurance. We also maintain full property coverage on all properties not occupied by our tenants and other property coverage as may be required by our lenders which are not required to be carried by our tenants under our leases.

Corporate Responsibility—Environmental, Social, and Governance (ESG)

Corporate responsibility, including ESG efforts, has been one of our cornerstones since our inception. We believe that our corporate responsibility and ESG initiatives are key to our performance, and we are focused on efforts and changes designed to have long-term, positive impacts for our shareholders, employees, tenants, other stakeholders and the communities where we live, work and own our properties. We are committed to our ESG efforts not just because we believe it is the right thing to do but also because it is good for our business. Our mission is to operate our business in a way that honors and advances our guiding values: performance excellence, integrity, respect, leadership, humility, partnership and transparency.

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Environmental

As a real estate owner, we are aware of the need to develop and implement environmentally sustainable practices within our business and are committed to doing so. We believe that mitigating environmental risks and working to implement sustainable practices is important to the success and long-term performance of our business.

Our efforts in this area are primarily undertaken in partnership with our tenants due to the nature of our business model. We acquire, own, and manage primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Substantially all of our portfolio is subject to net leases, which generally means that, among other things, our tenants are responsible for maintenance of the buildings and properties as well as implementation of any sustainable business practices or environmental initiatives. As a result, when and where possible, we are focused on working with our tenants to promote environmental responsibility and energy efficient facilities. For example, we have a building with a solar PV system installed pursuant to a solar equipment lease. The PV equipment generates electricity for use at the property. We also have a property that has a LEED (Leadership in Energy and Environmental Design) certification.

Our acquisition process generally includes a robust environmental assessment of every property we acquire, including obtaining a Phase I environmental site assessment based on current industry standards and best practices. We carefully review any recognized environmental conditions identified as a result of the assessment and work with the tenant and nationally recognized environmental experts to implement our forward looking strategy, including any required governmental reporting or remediation action. Our team also carefully evaluates each property in our portfolio to ensure we have appropriate insurance coverage in place, either directly or through the tenant pursuant to the terms of our leases, in an effort to provide the financial resources to address any unforeseen environmental issue, natural disaster or other risk based on industry best practices.

In addition, we promote environmental mindfulness and have supported several internal initiatives to encourage sustainability at our corporate offices. Recent initiatives and efforts have included reduced paper consumption through electronic document review and digital signature software, installation of energy efficient lighting in our corporate offices and providing purified water dispensers that can be used in lieu of single-use plastic water and drink bottles.

Social

Our commitment to our employees is central to our ability to continue to deliver strong performance and financial results for our shareholders and other stakeholders. We are as passionate about our people as we are about real estate. We seek to create and cultivate an engaging work environment for our employees which allows us to attract, retain and develop top talent to manage our business. To do that, we believe it is essential that we develop and maintain a culture that lives up to our values of performance excellence, integrity, respect, leadership, humility and transparency. We are committed to providing our employees with an environment that is free from discrimination and harassment, that respects and honors their differences and unique life experiences and that enables every employee the opportunity to develop and excel in their role and reach their full potential. We believe that we have created a collaborative, creative workplace where people with unique talents can flourish, where their opinions are valued and where their contributions are rewarded.

As part of our commitment to our employees, we are focused on the following:

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Career Development—We strive to create an engaging work experience that allows for career development and related opportunities. We offer numerous opportunities for our employees to engage in personal and professional development, including educational support and financial assistance, participating in industry conferences and networking events, individual leadership and management training, mentorship opportunities and reimbursement for continuing education requirements.

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Diversity and Inclusion—We are committed to providing equal opportunity in all aspects of employment and cultivating a diverse and inclusive workplace. We believe that diverse backgrounds and experiences help drive our performance and are important assets for the company.

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Employee Wellness—Our employees are our most valuable asset and their individual and group contributions drive our performance and success. As a result, we are focused on and invest in our

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team’s overall health, wellness and engagement. We employ numerous strategies and initiatives to nurture and nourish our employees’ physical, mental and emotional well-being, including, among other things, competitive employee benefits, generous fringe benefits to make office environment more comfortable, transparent and open communication and dialogue between our senior executives and our employee base, events and opportunities for social connectedness, particularly during periods where we are working from home, family-friendly corporate events, routine fitness exploration classes, flu shots administered by a third-party health-services provider, yoga and massage sessions, flexible work schedules to meet specific employee needs and access to an employee assistance program and other emotional and mental health resources.

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Community Engagement—Giving back to our communities is important to us and our employees. We provide regular volunteer opportunities and fundraising initiatives throughout the year that provide our employees with meaningful civic involvement. Since our inception, we have provided opportunities for our employees to contribute time and resources to benefit local nonprofit organizations.

Governance

We are committed to conducting our business in accordance with corporate governance best practices. Our reputation is one of our most important assets and each trustee, officer and employee must contribute to the care and preservation of that asset. To that end, our board of trustees has adopted our Code of Business Conduct and Ethics (the “Code of Ethics”), which applies to our trustees, officers, and employees. Among other matters, our Code of Ethics is designed to deter wrongdoing and to promote:

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honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

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full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submits to, the SEC and in shareholder reports and other public communications made by us;

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compliance with applicable laws and governmental rules and regulations;

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the prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code of Ethics; and

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accountability for adherence to the Code of Ethics.

Any waiver of the Code of Ethics for our trustees or executive officers must be approved by a majority of our independent trustees, and any such waiver shall be promptly disclosed as required by law and NYSE regulations. Our employees have access to members of our board of trustees to report anonymously, if desired, any suspicion of misconduct by any member of our senior management or executive team. Anonymous reporting is always available through the company’s whistleblower hotline and reported to our Audit Committee quarterly. Our Code of Ethics, as well as our charter, bylaws, committee charters and other governance documents may be found on our website.

We have structured our corporate governance in a manner we believe closely aligns our interests with those of our shareholders. Notable features of our corporate governance structure include the following:

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our board of trustees is not classified, with each of our trustees subject to election annually, and we may not elect to be subject to the elective provision of the MGCL that would classify our board of trustees without the affirmative vote of a majority of the votes cast on the matter by shareholders entitled to vote generally in the election of trustees;

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upon the completion of this offering, six out of nine trustees will be independent;

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we have a fully independent Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee;

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at least one of our trustees qualifies as an “audit committee financial expert” as defined by the SEC; and

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we do not have a shareholder rights plan, however, our board of trustees may adopt a shareholder rights plan in the future without the approval of our shareholders, but in such case it must seek ratification from our shareholders within 12 months of adoption of the plan for the plan to remain in effect.

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Competition

We face competition in the acquisition and financing of properties in developed areas from numerous investors, including traded and non-traded public REITs, private REITs, private equity investors, institutional investment funds, individuals, banks and insurance companies, some of which have greater financial resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more risk. We also believe that competition for real estate financing comes from middle-market business owners themselves, many of whom have had a historic preference to own, rather than lease, the real estate they use in their businesses. The competition we face may increase the demand for properties and, therefore, reduce the number of suitable acquisition opportunities available to us or increase the price we must pay to acquire such properties. This competition will increase if investments in real estate become more attractive relative to other forms of investment.

Employees

As of November 15, 2021, we had 21 full-time employees, all of whom are located in our single office in Lake Como, New Jersey. Our staff is mostly comprised of professional employees engaged in origination, closing, financial reporting, portfolio management and capital markets activities essential to our business.

Legal Proceedings

From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, to any legal proceedings which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition, liquidity or results of operations if determined adversely to us.

Corporate Information

Our offices are located at 1901 Main Street in Lake Como, New Jersey 07719. Our telephone number is 877-449-8828. Our internet website is https://fsctrust.com. The information contained in, or that can be accessed through, our website is not incorporated by reference in or otherwise a part of this prospectus.

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MANAGEMENT

Executive Officers and Trustees

Upon completion of this offering, our board of trustees will consist of nine members, including a majority of trustees who are independent within the meaning of the listing standards of the NYSE. Each of our trustees will be elected by our shareholders at our annual meeting of shareholders to serve until the next annual meeting of our shareholders and until his or her successor is duly elected and qualified. Subject to rights pursuant to any employment agreements, our officers serve at the pleasure of our board of trustees.

Until the current holders (or permitted transferees) of the Series A-1 preferred shares beneficially own less than 10% of the common shares issued and outstanding after this offering, we have agreed to nominate one individual designated by such holders for election to our board of trustees, and such holders have a right to designate an observer to our board of trustees. Such holders have designated Elliot Chovev as an observer to our board of trustees and have not designated an individual for nomination for election to our board of trustees.

Until the current holders (or permitted transferees) of the Series A-2 preferred shares beneficially own less than 10% of the common shares issued and outstanding after this offering, we have agreed to nominate one individual designated by such holders for election to our board of trustees, and such holders have a right to designate an observer to our board of trustees. Such holders have previously designated Matthew Settle for nomination for election to our board of trustees and have not designated an individual as an observer to our board of trustees.

The following table sets forth certain information concerning our trustees, our trustee nominee and our executive officers:

Name	Age		Position(s)
William P. Dioguardi	​	64	Chairman of the Board of Trustees, Chief Executive Officer
Coby R. Johnson	​	51	Trustee, President, Chief Operating Officer and Secretary
John E. Warch	​	64	Senior Vice President, Chief Financial Officer and Treasurer
Jared W. Morgan	​	49	Senior Vice President, Head of Acquisitions
Cynthia M. Daly	​	52	Senior Vice President, Head of Underwriting
Michael S. Dana	​	62	Independent Trustee
Stephen R. Petersen	​	65	Independent Trustee
Elizabeth A. Picklo-Smith*	​	58	Independent Trustee Nominee
Peter S. Reinhart	​	71	Independent Trustee
Spencer F. Segura	​	69	Independent Trustee
Matthew B. Settle	​	36	Trustee
James S. Vaccaro	​	65	Independent Trustee

*

This individual has agreed to become a trustee upon completion of this offering.

We expect our board of trustees to determine that Michael S. Dana, Stephen R. Petersen, Peter S. Reinhart, Spencer F. Segura, Elizabeth A. Picklo-Smith and James S. Vaccaro are each an “independent director” as such term is defined by the applicable rules and regulations of the NYSE.

William P. Dioguardi, Chairman of Our Board of Trustees and Chief Executive Officer

Mr. Dioguardi has served as the Chairman of our board of trustees and our Chief Executive Officer since our formation in July 2012. Mr. Dioguardi was the founding shareholder of FSC LLC, a real estate investment management firm focused on net lease real estate, in November 2008, where he led the acquisition and asset management of net lease properties through syndication to investors. Prior to FSC LLC, Mr. Dioguardi was President of Spencer Trask Ventures, Inc., a leading private equity firm based in New York City, at which Mr. Dioguardi led a team that invested in technology companies. Mr. Dioguardi also founded and built

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Vantage Securities, an investment banking firm that participated in public and private offerings of securities. Prior to founding Vantage, Mr. Dioguardi served in several senior roles of increasing responsibility at Integrated Resources Equity Corp., at the time the largest real estate syndication firm in the United States. Mr. Dioguardi received a B.S. degree in Business Administration from Monmouth University. Active in community affairs for many years in Avon-by-the-Sea, New Jersey, Mr. Dioguardi served as Commissioner of Revenue and Finance from 1991—2003. In addition, from 2005—2015, he served as a member of the board of trustees of Monmouth University and the University’s Investment Committee, which he chaired for several years. Our board of trustees believes that Mr. Dioguardi’s strategic vision, intimate understanding of our history and operations and his extensive real estate and capital markets experience make him well-suited to serve as a trustee.

Coby R. Johnson, Member of Our Board of Trustees, President, Chief Operating Officer and Secretary

Mr. Johnson has served as our President since June 2014 and as our Chief Operating Officer, Secretary and a trustee since our formation in July 2012. From October 2010 until July 2012, Mr. Johnson was a Managing Director of FSC LLC focusing on all aspects of net lease real estate acquisition and investment. Prior to joining FSC LLC, Mr. Johnson led the alternative investments group of a financial services firm, served in business development, operational and advisory roles for enterprises in industries including real estate, financial services and technology, and practiced corporate and securities law at major firms in Boston and Philadelphia. Mr. Johnson has participated in numerous real estate and capital markets transactions, including public and private equity and debt financings. Mr. Johnson received a B.A. in Economics from the University of Illinois—Urbana and a J.D. from Emory University School of Law. Our board of trustees believes that Mr. Johnson’s familiarity with our history and operations, his experience as a participant in net lease financing and his extensive real estate and capital markets experience make him well-suited to serve as a trustee.

John E. Warch, Senior Vice President, Chief Financial Officer and Treasurer

Mr. Warch has served as our Senior Vice President, Chief Financial Officer since September 2013 and as our Treasurer since April 2015. From August 2012 until September 2013, Mr. Warch was a Senior Consultant at David Landau & Associates, LLC, responsible for, among other things, Sarbanes-Oxley 404 compliance testing of real estate clients. From November 2006 until March 2012, Mr. Warch served as Senior Vice President and Chief Accounting Officer of CapLease, Inc. (previously NYSE: LSE), where he was responsible for all aspects of the financial infrastructure of a publicly-held real estate investment trust, managed financial and SEC reporting and compliance, oversaw Sarbanes-Oxley 404 compliance and coordinated audits and reviews with independent accountants. Mr. Warch, is a Certified Public Accountant and earned a B.S. in Accounting and an M.B.A. in Finance from St. John’s University.

Jared W. Morgan, Senior Vice President, Head of Acquisitions

Mr. Morgan has served as our Senior Vice President, Head of Acquisitions, since August 2016. From May 2013 until July 2016, Mr. Morgan served as Vice President of Acquisitions at Spirit Realty Capital, Inc. (NYSE: SRC), responsible for sourcing new acquisitions in the marketplace. From August 2006 until July 2011, Mr. Morgan was the Vice President, Dispositions and Acquisitions, of Sovereign Investment Company, where he bought and sold over $2 billion of net lease assets. Mr. Morgan has served as Operating Partner of Excess Space Retail Services, Inc. and was co-founder of an Apollo Real Estate Advisors venture. Mr. Morgan earned a B.A. from Colby College.

Cynthia M. Daly, Senior Vice President, Head of Underwriting

Ms. Daly has served as our Senior Vice President, Head of Underwriting since January 2021. From December 2016 until December 2020, Ms. Daly served as our Vice President, Underwriting. From November 2012 until December 2016, Ms. Daly served as our Director of Acquisitions. Prior to joining us, Ms. Daly was the founder of Sand Dollar Investments LLC, a real estate consulting firm, from March 2008 until November 2012. From January 2001 until November 2010, Ms. Daly served as Executive Vice President and Director of Monmouth Real Estate Investment Corporation (NYSE: MNR), a REIT focused on net lease industrial properties. Ms. Daly earned a B.A. in English from Lafayette College and an M.B.A. from Monmouth University.

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Michael S. Dana, Member of Our Board of Trustees

Mr. Dana has served as a trustee since September 2017. Since January 2005, Mr. Dana has served as President and Chief Executive Officer of Onex Real Estate Partners, a division of Onex Corporation (TSX: ONEX), a publicly traded private equity fund with approximately $25 billion of assets under management. Mr. Dana oversees all real estate investment decisions as well as the strategic direction of Onex Real Estate Partners. Mr. Dana has over 30 years of real estate and finance experience. Prior to forming Onex Real Estate Partners, Mr. Dana accumulated over a decade of investment banking experience that culminated at Credit Suisse First Boston, where he was the North American Head of Real Estate Investment Banking and oversaw and advised public and private companies on several billion dollars of transactions including: entity acquisitions, mergers, corporate recapitalizations, initial public offerings and other capital raising activities. Prior to investment banking, Mr. Dana ran the capital markets division of Equitable Real Estate. Mr. Dana earned a B.S. in Marketing from the University of Maryland and an M.B.A. from the Wharton School at the University of Pennsylvania. Mr. Dana is a member of our board of trustees and Co-Chair of the Baltimore Incentive Program of the University of Maryland. Our board of trustees believes that Mr. Dana’s extensive real estate experience and his expertise in finance make him well-suited to serve as a trustee.

Stephen R. Petersen, Member of Our Board of Trustees

Mr. Petersen has served as a trustee since March 2014. Mr. Petersen has been a Managing Director at Seaward Management, an independent investment management firm, since October 2013. Previously, Mr. Petersen served as Senior Vice President, Investments at Fidelity Investments for approximately 32 years. During his tenure at Fidelity, Mr. Petersen served as a Portfolio Manager and Group Leader (Income-Growth Team with $4 billion of assets under management) of The Fidelity Management Trust Company and was responsible for managing several equity income and balanced mutual funds (Fidelity Equity Income Fund (1993-2011), Fidelity Balanced Fund (1996-1997), Fidelity VIP Equity-Income Fund (1997-2011), Fidelity Puritan Fund (2000-2007), Fidelity Advisor Equity-Income Fund (2009-2011), and Fidelity Equity-Income II (2009-2011)). Mr. Petersen received a B.B.A. in Finance and an M.S. in Finance from the University of Wisconsin-Madison. Mr. Petersen serves on the Board of the University of Wisconsin Foundation and Chairs its Traditional Asset Committee. Our board of trustees believes that Mr. Petersen’s extensive investment management experience and his expertise in finance make him well-suited to serve as a trustee.

Elizabeth A. Picklo-Smith (Liz Smith), Proposed Member of Our Board of Trustees

Ms. Smith will become a trustee upon the completion of this offering. Since September 2020, Ms. Smith has been the Senior Director, Market Development for The Norwood Company, a provider of construction management, design build and general contracting services. Prior to joining The Norwood Company, Ms. Smith was Director of Business Development at Cutler Associates, Inc., from September 2017 to August 2020. From November 2015 to June 2017, Ms. Smith was Director of Business Development at Clark Richardson & Biskup, Inc., a global design, construction and consulting firm that specializes in advanced technology industries. Ms. Smith attended Kutztown University and several night schools for real estate related studies. Our board of trustees believes that Ms. Smith’s extensive experience in the construction and real estate industries makes her well-suited to serve as a trustee.

Peter S. Reinhart, Member of Our Board of Trustees

Mr. Reinhart has served as a trustee since October 2015. From July 2011 until June 2020, Mr. Reinhart served as the Director of the Kislak Real Estate Institute and Specialist Professor at Monmouth University. Previously, for thirty-three years, Mr. Reinhart served in senior management roles at Hovnanian Enterprises, Inc. (NYSE: HOV), a large, national home builder. While at Hovnanian Mr. Reinhart served as Senior Vice President and General Counsel for 28 years and served on its board of directors for 18 years. Mr. Reinhart is Vice Chair of our board of trustees of Hackensack Meridian Health Corporation, and the current Chairman of New Jersey Future, the leading land use policy organization in New Jersey. He is the past president of the New Jersey Builders Association, previously served on the Council on Affordable Housing for ten years and was a member of the Real Estate Task Force of New Jersey Governor Whitman’s Economic Master Plan Commission. He is a graduate of Franklin and Marshall College and Rutgers Camden Law School. Our

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board of trustees believes that Mr. Reinhart’s experience serving as a member of several boards and his extensive experience in real estate and corporate governance make him well-suited to serve as a trustee.

Spencer F. Segura, Member of Our Board of Trustees

Mr. Segura has served as a trustee since our formation in July 2012. Mr. Segura has been managing his family office for over five years. Mr. Segura was formerly Senior Managing Director of Spencer Trask Ventures, Inc., which he joined in 1995 and oversaw the development and financing of numerous early-stage companies. He co-founded or provided initial equity capital for several portfolio companies, including companies such as Faroudja, Next Level Communications, Prospect Medical and Arrive Technologies. Prior to Spencer Trask, he held positions in the financial services industry, including at Oppenheimer & Co. Mr. Segura earned a B.A. in History from the University of California at Los Angeles and a J.D. from Loyola Law School. Mr. Segura serves on the board of trustees of Imthera Medical Inc., a privately funded company that has developed a neuro-stimulation medical device for the treatment of Obstructive Sleep Apnea. Our board of trustees believes that Mr. Segura’s extensive investment banking and capital markets experience and his expertise in finance make him well-suited to serve as a trustee.

Matthew B. Settle, Member of Our Board of Trustees

Mr. Settle has served as a trustee since June 2021. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contingently Redeemable Series A-2 Preferred Shares.” Since 2019, Mr. Settle has served as a senior member of Carlyle Credit Opportunities Fund, which is a Carlyle fund focused on providing bespoke junior capital solutions to family and founder-owned private companies. Mr. Settle is responsible for sourcing, evaluating, structuring and executing investment opportunities across industries for Carlyle. Prior to joining Carlyle, from 2010 to 2019, Mr. Settle was a Managing Director at Guggenheim Partners where he worked in a variety of roles with a focus on junior capital and opportunistic credit investments across all industry verticals. Previously, Mr. Settle oversaw the tech, media, telecommunication and industrials verticals. Before joining Guggenheim in 2010, Mr. Settle was an analyst at MJX Asset Management where Mr. Settle focused on investing in broadly syndicated leveraged loans. Mr. Settle received a Bachelor of Science in Finance and International Business from New York University’s Stern School of Business. Our board of trustees believes that Mr. Settle’s extensive experience and expertise in finance make him well-suited to serve as a trustee.

James S. Vaccaro, Member of Our Board of Trustees

Mr. Vaccaro has served as a trustee since March 2014. Mr. Vaccaro has been the President and CEO of Manasquan Savings Bank since August 2012. Previously, Mr. Vaccaro served from January 2008 to March 2011 as Chairman, President and CEO of Central Jersey Bancorp, parent company of Allaire Community Bank and Monmouth Community Bank, which he helped found. Mr. Vaccaro also served in various capacities at Central Jersey Bank and Trust Company including executive vice president, treasurer, CFO and as a member of its board of directors. Mr. Vaccaro received a B.S. in Economics from Ursinus College. Mr. Vaccaro is a member of the board of trustees for Saint Barnabas Corporation, Monmouth Medical Center, the New Jersey Repertory Theater, and Monmouth University. Mr. Vaccaro also serves as the chairman of the board of Visiting Nurses Association of Central New Jersey, is on the advisory board of Interfaith Neighbors and is on the leadership council of Prevention First. Mr. Vaccaro was recently elected as the Second Vice Chair of board of directors of the New Jersey Bankers Association. Our board of trustees believes that Mr. Vaccaro’s extensive knowledge and experience in business and operational strategy across a wide range of industry sectors make him well-suited to serve as a trustee.

Family Relationships

There are no family relationships among any of our trustees or executive officers.

Role of the Board in Risk Oversight

Our board of trustees oversees a company-wide approach to risk management that is carried out by our executive officers. Our board of trustees will determine the appropriate risk for us generally, assess the specific risks faced by us and review the steps taken by our executive officers to manage those risks. While our board of trustees will maintain the ultimate oversight responsibility for the risk management process, its committees

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oversee risk in certain specified areas. Specifically, our Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements and the incentives created by the compensation awards it makes. Our Audit Committee oversees management of enterprise risks and financial risks, as well as potential conflicts of interests. Our Nominating and Corporate Governance Committee is responsible for overseeing the management of risks associated with the independence of our board of trustees.

Committees of Our Board of Trustees

Our entire board of trustees will be responsible for supervising our business. However, our bylaws provide that our board of trustees may establish such committees as our board of trustees believes appropriate and in our best interests.

Our board of trustees has three standing committees: Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. The charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on our investor relations website at https://fsctrust.com. Our board of trustees may establish other committees as it deems necessary or appropriate from time to time.

Audit Committee

Upon completion of this offering, our Audit Committee will consist of Messrs. Petersen, Dana and Vaccaro, with Mr. Vaccaro serving as the chair. The functions of our Audit Committee, among other things, include:

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reviewing our financial statements, including any significant financial items or changes in accounting policies, with our senior management and independent registered public accounting firm;

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reviewing our financial risk and control procedures, compliance programs and significant tax, legal and regulatory matters;

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appointing and determining the compensation for our independent auditors;

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establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters; and

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reviewing and overseeing our independent registered public accounting firm.

Our board of trustees has determined that Mr. Vaccaro qualifies as an “audit committee financial expert” as such term is defined by the SEC. Messrs. Petersen, Vaccaro and Dana are independent as independence is defined in Rule 10A-3 of the Exchange Act and under the NYSE listing standards. Our Audit Committee is comprised entirely of independent trustees.

Compensation Committee Interlocks and Insider Participation

Upon completion of this offering, our Compensation Committee will consist of Messrs. Petersen, Dana and Reinhart, with Mr. Petersen serving as the chair. The functions of our Compensation Committee, among other things, include:

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reviewing and approving corporate goals and objectives relevant to the compensation of certain of our key executives, evaluating the performance of these executives in light of those goals and objectives, and determining the compensation of these executives based on that evaluation;

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reviewing and approving executive officer and trustee compensation;

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reviewing and approving overall compensation programs; and

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administering our incentive compensation and equity-based plans.

In order to comply with certain SEC and tax law requirements, our Compensation Committee (or a subcommittee of our Compensation Committee) must consist of at least two trustees that qualify as “non-employee directors” for the purposes of Rule 16b-3 under the Exchange Act. Each of Messrs. Petersen, Dana and Reinhart qualify as a “non-employee director” under SEC Rule 16b-3.

None of the members of our Compensation Committee have ever been one of our officers or employees. None of our executive officers have served as a member of the board of trustees or board of directors,

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Compensation Committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our trustees or on our Compensation Committee.

Nominating and Corporate Governance Committee

Upon completion of this offering, our Nominating and Corporate Governance Committee will consist of Messrs. Vaccaro, Dana and Reinhart, with Mr. Reinhart serving as the chair. The functions of our Nominating and Corporate Governance Committee, among other things, include:

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identifying individuals qualified to become board members and recommending trustee nominees and board members for committee membership;

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developing and recommending corporate governance guidelines to our board of trustees; and

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overseeing the evaluation of our board of trustees and its committees and management.

Codes of Business Conduct and Ethics

Our board of trustees has adopted a Code of Ethics that applies to our trustees, officers and employees. The current version of this code is available on our website at https://fsctrust.com and in print to any shareholder who requests copies by contacting our Secretary at 1901 Main Street, Lake Como, New Jersey 07719. Any amendments to the code, or any waivers of its requirements, will be disclosed on our website. We will promptly disclose to our shareholders, if required by applicable laws, any amendments to, or waivers from, provisions of the Code of Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website, rather than by filing a Form 8-K.

Trustee Compensation

We pay each of our independent trustees $1,000 for each meeting of our board of trustees such trustee attends. Following the completion of this offering, we expect that each independent non-employee trustee will receive a retainer in the amount of $100,000 annually, $40,000 payable in cash or common shares at the election of the trustee and the remaining $60,000 payable in the form of LTIP Units. In addition, the lead independent trustee and the chairperson of each of our Audit, Compensation and Nominating and Corporate Governance Committees will receive an additional annual retainer of $15,000, $12,500, $7,500 and $5,000, respectively, each payable in cash or common shares at the election of such trustee. If a trustee is also one of our employees or is determined to be not independent, we do not pay compensation for services rendered as a trustee. All trustees are also reimbursed for reasonable out-of-pocket expenses incurred in connection with attendance at each meeting of our board of trustees.

The following table presents the total compensation for each person who served as a member of our board of trustees during 2020. As indicated above, we did not pay any fees, make any equity awards, or pay any other compensation to Messrs. Dioguardi and Johnson, for their services as trustees and none of our independent trustees held any equity awards as of December 31, 2020. Messrs. Dioguardi and Johnson were separately compensated as our executive officers and their compensation is disclosed below under “Executive Compensation.” Mr. Settle was appointed to our board of trustees in June 2021 and did not receive compensation for services as a trustee in 2020.

2020 Trustee Compensation

Trustee Name	Fees Earned or Paid in Cash in 2020(1)			Total
Stephen R. Petersen	​	$	3,000	​	$	3,000
James S. Vaccaro	​	$	2,000	​	$	2,000
Peter S. Reinhart	​	$	3,000	​	$	3,000
Spencer Segura	​	$	—	​	$	—
Michael Dana	​	$	3,000	​	$	3,000

(1)

Amounts reported in this column represent the $1,000 fee for each meeting of our board of trustees such trustee attends.

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EXECUTIVE COMPENSATION

The following is a discussion and analysis of compensation arrangements of our named executive officers. This discussion contains forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion. As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled back disclosure requirements applicable to emerging growth companies.

The following members of our executive officers are the “named executive officers” for purposes of the SEC’s compensation disclosure regulations for emerging growth companies: William P. Dioguardi, Coby R. Johnson, John E. Warch, Jared W. Morgan and Cynthia M. Daly.

Our Compensation Committee is responsible for making all executive compensation determinations. Our Compensation Committee has designed a compensation program with the objectives of attracting and retaining top management talent, linking compensation realized to the achievement of our short- and long-term strategic goals, and aligning shareholder and management interests by encouraging long-term shareholder value creation.

2020 Summary Compensation Table

The table below summarizes for each of the named executive officers the compensation amounts paid or earned for the years ended December 31, 2020 and 2019.

Name and Principal Position	Year		Salary			Bonus			All other Compensation(1)			Total
William P. Dioguardi	​	2020	​	$	360,000	​	$	250,000	​	$	11,400	​	$	621,400
Chief Executive Officer	​	2019	​	$	360,000	​	$	250,000	​	$	11,200	​	$	621,200
Coby R. Johnson	​	2020	​	$	295,000	​	$	195,000	​	$	11,400	​	$	501,400
President, Chief Operating Officer and Secretary	​	2019	​	$	295,000	​	$	195,000	​	$	11,200	​	$	501,200
John E. Warch	​	2020	​	$	260,000	​	$	95,000	​	$	11,682	​	$	366,682
Senior Vice President, Chief Financial Officer and Treasurer	​	2019	​	$	260,000	​	$	95,000	​	$	11,985	​	$	366,985
Jared W. Morgan	​	2020	​	$	240,000	​	$	140,000	​	$	9,600	​	$	389,600
Senior Vice President, Head of Acquisitions	​	2019	​	$	240,000	​	$	140,000	​	$	9,600	​	$	389,600
Cynthia M. Daly	​	2020	​	$	177,500	​	$	37,500	​	$	7,100	​	$	222,100
Senior Vice President, Head of Underwriting	​	2019	​	$	177,500	​	$	37,500	​	$	7,650	​	$	222,650

(1)

The amounts reported in this column for 2020 represent our matching contributions to the 401(k) Plan (as defined below) and, with respect to Mr. Warch, professional dues paid by us on his behalf.

Compensation Policies

Our executive officers, at the direction of our board of trustees, have reviewed our employee compensation policies, plans and practices to determine if they create incentives or encourage behavior that is reasonably likely to have a material adverse effect on us. In conducting this evaluation, our executive officers have reviewed our compensation plans, including our long-term incentive plan and employment agreements, to evaluate risk and the internal controls we have implemented to manage those risks. In completing this evaluation, our board of trustees and executive officers believe that there are no unmitigated risks created by our compensation policies, plans and practices that create incentives or encourage behavior that is reasonably likely to have a material adverse effect on us.

Employment Agreements with Executive Officers

We have entered into separate employment agreements (each an “Employment Agreement” and collectively, the “Employment Agreements”) with each of: (1) Mr. Dioguardi, the Chairman of our board of trustees and

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our Chief Executive Officer, dated May 19, 2017; (2) Mr. Johnson, a member of our board of trustees and our President, Chief Operating Officer and Secretary, dated May 19, 2017; (3) Mr. Warch, our Senior Vice President, Chief Financial Officer and Treasurer, dated December 3, 2014; (4) Mr. Morgan, our Senior Vice President, Head of Acquisitions, dated August 1, 2016; and (5) Ms. Daly, our Senior Vice President, Head of Underwriting, dated December 3, 2014, (each, an “Executive” and collectively, the “Executives”). The minimum base salaries of the Executives as set forth in their respective Employment Agreements are as follows: (1) Mr. Dioguardi, $345,000; (2) Mr. Johnson, $276,000; (3) Mr. Warch, $175,000; (4) Mr. Morgan, $210,000; and (5) Ms. Daly, $125,000.

The 2021 base salaries of the Executives are set forth below:

Executive Officer	Title	2021 Salary
William P. Dioguardi	Chairman of the Board of Trustees, Chief Executive Officer	​	$	360,000
Coby R. Johnson	Trustee, President, Chief Operating Officer and Secretary	​	$	295,000
John E. Warch	Senior Vice President, Chief Financial Officer and Treasurer	​	$	260,000
Jared W. Morgan	Senior Vice President, Head of Acquisitions	​	$	240,000
Cynthia M. Daly	Senior Vice President, Head of Underwriting	​	$	177,500

The base salary of each of these employees is subject to review by us no less frequently than annually for increase and the then current base salary may not be decreased. Our board of trustees, in consultation with our Compensation Committee, has the discretion to increase each Executive’s respective base salary from time to time as it sees fit.

The employment terms of each Employment Agreement are as follows: (1) Mr. Dioguardi, from May 19, 2017 until May 18, 2018 with automatic one-year renewals thereafter unless the Executive or we provide notice of non-renewal to the other party; (2) Mr. Johnson, from May 19, 2017 until May 1, 2018 with automatic one-year renewals thereafter unless the Executive or we provide notice of non-renewal to the other party; (3) Mr. Warch, from December 3, 2014 until December 31, 2015 with automatic one-year renewals beginning January 1, 2016 and thereafter unless the Executive or we provide notice of non-renewal to the other party; (4) Mr. Morgan, from August 1, 2016 until December 31, 2017 with automatic one-year renewals beginning January 1, 2018 and thereafter unless the Executive or we provide notice of non-renewal to the other party; and (5) Ms. Daly, December 3, 2014 until December 31, 2015 with automatic one-year renewals beginning January 1, 2016 and thereafter unless the Executive or we provide notice of non-renewal to the other party.

In addition, during the term of the Employment Agreements, each Executive will be eligible to participate in various medical, dental, disability, life insurance, pension and other employee benefit plans made available by us, from time to time, to our senior executives.

Each of the Employment Agreements provide that the relevant Executive will be obligated to devote substantially all of his or her business time and effort to the performance of his or her duties to us, provided such Executive will be permitted to engage in specified activities, including civic, charitable and industry related activities, management of personal investments and affairs and other activities specifically approved by our board of trustees so long as such activities do not interfere with the discharge of his or her duties and obligations to us.

The Employment Agreements provide for severance payments upon the occurrence of:

1.

a termination of employment by us without cause (as defined in the Employment Agreements);

2.

a termination of employment upon and Executive’s death or disability;

3.

a termination of employment by the Executive with good reason (as defined in the Employment Agreements); and/or

4.

a termination of employment either (a) by us without cause or (b) by the Executive with good reason, in each case within 12 months of a change in control (as defined in the Employment Agreements).

The Employment Agreements for Messrs. Dioguardi and Johnson provide that, upon the occurrence of items 1, 2, 3 and 4 listed above, such Executive will be entitled to receive unpaid base salary for the period prior

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to the date termination and incentive bonus and other benefits that have been earned and accrued prior to the date of termination and, subject to the Executive’s continued compliance with certain restrictive covenants and the Executive’s execution and non-revocation of a release of claims (a “Release”) in the event of items 1, 2 and 3: (1) (a) in the event of items 1, 3 and 4, severance pay equal to 2.5 times the sum of the then current base salary (without regard to any reduction in base salary that constitutes “Good reason”) and the average of the last two annual cash bonuses paid or agreed to be paid to each of the Executives (the “Average Bonus”) and (b) in the event of item 2, severance pay equal to one times the sum of the then current base salary and the Average Bonus; (2) a pro-rated Average Bonus (the “Pro-Rated Bonus”); (3) (a) all non-vested time-based long-term incentive awards and all non-vested but earned performance-based long-term incentive awards will accelerate, become fully earned and vested and (b) the end of the performance period for all non-vested but unearned performance-based long-term incentive awards will be the date of such termination and a pro rata amount of any such awards then deemed to be earned awards will accelerate, become fully earned and vested; and (4) (a) in the event of items 1, 3 and 4, continued medical, dental, disability, life insurance and other employee welfare benefits then provided to our senior executives (or, if continued participation is precluded under the terms of our welfare plans or by applicable law, reimbursement of such expenses) (“COBRA Benefits”) for a period of two and one half years following the termination date and (b) in the event of item 2 listed above, continued coverage under the group health plan then provided to our senior executives (or, if continued participation is precluded under the terms of such plan or by applicable law, reimbursement of such expenses) for a period of two and one half years following the termination date.

The Employment Agreements for Messrs. Warch and Morgan and Ms. Daly provide that, upon the occurrence of items 1 and 2 listed above, such Executive will be entitled to receive unpaid base salary for the period prior to the date of termination and incentive bonus and other benefits that have been earned but remain unpaid prior to the date of termination and, and subject to the Executive’s continued compliance with certain restrictive covenants and Executive’s execution and non-revocation of a Release, such Executive will also be entitled to receive (1) in the case of Mr. Warch and Ms. Daly, severance pay equal to one times the then current base salary of such Executive, and, in the case of Mr. Morgan, severance pay equal to one-half the sum of his then current base salary; (2) (a) all non-vested time-based long-term incentive awards and all non-vested but earned performance-based long-term incentive awards will accelerate, become fully earned and vested and (b) the end of the performance period for all non-vested but unearned performance-based long-term incentive awards will be the date of such termination and a pro rata amount of any such awards then deemed to be earned awards will accelerate, become fully earned and vested; and (3) upon the occurrence of item 2 listed above, continued coverage under the group health plan then provided to our senior executives (or, if continued participation is precluded under the terms of such plan or by applicable law, reimbursement of such expenses) for a period of one year following the termination date.

All of the Employment Agreements provide that with respect to item 4 listed above, each Executive will be entitled to receive: (1) unpaid base salary for the period prior to the date of termination and incentive bonus and other benefits that have been earned but remain unpaid prior to the date of termination; (2) severance pay equal to 2.5 times the sum of the then current base salary (without regard to any reduction in base salary that constitutes “Good reason”) and the Average Bonus; (3) the Pro-Rated Bonus; (4) (a) all non-vested time-based long-term incentive awards and all non-vested but earned performance-based long-term incentive awards will accelerate, become fully earned and vested and (b) the end of the performance period for all non-vested but unearned performance-based long-term incentive awards will be the date of such termination and a pro rata amount of any such awards then deemed to be earned awards will accelerate, become fully earned and vested; and (5) COBRA Benefits for a period of two and one half years following the termination date.

The Employment Agreements also contain standard confidentiality provisions, which apply indefinitely and non-competition and non-solicitation provisions which apply during the term of the employment agreement (including renewals) and for one year following the employee’s termination under certain circumstances.

Bonuses

During the term of the Employment Agreements, each Executive will have opportunities for bonuses and will have opportunities for incentive compensation comparable to those provided to other of our senior executives and will be eligible to participate in all bonus and incentive compensation plans made available by us, from time to time, to our senior executives.

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Our board of trustees annually establishes a bonus pool from which it may award discretionary bonuses to each Executive and other employees. In 2020, the discretionary bonus pool was set at $1 million and the bonus payments, if any, for our Executives was set between 21%-69% of their respective base salaries. For 2021, the discretionary bonus pool has been set at $1 million, and the bonus payments, if any, for our Executives was set between 21%-69% of their respective base salaries. The 2021 discretionary bonus pool may be increased by up to an additional $1 million to $2 million if DST syndications and other value-add business activities generate $8 million or more of revenue. As of November 15, 2021, the company has generated in excess of $8 million of revenues from its DST syndications and other value-add business activities. Following the offering, our board of trustees does not intend to maintain a bonus pool tied solely and directly to the company’s value add business.

LTIP Grants

On April 29, 2021, we granted Mr. Dioguardi 300,000 LTIP Units, Mr. Johnson 300,000 LTIP Units, Mr. Warch 45,000 LTIP Units, Mr. Morgan 75,000 LTIP Units and Ms. Daly 45,000 LTIP Units, 66.7% of which were vested at the time of grant and the remainder are subject to vesting at a rate of 16.7% on both the second and third anniversary date of the grant. In the event of a qualified termination of the executive, his unvested LTIP Units will become vested and no longer subject to forfeiture. If there is a change of control and the executive’s service is terminated without cause or good reason within 12 months of such change of control, the unvested LTIP Units will become vested. If the executive’s service is terminated and it is not a qualified termination or he is terminated subsequent to a change of control not as described above, then all of his unvested LTIP Units would automatically terminate and be forfeited.

401(k) Retirement Plan

We have enabled our employees who satisfy certain eligibility requirements to participate in a company sponsored 401(k) post-retirement plan (the “401(k) Plan”). Our named executive officers are eligible to participate in the plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation within prescribed limits, generally on a pre- or post-tax basis, through contributions to 401(k) Plan. Currently, we match contributions made by participants in the 401(k) Plan up to a specified percentage of the employee contributions, and these matching contributions are fully vested as of the date on which the contribution is made. We believe that providing a vehicle for retirement savings and making fully vested matching contributions, adds to the overall desirability of our executive compensation package and provides further incentives to our employees, including our named executive officers, in accordance with our compensation policies.

2014 Equity Incentive Plan

In 2014, our board of trustees and our shareholders adopted the 2014 Equity Plan, pursuant to which our trustees, employees and certain other persons may be granted common shares, options to purchase common shares or other equity rights in us. The 2014 Equity Plan is designed to enable us to attract, retain and compensate award recipients by increasing their equity interest in us and strengthen the mutuality of interests between such individuals and our shareholders.

Common shares granted to officers and employees as part of their performance bonuses and in connection with an employment agreement pursuant to the 2014 Equity Plan are subject to time-based and performance-based vesting provisions. The company granted incentive and non-qualified stock options to certain members of our board of trustees, officers and employees under the 2014 Equity Plan to purchase common shares. Each option is subject to time-based vesting and expires on the tenth anniversary of their respective grant dates. As a result of the October 23, 2020 restructuring, each option for one common share converted into an option for 0.10742102 convertible non-participating common shares, with an exercise price equal to the options’ original exercise price multiplied by 9.3091650. Currently, there are 53,711 non-participating common shares authorized and reserved for issuance under the 2014 Equity Plan. As of September 30, 2021, options to purchase 11,747 non-participating common shares had been granted under the 2014 Equity Plan, 12,013 restricted non-participating common shares had been granted under the 2014 Equity Plan and no shares remain available for future issuance.

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Each award agreement sets forth the participant’s rights with respect to each award following termination of employment. If a participant is terminated for cause, as defined in the award agreement, then all shares subject to such award shall be forfeited as of the date cause to terminate exists. If a participant is terminated for any reason other than cause, then the participant has the right to exercise any outstanding awards at any time within three months of termination. If a participant is termination by reason of disability, as defined in the award agreement, then the participant shall one year to exercise any vested awards.

With respect to incentive share options, if a participant’s employment is terminated for any reason other than death, any incentive share option granted to such participant may not be exercised later than three months, or one year in the case of termination due to disability, after the date of such termination of employment. An incentive share option may be exercised within one year after the participant’s death if the participant dies (1) while employed, (2) during the three-month period described in the preceding sentence or (3) during the one-year period described in the preceding sentence and before the incentive share option otherwise lapses. The compensation committee may, prior to the lapse of an incentive share option as described in the preceding two sentences, provide in writing that the exercise period will extend until a later date, provided, however, no later than the original exercise period, but if the exercise period is so extended and the option is exercised after the dates specified in the preceding two sentences, it will automatically become a nonstatutory share option.

Each award agreement under the 2014 Equity Plan sets forth the treatment of the awards in the event of a change in control or IPO (as defined below). The 2014 Equity Plan defines “change in control” as the occurrence, in a single transaction or a series of related transactions, of any or more of the following events: any sale, lease, exclusive license or transfer of all or substantially all of our assets and our subsidiaries taken as a whole, except where such transaction is to our wholly-owned subsidiary; or a merger (including a reverse merger) in which we are the surviving corporation where either (1) our outstanding shares outstanding immediately preceding the merger are converted by virtue of the merger into other property or (2) our voting securities outstanding immediately preceding the merger represent less than fifty percent (50%) of the total voting power represented by the voting securities of the entity surviving such merger (other than, with respect to events otherwise described in this bullet point), our formation of a holding company, a merger or consolidation with a wholly-owned subsidiary, our reincorporation in a different jurisdiction, or other transaction in which there is no substantial change after the merger in our shareholders or their relative share holdings, or in which our management continues in substantially the same manner as prior to any such corporate transaction to manage the entity surviving such transaction).

A change in control will not be deemed to occur on account of (1) the sale of common shares in an IPO or (2) acquisition of our securities by an investor, any affiliate thereof or any other person that acquires our securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for us through the issuance of equity securities.

The 2014 Equity Plan defines “IPO” as the first day as of which sales of our common shares are made public pursuant to the first firm commitment underwritten public offering of our common shares registered under the Securities Act of 1933, as amended (the “Securities Act”).

We do not intend to issue any further awards under the 2014 Equity Plan following the completion of this offering.

2021 Equity Incentive Plan

On April 29, 2021, our board of trustees and on June 25, 2021, our shareholders adopted the 2021 Equity Incentive Plan, under which equity awards may be made in respect of 3,000,000 of our common shares authorized and reserved under the plan. As of September 30, 2021, 895,500 LTIP Units had been granted under the 2021 Equity Incentive Plan, and 2,104,500 shares remain available for future issuance.

Under the 2021 Equity Incentive Plan, awards may be granted in the form of options, restricted shares, restricted share units, share appreciation rights, dividend equivalent rights, other equity-based awards (including share awards) and performance-based awards (including performance share units and performance-based restricted shares) and LTIP Units. The following is a summary of the material terms of the 2021 Equity Incentive Plan. This summary is qualified in its entirety by reference to the full text of the 2021 Equity Incentive Plan which has been filed as an exhibit to this registration statement.

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Administration

The 2021 Equity Incentive Plan is administered by our Compensation Committee, or at the discretion of our board of trustees, by our board of trustees.

Plan Term

The 2021 Equity Incentive Plan will terminate on the tenth (10th) anniversary of the date of its adoption, unless earlier terminated by our board of trustees.

Eligibility

Under the 2021 Equity Incentive Plan, “Participants” includes our and our subsidiaries’ officers, employees, trustees or consultants. Our Compensation Committee will determine which Participants will receive grants of awards.

Incentives Available

Under the 2021 Equity Incentive Plan, our Compensation Committee may grant any of the following types of awards to a Participant: nonqualified share options (“NQSOs”); share appreciation rights (“SARs”); restricted share grants (“restricted shares”); restricted share units (“RSUs”); performance awards; other equity-based awards (including share awards); LTIP Units; and cash- based awards, each as defined below, and, to certain Participants in accordance with Section 422 of the Code, incentive stock options (“ISOs”) (each type of grant is considered an “Award”).

Common Shares Available

Subject to any adjustment as provided in the 2021 Equity Incentive Plan, up to 3,000,000 common shares may be issued pursuant to Awards granted under the 2021 Equity Incentive Plan, all of which may be granted as ISOs.

If an Award or any portion thereof that is granted under 2021 Equity Incentive Plan (1) is canceled, forfeited, expires or otherwise terminates without all of the common shares covered by such Award having been issued or (2) is settled in cash (i.e., the participant receives cash rather than common shares), such cancellation, forfeiture, expiration, termination, or settlement will not reduce (or otherwise offset) the number of common shares that may be available for issuance under 2021 Equity Incentive Plan. If any common shares issued pursuant to an Award are forfeited and returned back to or reacquired by us because of the failure to meet a contingency or condition required to vest such common shares in the participant, then the common shares that are forfeited or reacquired will again become available for issuance under 2021 Equity Incentive Plan.

Share Options

Our Compensation Committee may grant NQSOs to Participants and ISOs to Participants (collectively, “Options”) who are our employees or employees of our subsidiary on the date of grant. A NQSO is the right to purchase one or more common shares at a designated exercise price. An ISO is an Option that is subject to statutory requirements and limitations required for certain tax advantages allowed under Section 422 of the Code, and an NQSO is an Option that does not qualify as an ISO.

Vesting and Exercise Periods for Options

Each Option granted under the 2021 Equity Incentive Plan may be subject to certain vesting requirements and will become exercisable in accordance with the specific terms and conditions of the Option, as determined by our Compensation Committee at the time of grant and set forth in an Award agreement. The term of an Option generally may not exceed ten years from the date it is granted (five years in the case of an ISO granted to a ten-percent shareholder). Each Option, to the extent it becomes exercisable, may be exercised at any time in whole or in part until its expiration or termination, unless otherwise provided in applicable Award agreement.

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Exercise Price for Options

The purchase price per share with respect to any Option granted under the 2021 Equity Incentive Plan may be not less than the greater of the par value of a share and 100% of the fair market value of a common share on the date the Option is granted (110% in the case of an ISO granted to a ten-percent shareholder).

Share Appreciation Rights

Our Compensation Committee may grant SARs to Participants on terms and conditions determined by our Compensation Committee at the time of grant and set forth in an Award agreement.

Amount Payable

A SAR is a right granted to a participant to receive an amount equal to (1) the excess of the fair market value of a share as of the date of exercise of such SAR over the fair market value of a Share on the date the SAR was granted, multiplied by (2) the number of common shares as to which the SAR is being exercised. A SAR may be settled or paid in cash, common shares or a combination of each, in accordance with its terms.

Duration

Each SAR will be exercisable or be forfeited or expire on such terms as our Compensation Committee determines. Except in limited circumstances, an SAR shall have a term of no greater than ten years.

Restricted Shares; Restricted Share Units

Our Compensation Committee may grant either common shares (restricted shares) or phantom common shares (RSUs), in each case subject to certain vesting requirements, on terms and conditions determined by our Compensation Committee at the time of grant and set forth in an Award agreement.

Restricted Shares

Unless our Compensation Committee determines otherwise, upon the issuance of shares of restricted shares, the participant shall have all of the rights of a shareholder with respect to such shares, including the right to vote the common shares and to receive all dividends or other distributions made with respect to the common shares. Our Compensation Committee may determine that the payment to the participant of dividends, or a specified portion thereof, declared or paid on such common shares shall be deferred until the lapsing of the restrictions imposed upon such shares and held by us for the account of the participant until such time. Payment of deferred dividends in respect of restricted shares shall be made upon the lapsing of restrictions imposed on the shares of restricted shares in respect of which the deferred dividends were paid, and any dividends deferred in respect of any shares of restricted shares shall be forfeited upon the forfeiture of such restricted shares.

Period for Lapsing of Restrictions on Restricted Shares

During such period as may be set by our Compensation Committee in the Award agreement (the “Vesting Period”), the Participant shall not be permitted to sell, transfer, pledge, hypothecate, or assign restricted shares awarded under the 2021 Equity Incentive Plan except by will or the laws of descent and distribution. Our Compensation Committee may also impose such other restrictions and conditions, including the attainment of pre-established performance objectives (as defined below) or other corporate or individual performance goals, on restricted share as it determines in its sole discretion.

Restricted Share Units

Each RSU shall represent the right of the participant to receive a payment upon vesting of the RSU, or on any later date specified by our Compensation Committee, of an amount equal to the fair market value of a share as of the date the RSU becomes vested or such later date as determined by our Compensation Committee at the time the RSU is granted (and which will be set forth in the applicable grant agreement). A RSU may be settled or paid in cash, common shares or a combination of each, as determined by our Compensation Committee.

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Performance Awards

The Compensation Committee may grant an Award subject to the attainment of performance goals over a specified performance period (“Performance Awards”). Performance Awards may be granted to Participants on terms and conditions determined by the Compensation Committee and set forth in an Award agreement.

Other Equity-Based Awards

The Compensation Committee may grant an Award that is payable in, valued in whole or in part by reference to, or otherwise based on or related to common shares (an “Other Equity-Based Award”), including, without limitation, common shares awarded purely as a “bonus” and not subject to any restrictions or conditions to a Participant on such terms and conditions as the Compensation Committee may determine at the time of grant.

LTIP Units

Our Compensation Committee may grant an Award of LTIP Units to a Participant on such terms and conditions as our Compensation Committee may determine at the time of grant. LTIP Units are intended to be profits interests in the Operating Partnership, the rights and features of which, if applicable, will be set forth in the Partnership Agreement, as applicable.

Cash-Based Awards

Our Compensation Committee may grant a cash-based Award to a Participant on such terms and conditions as our Compensation Committee may determine at the time of grant. Our Compensation Committee shall determine the maximum duration of the cash-based Award, the amount of cash to which the cash-based Award pertains, the conditions upon which the cash-based Award shall become vested or payable, and such other provisions as our Compensation Committee may determine. Each cash-based Award shall specify a cash-dominated payment amount, formula or payment ranges as determined by our Compensation Committee.

Adjustments upon Changes in Capitalization

In the event that the outstanding common shares are changed into or exchanged for a different number or kind of common shares or other stock or securities or other equity interests of another corporation or entity, whether through merger, consolidation, reorganizations, recapitalization, reclassification, stock dividend, stock split, reverse stock split, substitution or other similar corporate event or transaction, or an extraordinary dividend or distribution by us in respect of our common shares or other beneficial interests or securities convertible into beneficial interests in cash, securities or other property, our Compensation Committee shall determine the appropriate adjustments, if any, to (1) the maximum number and kind of shares of beneficial interest or other securities or other equity interests as to which Awards may be granted under the 2021 Equity Incentive Plan, (2) the maximum number and common shares or other shares of beneficial interest or securities that may be issued upon exercise of ISOs, (3) the number of common shares or other securities covered by any or all outstanding Awards that have been granted under the 2021 Equity Incentive Plan, (4) the exercise price of outstanding Options and the base price of outstanding SARs and (5) the performance objectives applicable to outstanding performance awards.

Effect of Change in Control or Certain Other Transactions

Generally, the Award agreement evidencing each Award will provide any specific terms applicable to that Award in the event of a Change in Control (as defined below). In the event of a Change in Control, the Compensation Committee may, in its sole discretion, provide that Awards: (1) will be settled in cash rather than common shares; (2) will become immediately vested and exercisable; (3) will be continued following such Change in Control, which may include, in the discretion of the Compensation Committee or the parties to the Change in Control, the assumption, continuation, or substitution of the Awards, in each case with appropriate adjustments to the number, kind of shares, and exercise prices of the Awards; (4) will be settled by payment in cash or cash equivalents in an amount equal to the excess, if any, of the fair market value of the common shares underlying the Awards over the exercise or base price of the Awards; or (5) any combination of the

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foregoing. The Compensation Committee’s determination need not be uniform and may be different for different participants whether or not such participants are similarly situated.

For purposes of the 2021 Equity Incentive Plan, “Change in Control” generally means the occurrence of any of the following events: (1) any person (other than directly by us) first acquires our securities representing twenty percent or more of either the then outstanding common shares or shares representing the combined voting power of our then outstanding voting securities, other than an acquisition by certain employee benefit plans, us or a related entity, or any person in connection with a non-control transaction; (2) a majority of the members of our board of trustees is replaced by trustees whose appointment or election is not endorsed by a majority of the members of our board of trustees serving immediately prior to such appointment or election; (3) the consummation of any merger, consolidation, or reorganization, other than in a non-control transaction; (4) approval by our shareholders of a complete liquidation or dissolution or (5) the consummation of a sale or disposition of all or substantially all of the assets. A “non-control transaction” generally includes any transaction in which (1) shareholders immediately before such transaction continue to own at least a majority of the combined voting power of such resulting entity following the transaction; (2) a majority of the members of our board of trustees immediately before such transaction continue to constitute at least a majority of our board of the surviving entity following such transaction, and (3) with certain exceptions, no person acquires beneficial ownership of twenty percent or more of, respectively, the then outstanding shares of common stock of the entity resulting from such transaction or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to such transaction.

Transferability

The 2021 Equity Incentive Plan generally restricts the transfer of any Awards, except (1) transfers by will or the laws of descent and distribution or (2) to a beneficiary designated by the participant, to whom any benefit under the 2021 Equity Incentive Plan is to be paid or who may exercise any rights of the participant in the event of the participant’s death before he or she receives any or all of such benefit or exercises an Award, or (c) except in the case of an ISO, pursuant to a domestic relations order.

Amendment or Termination of the Equity Incentive Plan

The 2021 Equity Incentive Plan may be amended or terminated by our board of trustees without shareholder approval unless shareholder approval of the amendment or termination is required under applicable law, regulation, or NYSE requirement. No amendment may materially and adversely alter or impair any Awards that had been granted under the 2021 Equity Incentive Plan prior to the amendment without the impacted participant’s consent. The 2021 Equity Incentive Plan will terminate on the tenth anniversary of its effective date; however, when the 2021 Equity Incentive Plan terminates, any applicable terms will remain in effect for administration of any Awards outstanding at the time of the 2021 Equity Incentive Plan’s termination.

Forfeiture Events; Clawback

Our Compensation Committee may specify in an Award agreement that the participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, clawback or recoupment upon the occurrence of certain specified events or as required by law, in addition to any otherwise applicable forfeiture provisions that apply to the Award. Without limiting the generality of the foregoing, any Award under the 2021 Equity Incentive Plan shall be subject to the terms of any clawback policy maintained by us, as it may be amended from time to time.

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Outstanding Equity Awards at 2020 Fiscal Year-End

The following table sets forth certain information regarding outstanding equity awards held by our named executive officers as of December 31, 2020. Messrs. Dioguardi and Johnson did not hold any equity awards as of December 31, 2020.

​

Option Awards

Name

Most Recent Grant Date

Number of Non-participating Common Shares Underlying Unexercised Options (#) Exercisable

Number of Non-participating Common Shares Underlying Unexercised Options (#) Unexercisable

Equity incentive plan awards: Number of securities underlying unexercised unearned options (#)

Weighted Average Option Exercise Price ($)

Option Expiration Date On or Before

John E. Warch

​

03/07/2019

​

1,202

​

250(1)

​

—

​

46.54

​

03/06/2029

Jared W. Morgan

​

03/07/2019

​

556

​

250(1)

​

—

​

46.54

​

03/06/2029

​

​

03/12/2018

​

—

​

—

​

2,686(2)

​

46.54

​

03/11/2028

Cynthia M. Daly

​

03/07/2019

​

191

​

52(1)

​

—

​

46.54

​

03/06/2029

(1) The options vest ratably in three equal annual installments following the grant date.

(2) One-third of the option shares vest upon a listing event with the remainder vesting in two equal annual installments on each of the one-year and two-year anniversaries of the listing event. This offering will constitute a listing event for purposes of this option.

Anticipated Changes to Compensation of Certain Executive Officers for 2022

Our board of trustees is in the process of evaluating compensation for our executive officers for 2022 following the completion of this offering. Our compensation committee engaged FPL Associates, an independent compensation consultant, which provided market data and related information in connection with, among other things, developing a compensation framework and compensation objectives for our executive compensation program and determining the appropriate levels and forms of compensation for the named executive officers and non-employee directors, all in furtherance of the board of trustee’s goal of appropriately motivating and retaining the named executive officers and aligning the interests of management and our board of trustees with those of our shareholders. Our compensation consultant has not been engaged by management or any of our executive officers to perform any work on behalf of management collectively or the executive officers individually. The board of trustees considers our compensation consultant to be independent.

In connection with this evaluation, we expect salary increases for our named executive officers for 2022, together with increases in bonus opportunities commensurate with these salary increases. We expect the base salaries of each of Messrs. Dioguardi and Johnson to increase by approximately 5.0% for 2022, compared to 2021, and expect increases for other executive officers to range from approximately 3.8% to 8.3%. In addition, we expect our board of trustees or compensation committee to determine a short-term incentive compensation framework for executive officers for 2022 that will include target cash bonuses based on a weighting, determined by our board of trustees or compensation committee, of company goals, such as financial performance, balance sheet performance and qualitative factors, including strategic objectives and individual performance as well as a bandwidth of opportunity for bonus compensation, ranging from a minimum, or threshold, bonus generally in the range of 50% of target, to a maximum, or outperform, bonus generally in the range of 150% of target. Under this bonus framework, we expect opportunities for cash bonuses for 2022 for each of Messrs. Dioguardi and Johnson, to increase approximately $100,000 at the threshold level and approximately $200,000 at the outperform level from their respective 2020 cash bonuses. We expect lesser increases in bonus opportunities for our other executive officers in 2022.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related party transactions are transactions in which we are a participant where the amount involved exceeds $120,000, and a member of our board of trustees or a board nominee, an executive officer or a holder of more than 5% of our voting securities (or an immediate family member of any of the foregoing) has a direct or indirect material interest. In connection with this offering, we intend to implement a formal written policy relating to the review, approval or ratification of related party transactions. All past related party transactions were reported to, and approved by, our full board of trustees. Our board of trustees will consider all relevant facts and circumstances when deliberating such transactions, including whether the terms of the transaction are fair to us and whether the transaction is consistent with, and contributes to, our interests.

The following is a summary of related party transactions since January 1, 2019, other than compensation arrangements described under “Executive Compensation” and “Management—Trustee Compensation.” The related party transactions listed below were all approved by our board of trustees.

Marketing Agreement

Pursuant to an amended and restated marketing agreement, effective January 1, 2018, we engaged FSC LLC to provide marketing and distribution services in connection with the private securities offerings under the Section 1031 Exchange Program. Mr. Dioguardi owns 60% of the equity interests of FSC LLC, and Mr. Segura owns 40% of the equity interests of FSC LLC. In addition, Messrs. Dioguardi and Segura are principals of FSC LLC, and Mr. Johnson is an executive officer of FSC LLC. We advance FSC LLC up to $25,000 per month (subject to increase upon approval by our board of trustees). During the year ended December 31, 2020, our board of trustees approved an increase to, and we advanced, $80,000 to FSC LLC for each of the months during the three months ended June 30, 2020. If FSC LLC’s net earnings were in excess of $0, such advances were repaid to us, out of such net earnings, up to the amount advanced by us. On November 1, 2021, the parties agreed to terminate the agreement effective immediately.

During the nine months ended September 30, 2021 and the years ended December 31, 2020 and 2019, we incurred net expenses of $0, $315,000 and $75,595, respectively, pursuant to the marketing agreement, which are included in general and administrative expenses within our consolidated statements of operations.

Private Placement Broker-Dealer Compensation

In connection with the private securities offerings under the Section 1031 Exchange Program, we paid an unaffiliated registered broker-dealer selling commissions and dealer manager fees of $9,518,150 during the nine  months ended September 30, 2021 and $2,625,410 and $2,819,915 during the years ended December 31, 2020 and 2019, respectively. The registered broker-dealers re-allowed payments of $3,843,599 during the nine months ended September 30, 2021 and $929,669 and $1,256,340 during the years ended December 31, 2020 and 2019, respectively, to Mr. Dioguardi, the Registered Principal of FSC LLC, as the Office of Supervisory Jurisdiction, and Mr. Dioguardi remitted these entire amounts to FSC LLC, which used these amounts to pay its expenses. In addition, in connection with the issuance of Series U2 OP units upon the completion of this offering, we expect to pay an unaffiliated registered broker-dealer selling commissions and dealer manager fees of up to approximately $439,000, up to approximately $108,000 of which may be re-allowed to FSC LLC and its affiliates. Mr. Dioguardi owns 60% of the equity interests of FSC LLC, and Mr. Segura owns 40% of the equity interests of FSC LLC. In addition, Messrs. Dioguardi and Segura are principals of FSC LLC, and Mr. Johnson is an executive officer of FSC LLC. Certain of our officers and employees are registered representatives of the broker-dealer and may receive a portion of such selling commissions.

Office Lease

We entered into an operating lease for its corporate office space commencing January 1, 2013 with a related party, 1900 Main Street, LC, LLC, which is owned by Messrs. Dioguardi and Segura. The lease term continues on a year-to-year basis and can be terminated by either party with 30 days’ notice without cause. The monthly rent beginning January 1, 2016 is $6,500 per month with 1900 Main Street, LC, LLC, being responsible for all operating costs of the premises.

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Directed Share Program

At our request, the underwriters have reserved      % of the common shares to be issued by us and offered by this prospectus for sale, at the initial public offering price, to trustees, officers, employees, business associates and related persons. The directed share program will not limit the ability of such trustees, officers, employees and related persons to purchase additional common shares. We do not currently know the extent to which these related persons will participate in our directed share program, if at all, or the extent to which they will purchase additional common shares.

158

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of certain of our investment policies. These policies have been determined by our board of trustees and, in general, may be amended or revised from time to time by our board of trustees without a vote of our shareholders.

Investments in Real Estate or Interests in Real Estate

We conduct substantially all of our investment activities through the Operating Partnership and its subsidiaries. Our objective is to own and manage a diversified portfolio of single-tenant net lease real estate that maximizes cash available for distribution and delivers sustainable long-term risk adjusted returns to our shareholders. We have not established a specific policy regarding the relative priority of seeking to maximize cash available for distribution and delivering sustainable long-term risk adjusted returns. We intend to actively manage our existing portfolio and seek to grow our portfolio through attractive acquisitions. Our business focuses primarily on acquiring, owning and actively managing a diversified portfolio of single-tenant, income producing retail, industrial, medical and other office properties throughout the United States that are subject to long-term net leases. For a discussion of our properties and our business and other strategic objectives, see “Our Business.”

We expect to pursue our investment objective through the ownership by the Operating Partnership of properties and investments in DSTs, but we may also make investments in other entities, including joint venture entities. Future investment activities will not be limited to any geographic area, property type or to a specified percentage of our assets. While we may diversify in terms of tenant, industry, geography and property type, we do not have any limit on the amount or percentage of our assets that may be leased to any one tenant or invested in any one industry, geography or property type. We intend to engage in such future investment activities in a manner that is consistent with the maintenance of our status as a REIT for U.S. federal income tax purposes. In addition, we may purchase or lease other income producing properties for long-term investment or sell such properties, in whole or in part, when we determine that circumstances warrant such an action.

We may also participate with third parties in property ownership through investment vehicles, including joint ventures, partnership arrangements or other types of co-ownership. These types of investments may permit us to own interests in larger portfolios of properties and, therefore, provide us with flexibility in structuring our portfolio. We may participate in these investment vehicles even if we have funds available for investment. We will not, however, enter into an investment vehicle that would not otherwise meet our investment policies, as established or modified by our board of trustees from time to time.

The structure and terms of the investment vehicles may vary and will depend on market conditions.

We do not have a specific policy to acquire assets primarily for capital gain or primarily for income.

We may issue common or preferred shares, OP units or other securities in exchange for real estate.

Investments in Real Estate Mortgages

Our business strategy emphasizes equity investments in single-tenant net lease real estate and we have no current intention to invest in mortgages or to engage in originating, servicing or warehousing mortgages or other mortgage activities. However, our investment policies will not restrict our ability to invest in mortgages. Accordingly, we may, at the discretion of our board of trustees, invest in mortgages, including non-performing loans, and other types of real estate interests in the future, including, without limitation, participating in convertible mortgages; provided, in each case, investment is consistent with our qualification as a REIT. Investments in real estate mortgages run the risk that one or more borrowers may default under certain mortgages and that the collateral securing such mortgages may not be sufficient to enable us to recoup our full investment.

Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers

Subject to the gross income and asset tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers, including for the

159

purpose of exercising control over such entities. We do not currently have any policy limiting the types of entities in which we may invest or the proportion of assets to be so invested, whether through acquisition of an entity’s common shares, limited liability or partnership interests, interests in another REIT or entry into a joint venture. We do not intend to underwrite securities of other issuers.

Dispositions

To capture increased value or avoid value degradation due to unfavorable changes in the critical nature of an asset, underlying real estate fundamentals, tenant credit profile or lease and guarantee structures, we may selectively dispose of any of our properties that we determine are not suitable for long-term investment purposes based upon management’s review of our portfolio. In addition, on a selective basis, we may acquire and re-sell properties that we purchase in connection with the acquisition of a larger portfolio of properties. If properties are being sold on an all-or-none basis, we may purchase some properties that do not meet our desired investment criteria to acquire a larger portfolio of properties we wish to hold for the long-term. In each case, we will ensure that such action would be in our best interest and consistent with our intention to qualify for taxation as a REIT.

Equity Capital Policies

To the extent that our board of trustees determines to obtain additional capital, we may issue debt or equity securities, including senior securities, retain earnings (subject to provisions in the Code requiring distributions of income to maintain REIT qualification) or pursue a combination of these methods. Our board of trustees does not currently intend to cause us to repurchase any of our outstanding common shares.

Reporting Policies

We intend to make available to our shareholders our annual reports, including our audited financial statements. After the completion of this offering, we will become subject to the information reporting requirements of the Exchange Act. Pursuant to those requirements, we will be required to file annual and periodic reports, proxy statements and other information, including audited financial statements, with the SEC.

Investments in Other Securities

Other than as described above, we do not intend to invest in any additional securities such as bonds, preferred shares or common shares.

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PRINCIPAL SHAREHOLDERS

The table below shows information with respect to the beneficial ownership of our common shares immediately before and after the completion of this offering, for:

•

each person or group of affiliated persons known to us to beneficially own more than 5% of our common shares;

•

each of our trustees; and

•

each executive specified below.

Beneficial ownership immediately before this offering is based on           common shares outstanding as of           , 2021 and reflects the issuance of: (1)           common shares upon the automatic conversion of all of our 7,550,730 outstanding preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus); and (2) 200,015 common shares upon the automatic conversion of all of our 200,015 outstanding non-participating common shares at a rate of one common share for every one non-participating common share, upon the listing of our common shares on the NYSE.

Outstanding shares exclude: (1) 11,747 common shares issuable upon the exercise of options; (2) 474,851 common shares issuable in connection with the exercise of outstanding warrants that will not be exercisable for a period ranging from one to two years after the listing or our common shares on the NYSE; (3) 10,743 warrants for common shares issuable upon exercise of outstanding options; (4) 895,500 common shares that we may issue upon redemption of 895,000 LTIP Units; (5) 2,104,500 common shares available for future grants under the 2021 Equity Incentive Plan; and (6) 65,636 common shares that may be issued in exchange for 65,636 outstanding OP units; (7) 181,116 common shares that may be issued in exchange for 181,116 Series U1 OP units; and (8)                  common shares that may be issued in exchange for           Series U2 OP units that will be issued upon the completion of this offering in exchange for approximately $10.3 million of the DST interests held by investors, which such number of Series U2 OP units is equal to approximately $10.3 million divided by 120% of the initial public offering price of our common shares in this offering (based on the midpoint of the price range set forth on the cover page of this prospectus).

Beneficial ownership immediately after this offering further assumes the issuance of           common shares in this offering.

Beneficial ownership and percentage ownership are determined in accordance with the SEC’s rules. In computing the number of shares a person beneficially owns and the corresponding percentage ownership of that person, common shares issuable upon the exercise of options and warrants that are currently exercisable or will become exercisable within 60 days after           , 2021, and upon automatic conversion of our preferred shares in connection with this offering, are considered to be outstanding. The shares issuable upon the exercise of such options and warrants are considered to be outstanding for purposes of calculating the percentage ownership of the person that holds such instrument but are not considered to be outstanding for purposes of calculating the percentage ownership of any other person. To our knowledge, except as indicated in the footnotes to this table and subject to community property laws where applicable, the persons named in the table below have sole voting and investment power with respect to all common shares shown as beneficially owned by them. The table below does not take into account any common shares the persons listed below may purchase in this offering. Unless otherwise indicated, the address for the beneficial owners below is: c/o Four Springs Capital Trust, 1901 Main Street in Lake Como, New Jersey 07719.

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​	Number of Common Shares Beneficially Owned		Percentage of Common Shares Beneficially Owned
Name of Beneficial Owner			Before this Offering		After this Offering
Greater than Five Percent Beneficial Owners:	​	​	​	​	​	​
Investment funds affiliated with Carlyle (1)	​	​	​	%	​	%
Investment funds affiliated with GSAM (2)	​	​	​	%	​	%
Social Insurance Organization(3)	​	1,091,706	​	%	​	%
Named Executive Officers, Trustees and Trustee Nominee:	​	​	​	​	​	​
William P. Dioguardi(4)	​	99,764	​	%	​	%
Coby R. Johnson(5)	​	26,856	​	%	​	%
John E. Warch(6)	​	4,282	​	*	​	*
Jared W. Morgan(7)	​	3,725	​	*	​	*
Cynthia M. Daly(8)	​	4,100	​	*	​	​
Michael S. Dana (9)	​	717	​	%	​	%
Stephen R. Petersen (10)	​	22,191	​	*	​	*
Peter S. Reinhart (11)	​	14,524	​	*	​	*
Spencer F. Segura (12)	​	87,856	​	*	​	*
Matthew S. Settle	​	—	​	*	​	*
Elizabeth A. Picklo-Smith	​	—	​	*	​	*
James S. Vaccaro (13)	​	2,947	​	​	​	​
All executive officers, trustees and trustee nominee as a group (12 persons)	​	266,962	​	%	​	%

*

Less than 1% of outstanding common shares.

(1)

Represents: (a) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Carlyle Credit Opportunities Fund II L.P., a Delaware limited partnership and affiliate of Carlyle (“Carlyle Credit Opportunities Fund II L.P.”); (b) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Carlyle Credit Opportunities Fund (Parallel) II AIV 2 Holdings L.P., a Delaware limited partnership and affiliate of Carlyle (“Carlyle Credit Opportunities Fund (Parallel) II AIV 2 Holdings L.P.”); (c) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Carlyle Credit Opportunities Fund L.P., a Delaware limited partnership and affiliate of Carlyle (“Carlyle Credit Opportunities Fund L.P.”); (d) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Carlyle Credit Opportunities Fund (Parallel) II AIV Holdings L.P., a Delaware limited partnership and affiliate of Carlyle (“Carlyle Credit Opportunities Fund (Parallel) II AIV Holdings L.P.” and together with Carlyle Credit Opportunities Fund II L.P. and Carlyle Credit Opportunities Fund (Parallel) II AIV 2 Holdings L.P., the “CCOF Investors”); (e) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Carlyle Credit Opportunities Fund (Parallel) AIV L.P., a Delaware limited partnership and affiliate of Carlyle (“Carlyle Credit Opportunities Fund (Parallel) AIV L.P.” and together with Carlyle Credit Opportunities Fund L.P., the “CCOF II Investors”); and (f) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus)held by Carlyle Skyline Credit Fund L.P., a Delaware limited partnership and affiliate of Carlyle (“Carlyle Skyline” and, together with the CCOF Investors and the CCOF II Investors, the “Carlyle Investors”) The Carlyle Group Inc., which is a publicly traded entity listed on the Nasdaq, is the sole shareholder of Carlyle Holdings I GP Inc., which is the managing member of Carlyle Holdings I GP Sub L.L.C., which is the general partner of Carlyle Holdings I L.P., which, with respect to the securities held of record by the Carlyle Investors, is the managing member of CG Subsidiary Holdings L.L.C., which is the managing member of TC Group, L.L.C., which is the general partner of TC Group Sub L.P., which is the managing member of CCOF, L.L.C., which is the general partner of CCOF General Partner, L.P., which is the general partner of each of the CCOF Investors. TC Group Sub L.P. is also the managing member of CCOF II, L.L.C., which is the

162

general partner of CCOF II General Partner, L.P., which is the general partner of each of the CCOF II Investors. TC Group Sub L.P. is also the managing member of Carlyle Skyline Credit Fund, L.L.C., which is the general partner of Carlyle Skyline Credit Fund GP, L.P., which is the general partner of Carlyle Skyline.

Voting and investment determinations with respect to the securities held by the CCOF Investors are made by an investment committee of CCOF General Partner, L.P., consisting of Mark Jenkins, Kewsong Lee, Linda Pace, Justin Plouffe, Alexander Popov and Ian Jackson as a non-voting member. Voting and investment determinations with respect to the securities held by the CCOF II Investors and Carlyle Skyline are made by an investment committee of CCOF II General Partner, L.P., consisting of Mark Jenkins, Kewsong Lee, Linda Pace and Alexander Popov. Accordingly, each of the entities and individuals named herein may be deemed to share beneficial ownership of the securities held of record by the Carlyle Investors. Each of them disclaims any such beneficial ownership.

The address of each of TC Group Cayman Investment Holdings, L.P. and TC Group Cayman Investment Holdings Sub L.P. is c/o Walkers, 190 Elgin Avenue, George Town, Grand Cayman KY1-9001. The address of each of the other entities named in this footnote is c/o The Carlyle Group Inc., 1001 Pennsylvania Avenue, NW, Suite 220 South, Washington, District of Columbia 20004-2505.

(2)

Represents: (a) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Vintage Real Estate Partners II Foreign Income Blocker LLC, a Delaware limited liability company and affiliate of GSAM; and (b) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by HO Fund B Foreign Income Blocker LLC, a Delaware limited liability and affiliate of GSAM; (c) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by GT Fund B Foreign Income Blocker LLC, a Delaware limited liability company and affiliate of GSAM; (d) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Vintage Secondary Strategies LLC, a Delaware limited liability company and affiliate of GSAM; (e) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by DALPP Series C Foreign Income Blocker LLC, a Delaware limited liability company and affiliate of GSAM; (f) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by Vintage Real Estate Partners II (International) Offshore Holdings LP, a Cayman Islands exempted limited partnership and affiliate of GSAM; (g) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by VREP II International AJAX Holdings SCSp, a Luxembourg limited partnership and affiliate of GSAM; and (h) the automatic conversion of preferred shares into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus) held by RA Program 2019 Foreign Income Blocker Ltd., a Cayman Islands exempted company and affiliate of GSAM (collectively, the “GSAM Entities”). Voting and investment determinations with respect to the securities held by the GSAM Entities are made by an investment committee comprised of      . The address for the GSAM Entities is c/o Goldman Sachs Asset Management L.P., 200 West Street, New York, NY 10282.

(3)

Voting and investment determinations with respect to the securities held by the Social Insurance Organization is made by Abdulla Bin Khalifa Al Khalifa. Abdulla Bin Khalifa Al Khalifa may be deemed to have beneficial ownership of the securities held of record by the Social Insurance Organization and he disclaims any such beneficial ownership. The address for the Social Insurance Organization is c/o Osool Asset Management B.S.C., Building 551, Road 4612, Block 346, 1st Floor, Arcapita Building, Bahrain Bay, Manama, Kingdom of Bahrain.

(4)

Includes: (a) 14,012 common shares held directly by Mr. Dioguardi; (b) 80,566 common shares issued upon conversion of non-participating common shares in connection with the consummation of this offering at a one-for-one basis; (c) 646 common shares held by Four Springs Capital, LLC, of which Mr. Dioguardi is the majority owner; (d) 4,524 common shares held by Four Springs Capital, LLC issued upon conversion of non-participating common shares in connection with the consummation of this offering at a one-for-one basis; and (e) 19 OP units held by FSCTOP, LLC, which may be redeemed for our common shares on a one-for-one basis. Does not include: (a) 300,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; (b) 277,261 common shares issuable upon exercise of warrants held by Four Springs Capital, LLC; and (c) 1,312 common shares beneficially owned by Mr. Dioguardi’s wife as to which Mr. Dioguardi does not have voting or investment power.

(5)

Does not include 300,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis.

(6)

Includes: (a) 2,955 common shares issued upon conversion of non-participating common shares in connection with the consummation of this offering at a one-for-one basis; and (b) 1,327 common shares issuable upon exercise of vested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis. Does not include: (a) 45,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; and (b) 125 common shares issuable upon exercise of unvested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis.

(7)

Includes: (a) 2,149 common shares issued upon conversion of non-participating common shares in connection with the consummation of this offering at a one-for-one basis; and (b) 1,576 common shares issuable upon exercise of vested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a

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one-for-one basis. Does not include: (a) 75,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; and (b) 1,916 common shares issuable upon exercise of unvested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis.

(8)

Includes: (a) 1,064 common shares; and (b) 3,036 common shares following the consummation of this offering consisting of 2,820 non-participating common shares held that automatically convert into common shares upon consummation of this offering at a one-for-one basis and 216 common shares issuable upon exercise of vested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis. Does not include: (a) 45,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; and (b) 27 common shares issuable upon exercise of unvested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis.

(9)

Includes 717 common shares issuable upon exercise of vested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis. Does not include: (a) 16,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; and (b) 90 common shares issuable upon exercise of unvested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis.

(10)

Includes: (a) 20,667 common shares; and (b) 1,524 common shares issuable upon exercise of vested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis. Does not include: (a) 16,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; and (b) 90 common shares issuable upon exercise of unvested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis.

(11)

Includes: (a) 6,529 common shares; (b) 6,740 common shares held jointly by Mr. Reinhart and his wife as to which Mr. Reinhart shares voting and investment power; and (c) 1,255 common shares issuable upon exercise of vested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis. Does not include: (a) 16,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; and (b) 90 common shares issuable upon exercise of unvested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis.

(12)

Includes: (a) 53,711 common shares issuable upon excise of vested options for non-participating common shares, held by the Spencer F. Segura Gift Trust of which Mr. Segura is trustee, that automatically convert into common shares upon consummation of this offering at a one-for-one basis; and (b) 34,145 common shares held by SFS Growth Fund LLC, which is controlled by Mr. Segura. Does not include 19,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis.

(13)

Includes: (a) 1,423 common shares; and (b) 1,524 common shares issuable upon exercise of vested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis. Does not include: (a) 16,000 LTIP Units, which may be redeemed for our common shares on a one-for-one basis; and (b) 90 common shares issuable upon exercise of unvested options for non-participating common shares that automatically convert into common shares upon consummation of this offering at a one-for-one basis.

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DESCRIPTION OF SECURITIES

The following summary of the terms of our shares does not purport to be complete and is subject to and qualified in its entirety by reference to our charter, and our bylaws, which will be in effect upon completion of this offering and to the Maryland REIT Law (as defined below). Copies of our charter and our bylaws are filed as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”

General

Upon completion of this offering, we will be authorized to issue up to 600,000,000 shares of beneficial interest (which we refer to in this prospectus as the authorized shares) consisting of 504,671,451 common shares, par value $0.001 per share, which are referred to in this prospectus as our “common shares,” and 87,547,309 preferred shares, par value $0.001 per share, which are referred to in this prospectus as our “preferred shares.”

Our charter generally may be amended by our board of trustees, without shareholder approval, to increase or decrease the aggregate number of authorized shares or the number of shares of any class. The authorized common shares and undesignated preferred shares are generally available for future issuance without approval by our shareholders, unless such approval is required by applicable law, the terms of any of our outstanding shares or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Our board of trustees may classify and reclassify any unissued shares into other classes or series of shares, including one or more classes or series of shares that have priority over our common shares with respect to dividends or upon liquidation, or have voting rights and other rights that differ from the rights of the common shares, and authorize us to issue the newly classified shares. Before authorizing the issuance of shares of any new class or series, our board of trustees must set, subject to the provisions in our charter relating to the restrictions on ownership and transfer of our shares, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series of shares.

Both Maryland statutory law governing Maryland REITs (the “Maryland REIT Law”) and our charter provide that none of our shareholders will be personally liable, by reason of status as a shareholder, for any of our obligations.

Our charter provides that, subject to the provisions of any class or series of preferred shares then outstanding and to the mandatory provisions of applicable law, our shareholders are entitled to vote on the following matters:

•

election or removal of trustees;

•

amendment of the charter (other than an amendment to increase or decrease the number of authorized shares or the number of shares of any class);

•

our termination; and

•

our merger or consolidation, or the sale or other disposition of all or substantially all of our assets.

Shareholders will also be entitled to vote on such matters as may be required by our charter, bylaws or applicable law. Provisions of our charter regarding the restriction on the transfer and ownership of our shares may preclude a shareholder’s right to vote in certain circumstances.

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Shares of Beneficial Interest

Common Shares

Upon completion of this of offering, we will have outstanding           common shares.

All common shares issued in this offering have been duly authorized and will be fully paid and nonassessable. Subject to the restrictions on ownership and transfer of our shares discussed below under “—Restrictions on Ownership and Transfer” and the voting rights of holders of outstanding shares of any other class or series of our shares, holders of our common shares are entitled to one vote for each share held of record on all matters on which shareholders are entitled to vote generally, including the election or removal of trustees, and, except as provided with respect to any other class or series of our shares, the holders of our common shares will possess the exclusive voting power. Trustees will be elected by a plurality of the votes cast at meetings where trustees are being elected. The holders of our common shares do not have cumulative voting rights in the election of trustees. This means that the holders of a majority of the outstanding common shares can elect all of the trustees then standing for election, and the holders of the remaining shares will not be able to elect any trustees.

Holders of our common shares are entitled to receive dividends as and when authorized by our board of trustees and declared by us out of assets legally available for the payment of dividends. Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of outstanding shares of any other class or series of our shares having liquidation preferences, if any, the holders of our common shares will be entitled to share ratably in our remaining assets legally available for distribution. Holders of our common shares do not have preemptive, subscription, redemption or conversion rights. There are no sinking fund provisions applicable to the common shares. Holders of our common shares generally have no appraisal rights. All of our common shares that will be outstanding at the time of the completion of this offering will have equal dividend and liquidation rights. The rights, powers, preferences and privileges of holders of our common shares will be subject to those of the holders of any of our preferred shares or any other class or series of shares we may authorize and issue in the future.

Under the MGCL, a Maryland corporation generally cannot amend its charter, consolidate, merge, convert, sell all or substantially all of its assets, engage in a share exchange or dissolve unless the action is advised by its board of trustees and approved by the affirmative vote of shareholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. As permitted by Maryland law, our charter provides that any of these actions may be approved by the affirmative vote of shareholders entitled to cast a majority of all of the votes entitled to be cast on the matter. In addition, because many of our operating assets are held by our subsidiaries, these subsidiaries may be able to merge or sell all or substantially all of their assets without the approval of our shareholders.

Non-participating Common Shares

There are 200,015 of our non-participating common shares, par value $0.001 per share, which are referred to in this prospectus as our “non-participating common shares,” issued and outstanding. The non-participating common shares have 9.3091650 votes on each matter upon which holders of common shares are entitled to vote, including the election of trustees. The non-participating common shares have no dividend or distribution rights with respect to such shares, unless they are exchanged for common shares. Upon the listing of our common shares on the NYSE, each non-participating common share will automatically be exchanged for one common share. Upon such exchange, the resulting common shares will have the same voting, dividend and distribution rights as shareholders participating in this offering.

Preferred Shares

We have issued an aggregate of 7,550,730 Series A-1 and A-2 preferred shares. Upon the listing of our common shares on the NYSE, all of these preferred shares automatically convert into a number common shares based on the company’s option of either (1) the preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by 90% of the per common share listing event price or (2) the preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by the undiscounted price per

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common share at the listing event plus a cash fee to holders of preferred shares at 10% of the preferred shares’ stated value. All accrued and unpaid dividends, which are not included in the stated value of the preferred shares, including on the date of such conversion will be paid in cash. We intend to elect the first conversion option, and, as a result, these 7,550,730 preferred shares will automatically convert into a number of common shares equal to their aggregate stated value divided by 90% of the initial public offering price of our common shares in this offering, upon the listing of our common shares on the NYSE (or           common shares, based on the midpoint of the price range set forth on the cover page of this prospectus). Immediately following such conversion, there will be no preferred shares outstanding. Upon conversion, the resulting common shares will have the same voting, dividend and distribution rights as shareholders participating in this offering.

The Series A-1 and A-2 preferred shares provide for contingent conversion and redemption features that may be exercisable by either the company or the holder and may result in conversion into a variable number of common shares upon a qualifying listing event. The Series A-1 and A-2 preferred shares are presented as temporary equity in an account presented between liabilities and equity on the consolidated balance sheets because they contain redemption and conversion features outside of the company’s control. The conversion feature is bifurcated from the Series A-1 and A-2 preferred share host instrument and presented as a liability on the consolidated balance sheets. Cumulative dividends are accrued as change in value and recognized as part of cumulative dividends and net loss attributable to common shareholders in the consolidated statements of operations.

If we issue additional preferred shares, the shares will be fully paid and non-assessable. Prior to the issuance of a new series of preferred shares, we will file, with the State Department of Assessments and Taxation of Maryland, Articles Supplementary that will become part of our charter and that will set forth the terms of the new series.

Warrants

Upon completion of this offering, we will have outstanding warrants to purchase up to 474,851 common shares with a weighted average exercise price of $23.31 per common share. Upon completion of this offering the warrants will be exercisable as follows:

•

50% of the common shares issuable upon exercise of the subject warrant shall become exercisable on the first anniversary date of the listing of our common shares for trading on the NYSE (“Listing Event”);

•

an additional 25% of the common shares issuable upon exercise of the subject warrant shall become exercisable on the 18 month anniversary date of the Listing Event; and

•

the remaining 25% of the common shares issuable upon exercise of the subject warrant shall become exercisable on the two year anniversary date of the Listing Event.

The exercise period for the warrants will expire on the earlier to occur of: (1) the third anniversary date of the Listing Event; and (2) seven years from the date of original issuance of the warrants. Subject to the restrictions described above, warrants may be exercised at any time up to the close of business on the expiration date. After the close of business on the expiration date, unexercised warrants will become void.

The minimum number of common shares for which a warrant may be exercised at any one time shall be the lesser of: (1) the maximum number of common shares issuable upon exercise of the subject warrant; and (2) 100 common shares.

In addition, upon completion of this offering, we will have 10,743 warrants for common shares issuable upon exercise of outstanding options held by our trustees with a weighted average price of $186.18 per share.

Options

Upon completion of this offering, we will have outstanding options to purchase up to 11,747 common shares, with a weighted average exercise price of $37.94. Such options generally expire ten years after the respective grant date of the option.

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Restrictions on Ownership and Transfer

In order for us to qualify as a REIT under the Code, not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (defined in the Code to include certain entities such as qualified pension plans) during the last half of a taxable year, and our shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of twelve months (or during a proportionate part of a shorter taxable year).

In order to ensure that we qualify as a REIT, our charter, subject to certain exceptions, provides the following:

•

No person may (1) beneficially own more than 9.8% in value or in number, whichever is more restrictive, of (a) our outstanding common shares or (b) our aggregate outstanding shares of beneficial interest or (2) constructively own more than 9.8% in value or in number, whichever is more restrictive, of any class or series of our outstanding shares of beneficial interest. Our board of trustees, subject to limitations, retains the authority to affect additional increases to, or establish exemptions from, the ownership limit.

•

No person may beneficially or constructively own our shares of beneficial interest to the extent such beneficial or constructive ownership would result in us being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT (including, but not limited to, beneficial ownership or constructive ownership that would result in us actually or constructively owning an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by us from such tenant would cause us to fail to satisfy the gross income requirement of either Section 856(c)(2) or 856(c)(3) of the Code (i.e., the annual 75% or the 95% gross income tests).

•

Any transfer of our shares of beneficial interest that, if effective, would result in our shares of beneficial interest being owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code) shall be prohibited.

•

No person may beneficially or constructively own our shares of beneficial interest to the extent that such beneficial or constructive ownership would cause us to constructively own 10% or more of the ownership interests in a tenant (other than a taxable REIT subsidiary) of our real property within the meaning of Section 856(d)(2)(B) of the Code.

The restrictions will remain in place until our board of trustees determines it is no longer in our best interest to qualify as REIT, or that these restrictions are no longer required for us to qualify as a REIT.

Under our charter, if any person would otherwise beneficially own or constructively own our shares of beneficial interest in violation of one or more of the first three ownership and transfer restrictions described above, then that number of our shares of beneficial interest the beneficial or constructive ownership of which otherwise would cause such person to violate such restriction shall be automatically transferred to a charitable trust for the benefit of one or more charitable beneficiaries. If the transfer to the charitable trust would not prevent the violation of the applicable ownership or transfer restriction, then, in the case where the beneficial ownership or constructive ownership that would otherwise be in violation of the ownership or transfer restrictions described above arises from a transfer, the transfer of that number of our shares of beneficial interest that otherwise would cause any person to violate an ownership or transfer restriction shall be void ab initio, and the intended transferee shall acquire no rights in such shares of beneficial interest. In addition, our board of trustees is authorized to take such action as it deems advisable to refuse to give effect to or to prevent any transfer or other event which the board of trustees determines in good faith is in violation of the restrictions set forth above. These actions, include without limitation, causing us to redeem or repurchase shares, refusing to give effect to a transfer on our books or instituting proceedings to enjoin a transfer or other event. A person or entity that would have acquired actual, beneficial or constructive ownership of our shares of beneficial interest but for the application of the ownership and transfer restrictions described above is referred to as a “prohibited owner.”

Under our charter, any person who acquires or attempts or intends to acquire beneficial ownership or constructive ownership of our shares of beneficial interest that will or may violate an ownership or transfer restriction described above, or any person who would have owned our shares of beneficial interest that result in a transfer to a charitable trust, shall immediately give written notice to us of such event, or in the case of

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such a proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall provide to us such other information as we may request in order to determine the effect, if any, of such transfer on our status as a REIT.

Prohibited owners are not entitled to voting rights, dividends or distributions with respect to our share of beneficial ownership. If any dividends or distributions are paid to a prohibited owner prior to the discovery by us that such shares have been transferred to a charitable trust, then such dividends or distributions shall be paid by the prohibited owner to it upon demand. A charitable trust shall have the right to sell or otherwise dispose of any of our shares transferred to the charitable trust to any person who may acquire such shares without such acquisition and ownership resulting in such shares violating an ownership or transfer restriction described above. In the event that the charitable trust sells the shares that it holds, the prohibited owner of such shares will receive the lesser of (1) the amount paid by such prohibited owner for the shares or, if the such prohibited owner did not give value for such shares in connection with the transfer or other event which resulted in such shares being transferred to the charitable trust, the market value of such shares on the day of such transfer or other event, and (2) the amount received upon the sale by the charitable trust. The charitable trust may reduce the amount payable to the prohibited owner by the amount of the dividends and other distributions which have been paid to the prohibited owner and are owed by the prohibited owner to the charitable trust pursuant to the charter. Any net sales proceeds in excess of the amount payable to the prohibited owner shall be immediately paid to the charitable beneficiary.

Our charter also provides that shares transferred to a charitable trust shall be deemed to have been offered for sale to us, or our designee, which shall have the right to accept such offer for a period of 90 days after the later of: (1) the date of the transfer or other event which resulted in such shares being transferred to the to the charitable trust; and (2) the date our board of trustees has actual knowledge that such a transfer or event had occurred. The price at which we may purchase such shares transferred to the charitable trust would be equal to the lesser of: (1) the amount paid by the prohibited owner for such shares or, if such prohibited owner did not give value for such shares in connection with the transfer or other event which resulted in such shares to be transferred to the charitable trust, the market price of such shares on the date of the transfer or other event; or (2) the market price of such shares on the date that we accept the offer to purchase the shares. Upon such a sale by the charitable trust to us, the net proceeds from such sale shall be distributed to the prohibited owner and charitable trust, as described in the preceding paragraph.

Our board of trustees may, subject to certain limits, waive the first ownership restriction (i.e., the 9.8% ownership restriction) with respect to a person if (1) such person is not an individual, (2) such person’s constructive ownership of interests in tenants of our real property (or tenants of any entity in which we own a direct or indirect interest) will not adversely affect our ability to qualify as a REIT, (3) such person’s beneficial or constructive ownership of our shares in excess of the first ownership restriction will not have an adverse effect on our ability to qualify as a REIT, and (4) such person has agreed that any shares in excess of the first ownership restriction beneficially or constructively owned by such person will automatically be transferred to a charitable trust as necessary to prevent such person’s beneficial or constructive ownership of such shares from adversely affecting our ability to qualify as a REIT. Our board of trustees also may, subject to certain limitations, waive the first ownership restriction (i.e., the 9.8% ownership restriction) with respect to a person if certain other requirements are satisfied. As a condition of any such waiver, our board of trustees may require certain representations and covenants.

Our board of trustees has granted ownership waivers to the holders of our Series A-1 preferred shares and Series A-2 preferred shares. These ownership waivers will continue after the closing of this offering. These shareholders may constructively own and beneficially own in excess of 9.8% of our shares, up to the full number of preferred shares purchased (or such number of common shares into which the preferred shares are converted), so long as no “individual” for purposes of Section 542(a)(2) of the Code, who owns shares through the preferred shareholders, beneficially owns more than 9.8% (in value or in number of shares, whichever is more restrictive) of our outstanding shares.

All persons who own, directly or by virtue of the applicable attribution provisions of the Code, more than 5% of the value of any class of outstanding shares, must file an affidavit with us containing the information specified in the charter by January 31 of each year. In addition, each shareholder shall upon demand be

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required to disclose to us such additional information as we may request in order to determine the effect, if any, of such ownership on our status as a REIT and to ensure compliance with the ownership and transfer restrictions.

The ownership and transfer restrictions could have the effect of delaying, deferring or preventing a transaction or a change in control of us that might involve a premium price for the common shares or otherwise be in the best interest of our shareholders.

This summary of ownership and transfer restrictions does not purport to be complete and is subject to and qualified in its entirety by reference to our charter, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part.

Registration Rights

We have entered into an investors’ rights agreement with the holders of our Series A-1 preferred shares and an investors’ rights agreement with the holders of our Series A-2 preferred shares. The registration rights provisions of these agreements provide those holders with demand, piggyback and Form S-3 registration rights. These shares are collectively referred to herein as “registrable securities.”

Demand Registration Rights

The holders of at least a majority of the Series A-1 preferred shares and the holders of at least a majority of the Series A-2 preferred shares then outstanding each have the right to make up to two demands that we file a registration statement under the Securities Act covering the registrable securities then outstanding; provided, that the aggregate amount of securities to be sold under the registration statement is at least $10.0 million, net of underwriting discounts and commissions, subject to specified exceptions.

Piggyback Registration Rights

If we register any securities for public sale, the holders of our registrable securities then outstanding will each be entitled to notice of the registration and will have the right to include their shares in the registration statement. The underwriters of any underwritten offering will have the right to limit the number of shares having registration rights to be included in the registration statement, and the company will include in such registration, if a piggyback registration is initiated as a primary underwritten offering: (1) first, the number of registrable securities requested to be included in such registration by the holders equal to up to 50% of the registrable securities held by them on the date hereof (the “Minimum Amount”); (2) second, the common shares that the company proposes to sell; (3) third, the common shares requested to be included therein by holders of registrable securities in excess of the Minimum Amount, allocated pro rata among all such holders on the basis of the number of registrable securities owned by each such holder or in such manner as they may otherwise agree; and (4) fourth, the common shares requested to be included therein by holders of common shares other than holders of registrable securities, allocated among such holders in such manner as they may agree. If the piggyback registration is initiated as an underwritten offering on behalf of a holder of common shares other than the holders of registrable securities and the underwriters exercise their right to limit the offering, the company will include in such offering: (1) first, the common shares requested to be included therein by the holder(s) requesting such registration, allocated pro rata among all such holders on the basis of the number of common shares owned by all such holders or in such manner as they may otherwise agree; and (2) second, the Minimum Amount allocated pro rata among all such holders on the basis of the number of registrable securities owned by each such holder or in such manner as they may otherwise agree.

Registration on Form S-3

If we are eligible to file a registration statement on Form S-3, the holders of Series A-1 preferred shares and the holders of Series A-2 preferred shares each have the right to make up to two demands that we file registration statements on Form S-3. The right to have such shares registered on Form S-3 is further subject to other specified conditions and limitations.

Expenses of Registration

We will pay all expenses relating to any demand, piggyback or Form S-3 registration, other than underwriting discounts and commissions, subject to specified conditions and limitations.

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Termination of Registration Rights

The registration rights granted under an investors’ rights agreement will terminate on date on which the holders of the Series A-1 preferred shares or Series A-2 preferred shares, as applicable, beneficially own less than ten percent (10%) of the common shares issued or issuable upon conversion of the Series A-1 preferred shares and Series A-2 preferred shares, respectively, originally purchased by such holders.

Transfer Agent and Registrar

The transfer agent and registrar for our common shares is American Stock Transfer & Trust Company.

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CERTAIN PROVISIONS OF MARYLAND LAW
AND OF OUR CHARTER AND BYLAWS

The following summary of certain provisions of Maryland REIT Law and of our charter and bylaws does not purport to be complete and is subject to and qualified in its entirety by reference to our charter and bylaws, copies of which are filed as exhibits to the registration statement of which this prospectus is a part, and Maryland REIT Law. See “Where You Can Find More Information.”

Duration

Under our charter, we have a perpetual term of existence and will continue perpetually subject to the authority of our board of trustees to terminate our existence and liquidate our assets and subject to termination pursuant to the Maryland REIT Law.

Board of Trustees

Our charter provides that the number of our trustees shall not be less than one nor more than fifteen. Any vacancy, including a vacancy created by an increase in the number of trustees, may be filled by a majority of the trustees. Our trustees generally will each serve for a one-year term. Our charter generally provides that a trustee may be removed from office only at a meeting of shareholders by a vote of not less than 2∕3 (two-thirds) of the shares then outstanding and entitled to vote generally in the election of trustees.

Business Combinations

Under the Maryland Business Combination Law, as applicable to Maryland REITs, certain “business combinations” ​(including certain mergers, consolidations, share exchanges or, in certain circumstances, asset transfers or issuances or reclassifications of equity securities) between a Maryland REIT and an “interested shareholder” or an affiliate of the interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. An interested shareholder includes a person and an affiliate or associate (as defined under Maryland law) of the trust who, at any time during the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the trust’s then outstanding voting shares. A person is not an interested shareholder under the statute if the board of trustees approved in advance the transaction by which such person otherwise would have become an interested shareholder. However, in approving a transaction, the board of trustees may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by our board of trustees. After the five-year prohibition, any such business combination must be recommended by the trustees of such trust and approved by the affirmative vote of at least:

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80% of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest of the trust, voting together as a single voting group; and

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two-thirds of the votes entitled to be cast by holders of outstanding voting shares of beneficial interest other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or by the interested shareholder’s affiliates or associates, voting together as a single voting group.

These super-majority voting requirements do not apply if the trust’s common shareholders receive a minimum price (as defined under Maryland law) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares. These provisions also do not apply to business combinations that are approved or exempted by the board of trustees of the trust prior to the time that the interested shareholder becomes an interested shareholder. Pursuant to the statute, prior to completion of this offering, our board of trustees will adopt a resolution exempting any transactions between us and any other person from these provisions of the Maryland Business Combination Law. Consequently, the five-year prohibition and the super-majority vote requirements will not apply to business combinations involving us. In the event that our board of trustees amends or revokes this resolution, business combinations between us and an interested shareholder or an affiliate of an interested shareholder would be subject to the five-year prohibition and the super-majority vote requirements. Our board of trustees cannot amend or revoke these resolutions without the affirmative vote of a majority of the votes cast on the matter by our shareholders

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entitled to vote generally in the election of trustees. Application of the business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any such acquisition.

Control Share Acquisitions

Under the Maryland Control Share Acquisition Act, as applicable to Maryland REITs, “control shares” of a Maryland REIT acquired in a “control share acquisition” have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter by shareholders, excluding shares owned by the acquirer, by officers or by trustees who are employees of the trust in question. “Control shares” are voting shares of beneficial interest which, if aggregated with all other shares previously acquired by such acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise the voting power in the election of trustees within one of the following ranges of voting power:

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

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

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more than 50%.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions. The Maryland Control Share Acquisition Act does not apply (1) to shares acquired in a merger, consolidation or share exchange if the trust is a party to the transaction or (2) to acquisitions approved or exempted by the charter or bylaws of the trust.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel our board of trustees to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the trust may itself present the question at any shareholders meeting.

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

Upon completion of this offering, our bylaws will contain a provision exempting from the control share acquisition statute any acquisition by any person of our shares of beneficial interest, and this provision of our bylaws cannot be amended without the affirmative vote of a majority of the votes cast on the matter by our shareholders entitled to vote generally in the election of trustees. In the event that our bylaws are amended to modify or eliminate this provision, acquisitions of our common shares may constitute a control share acquisition.

Subtitle 8

Subtitle 8 of Title 3 of the MGCL (the “Maryland Unsolicited Takeover Act”) permits a Maryland REIT with a class of equity securities registered under the Exchange Act and at least three independent trustees to elect, by provision in its charter or bylaws or a resolution of its board of trustees and notwithstanding any contrary provision in the charter or bylaws, to be subject to any or all of five provisions, including:

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classified board;

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a two-thirds vote of outstanding shares to remove a trustee;

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a requirement that the number of trustees be fixed only by vote of our board of trustees;

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a requirement that a vacancy on our board of trustees be filled only by the affirmative vote of a majority of the remaining trustees and that such trustee filling the vacancy serve for the remainder of the full term of the class of trustees in which the vacancy occurred and until a successor is duly elected and qualified; and

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a provision that a special meeting of shareholders must be called upon the written request of shareholders entitled to cast a majority of all the votes entitled to be cast at the meeting.

Through provisions in our charter and bylaws unrelated to the Maryland Unsolicited Takeover Act, we (1) require the affirmative vote of a not less than two-thirds of the shareholders entitled to cast all the votes entitled to be cast generally in the election of trustees for the removal of any trustee from our board of trustees, with or without cause, (2) vest in our board of trustees the exclusive power to fix the number of trustees, subject to the limitations set forth in our charter and bylaws and (3) require, unless called by the chairman of our board of trustees, president, chief executive officer or our board of trustees, the request of shareholders entitled to cast a majority of all the votes entitled to be cast on such matter to call a special meeting to consider and vote on any matter that may properly be considered at a meeting of shareholders. We have elected to be subject to the provision of the Maryland Unsolicited Takeover Act requiring that any vacancy on our board of trustees be filled only by the affirmative vote of a majority of the remaining trustees for the remainder of the full term of the class of trustees in which the vacancy occurred, and until a successor is duly elected and qualifies. Our board of trustees is not currently classified, and our board of trustees cannot elect to classify our board of trustees or elect to be subject to one or more of the other provisions of the Maryland Unsolicited Takeover Act without the affirmative vote of a majority of the votes cast on the matter by our shareholders entitled to vote generally in the election of trustees.

Amendment to the Charter and Bylaws

Our charter may be amended by our board of trustees without the consent of the holders of our shares of beneficial interest in certain instances as well as by the affirmative vote of the holders of not less than a majority of the shares then outstanding and entitled to vote thereon after our board of trustees has approved any such amendment and submitted to our shareholders for approval. Any amendment to the number of trustees or the provisions regarding the resignations removal of a trustee must be approved the affirmative vote of the holders of two-thirds of all of the votes entitled to be cast.

In addition, if our board of trustees determines, with the advice of counsel, that any one or more of the provisions of our charter conflict with the Maryland REIT Law, the Code or other applicable federal or state law(s), the conflicting provisions of our charter shall be deemed never to have constituted a part of our charter, even without any amendment thereof.

Our bylaws may be amended by our board of trustees without the consent of the holders of our shares of beneficial interest in certain instances. The provisions of our bylaws prohibiting our board of trustees from revoking, altering or amending its resolution exempting any business combination from the Maryland Business Combination Law or exempting any acquisition of our stock from the Maryland Control Share Acquisition Act without the approval of our holders of shares of beneficial interest must be approved by the affirmative vote of a majority of the holders of all of the votes entitled to be cast.

Meetings and Special Voting Requirements

Subject to restrictions in our charter on ownership and transfer of our shares and the terms of each class or series of shares, each holder of common shares is entitled at each meeting of shareholders to cast one vote per share owned by such shareholder on those matters submitted to a vote of shareholders, including the election of trustees. There is no cumulative voting in the election of our board of trustees, which means that the holders of a majority of shares of our outstanding shares entitled to vote in the election of trustees generally can elect all of the trustees then standing for election and the holders of the remaining shares of beneficial interest will not be able to elect any trustees.

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Under Maryland law, a Maryland REIT generally cannot dissolve, amend its charter or merge, unless approved by the affirmative vote of shareholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland REIT may provide in its charter for approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter. Our charter provides for approval of these matters by the affirmative vote of a majority of the votes entitled to be cast.

Also, our operating assets are held by our subsidiaries and these subsidiaries may be able to merge or sell all or substantially all of their assets without the approval of our shareholders.

An annual meeting of our shareholders will be held each year, at least 30 days after delivery of our annual report to our shareholders. Special meetings of shareholders may be called only upon the request of a majority of our trustees, the President, the Chief Executive Officer or the Chairman of our board of trustees and must be called by our secretary upon the written request of shareholders holding at least a majority of our outstanding shares entitled to be voted on any issue proposed to be considered at any such special meeting. Upon receipt of a written request of shareholders holding a majority of our outstanding shares stating the purpose of the special meeting, our secretary will provide all of our shareholders written notice of the meeting and the purpose of such meeting. The meeting must be held not less than 15 or more than 60 days after the distribution of the notice of meeting. The presence of shareholders entitled to cast a majority of all the votes entitled to be cast at the meeting, either in person or by proxy, will constitute a quorum.

No trustee or any of their respective affiliates may vote or consent on matters submitted to the shareholders regarding removal of such trustee or any transaction between us and any of them. In determining the requisite percentage interests of our outstanding shares necessary to approve a matter with respect to which a trustee and any of his or her affiliates may not vote or consent, any shares owned by any of them shall not be included.

Limitation of Liability and Indemnification

The Maryland REIT Law permits a Maryland REIT to include in its charter a provision limiting the liability of its trustees and officers to the trust and its shareholders for money damages except for liability resulting from (1) actual receipt of an improper benefit or profit in money, property or services or (2) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains a provision which eliminates such liability to the maximum extent permitted by the Maryland REIT Law.

The Maryland REIT Law permits a Maryland REIT to indemnify and advance expenses to its trustees and officers to the same extent as permitted for directors and officers of a Maryland corporation under the MGCL. In the case of directors and officers of a Maryland corporation, the MGCL permits a Maryland corporation to indemnify present and former directors and officers against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of such service, unless it is established that either: (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and either (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; (2) the director or officer actually received an improper personal benefit in money, property or services; or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

Our bylaws require us to indemnify, without a preliminary determination of the ultimate entitlement to indemnification: (1) any present or former trustee, officer or shareholder who has been successful, on the merits or otherwise, in the defense of a proceeding to which he was made a party by reason of such status, against reasonable expenses incurred by him in connection with the proceeding; (2) any present or former trustee or officer against any claim or liability to which he may become subject by reason of such status unless it is established that (a) his act or omission was committed in bad faith or was the result of active and deliberate dishonesty, (b) he actually received an improper personal benefit in money, property or services or (c) in the case of a criminal proceeding, he had reasonable cause to believe that his act or omission was unlawful; and (3) each shareholder or former shareholder against any claim or liability to which he may be subject by reason of such status as a shareholder or former shareholder.

In addition, our bylaws require us to pay or reimburse, in advance of final disposition of a proceeding, reasonable expenses incurred by a present or former trustee or officer made a party to a proceeding by reason

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of his status as a trustee or officer provided that, in the case of a trustee or officer, we shall have received (1) a written affirmation by the trustee or officer of his good faith belief that he has met the applicable standard of conduct necessary for indemnification by us as authorized by the bylaws and (2) a written undertaking by him or on his behalf to repay the amount paid or reimbursed by us if it shall ultimately be determined that the applicable standard of conduct was not met. The bylaws also (1) permit us, with the approval of our trustees, to provide indemnification and payment or reimbursement of expenses to a present or former trustee or officer who served our predecessor in such capacity, and to any of our employees or agents of our predecessor, (2) provide that any indemnification or payment or reimbursement of the expenses permitted by our bylaws shall be furnished in accordance with the procedures provided for indemnification and payment or reimbursement of expenses under Section 2-418 of the MGCL for directors of Maryland corporations and (3) permit us to provide such other and further indemnification or payment or reimbursement of expenses as may be permitted by the MGCL for directors of Maryland corporations.

The Partnership Agreement of the Operating Partnership also provides for indemnification by the Operating Partnership of us, as general partner, for any costs, expenses or liabilities incurred by it by reason of any act performed by it for or on behalf of the Operating Partnership; provided that such person’s actions were taken in good faith and in the belief that such conduct was in the best interests of the Operating Partnership and that such person was not guilty of fraud, willful misconduct or gross negligence.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our trustees and officers pursuant to the foregoing provisions or otherwise, we have been advised that, although the validity and scope of the governing statute has not been tested in court, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In addition, state securities laws may limit indemnification.

Indemnification Agreements

In addition to the indemnity provided in our charter and under Maryland law, we have entered into an Indemnification Agreement with each of our trustees which provides that we agree to reimburse the trustee for losses incurred in legal proceedings related to the trustee’s service as trustee and to advance funds to the trustee or officer to pay expenses as they are incurred. The general effect to our shareholders of any arrangement under which we agree to insure or indemnify any persons against liability is a potential reduction in distributions resulting from our payment of premiums associated with insurance or indemnification payments in excess of amounts covered by insurance, including those required pursuant to our indemnification agreements. In addition, indemnification could reduce the legal remedies available to our shareholders and us against our officers and trustees. Maryland law permits us to advance reasonable expenses to a trustee or officer upon receipt of (1) a written affirmation by the trustee or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification and (2) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed if it is ultimately determined that the standard of conduct was not met. However, indemnification does not reduce the exposure of trustees and officers to liability under federal or state securities laws, nor does it limit the shareholders’ ability to obtain injunctive relief or other equitable remedies for a violation of a trustee’s or an officer’s duties to us, although the equitable remedies may not be an effective remedy in some circumstances.

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THE OPERATING PARTNERSHIP AND THE PARTNERSHIP AGREEMENT

The following summary of material provisions of the Third Amended and Restated Agreement of Limited Partnership of Four Springs Capital Trust Operating Partnership L.P., as amended (the “Partnership Agreement”), does not purport to be complete and is subject to and qualified in its entirety by reference to the Partnership Agreement, a form of which is filed as an exhibit to the registration statement of which this prospectus is a part, and applicable provisions of the Delaware Revised Uniform Limited Partnership Act (“DRULPA”). See “Where You Can Find More Information.”

General

The Operating Partnership, Four Springs Capital Trust Operating Partnership, L.P., is a Delaware limited partnership of which we are the sole general partner. We are structured as an UPREIT, and all of our assets are owned and substantially all of our business is conducted through the Operating Partnership.

The Operating Partnership was formed for the purpose of (1) conducting any business that may be lawfully conducted by a limited partnership organized pursuant to the DRULPA, (2) entering into any partnership, joint venture or other similar arrangement to engage in any such business or the ownership of interests in any entity engaged in any such business and (3) doing anything necessary or incidental to the foregoing. However, the Operating Partnership may not, without our consent take, or refrain from taking, any action that, in our judgment, in our sole and absolute discretion could:

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adversely affect our ability to continue to qualify as a REIT;

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subject us to any taxes under Code Section 857 or Code Section 4981 or any other related or successor provision under the Code; or

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violate any law or regulation of any governmental body or agency having jurisdiction over us or our securities.

As the sole general partner of the Operating Partnership, we have full, exclusive and complete responsibility and discretion in the management and control of the Operating Partnership. The Operating Partnership may admit additional limited partners in accordance with the terms of the Partnership Agreement. The limited partners of the Operating Partnership have no authority in their capacity as limited partners to transact business for, or participate in the management activities or decisions of, the Operating Partnership except as required by applicable law. Consequently, as the sole general partner of the Operating Partnership, we control its assets and business. However, any amendment to the Partnership Agreement that would:

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affect the conversion factor or the redemption right in a manner adverse to the limited partners;

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adversely affect the rights of the limited partners to receive the distributions payable to them pursuant to the Partnership Agreement (other than the issuance of additional OP units);

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alter the allocations of the Operating Partnership’s profit and loss to the limited partners (other than the issuance of additional OP units); or

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impose on the limited partners any obligation to make additional capital contributions to the Operating Partnership,

requires the consent of limited partners holding more than 50% of the interests of the limited partners, subject to certain exceptions as set forth in the Partnership Agreement.

If there is a conflict between the interests of our shareholders on one hand and any limited partners on the other, we will endeavor in good faith to resolve the conflict in a manner not adverse to either our shareholders or such limited partners; provided, however, that for so long as we own a controlling interest in the Operating Partnership, any conflict that cannot be resolved in a manner not adverse to either our shareholders or any limited partners shall be resolved in favor of our shareholders. The Partnership Agreement also provides that we, as general partner, shall not be liable to the Operating Partnership, its partners or any other person bound by the Partnership Agreement for monetary damages for losses sustained, liabilities incurred or benefits not derived by the Operating Partnership or any future limited partner, provided we, as general partner, acted in good faith. Moreover, the Partnership Agreement provides that the Operating Partnership is required to

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indemnify us, our trustees, managers and employees from and against any and all claims that relate to the operations of the Operating Partnership, except (1) if the act or omission of the person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active or deliberate dishonesty, (2) for any transaction for which the indemnified party received an improper personal benefit, in money, property or services or (3) in the case of a criminal proceeding, if the indemnified person had reasonable cause to believe that the act or omission was unlawful.

Operations

The Partnership Agreement requires that the Operating Partnership be operated in a manner that will enable us to continue to satisfy the requirements for being classified as a REIT for U.S. federal tax purposes, to avoid any U.S. federal income or excise tax liability imposed by the Code, and to ensure that the Operating Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Code.

In addition to the administrative and operating costs and expenses incurred by the Operating Partnership, the Operating Partnership pays all of our administrative costs and expenses and our expenses will be treated as expenses of the Operating Partnership. Such expenses include, among others:

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all expenses relating to the formation and continuity of our existence;

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all expenses relating to the offering of our securities;

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all expenses associated with the preparation and filing of any periodic reports by us under federal, state or local laws or regulations;

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all expenses associated with compliance by us with applicable laws, rules and regulations;

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all costs and expenses relating to any issuance or redemption of the OP units or shares of beneficial interest; and

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all of our other operating or administrative costs incurred in the ordinary course of our business on behalf of the Operating Partnership.

Partnership Allocations

The allocation provisions of the Partnership Agreement have been modified. Under the modified Partnership Agreement, subject to compliance with the provisions of the Code Sections 704(b) and 704(c) and Treasury Regulations promulgated thereunder, income, gain and loss of the Operating Partnership for each fiscal year is generally allocated to and among the partners to cause, to the extent possible, their “Modified Capital Account” balances to equal their respective “Target Balances.” The term “Modified Capital Account” means, for each partner, the partner’s capital account balance increased by such partner’s share of “partnership minimum gain” and of “partner minimum gain” ​(as determined pursuant to Treasury Regulations Sections 1.704-2(g) and 1.704-2(i)(5), respectively). The term “Target Balance” shall mean, for each partner at any point in time, either (1) a positive amount equal to the net amount, if any, the partner would be entitled to receive or (2) a negative amount equal to the net amount the partner would be required to pay or contribute to the Operating Partnership or to any third party, assuming, in each case, that: (a) the Operating Partnership sold all of its assets for an aggregate purchase price equal to their aggregate carrying value (assuming for this purpose only that the carrying value of any asset that secures a liability that is treated as “nonrecourse” for purposes of Treasury Regulations Section 1.1001-2 is no less than the amount of such liability that is allocated to such asset in accordance with Treasury Regulations Section 1.704-2(d)(2)); (b) all liabilities of the Operating Partnership were paid in accordance with their terms from the amounts specified in clause (a) of this sentence; (c) any partner that was obligated to contribute any amount to the Operating Partnership pursuant to this Agreement or otherwise (including the amount a Partner would be obligated to pay to any third party pursuant to the terms of any liability or pursuant to any guaranty, indemnity or similar ancillary agreement or arrangement entered into in connection with any liability of the Operating Partnership) contributed such amount to the Operating Partnership; (d) all liabilities of the Operating Partnership that were not completely repaid pursuant to clause (b) of this sentence were paid in accordance with their terms from the amounts specified in clause (c) of this sentence; and (E) the balance, if any, of any amounts held by the Operating Partnership was distributed in accordance with liquidation distribution provisions of the Partnership Agreement Section 10.2).

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Capital Contributions and Borrowings

Upon completion of this offering, we will contribute to the Operating Partnership the net proceeds from this offering in exchange for additional OP units. Under the Partnership Agreement, we are obligated to contribute the net proceeds of any subsequent offering of our common shares to the Operating Partnership in exchange for additional OP units.

The Partnership Agreement provides that if the Operating Partnership requires additional funds at any time in excess of funds available to the Operating Partnership from borrowing or capital contributions, we may borrow such funds from a financial institution or other lender and lend such funds to the Operating Partnership.

Issuance of Additional Limited Partnership Interests

As the sole general partner of the Operating Partnership, we are authorized, without the consent of the limited partners, to cause the Operating Partnership to issue additional OP units to us, to limited partners or to other persons for such consideration and on such terms and conditions as we may establish in our sole discretion. If additional OP units are issued to us, then, unless the additional OP units are issued in connection with a contribution of property to the Operating Partnership, we must (1) issue additional shares and must contribute to the Operating Partnership the entire net proceeds received by us from such issuance or (2) issue additional OP units to all partners in proportion to their respective interests in the Operating Partnership. Consideration for additional partnership interests may be cash or other property or assets. No person, including any partner or assignee, has preemptive, preferential or similar rights with respect to additional capital contributions to the Operating Partnership or the issuance or sale of any partnership interests therein.

The Operating Partnership may issue partnership interests in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption (including, without limitation, terms that may be senior or otherwise entitled to preference over the OP units) as we may determine, in our sole and absolute discretion, without the approval of any limited partner or any other person. Without limiting the generality of the foregoing, we may specify, as to any such class or series of partnership interest:

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the allocations of items of partnership income, gain, loss, deduction and credit to each such class or series of partnership interest;

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the right of each such class or series of partnership interest to share in distributions; and

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the rights of each such class or series of partnership interest upon dissolution and liquidation of the Operating Partnership.

Series U1 OP Units

On May 31, 2020, the Operating Partnership issued 181,116 of Series U1 OP units (convertible into 181,116 of our common shares) at $22 per unit in exchange for acquiring 90% of the beneficial ownership interest in FSC GM Lebanon IN, DST (“GMLI DST”) previously held by third party investors thereby wholly-owning GMLI DST. The Operating Partnership retained control of GMLI DST subsequent to this transaction. The Series U1 OP units receive cumulative distributions at a per annum rate of $1.10, $1.26, $1.41, $1.57, $1.72 and $1.88 per unit commencing on May 31, 2020 and each anniversary thereof through May 31, 2025. In addition, in the event of the liquidation or dissolution of the Operating Partnership or the company, the holders of Series U1 OP units are entitled to receive a liquidation amount per unit of $22.00, $23.87, $25.73, $27.60, $29.46 and $31.34 commencing on May 31, 2020 and each anniversary thereof through May 31, 2025. Commencing May 31, 2021, holders of Series U1 OP units have the option to exchange the Series U1 OP units for a corresponding number of our common shares, and we may, in our sole and absolute discretion, elect to redeem the partner in cash at a price per Series U1 OP unit equal to the liquidation amount or, if the common shares have been listed on a national securities exchange, the closing price of our common shares. During the period May 31, 2026 through November 30, 2026, the Series U1 OP unit holders have the right to require the Operating Partnership to redeem the units in whole or in part, at the liquidation amount in cash. With respect

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to distributions and liquidation rights, the Series U1 OP units rank on parity with the common OP units and will rank on parity with the Series U2 OP units.

Series U2 OP Units

Investors holding approximately $10.3 million of beneficial interests in FSC BJ Tilton NH, DST, FSC Healthcare IV, DST and FSC Industrial I, DST have agreed to exchange, upon the completion of this offering, their DST beneficial interests for an aggregate number of Series U2 OP units equal to such amount divided by 120% of the initial public offering price of our common shares in this offering (or        Series U2 OP units, based on the midpoint of the price range set forth on the cover page of this prospectus). We owned approximately 25.0%, 5.0% and 5.0% of the equity interests in FSC BJ Tilton NH, DST, FSC Healthcare IV, DST and FSC Industrial I, DST, respectively, as of November 15, 2021, and, as a result of this exchange, we expect to own 38.0%, 35.4% and 32.6% of the equity interests in such DSTs, respectively, upon completion of this offering. The Series U2 OP units will receive cumulative distributions at a per annum rate of to 5.5% of the Series U2 OP unit issue price unless the distribution rate on the common OP units exceeds such distribution rate, at which point, the distribution rate on the Series U2 OP units will be equal to the distribution rate on the common OP units for all future distributions on the Series U2 OP units. Commencing on the one-year anniversary of the completion of this offering, holders of Series U2 OP units will have the option to exchange the Series U2 OP units for a corresponding number of our common shares, and we may, in our sole and absolute discretion, elect to redeem the partner in cash at a price per Series U2 OP unit equal to the closing price of our common shares. With respect to distributions and liquidation rights, the Series U2 OP units will rank on parity with the common OP units and Series U1 OP units.

LTIP Units

The Operating Partnership has authorized a class of LTIP Units. LTIP Units are a special class of membership OP units that are structured to qualify as “profits interests” for tax purposes, with the result that at issuance they have no capital account in the Operating Partnership. We may at any time cause the Operating Partnership to issue LTIP Units to our trustees, officers, employees and consultants. We will not receive a tax deductions for LTIP Units granted. LTIP Units may, at our sole discretion (as the general partner of the Operating Partnership), be issued subject to vesting, forfeiture and additional restrictions on transfer pursuant to the terms of a vesting agreement. The terms of any vesting agreement may be modified by us (as the general partner of the Operating Partnership) from time to time in our sole discretion, subject to any restrictions on amendment imposed by the relevant vesting agreement or by the equity incentive plan, if applicable.

In general, LTIP Units will receive the same per-unit distributions as the common OP units; provided however that at our sole discretion (as the general partner), an amount up to 90% of any distributions declared and payable with respect to the LTIP Units may be deferred and shall be paid at the closing of an initial public offering of our shares. Because it is possible that LTIP Unit holders may be allocated income for tax purposes without a corresponding distribution, the Partnership Agreement provides for tax distributions for LTIP Unit holders, but not for any other OP unit holders.

Initially, each LTIP Unit will have a capital account balance of zero and, therefore, will not have full parity with the common OP units with respect to liquidating distributions. However, the Partnership Agreement provides that “book gain,” or economic appreciation, in our assets realized by the Operating Partnership as a result of the actual sale of all or substantially all of the Operating Partnership’s assets or the revaluation of the Operating Partnership’s assets as provided by applicable U Treasury Regulations will be allocated first to the LTIP Unit holders until the capital account per LTIP Unit is equal to the average capital account per unit of the general partner’s common OP units.

The Partnership Agreement and applicable Treasury Regulations provide that the Operating Partnership’s assets may be revalued upon the occurrence of certain events, including additional capital contributions by us or other partners, the redemption of a partnership interest, a liquidation (as defined in the Treasury Regulations) of the Operating Partnership or the issuance of a partnership interest (including LTIP Units) to a new or existing partner as consideration for the provision of services to, or for the benefit of, the Operating Partnership. Upon equalization of the capital accounts of the LTIP Unit holders with the average per-unit capital account of the general partner’s OP units, the LTIP Units will achieve full parity with OP units for all purposes, including with respect to liquidating distributions. If such parity is reached, vested LTIP Units may

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be converted into an equal number of OP units at any time, and thereafter enjoy all the rights of OP units. If a sale or revaluation of assets occurs at a time when the Operating Partnership’s assets have appreciated sufficiently since the last revaluation, the LTIP Units would achieve full parity with the OP units upon such sale or revaluation.

In the absence of sufficient appreciation in the value of the Operating Partnership’s assets at the time of a sale or revaluation, full parity would not be reached. Consequently, an LTIP Unit may never become convertible because the value of the Operating Partnership’s assets has not appreciated sufficiently between revaluations to equalize capital accounts. Until and unless parity is reached, the value for a given number of LTIP Units will be less than the value of an equal number of our common shares.

This discussion of the LTIP Unit is entirely subject to the terms of the Partnership Agreement and the 2021 Equity Incentive Plan.

Redemption Rights

Pursuant to the Partnership Agreement, the limited partners have the right to cause the Operating Partnership to redeem their OP units for cash based upon the value of an equivalent number of common shares, or, at our election, common shares at a one to one rate, subject to adjustment as provided in the Partnership Agreement for certain events such as share dividends, share subdivisions or combinations. The right of LTIP Unit holders to cause such redemption shall also be regulated by his or her award agreement. Notwithstanding the foregoing, a limited partner will not be entitled to exercise its redemption right to the extent the issuance of shares of beneficial interest to the redeeming limited partner would (1) be prohibited, as determined in our sole discretion, under our charter or (2) cause the acquisition of our shares by such redeeming limited partner to be “integrated” with any other distribution of our shares for purposes of complying with the Securities Act.

No Removal of the General Partner

We may not be removed as general partner by the limited partners with or without cause.

Withdrawal of General Partner; Transfer of General Partner’s Interests

We may not (1) voluntarily withdraw as the general partner of the Operating Partnership, (2) engage in any merger, consolidation or other business combination or sale of all or substantially all of our assets (other than in connection with a change in our state of incorporation or organizational form) or (3) transfer our general partnership interest (except to a wholly-owned subsidiary), unless the transaction in which such withdrawal, business combination or transfer occurs results in the limited partners receiving or having the right to receive an amount of cash, securities or other property equal in value to the amount they would have received if they had exercised their redemption rights immediately prior to such transaction or unless, in the case of a merger or other business combination, the successor entity contributes substantially all of its assets to the Operating Partnership in return for an interest in the Operating Partnership and agrees to assume all obligations of the general partner of the Operating Partnership. We may also enter into a business combination or transfer our general partnership interest upon the receipt of the consent of a majority-in-interest of the limited partners of the Operating Partnership.

Restrictions on Transfer by Limited Partners

The Partnership Agreement provides that each limited partner, and each transferee of partnership interests or assignee pursuant to a permitted transfer, has the right to transfer all or any portion of its partnership interest to any person, subject to the provisions of the Partnership Agreement. No limited partner shall have the right to substitute a transferee as a limited partner in its place. A transferee of the interest of a limited partner may be admitted as a substituted limited partner only with our consent, which consent may be given or withheld by us in our sole and absolute discretion.

Term

The Operating Partnership shall continue until terminated as provided in the Partnership Agreement or by operation of law.

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Tax Matters

Pursuant to the Partnership Agreement, we are the partnership representative of the Operating Partnership and, as such, have authority to handle tax audits and to make tax elections under the Code on behalf of the Operating Partnership.

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there was no public market for our common shares. We cannot predict the effect, if any, future sales of common shares, or the availability for future sale of common shares, will have on the market price of our common shares prevailing from time to time. Future sales of substantial amounts of our common shares in the public market, or the perception that such sales could occur, could adversely affect the prevailing market price of our common shares and could impair our future ability to raise capital through the sale of equity or equity-related securities at a time and price that we deem appropriate.

Upon completion of this offering we will have a total of           common shares outstanding. All of the           common shares sold in this offering, or           common shares assuming the underwriters exercise their option to purchase additional shares in full, will be freely tradable without restriction by persons other than our “affiliates.” Under the Securities Act, an “affiliate” of a company is a person that directly or indirectly controls, is controlled by or is under common control with that company. The remaining           common shares outstanding immediately following the completion of this offering, as well as any other shares held by our affiliates, may not be resold except pursuant to an effective registration statement or an applicable exemption from registration, including an exemption under Rule 144 under the Securities Act (“Rule 144”).

Our charter authorizes us to issue up to 600,000,000 shares of beneficial interest, including 87,547,309 preferred shares. Moreover, under Maryland law and our charter our board of trustees has the power to amend our charter to increase the aggregate number of common shares that we are authorized to issue without approval of our shareholders. Similarly, the Partnership Agreement of the Operating Partnership authorizes us to issue an unlimited number of OP units, which may be exchangeable for common shares.

Lock-Up Agreements

Subject to certain exceptions, we, our executive officers, trustees, GSAM and Carlyle have agreed that, without the prior written consent of the representatives on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus: (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any common shares or any securities convertible into or exercisable or exchangeable for common shares; (2) file any registration statement with the SEC relating to the offering of any common shares or any securities convertible into or exercisable or exchangeable for common shares; or (3) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common shares, whether any such transaction described above is to be settled by delivery of common shares or such other securities, in cash or otherwise. In addition, our shareholders holding substantially all of our other common shares outstanding immediately prior to the completion of this offering may not effect any offer, sale or distribution of any common shares or any option or right to acquire common shares, for 180 days after the date of this prospectus, without first obtaining our consent. We have agreed not to provide this consent without first obtaining the written consent of the representatives. See “Underwriting.”

Rule 144

Rule 144 provides an exemption from the registration and prospectus-delivery requirements of the Securities Act. This exemption is available to affiliates of ours that sell our restricted or non-restricted securities and also to non-affiliates that sell our restricted securities. Restricted securities include securities acquired from the issuer of those securities, or from an affiliate of the issuer, in a transaction or chain of transactions not involving any public offering. The shares we are selling in this offering are not restricted securities. However, all the shares we have issued before this offering are restricted securities, and they will continue to be restricted securities until they are resold pursuant to Rule 144 or pursuant to an effective registration statement.

A person who is, or at any time during the 90 days preceding the sale was, an affiliate of ours generally may sell, within any three-month period, a number of shares that does not exceed the greater of:

•

1% of the number of our common shares outstanding, which will equal approximately           shares immediately after this offering; and

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•

the average weekly trading volume of our common shares on the NYSE during the four calendar weeks preceding the date a required notice regarding the sale is filed with the SEC.

In addition, sales by these persons must also satisfy requirements with respect to the manner of sale, public notice, the availability of current public information about us and, in the case of restricted securities, a minimum holding period for those securities. All other persons may rely on Rule 144 to freely sell our restricted securities, so long as they satisfy both the minimum holding period requirement and, until a one-year holding period has elapsed, the current public information requirement.

Warrants

Upon completion of this offering, we will have outstanding warrants to purchase up to 474,851 common shares with a weighted average exercise price of $23.31 per common share. Upon completion of this offering the warrants will be exercisable as follows:

•

50% of the common shares issuable upon exercise of the subject warrant shall become exercisable on the first anniversary date of the Listing Event;

•

an additional 25% of the common shares issuable upon exercise of the subject warrant shall become exercisable on the 18 month anniversary date of the Listing Event; and

•

the remaining 25% of the common shares issuable upon exercise of the subject warrant shall become exercisable on the two year anniversary date of the Listing Event.

The exercise period for the warrants will expire on the earlier to occur of: (1) the third anniversary date of the Listing Event; and (2) seven years from the date of original issuance of the warrants. Subject to the restrictions described above, warrants may be exercised at any time up to the close of business on the expiration date. After the close of business on the expiration date, unexercised warrants will become void.

In addition, upon completion of this offering, we will have 10,743 warrants for common shares issuable upon exercise of outstanding options held by our trustees with a weighted average price of $186.18 per share.

Options

Upon completion of this offering, we will have outstanding options to purchase up to 11,747 common shares, with a weighted average exercise price of $37.94. Such options generally expire ten years after the respective grant date of the option.

Rule 701

Generally, an employee, officer, trustee or qualified consultant of ours who purchased common shares before the effective date of the registration statement of which this prospectus is a part, or who holds options as of that date, pursuant to a written compensatory plan or contract may rely on the resale provisions of Rule 701 under the Securities Act (“Rule 701”). Under Rule 701, these persons who are not our affiliates may generally sell those securities, commencing 90 days after the effective date of the registration statement, without having to comply with the current public information and minimum holding period requirements of Rule 144. These persons who are our affiliates may generally sell those securities under Rule 701, commencing 90 days after the effective date of the registration statement, without having to comply with Rule 144’s minimum holding period restriction.

Neither Rule 144 nor Rule 701 supersedes our security holders’ contractual obligations under the lock-up agreements described above.

Registration Rights

See “Description of Securities—Registration Rights” for a detailed description of the registration rights granted to the holders of our Series A-1 preferred shares and Series A-2 preferred shares.

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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of the material U.S. federal income tax considerations relating to our qualification and taxation as a REIT and to the acquisition, ownership and disposition of our common shares. For purposes of this section, references to “company,” “we,” “our” and “us” mean only Four Springs Capital Trust and not its subsidiaries or other lower-tier entities, except as otherwise indicated. The sections of the Code and the corresponding Treasury Regulations that relate to qualification and taxation as a REIT are highly technical and complex. This summary is based upon, and qualified in its entirety by, the Code, the Treasury Regulations, rulings and other administrative pronouncements issued by the IRS and judicial decisions, all as currently in effect, and all of which are subject to differing interpretations or to change, possibly with retroactive effect. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below. We have not sought and will not seek an advance ruling from the IRS regarding any matter discussed in this prospectus. The summary is also based upon the assumption that we will operate the company and its subsidiaries and affiliated entities in accordance with their applicable organizational documents. It does not purport to discuss all aspects of U.S. federal income taxation that may be important to a particular investor in light of its investment or tax circumstances or to investors subject to special tax rules, such as:

•

financial institutions;

•

insurance companies;

•

broker-dealers;

•

regulated investment companies;

•

partnerships or other entities treated as partnerships for U.S. federal income tax purposes and trusts;

•

U.S. shareholders (as defined below) whose functional currency is not the U.S. dollar;

•

persons who, as nominees, hold our shares on behalf of other persons;

•

persons who receive our shares through the exercise of employee options or otherwise as compensation;

•

persons holding our shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;

•

shareholders subject to special tax accounting rules as a result of their use of “applicable financial statements” ​(within the meaning of Section 451(b)(3) of the Code);

and, except to the extent discussed below:

•

tax-exempt organizations; and

•

foreign investors.

This summary assumes that investors will hold their common shares as a capital asset, which generally means as property held for investment.

The U.S. federal income tax treatment of holders of our common shares depends in some instances on determinations of fact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent or authority may be available. In addition, the tax consequences to any particular shareholder of holding our common shares will depend on the shareholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the federal, state, local and foreign income and other tax consequences to you in light of your particular investment or tax circumstances of acquiring, holding, exchanging or otherwise disposing of our common shares.

Taxation of the Company

We elected to be taxed as a REIT under Sections 856 through 860 of the Code commencing with our initial taxable year ended December 31, 2012. We have been organized and believe that we have been operated in a manner that has allowed us to qualify for taxation as a REIT under the Code, and we intend to continue to be organized and to operate in this manner.

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In connection with the filing of the registration statement of which this prospectus is a part, we will receive an opinion of Duane Morris LLP to the effect that commencing with our taxable year ended on December 31, 2012, we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our actual and proposed method of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Code. It must be emphasized that the opinion of Duane Morris LLP will be based on various assumptions relating to our organization and operation and will be conditioned upon fact-based representations and covenants made by our management regarding our organization, assets and income, and the future conduct of our business operations. While we intend to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, the possibility of future changes in our circumstances and despite the opinion being delivered by Duane Morris LLP with respect to our meeting of the requirements for qualification and taxation as a REIT under the Code, no assurance can be given by Duane Morris LLP or by us that we will qualify as a REIT for any particular year. The opinion will be expressed as of the date issued. Duane Morris LLP will have no obligation to advise us or our shareholders of any subsequent change in the matters stated, represented or assumed, or of any subsequent change in the applicable law. You should be aware that opinions of counsel are not binding on the IRS, and no assurance can be given that the IRS will not challenge the conclusions set forth in such opinions.

Qualification and taxation as a REIT depend on our ability to meet, on a continuing basis through actual operating results, various qualification tests imposed under the Code regarding the composition of our assets and income, distribution levels, and diversity of share ownership. No assurance can be given that the actual results of our operations for any taxable year will satisfy such requirements for qualification and taxation as a REIT.

Taxation of REITs in General

As indicated above, our qualification and taxation as a REIT depends upon our ability to meet, on a continuing basis, various qualification requirements imposed upon REITs by the Code. The material qualification requirements are summarized below under “—Requirements for Qualification—General.” While we intend to operate so that we qualify as a REIT, no assurance can be given that the IRS will not challenge our qualification, or that we will be able to operate in accordance with the REIT requirements in the future. See “—Failure to Qualify.”

Provided that we qualify as a REIT, generally we will be entitled to a deduction for dividends that we pay and will not be subject to U.S. federal corporate income tax on our taxable income that is currently distributed to our shareholders. This treatment substantially eliminates the “double taxation” at the corporate and shareholder levels that generally results from investment in a corporation. In general, the income that we generate is taxed only at the shareholder level upon a distribution of dividends to our shareholders.

Most domestic shareholders that are individuals, trusts or estates are taxed on corporate dividends at a maximum rate of 20% (the long-term capital gains rate). With limited exceptions, however, dividends from us or from other entities that are taxed as REITs are generally not eligible for this rate and will continue to be taxed at rates applicable to ordinary income. See “Taxation of Shareholders—Taxation of Taxable Domestic Shareholders—Distributions.”

Net operating losses (“NOLs”), foreign tax credits and other tax attributes of REITs generally do not pass through to our shareholders. See “—Taxation of Shareholders.”

If we qualify as a REIT, we will nonetheless be subject to U.S. federal tax in the following circumstances:

•

We will be taxed at regular corporate rates on any undistributed “real estate investment trust taxable income,” including undistributed net capital gains;

•

We may be subject to the “alternative minimum tax” on our items of tax preference, including any deductions of NOLs;

•

If we have net income from prohibited transactions, which are, in general, sales or other dispositions of inventory or property held primarily for sale to customers in the ordinary course of business, other than foreclosure property, such income will be subject to a 100% tax. See “—Prohibited Transactions,” and “—Foreclosure Property,” below;

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•

If we elect to treat property that we acquire in connection with a foreclosure of a mortgage loan or certain leasehold terminations as “foreclosure property,” we may thereby avoid the 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction), but the income from the sale or operation of the property may be subject to corporate income tax at the highest applicable rate;

•

We may elect to retain and pay income tax on our net capital gain. In that case, a shareholder would include its proportionate share of our undistributed net capital gain (to the extent we make a timely designation of such gain to the shareholder) in its income, would be deemed to have paid the tax that we paid on such gain, and would be allowed a credit or refund for its proportionate share of the tax deemed to have been paid;

•

If we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below, but nonetheless maintain our qualification as a REIT because we satisfy other requirements, we will be subject to a 100% tax on an amount based on the magnitude of the failure, as adjusted to reflect the profit margin associated with our gross income;

•

If we should fail to satisfy the asset tests (other than certain de minimis failures) or other requirements applicable to REITs, as described below, and yet maintain our qualification as a REIT because there is reasonable cause for the failure and other applicable requirements are met, we may be subject to an excise tax. In that case, the amount of the excise tax will be at least $50,000 per failure, and, in the case of certain asset test failures, will be determined as the amount of net income generated by the assets in question multiplied by the highest corporate tax rate if that amount exceeds $50,000 per failure;

•

If we should fail to distribute during each calendar year at least the sum of (1) 85% of our REIT ordinary income for such year, (2) 95% of our REIT capital gain net income for such year, and (3) any undistributed taxable income from prior periods, we would be subject to a nondeductible 4% excise tax on the excess of the required distribution over the sum of (a) the amounts that we actually distributed and (b) the amounts we retained and upon which we paid income tax at the corporate level;

•

We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record keeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s shareholders, as described below in “—Requirements for Qualification—​General;”

•

A 100% tax may be imposed on transactions between us and a TRS that do not reflect arm’s-length terms;

•

If we acquire appreciated assets from a corporation that is not a REIT (i.e., a corporation taxable under subchapter C of the Code) in a transaction in which the adjusted tax basis of the assets in our hands is determined by reference to the adjusted tax basis of the assets in the hands of the subchapter C corporation, we may be subject to tax on such appreciation at the highest corporate income tax rate then applicable if we subsequently recognize gain on a disposition of any such assets during the five-year period following their acquisition from the subchapter C corporation. The results described in this paragraph with respect to the recognition of gain assume that the C corporation will refrain from making an election to recognize gain with respect to the disposition of the assets under the applicable Treasury Regulations on its tax return for the year in which we acquire the asset from the C corporation. The IRS recently issued final Treasury Regulations that exclude from the application of this built-in gains tax any gain from the sale of property we acquired in an exchange under Section 1031 (a like kind exchange) or 1033 (an involuntary conversion) of the Code; and

•

Our subsidiaries that are C corporations, including our TRSs, are subject to federal corporate income tax on their earnings.

In addition, we and our subsidiaries may be subject to a variety of taxes, including payroll taxes and state, local, and foreign income, franchise, property and other taxes on our assets and operations. We could also be subject to tax in situations and on transactions not presently contemplated.

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Requirements for Qualification—General

The Code defines a REIT as a corporation, trust or association:

(1)

that is managed by one or more trustees or directors;

(2)

the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

(3)

that would be taxable as a domestic corporation but for Sections 856-860 of the Code;

(4)

that is neither a financial institution nor an insurance company subject to specific provisions of the Code;

(5)

the beneficial ownership of which is held by 100 or more persons;

(6)

in which, during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, actually or constructively, by five or fewer “individuals” ​(as defined in the Code to include specified tax-exempt entities);

(7)

that properly elects to be taxed as a REIT and such election has not been terminated or revoked; and

(8)

which meets other tests described below, including with respect to the nature of its income and assets.

The Code provides that conditions (1) through (4) must be met during the entire taxable year, and that condition (5) must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a shorter taxable year. Conditions (5) and (6) need not be met during a corporation’s initial tax year as a REIT. Our charter provides restrictions regarding the ownership and transfers of our shares, which are intended to assist us in satisfying the share ownership requirements described in conditions (5) and (6) above.

To monitor compliance with the share ownership requirements, we generally are required to maintain records regarding the actual ownership of our shares. To do so, we must demand written statements each year from the record holders of significant percentages of our shares pursuant to which the record holders must disclose the actual owners of the shares (i.e., the persons required to include our dividends in their gross income). We must maintain a list of those persons failing or refusing to comply with this demand as part of our records. We could be subject to monetary penalties if we fail to comply with these record-keeping requirements. If you fail or refuse to comply with the demands, you will be required by Treasury Regulations to submit a statement with your tax return disclosing your actual ownership of our shares and other information.

In addition, a corporation generally may not elect to become a REIT unless its taxable year is the calendar year. We have adopted December 31 as our year-end, and thereby will satisfy this requirement.

The Code provides relief from violations of certain of the REIT requirements, in cases where a violation is due to reasonable cause and not to willful neglect, and other requirements are met, including, in certain cases, the payment of a penalty tax that is based upon the magnitude of the violation. See “—Income Tests” and “—Asset Tests” below. If we fail to satisfy any of the various REIT requirements, there can be no assurance that these relief provisions would be available to enable us to maintain our qualification as a REIT, and, if such relief provisions are available, the amount of any resultant penalty tax could be substantial.

Ownership of Interests in Partnerships and Limited Liability Companies

In the case of a REIT that is a partner in a partnership or a member in a limited liability company treated as a partnership for federal income tax purposes, Treasury Regulations provide that the REIT will be deemed to own its proportionate share of the assets of the partnership or limited liability company, as the case may be, based on its interest in partnership capital, subject to special rules relating to the 10% asset test described below. Also, the REIT will be deemed to be entitled to its proportionate share of the income of that entity. The assets and gross income of the partnership or limited liability company retain the same character in the hands of the REIT for purposes of Section 856 of the Code, including satisfying the gross income tests and the asset tests. Thus, our pro rata share of the assets and items of income of any partnership, such as the Operating Partnership, or limited liability company treated as a partnership or disregarded entity for federal income tax

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purposes, including such partnership’s or limited liability company’s share of these items of any partnership or limited liability company treated as a partnership or disregarded entity for federal income tax purposes in which it owns an interest, would be treated as our assets and items of income for purposes of applying the requirements described in this discussion, including the gross income and asset tests described below

We will have control of the Operating Partnership and the subsidiary partnerships and limited liability companies and intend to operate them in a manner consistent with the requirements for our qualification as a REIT. If we become a limited partner or non-managing member in any partnership or limited liability company and such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.

Taxable REIT Subsidiaries

A REIT may own up to 100% of the shares of one or more TRSs. A domestic TRS is a fully taxable corporation that may earn income that would not be qualifying income if earned directly by the parent REIT. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. To the extent that a domestic TRS is required to pay taxes, it will have less cash available for distribution to us. If dividends are paid to us by our domestic TRSs, then the dividends we pay to our shareholders who are taxed at individual rates, up to the amount of dividends we receive from our domestic TRSs, will generally be eligible to be taxed at the reduced 20% rate currently applicable to qualified dividend income. Dividends paid by foreign TRSs may not be treated similarly, and the tax treatment of a foreign TRS in its jurisdiction of tax residence will depend on the laws of that jurisdiction and may vary considerably.

The subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns securities possessing more than 35% of the total voting power or total value of the outstanding securities of such corporation will automatically be treated as a TRS. We are not treated as holding the assets of a TRS or as receiving any income that the TRS earns. Rather, the stock issued by a TRS to us is an asset in our hands, and we treat the distributions paid to us from such TRS, if any, as income. This treatment can affect our compliance with the gross income and asset tests. Because we do not include the assets and income of TRSs in determining our compliance with the REIT requirements, we may use such entities to undertake indirectly activities that the REIT rules might otherwise preclude us from doing directly or through pass-through subsidiaries. Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs.

A domestic TRS will pay income tax at regular corporate rates on any income that it earns. In addition, TRSs (as are other taxpayers), are subject to a limitation on their ability to deduct net business interest generally equal to 50% of adjusted taxable income, subject to certain exceptions. See “—Annual Distribution Requirements.” This provision may limit the ability of our TRSs to deduct interest, which could increase their taxable income. Further, the rules impose a 100% excise tax on certain transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an arm’s-length basis.

We currently own an interest in two TRSs and may acquire securities in additional TRSs in the future.

Income Tests

In order to qualify as a REIT, we must satisfy two gross income requirements on an annual basis. First, at least 75% of our gross income for each taxable year, excluding gross income from sales of inventory or dealer property in “prohibited transactions,” certain hedging transactions and certain foreign currency gains, generally must be derived from investments relating to real property or mortgages on real property, including interest income derived from mortgage loans secured by real property (including certain types of mortgage backed securities), “rents from real property,” dividends received from other REITs, and gains from the sale of real estate assets (except for a nonqualified publicly offered REIT debt instrument as defined in the Code), as well as specified income from temporary investments.

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Second, at least 95% of our gross income in each taxable year, excluding gross income from prohibited transactions, certain hedging transactions and certain foreign currency gains, must be derived from some combination of such income from investments in real property (i.e., income that qualifies under the 75% income test described above, including nonqualified publicly offered REIT debt instruments), as well as other dividends, interest, and gain from the sale or disposition of shares or securities, which need not have any relation to real property.

For these purposes, the term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of all or some of the amount depends in any way on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely by reason of being based on a fixed percentage or percentages of receipts or sales.

Rents we receive from a tenant will qualify as “rents from real property” for the purpose of satisfying the gross income requirements for a REIT described above only if all of the following conditions are met:

•

The amount of rent must not be based in any way on the net income or profits of any person. However, an amount we receive or accrue generally will not be excluded from the term “rents from real property” solely because it is based on a fixed percentage or percentages of receipts or sales;

•

We, or an actual or constructive owner of 10% or more of our shares, must not actually or constructively own 10% or more of the interests in the assets or net profits of the tenant, or, if the tenant is a corporation, 10% or more of the voting power or value of all classes of shares of the tenant. Rents received from a tenant that is a TRS, however, will not be excluded from the definition of “rents from real property” as a result of this condition if at least 90% of the space at the property to which the rents relate is leased to third parties, and the rents paid by the TRS are substantially comparable to rents paid by our other tenants for comparable space. Whether rents paid by a TRS are substantially comparable to rents paid by our other tenants is determined at the time the lease with the TRS is entered into, extended, and modified, if such modification increases the rents due under such lease. Notwithstanding the foregoing, if a lease with a “controlled taxable REIT subsidiary” is modified and such modification results in an increase in the rents payable by such TRS, any such increase will not qualify as “rents from real property.” For purposes of this rule, a “controlled taxable REIT subsidiary” is a TRS in which we own shares possessing more than 50% of the voting power or more than 50% of the total value of the outstanding shares of such TRS;

•

Rent attributable to personal property, leased in connection with a lease of real property, is not greater than 15% of the total rent received under the lease. If this condition is not met, then the portion of the rent attributable to personal property will not qualify as “rents from real property”; and

•

We generally must not operate or manage the property or furnish or render services to our tenants, subject to a 1% de minimis exception and except as provided below. We may, however, perform services that are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not otherwise considered “rendered to the occupant” of the property. In addition, we may employ an independent contractor from whom we derive no income to provide customary services, or a TRS, which may be wholly or partially owned by us, to provide both customary and non-customary services to our tenants without causing the rent we receive from those tenants to fail to qualify as “rents from real property.” Any amounts we receive from a TRS with respect to the TRS’s provision of non-customary services will, however, be non-qualifying income under the 75% gross income test and, except to the extent received through the payment of dividends, the 95% REIT gross income test.

We generally do not intend to take actions we believe will cause us to fail to satisfy the rental conditions described above.

From time to time, we may enter into hedging transactions with respect to one or more of our liabilities. The term “hedging transaction” generally means any transaction we enter into in the normal course of our business primarily to manage risk of interest rate changes or fluctuations with respect to borrowings made or to be made. The hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase these items, and futures and forward contracts. Income from a hedging transaction, including gain from the sale or disposition of such a transaction, that is clearly identified as such as specified in the Code, or that is a hedging transaction entered into in connection with and subsequent to a hedging transaction described above

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in this paragraph, in which the underlying indebtedness or property has been extinguished or disposed of, will not constitute gross income for purposes of the 75% or 95% gross income test, and therefore will be exempt from this test. To the extent that we do not properly identify such transactions as hedges, the income from those transactions is not likely to be treated as qualifying income for purposes of the gross income tests. We intend to structure any hedging transactions in a manner that does not jeopardize our status as a REIT.

We may directly or indirectly receive distributions from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions generally are treated as dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions will generally constitute qualifying income for purposes of the 95% gross income test, but not for purposes of the 75% gross income test. Any dividends that we receive from a REIT, however, will be qualifying income for purposes of both the 95% and 75% gross income tests.

Interest income constitutes qualifying mortgage interest for purposes of the 75% gross income test to the extent that the obligation upon which such interest is paid is secured by a mortgage on real property. If we receive interest income with respect to a mortgage loan that is secured by both real property and other property, and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property on the date that we acquired or originated the mortgage loan, the interest income will be apportioned between the real property and the other collateral, and our income from the arrangement will qualify for purposes of the 75% gross income test only to the extent that the interest is allocable to the real property. Even if a loan is not secured by real property, or is undersecured, the income that it generates may nonetheless qualify for purposes of the 95% gross income test.

If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may still qualify as a REIT for such year if we are entitled to relief under applicable provisions of the Code. These relief provisions will be generally available if (1) our failure to meet these tests was due to reasonable cause and not due to willful neglect and (2) following our identification of the failure to meet the 75% or 95% gross income test for any taxable year, we file a schedule with the IRS setting forth each item of our gross income for purposes of the 75% or 95% gross income test for such taxable year in accordance with Treasury Regulations yet to be issued. It is not possible to state whether we would be entitled to the benefit of these relief provisions in all circumstances as such relief is subject to IRS discretion. If these relief provisions are inapplicable to a particular set of circumstances, we will not qualify as a REIT. As discussed above under “—Taxation of REITs in General,” even where these relief provisions apply, the Code imposes a tax based upon the amount by which we fail to satisfy the particular income test.

Asset Tests

At the close of each calendar quarter, we must also satisfy four tests relating to the nature of our assets. First, at least 75% of the value of our total assets must be represented by some combination of “real estate assets,” cash, cash items, U.S. government securities, and, under some circumstances, shares or debt instruments purchased with new capital. For this purpose, real estate assets include interests in real property, such as land, buildings, leasehold interests in real property (including personal property leased in connection therewith that qualifies under the REIT income test as rent from real property), shares of other corporations that qualify as REITs, and some kinds of mortgage-backed securities and mortgage loans. Assets that do not qualify for purposes of the 75% gross income test are subject to the additional asset tests described below.

Second, not more than 25% of the value of our total assets may be represented by nonqualified publicly offered REIT debt instruments or by securities (including securities of one or more TRSs, as further limited as noted below) other than those securities includable in the 75% asset test.

Third, the value of any one issuer’s securities that we own may not exceed 5% of the value of our total assets, and we may not own more than 10% of any one issuer’s outstanding securities, as measured by either voting power or value. The 5% and 10% asset tests do not apply to securities of TRSs and qualified REIT subsidiaries and the 10% asset test does not apply to “straight debt” having specified characteristics and to certain other securities described below. Solely for purposes of the 10% asset test, the determination of our interest in the assets of a partnership or limited liability company in which we own an interest will be based on our proportionate interest in any securities issued by the partnership or limited liability company, excluding for this purpose certain securities described in the Code.

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Fourth, the aggregate value of all securities of TRSs that we hold may not exceed 20% of the value of our total assets.

Notwithstanding the general rule, as noted above, for purposes of the REIT income and asset tests we are treated as owning our proportionate share of the underlying assets of a subsidiary partnership. If we hold indebtedness issued by a partnership, the indebtedness will be subject to, and may cause a violation of, the asset tests unless the indebtedness is a qualifying mortgage asset or other conditions are met. Similarly, although shares of another REIT is a qualifying asset for purposes of the REIT asset tests, any non-mortgage debt that is issued by another REIT may not so qualify (such debt, however, will not be treated as “securities” for purposes of the 10% asset test, as explained below).

Certain securities will not cause a violation of the 10% asset test described above. Such securities include instruments that constitute “straight debt,” which includes, among other things, securities having certain contingency features. A security does not qualify as “straight debt” where a REIT (or a controlled TRS of the REIT) owns other securities of the same issuer which do not qualify as straight debt, unless the value of those other securities constitute, in the aggregate, 1% or less of the total value of that issuer’s outstanding securities. In addition to straight debt, the Code provides that certain other securities will not violate the 10% asset test. Such securities include (1) any loan made to an individual or an estate, (2) certain rental agreements pursuant to which one or more payments are to be made in subsequent years (other than agreements between a REIT and certain persons related to the REIT under attribution rules), (3) any obligation to pay rents from real property, (4) securities issued by governmental entities that are not dependent in whole or in part on the profits of (or payments made by) a non-governmental entity, (5) any security (including debt securities) issued by another REIT and (6) any debt instrument issued by a partnership if the partnership’s income is of a nature that it would satisfy the 75% gross income test described above under “—Income Tests.” In applying the 10% asset test, a debt security issued by a partnership is not taken into account to the extent, if any, of the REIT’s proportionate interest in the equity securities issued by that partnership.

No independent appraisals have been obtained to support our conclusions as to the value of particular securities other than real estate assets. Moreover, values of some assets, including instruments issued in securitization transactions, may not be susceptible to a precise determination, and values are subject to change in the future. Furthermore, the proper classification of an instrument as debt or equity for federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT asset requirements. Accordingly, there can be no assurance that the IRS will not contend that our interests in our subsidiaries or in the securities of other issuers will not cause a violation of the REIT asset tests.

However, certain relief provisions are available to allow REITs to satisfy the asset requirements or to maintain REIT qualification notwithstanding certain violations of the asset and other requirements. One such provision allows a REIT which fails one or more of the asset requirements to nevertheless maintain its REIT qualification if (1) the REIT provides the IRS with a description of each asset causing the failure, (2) the failure is due to reasonable cause and not willful neglect, (3) the REIT pays a tax equal to the greater of (a) $50,000 per failure and (b) the product of the net income generated by the assets that caused the failure multiplied by the highest applicable corporate tax rate and (4) the REIT either disposes of the assets causing the failure within six months after the last day of the quarter in which it identifies the failure, or otherwise satisfies the relevant asset tests within that time frame.

In the case of de minimis violations of the 10% and 5% asset tests, a REIT may maintain its qualification despite a violation of such requirements if (1) the value of the assets causing the violation does not exceed the lesser of 1% of the REIT’s total assets at the end of the quarter for which the measurement is calculated, and $10,000,000 and (2) the REIT either disposes of the assets causing the failure within six months after the last day of the quarter in which it identifies the failure, or the relevant tests are otherwise satisfied within that time frame.

The asset tests described above must be satisfied at the close of each quarter of our taxable year in which we (directly or through our partnerships or limited liability companies) acquire securities in the applicable issuer, increase our ownership of securities of such issuer (including as a result of increasing our interest in a partnership or limited liability company which owns such securities), or acquire other assets. If we should fail to satisfy the asset tests at the end of a calendar quarter, such a failure would not cause us to lose our REIT qualification if we (1) satisfied the asset tests at the close of the preceding calendar quarter and (2) the

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discrepancy between the value of our assets and the asset requirements was not wholly or partly caused by an acquisition of non-qualifying assets, but instead arose from changes in the market value of our assets. If the condition described in (2) were not satisfied, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose or by making use of relief provisions described below.

Annual Distribution Requirements

In order to qualify as a REIT, we are required to distribute dividends, other than capital gain dividends, to our shareholders in an amount at least equal to:

(1)

the sum of

(a)

90% of our REIT taxable income, computed without regard to our net capital gains and the deduction for dividends paid, and

(b)

90% of our net income, if any, (after tax) from foreclosure property (as described below), minus

(2)

the sum of specified items of non-cash income over 5% of our “REIT taxable income.”

For these purposes, our “REIT taxable income” is computed without regard to the dividends paid deduction and our net capital gain. In addition, for purposes of this test, non-cash income means income attributable to leveled stepped rents, original issue discount on purchase money debt, cancellation of indebtedness, or any like-kind exchanges that are later determined to be taxable.

In addition, our “REIT taxable income” will be reduced by any taxes we are required to pay on any gain we recognize from the disposition of any asset we acquired from a corporation which is or has been a C corporation in a transaction in which our basis in the asset is less than the fair market value of the asset, in each case determined at the time we acquired the asset, within the five-year period following our acquisition of such asset.

We generally must make these distributions in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for the year and if paid with or before the first regular dividend payment after such declaration. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be “preferential dividends.” A dividend is not a preferential dividend if the distribution is (1) pro rata among all outstanding shares within a particular class, and (2) in accordance with the preferences among different classes of shares as set forth in our organizational documents. Once the company sells its shares of beneficial interest publicly and is required to file annual and periodic reports under the Exchange Act, the preferential dividend prohibition terminates.

To the extent that we distribute at least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will be subject to tax at regular corporate tax rates on the retained portion. We may elect to retain, rather than distribute, our net long-term capital gains and pay tax on such gains. In this case, we could elect for our shareholders to include their proportionate shares of such undistributed long-term capital gains in income, and to receive a corresponding credit for their share of the tax that we paid. Our shareholders would then increase their adjusted basis of their shares by the difference between (1) the amounts of capital gain dividends that we designated and that they include in their taxable income and (2) the tax that we paid on their behalf with respect to that income.

To the extent that we have available NOLs carried forward from prior tax years, such losses may reduce the amount of distributions that we must make in order to comply with the REIT distribution requirements. Such losses, however, will generally not affect the character, in the hands of our shareholders, of any distributions that are actually made as ordinary dividends or capital gains. See “—Taxation of Shareholders—Taxation of Taxable Domestic Shareholders—Distributions.”

If we should fail to distribute during each calendar year at least the sum of (1) 85% of our REIT ordinary income for such year, (2) 95% of our REIT capital gain net income for such year and (3) any undistributed taxable income from prior periods, we would be subject to a non-deductible 4% excise tax on the excess of

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such required distribution over the sum of (a) the amounts actually distributed and (b) the amounts of income we retained and on which we paid corporate income tax.

It is possible that, from time to time, we may not have sufficient cash to meet the distribution requirements due to timing differences between our actual receipt of cash, including receipt of distributions from our subsidiaries and our inclusion of items in income for U.S. federal income tax purposes.

In the event that such timing differences occur, in order to meet the distribution requirements, it might be necessary for us to arrange for short-term, or possibly long-term, borrowings, dispose of assets or to pay dividends in the form of taxable in-kind distributions of property. Alternatively, we may declare a taxable dividend payable in cash or shares at the election of each shareholder, where the aggregate amount of cash to be distributed in such dividend may be subject to limitation. In such case, for federal income tax purposes, the amount of the dividend paid in shares of beneficial interest will be equal to the amount of cash that could have been received instead of the shares.

We may be able to rectify a failure to meet the distribution requirements for a year by paying “deficiency dividends” to shareholders in a later year, which may be included in our deduction for dividends paid for the earlier year. In this case, we may be able to avoid losing REIT qualification or being taxed on amounts distributed as deficiency dividends. We will be required to pay interest and a penalty based on the amount of any deduction taken for deficiency dividends.

Prohibited Transactions

Net income that we derive from a prohibited transaction is subject to a 100% tax. The term “prohibited transaction” generally includes a sale or other disposition of property (other than foreclosure property, as discussed below) that is held primarily for sale to customers in the ordinary course of a trade or business by us or by a borrower that has issued a shared appreciation mortgage or similar debt instrument to us. We intend to conduct our operations, and as the sole owner of the general partner of the Operating Partnership, we intend to cause the Operating Partnership to conduct its operations, so that no asset that we own (or are treated as owning) or that the Operating Partnership owns will be treated as, or as having been, held for sale to customers, and that a sale of any such asset will not be treated as having been in the ordinary course of our business. Whether property is held “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular facts and circumstances. No assurance can be given that any property that we sell will not be treated as property held for sale to customers, or that we can comply with certain safe harbor provisions of the Code that would prevent such treatment (as set forth below). The 100% tax does not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will be subject to tax in the hands of the corporation at regular corporate rates. Through a wholly-owned TRS, we have been active in syndicating ownership in net lease properties pursuant to the Section 1031 Exchange Program. Through this program we provide financing for properties with respect to which third-party investors, who are seeking to reinvest the proceeds from sales of investment property in transactions that are eligible for favorable tax treatment under Section 1031 of the Code, acquire ownership interests in certain of our properties. Under the Section 1031 Exchange Program, we establish DSTs that each own one or more properties. We typically offer up to 95% of the equity interests of each DST to qualified investors with the remaining equity interests held by us. As a result of conducting such activities through a TRS, such activities will not be subject to the 100% prohibited transaction tax, but the TRS is subject to tax on its income and gains at the regular corporate rates.

The safe harbor to the characterization of the sale of property by a REIT as a prohibited transaction and to the application of the 100% prohibited transaction tax is available if the following requirements are met:

•

the REIT has held the property for not less than two years;

•

the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of the sale that are includable in the basis of the property do not exceed 30% of the selling price of the property;

•

property sales by the REIT do not exceed at least one of the following thresholds: (1) seven sales in the current year; (2) sales in the current year do not exceed 10% of the REIT’s assets as of the beginning of the year (as measured by either fair market value or tax basis); or (3) sales in the current year do not

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exceed 20% of the REIT’s assets as of the beginning of the year and sales over a three-year period do not exceed, on average, 10% per annum of the REIT’s assets, in each case as measured by either fair market value or tax basis;

•

in the case of property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years for the production of rental income; and

•

if the REIT has made more than seven sales of non-foreclosure property during the taxable year, substantially all of the marketing and development expenditures with respect to the property are made through an independent contractor from whom the REIT derives no income or by a TRS.

Foreclosure Property

Foreclosure property is real property and any personal property incident to such real property (1) that we acquire as the result of having bid in the property at foreclosure, or having otherwise reduced the property to ownership or possession by agreement or process of law, after a default (or upon imminent default) on a lease of the property or a mortgage loan held by us and secured by the property, (2) for which we acquired the related loan or lease at a time when default was not imminent or anticipated and (3) with respect to which we made a proper election to treat the property as foreclosure property.

We generally will be subject to tax at the maximum corporate rate on any net income from foreclosure property, including any gain from the disposition of the foreclosure property, other than income that constitutes qualifying income for purposes of the 75% gross income test. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property would otherwise constitute inventory or dealer property. To the extent that we receive any income from foreclosure property that does not qualify for purposes of the 75% gross income test, we intend to make an election to treat the related property as foreclosure property.

Derivatives and Hedging Transactions

As discussed in “—Income Tests” above, we and our subsidiaries may enter into hedging transactions with respect to interest rate exposure on one or more of our assets or liabilities. Except to the extent provided by Treasury Regulations, any income from a hedging transaction we enter into (1) in the normal course of our business primarily to manage risk of interest rate or price changes or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets, which is clearly identified as specified in Treasury Regulations before the close of the day on which it was acquired, originated or entered into, including gain from the sale or disposition of such a transaction, and (2) primarily to manage risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% income tests which is clearly identified as such before the close of the day on which it was acquired, originated, or entered into, will not constitute gross income for purposes of the 75% or 95% gross income test. In addition, income from certain new hedging transactions that counteract prior qualifying hedging transactions described in (1) and (2) above which is clearly identified as such before the close of the day on which it was acquired, originated, or entered into, will not constitute gross income for purposes of the 75% or 95% gross income test. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the 75% and 95% gross income tests. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT. We may conduct some or all of our hedging activities (including hedging activities relating to currency risk) through a TRS or other corporate entity, the income from which may be subject to federal income tax, rather than by participating in the arrangements directly or through pass-through subsidiaries. No assurance can be given, however, that our hedging activities will not give rise to income that does not qualify for purposes of either or both of the REIT income tests, or that our hedging activities will not adversely affect our ability to satisfy the REIT qualification requirements.

Failure to Qualify

If we fail to satisfy one or more requirements for REIT qualification other than the income or asset tests, we could avoid disqualification if our failure is due to reasonable cause and not to willful neglect and we pay a

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penalty of $50,000 for each such failure. Relief provisions are available for failures of the income tests and asset tests, as described above in “—Income Tests” and “—Asset Tests.”

If we fail to qualify for taxation as a REIT in any taxable year, and the relief provisions described above do not apply, we would be subject to tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates. We cannot deduct distributions to shareholders in any year in which we are not a REIT, reducing the cash available for distribution by us to our shareholders, nor; however, would we be required to make distributions in such a year. In this situation, to the extent of current and accumulated earnings and profits, distributions to domestic shareholders that are individuals, trusts and estates may be eligible for the preferential tax rates on qualified dividend income but would not be eligible to deduct 20% of our ordinary REIT dividends. See “Taxation of Shareholders—Taxation of Taxable Domestic Shareholders—​Distributions.” In addition, subject to the limitations of the Code, corporate distributees may be eligible for the dividends-received deduction. Unless we are entitled to relief under specific statutory provisions, we would also be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year during which we lost qualification. It is not possible to state whether, in all circumstances, we would be entitled to this statutory relief.

Taxation of Shareholders

Taxation of Taxable Domestic Shareholders

As used herein, a “domestic shareholder” means a beneficial owner of our shares of beneficial interest that, for U.S. federal income tax purposes, is or is treated as:

•

an individual who is a citizen or resident of the United States;

•

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;

•

an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

•

a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons (within the meaning of Section 7701(a)(30) of the Code) or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our shares of beneficial interest, the U.S. federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner of a partnership holding our common shares should consult its own tax advisor regarding the U.S. federal income tax consequences to the partner of the acquisition, ownership and disposition of our common shares by the partnership.

Distributions

So long as we qualify as a REIT, the distributions that we make to our taxable domestic shareholders out of current or accumulated earnings and profits, that we do not designate as capital gain dividends, will generally be taken into account by shareholders as ordinary income and will not be eligible for the dividends-received deduction for corporations. With limited exceptions, our dividends are not eligible for taxation at the preferential income tax rates (i.e., 20% maximum federal rate) for qualified dividends received by domestic shareholders that are individuals, trusts and estates from taxable C corporations. However, provided that we and the shareholders satisfy certain holding period requirements, such shareholders are taxed at the preferential rates on dividends designated by and received from REITs to the extent that the dividends are attributable to:

•

income retained by the REIT in the prior taxable year on which the REIT was subject to corporate level income tax (less the amount of tax);

•

dividends received by the REIT from TRSs or other taxable C corporations; or

•

income in the prior taxable year from the sales of “built-in gain” property acquired by the REIT from C corporations in carryover basis transactions (less the amount of corporate tax on such income).

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Distributions that we designate as capital gain dividends will generally be taxed to our domestic shareholders as long-term capital gains, to the extent that such distributions do not exceed our actual net capital gain for the taxable year, without regard to the period for which the shareholder that receives such distribution has held its shares. In addition, the total amount of dividends that we may designate as “qualified dividend income” or “capital gain dividends” may not exceed our dividends paid for the taxable year. We may elect to retain and pay taxes on some or all of our net long-term capital gains, in which case provisions of the Code will treat a shareholder as having received, solely for tax purposes, its pro rata share of our undistributed capital gains, and the shareholders will receive a corresponding credit for taxes that we paid on such undistributed capital gains. See “—Taxation of the Company—Annual Distribution Requirements.” Corporate shareholders may be required to treat up to 20% of some capital gain dividends as ordinary income. Long-term capital gains are generally taxable at maximum federal rates of 20% in the case of shareholders that are individuals, trusts and estates, and 21% in the case of shareholders that are corporations. Capital gains attributable to the sale of depreciable real property held for more than 12 months are subject to a 25% maximum federal income tax rate for taxpayers who are taxed as individuals, to the extent of previously claimed depreciation deductions. Dividends paid by us to a corporate U.S. shareholder will not be eligible for the dividends received deduction for corporations.

In accordance with Public Law No. 115-97, commonly referred to as the TCJA, the effective tax rate on ordinary REIT dividends for U.S. shareholders of our common shares that are individuals, estates or trusts is effectively reduced by permitting such holders to claim a deduction in determining their taxable income equal to 20% of any such dividends they receive. To qualify for this deduction, the stockholder receiving a such dividend must hold the dividend-paying REIT shares for at least 46 days (taking into account certain special holding period rules) of the 91-day period beginning 45 days before the shares become ex-dividend, and cannot be under an obligation to make related payments with respect to a position in substantially similar or related property. The deduction is set to expire after December 31, 2025.

Distributions in excess of our current and accumulated earnings and profits will generally represent a return of capital and will not be taxable to a shareholder to the extent that the amount of such distributions do not exceed the adjusted basis of the shareholder’s shares in respect of which the distributions were made. Rather, the distribution will reduce the adjusted basis of the shareholder’s shares. To the extent that such distributions exceed the adjusted basis of a shareholder’s shares, the shareholder generally must include such distributions in income as long-term capital gain, or short-term capital gain if the shares have been held for one year or less. In addition, any dividend that we declare in October, November or December of any year and that is payable to a shareholder of record on a specified date in any such month will be treated as both paid by us and received by the shareholder on December 31 of such year, provided that we actually pay the dividend before the end of January of the following calendar year.

To the extent that we have available NOLs and capital losses carried forward from prior tax years, such losses may reduce the amount of distributions that we must make in order to comply with the REIT distribution requirements. However, as a result of the enactment of the TCJA and Public Law No. 116-136, known as the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), NOL carryforwards of losses arising in taxable years beginning after December 31, 2017 may be deducted in taxable years beginning after December 31, 2020 only to the extent of 80% of our “REIT taxable income” in the carryforward year (computed without regard to the NOL deduction). In contrast to prior law, which permitted unused NOL carryforwards to be carried back two years (or zero years for REITs) and forward 20 years, the TCJA and the CARES Act provide that losses arising in taxable years ending after December 31, 2017 and beginning before January 1, 2021 can be carried back five years (or zero years for REITs) and can be carried forward indefinitely. NOLs arising in taxable years beginning after December 31, 2020 may not be carried back to any prior taxable year but can be carried forward indefinitely. See “—Taxation of the Company—Annual Distribution Requirements.” Such losses, however, are not passed through to shareholders and do not offset income of shareholders from other sources, nor would such losses affect the character of any distributions that we make, which are generally subject to tax in the hands of shareholders to the extent that we have current or accumulated earnings and profits. This offering will not constitute a change of control and thus will not have an impact on our ability to use the NOLs as described above.

Dispositions of the Company’s Shares

If a domestic shareholder sells or disposes of shares of beneficial interest, it generally will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount of cash and

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the fair market value of any property received on the sale or other disposition and its adjusted basis in the shares of beneficial interest for tax purposes. This gain or loss will generally be long-term capital gain or loss if the shareholder has held the shares of beneficial interest for more than one year at the time of such sale or disposition. In general, capital gains recognized by individuals, trusts and estates upon the sale or disposition of our shares will be subject to a maximum federal income tax rate of 20% if the shares are held for more than one year, and will be taxed at ordinary income rates (of up to 37%) if the shares are held for one year or less. Gains recognized by shareholders that are corporations are subject to federal income tax at a maximum rate of 21%, whether or not such gains are classified as long-term capital gains. Capital losses recognized by a shareholder upon the disposition of our shares that were held for more than one year at the time of disposition will be considered long-term capital losses, and are generally available only to offset capital gain income of the shareholder but not ordinary income (except in the case of individuals, who may offset up to $3,000 of ordinary income each year). In addition, any loss upon a sale or exchange of our shares by a shareholder who has held the shares for six months or less, after applying holding period rules, will be treated as a long-term capital loss to the extent of distributions that we make that are required to be treated by the shareholder as long-term capital gain.

If an investor recognizes a loss upon a subsequent disposition of our shares or other securities in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury Regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss-generating transaction to the IRS. These regulations, though directed towards “tax shelters,” are broadly written and apply to transactions that would not typically be considered tax shelters. The Code imposes significant penalties for failure to comply with these requirements. You should consult your tax advisor concerning any possible disclosure obligation with respect to the receipt or disposition of our shares or securities or transactions that we might undertake directly or indirectly.

Moreover, you should be aware that we and other participants in the transactions in which we are involved (including their advisors) might be subject to disclosure or other requirements pursuant to these regulations.

Additional Medicare Tax on Unearned Income

Certain “high income” taxable domestic shareholders, including individuals, estates and trusts, are subject to an additional 3.8% Medicare tax on unearned income. For individuals, the additional Medicare tax applies to the lesser of (1) “net investment income” or (2) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions that are allocable to such income. Investment income generally includes passive income such as interest, dividends, annuities, royalties, rents, and capital gains. Investors are urged to consult their own tax advisors regarding the implications of the additional Medicare tax resulting from an investment in our shares.

Passive Activity Losses and Investment Interest Limitations

Distributions that we make and gain arising from the sale or exchange by a domestic shareholder of our shares will not be treated as passive activity income. As a result, shareholders will not be able to apply any “passive losses” against income or gain relating to our shares. To the extent that distributions we make do not constitute a return of capital, they will be treated as investment income for purposes of computing the investment interest limitation.

Taxation of Foreign Shareholders

Shares of beneficial interest applicable to non-U.S. holders

A “non-U.S. holder” is an owner of our shares of beneficial interest that is neither a “domestic shareholder,” as defined above, nor an entity treated as a partnership for U.S. federal income tax purposes. Special rules may apply to certain non-U.S. holders, including controlled foreign corporations, passive foreign investment companies, certain U.S. expatriates, and non-U.S. persons eligible for benefits under an applicable income tax treaty with the United States. Such non-U.S. holders should consult their tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.

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Ordinary Dividends

The portion of dividends received by a non-U.S. holder that is (1) payable out of our earnings and profits, (2) not attributable to gain from our sale or exchange of a U.S. real property interest (“USRPI”) nor designated by us as a capital gain dividend and (3) not effectively connected with a U.S. trade or business of the non-U.S. holder, will be subject to U.S. withholding tax at the rate of 30%, unless reduced or eliminated by treaty.

In general, non-U.S. holders will not be considered to be engaged in a U.S. trade or business solely as a result of their ownership of our shares. In cases where the dividend income from a non-U.S. holder’s investment in our shares is, or is treated as, effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business, the non-U.S. holder generally will be subject to federal income tax at graduated rates, in the same manner as domestic shareholders are taxed with respect to such dividends. Such income generally must be reported on a U.S. income tax return filed by or on behalf of the non-U.S. holder. The income may also be subject to the 30% branch profits tax (or such lower rate as provided by an applicable tax treaty) in the case of a non-U.S. holder that is a corporation.

Non-Dividend Distributions

Distributions that we make which are not dividends out of our earnings and profits will not be subject to U.S. income tax to the extent that such distributions do not exceed the non-U.S. holder’s adjusted basis in our shares. Such distributions in excess of earnings and profits that do exceed the adjusted basis of the non-U.S. holder in its common shares will be treated as gain from the sale of its shares, the tax treatment of which is described below. See “—Dispositions of the Company’s Shares” below. If we cannot determine at the time a distribution is made whether or not the distribution will exceed current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to dividends unless the non-U.S. holder provides the certification described below under “—Information Reporting Requirements and Withholding—​Generally.” A non-U.S. holder may seek a refund from the IRS of any amounts withheld if it subsequently is determined that the distribution was, in fact, in excess of our current and accumulated earnings and profits.

Capital Gain Dividends and Distributions Attributable to a Sale or Exchange of U.S. Real Property Interests

Under FIRPTA, a distribution that we make to a non-U.S. holder, to the extent attributable to gains from dispositions of USRPIs that we held directly or through pass-through subsidiaries, or USRPI capital gains, will, except as described below, be considered effectively connected with a U.S. trade or business of the non-U.S. holder and will be subject to U.S. income tax at the rates applicable to U.S. individuals or corporations, without regard to whether we designate the distribution as a capital gain dividend. See above under “—Taxation of Foreign Shareholders—Ordinary Dividends,” for a discussion of the consequences of income that is effectively connected with a U.S. trade or business. In addition, we will be required to withhold tax equal to 21% of the maximum amount that could have been designated as USRPI capital gains dividends. Distributions subject to FIRPTA may also be subject to a 30% branch profits tax in the hands of a non-U.S. holder that is a corporation. A distribution is not a USRPI capital gain if we held an interest in the underlying asset solely as a creditor. Capital gain dividends received by a non-U.S. holder that are attributable to dispositions of our assets other than USRPIs are not subject to U.S. federal income or withholding tax, unless (1) the gain is effectively connected with the non-U.S. holder’s U.S. trade or business, in which case the non-U.S. holder would be subject to the same treatment as a U.S. shareholder with respect to such gain, or (2) the non-U.S. holder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year, in which case the non-U.S. holder will incur a 30% tax on his or her capital gains.

A capital gain dividend that would otherwise have been treated as a USRPI capital gain will not be so treated or be subject to FIRPTA, and generally will not be treated as income that is effectively connected with a U.S. trade or business, and instead will be treated in the same manner as an ordinary dividend (see “—Taxation of Foreign Shareholders—Ordinary Dividends”), if (1) the capital gain dividend is received with respect to a class of shares that is regularly traded on an established securities market located in the United States and (2) the recipient non-U.S. holder does not own more than 10% of that class of shares at any time during the one-year period ending on the date on which the capital gain dividend is received. We anticipate that our common shares will be “regularly traded” on an established securities market.

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Dispositions of the Company’s Shares

Unless our shares constitute a USRPI, a sale of our shares by a non-U.S. holder generally will not be subject to U.S. federal income taxation. Our shares will not be treated as a USRPI if less than 50% of our assets throughout a prescribed testing period consist of interests in real property located within the United States, excluding, for this purpose, interests in real property solely in a capacity as a creditor.

Even if the foregoing 50% test is not met, our shares nonetheless will not constitute a USRPI if we are a “domestically controlled qualified investment entity.” A domestically controlled qualified investment entity includes a REIT if less than 50% of its value is held directly or indirectly by non-U.S. holders at all times during a specified testing period. We believe that we are, and we will be, a domestically controlled qualified investment entity, and that a sale of our shares should not be subject to taxation under FIRPTA. However, no assurance can be given that we are or will remain a domestically-controlled qualified investment entity.

In the event that we are not a domestically controlled qualified investment entity, but our shares are “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market, a non-U.S. holder’s sale of our common shares nonetheless would not be subject to tax under FIRPTA as a sale of a USRPI, provided that the selling non-U.S. holder held 10% or less of our outstanding common shares at any time during the five-year period ending on the date of the sale. We expect that our common shares will be regularly traded on an established securities market.

If gain on the sale of our shares were subject to taxation under FIRPTA, the non-U.S. holder would be required to file a U.S. federal income tax return and would be subject to the same treatment as a U.S. shareholder with respect to such gain, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of non-resident alien individuals, and the purchaser of the shares could be required to withhold 15% of the purchase price and remit such amount to the IRS.

Gain from the sale of our shares that would not otherwise be subject to FIRPTA will nonetheless be taxable in the United States to a non-U.S. holder in two cases: (1) if the non-U.S. holder’s investment in our shares is effectively connected with a U.S. trade or business conducted by such non-U.S. holder, the non-U.S. holder will be subject to the same treatment as a U.S. shareholder with respect to such gain; or (2) if the non-U.S. holder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain. In addition, even if we are a domestically controlled qualified investment entity, upon disposition of our shares (subject to a 5% exception applicable to “regularly traded” shares), a non-U.S. holder may be treated as having gain from the sale or exchange of a USRPI if the non-U.S. holder (1) disposes of our common shares within a 30 day period preceding the ex-dividend date of a distribution, any portion of which, but for the disposition, would have been treated as gain from the sale or exchange of a USRPI and (2) acquires, or enters into a contract or option to acquire, other shares of our common shares within 30 days after such ex-dividend date.

Estate Tax

If our shares are owned or treated as owned by an individual who is not a citizen or resident (as specially defined for U.S. federal estate tax purposes) of the United States at the time of such individual’s death, the shares will be includable in the individual’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise, and may therefore be subject to U.S. federal estate tax.

The U.S. federal taxation of non-U.S. holders is a highly complex matter that may be affected by many other considerations. Accordingly, non-U.S. holders should consult their tax advisors regarding the income and withholding tax considerations with respect to owning the company’s shares.

Taxation of Tax-Exempt Shareholders

Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from federal income taxation. However, they may be subject to taxation on their unrelated business taxable income (“UBTI”). While some investments in real estate may generate UBTI, the IRS has ruled that dividend distributions from a REIT to a tax-exempt entity do not constitute UBTI. Based on that ruling, and provided that (1) a tax-exempt shareholder has not held our shares as “debt financed

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property” within the meaning of the Code (i.e., where the acquisition or holding of the property is financed through a borrowing by the tax-exempt shareholder) and (2) our shares are not otherwise used in an unrelated trade or business, distributions that we make and income from the sale of our shares generally should not give rise to UBTI to a tax-exempt shareholder.

Tax-exempt shareholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from federal income taxation under sections 501(c)(7), (c)(9), (c)(17) and (c)(20) of the Code are subject to different UBTI rules, which generally require such shareholders to characterize distributions that we make as UBTI.

In certain circumstances, a pension trust that owns more than 10% of our shares could be required to treat a percentage of the dividends as UBTI if we are a “pension-held REIT.” We will not be a pension-held REIT unless (1) we are required to “look through” one or more of our pension trust shareholders in order to satisfy the REIT “closely held” test and (2) either (a) one pension trust owns more than 25% of the value of our shares or (b) one or more pension trusts, each individually holding more than 10% of the value of our shares, collectively owns more than 50% of the value of our shares. Certain restrictions on ownership and transfer of our shares generally should prevent a tax-exempt entity from owning more than 10% of the value of our shares and generally should prevent us from becoming a pension-held REIT.

Tax-exempt shareholders are urged to consult their tax advisors regarding the federal, state, local and foreign income and other tax consequences of owning the company’s shares.

State, Local and Foreign Taxes

We and our subsidiaries and shareholders may be subject to state, local or foreign taxation in various jurisdictions including those in which we or they transact business, own property or reside. We may own properties located in numerous jurisdictions, and may be required to file tax returns in some or all of those jurisdictions. Our state, local or foreign tax treatment and that of our shareholders may not conform to the federal income tax treatment discussed above. We may pay foreign property taxes, and dispositions of foreign property or operations involving, or investments in, foreign property may give rise to foreign income or other tax liability in amounts that could be substantial. Any foreign taxes that we incur do not pass through to shareholders as a credit against their U.S. federal income tax liability. Prospective investors should consult their tax advisors regarding the application and effect of state, local and foreign income and other tax laws on an investment in our shares.

Information Reporting Requirements and Withholding

Generally

We will report to our shareholders and to the IRS the amount of distributions we pay during each calendar year, and the amount of tax we withhold, if any. Under the backup withholding rules, a domestic shareholder may be subject to backup withholding at a rate of 24% with respect to distributions unless the holder: (1) is a corporation or qualifies for certain other exempt categories and, when required, demonstrates this fact; or (2) provides a correct taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules. A domestic shareholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS.

Backup withholding will generally not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. shareholder provided that the non-U.S. shareholder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as providing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI (or other Form W-8, if applicable), or if certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient. Payments of the net proceeds from a disposition or a redemption effected outside the U.S. by a non-U.S. shareholder made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) generally will apply to such a payment if the broker has certain connections with the U.S. unless the broker has documentary evidence in its

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records that the beneficial owner is a non-U.S. shareholder and specified conditions are met or an exemption is otherwise established. Payment of the net proceeds from a disposition by a non-U.S. shareholder of shares made by or through the U.S. office of a broker is generally subject to information reporting and backup withholding unless the non-U.S. shareholder certifies under penalties of perjury that it is not a U.S. person and satisfies certain other requirements, or otherwise establishes an exemption from information reporting and backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the shareholder’s federal income tax liability if certain required information is furnished to the IRS. Shareholders are urged to consult their own tax advisors regarding application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.

FATCA Withholding

Pursuant to sections 1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding tax (“FATCA withholding”) will be imposed on certain payments to you or to certain foreign financial institutions, investment funds and other non-U.S. persons receiving payments on your behalf if you or such persons fail to comply with certain information reporting requirements. Such payments will include U.S.-source dividends. Payments of dividends that you receive in respect of our common shares will be affected by this withholding if you are subject to the FATCA information reporting requirements and fail to comply with them or if you hold our common shares through a non-U.S. person (e.g., a foreign bank or broker) that fails to comply with these requirements (even if payments to you would not otherwise have been subject to FATCA withholding). You should consult your own tax advisors regarding the relevant U.S. law and other official guidance on FATCA withholding.

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UNDERWRITING

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Wells Fargo Securities, LLC are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:

Name	Number of Shares
Morgan Stanley & Co. LLC
Goldman Sachs & Co. LLC	​
Wells Fargo Securities., LLC	​
Mizuho Securities USA LLC	​
Scotia Capital (USA) Inc.	​
WR Securities, LLC	​
Nomura Securities International, Inc.	​
Berenberg Capital Markets LLC	​
R. Seelaus & Co., LLC	​
Total:	​

The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the common shares subject to their acceptance of the shares from us and subject to prior sale and the underwriters reserve the right to reject any order in whole or in part. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the common shares offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the common shares offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ option to purchase additional shares described below. The underwriters may offer and sell the common shares through certain of their affiliates or other registered broker-dealers or selling agents.

The underwriters initially propose to offer part of the common shares directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $      per share under the public offering price. After the initial offering of the common shares, the offering price and other selling terms may from time to time be varied by the representatives.

“Wolfe | Nomura Alliance” is the marketing name used by Wolfe Research Securities LLC and Nomura Securities International, Inc. in connection with certain equity capital markets activities conducted jointly by the firms. Both Nomura Securities International, Inc. and Wolfe Research Securities LLC are serving as underwriters in the offering described herein. In addition, Wolfe Research Securities may provide sales support services, investor feedback, investor education, and/or other independent equity research services in connection with this offering.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to           additional common shares at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering overallotments, if any, made in connection with the offering of the common shares offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional common shares as the number listed next to the underwriter’s name in the preceding table bears to the total number of common shares listed next to the names of all underwriters in the preceding table.

The following table shows the per share and total public offering price, underwriting discounts and commissions and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional                 common shares.

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​	​	​	​	Total
​	Per Share			No Exercise			Full Exercise
Public offering price	​	$		​	$		​	$
Underwriting discounts and commissions	​	​		​	​		​	​
Proceeds, before expenses, to us	​	$		​	$		​	$	​

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $      . We have agreed to reimburse the underwriters for expense relating to clearance of this offering with the Financial Industry Regulatory Authority (“FINRA”) up to $      .

We expect our common shares to be approved for listing on the NYSE under the trading symbol “FSPR.”

We, our executive officers, trustees, GSAM and Carlyle have agreed that, without the prior written consent of the representatives on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus (the “restricted period”):

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any common shares or any securities convertible into or exercisable or exchangeable for common shares;

•

file any registration statement with the SEC relating to the offering of any common shares or any securities convertible into or exercisable or exchangeable for common shares; or

•

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common shares,

whether any such transaction described above is to be settled by delivery of common shares or such other securities, in cash or otherwise. In addition, we and each such person agrees that, without the prior written consent of the representatives on behalf of the underwriters, we or such other person will not, during the restricted period, make any demand for, or exercise any right with respect to, the registration of any common shares or any security convertible into or exercisable or exchangeable for common shares.

The restrictions described in the immediately preceding paragraph to do not apply to:

•

the sale of shares to the underwriters;

•

the issuance by the Company of common shares upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing; or

•

transactions by any person other than us relating to common shares or other securities acquired in open market transactions after the completion of this offering of the shares; provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made in connection with subsequent sales of the common shares or other securities acquired in such open market transactions.

The representatives, in their sole discretion, may release the common shares and other securities subject to the lock-up agreements described above in whole or in part at any time. The lock-up agreements for GSAM and Carlyle provide that each holder will be released, pro rata, from its lock-up agreement in the event and to the extent that the representatives permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any officer, trustee or holder of greater than 5% of our outstanding common shares.

In addition, our shareholders holding substantially all of our other common shares outstanding immediately prior to the completion of this offering may not effect any offer, sale or distribution of any common shares or any option or right to acquire common shares, for 180 days after the date of this prospectus, without first obtaining our consent. We have agreed not to provide this consent without first obtaining the written consent of the representatives.

In order to facilitate the offering of the common shares, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common shares. Specifically, the underwriters may sell

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more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the option to purchase additional shares. The underwriters can close out a covered short sale by exercising the option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the option to purchase additional shares. The underwriters may also sell shares in excess of the option to purchase additional shares, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, common shares in the open market to stabilize the price of the common shares. These activities may raise or maintain the market price of the common shares above independent market levels or prevent or retard a decline in the market price of the common shares. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of common shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses. In particular, as part of the New Credit Facility that we expect to enter into in connection with this offering, affiliates of Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, Wells Fargo Securities, LLC, Mizuho Securities USA LLC and Scotia Capital (USA) Inc., each of whom is an underwriter of this offering, are expected to become lenders under such facility.

In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

M&T Securities, Inc., a FINRA member and an affiliate of a lender under the M&T Credit Facility, which will be repaid in connection with this offering, is being paid a referral fee by R. Seelaus & Co., LLC.

Pricing of the Offering

Prior to this offering, there has been no public market for our common shares. The initial public offering price was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

Directed Share Program

At our request, the underwriters have reserved    % of the common shares to be issued by us and offered by this prospectus for sale, at the initial public offering price, to trustees, officers, employees, business associates

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and related persons. If purchased by these persons, these shares will be subject to a 180-day lock-up restriction. The number of common shares available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus.

Selling Restrictions

Australia

This prospectus:

•

does not constitute a disclosure document or a prospectus under Chapter 6D.2 of the Corporations Act 2001 (Cth) (the “Corporations Act”);

•

has not been, and will not be, lodged with the Australian Securities and Investments Commission (“ASIC”), as a disclosure document for the purposes of the Corporations Act and does not purport to include the information required of a disclosure document for the purposes of the Corporations Act; and

•

may only be provided in Australia to select investors who are able to demonstrate that they fall within one or more of the categories of investors, available under section 708 of the Corporations Act (“Exempt Investors”).

The common shares may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the common shares may be issued, and no draft or definitive prospectus, advertisement or other offering material relating to any common shares may be distributed in Australia, except where disclosure to investors is not required under Chapter 6D of the Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the common shares, you represent and warrant to us that you are an Exempt Investor.

As any offer of common shares under this prospectus will be made without disclosure in Australia under Chapter 6D.2 of the Corporations Act, the offer of those securities for resale in Australia within 12 months may, under section 707 of the Corporations Act, require disclosure to investors under Chapter 6D.2 if none of the exemptions in section 708 applies to that resale. By applying for the common shares you undertake to us that you will not, for a period of 12 months from the date of issue of the common shares, offer, transfer, assign or otherwise alienate such common shares to investors in Australia except in circumstances where disclosure to investors is not required under Chapter 6D.2 of the Corporations Act or where a compliant disclosure document is prepared and lodged with ASIC.

Canada

The common shares may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the common shares must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

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Dubai International Financial Centre (“DIFC”)

This prospectus relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Markets Rules 2012 of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no responsibility for this prospectus. The common shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the common shares offered should conduct their own due diligence on the common shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

In relation to its use in the DIFC, this prospectus is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the common shares may not be offered or sold directly or indirectly to the public in the DIFC.

European Economic Area

Neither this prospectus nor any related free writing prospectus is a prospectus for the purposes of the Prospectus Regulation (as defined below). This prospectus and any related free writing prospectus and any offer if made subsequently is directed only at persons in Member States of the European Economic Area (the “EEA”) who are “qualified investors” within the meaning of Article 2(e) of the Prospectus Regulation. This prospectus and any related free writing prospectus have been prepared on the basis that any offer of common shares in any Member State of the EEA will be made pursuant to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of common shares. Accordingly any person making or intending to make an offer in that Member State of common shares which are the subject of the offering contemplated in this prospectus and any related free writing prospectus may only do so in circumstances in which no obligation arises for Four Springs Capital Trust or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Regulation in relation to such offer. Neither Four Springs Capital Trust nor the underwriters have authorized, nor do they authorize, the making of any offer of common shares in circumstances in which an obligation arises for Four Springs Capital Trust or the underwriters to publish a prospectus for such offer. The expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

In relation to each Member State of the EEA (each, a “Relevant State”), no common shares have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the common shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that the common shares may be offered to the public in that Relevant State at any time :

(1)

to any legal entity which is a qualified investor as defined under Article 2 of the Prospectus Regulation;

(2)

to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the Prospectus Regulation), subject to obtaining the prior consent of the underwriter or underwriters for any such offer; or

(3)

in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of the common shares shall require Four Springs Capital Trust or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to the common shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any common shares to be offered so as to enable an investor to decide to purchase or subscribe for any common shares.

207

Germany

This prospectus has not been prepared in accordance with the requirements for a prospectus or any other disclosure document under the Prospectus Regulation (as defined above), the German Securities Prospectus Act (Wertpapierprospektgesetz), the German Capital Investment Code (Kapitalanlagegesetzbuch), or the German Investment Products Act (Vermoegensanlagegesetz). Neither the German Federal Financial Services Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht — BaFin) nor any other competent authority has been, or will be, notified of the intention to distribute the common shares in Germany. Consequently, our common shares may not be distributed in Germany by way of public offering, public advertisement or in any similar manner and this prospectus and any other document relating to this offering, as well as information or statements contained therein, may not be supplied to the public in Germany or used in connection with any offer for subscription of the common shares to the public in Germany or any other means of public marketing. The common shares are being offered and sold in Germany only to persons who are “qualified investors” within the meaning of Article 2(e) of the Prospectus Regulation (as defined above). This prospectus is strictly for use of the person who has received it. It may not be forwarded to other persons or published in Germany.

Hong Kong

The common shares may not be offered or sold in Hong Kong by means of any prospectus other than (1) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“Securities and Futures Ordinance”), (2) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder or (3) in other circumstances which do not result in the prospectus being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the common shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

Japan

No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) (the “FIEL”) has been made or will be made with respect to the solicitation of the application for the acquisition of the common shares.

Accordingly, the common shares have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the account or benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the account or benefit of, any resident of Japan except pursuant to the following exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.

For Qualified Institutional Investors (“QII”)

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the common shares constitutes either a “QII only private placement” or a “QII only secondary distribution” ​(each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the common shares. The common shares may only be transferred to QIIs.

208

For Non-QII Investors

Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the common shares constitutes either a “small number private placement” or a “small number private secondary distribution” ​(each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the common shares. The common shares may only be transferred en bloc without subdivision to a single investor.

Singapore

The common shares which are the subject of this prospectus do not represent units in a collective investment scheme which is authorized or recognized by the Monetary Authority of Singapore (“MAS”) under Section 286 or 287 of the Securities and Futures Act (Chapter 289 of Singapore) (“SFA”) and this prospectus has not been registered as a prospectus with the Monetary Authority of Singapore under the SFA. This prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of our common shares will not be circulated or distributed, nor will our common shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore, other than institutional investors as defined in Section 4A of the SFA or relevant regulations thereunder.

United Kingdom

In the United Kingdom, neither this prospectus nor any related free writing prospectus is a prospectus for the purposes of the UK Prospectus Regulation (as defined below). This prospectus and any related free writing prospectus have been prepared on the basis that any offer if made subsequently is directed only at persons in the United Kingdom who are “qualified investors” within the meaning of Article 2(e) of the UK Prospectus Regulation. This prospectus and any related free writing prospectus have been prepared on the basis that any offer of common shares in the United Kingdom will be made pursuant to an exemption under the UK Prospectus Regulation from the requirement to publish a prospectus for offers of common shares. Accordingly any person making or intending to make an offer in the United Kingdom of common shares which are the subject of the offering contemplated in this prospectus and any related free writing prospectus may only do so in circumstances in which no obligation arises for Four Springs Capital Trust or any of the underwriters to publish a prospectus pursuant to Section 85 of the United Kingdom’s Financial Services and Markets Act 2000, as amended (the “FSMA”) in relation to such offer. Neither Four Springs Capital Trust nor the underwriters have authorized, nor do they authorize, the making of any offer of common shares in circumstances in which an obligation arises for Four Springs Capital Trust or the underwriters to publish a prospectus for such offer. The expression “UK Prospectus Regulation” means Regulation (EU) 2017/1129 as it forms part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018, as amended by the European Union (Withdrawal Agreement) Act 2020.

This prospectus and any related free writing prospectus may not be distributed or circulated to any person in the United Kingdom other than to: (1) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”); and (2) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This prospectus and any related free writing prospectus is directed only at relevant persons. Other persons should not act on this prospectus and any related free writing prospectus or any of its contents. This prospectus and any related free writing prospectus is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any other purpose.

No common shares have been offered or will be offered pursuant to the offering to the public in the United Kingdom prior to the publication of a prospectus in relation to the common shares which has been approved by the Financial Conduct Authority, except that the common shares may be offered to the public in the United Kingdom at any time:

(1)

to any legal entity which is a qualified investor as defined under Article 2 of the UK Prospectus Regulation;

209

(2)

to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the UK Prospectus Regulation), subject to obtaining the prior consent of the underwriter or underwriters for any such offer; or

(3)

in any other circumstances falling within Section 86 of the FSMA,

provided that no such offer of common shares shall require Four Springs Capital Trust or any underwriter to publish a prospectus pursuant to Section 85 of the FSMA. For the purposes of this provision, the expression an “offer to the public” in relation to the common shares in the United Kingdom means the communication in any form and by any means of sufficient information on the terms of the offer and any common shares to be offered so as to enable an investor to decide to purchase or subscribe for any common shares.

Any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) in connection with the issue or sale of the common shares may only be communicated or caused to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to Four Springs Capital Trust.

All applicable provisions of the FSMA must be complied with in respect to anything done by any person in relation to the common shares in, from or otherwise involving the United Kingdom.

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LEGAL MATTERS

The validity of the common shares offered by this prospectus will be passed upon for us by Duane Morris LLP, New York, New York. In addition, Duane Morris LLP, New York, New York, will pass on certain tax matters for us. Sidley Austin LLP, New York, New York, will act as counsel to the underwriters in connection with this offering.

EXPERTS

The consolidated financial statements and schedule of Four Springs Capital Trust as of and for each of the two years ended December 31, 2020 and 2019 included in this prospectus have been so included in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting.

The statement of revenues and certain operating expenses, Amazon Property Austin, TX, for the year ended December 31, 2020, included in this prospectus has been so included in reliance on the report of BDO USA, LLP, independent auditors, appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting.

All statistical and economic market data included in this prospectus that have been attributed to RCG, including information in “Prospectus Summary—Our Target Market” and “Our Business—Our Target Market,” are derived from market information prepared by RCG, a nationally recognized real estate consulting firm, and is included in this prospectus in reliance on RCG’s authority as an expert in such matters.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-11, including exhibits and schedules filed with the registration statement of which this prospectus is a part, under the Securities Act with respect to the common shares offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to us and our common shares, we refer you to the registration statement and to the exhibits and schedules thereto. Statements contained in this prospectus about the contents of any contract or other document are not necessarily complete, and in each instance we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Our SEC filings, including our registration statement, are available to you, free of charge, on the SEC at http://www.sec.gov.

Upon completion of this offering, we will become subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information and will make available to our shareholders annual reports containing audited financial information for each year and quarterly reports for the first three quarters of each fiscal year containing unaudited interim financial information. These reports and other information will be available through the SEC’s website referred to above.

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INDEX TO FINANCIAL STATEMENTS

Unaudited Consolidated Financial Statements of Four Springs Capital Trust	​
Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020 (audited)	F-2
Consolidated Statements of Operations for the Nine Months Ended September 30, 2021 and 2020	F-4
Consolidated Statements of Comprehensive Loss for the Nine Months Ended September 30, 2021 and 2020	F-5
Consolidated Statements of Changes in Contingently Redeemable Preferred Shares and OP Units and Changes in Equity for the Nine Months Ended September 30, 2021 and 2020	F-6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	F-9
Notes to Consolidated Financial Statements	F-11

Audited Consolidated Financial Statements of Four Springs Capital Trust	​
Report of Independent Registered Public Accounting Firm	F-59
Consolidated Balance Sheets as of December 31, 2020 and 2019	F-60
Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019	F-62
Consolidated Statements of Comprehensive (Loss) Income for the Years Ended December 31, 2020 and 2019	F-63
Consolidated Statements of Changes in Contingently Redeemable Preferred Shares and OP Units and Changes in Equity for the Years Ended December 31, 2020 and 2019	F-64
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019	F-68
Notes to Consolidated Financial Statements	F-70
Schedule III—Real Estate and Accumulated Depreciation	F-117
Statements of Revenues and Certain Operating Expenses, Amazon Property Austin, TX	​
Independent Auditor’s Report	F-120
Statements of Revenues and Certain Operating Expenses for the Three Months Ended March 31, 2021 (Unaudited) and the Year Ended December 31, 2020	F-122
Notes to Statements of Revenues and Certain Operating Expenses	F-123

F-1

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Consolidated Balance Sheets

​	September 30, 2021			December 31, 2020
​	(Unaudited)			​	​	​
Assets:	​	​	​	​	​	​
Real estate, net	​	$	686,216,819	​	$	374,498,898
Cash and cash equivalents	​	​	32,795,495	​	​	10,323,785
Accounts receivable and other assets	​	​	17,637,435	​	​	8,144,285
Receivable from affiliate	​	​	1,388	​	​	50,429
Deferred rent receivable	​	​	7,966,342	​	​	6,238,440
Origination value of acquired in-place leases, net	​	​	77,596,829	​	​	42,336,654
Acquired favorable leases, net	​	​	14,253,062	​	​	7,061,362
Real estate and other assets classified as held for sale	​	​	3,316,713	​	​	740,158
Total Assets	​	$	839,784,083	​	$	449,394,011
Liabilities and Equity	​	​	​	​	​	​
Liabilities:	​	​	​	​	​	​
Notes payable, net	​	$	280,288,004	​	$	161,590,853
Line of credit, net	​	​	42,807,023	​	​	14,180,302
Mezzanine note payable, net	​	​	86,411,914	​	​	83,067,793
Accounts payable, accrued expenses and other liabilities	​	​	31,508,526	​	​	11,486,551
Acquired unfavorable leases, net	​	​	5,521,893	​	​	2,546,442
Liabilities related to assets classified as held for sale	​	​	—	​	​	20,940
Total Liabilities	​	​	446,537,360	​	​	272,892,881
Commitments and Contingencies – See note 21	​	​	​	​	​	​
Temporary Equity:	​	​	​	​	​	​
Contingently redeemable Series A-1 preferred shares, $0.001 par value, 10,000,000 shares designated, 2,550,730 and 2,512,825 shares issued and outstanding (convertible to common shares) at September 30, 2021 and December 31, 2020, respectively.	​	​	50,581,637	​	​	47,632,738
Contingently redeemable Series A-2 preferred shares, $0.001 par value, 15,000,000 shares designated, 7,500,000 and 0 shares issued and outstanding (convertible to common shares) at September 30, 2021 and December 31, 2020, respectively.	​	​	139,993,933	​	​	—
Contingently redeemable Series U1 OP units, $4,323,239 and $4,147,805 liquidation preference; 181,116 units issued and outstanding (convertible to 181,116 common shares) at September 30, 2021 and December 31, 2020, respectively.	​	​	4,357,701	​	​	4,147,805
Total Temporary Equity	​	​	194,933,271	​	​	51,780,543

See accompanying notes to consolidated financial statements.

F-2

​	September 30, 2021			December 31, 2020
​	(Unaudited)			​	​	​
Permanent Equity:	​	​	​	​	​	​
Shareholders’ Equity:	​	​	​	​	​	​
Preferred shares, $0.001 par value, 87,547,309 shares authorized, 25,000,000 and 10,000,000 of which have been designated, at September 30, 2021 and December 31, 2020, respectively.	​	​	—	​	​	—
Common shares, $0.001 par value, 504,671,451 shares authorized, 223,203 of which have been designated, 6,533,284 issued and outstanding at September 30, 2021 and December 31, 2020.	​	​	6,533	​	​	6,533
Non-participating common shares, $0.001 par value, 223,203 shares designated, 200,015 issued and outstanding (convertible to 200,015 common shares) at September 30, 2021 and December 31, 2020.	​	​	200	​	​	200
Additional paid-in capital	​	​	137,543,801	​	​	140,127,691
Accumulated other comprehensive loss	​	​	(1,004,373)	​	​	(2,670,745)
Cumulative dividends in excess of net income	​	​	(108,654,333)	​	​	(83,375,057)
Total shareholders’ equity	​	​	27,891,828	​	​	54,088,622
Noncontrolling Interests	​	​	170,421,624	​	​	70,631,965
Total Equity	​	​	198,313,452	​	​	124,720,587
Total Liabilities, Contingently Redeemable Interests and Equity	​	$	839,784,083	​	$	449,394,011

See accompanying notes to consolidated financial statements.

F-3

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Unaudited Consolidated Statements of Operations

​	Nine Months Ended September 30,
​	2021			2020
Revenues:	​	​	​	​	​	​
Rental	​	$	38,761,145	​	$	25,826,350
Other	​	​	205,692	​	​	128,507
Total Revenues	​	​	38,966,837	​	​	25,954,857
Expenses:	​	​	​	​	​	​
Property operating	​	​	5,458,319	​	​	3,144,193
General and administrative	​	​	11,728,675	​	​	3,843,322
Professional fees	​	​	2,120,528	​	​	390,030
Depreciation and amortization	​	​	15,724,741	​	​	10,059,232
Interest	​	​	17,878,327	​	​	7,597,716
Acquisition costs	​	​	40,787	​	​	195,452
Provision for impairment	​	​	335,000	​	​	535,000
Total Expenses	​	​	53,286,377	​	​	25,764,945
Change in fair value of compound embedded derivative and warrant liability	​	​	(415,614)	​	​	(208,757)
Loss on extinguishment of debt	​	​	(310,619)	​	​	—
Gain on sale of real estate	​	​	2,431,142	​	​	401,431
Provision for income taxes	​	​	(1,995,759)	​	​	(47,653)
Net (Loss) Income	​	​	(14,610,390)	​	​	334,933
Net Loss (Income) Attributable to Noncontrolling Interests	​	​	6,280,253	​	​	(758,130)
Net (Loss) Income Attributable to Four Springs Capital Trust	​	​	(8,330,137)	​	​	(423,197)
Preferred Share Dividends and Series U1 OP Unit Distributions	​	​	(10,089,581)	​	​	(14,618,122)
Accretion on Contingently Redeemable Preferred Shares and OP Units	​	​	(2,590,568)	​	​	(541,413)
Net Loss Attributable to Common Shareholders	​	$	(21,010,286)	​	$	(15,582,732)
Loss Per Common Share—Basic and Diluted:	​	​	​	​	​	​
Net loss per common share	​	$	(3.24)	​	$	(8.37)

See accompanying notes to consolidated financial statements.

F-4

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Unaudited Consolidated Statements of Comprehensive Loss

​	Nine Months Ended September 30,
​	2021			2020
Net (Loss) Income	​	$	(14,610,390)	​	$	334,933
Other comprehensive income (loss), net of tax	​	​	​	​	​	​
Change in net realized and unrealized income (loss) on hedging instruments	​	​	1,773,686	​	​	(2,186,212)
(Provision for income taxes) income tax benefit related to other comprehensive loss	​	​	(92,689)	​	​	109,309
Other comprehensive income (loss), net of tax	​	​	1,680,997	​	​	(2,076,903)
Comprehensive Loss	​	​	(12,929,393)	​	​	(1,741,970)
Loss (Income) Attributable to Noncontrolling Interests	​	​	6,280,253	​	​	(758,130)
Other Comprehensive (Income) Loss Attributable to Noncontrolling Interests	​	​	(14,625)	​	​	34,650
Comprehensive Loss Attributable to Four Springs Capital Trust	​	$	(6,663,765)	​	$	(2,465,450)

See accompanying notes to consolidated financial statements.

F-5

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Unaudited Consolidated Statements of Changes in Contingently Redeemable Preferred Shares and OP Units
and Changes in Equity

​

Contingently Redeemable Preferred Shares and OP Units

Series A, Series B, Series C, Series D and Series DRIP 1 Preferred Shares

Common Shares and Non-participating Common Shares

Additional Paid-In Capital

Cumulative Dividends and Net Losses

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Noncontrolling Interests

Total Equity

​

Shares / Units

Amount

Shares

Amount

Shares

Amount

Balance, December 31, 2019

​

2,754,452

​

$

52,478,008

​

11,926,588

​

$

11,926

​

1,861,833

​

$

1,863

​

$

133,600,773

​

$

(60,237,242)

​

$

(836,257)

​

$

72,541,063

​

$

57,129,117

​

$

129,670,180

Gross proceeds from issuance of Series D preferred shares

​

—

​

​

—

​

523,209

​

​

524

​

—

​

​

—

​

​

10,323,740

​

​

—

​

​

—

​

​

10,324,264

​

​

—

​

​

10,324,264

Dividend shares issued in-kind to Series D preferred shareholders

​

—

​

​

—

​

75,367

​

​

75

​

—

​

​

—

​

​

1,507,265

​

​

(1,507,340)

​

​

—

​

​

—

​

​

—

​

​

—

Gross proceeds from issuance of Series DRIP 1 preferred shares

​

—

​

​

—

​

21,288

​

​

21

​

—

​

​

—

​

​

415,091

​

​

—

​

​

—

​

​

415,112

​

​

—

​

​

415,112

Dividend shares issued in-kind to contingently redeemable Series E preferred shareholders

​

354,444

​

​

7,088,881

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(7,088,881)

​

​

—

​

​

(7,088,881)

​

​

—

​

​

(7,088,881)

Accretion of contingently redeemable Series E preferred shares

​

—

​

​

429,773

​

—

​

​

—

​

—

​

​

—

​

​

(429,773)

​

​

—

​

​

—

​

​

(429,773)

​

​

—

​

​

(429,773)

Gross proceeds from issuance of contingently redeemable Series U1 OP units

​

181,116

​

​

3,984,552

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Distributions on contingently redeemable Series U1 OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(66,411)

​

​

—

​

​

(66,411)

​

​

—

​

​

(66,411)

Accretion of contingently redeemable Series U1 OP  units

​

—

​

​

111,639

​

—

​

​

—

​

—

​

​

—

​

​

(111,639)

​

​

—

​

​

—

​

​

(111,639)

​

​

—

​

​

(111,639)

OP acquisition of net assets of noncontrolling interests in DSTs

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(3,980,536)

​

​

(3,980,536)

Consideration in excess of net assets acquired from noncontrolling interests in DSTs

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

(1,743,418)

​

​

—

​

​

—

​

​

(1,743,418)

​

​

—

​

​

(1,743,418)

Repurchase of Series A preferred shares

​

—

​

​

—

​

(2,500)

​

​

(2)

​

—

​

​

—

​

​

—

​

​

(17,998)

​

​

—

​

​

(18,000)

​

​

—

​

​

(18,000)

Repurchase of Series C preferred shares

​

—

​

​

—

​

(100,000)

​

​

(100)

​

—

​

​

—

​

​

—

​

​

(749,900)

​

​

—

​

​

(750,000)

​

​

—

​

​

(750,000)

Share-based compensation

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

30,706

​

​

—

​

​

—

​

​

30,706

​

​

—

​

​

30,706

See accompanying notes to consolidated financial statements.

F-6

​

Contingently Redeemable Preferred Shares and OP Units

Series A, Series B, Series C, Series D and Series DRIP 1 Preferred Shares

Common Shares and Non-participating Common Shares

Additional Paid-In Capital

Cumulative Dividends and Net Losses

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Noncontrolling Interests

Total Equity

​

Shares / Units

Amount

Shares

Amount

Shares

Amount

Proceeds from DSTs

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

3,193,652

​

​

3,193,652

Cost of issuing Series D preferred shares and DST beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

(597,138)

​

​

—

​

​

—

​

​

(597,138)

​

​

(316,869)

​

​

(914,007)

Net (loss) income

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(423,197)

​

​

—

​

​

(423,197)

​

​

758,130

​

​

334,933

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,042,253)

​

​

(2,042,253)

​

​

(34,650)

​

​

(2,076,903)

Dividends on Series A, B, C, D and DRIP 1 preferred shares and OP units and Series A preferred OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(5,955,484)

​

​

—

​

​

(5,955,484)

​

​

(52,458)

​

​

(6,007,942)

Distributions on DST beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,754,299)

​

​

(2,754,299)

Balance, September 30, 2020

​

3,290,012

​

$

64,092,853

​

12,443,952

​

$

12,444

​

1,861,833

​

$

1,863

​

$

142,995,607

​

$

(76,046,453)

​

$

(2,878,510)

​

$

64,084,951

​

$

53,942,087

​

$

118,027,038

Balance, December 31, 2020

​

2,693,941

​

$

51,780,543

​

—

​

$

—

​

6,733,299

​

$

6,733

​

$

140,127,691

​

$

(83,375,057)

​

$

(2,670,745)

​

$

54,088,622

​

$

70,631,965

​

$

124,720,587

Bifurcated proceeds from issuance of contingently redeemable Series A-2 preferred shares

​

7,500,000

​

​

137,917,002

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Cost of issuing contingently redeemable Series A-2 preferred shares

​

—

​

​

(1,034,620)

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Dividends paid to contingently redeemable Series A-1 and A-2 preferred shareholders

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(6,044,656)

​

​

—

​

​

(6,044,656)

​

​

—

​

​

(6,044,656)

Bifurcated dividend shares issued in-kind of contingently redeemable Series A-1 preferred shares

​

37,905

​

​

730,935

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(758,098)

​

​

—

​

​

(758,098)

​

​

—

​

​

(758,098)

Bifurcated accretion dividends of contingently redeemable Series A-1 and A-2 preferred shares

​

—

​

​

2,948,842

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(3,127,744)

​

​

—

​

​

(3,127,744)

​

​

—

​

​

(3,127,744)

Accretion of contingently redeemable Series A-1 and A-2 preferred shares

​

—

​

​

2,380,673

​

—

​

​

—

​

—

​

​

—

​

​

(2,380,673)

​

​

—

​

​

—

​

​

(2,380,673)

​

​

—

​

​

(2,380,673)

Distributions on contingently redeemable Series U1 OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(159,083)

​

​

—

​

​

(159,083)

​

​

—

​

​

(159,083)

Accretion of contingently redeemable Series U1 OP units

​

—

​

​

209,896

​

—

​

​

—

​

—

​

​

—

​

​

(209,895)

​

​

—

​

​

—

​

​

(209,895)

​

​

—

​

​

(209,895)

Equity-based compensation

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

6,678

​

​

—

​

​

—

​

​

6,678

​

​

6,653,034

​

​

6,659,712

Proceeds from DSTs

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

116,201,694

​

​

116,201,694

Cost of issuing DST beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(10,234,532)

​

​

(10,234,532)

See accompanying notes to consolidated financial statements.

F-7

​

Contingently Redeemable Preferred Shares and OP Units

Series A, Series B, Series C, Series D and Series DRIP 1 Preferred Shares

Common Shares and Non-participating Common Shares

Additional Paid-In Capital

Cumulative Dividends and Net Losses

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Noncontrolling Interests

Total Equity

​

Shares / Units

Amount

Shares

Amount

Shares

Amount

Net loss

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(8,330,137)

​

​

—

​

​

(8,330,137)

​

​

(6,280,253)

​

​

(14,610,390)

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

1,666,372

​

​

1,666,372

​

​

14,625

​

​

1,680,997

Dividends and distributions on common shares and common OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(6,859,558)

​

​

—

​

​

(6,859,558)

​

​

(68,914)

​

​

(6,928,472)

Distributions declared on LTIP OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(529,509)

​

​

(529,509)

Distributions on DST beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(5,966,486)

​

​

(5,966,486)

Balance, September 30, 2021

​

10,231,846

​

$

194,933,271

​

—

​

$

—

​

6,733,299

​

$

6,733

​

$

137,543,801

​

$

(108,654,333)

​

$

(1,004,373)

​

$

27,891,828

​

$

170,421,624

​

$

198,313,452

See accompanying notes to consolidated financial statements.

F-8

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Unaudited Consolidated Statements of Cash Flows

​	For the Nine Months Ended September 30,
​	2021			2020
Cash Flows from Operating Activities:	​	​	​	​	​	​
Net (loss) income	​	$	(14,610,390)	​	$	334,933
Adjustments to reconcile net (loss) income to net cash provided by operating activities:	​	​	​	​	​	​
Impairment loss	​	​	335,000	​	​	535,000
Gain from sale of real estate	​	​	(2,431,142)	​	​	(401,431)
Depreciation	​	​	11,372,759	​	​	7,266,762
Equity-based compensation	​	​	6,659,712	​	​	30,706
Amortization of deferred financing costs	​	​	2,103,165	​	​	1,020,198
Change in fair value of compound embedded derivative and warrant liability	​	​	415,614	​	​	208,757
Amortization of interest rate hedge payoff	​	​	1,017,636	​	​	—
Capitalized interest on mezzanine note payable	​	​	2,968,224	​	​	—
Amortization of origination value of acquired in-place leases	​	​	4,304,816	​	​	2,776,170
Amortization of acquired favorable (unfavorable) leases, net	​	​	118,093	​	​	231,182
Amortization of leasing commissions	​	​	48,909	​	​	16,303
Amortization of mortgage premium	​	​	(69,918)	​	​	(68,585)
Write-off of deferred costs	​	​	20,875	​	​	—
Changes in operating assets and liabilities:	​	​	​	​	​	​
Accounts receivable and other assets	​	​	(6,538,120)	​	​	(1,578,746)
Deferred rent receivable	​	​	(1,800,083)	​	​	(1,215,223)
Accounts payable, accrued expenses and other liabilities	​	​	9,825,852	​	​	2,089,928
Receivable from affiliate	​	​	49,041	​	​	(36)
Net Cash Provided by Operating Activities	​	​	13,790,043	​	​	11,245,918
Cash Flows from Investing Activities:	​	​	​	​	​	​
Acquisitions and additions to real estate	​	​	(381,606,539)	​	​	(27,400,550)
Equipment additions	​	​	(95,411)	​	​	(22,085)
Proceeds from sale of real estate	​	​	14,185,709	​	​	5,102,630
Net Cash Used in Investing Activities	​	​	(367,516,241)	​	​	(22,320,005)
Cash Flows from Financing Activities:	​	​	​	​	​	​
Proceeds from notes payable	​	​	122,582,127	​	​	8,402,389
Principal repayments of notes payable	​	​	(2,740,830)	​	​	(215,321)
Proceeds from line of credit	​	​	202,000,000	​	​	5,000,000
Repayments on line of credit	​	​	(174,380,953)	​	​	(4,000,000)
Proceeds from issuance of Series A-2 preferred shares	​	​	147,750,000	​	​	—
Payments on offering-related costs	​	​	(1,374,053)	​	​	(880,132)
Cost of issuing Series A-2 preferred shares	​	​	(1,034,620)	​	​	—
Debt issuance costs	​	​	(1,793,822)	​	​	(1,302,483)

See accompanying notes to consolidated financial statements.

F-9

​	For the Nine Months Ended September 30,
​	2021			2020
Payments to acquire beneficial interest from noncontrolling interests	​	​	—	​	​	(1,739,402)
Proceeds from issuance of Series D and Series DRIP 1 preferred shares	​	​	—	​	​	10,739,376
Proceeds from issuing DST beneficial interests	​	​	116,201,694	​	​	3,193,652
Cost of issuing Series D preferred shares	​	​	—	​	​	(597,138)
Cost of issuing DST beneficial interests	​	​	(10,234,532)	​	​	(316,869)
Repurchase of preferred shares	​	​	—	​	​	(768,000)
Dividends paid on Series A, B, C, D and DRIP 1 preferred shares and OP units	​	​	—	​	​	(6,007,942)
Dividends paid on Series A-1 and Series A-2 preferred shares	​	​	(6,044,656)	​	​	—
Dividends paid on common shares and common OP units	​	​	(6,928,472)	​	​	—
Distributions paid on Series U1 OP units	​	​	(159,083)	​	​	(66,411)
Distributions paid on LTIP OP units	​	​	(52,951)	​	​	—
Distributions paid on DST beneficial interests	​	​	(5,966,486)	​	​	(2,754,299)
Net Cash Provided by Financing Activities	​	​	377,823,363	​	​	8,687,420
Net Increase in Cash, Cash Equivalents and Restricted Cash	​	​	24,097,165	​	​	(2,386,667)
Cash, Cash Equivalents and Restricted Cash, Beginning of Year	​	​	12,478,764	​	​	14,737,081
Cash, Cash Equivalents and Restricted Cash, End of Period	​	$	36,575,929	​	$	12,350,414
Supplemental Disclosures of Cash Flow Information:	​	​	​	​	​	​
Cash paid for interest	​	$	12,600,183	​	$	6,348,916
Cash paid for income taxes (net of refunds)	​	$	333,686	​	$	393,440
Supplemental Disclosures of Non-Cash Investing and Financing Activities:	​	​	​	​	​	​
Series U1 OP units issued in UPREIT to acquire noncontrolling interests in real estate	​	$	—	​	$	3,984,552
Discount on Series A-2 preferred shares	​	$	2,250,000	​	$	—
Series A-1 preferred share paid in-kind dividends and accretion dividends	​	$	1,721,823	​	$	—
Series A-1 preferred share accretion	​	$	1,301,212	​	$	—
Series A-2 preferred share paid in-kind dividends and accretion dividends	​	$	2,164,019	​	$	—
Series A-2 preferred share accretion	​	$	1,079,461	​	$	—
Series U-1 OP units accretion	​	$	209,895	​	$	111,639
LTIP OP units dividend declared and not paid	​	$	476,558	​	$	—
Series D preferred share dividends paid in-kind	​	$	—	​	$	1,507,340
Series E preferred share dividends paid in-kind	​	$	—	​	$	7,088,881
Series E preferred share accretion	​	$	—	​	$	429,773

See accompanying notes to consolidated financial statements.

F-10

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements

1. Organization and Business

Four Springs Capital Trust, a Maryland real estate investment trust (the “Trust”), is a real estate investment trust (“REIT”) which was formed on July 5, 2012. The Trust is the sole general partner of and owned 93.6% of Four Springs Capital Trust Operating Partnership, L.P. (the “Operating Partnership” or “OP”) as of September 30, 2021 and 97.3% as of December 31, 2020. The principal business of the Trust and the Operating Partnership (collectively, the “company,” “we,” “our,” or “us”) is the ownership, acquisition and management of net leased real estate.

The company owns substantially all of its real estate properties through the Operating Partnership and Delaware Statutory Trusts (“DSTs”). However, properties may be owned directly, through other subsidiaries of the Operating Partnership, or through other entities. FSCT OP, LLC is the initial limited partner of the Operating Partnership. The company’s ownership of properties through the Operating Partnership is referred to as an “UPREIT” structure. An UPREIT structure may enable sellers of properties to transfer their properties to the Operating Partnership in exchange for limited partnership units of the Operating Partnership (“OP units”) and defer potential gain recognition for tax purposes with respect to such transfers of properties.

Beginning in July 2012, the company commenced a private placement of Series A preferred shares at a price of $10 per share that also included a quarter of one warrant. The Series A preferred shares offering ended in February 2014. From March 2014 through December 2014, the company offered a private placement of Series B preferred shares at a price of $10.75 per share that also included fifteen-hundredths of one warrant. The company commenced an offering of Series C preferred shares at $11 per share in November 2015 that also included warrants on a discretionary basis. The Series C preferred shares offering ended in March 2017.

On June 21, 2017, the company amended its declaration of trust to effect a one-for-two reverse split of the company’s common shares (the “Reverse Share Split”). In connection with the Reverse Share Split, the Operating Partnership effected a one-for-two reverse split on the common OP units (the “Reverse Common OP Unit Split,” and together with the Reverse Share Split, the “Reverse Split”). The number of authorized common shares were not adjusted as a result of the Reverse Share Split. As a result of the Reverse Split, the Series A, B and C preferred share conversion rate, the Series A, B and C preferred OP unit conversion rate, and the warrant and option prices and ratios likewise, as applicable to the Series A, B and C preferred shares, were adjusted, as follows:

•

upon a conversion, every two outstanding Series A, B or C preferred shares converts into one common share;

•

upon a conversion, every two outstanding Series A, B or C preferred OP units converts into one OP unit;

•

the exercise price per share of each outstanding warrant to purchase Series A, B or C preferred shares increased to twice its original exercise price per share and the number of common shares issuable upon conversion of each Series A, B or C preferred share issued in connection with a warrant exercise decreased by one-half; and

•

the exercise price per share of each option, outstanding as of June 21, 2017, to purchase common shares increased to twice its original exercise price per share and the number of common shares issuable upon exercise of each outstanding option decreased by one-half.

In January 2018, the company completed a private placement of Series E preferred shares at an offering price of $20.00 per share. In May 2018, the company commenced a private placement offering of Series D preferred shares at $20.00 per share. The Series D preferred shares offering ended in October 2020.

F-11

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

1. Organization and Business (Continued)

On October 23, 2020, the Trust amended its declaration of trust to effect a restructuring of its outstanding common shares and OP units and certain of its preferred shares (the “Restructuring”) such that the following occurred:

•

each common share outstanding immediately before the Restructuring was exchanged for 0.10742102 of a non-participating common share;

•

each Series A, B, C, D and DRIP 1 preferred share was exchanged for 0.3209537, 0.3450252, 0.3530491, 1.0000000, and 0.9750000 of a common share, respectively;

•

options and warrants outstanding immediately before the Restructuring exercisable for common shares were adjusted as follows: (1) the class of shares issuable upon exercise of such options and warrants will be non-participating common shares; (2) the number of non-participating common shares will be determined by multiplying the original number of shares issuable upon exercise of such instruments by 0.10742102; and (3) the exercise price per non-participating common share will be determined by multiplying the original exercise price per share as set forth in such instruments by 9.3091650; and

•

warrants outstanding immediately before the Restructuring exercisable for Series A, B and C preferred shares were adjusted as follows: (1) the class of shares issuable upon exercise of such warrants will be common shares; (2) the number of shares issuable upon exercise of such warrants will be determined by multiplying the original number of shares issuable upon exercise of such instruments by 0.3209537, 0.3450252, 0.3530491, respectively; and (3) the exercise price per common share will be $31.1571429.

In connection with the Restructuring, the Operating Partnership effected a similar exchange of its common OP units, Series A, B, C, D and DRIP 1 preferred OP units outstanding immediately before the Restructuring.

The company consummated a private placement offerings of Series A-1 preferred shares at $19.70 per share in November 2020 and Series A-2 preferred shares at $19.70 per share in May 2021 and August 2021.

Summary of Activity

We operate our business in two segments: the real estate ownership and operating segment (the “Real Estate Segment”) and the real estate investment syndication and management segment (the “Investment Management Segment”). We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker (“CODM”), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into these two reportable segments based on the economic characteristics and nature of our assets and services.

In the Real Estate Segment, during the nine months ended September 30, 2021, the company acquired forty-two properties and sold seven properties. During the nine months ended September 30, 2020, the company acquired four properties and sold one property. As of September 30, 2021, the company wholly owned or had an ownership interest in 136 properties which were located in 32 states and leased to 65 tenants operating in 37 different industries. As of September 30, 2021, the weighted average remaining lease term of the properties in the company’s portfolio was approximately 10 years. The properties in the portfolio were 99.8% and 100% leased as of September 30, 2021 and December 31, 2020, respectively.

In the Investment Management Segment, the company commenced or completed syndicating seven and one properties during the nine months ended September 30, 2021 and 2020, respectively.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. One of the most significant risks and uncertainties is the potential adverse effect of COVID-19. The COVID-19 pandemic has had repercussions

F-12

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

1. Organization and Business (Continued)

across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets.

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to the following:

•

reduced economic activity severely impacts our tenants’ businesses, financial condition and liquidity and may cause tenants to be unable to fully meet their obligations to us;

•

the negative financial impact of the pandemic could impact our future compliance with financial covenants of our credit facility and other debt agreements; and

•

weaker economic conditions could cause us to recognize impairment in value of our tangible or intangible assets.

As of September 30, 2021, the company has not granted any requests for rent deferral or rent abatement during this pandemic. The company has collected 100% of base rent originally contracted for the nine months ended September 30, 2021, September 30, 2020 and year ended December 31, 2020.

The full impact of the COVID-19 outbreak continues to evolve. As such, it is uncertain as to the full magnitude that the pandemic will have on the company’s financial condition, liquidity and future results of operations. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, and cash flows.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from those estimates. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. This interim financial information should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020. Management believes that all adjustments of a normal, recurring nature considered necessary for a fair presentation have been included. This interim financial information does not necessarily represent or indicate what the operating results will be for the year ending December 31, 2021. All material intercompany accounts and transactions have been eliminated.

The accompanying consolidated financial statements include the accounts of the company and its controlling investments in subsidiaries. Results of operations of properties acquired are included in the consolidated statements of operations from the date of acquisition. All intercompany transactions, balances and accounts have been eliminated in consolidation. The company determines whether it has a controlling interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”) under GAAP.

Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and which provide the equity holders with the obligation to absorb losses, the

F-13

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

right to receive residual returns and the right or power to make decisions about or direct the entity’s activities that most significantly impact the entity’s economic performance. Voting interest entities, where the company has a majority interest, are consolidated in accordance with GAAP. The guidance states that the usual condition for a controlling financial interest in an entity is ownership of a majority voting interest. Accordingly, the company consolidates voting interest entities in which it has a majority of the voting interests.

VIEs are entities that lack one or more of the characteristics of a voting interest entity. The primary beneficiary of a VIE is required to consolidate the VIE. The company determines whether it is the primary beneficiary of a VIE by performing a qualitative analysis of the VIE that includes, among other factors, an evaluation of which enterprise has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the VIE. The company identified the Operating Partnership as a VIE that continues to be consolidated by the company as the primary beneficiary because the company has a controlling financial interest in this VIE. We evaluated the DSTs and determined they are VIEs. We evaluated the company’s interests in the DSTs and determined we have the power to direct activities that most significantly impact these VIEs and are the primary beneficiary of these VIEs.

A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to us. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheets and the presentation of net income was modified to present earnings and other comprehensive income attributed to controlling and noncontrolling interests.

Square footage, acreage, occupancy and other measures used to describe real estate included in these notes to the consolidated financial statements are presented on an unaudited basis.

Contingently Redeemable Series A-1 and Series A-2 Preferred Shares

The Series A-1 and Series A-2 preferred shares provide for contingent conversion and redemption features that may be exercisable by either the company or the holder and may result in conversion into a variable number of common shares upon a qualifying listing event. The contingently redeemable Series A-1 and Series A-2 preferred shares are presented as temporary equity in an account presented between liabilities and equity on the consolidated balance sheets because they contain redemption and conversion features outside of the company’s control. This accounting treatment is in accordance with Accounting Standards Codification (“ASC”) 480-10-S99, “Distinguishing Liabilities from Equity.” The issuance costs and discount are being accreted to the carrying value of the Series A-1 and Series A-2 preferred shares over the redemption period. The conversion features are bifurcated from the Series A-1 and Series A-2 preferred share host instruments and included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets. Cumulative dividends are accrued as change in value and recognized as part of preferred share dividends and Series U1 OP Unit distributions in the consolidated statements of operations.

Contingently Redeemable Series E Preferred Shares

In connection with the private placement offering of the Series E preferred shares, we entered into put and call arrangements wherein we may be required or elect to redeem the shares for cash at a later date. In accounting for these arrangements we are required to make estimates with regard to the final amount we will eventually pay for the shares that we may redeem. In the put arrangements, the final settlement values are based on liquidation preferences as an estimate for the final value that will eventually be paid to settle the arrangement. We account for the put arrangement as temporary equity in an account presented between liabilities and equity on the consolidated balance sheets. This classification is appropriate because the instruments are contingently redeemable based on events outside the company’s control. This accounting treatment is in

F-14

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

accordance with ASC 480-10-S99, “Distinguishing Liabilities from Equity.” Redeemable noncontrolling interests are accreted to their redemption value over the period from the date of issuance to the first date on which the put option is exercisable. The issuance costs and discount are being accreted to the carrying value of the Series E preferred shares over the redemption period. Cumulative dividends are accrued as change in value and recognized as part of preferred share dividends and Series U1 OP Unit distributions in the consolidated statements of operations. The Series E preferred shares were fully redeemed during the year ended December 31, 2020.

Accounting for Real Estate Investments

Real estate properties comprise all tangible assets we hold for rent or for administrative purposes. Real property is recognized at cost less accumulated depreciation. Betterments, major renovations and certain costs directly related to the improvement of real properties are capitalized. Direct costs incurred in acquiring completed properties that meet the classification of a business for accounting purposes are charged to expense as incurred. Acquired completed properties that do not meet the classification of a business are accounted for as asset acquisitions with direct costs of the acquisitions capitalized and allocated to acquired tangible and intangible assets on a relative fair value basis. Accordingly, asset acquisitions are recorded on a relative fair value basis. Maintenance and repair expenses are charged to expense as incurred.

Depreciation of an asset begins when it is available for use and is calculated using the straight-line method over the estimated useful lives. Each period, depreciation is charged to expense and credited to the related accumulated depreciation account. A used asset acquired is depreciated over its estimated remaining useful life, not to exceed the life of a new asset. The range of useful lives for depreciable assets are as follows:

Category	Term
Buildings	19 – 50 years
Building and site improvements	5 – 40 years
Tenant improvements	Shorter of remaining life of the lease or useful life
Furniture and equipment	3 – 20 years

Tenant improvements are capitalized in real property when we own the improvement. If the improvements are deemed to be owned by the tenant and we assume its payments (such as an upfront cash payment to the lessee or by assuming the payment or reimbursement of all or part of those costs) then we recognize the inducements as a deferred lease incentive.

Assets and liabilities of properties that meet various held-for-sale criteria, including that it is probable that a sale will occur within 12 months, are presented separately in the consolidated balance sheets, with assets and liabilities being separately stated. Properties that the company has determined are held for sale cease depreciating and are also required to be simultaneously reviewed for impairment and carried on the company’s consolidated balance sheets at the lower of net carrying value or estimated fair value less costs to sell.

Acquisitions of rental real estate that meet the definition of a business are accounted for as business combinations and the purchase price is allocated among the above components based on their estimated fair values at the date of acquisition and all transaction costs are expensed as incurred. Acquisitions of rental real estate not meeting the definition of a business are accounted for as asset acquisitions and the purchase price and direct costs are allocated among the below components based on their relative fair values at the date of acquisition. The company’s acquisitions of rental real estate are generally accounted for as asset acquisitions. For real estate assets acquired through a sale-leaseback transaction and subject to a lease contract which contains a purchase option, the company will account for such acquisition as a financing arrangement and record the investment in the consolidated balance sheets.

F-15

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

The company allocates the purchase price of rental real estate acquired to the following:

•

acquired tangible assets, consisting of land, building and improvements; and

•

identified intangible assets and liabilities, consisting of favorable and unfavorable leases, in-place leases, tenant relationships and debt premiums and discounts

In estimating the fair value of the tangible and intangible assets acquired, the company considers information obtained about each property as a result of its due diligence activities and other market data, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and the value of favorable and unfavorable leases. For real estate acquired subject to existing leases, in-place lease values are based on our estimate of costs related to tenant acquisition and carrying costs during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of acquisition. The value assigned to in-place leases is amortized as a component of depreciation and amortization in the accompanying consolidated statements of operations on a straight-line basis over the remaining initial term of the related lease. Factors considered by us in our analysis of in-place lease intangibles include market rents, real estate taxes, insurance, and other operating expenses and costs to execute similar leases during the expected lease-up period. The value of tenant relationship intangibles, if any, is amortized as a component of depreciation and amortization expense over the anticipated life of the relationships.

Favorable lease values, including premium on at-the-money contracts, and unfavorable lease values are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to in-place leases at the time of acquisition and our estimate of current market lease rates for each corresponding in-place lease or the estimated return on cost for at-market leases, measured over a period equal to the remaining initial term of the lease. Capitalized favorable lease values are amortized over the remaining term of the respective leases as a decrease to rental revenue. Unfavorable lease values are amortized as an increase in rental revenue over the estimated remaining term of the respective leases.

Assessment of the recoverability of lease intangibles by us must be made when we have reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such costs. Should a lease terminate early, the unamortized portion of any related lease intangible is immediately recognized in our consolidated statements of operations.

For property acquisitions where the company assumes existing mortgage debt, the debt is recorded at its estimated fair value, based on management’s estimate of current borrowing rates available to the company for comparable financing. The company amortizes any discount or premium as part of interest expense on the related debt using the effective interest method.

Impairment

The company reviews its owned real properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If impairment indicators are present, the evaluation may include estimating and reviewing anticipated future undiscounted cash flows to be derived from the asset. Estimating future cash flows is highly subjective and includes an evaluation of factors such as the anticipated cash flows from the property, which may include rent from current leases in place and projected future leases, estimated capital expenditures, and an estimate of proceeds to be realized upon sale of the property. If such cash flows are less than the asset’s net carrying value, an impairment charge is recognized to earnings to the extent by which the asset’s carrying value exceeds the estimated fair value. The company’s

F-16

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

estimates could differ materially from actual results. The company recognized $335,000 in impairment losses on one property during the nine months ended September 30, 2021 in order to reduce the carrying value of the property to its estimated fair value minus cost to sell. The company recognized $535,000 in impairment losses on one property during the nine months ended September 30, 2020; this property was sold in December 2020. The fair value measurements for these two properties approximated their estimated selling prices.

Revenue Recognition

Rental revenues are recorded as income when earned and when they can be reasonably estimated. The company recognizes the effects of any scheduled rent increases and rent abatements on a straight-line basis over the term of the lease. This requires that rental income be recognized in equal annual amounts over the term of the lease. Deferred rent receivable represents the cumulative effect of straight-lining leases and is computed as the difference between income accrued on a straight-line basis and contractual rent payments. The company reviews its straight-line operating lease receivables for collectability on a contract by contract basis and any amounts not considered substantially collectible are written off against rental revenues and the tenant revenues are recorded on a cash basis. Leases generally require tenants to reimburse the company for certain operating expenses applicable to their leased premises. These lessee-reimbursed costs and lessee reimbursements are recorded as incurred and earned, respectively, and have been included in property operating expenses and rental revenues, respectively, in the accompanying consolidated statements of operations. Lessor costs paid by lessees directly to third parties are not recognized in the consolidated statements of operations. Rental income also includes the amortization of favorable and unfavorable leases as an adjustment to rental income over the terms of the respective leases.

Offering Costs

During the nine months ended September 30, 2021 and 2020, the company incurred offering costs consisting primarily of issuing equity-based warrants, legal costs and sales commissions related to prospective equity offerings and the private placements of the company’s preferred shares and DSTs formed by the company to offer beneficial ownership interests in the trusts to unrelated third party investors. The costs of future offerings are deferred and included in accounts receivable and other assets in the consolidated balance sheets. Deferred offering costs are recognized as either a reduction of future equity offering proceeds or expensed if such costs no longer provide a future benefit or if such respective future offering is aborted. Offering costs of beneficial interests in DSTs are recorded as reductions of the equity proceeds from the sale of beneficial interests in the consolidated statements of changes in contingently redeemable preferred shares and OP units and changes in equity. Offering costs of the Series D preferred share private placement offering are recognized as a reduction of the related equity proceeds. Offering costs of the Series A-1, Series A-2 and Series E preferred share offerings are recognized as reductions of the related equity proceeds received and are accreted to the carrying value of the preferred shares, recognized as temporary equity in the consolidated balance sheets.

Warrant Liability

The Company accounts for warrants on preferred shares and common shares with staggered expiration provisions contingent upon a qualified listing event as liability-classified instruments based on an assessment of the warrants’ specific terms and applicable authoritative guidance. Warrants that are required to be classified as a liability are recorded at their initial fair value on the date of issuance and are valued at each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations.

Share-Based Compensation

Our 2021 Equity Incentive Plan (the “2021 Equity Plan”) and 2014 Equity Incentive Plan (the “2014 Equity Incentive Plan,” and, collectively with the 2021 Equity Incentive Plan, the “Equity Incentive Plans”) are

F-17

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

designed to promote the success and enhance the value of the company by linking the personal interests of the employees, officers, trustees and consultants of the company and its subsidiaries to those of the company shareholders and by providing such persons with an incentive for outstanding performance. The Equity Incentive Plans are further intended to provide flexibility to the company in its ability to motivate, attract and retain the services of employees, officers, trustees and consultants upon whose judgment, interest and special effort the successful conduct of the company’s operation is largely dependent. Accordingly, the Equity Incentive Plans permit the grant of options, share appreciation rights, restricted shares, restricted share units, long term incentive plan unit (“LTIP OP unit”) awards, performance awards and other awards from time to time to selected employees, officers, trustees and consultants of the company and its subsidiaries.

Noncontrolling Interests

Due to the company’s control through its general partner interest in the Operating Partnership and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, is consolidated with the company and the limited partner interests, other than those held by the company, are reflected as noncontrolling interests on the accompanying consolidated balance sheets and statements of operations.

The beneficial ownership interests in the DSTs, excluding beneficial ownership by the company’s wholly-owned subsidiaries and the Operating Partnership, are reflected as noncontrolling interests on the accompanying consolidated balance sheets and statements of operations.

The company evaluates individual noncontrolling interests for the ability to recognize the noncontrolling interests as permanent equity on the consolidated balance sheets at the time such interests are issued and on a continual basis. We report such noncontrolling interests within equity in the consolidated balance sheets, but separate from total shareholders’ equity. Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount or (2) its redemption value as of the end of the period in which the determination is made.

The limited partners of the Operating Partnership that held Series A preferred OP units, other than the company, had the right to cause the Operating Partnership to redeem their OP units for cash or, at the sole option of the company, the company had a right to exchange the OP units by issuing one share of the company’s Series A preferred shares for each Series A preferred OP unit. These redemption rights may not be exercised under certain circumstances which would cause the company to lose its REIT status. The Series A preferred OP units, other than those held by the company, were included in noncontrolling interests in the accompanying consolidated balance sheets, statements of operations and statements of changes in contingently redeemable preferred shares and OP units and changes in equity.

The limited partners of the Operating Partnership holding Series U1 OP units have the right to cause the Operating Partnership to redeem their OP units for cash. This redemption right may be exercised only from May 31, 2026 through November 30, 2026. The Series U1 OP units are classified as temporary equity in the accompanying consolidated balance sheets. This classification is appropriate because the instruments are contingently redeemable based on events outside the company’s control. This accounting treatment is in accordance with ASC 480-10-S99, “Distinguishing Liabilities from Equity.” Redeemable noncontrolling interests are accreted for the excess of accreted redemption value over the initial carrying value adjusted for distributions and their allocable share of net income and other comprehensive losses over the period from the date of issuance to the first date on which the put option is exercisable.

Certain of the company’s board of trustees and employees have been awarded limited partnership interests in the Operating Partnership in the form of LTIP OP units. The holders of LTIP OP units are generally entitled to exchange their units up to a one-for-one basis into common OP units as limited by each holder’s capital account balance. The LTIP OP units are included in noncontrolling interests in the accompanying consolidated

F-18

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

balance sheets, statements of operations and statements of changes in contingently redeemable preferred shares and OP units and changes in equity.

Income Taxes

The company has made an election to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. As such, we will generally not be subject to federal income tax on that portion of our taxable income that is distributed to shareholders if we distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain to our shareholders by prescribed dates and comply with various other requirements of the Internal Revenue Code of 1986, as amended (the “Code”). If the company fails to qualify as a REIT in any taxable year, we will be subject to federal income tax on the company’s taxable income at regular corporate rates.

The company, excluding the company’s taxable REIT subsidiaries, recognized certain state, local and franchise tax expense of $156,773 and $183,800 included in provision for income taxes in the accompanying consolidated statements of operations for the nine months ended September 30, 2021 and 2020, respectively. Under certain circumstances, federal income and excise taxes may be due with respect to certain portions of the company’s net income and/or undistributed taxable income.

The company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may perform non customary services for the tenants of the company, hold assets that the company cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in federal and state income tax liability for these entities. The company does not expect to incur any corporate federal income tax liability outside of the TRSs, as we believe we have maintained our qualification as a REIT. During the nine months ended September 30, 2021, the company’s TRSs recognized provisions for federal income tax of $1,199,679 and provisions for state, local and franchise tax of $639,307 on the accompanying consolidated statements of operations of the company. During the nine months ended September 30, 2020, the company’s TRSs recognized federal income tax benefit of $14,457 and state, local and franchise tax benefit of $121,690 which are included in provisions for income taxes on the accompanying consolidated statements of operations of the company.

The income tax provision for the company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes due to non-taxable REIT income, noncontrolling interests in consolidated subsidiaries and other permanent differences including the nondeductibility of acquisition costs of business combinations for federal income tax reporting.

Uncertain tax positions are assessed by the company to determine whether a tax position of the company is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit with a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. We have assessed the federal and state tax positions and have concluded that we have no material uncertain tax liabilities to be recognized or disclosed.

The company’s federal income tax returns are subject to examination by the Internal Revenue Service, generally for three years after they are filed. The company’s state tax returns are subject to examination by state tax authorities depending upon the statute of limitations for tax audit in the respective states. The related state tax returns are subject to examination by state tax authorities depending upon the statute of limitations for tax audit in the respective states.

F-19

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

Cash and Cash Equivalents

The company defines cash equivalents as highly liquid investments purchased with maturities of three months or less at date of purchase. From time to time, the company’s account balance held at financial institutions exceeds Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related to the balance on deposit in excess of FDIC insurance coverage. We believe that the risk of loss is not significant and we have never experienced any losses related to these balances.

Accounts Receivable

The company’s rental revenues are recognized based on contractual arrangements with its tenants. From the inception of a lease, if collection of substantially all of the lease payments is probable for a tenant, then rental revenue is recognized as earned over the life of the lease agreement on a straight-line basis. If management determines that collection of substantially all of a lease’s payments is not probable, it will revert to recognizing such lease payments on a cash basis and will reverse any recorded receivables related to that lease. In the event that management subsequently determines collection of substantially all of that lease’s receivable is probable, management will reinstate and record all such receivables for the lease in accordance with the lease.

Restricted Cash

Pursuant to certain debt agreements, the company maintains escrows for real estate taxes, insurance and other reserves. Restricted cash is included in accounts receivable and other assets in the consolidated balance sheets. Restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the consolidated statements of cash flows. The following is a reconciliation of cash, cash equivalents, and restricted cash as presented in the consolidated statements of cash flows:

​	2021			2020
As of January 1,	​	​	​	​	​	​
Cash and cash equivalents	​	$	10,323,785	​	$	11,360,542
Escrows and certificate of deposit	​	​	2,154,979	​	​	3,376,539
Cash, cash equivalents, and restricted cash	​	$	12,478,764	​	$	14,737,081
As of September 30,	​	​	​	​	​	​
Cash and cash equivalents	​	$	32,795,495	​	$	9,053,190
Escrows and certificate of deposit	​	​	3,780,434	​	​	3,297,224
Cash, cash equivalents, and restricted cash	​	$	36,575,929	​	$	12,350,414

Fair Value Measurements

Fair value is defined by ASC 820, “Fair Value Measurement,” as the exit price, which is the amount that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels. Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access; Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as interest rates and yield curves that are observable at commonly quoted intervals; Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions as there is little, if any, related market activity.

Financial and non-financial assets and liabilities measured at fair value on a nonrecurring basis in the consolidated financial statements consist of real estate and related assets acquired and liabilities assumed

F-20

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

related to acquisitions and assets classified as held for sale. The fair values of these assets and liabilities were determined as of the acquisition dates using widely accepted valuation techniques, including (1) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (2) income capitalization approach, which considers prevailing market capitalization rates, and (3) comparable sales activity. In general, multiple valuation techniques were considered when measuring fair values. However, in certain circumstances, a single valuation technique may be appropriate. All of the fair values of the assets and liabilities as of the acquisition dates were derived using Level 3 inputs.

We are also required by GAAP to disclose fair value information about financial instruments , which are not otherwise reported at fair value in our consolidated balance sheet, to the extent it is practicable to estimate a fair value for those instruments. These disclosure requirements exclude certain financial instruments and all non-financial instruments. Cash and cash equivalents represent a Level 1 measurement due to their liquidity. The company believes that the fair value of the financial instruments consisting of accounts receivable accounts payable and accrued expenses approximates their carrying value due to their short-term nature. The company believes that the fair value of the line of credit approximates the carrying value due to the variable rate basis of the instrument. The financial instruments for which it is practicable to estimate fair value include the company’s nonrecourse mortgage notes payable and mezzanine note payable. The fair value of the notes payable and mezzanine note payable are estimated by discounting future cash flows utilizing a discount rate equivalent to the estimated market interest rates as of the reporting date. The company has determined this is a Level 3 measurement due to the significant unobservable inputs.

The interest rate swaps are derivative instruments whose fair values are measured on a recurring basis using market-standard valuation models. Such models involve using market-based observable inputs, including interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and respective counterparty’s nonperformance risk in the fair value measurements, which we have concluded are not material to the valuation. Due to these derivative instruments being custom, over-the-counter contracts with various bank counterparties that are not traded in an active market, the fair value is classified as Level 2.

The compound embedded derivative and warrant liability are instruments measured at fair value on a recurring basis using valuation models that incorporate significant unobservable inputs. The compound embedded derivative fair value is calculated based on the discounted difference of probable host instrument outcomes with and without the conversion feature, utilizing discount rates ranging from 16.6% to 20.34% as of September 30, 2021 and 16.6% as of December 31, 2020, respectively. The warrant liability fair value is calculated using an option pricing model (refer to “Note 16. Equity” for unobservable inputs). We classified these fair values as Level 3 because of significant unobservable inputs.

The following table presents the company’s financial instruments measured at fair value on a recurring basis:

​	As of September 30, 2021									As of December 31, 2020
​	Level 1			Level 2			Level 3			Level 1			Level 2			Level 3
Liabilities	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Derivative hedging instruments	​	$	—	​	$	1,035,907	​	$	—	​	$	—	​	$	1,791,957	​	$	—
Compound embedded derivative	​	$	—	​	$	—	​	$	12,297,132	​	$	—	​	$	—	​	$	1,741,694
Warrant liability	​	$	—	​	$	—	​	$	159,119	​	$	—	​	$	—	​	$	259,880

F-21

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

The following table reconciles the beginning and end of period balances of financial instruments measured on a recurring basis categorized as Level 3 in the fair value hierarchy:

​	Nine Months Ended September 30, 2021			Year Ended December 31, 2020
Compound embedded derivative	​	​	​	​	​	​
Balance at beginning of year	​	$	1,741,694	​	$	—
Bifurcated original issuance	​	​	9,832,998	​	​	1,690,601
Bifurcated PIK dividends	​	​	27,163	​	​	8,673
Bifurcated accretion dividends	​	​	178,902	​	​	​
Change in fair value	​	​	516,375	​	​	42,420
Balance at end of period	​	$	12,297,132	​	$	1,741,694
Warrant liability	​	​	​	​	​	​
Balance at beginning of year	​	$	259,880	​	$	657,198
Change in fair value	​	​	(100,761)	​	​	(397,318)
Balance at end of period	​	$	159,119	​	$	259,880

The table below presents fair values measured on a nonrecurring basis for certain of our financial instruments for which it is practicable to estimate fair value. The carrying values and fair values of these financial instruments were as follows:

​

​

​

As of September 30, 2021

As of December 31, 2020

​

Level

Face Value(1)

Fair Value

Face Value(1)

Fair Value

Liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nonrecourse mortgage notes payable

​

3

​

$

282,952,310

​

$

287,226,286

​

$

163,111,013

​

$

171,694,374

Mezzanine note payable

​

3

​

$

88,638,917

​

$

88,462,479

​

$

85,670,693

​

$

85,670,693

(1)

The face values of the notes payable reflect the principal amounts outstanding excluding unamortized financing costs.

Deferred Financing Costs

The company defers costs incurred associated with the issuance of its debt obligations. Deferred financing costs are presented as deductions from the carrying value of the related debt obligation in the consolidated balance sheets and are amortized as a component of interest expense using the straight-line method, which approximates the effective interest method, over the terms of the respective financing agreements. As of September 30, 2021 and December 31, 2020, accumulated amortization of deferred financing costs totaled $3,463,836 and $1,376,340, respectively. Fully amortized deferred financing costs written-off during the nine months ended September 30, 2021 and year ended December 31, 2020 were $0 and $2,567,192, respectively.

Derivative Instruments and Hedging Activities

We may enter into derivative contracts as part of our overall financing strategy to manage our exposure to changes in interest rates associated with current and/or future debt issuances. We do not use derivatives for trading or speculative purposes. These derivative instruments are measured on a recurring basis and recorded on the consolidated balance sheets at fair value as either an asset or liability using Level 2 inputs. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether

F-22

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

we have elected to apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the earnings effect of the hedged forecasted transactions in a cash flow hedge. The company entered into twelve derivative contracts as of September 30, 2021 and December 31, 2020, consisting of interest rate swap agreements originally designated by the company as qualifying cash flow hedges.

The changes in the fair value of derivatives that qualify and are designated as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. During the nine months ended September 30, 2021, the company had one derivative interest rate swap agreement that ceased to provide effective cash flow hedging and was no longer designated as a hedge of qualifying hedging relationships as of September 30, 2021 and $56,888 was reclassified from accumulated other comprehensive income into interest expense during the nine months ended September 30, 2021. As of December 31, 2020, the company did not have any derivatives that were not designated as hedges of qualifying hedging relationships.

The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the company may also have other financial relationships. The company does not anticipate that any of the counterparties will fail to meet their obligations.

The Series A-1 and A-2 preferred shares contain an compound embedded derivative meeting the criteria for a derivative instrument that is bifurcated from the host instrument and recognized at fair value continuously as a compound embedded derivative included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

Lessee Costs and Sublease Revenue

In connection with the company’s ground lease and solar equipment lease, the company, as a lessee, recognizes right-of-use assets and lease obligations for these long-term leases classified as an operating lease. The operating lease assets and corresponding operating lease liabilities are recognized based on the present value of the lease payments. The company uses its estimated incremental borrowing rate, which is the estimated rate at which the company could borrow on a collateralized basis with similar payments over a similar term, in determining the present value of the lease payments. The company recognizes lease expense on the ground lease and solar equipment lease on a straight-line basis included in property operating expense in the consolidated statements of operations. The company, as sublessor, leases the land and solar equipment to tenants of the company. These sublessees are responsible for either reimbursing the company for ground lease payments made by the company or making payments directly to solar equipment lessor. Sublease revenue from the ground lease and solar equipment lease is classified as an operating lease and recognized on a straight-line basis included in rental revenues in the consolidated statements of operations.

Segment Reporting

We operate our business in two segments: the Real Estate Segment and the Investment Management Segment.

Real Estate Segment

Rental revenue from real estate investments generate the vast majority of our earnings. We invest primarily in commercial properties located in the United States that are leased to companies on a net lease basis. We

F-23

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

consider all of the company’s assets, liabilities and real estate operational expenses as part of the Real Estate Segment. The Real Estate Segment activities consist of acquiring real estate properties for long-term holding periods, and we actively manage our portfolio. We believe our proactive approach to asset management and property management helps enhance the performance of our portfolio through risk mitigation strategies and opportunistic sales. We seek to reinvest net disposition proceeds in single-tenant net lease properties that improve our portfolio by enhancing diversification and improve key metrics such as tenant credit quality, weighted average remaining lease term and property age.

Investment Management Segment

Through one of our TRSs, we provide investment management services, including (1) sourcing and syndicating investments in net lease properties (the “ Investment Programs”) for third-party investors, including those reinvesting proceeds from the sale of investment properties and are seeking to qualify for tax deferred treatment under Section 1031 of the Code, and (2) managing the Investment Programs, for which we earn acquisition, financing and asset management revenue. At September 30, 2021, the Investment Management Segment manages the Investment Programs’ 27 net leased properties (in all of which we also have an ownership interest) totaling approximately 2.67 million square feet, with an occupancy rate of 100%. Assets, liabilities, rental revenues and property operating expenses of the Investment Programs are included in the Real Estate Segment.

Certain of our intercompany transactions that have been eliminated in consolidation for financial accounting purposes are subject to taxation.

The CODM measures and evaluates the performance of our Real Estate Segment based on the cash net operating income of properties within the segment. The CODM measures and evaluates the performance of our Investment Management Segment based on the recurring and nonrecurring revenues generated by this business segment.

Recently Issued Accounting Pronouncements

During June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019 for public reporting entities except for those meeting the definition by the Securities and Exchange Commission (“SEC”) of a smaller reporting company. For other entities, this guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, as amended by ASU 2019-10. The amendments in ASU 2016-13 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. In November 2018, the FASB issued ASU 2018-19, Codification of Topic 326, Financial Instruments—Credit Losses, to amend the effective date requirements and to clarify the scope of the guidance in the ASU 2016-13. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. Management does not believe the guidance will have a significant impact on the company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning

F-24

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date. The guidance was adopted in 2020 and did not have an impact on the company’s consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), Targeted Improvements for Related Party Guidance for Variable Interest Entities, to improve consideration of indirect interests held through related parties under common control in order to align determining whether fees paid to decision makers and service providers are variable interests and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. ASU 2018-17 is effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this update are effective for a private company or emerging growth company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted. The ASU is required to be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. We are currently evaluating the impact of the adoption of ASU 2018-17 on our consolidated financial statements, including the timing of adopting this standard.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. Election to apply the amendments for contract modifications and eligible hedging relationships may be made as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of the guidance on our LIBOR-based debt and derivative contracts and the timing of adopting this standard.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share computation. The amendments in the ASU are effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Management does not believe the guidance will have a significant impact on the company’s consolidated financial statements.

Reclassifications

Certain amounts included in 2020 consolidated financial statements have been reclassified to conform to the 2021 presentation. There was no effect on net (loss) income or equity related to these reclassifications.

F-25

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

3. Real Estate

The company’s held-and-used real estate assets consist of the following as of September 30, 2021 and December 31, 2020:

​	September 30, 2021			December 31, 2020
Land	​	$	118,721,918	​	$	84,544,959
Building and improvements	​	​	611,630,241	​	​	324,583,326
​	​	​	730,352,159	​	​	409,128,285
Accumulated depreciation	​	​	(44,135,340)	​	​	(34,629,387)
​	​	$	686,216,819	​	$	374,498,898

Depreciation expense on building and improvements for the nine months ended September 30, 2021 and 2020, was $11,338,365 and $7,236,418, respectively.

During the nine months ended September 30, 2021, the company purchased forty-two fully occupied, single tenant net-lease properties which were determined to be treated as asset acquisitions. All of these properties were treated as held and used at the time of acquisition. The properties were acquired for $381,442,737 and had a weighted average initial lease term of approximately 11 years.

During the nine months ended September 30, 2020, the company purchased four fully occupied, single tenant net-lease properties which were determined to be treated as asset acquisitions. Of these properties, three properties acquired for $19,641,103 were treated as held and used and one property acquired for $4,701,199 was classified as held for sale at the time of acquisition. The three properties classified as held and used had a weighted average initial lease term of approximately 13 years.

The table below summarizes the allocation of the purchase price and capitalized acquisition costs of properties acquired and classified as held and used during the nine months ended September 30, 2021 and 2020.

​	Nine Months Ended September 30,
​	2021			2020
Land	​	$	37,417,029	​	$	4,809,623
Building	​	​	267,437,376	​	​	11,261,755
Site improvements	​	​	24,658,375	​	​	526,479
Tenant improvements	​	​	6,578,417	​	​	680,643
Origination value of acquired in-place leases	​	​	41,012,983	​	​	2,257,029
Acquired favorable in-place leases	​	​	7,629,807	​	​	105,574
Acquired unfavorable in-place leases	​	​	(3,291,250)	​	​	—
​	​	$	381,442,737	​	$	19,641,103

Asset Sales

Management of the company determined one property met the criteria for held-for-sale treatment as of September 30, 2021 and December 31, 2020, respectively.

F-26

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

3. Real Estate (Continued)

The table below summaries the assets and liabilities of properties held for sale as of September 30, 2021 and December 31, 2020.

​	September 30, 2021			December 31, 2020
Real estate, net	​	$	2,887,996	​	$	726,318
Accounts receivable and other assets	​	​	1,862	​	​	13,840
Deferred rent receivable	​	​	72,181	​	​	—
Origination value of acquired in-place leases, net	​	​	354,674	​	​	—
Total Assets	​	$	3,316,713	​	$	740,158
Accounts payable, accrued expenses and other liabilities	​	$	—	​	$	20,940
Total Liabilities	​	$	—	​	$	20,940

During the nine months ended September 30, 2021, the company sold seven properties recognizing total revenues and net loss before gain on sale on these seven properties of $151,118 and $408,814, respectively, and net income, before gain on sale attributable to Four Springs Capital Trust of $390,171. In connection with the sale of one property there was a loss on extinguishment of debt of $310,619 related to the repayment of the debt and a prepayment penalty.

During the nine months ended September 30, 2020, the company sold one property recognizing total revenues and net income before gain on sale on the property of $45,609 and $18,420, respectively, and net income, before gain on sale, attributable to Four Springs Capital Trust of $18,113.

4. Leases

Lessor

The company has entered into lease agreements with various tenants for real estate. The following are the future minimum rentals to be received under non-cancelable operating leases in effect at September 30, 2021, excluding solar equipment sublease revenue:

Year ending December 31,	Amount
2021 (remainder of the year)	​	$	13,398,887
2022	​	​	53,787,622
2023	​	​	54,272,742
2024	​	​	53,760,126
2025	​	​	51,178,239
Thereafter	​	​	357,842,462
​	​	$	584,240,078

The preceding future minimum rental payments do not include option or renewal periods. In addition to the minimum lease payments, leases require tenants to reimburse the company for certain operating expenses, which have been included in rental revenues, and amounted to $5,358,770 and $2,728,247 for the nine months ended September 30, 2021 and 2020, respectively.

F-27

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

4. Leases (Continued)

The table below summarizes rental revenues from lessees each accounting for more than 10% of total rental revenue for the nine months ended September 30, 2021 and 2020.

​	Nine Months Ended September 30,
​	2021					2020
Lessee	Dollars			Percent		Dollars			Percent
Amazon.com	​	$	5,790,288	​	14.9%	​	$	—	​	—%
​	​	$	5,790,288	​	14.9%	​	$	—	​	—%

Lessee

In connection with the acquisitions of two industrial properties in 2021, the company assumed two ground leases as lessee. The company’s tenants at the industrial properties are obligated to reimburse the company for ground lease payments made to the ground lessor. The company recognized ground lease expense of $83,729 for the nine months ended September 30, 2021 and sublease revenue of $83,729 for the nine months ended September 30, 2021. The company recognized right-of-use assets of $4,119,567 and related lease obligations of $4,119,567 for the ground leases in accounts receivable and other assets and accounts payable, accrued expenses and other liabilities, respectively, on the consolidated balance sheets as of September 30, 2021.

The following are the future minimum rentals under the non-cancelable operating leases for the ground leases, as lessee, in effect at September 30, 2021:

Year ending December 31,	Amount
2021 (remainder of the year)	​	$	56,118
2022	​	​	225,394
2023	​	​	227,620
2024	​	​	229,913
2025	​	​	232,274
Thereafter	​	​	8,301,922
Ground lease payments	​	​	9,273,241
Less interest	​	​	(5,153,674)
Present value of ground operating lease liability	​	$	4,119,567

In connection with an acquisition of an industrial property in 2018, the company assumed a solar equipment lease as the lessee. The company’s tenant at the industrial property is obligated to perform all responsibilities under the solar equipment lease as the sublessee including making solar lease installment payments. The company recognized solar equipment lease expense of $71,580 for each of the nine months ended September 30, 2021 and 2020 and sublease revenue of $71,580 for each of the nine months ended September 30, 2021 and 2020. The company recognized a right-of-use asset and related lease obligation for the solar equipment lease in accounts receivable and other assets and accounts payable, accrued expenses and other liabilities, respectively, on the consolidated balance sheets as of September 30, 2021 and December 31, 2020.

F-28

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

4. Leases (Continued)

The following are the future minimum rentals under the non-cancelable operating lease for the solar equipment, as lessee, in effect at September 30, 2021:

Year ending December 31,	Amount
2021 (remainder of the year)	​	$	—
2022	​	​	84,430
2023	​	​	86,118
2024	​	​	87,840
2025	​	​	89,598
Thereafter	​	​	1,203,840
Solar lease payments	​	​	1,551,826
Less interest	​	​	(428,772)
Present value of solar operating lease liability	​	$	1,123,054

5. Identified Intangible Assets

The following is a summary of the company’s identified intangible assets as of September 30, 2021 and December 31, 2020:

Origination Value of Acquired In-Place Leases

​	September 30, 2021			December 31, 2020
Origination value of acquired in-place leases	​	$	94,599,128	​	$	55,288,079
Accumulated amortization	​	​	(16,647,625)	​	​	(12,951,425)
​	​	​	77,951,503	​	​	42,336,654
Less net origination value of acquired in-place leases of assets classified as held-for-sale	​	​	(354,674)	​	​	—
​	​	$	77,596,829	​	$	42,336,654

The estimated annual amortization of origination value of acquired in-place leases as of September 30, 2021 is as follows:

Year ending December 31,	Amount
2021 (remainder of the year)	​	$	1,905,930
2022	​	​	7,611,088
2023	​	​	7,569,149
2024	​	​	7,416,414
2025	​	​	7,145,535
Thereafter	​	​	46,303,387
​	​	$	77,951,503

F-29

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

5. Identified Intangible Assets (Continued)

Acquired Favorable In-Place Leases

​	September 30, 2021			December 31, 2020
Acquired favorable in-place leases	​	$	15,790,778	​	$	8,357,891
Accumulated amortization	​	​	(1,537,716)	​	​	(1,296,529)
​	​	$	14,253,062	​	$	7,061,362

Acquired Unfavorable In-Place Leases

​	September 30, 2021			December 31, 2020
Acquired unfavorable in-place leases	​	$	6,345,510	​	$	3,059,417
Accumulated amortization	​	​	(823,617)	​	​	(512,975)
​	​	$	5,521,893	​	$	2,546,442

Amortization of acquired favorable and unfavorable in-place leases resulted in a net decrease in rental income of $118,093 and $231,182 for the nine months ended September 30, 2021 and 2020, respectively. The estimated net amortization of acquired favorable and unfavorable leases at September 30, 2021 is as follows:

Year ending December 31,	Amount
2021 (remainder of the year)	​	$	119,821
2022	​	​	479,285
2023	​	​	479,286
2024	​	​	482,496
2025	​	​	494,790
Thereafter	​	​	6,675,491
Net acquired favorable leases	​	$	8,731,169

6. Variable Interest Entity Financial Information

Substantially all of the assets and liabilities of the company are held through the Operating Partnership and DSTs, which have been determined to be VIEs. The Trust and the Operating Partnership provided certain non-recourse carve-out loan guarantees on acts or events that would result in recourse liability only to the extent that a lender suffers a loss from certain carve-out events. The following table presents certain assets and liabilities of the DSTs, which are included in the consolidated balance sheets as of September 30, 2021 and

F-30

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

6. Variable Interest Entity Financial Information (Continued)

December 31, 2020. The liabilities in the table below include third-party liabilities of the DSTs only, and exclude intercompany balances that are eliminated in consolidation.

​	September 30, 2021			December 31, 2020
Assets of the DSTs that can only be used to settle obligations of the DSTs:	​	​	​	​	​	​
Real estate, net	​	$	336,311,315	​	$	129,255,112
Cash and cash equivalents	​	​	11,241,439	​	​	4,753,467
Accounts receivable and other assets	​	​	7,934,819	​	​	1,895,787
Deferred rent receivable	​	​	2,914,093	​	​	1,871,615
Origination value of acquired in-place leases, net	​	​	34,268,517	​	​	13,747,713
Acquired favorable leases, net	​	​	5,908,768	​	​	164,592
​	​	$	398,578,951	​	$	151,688,286

​	September 30, 2021			December 31, 2020
Liabilities of the DSTs for which creditors or beneficial interest holders do not have recourse to the general credit of the company:	​	​	​	​	​	​
Notes payable, net	​	$	201,345,334	​	$	74,990,519
Accounts payable	​	​	9,144,185	​	​	2,022,613
Acquired unfavorable leases, net	​	​	2,054,854	​	​	225,810
​	​	$	212,544,373	​	$	77,238,942

7. Accounts Receivable and Other Assets

Accounts receivable and other assets in the consolidated balance sheets as of September 30, 2021 and December 31, 2020 consist of the following:

​	September 30, 2021			December 31, 2020
Accounts receivable, net	​	$	4,074,966	​	$	2,487,730
Prepaid expenses, deferred costs and deposits	​	​	4,341,466	​	​	1,787,644
Escrows	​	​	3,780,434	​	​	2,154,979
Right-of-use assets	​	​	5,242,621	​	​	1,171,096
Furniture, fixtures and equipment, net	​	​	135,067	​	​	74,050
Deferred tax asset	​	​	64,743	​	​	482,626
​	​	​	17,639,297	​	​	8,158,125
Less accounts receivable and other assets of real estate assets classified as held-for-sale	​	​	(1,862)	​	​	(13,840)
​	​	$	17,637,435	​	$	8,144,285

F-31

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

8. Notes Payable

The following is a summary of the terms of the company’s mortgage notes payable as of September 30, 2021 and December 31, 2020 included in notes payable, net on the consolidated balance sheets:

Entity

Lender

Date of Loan

Maturity Date(2)

Periodic Payment

Interest Rate

Balloon Payment Amount

Carrying Value(1) at:

9/30/2021

12/31/2020

FSC MON Morton IL, LLC

Heartland Bank & Trust Co.

12/26/2013

2/8/2022

Principal and Interest

4.15%

​

$

2,615,441

​

$

2,639,086

​

$

2,691,722

FSC BJ Tilton NH, DST

Deutsche Mortgage & Asset Receiving Corp.

1/4/2013

1/6/2023

Interest Only

4.75%

​

​

4,440,000

​

​

4,444,102

​

​

4,446,562

FSC AS Jonesboro AR, DST

J.P. Morgan Chase Comm. Mortgage Securities Trust

10/26/2012

11/6/2022

Interest Only

4.85%

​

​

5,460,000

​

​

5,492,332

​

​

5,516,583

FSC AS Mt Juliet TN, DST

Deutsche Mortgage & Asset Receiving Corp.

11/29/2012

12/6/2022

Interest Only

5.00%

​

​

6,000,000

​

​

6,046,948

​

​

6,079,449

FSC DG Middleburg FL, LLC

J.P. Morgan Chase Comm. Mortgage Securities Trust

4/19/2012

5/6/2022

Interest Only

5.35%

​

​

773,500

​

​

865,701

​

​

870,162

FSC DG Yulee FL, LLC

Ladder Capital Finance, LLC

7/9/2012

8/6/2022

Interest Only

5.25%

​

​

875,000

​

​

881,244

​

​

887,489

FSC GM Lebanon IN DST, LLC

J.P. Morgan Chase Bank

10/20/2014

11/1/2024

Interest Only

4.30%

​

​

6,228,750

​

​

6,228,750

​

​

6,228,750

FSC Care Mt. Prospect IL, LLC

UBS Real Estate Securities Inc.

12/31/2014

1/6/2025

Interest Only

4.15%

​

​

8,580,000

​

​

8,580,000

​

​

8,580,000

FSC DOM Odenton MD, LLC

J.P. Morgan Chase Bank

5/22/2015

6/1/2025

Interest Only

3.77%

​

​

6,215,000

​

​

6,215,000

​

​

6,215,000

FSC CES Oklahoma City OK, LLC

J.P. Morgan Chase Bank

5/29/2015

6/1/2025

Interest Only First 5 Years

4.02%

​

​

1,979,802

​

​

—

​

​

2,158,674

FSC MRC Odessa TX, DST

Deutsche Mortgage & Asset Receiving Corp.

9/4/2015

9/6/2025

Principal and Interest

4.74%

​

​

5,418,478

​

​

6,265,810

​

​

6,410,543

FSC ITW St. Charles MO, LLC

Simmons Bank

10/28/2015

11/5/2022

Principal and Interest

4.25%

​

​

3,484,424

​

​

3,608,486

​

​

3,691,840

FSC FMC Lubbock TX, DST

KeyBank National Assoc.

7/28/2016

8/1/2026

Interest Only First 3 Years

4.60%

​

​

2,514,151

​

​

2,767,690

​

​

2,802,080

FSC FMC Carbondale IL, DST

KeyBank National Assoc.

7/28/2016

8/1/2026

Interest Only First 3 Years

4.60%

​

​

2,057,033

​

​

2,264,474

​

​

2,292,611

FSC HBCBS Mt. Laurel NJ, LLC

Wells Fargo Bank Northwest N.A.

9/29/2016

12/15/2026

Interest Only First 5 Years

3.41%

​

​

9,569,348

​

​

11,750,000

​

​

11,750,000

FSC Healthcare III, DST

UBS AG

10/19/2017

11/6/2027

Interest Only First 5 Years

4.96%

​

​

3,969,393

​

​

4,300,000

​

​

4,300,000

FSC Healthcare IV, DST

GreenState Credit Union

6/1/2018

7/15/2028

Interest Only First 2 Years

4.70%

​

​

11,328,472

​

​

13,052,425

​

​

13,184,690

GPM Properties(3)

Capital One, N.A.

5/17/2019

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

10,537,133

​

​

11,264,476

​

​

11,352,001

FSC Industrial II DST, LLC

Provident Bank

6/11/2019

6/1/2026

Interest Only First 4 Years

4.16%

​

​

3,322,182

​

​

3,575,000

​

​

3,575,000

FSC Plattsburgh NY, LLC(4)

People’s United Bank, N.A.

9/18/2019

9/18/2029

Interest Only First 5 Years

L + 1.70%

​

​

2,216,478

​

​

2,567,777

​

​

2,567,777

FSC Industrial III, DST

Provident Bank

7/12/2019

8/1/2026

Interest Only First 4 Years

3.98%

​

​

4,493,944

​

​

4,753,650

​

​

4,753,650

FSC AB Blaine MN, LLC(5)

M&T Bank

8/22/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

2,479,584

​

​

2,691,392

​

​

2,691,392

FSC AB Brighton CO, LLC(5)

M&T Bank

8/22/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

2,779,381

​

​

3,010,232

​

​

3,016,798

FSC AB Middleton WI, LLC (5)

M&T Bank

8/22/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

2,533,717

​

​

2,744,163

​

​

2,750,149

F-32

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

8. Notes Payable (Continued)

Entity

Lender

Date of Loan

Maturity Date(2)

Periodic Payment

Interest Rate

Balloon Payment Amount

Carrying Value(1) at:

9/30/2021

12/31/2020

FSC STU North Canton OH, LLC(6)

Chemical Bank

8/23/2019

8/22/2024

Interest Only First 3 Years

L + 2.10%

​

4,600,679

​

​

4,839,175

​

​

4,839,175

FSC AB Bordentown NJ, LLC(7)

M&T Bank

9/20/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

2,852,937

​

​

3,084,098

​

​

3,090,661

FSC FE Cincinnati OH, LLC

Provident Bank

2/20/2020

2/1/2027

Interest Only First 3 Years

3.60%

​

2,311,598

​

​

2,500,000

​

​

2,500,000

FSC GW Muncie IN, LLC(8)

OceanFirst Bank N.A.

3/18/2020

3/1/2030

Interest Only First 5 Years

L + 2%

​

1,304,631

​

​

1,468,500

​

​

1,468,500

FSC GW Greenwood IN, LLC(8)

OceanFirst Bank N.A.

3/18/2020

3/1/2030

Interest Only First 5 Years

L + 2%

​

1,138,499

​

​

1,281,500

​

​

1,281,500

FSC Healthcare V, DST

Provident Bank

6/9/2020

7/1/2027

Interest Only First 4 Years

3.50%

​

3,123,363

​

​

3,320,000

​

​

3,320,000

FSC Industrial IV, DST

OceanFirst Bank N.A.

11/10/2020

11/10/2027

Interest Only First 5 Years

3.05%

​

21,688,354

​

​

22,550,000

​

​

22,550,000

FSC Industrial V, DST

Provident Bank

12/22/2020

1/1/2028

Interest Only First 2 Years

3.50%

​

4,947,378

​

​

5,500,000

​

​

5,500,000

FSC Industrial 6, DST

OceanFirst Bank N.A.

3/12/2020

3/12/2028

Interest Only First 5 Years

3.10%

​

19,584,521

​

​

20,392,475

​

​

—

FSC Industrial 7, DST

OceanFirst Bank N.A.

3/12/2020

3/12/2028

Interest Only First 5 Years

3.15%

​

23,402,609

​

​

24,359,651

​

​

—

FSC Industrial 8, DST

Sun Life Assurance Company of Canada

5/14/2021

6/10/2026

Interest Only

2.31%

​

37,100,000

​

​

37,100,000

​

​

—

FSC FMC Houston, TX DST

Provident Bank

5/28/2021

5/1/2028

Interest Only First 5 Years

3.25%

​

2,701,611

​

​

2,810,000

​

​

—

FSC FMC Albany OR, DST

Provident Bank

5/28/2021

5/1/2028

Interest Only First 5 Years

3.25%

​

4,759,066

​

​

4,950,000

​

​

—

FSC UNCHCS Chapel Hill NC, DST

Provident Bank

5/28/2021

5/1/2028

Interest Only First 5 Years

3.25%

​

7,662,577

​

​

7,970,000

​

​

—

FSC BKI Conyers GA, DST

Provident Bank

9/24/2021

10/1/2028

Interest Only First 5 Years

2.95%

​

8,366,432

​

​

8,720,000

​

​

—

FSC BPS Dallas TX, DST

Provident Bank

9/24/2021

10/1/2028

Interest Only First 5 Years

2.95%

​

4,173,621

​

​

4,350,000

​

​

—

FSC CSL Allentown PA, DST

Provident Bank

9/24/2021

10/1/2028

Interest Only First 5 Years

2.95%

​

2,389,039

​

​

2,490,000

​

​

—

FSC FMC Baton Rouge LA, DST

Provident Bank

9/24/2021

10/1/2028

Interest Only First 5 Years

2.95%

​

3,007,886

​

​

3,135,000

​

​

—

FSC HFO Southfield MI, DST

Provident Bank

9/24/2021

10/1/2028

Interest Only First 5 Years

2.95%

​

6,049,352

​

​

6,305,000

​

​

—

Subtotal

​

​

​

​

​

​

​

​

​

283,134,137

​

​

163,362,758

Deferred financing costs, net of accumulated amortization

​

​

​

​

​

​

​

​

​

(2,846,133)

​

​

(1,771,905)

​

​

​

​

​

​

​

​

​

$

280,288,004

​

$

161,590,853

(1)

Carrying value represents principal outstanding plus unamortized debt premiums. Debt premium amortization of $69,918 and $68,585 is included as a reduction of interest expense in the consolidated statements of operations for the nine months ended September 30, 2021 and 2020, respectively.

F-33

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

8. Notes Payable (Continued)

(2)

Reflected is the earlier of the stated maturity dates as defined in the respective loan agreements. Should the loan not be repaid at the anticipated repayment date, the loan will require monthly principal and interest and the applicable interest rate would increase as specified in the respective loan agreement until the extended maturity date.

(3)

Capital One, N.A.’s loan is cross collateralized with FSC EPP Colony TX, LLC; FSC EPP Elkhart IN, LLC; FSC EPP Eufaula OK, LLC; FSC EPP Granger IL, LLC; FSC EPP Irving TX, LLC; FSC EPP Mishawaka IN, LLC; FSC EPP Richland Hills TX, LLC; FSC EPP Utica MI, LLC (collectively, the “GPM Properties”). The GPM Properties’ loan requires interest at LIBOR plus 2.15% per annum. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.855% on the loan at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loan is 4.005% per annum.

(4)

FSC Plattsburgh NY, LLC’s loan with People’s United Bank, N.A. requires interest at LIBOR plus 1.70%. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.66% on this loan at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loan is 3.36% per annum.

(5)

FSC AB Blaine MN, LLC’s, FSC AB Brighton CO, LLC’s and FSC AB Middletown WI, LLC’s loans with M&T Bank require interest at LIBOR plus 1.90%. In connection with these loans, the company entered into interest rate swap agreements to fix LIBOR at 1.443% on these loans at notional values equivalent to the loans’ scheduled amortized principal balances through the loans’ maturity dates. The effective interest rate on the loans is 3.343% per annum.

(6)

FSC STU North Canton OH, LLC’s loan with Chemical Bank require interest at LIBOR plus 2.10%. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.40% on this loan at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loan is 3.50% per annum.

(7)

FSC AB Bordentown NJ, LLC’s loan with M&T Bank requires interest at LIBOR plus 1.90%. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.54% on this loan at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loan is 3.44% per annum.

(8)

FSC GW Muncie IN, LLC and FSC GW Greenwood IN, LLC’s loans with OceanFirst Bank N.A. requires interest at LIBOR plus 2%. In connection with these loans, the company entered into interest rate swap agreements to fix LIBOR at 0.84% for the first five year of the loans at notional values equal to each loan’s scheduled principal balance for the first five years. The effective interest rate on the loans is 2.84% per annum.

The above notes are secured by the related mortgage/deed of trust and assignment of rents and leases on real estate having a carrying value of $434,831,398 and $242,926,828 as of September 30, 2021 and December 31, 2020, respectively, and are subject to prepayment penalties as defined in the related loan agreements.

The weighted average interest rate pursuant to fixed effective rates via interest swap agreements (see “Note 2. Summary of Significant Accounting Policies—Derivative Instruments and Hedging Activities”) on the above notes payable was 3.71% and 4.20% as of September 30, 2021 and September 30, 2020, respectively.

The company is subject to certain loan covenants per the mortgage notes payable agreements, which require a debt service coverage ratio of 1.50 to 1.00 or lower, determined quarterly. As of and for the nine months ended September 30, 2021 and for the year ended December 31, 2020, the company was compliant with the mortgage notes payable covenants.

The following are the future principal payments on the mortgage notes payable as of September 30, 2021 (including principal amortization and balloon payments):

Year ending December 31,	Amount
2021 (remainder of the year)	​	$	404,398
2022	​	​	20,803,578
2023	​	​	6,343,610
2024	​	​	33,776,067
2025	​	​	21,742,059
Thereafter	​	​	199,882,598
Total principal payments	​	​	282,952,310
Unamortized debt premiums, net	​	​	181,827
Total notes payable before deferred financing costs, net	​	$	283,134,137

F-34

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

8. Notes Payable (Continued)

The estimated amortization of the debt premiums as of September 30, 2021 is as follows:

Year ending December 31,	Amount
2021 (remainder of the year)	​	$	23,306
2022	​	​	73,756
2023	​	​	5,949
2024	​	​	5,948
2025	​	​	5,948
Thereafter	​	​	66,920
​	​	$	181,827

9. Line of Credit, Net

The company’s revolving credit facility with Citizens Bank, National Association (“Citizens”) and other participating lenders (the “Citizens Facility”) originally provided the company with up to a $125 million borrowing capacity with an additional $75 million expansion feature. The Citizens Facility bore interest based on the company’s option of LIBOR plus 2.5% to 3% per annum or the base rate plus 1.50% to 2% per annum, with the interest rate spread determined based on the company’s election of LIBOR or base rate borrowings and the ratio of debt to value. The base rate was the greater of Citizens’ prime rate, the average Federal Reserve Bank of Cleveland’s overnight rate, or the one-month LIBOR plus 1%. The Citizens Facility also required an unused fee of 0.25% per annum and was scheduled to mature on October 23, 2021. Pursuant to the terms of the Citizens Facility, the company was required to comply with covenants including those to maintain a minimum fixed charge coverage ratio of 1.50 to 1.00, maintain minimum borrowing base and net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield, maintain a diversified portfolio, and maintain distribution rates.

On October 30, 2020, the company amended and restated the Citizens Facility with M&T Bank, a participating lender under the former-Citizens Facility. Citizens resigned as agent and lender and M&T Bank replaced Citizens as the agent on the facility. The amended and restated borrowing facility (the “M&T Credit Facility”) provides the company with a $100,000,000 borrowing capacity with an additional $50,000,000 expansion feature. The M&T Credit Facility redefined certain terms and covenants including providing for covenants relating to a mezzanine loan of up to $100,000,000. The M&T Credit Facility bears interest based on the company’s option of LIBOR, with a LIBOR floor of 1% on unhedged LIBOR, plus 2.50% to 2.75% per annum or the base rate plus 1.50% to 1.75% per annum, with the interest rate spread determined based on the company’s election of LIBOR or base rate borrowings and the ratio of debt to value (2.86% as of September 30, 2021, inclusive of the credit facility interest rate swaps; see “Note 2. Summary of Significant Accounting Policies—Derivative Instruments and Hedging Activities”). The base rate is the greater of M&T Bank’s prime rate, the Federal Funds Effective Rate plus 0.5%, or 1% plus the greater of one-month LIBOR or 1% on the unhedged borrowing.The M&T Credit Facility matures on October 30, 2022 and maturity may be extended to October 30, 2023 with a 0.25% extension fee on the total commitment and the company meeting certain conditions including completing a qualified listing event. Pursuant to the terms of the M&T Credit Facility, the company shall comply with covenants including those to maintain a minimum fixed charge coverage ratio, maintain minimum borrowing base and net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield, maintain a diversified portfolio, and maintain distribution rates. The M&T Credit Facility is secured by mortgages/deeds of trust and assignments of rents and leases on 52 properties having real estate net book value of approximately $123.7 million as of September 30, 2021 and 50 properties having real estate book value of approximately $96.4 million as of December 31, 2020. As a result of Citizens National Association exiting the credit facility, the company exited its interest rate swap with Citizens National Association with a payment of $1,281,000 recognized in other

F-35

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

9. Line of Credit, Net (Continued)

comprehensive loss of which $880,688 and $213,500 was reclassified from other comprehensive loss as an increase to interest expense during the nine months ended September 30, 2021 and year ended December 31, 2020, respectively. As of and for the nine months ended September 30, 2021 and year ended December 31, 2020, the company was compliant with the credit facility covenants.

The outstanding balance of the M&T Credit Facility as of September 30, 2021 and December 31, 2020 was $45,000,000 and $17,380,953, respectively.

Deferred financing costs, net of accumulated amortization, of $2,192,977 and $3,200,651 are presented as deductions of the lines of credit balances as of September 30, 2021 and December 31, 2020, respectively, in the consolidated balance sheets. The credit facility weighted average interest rate during the nine months ended September 30, 2021 and 2020 is 3.15% and 3.56%, respectively.

10. Mezzanine Note Payable, Net

On October 30, 2020, the company entered into a $100,000,000 loan agreement (the “Mezzanine Loan”) secured by a pledge of the company’s equity interest in the Operating Partnership. The loan requires (1) monthly interest only payments at 7% per annum plus (2) interest capitalized quarterly as additional principal at a rate of 4.5% per annum. The Mezzanine Loan provides that upon repayment a minimum of $23,000,000 in aggregate interest through the earlier of the loan’s full satisfaction or maturity on October 30, 2025 is payable. However, from and after the date of the initial public offering, the additional amount payable shall be equal to the lesser of (1) the yield maintenance amount and (2) if prior to the second anniversary of the initial public offering date, 2% of the prepaid amount, and if at any time thereafter, 1% of the prepaid amount. The Mezzanine Loan provides for adjustments to interest payments due in order to not be treated as an applicable high yield discount obligation under the Code. A portion of the Mezzanine Loan may be prepaid with a minimum principal payment of $10,000,000. Pursuant to the terms of Mezzanine Loan, the company shall comply with covenants including those to maintain a minimum fixed charge coverage ratio of 1.50 to 1.00, maintain net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield of 9%, and maintain a diversified portfolio. The Mezzanine Loan is subordinate to the M&T Credit Facility. The company borrowed $85,000,000 at closing of the Mezzanine Loan. As of September 30, 2021 and December 31, 2020 the Mezzanine Loan had an outstanding balance of $88,638,917 and $85,670,693, respectively. Deferred financing costs, net of accumulated amortization, of $2,227,003 and $2,602,900 are presented as deductions of the Mezzanine Loan as of September 30, 2021 and December 31, 2020 in the consolidated balance sheets.

11. Contingently Redeemable Series A-1 and A-2 Preferred Shares

On November 20, 2020, we issued 2,500,000 convertible Series A-1 preferred shares, $0.001 par value per share, resulting in $49.3 million in gross proceeds at a 1.5% discount from the $20.00 per share initial stated value. On May 4, 2021, the terms of the Series A-1 preferred shares were amended to replace the paid-in-kind dividends with accretion dividends that are no longer issued in the form of additional Series A-1 preferred shares and instead added to the Series A-1 preferred shares’ stated value at the same yield terms as the former paid-in-kind dividends and to revise the certain other terms. The Series A-1 preferred shares rank senior to our common shares and non-participating common shares with respect to payment of dividends and distributions upon our liquidation. The Series A-1 preferred shares’ liquidation value as of September 30, 2021 and December 31, 2020 was $53,138,191 and $50,256,500, respectively.

The Series A-1 preferred shares automatically convert upon a qualifying listing event into a number of common shares based on our option of either (1) the Series A-1 preferred shares’ stated value divided by 90% of the per common share listing event price or (2) the Series A-1 preferred shares’ stated value divided by the undiscounted price per common share at the listing event plus a cash fee to holders of Series A-1 preferred

F-36

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

11. Contingently Redeemable Series A-1 and A-2 Preferred Shares (Continued)

shares at 10% of the Series A-1 preferred shares’ stated value. In the event that the holders of Series A-1 preferred shares would own 20% or more of our outstanding shares of beneficial interest following a qualifying listing event, the holders of the Series A-1 preferred shares may elect to cause the company to either (1) redeem from the holders of Series A-1 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-1 preferred shares so that the holders of the Series A-1 preferred shares hold 19.9% of our outstanding shares of beneficial interest following the qualifying listing event or (2) permit the holders of Series A-1 preferred shares to include in the qualifying listing event a number of common shares (into which the Series A-1 preferred shares convert) for sale so that the holders of the Series A-1 preferred shares hold 19.9% of our outstanding shares of beneficial interest following the qualifying listing event; provided, however, that if the holders of the Series A-1 preferred shares elect pursuant to clause (2) above to cause the company to permit the holders of the Series A-1 preferred shares to include in the qualifying listing event any common shares for sale, then the company, in its sole discretion, will have the right to redeem from the holders of the Series A-1 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-1 preferred shares so that the holders of the Series A-1 preferred shares hold less than 19.9% of our outstanding shares of beneficial interest following a qualifying listing event. The Series A-1 preferred shares redeemed in this event will be redeemed in cash at a per share price equal to the greater of (a) the amount such holders of Series A-1 preferred shares would have received as if such Series A-1 preferred shares were automatically converted in connection with a qualifying listing event (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-1 preferred shares or, in certain cases, an independent expert) or (b) the Series A-1 Trust Redemption Price (as defined below).

We have an option to redeem all of the Series A-1 preferred shares with a payment providing the holders with an amount equal to the greater of (1) a 15% internal rate of return on such holder’s Series A-1 preferred shares and (2) the amount the holders of the Series A-1 preferred shares would have received as if such Series A-1 preferred shares were converted into a number of common shares based on the stated value of $20.00 per share, adjusted for additional issuances of common shares and instruments convertible into common shares of the company, plus accretion dividends and unpaid dividends (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-1 preferred shares or, in certain cases, an independent expert) (the “Series A-1 Trust Redemption Price” and such option to redeem, the “Series A-1 preferred share call option”). At any time, including upon the company’s exercise of the Series A-1 preferred share call option, (1) any holder of Series A-1 preferred shares may elect to convert all or any portion of such holder’s Series A-1 preferred shares into common shares and (2) the majority of holders of Series A-1 preferred shares may elect to convert all of the Series A-1 preferred shares into common shares of the company.

Holders of Series A-1 preferred shares are entitled to the number of votes on an as converted basis as to any matters together as a single class with holders of common shares. Dividends on Series A-1 preferred shares are cumulative at 11.5% per annum (7% cash, 4.5% accretion dividend added to the Series A-1 preferred shares’ stated value) on the stated value per share through April 19, 2022, 12% (7% cash, 5% accretion dividend) commencing on April 20, 2022, 13% (8% cash, 5% accretion dividend) commencing on November 20, 2022 and 15% (9% cash, 6% accretion dividend) commencing on November 20, 2023.

There were no unpaid cash dividends on Series A-1 preferred shares as of September 30, 2021 and December 31, 2020. The outstanding balance of contingently redeemable Series A-1 preferred shares of $53,138,191 and $50,256,500 as of September 30, 2021 and December 31, 2020, respectively, less the bifurcated conversion feature liability of $1,768,959 and $1,699,274, respectively, and unaccreted offering costs and unaccreted issuance discount of $787,595 and $924,488, respectively, is presented as temporary equity in the consolidated balance sheets.

The holders of a majority of the outstanding Series A-1 preferred shares have the right to designate a trustee to the board of trustees. The holders of Series A-1 preferred shares have designated an observer to the

F-37

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

11. Contingently Redeemable Series A-1 and A-2 Preferred Shares (Continued)

company’s board of trustees. The holders of Series A-1 preferred shares have the right to approve certain of the company’s actions.

On May 4, 2021 and August 11, 2021, we issued an aggregate of 7,500,000 convertible Series A-2 preferred shares, $0.001 par value per share, resulting in $147,750,000 in gross proceeds at a 1.5% discount to the $20.00 per share initial stated value. The Series A-2 preferred shares rank senior to our common shares and non-participating common shares with respect to payment of dividends and distributions upon our liquidation. The Series A-2 preferred shares’ liquidation value as of September 30, 2021 was $153,013,603.

The Series A-2 preferred shares automatically convert upon a qualifying listing event into a number of common shares based on our option of either (1) the Series A-2 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by 90% of the per common share listing event price or (2) the Series A-2 preferred shares’ stated value, including accretion dividends and unpaid dividends, divided by the undiscounted price per common share at the listing event plus a cash fee to holders of Series A-2 preferred shares at 10% of the Series A-2 preferred shares’ stated value. In the event that the holders of Series A-2 preferred shares would own 25% or more of our outstanding shares of beneficial interest following a qualifying listing event, the holders of the Series A-2 preferred shares may elect to cause the company to either (1) redeem from the holders of Series A-2 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-2 preferred shares so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following the qualifying listing event or (2) permit the holders of Series A-2 preferred shares to include in the qualifying listing event a number of common shares (into which the Series A-2 preferred shares convert) for sale so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following the qualifying listing event, provided, however, that if the holders of the Series A-2 preferred shares elect pursuant to clause (2) above to cause the company to permit the holders of the Series A-2 preferred shares to include in the qualifying listing event any common shares for sale, then the company, in its sole discretion, will have the right to redeem from the holders of the Series A-2 preferred shares, concurrently with the closing of the qualifying listing event, such number of Series A-2 preferred shares so that the holders of the Series A-2 preferred shares hold less than 25% of our outstanding shares of beneficial interest following a qualifying listing event. The Series A-2 preferred shares redeemed be redeemed in cash at a per share price equal to the greater of (a) the amount such holders of Series A-2 preferred shares would have received as if such Series A-2 preferred shares were automatically converted in connection with a qualifying listing event (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-2 preferred shares or, in certain cases, an independent expert) or (b) the Series A-2 Trust Redemption Price (as defined below).

We have an option to redeem all of the Series A-2 preferred shares with a payment providing the holders with an amount equal to the greater of (1) a 15% internal rate of return on such holder’s Series A-2 preferred shares and (2) the amount the holders of the Series A-2 preferred shares would have received as if such Series A-2 preferred shares were converted into a number of common shares based on the stated value of $20.00 per share, adjusted for additional issuances of common shares and instruments convertible into common shares of the company, plus accretion dividends and unpaid dividends (with such amount determined at the fair market value as determined by our board of trustees and the holders of Series A-2 preferred shares or, in certain cases, an independent expert) (the “Series A-2 Trust Redemption Price” and such option to redeem, the “Series A-2 preferred share call option”). At any time, including upon the company’s exercise of the Series A-2 preferred share call option, (1) any holder of Series A-2 preferred shares may elect to convert all or any portion of such holder’s Series A-2 preferred shares into common shares and (2) the majority of holders of Series A-2 preferred shares may elect to convert all of the Series A-2 preferred shares into common shares of the company.

Holders of Series A-2 preferred shares are entitled to the number of votes on an as converted basis as to any matters together as a single class with holders of common shares. Dividends on Series A-2 preferred shares are

F-38

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

11. Contingently Redeemable Series A-1 and A-2 Preferred Shares (Continued)

cumulative at 11.5% per annum (7% cash, 4.5% accretion dividend added to the Series A-2 preferred shares’ stated value) on the stated value per share through April 19, 2022, 12% (7% cash, 5% accretion dividend) commencing on April 20, 2022, 13% (8% cash, 5% accretion dividend) commencing on November 20, 2022 and 15% (9% cash, 6% accretion dividend) commencing on November 20, 2023.

There were no unpaid cash dividends on Series A-2 preferred shares as of September 30, 2021 and December 31, 2020. The outstanding balance of contingently redeemable Series A-2 preferred shares of $153,013,603 as of September 30, 2021, reduced by the initial fair value of the compound embedded derivative of $9,969,378 and unaccreted offering costs and unaccreted issuance discount of $3,050,292, is presented as temporary equity in the consolidated balance sheets.

The holders of a majority of the outstanding Series A-2 preferred shares designated a trustee to the board of trustees. The holders of Series A-2 preferred shares have the right to designate an observer to the company’s board of trustees. The holders of Series A-2 preferred shares have the right to approve certain of the company’s actions.

12. Derivatives and Hedging Activities

The company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive loss or income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

Amounts reported in accumulated other comprehensive loss or income related to derivatives will be reclassified to interest expense as interest payments are made on the company’s variable-rate debt. During the next twelve months ending September 30, 2022, the company estimates that $471,915 and $195,210 will be reclassified from other comprehensive income as increases to interest expense for the swaps on the mortgage rate payable and M&T Credit Facility, respectively.

As of September 30, 2021 and December 31, 2020, the company’s interest rate derivatives and their respective cash flow interest rate hedge designations are as follows:

​	September 30, 2021					December 31, 2020
Interest Rate Derivatives	Number of Instruments		Notional Amounts			Number of Instruments		Notional Amounts
Designated as cash flow hedges	​	​	​	​	​	​	​	​	​	​
Mortgage notes payable swaps	​	9	​	$	32,945,452	​	9	​	$	33,057,952
M&T Credit Facility swaps	​	2	​	$	37,500,000	​	3	​	$	50,000,000
Not designated as qualifying hedges	​	​	​	​	​	​	​	​	​	​
M&T Credit Facility swap	​	1	​	$	12,500,000	​	—	​	$	—

As of September 30, 2021 and December 31, 2020, the compound embedded derivative in the Series A-1 and A-2 preferred shares was not designated as a qualifying hedge.

The table below presents the fair value of the company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 2021 and December 31, 2020.

F-39

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

12. Derivatives and Hedging Activities (Continued)

​

September 30, 2021

December 31, 2020

​

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

Derivatives designated as hedging instruments:

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage notes payable swaps

​

$

—

​

$

915,114

​

$

—

​

$

1,606,611

M&T Credit Facility swaps

​

​

—

​

​

90,594

​

​

—

​

​

185,346

Interest rate hedges included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets

​

​

—

​

​

1,005,708

​

​

—

​

​

1,791,957

Derivatives not designated as hedging instruments:

​

​

​

​

​

​

​

​

​

​

​

​

M&T Credit Facility swap included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets

​

​

—

​

​

30,200

​

​

—

​

​

—

Series A-1 and A-2 preferred share compound embedded derivative included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets

​

​

—

​

​

12,297,132

​

​

—

​

​

1,741,694

​

​

$

—

​

$

13,333,040

​

$

—

​

$

3,533,651

The table below details the location in the consolidated financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the nine months ended September 30, 2021 and 2020 for the interest rate swaps on the mortgage notes payable and the M&T Credit Facility.

​

Nine months ended September 30, 2021

Nine months ended September 30, 2020

​

Mortgage notes payable swaps

M&T Credit Facility swaps

Mortgage notes payable swaps

M&T Credit Facility swaps

Designated interest rate swaps

​

​

​

​

​

​

​

​

​

​

​

​

Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives

​

$

337,312

​

$

(27,199)

​

$

(1,984,677)

​

$

(1,064,374)

Amount of (loss) gain reclassified from accumulated other comprehensive income into income as (increase) decrease in interest expense

​

$

(354,184)

​

$

(1,052,501)

​

$

(204,510)

​

$

(658,330)

Non-designated interest rate swaps

​

​

​

​

​

​

​

​

​

​

​

​

Amount of (loss) gain reclassified from accumulated other comprehensive income into income as (increase) decrease in interest expense

​

​

—

​

​

(56,888)

​

​

—

​

​

—

The company has agreements with each of its derivative counterparties that contain a provision where if the company either defaults or is capable of being declared in default on any of its indebtedness, then the company could also be declared in default on its derivative obligations.

The interest swap agreements provide for cross default provisions with the company’s other debt obligations. As of September 30, 2021 and December 31, 2020, the fair value of derivatives in a net liability position

F-40

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

12. Derivatives and Hedging Activities (Continued)

including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $1,079,111 and $1,838,582, respectively. As of September 30, 2021 and December 31, 2020, the company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $1,079,111 and $1,838,582 as of September 30, 2021 and December 31, 2020, respectively.

13. Accounts Payable, Accrued Expenses and Other Liabilities

Accounts payable, accrued expenses and other liabilities in the consolidated balance sheets as of September 30, 2021 and December 31, 2020 consist of the following:

​	September 30, 2021			December 31, 2020
Accounts payable and accrued expenses	​	$	9,790,641	​	$	4,691,921
Prepaid rents	​	​	2,029,989	​	​	1,850,943
Lease obligations of right-of-use assets	​	​	5,719,179	​	​	1,171,096
Compound embedded derivative	​	​	12,297,132	​	​	1,741,694
Accrued distributions	​	​	476,558	​	​	—
Interest rate hedges	​	​	1,035,908	​	​	1,791,957
Warrant liability	​	​	159,119	​	​	259,880
​	​	​	31,508,526	​	​	11,507,491
Less accounts payable, accrued expenses and other liabilities of real estate assets classified as held-for-sale	​	​	—	​	​	(20,940)
​	​	$	31,508,526	​	$	11,486,551

14. Noncontrolling Interests

On December 28, 2012, the Operating Partnership issued 204,500 of Series A preferred OP units (the “UPREIT Series A preferred OP units”; convertible into 102,250 common OP units or 102,250 common shares of the Trust as of December 31, 2019) in connection with the purchase of a property. The UPREIT Series A preferred OP units receive priority distributions on a cumulative basis at a per annum rate of $0.70 per unit. In addition, in the event of the liquidation or dissolution of the Operating Partnership or the company, the holders of the units will be entitled to receive a liquidation preference of $10 per unit plus an amount equal to all accumulated and unpaid distributions whether or not declared. The UPREIT Series A preferred OP unit holders have the right to require the Operating Partnership to redeem the units in whole or in part, at any time and from time to time, by delivering a notice of redemption to the general partner, in an amount equal to the holder’s capital account as adjusted in accordance with and subject to the terms of the partnership agreement. The general partner may, in its sole and absolute discretion, elect to assume the redemption directly and satisfy the UPREIT Series A preferred OP unit redemption right by paying the redeeming partner in cash or in the form of Series A preferred shares of the Trust by issuing one Series A preferred share for each UPREIT Series A preferred OP unit. The company has adopted a policy of issuing shares in exchange for all units submitted for redemption. There have been no UPREIT Series A preferred OP unit redemption requests.

In connection with the Restructuring on October 23, 2020, the 204,500 UPREIT Series A preferred OP units were converted into 65,636 common OP units (the “UPREIT common OP units”). The UPREIT common OP unit holders have the right to require the Operating Partnership to redeem the units in whole or in part, at

F-41

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

14. Noncontrolling Interests (Continued)

any time and from time to time, by delivering a notice of redemption to the general partner, in an amount equal to the holder’s capital account as adjusted in accordance with and subject to the terms of the partnership agreement. The general partner may, in its sole and absolute discretion, elect to assume the redemption directly and satisfy the UPREIT common OP unit redemption right by paying the redeeming partner in cash or in the form of common shares of the Trust by issuing one common share for each UPREIT common OP unit. The company has adopted a policy of issuing shares in exchange for all units submitted for redemption. There have been no UPREIT common OP unit redemption requests as of September 30, 2021.

On May 31, 2020, the Operating Partnership issued 181,116 of Series U1 OP units (the “Series U1 OP units”; convertible into 181,116 common shares of the Trust) at $22 per unit in exchange for acquiring 90% of the beneficial ownership interest in FSC GM Lebanon IN, DST (“GMLI DST”) previously held by third party investors thereby wholly-owning GMLI DST. The Operating Partnership retained control of GMLI DST subsequent to this UPREIT transaction. The Series U1 OP units receive cumulative distributions at a per annum rate of $1.10, $1.26, $1.41, $1.57, $1.72 and $1.88 per unit commencing on May 31, 2020 and each anniversary thereof through May 31, 2025. In addition, in the event of the liquidation or dissolution of the Operating Partnership or the company, the holders of Series U1 OP units will be entitled to receive a liquidation amount per unit of $22.00, $23.87, $25.73, $27.60, $29.46 and $31.34 commencing on May 31, 2020 and each anniversary thereof through May 31, 2025. Commencing May 31, 2021, holders of Series U1 OP units have the option to convert the Series U1 OP units for a corresponding number of common shares of the Trust and the general partner of the Operating Partnership may, in its sole and absolute discretion, elect to redeem the partner in cash at the liquidation amount or, if the common shares have been listed on a national securities exchange, the close price per common share. During the period May 31, 2026 through November 30, 2026, the Series U1 OP unit holders have the right to require the Operating Partnership to redeem the units in whole or in part, at the liquidation amount in cash.

With respect to distributions and liquidation rights and prior to the Restructuring, the Series U1 OP units rank (1) junior to the Series D, Series DRIP 1 and Series E preferred OP units and (2) senior to the Series A, Series B and Series C preferred OP units and common OP units. Subsequent to the Restructuring, the Series U1 OP units rank (1) junior to the Series A-1 preferred OP units, (2) on parity with the common OP units and (3) senior to the non-participating common OP units. Any liquidation proceeds remaining shall be distributed on a pro rata and pari passu basis with common OP unit holders, including the Series U1 OP units, and preferred OP units on an as-converted basis.

On April 29, 2021, the company issued 895,500 LTIP OP Units as equity-based compensation. The company did not receive any proceeds from the issuance.

On June 26, 2020, the Operating Partnership acquired 48.6% of the beneficial ownership interest in FSC Industrial II, DST previously held by third party investors for $1,739,402 thereby wholly-owning FSC Industrial II, DST and retaining control of the acquiree subsequent to this acquisition.

The company formed DSTs to offer beneficial ownership interests in the trusts to third-party investors. As of September 30, 2021 and December 31, 2020, third-party beneficial ownership interests in the DSTs are presented below.

F-42

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

14. Noncontrolling Interests (Continued)

Trust	Year Acquired	September 30, 2021		December 31, 2020
FSC BJ Tilton NH, DST	2014	​	75.0%	​	75.0%
FSC AS Mt. Juliet TN, DST	2014	​	74.4%	​	74.4%
FSC AS Jonesboro AR, DST	2014	​	74.4%	​	74.4%
FSC MRC Odessa TX, DST	2015	​	90.0%	​	90.0%
FSC Healthcare I, DST	2014 & 2015	​	90.0%	​	90.0%
FSC Healthcare II, DST	2017	​	95.0%	​	95.0%
FSC Healthcare III, DST	2016	​	95.0%	​	95.0%
FSC Industrial I, DST	2018	​	95.0%	​	95.0%
FSC Healthcare IV, DST	2018	​	95.0%	​	95.0%
FSC Automotive I, DST	2018	​	95.0%	​	95.0%
FSC Industrial III, DST	2019	​	94.4%	​	94.4%
FSC Healthcare V, DST	2020	​	95.0%	​	95.0%
FSC Industrial IV, DST	2020	​	95.0%	​	89.1%
FSC Industrial V, DST	2020	​	95.0%	​	—%
FSC Industrial 6, DST	2021	​	95.0%	​	—%
FSC Industrial 7, DST	2021	​	95.0%	​	—%
FSC Industrial 8, DST	2021	​	95.0%	​	—%
FSC Healthcare 6, DST	2021	​	95.0%	​	—%
FSC Diversified 1, DST	2021	​	39.5%	​	—%

Four Springs TEN31 Xchange, LLC (“TEN31”) and GMLI DST, both consolidated into the Trust, entered into an unsecured loan agreement (the “TEN31-GMLI DST Loan”) with TEN31 as the lender and GMLI DST as the borrower to provide GMLI DST with working capital and releasing reserves after its sole tenant terminated its lease agreement in 2017. The loan provided for up to $1.8 million of advances of which $1.8 million was advanced and outstanding as of January 1, 2020. The loan required monthly interest payments at 9% per annum and the related interest revenue and interest expense were eliminated in consolidation of the Trust. The unsecured loan was subordinate to GMLI DST’s mortgage loan. The TEN31-GMLI DST Loan was satisfied in connection with the Operating Partnership’s UPREIT acquisition of the 90% interest in GMLI DST.

Net (loss) income attributable to noncontrolling interests on the consolidated statements of operations and changes in contingently redeemable preferred shares and OP units and changes in equity consisted of the following:

​	Nine Months Ended September 30,
​	2021			2020
Holders of Series A preferred OP units	​	$	—	​	$	(1,583)
Holders of Series U1 OP units	​	​	17,603	​	​	(2,317)
Holders of common OP units	​	​	5,111	​	​	—
Holders of LTIP OP units	​	​	21,174	​	​	—
DST beneficial interests	​	​	(6,324,141)	​	​	762,030
Net (loss) income attributable to noncontrolling interests	​	$	(6,280,253)	​	$	758,130

F-43

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

15. Contingently Redeemable Series E Preferred Shares

On January 22, 2018, the board of trustees of the company adopted resolutions to reclassify and redesignate 5,750,000 preferred shares as Series E preferred shares authorized for issuance. The company issued 2,000,000 Series E preferred shares (convertible into 2,222,222 common shares) in a private offering for $39.4 million in gross proceeds on January 22, 2018 at a discount from the $20.00 per share offering price. The company incurred approximately $3.1 million in costs in connection with this offering. The issuance discount and issuance costs are accreted to the carrying value of the Series E preferred shares over the 6.5 year redemption period.

Ranking

The Series E preferred shares ranked senior to the Series A, B, C, D, and DRIP 1 preferred shares and common shares with respect to the payment of dividends and distributions upon liquidation of the company. All Series E preferred shares had equal dividend, distribution, liquidation and other rights.

Redemption

Holders of Series E preferred shares had no exchange or redemption rights or preemptive rights to subscribe to any of our securities. The company may offer Series E preferred shareholders an option to redeem their shares on January 22, 2021. If a majority of Series E preferred shareholders (the “Series E Majority”) accepted a redemption offer by us, we would redeem the shares at the Series E preferred shares’ liquidation value calculated at $20.00 per Series E preferred share plus accumulated and unpaid dividends. If the Series E Majority rejected our redemption offer, the dividend rate on the Series E preferred shares would have adjusted to 8%. At any time after January 22, 2023, we may have exercised an option to redeem all of the Series E preferred shares outstanding and the redemption price would have been the greater of the liquidation value and the fair market value of such Series E preferred shares.

From and after July 22, 2024, the Series E Majority may have required us to redeem all of the Series E preferred shares. Under certain circumstances of noncompliance with the terms of the Series E preferred shares, the company would have been obligated to redeem all of the Series E preferred shares at the liquidation value.

On October 30, 2020, the company redeemed all 3,150,943 Series E preferred shares issued and outstanding plus unissued paid-in-kind shares accruing for the period October 1, 2020 through October 30, 2020 for $63,018,847 utilizing a portion of the proceeds of the Mezzanine Loan. Unaccreted Series E preferred share offering costs and issue discount of $2,133,504 were accelerated at redemption and are recognized in accretion on contingently redeemable preferred shares and OP units in the consolidated statements of operations for the year ended December 31, 2020.

Conversion

The Series E preferred shares were convertible into common shares at any time at the option of the holder. The Series E preferred shares were to automatically convert into common shares upon a qualified listing event of the company or upon the election of the Series E Majority to convert into common shares. The Series E preferred shares were to be converted into a number of common shares computed by multiplying the number of Series E preferred shares to be converted by the Series E preferred share liquidation value and dividing such result by the Series E preferred share conversion price of $18.00 per share, subject to adjustment.

Dividends

Dividends on the Series E preferred shares compounded quarterly on a cumulative basis at an initial annual rate of 17% of the liquidation value. The dividend rate was to be adjusted downward upon raising additional equity or if the company calls the Series E preferred shares and such call notice is rejected. The dividend rate may have increased upon the occurrence of an event of noncompliance under the terms of the Series E

F-44

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

15. Contingently Redeemable Series E Preferred Shares (Continued)

preferred shares. As of September 28, 2018, the dividend rate was reduced to 16.75% per annum. As of October 25, 2019, the dividend rate was reduced to 16.5% per annum. The company had the option to pay any dividends accruing on the Series E preferred shares in-kind by issuing additional Series E preferred shares that have an aggregate liquidation value equal to the amount of dividend to be paid in complete or partial satisfaction of the accrued dividend. We were required to pay to the holders of Series E preferred shares an amount in cash or in-kind shares, with the form of payment at the holder’s option, equal to the amount of the accrued and unpaid dividends on the Series E preferred shares if the company had free cash flow in excess of $5 million per calendar year.

Prior to the Series E redemption, 354,444 Series E preferred shares (convertible into 393,827 common shares) were issued as dividend shares paid in-kind for the period from January 1, 2020 through September 30, 2020 and 42,047 Series E preferred shares (convertible into 46,718 common shares) were accrued for the period as dividend shares for the period October 1, 2020 through October 23, 2020.

In the event that the company did not have funds sufficient to make a full distribution of the respective prescribed preferential dividend to the holders of Series E preferred shares and other series of Preferred Shares ranked on parity with the Series E preferred shares, then holders of such shares shall share ratably in such distributions based on the number of common shares into which such shares are then convertible. Subject to such preferential rights as may be granted by the board of trustees in future issuances of one or more series of preferred shares, cumulative dividends were to be payable (1) on a date each month set by the board of trustees (subject to each such dividend payment being authorized and declared), (2) upon the liquidation, dissolution or winding-up of the company, or (3) upon a qualified listing event.

Voting

Each outstanding Series E preferred share entitled the holder to a number of votes equal to the number of common shares into which each preferred share was convertible. The Series E preferred shareholders voted as a single class with the Series A, Series B, Series C, Series D, and Series DRIP 1 preferred shares and common shares. The holders of Series E preferred shares elected one trustee to serve on the company’s board of trustees (the “Series E Trustee”). The Series E Trustee may only be removed by the holders of Series E preferred shares. The Series E Majority had the right to appoint an observer to the board of trustees. The holders of Series E preferred shares had the right to approve certain of the company’s actions.

Liquidation

In the event of any liquidation, dissolution or winding-up of our affairs, subject to such preferential rights as may be granted by the board of trustees in future issuances of one or more series of preferred shares and subject to the rights of holders of any preferred shares on a parity with Series E preferred shares, holders of Series E preferred shares were entitled to receive, in priority to any shares that rank junior to the Series E preferred shares, an amount equal to the liquidation value. After the holders of the Series A, B, C, D, DRIP 1 and E preferred shares have each received their full respective liquidation preference, the holders of common shares were entitled to receive a common share participation amount. If any liquidation distribution proceeds remained after making such distributions, the remaining proceeds were to be distributed on a pro rata basis and pari passu to the holders of Series A, B, C, D, DRIP 1 and E preferred shares, any other series of preferred shares entitled to participate in any such liquidation proceeds and common shares on a pro rata basis.

16. Equity

On October 23, 2020, in connection with and as a result of the Restructuring, the company (1) adopted resolutions to reclassify and designated 223,203 common shares as non-participating common shares authorized for issuance, (2) exchanged 1,861,833 previously issued and then-outstanding common shares for

F-45

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

16. Equity (Continued)

non-participating common shares, (3) exchanged 12,452,690 previously issued and then-outstanding Series A, B, C, D and DRIP 1 preferred shares for common shares, (4) redesignated and reclassified 37,747,309 unissued Series A, B, C, D, and DRIP 1 preferred shares as preferred shares made available for future issuance or designation and (5) authorized an additional 6,533,284 common shares for issuance. On October 30, 2020, in connection with the redemption of the outstanding Series E preferred shares, 5,750,000 previously issued and unissued Series E preferred shares were redesignated and reclassified as preferred shares made available for future issuance or designation. The company adopted resolutions in November 2020 and May 2021 to designate and classify 10,000,000 preferred shares as Series A-1 preferred shares and 15,000,000 preferred shares as Series A-2 authorized for issuance; see “Note 11. Contingently Redeemable Series A-1 Preferred Shares” above.

Series A, B, C, D and DRIP 1 Preferred Shares

The company’s Series A, B, C, D and DRIP 1 preferred shares had the following characteristics:

Ranking

Prior to the Restructuring, the Series A, B, C, D and DRIP 1 preferred shares ranked junior to Series E preferred shares and senior to the common shares with respect to the payment of dividends and distributions upon liquidation of the company while the Series D preferred shares and Series DRIP 1 preferred shares ranked senior to the Series A, B and C preferred shares.

Redemption

Holders of Series A, B and C preferred shares had no exchange or redemption rights or preemptive rights to subscribe to any of the company’s securities. Series D and DRIP 1 preferred shares were redeemable subject to certain restrictions and limitations, including a one-year holding period for redemptions unrelated to the death of a shareholder, a declining redemption fee, a cap on the maximum number of Series D preferred shares and Series DRIP 1 preferred shares that may have been redeemed in any quarter and year, and the availability of cash to fund such redemptions.

Conversion

The Series A, B and C preferred shares were convertible into common shares at an amended conversion rate of one common share for two Series A, B and C preferred shares at any time at the option of the holder. The Series D and DRIP 1 preferred shares were convertible into common shares at a conversion rate of one common share for one Series D or DRIP 1 preferred share at any time at the option of the holder. Upon the occurrence of the following events, the Series A, B, C, D and DRIP 1 preferred shares were to automatically convert into common shares, without any further action of the holder: (1) upon a listing of the common shares on a national security exchange (a “Listing Event”) or (2) upon the election of holders of a majority of the then outstanding preferred shares to convert into common shares.

Dividends

Dividends on preferred shares accrued on the Series A and B preferred shares at an annual rate of $0.70 per share and on Series C preferred shares at an annual rate of $0.77 per share. Dividends on the Series D preferred shares accrued at an annual rate of $1.40 per share plus dividend shares paid in-kind at a rate of 3% per annum. Dividends on the Series D preferred shares accrued at an annual rate of $1.365 per share. During the year ended December 31, 2020 and nine months ended September 30, 2020, 84,105 and 75,367 Series D preferred shares (convertible into 84,105 and 49,284 common shares before the Restructuring), respectively, were issued as dividend shares paid in-kind.

F-46

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

16. Equity (Continued)

The dividends were cumulative and were payable monthly, if authorized and declared by the board of trustees. Upon conversion of the Series A, B, C, D and DRIP 1 preferred shares to common shares (other than pursuant to a Listing Event), all rights to accumulated and unpaid dividends on such preferred shares were cancelled and terminated.

Liquidation

Prior to the Restructuring, Series A, B, C, D and DRIP 1 preferred shares ranked junior to Series E preferred shares and any other class or series of our capital stock, the terms of which expressly provided that it ranked senior to the preferred shares, and subject to payment of or provision for our debts and other liabilities, the Series D preferred shares and Series DRIP 1 preferred shares ranked senior to the Series A, B and C preferred shares and the Series A, B and C preferred shares had parity with respect to the payment of dividends and distributions upon liquidation of the company. All outstanding Series A, B, C, D and DRIP 1 preferred shares were fully paid and non-assessable. After preferred shareholders were to receive their respective liquidation preference amount, common shareholders would receive a common share participation amount. If any liquidation proceeds remained after making both of these distributions, the remaining proceeds were to be distributed to the preferred shareholders and any other series of preferred shares and common shares on a pro rata, as if converted basis.

Transactions related to Series A, B, C, D and DRIP 1 preferred shares: During the year ended December 31, 2020 and the nine months ended September 30, 2020, the company issued 523,209 Series D preferred shares (convertible into 523,209 common shares) for gross proceeds of $10,324,264 not including Series D preferred shares issued as paid in-kind dividend shares. Each Series D preferred share had a price of $20.00 with a par value of $0.001.

Under the company’s Distribution Reinvestment Program (“DRIP”), as described below, the company issued 21,288 Series DRIP 1 preferred shares (convertible into 21,288 common shares) for gross proceeds of $415,112 during the year ended December 31, 2020 and the nine months ended September 30, 2020. Each Series DRIP 1 preferred share had a price of $19.50 with a par value of $0.001.

Non-participating Common Shares

The non-participating common shares, $0.001 par value per share, have no right to participate in any distributions, including any distributions upon liquidation of the company, and will automatically convert into common shares on a one-for-one basis upon a qualified listing event of the company.

Voting

Holders of Series A-1 and A-2 preferred shares, Series A, B, C, D and DRIP 1 preferred shares, Series E preferred shares and non-participating common shares vote as a single class with holders of common shares. Each outstanding preferred share entitles the holder to a number of votes equal to the number of common shares into which each preferred share is convertible. Subsequent to the Restructuring and as of December 31, 2020, each outstanding non-participating common share entitles the holder to 9.33091650 votes. Prior to the Restructuring, each Series A, B and C preferred share was convertible into one-half of a common share and each Series D preferred share and Series DRIP 1 preferred share was convertible into one common share.

Warrants

Warrants to purchase Series A, B and C preferred shares were issued with the Series A, B and C preferred shares, respectively. Each of these warrants gave the record holder the right to purchase one Series A, B or C preferred share at the strike price of $10.00, $10.75, or $11.00 per preferred share, respectively. The warrants for Series A, B and C preferred shares were classified in liabilities and presented at fair value in the consolidated

F-47

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

16. Equity (Continued)

balance sheets. In connection with the issuance of the Series E preferred shares, the company issued warrants to the procuring broker which are classified in equity. Each warrant gave the record holder the right to purchase one common share at an exercise price of $20.00 per preferred share. As a result of the Restructuring, (1) warrants to purchase Series A, B and C preferred shares prior to the Restructuring were converted into warrants to purchase common shares at $31.16 per common share and (2) warrants to purchase common shares prior to the Restructuring were converted into warrants to purchase non-participating common shares at $186.18 per common share. The Restructuring did not affect these warrants’ classifications. Subsequent to the Restructuring, in October 2020, the company issued warrants, classified in equity, to purchase 333,873 common shares at an exercise price of $20.00 per share to procuring brokers of the Series D preferred share offering at a fair value of $1,481,357 which was estimated using the Black-Scholes Model based on an expected life of 5.5 years, risk-free rate of 0.35% and expected share price volatility of 50%. The exercise period for the warrants shall expire on the earlier to occur of: (1) the third anniversary date of the closing of the listing event and (2) seven years from the date of issuance of the original warrants.

The fair value of the warrant liability included in accounts payable, accrued expenses and other liabilities in the consolidated balances sheets was estimated as of September 30, 2021 based on a hybrid model with Black-Scholes Model inputs based on a weighted average life of 2.06 years, risk-free rate of 0.24% and expected share price volatility of 68%. The fair value of the warrant liability was estimated as of December 31, 2020 based on a hybrid model with Black-Scholes Model inputs based on a weighted average life of 1.2 years, risk-free rate of 0.11% and expected share price volatility of 88.2%.

As of September 30, 2021, warrants to purchase 474,851 common shares and 10,743 non-participating common shares were outstanding. As of December 31, 2020, warrants to purchase 650,183 common shares and 10,743 non-participating common shares were outstanding.

Dividend Reinvestment Program (DRIP)

The board of trustees of the company authorized and approved the DRIP for the Company relating to the sale and issuance of the Series B preferred shares, Series C preferred shares, and Series DRIP 1 preferred shares. The DRIP has been designed to provide shareholders in the company a convenient way of investing in additional shares of beneficial interest of the company without incurring transaction costs such as commissions, service charges or brokerage fees. Shareholders may elect to reinvest either their full dividend or half of their dividend. The board of trustees shall determine, in its sole discretion, which class and/or series of shares will be made available for purchase pursuant to the DRIP, as well as the price at which the DRIP shares will be sold.

Share Repurchase Program

On March 19, 2014, the board of trustees of the company authorized and approved the Share Repurchase Program (the “SRP”) of the company whereby upon death, disability or other involuntary exigent circumstances of a shareholder, the shareholder may request that the company repurchase his or her shares. Shares that qualify for repurchase are subject to timing and percentage limitations, minimum repurchase, priority of requests and SRP share price calculations based upon the length of time the shareholder has continually held the applicable shares. During the year ended December 31, 2020, the company repurchased 2,500 Series A preferred shares and 100,000 Series C preferred shares for $768,000 under the SRP. During the nine months ended September 30, 2020, the company repurchased 2,500 Series A preferred shares and 100,000 Series C preferred shares for $768,000 under the SRP.

The board of trustees may also amend, suspend or terminate the program upon 30 days’ notice or reject any request for repurchase if it determines that the funds allocated to the SRP are needed for other purposes, such as the acquisition, maintenance or repair of properties, or for use in making a declared distribution.

F-48

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

16. Equity (Continued)

Additionally, the board of trustees reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase, change the purchase price for repurchases, or otherwise amend, suspend or terminate the terms of our share repurchase program.

17. Earnings Per Share

Basic earnings (loss) per common share is computed by dividing net income attributable to participating securities by the weighted average common shares outstanding. During the nine months ended September 30, 2021, the company had unvested LTIP OP units which provide for non-forfeitable rights to dividend equivalent payments. Accordingly, these unvested LTIP OP units are considered participating securities and are included in the computation of basic earnings per Common Share pursuant to the two-class method. The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations:

​	Nine Months Ended September 30,
​	2021			2020
Basic and Diluted:	​	​	​	​	​	​
Net loss attributable to common shareholders	​	$	(21,010,286)	​	$	(15,582,732)
Less: net income attributable to participating securities	​	​	(176,503)	​	​	—
Net loss attributable to attributable to participating securities	​	$	(21,186,789)	​	$	(15,582,732)
Weighted average common shares outstanding	​	​	6,533,284	​	​	1,861,833
Net loss per common share:	​	​	​	​	​	​
Net loss attributable to common shareholders	​	$	(3.24)	​	$	(8.37)

For per common share amounts, all incremental shares are considered anti-dilutive for periods that have a loss from continuing operations attributable to common shareholders. In addition, other common share equivalents may be anti-dilutive in certain periods. The weighted average number of potentially dilutive securities excluded from the earnings per share computation consist of the following:

​	Nine Months Ended September 30,
​	2021		2020
Pre-Restructuring convertible Series A preferred shares; 0 and 5,769,304 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	2,884,652
Post-Restructuring convertible Series A-1 preferred shares; 2,540,297, and 0 for the nine months ended September 30, 2021 and 2020, respectively	​	2,540,297	​	—
Post-Restructuring convertible Series A-2 preferred shares; 3,186,813, and 0 for the nine months ended September 30, 2021 and 2020, respectively	​	3,186,813	​	—
Pre-Restructuring convertible Series B preferred shares; 0 and 1,275,848 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	637,924
Pre-Restructuring convertible Series C preferred shares; 0 and 1,867,346 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	933,673
Pre-Restructuring convertible Series D preferred shares; 0 and 3,365,073 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	3,365,073
Pre-Restructuring convertible Series DRIP 1 preferred shares; 0 and 100,225 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	100,225
Pre-Restructuring convertible Series E preferred shares; 0 and 2,869,421 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	3,188,246

F-49

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

17. Earnings Per Share (Continued)

​	Nine Months Ended September 30,
​	2021		2020
Post-Restructuring convertible non-participating common shares; 200,015, and 0 for the nine months ended September 30, 2021 and 2020, respectively	​	200,015	​	—
Pre-Restructuring warrants exercisable for convertible Series A preferred shares; 0 and 696,337 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	348,169
Pre-Restructuring warrants exercisable for convertible Series B preferred shares; 0 and 155,314 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	77,657
Pre-Restructuring warrants exercisable for convertible Series C preferred shares; 0 and 279,930 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	139,965
Post-Restructuring warrants exercisable for common shares; 535,052, and 0 for the nine months ended September 30, 2021 and 2020, respectively	​	535,052	​	—
Pre-Restructuring options for common shares – convertible at 1:2; 0 and 40,000 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	20,000
Pre-Restructuring options for common shares – convertible at 1:1	​	—	​	95,730
Pre-Restructuring warrants for common shares at 1:1	​	—	​	100,000
Post-Restructuring options for convertible non-participating common shares at 1:1	​	11,783	​	—
Post-Restructuring warrants for convertible non-participating common shares at 1:1	​	10,743	​	—
Pre-Restructuring Series A preferred OP units exchangeable for common shares at 1:2; 0 and 204,500 for the nine months ended September 30, 2021 and 2020, respectively	​	—	​	102,250
Pre-Restructuring Series U1 OP units exchangeable for common shares at 1:1; 181,116 and 80,643 for the nine months ended September 30, 2021 and 2020, respectively	​	181,116	​	80,643
Post-Restructuring common OP units exchangeable for common shares at 1:1	​	65,636	​	—
Post-Restructuring LTIP OP units exchangeable for common shares at 1:1	​	505,154	​	—
Post-Restructuring non-participating common OP units convertible into common shares at 1:1	​	19	​	—

18. Share-Based Compensation and Employee Benefits

The board of trustees of the company adopted a resolution to authorize and approve the Equity Incentive Plans designed to promote the success and enhance the value of the company by linking the personal interests of the employees, officers, trustees and consultants of the company and its subsidiaries to those of the company shareholders and by providing such persons with an incentive for outstanding performance. The Equity Incentive Plans are further intended to provide flexibility to the company in its ability to motivate, attract and retain the services of employees, officers, trustees and consultants upon whose judgment, interest and special effort the successful conduct of the company’s operation is largely dependent. Accordingly, the Equity Incentive Plans permit the grant of share options, share appreciation rights, restricted shares, restricted

F-50

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

18. Share-Based Compensation and Employee Benefits (Continued)

share units, LTIP OP unit awards, performance awards and other awards from time to time to selected employees, officers, trustees and consultants of the company and its subsidiaries. The trustees reserved 3,000,000 and 500,000 shares of previously authorized but unissued common shares to be available to the 2021 Equity Incentive Plan and 2014 Equity Plan, respectively. As a result of the Restructuring, 53,711 shares are authorized under the 2014 Equity Plan. Share-based compensation granted to trustees of the board, officers and employees as part of their performance bonuses and in connection with an employment agreement pursuant to the Equity Incentive Plans are subject to time-based and performance-based vesting provisions.

The company uses the Black-Scholes option pricing model to estimate the fair value of a share-based award. This model requires inputs such as expected term, expected volatility, and risk-free interest rate, which are highly complex and subjective and generally require significant analysis and judgment to develop. The company does not estimate a forfeiture rate for unvested shares. Accordingly, forfeitures will lower share-based compensation expense as they occur during the applicable period.

The total fair value of share-based awards vested during the nine months ended September 30, 2021 and 2020 is $6,659,712 and $30,706, respectively, and is included in general and administrative expenses in the consolidated statements of operations.

On April 29, 2021, the company granted 895,500 LTIP OP units to executive officers and non-employee trustees of the board of trustees under the 2021 Equity Incentive Plan. Two-thirds of these grants (597,002 units) vested at the grant date, with a weighted average grant date fair value of $10.24, one-sixth vests over a period of two years and one-sixth vests over three years. There were 298,498 unvested LTIP OP units as of September 30, 2021. The LTIP OP units granted in the nine months ended September 30, 2021 have grant date fair values of $9,172,694, with a weighted average grant date fair value of $10.24, which are being amortized into expense on a straight-line basis over the respective tranche’s vesting period. The fair value of these grants was estimated based on a hybrid option pricing model with inputs based on a weighted average life of 1.4 years, risk-free rate of 0.1% and expected share price volatility of 82.8%. As of September 30, 2021, there was $2,519,660 of total unrecognized compensation cost related to unvested LTIP OP units, with a weighted average grant date fair value of $10.24, which is expected to be recognized over a weighted-average period of 2.1 years. The LTIP OP units are entitled to receive distributions per unit equal to the common OP unit distributions declared per unit. The company has elected to defer 90% of distributions to be paid at closing of an initial public offering of the company. As of September 30, 2021, $476,558 of distributions declared on LTIP OP units is unpaid.

During the nine months ended September 30, 2021, 448 non-participating common shares vested. No common shares or non-participating common shares vested during the year ended December 31, 2020. There were no common share forfeitures during the nine months ended September 30, 2021 and the year ended December 31, 2020. As of September 30, 2021, all non-participating common shares are vested. As of December 31, 2020, 448 convertible non-participating common shares issued under the 2014 Equity Plan were unvested.

The company granted non-qualified stock options to certain members of the board of trustees, officers and employees under the 2014 Equity Plan to purchase common shares at a conversion rate of 1:1 for options granted in 2019 and 2018 and at a conversion rate of 1:2 for options granted prior to 2017 pursuant to the reverse share split. Each option is subject to time-based vesting on or before June 7, 2029. As a result of the Restructuring, each option for one common share converted into an option for 0.10742102 convertible non-participating common shares, with an exercise price equal to the options’ original exercise price multiplied by 9.3091650.

No common share options or non-participating common share options were awarded during the nine months ended September 30, 2021. During the nine months ended September 30, 2021, 1,557 non-participating common share options vested (convertible into 1,557 common shares) with a weighted average exercise price of $46.44 per share and options for 82 non-participating common share were forfeited.

F-51

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

18. Share-Based Compensation and Employee Benefits (Continued)

During the nine months ended September 30, 2020, 23,086 common share options with a conversion rate of 1:1 (exercisable for 23,086 common shares prior to the Restructuring) vested with a weighted average exercise price of $5 per common share. During the nine months ended September 30, 2020, 2,915 common share options with a conversion rate of 1:1 were forfeited prior to the Restructuring.

As of September 30, 2021, there are options outstanding for 11,747 non-participating common shares that have vested or are expected to vest with a weighted average remaining contractual term of approximately six years and a weighted average exercise price of $37.94 per non-participating common share.

As of September 30, 2021 and December 31, 2020, there was $13,570 and $21,234, respectively, of total unrecognized compensation cost related to unvested share-based compensation granted under the Equity Incentive Plans excluding LTIP OP units. As of September 30, 2021 and December 31, 2020, the weighted average period over which the unrecognized compensation expense will be recorded is approximately one year.

The company made $65,342 and $68,158 in gross contributions to a company-sponsored 401(k) post-retirement plan for eligible employees during the nine months ended September 30, 2021 and 2020, respectively.

19. Related Party Transactions

The company entered into an operating lease for its corporate office space commencing October 1, 2012 with a related party. The lease requires monthly rent of $6,500. The lease term continues on a year-to-year basis and can be terminated by either party with 30 days’ notice. Lease expense incurred from the related party during each of the nine months ended September 30, 2021 and 2020 of $58,500 is included in general and administrative expenses in the consolidated statements of operations.

Pursuant to an amended and restated marketing agreement, effective January 1, 2018, the company advances an affiliate up to $25,000 per month. The advances are reconciled based on the earnings of the affiliate wherein the affiliate’s net earnings in excess of $0, if any, are repaid up to the amount advanced by the company. The agreement has an indefinite term; provided, however, that the agreement may be terminated by either party upon 30 days written notice. Certain of the company’s officers and trustees are principals and officers in the affiliate. During the year ended December 31, 2020, the board of trustees approved an increase in the monthly advance to $80,000 for a period of up to three months with such increase fully utilized during the period April 2020 to June 2020. During the nine months ended September 30, 2021 and 2020, the company incurred expenses of $0 and $240,000, respectively, pursuant to the marketing agreement, included in general and administrative expenses within the consolidated statements of operations. The company reimbursed the affiliate $86,696 and $15,903 during the nine months ended September 30, 2021 and 2020, respectively, for the affiliate’s expenditures.

The company was owed $1,388 and $50,429 from the affiliate entity as of September 30, 2021 and December 31, 2020. The short-term balances relate to various operating activities including advanced marketing fees.

In connection with private placement offerings of its securities, the company paid a registered broker-dealer selling commissions and dealer manager fees of $3,843,599 and $390,241 during the nine months ended September 30, 2021 and 2020, respectively. Pursuant to a broker-dealer agreement, the registered broker-dealer further passes these amounts as payments to brokers overseen by an affiliate of the company as their Office of Supervisory Jurisdiction. Certain of the company’s officers and employees are registered representatives of the broker-dealer.

20. Segments

We evaluate our results from operations by our two business segments: the Real Estate Segment and the Investment Management Segment.

F-52

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

20. Segments (Continued)

Real Estate Segment

Rental revenue from real estate investments generate the vast majority of our earnings. We invest primarily in commercial properties located in the United States that are leased to companies on a net lease basis. We consider all of the company’s assets, liabilities and real estate operational expenses as part of the Real Estate Segment. The Real Estate Segment activities consist of acquiring real estate properties for long-term holding periods, and we actively manage our portfolio. We believe our proactive approach to asset management and property management helps enhance the performance of our portfolio through risk mitigation strategies and opportunistic sales. We seek to reinvest net disposition proceeds in single-tenant net lease properties that improve our portfolio by enhancing diversification and improve key metrics such as tenant credit quality, weighted average remaining lease term and property age. The Real Estate Segment includes rental revenues from real estate investments in the Investment Programs.

Investment Management Segment

We earn revenue for investment services that we provide related to the Investment Programs. For the periods presented, we provided investment management services, including structuring, syndicating and managing various Investment Programs. As of September 30, 2021 and December 31, 2020, we managed total assets of $398,578,951 and $161,840,666, respectively, on behalf of the Investment Programs.

Acquisition Fee Revenue

We earn acquisition fees for sourcing and syndicating new investments on behalf of the Investment Programs. During the periods presented, we earned acquisition fees from various Investment Programs based on the purchase price of the net lease properties acquired by each Investment Program. For the nine months ended September 30, 2021, acquisition fees were (1) $6,105,879 for structuring and syndicating Investment Programs to third-party beneficial owners for an aggregate property purchase price of $202,077,370 and (2) $363,075 for the Operating Partnership’s ownership interest in the Investment Programs. For the nine months ended September 30, 2020, acquisition fees were (1) $114,697 for structuring and syndicating Investment Programs to third-party beneficial owners for an aggregate property purchase price of $5,734,827 and (2) $6,037 for the Operating Partnership's ownership interest in the Investment Programs. We earn acquisition fees when and as the Investment Programs are syndicated to the investors.

Financing Fee Revenue

We earn financing fees for sourcing and arranging debt financing on behalf of the Investment Programs. During the periods presented, we earned financing fees from various Investment Programs based on the principal amount of mortgage loans sourced and arranged for each Investment Program. For the nine months ended September 30, 2021, financing fees were (1) $1,014,384 for sourcing and arranging $129,221,598 of mortgage loans for various Investment Programs syndicated to third-party investors and (2) $62,616 for the Operating Partnership’s ownership percentage of syndicated properties. We earn financing fees when and as the Investment Programs are syndicated to investors.

Asset Management Revenue

We earn asset management revenue from the Investment Programs based on the purchase price of the managed property owned by each Investment Program. Asset management revenue from an Investment Program may decrease depending upon changes in such Investment Program’s asset base as a result of sales of assets owned by such Investment Program. For the nine months ended September 30, 2021, asset management fees were (1) $541,173 for managing Investment Programs that owned assets with an aggregate purchase price to syndicated third-party investors of $341,872,256 as of September 30, 2021 and (2) $124,337 for managing the

F-53

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

20. Segments (Continued)

Operating Partnership’s ownership interest in these Investment Programs. For the nine months ended September 30, 2020, asset management fees were (a) $286,173 for managing Investment Programs that owned assets with an aggregate purchase price to syndicated third-party investors of $116,597,935 as of September 30, 2020 and (b) $43,032 for managing the Operating Partnership’s ownership interest in these Investment Programs.

The following table presents a summary of revenue and expenses in our reportable segments:

​

Nine Months Ended September 30, 2021

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Rental

​

$

38,761,145

​

$

—

​

$

—

​

$

—

​

$

38,761,145

Less: Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

(1,681,989)

​

​

—

​

​

—

​

​

—

​

​

(1,681,989)

Acquisition fees and finance fees earned by the Investment Management Segment incurred by the Real Estate Segment(a)

​

​

—

​

​

7,545,954

​

​

—

​

​

(7,545,954)

​

​

—

Other syndication revenue earned by the Investment Management Segment incurred by the Real Estate Segment(a)

​

​

—

​

​

720,305

​

​

—

​

​

(720,305)

​

​

—

Asset management fees earned by the Investment Management Segment incurred by the Real Estate Segment

​

​

—

​

​

665,510

​

​

—

​

​

(665,510)

​

​

—

Other

​

​

205,692

​

​

—

​

​

—

​

​

—

​

​

205,692

Total cash Revenues by Segment

​

​

37,284,848

​

​

8,931,769

​

​

—

​

​

(8,931,769)

​

​

37,284,848

Property Operating Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property operating – asset management fee incurred by the Real Estate Segment and earned by the Investment Management Segment

​

​

665,510

​

​

—

​

​

—

​

​

(665,510)

​

​

—

Property operating – other

​

​

5,458,319

​

​

—

​

​

—

​

​

—

​

​

5,458,319

Total Property Operating Expenses

​

​

6,123,829

​

​

—

​

​

—

​

​

(665,510)

​

​

5,458,319

Cash Net Operating Income by Segment

​

$

31,161,019

​

$

8,931,769

​

$

—

​

$

(8,266,259)

​

$

31,826,529

Reconciliation of Cash Net Operating Income to reported net income (loss) attributable to Four Springs Capital Trust

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash Net Operating Income by Segment

​

$

31,161,019

​

$

8,931,769

​

$

—

​

$

(8,266,259)

​

$

31,826,529

F-54

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

20. Segments (Continued)

​

Nine Months Ended September 30, 2021

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

1,681,989

​

​

—

​

​

—

​

​

—

​

​

1,681,989

General and administrative – directly attributable to segment

​

​

(150,838)

​

​

(186,815)

​

​

—

​

​

—

​

​

(337,653)

General and administrative –  unallocated(b)

​

​

—

​

​

—

​

​

(11,391,022)

​

​

—

​

​

(11,391,022)

Professional fees – directly attributable to segment

​

​

(178,716)

​

​

(801,698)

​

​

—

​

​

—

​

​

(980,414)

Professional fees – unallocated(b)

​

​

—

​

​

—

​

​

(1,140,114)

​

​

—

​

​

(1,140,114)

Depreciation and amortization

​

​

(15,724,741)

​

​

—

​

​

—

​

​

—

​

​

(15,724,741)

Interest – mortgages notes payable

​

​

(6,460,799)

​

​

—

​

​

—

​

​

—

​

​

(6,460,799)

Interest – unallocated(c)

​

​

—

​

​

—

​

​

(11,417,528)

​

​

—

​

​

(11,417,528)

Acqusition costs

​

​

(40,787)

​

​

—

​

​

—

​

​

—

​

​

(40,787)

Provision for impairment

​

​

(335,000)

​

​

—

​

​

—

​

​

—

​

​

(335,000)

Change in fair value of warrant liability

​

​

—

​

​

—

​

​

(415,614)

​

​

—

​

​

(415,614)

Loss on extinguishment of debt

​

​

(310,619)

​

​

—

​

​

​

​

​

​

​

​

(310,619)

Gain on sale of real estate

​

​

2,431,142

​

​

—

​

​

—

​

​

—

​

​

2,431,142

Provision for income taxes – unallocated

​

​

—

​

​

—

​

​

(1,995,759)

​

​

—

​

​

(1,995,759)

Net Income (Loss) by Segment

​

​

12,072,650

​

​

7,943,256

​

​

(26,360,037)

​

​

(8,266,259)

​

​

(14,610,390)

Net (Income) Loss by Segment Attributable to Noncontrolling Interests

​

​

6,595,612

​

​

(315,359)

​

​

—

​

​

—

​

​

6,280,253

Net Income (Loss) by Segment Attributable to Four Springs Capital Trust

​

$

18,668,262

​

$

7,627,897

​

$

(26,360,037)

​

$

(8,266,259)

​

$

(8,330,137)

Real Estate Segment’s acquisition fee and finance fee capitalized and other syndication costs recognized as reduction of equity proceeds in the balance sheet and eliminated in consolidation:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Acquisition and finance fee(a)

​

$

7,545,954

​

​

​

​

​

​

​

​

​

​

​

​

Other syndication costs(a)

​

​

720,305

​

​

​

​

​

​

​

​

​

​

​

​

​

​

$

8,266,259

​

​

​

​

​

​

​

​

​

​

​

​

F-55

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

20. Segments (Continued)

​

Nine Months Ended September 30, 2020

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Rental

​

$

25,826,350

​

$

—

​

$

—

​

$

—

​

$

25,826,350

Less: Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

(984,041)

​

​

—

​

​

—

​

​

—

​

​

(984,041)

Acquisition fees earned by the Investment Management Segment incurred by the Real Estate Segment(a)

​

​

—

​

​

120,734

​

​

—

​

​

(120,734)

​

​

—

Other syndication revenue earned by the Investment Management Segment incurred by the Real Estate Segment(a)

​

​

—

​

​

111,145

​

​

—

​

​

(111,145)

​

​

—

Asset management fees earned by the Investment Management Segment incurred by the Real Estate Segment

​

​

—

​

​

329,205

​

​

—

​

​

(329,205)

​

​

—

Other

​

​

128,507

​

​

—

​

​

—

​

​

—

​

​

128,507

Total Revenues by Segment

​

​

24,970,816

​

​

561,084

​

​

—

​

​

(561,084)

​

​

24,970,816

Property Operating Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property operating – asset management fee incurred by the Real Estate Segment and earned by the Investment Management Segment

​

​

329,205

​

​

—

​

​

—

​

​

(329,205)

​

​

—

Property operating – other

​

​

3,144,193

​

​

—

​

​

—

​

​

—

​

​

3,144,193

Total Property Operating Expenses

​

​

3,473,398

​

​

—

​

​

—

​

​

(329,205)

​

​

3,144,193

Cash Net Operating Income by Segment

​

$

21,497,418

​

$

561,084

​

$

—

​

$

(231,879)

​

$

21,826,623

Reconciliation of Cash Net Operating Income to reported net income (loss) attributable to Four Springs Capital Trust

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash Net Operating Income by Segment

​

$

21,497,418

​

$

561,084

​

$

—

​

$

(231,879)

​

$

21,826,623

Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

984,041

​

​

—

​

​

—

​

​

—

​

​

984,041

General and administrative – directly attributable to segment

​

​

(156,580)

​

​

(268,752)

​

​

—

​

​

—

​

​

(425,332)

F-56

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

20. Segments (Continued)

​

Nine Months Ended September 30, 2020

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

General and administrative –  unallocated(b)

​

​

—

​

​

—

​

​

(3,417,990)

​

​

—

​

​

(3,417,990)

Professional fees – directly attributable to segment

​

​

(54,063)

​

​

(12,187)

​

​

—

​

​

—

​

​

(66,250)

Professional fees – unallocated(b)

​

​

—

​

​

—

​

​

(323,780)

​

​

—

​

​

(323,780)

Depreciation and amortization

​

​

(10,059,232)

​

​

—

​

​

—

​

​

—

​

​

(10,059,232)

Interest – mortgages notes payable

​

​

(4,338,155)

​

​

—

​

​

—

​

​

—

​

​

(4,338,155)

Interest – unallocated(c)

​

​

—

​

​

—

​

​

(3,259,561)

​

​

—

​

​

(3,259,561)

Acqusition costs

​

​

(181,194)

​

​

(14,258)

​

​

—

​

​

—

​

​

(195,452)

Provision for impairment

​

​

(535,000)

​

​

—

​

​

—

​

​

—

​

​

(535,000)

Change in fair value of warrant liability

​

​

—

​

​

—

​

​

(208,757)

​

​

—

​

​

(208,757)

Gain on sale of real estate

​

​

401,431

​

​

—

​

​

—

​

​

—

​

​

401,431

Provision for income taxes − unallocated

​

​

—

​

​

—

​

​

(47,653)

​

​

—

​

​

(47,653)

Net Income (Loss) by Segment

​

​

7,558,666

​

​

265,887

​

​

(7,257,741)

​

​

(231,879)

​

​

334,933

Net (Income) Loss by Segment Attributable to Noncontrolling Interests

​

​

(748,918)

​

​

(9,212)

​

​

—

​

​

—

​

​

(758,130)

Net Income (Loss) by Segment Attributable to Four Springs Capital Trust

​

$

6,809,748

​

$

256,675

​

$

(7,257,741)

​

$

(231,879)

​

$

(423,197)

Real Estate Segment’s acquisition fee capitalized and other syndication costs recognized as reduction of equity proceeds in the balance sheet and eliminated in consolidation:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Acquisition fee(a)

​

$

120,734

​

​

​

​

​

​

​

​

​

​

​

​

Other syndication costs(a)

​

​

111,145

​

​

​

​

​

​

​

​

​

​

​

​

​

​

$

231,879

​

​

​

​

​

​

​

​

​

​

​

​

(a)

The Real Estate Segment capitalizes the acquisition fee expended as direct costs of property acquisition, recognizes finance fees expended as deductions from the carrying value of the related debt obligation and recognizes other syndication-related costs incurred and paid to the Investment Management Segment as cost of issuing equity in the DSTs.

These fees are eliminated in the company’s consolidation.

(b)

Unallocated expenses consist of general and administrative expenses and professional fees not directly attributable to a segment.

(c)

Unallocated interest expense consists of interest on the M&T Credit Facility and Mezzanine Loan.

F-57

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Unaudited Consolidated Financial Statements (Continued)

21. Commitments and Contingencies

The company entered into employment agreements with senior executives of the company. The employment agreements provide for minimum annual base salaries, severance payments ranging from 6 months to 2.5 years of base salary and bonuses and up to 2.5 years of continued health and insurance coverage, employment periods, and incentive compensation. The employment agreements contain standard confidentiality provisions, which apply indefinitely and noncompetition and non-solicitation provisions for one year following termination under certain circumstances.

The company entered into purchase agreements to acquire twenty-two single-tenant occupied, net lease real estate properties for approximately $92.7 million as of September 30, 2021. Consummation of these acquisitions is subject to customary closing conditions, including completion of our due diligence, and no assurance can be given that we will complete these acquisitions on these terms or at all. The company deposited approximately $0.9 million pursuant to these purchase agreements.

The company is periodically subject to claims or litigation in the ordinary course of business, including claims generated from business conducted by tenants and/or accidents occurring on real estate owned by the company. In these instances, the company is typically indemnified by the tenant against any losses that might be suffered, and the company and/or the tenant are insured against such claim.

22. Subsequent Events

The following events occurred subsequent to September 30, 2021:

The company repaid $35.0 million on the M&T Credit Facility and borrowed $60.0 million. The outstanding balance of the M&T Credit Facility was $70.0 million as of November 15, 2021.

The company issued a 53.5% beneficial interest in FSC Diversified 1, DST for gross proceeds of $15.2 million resulting in 93% third-party ownerhip interest in this DST as of November 15, 2021.

Pursuant to purchase agreements entered into as of September 30, 2021, the company acquired 19 single-tenant occupied, net lease properties for approximately $66,277,000 to which $675,000 in deposits were applied. Of these, seven properties were acquired by the company with an entity formed as a DST, FSC Healthcare 7, DST, for approximately $33,037,000. In connection with this acquisition, FSC Healthcare 7, DST entered into a mortgage note payable for an aggregate of $18,170,561 in loan proceeds. The note requires monthly interest-only payments at a rate of 2.95% for the first five years and monthly principal and interest thereafter based on a thirty year amortization period until maturity in 2028.

The company sold one real estate property for approximately $3,612,000 for a gain on sale of approximately $171,000.

F-58

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Trustees
Four Springs Capital Trust
Lake Como, New Jersey

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Four Springs Capital Trust (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive (loss) income, changes in contingently redeemable preferred shares and OP units and changes in equity, and cash flows for the years then ended, and the related notes and schedule (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2014.

/s/ BDO USA, LLP

New York, New York

August 24, 2021

F-59

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Consolidated Balance Sheets

​	December 31,
​	2020			2019
Assets:	​	​	​	​	​	​
Real estate, net	​	$	374,498,898	​	$	316,221,143
Cash and cash equivalents	​	​	10,323,785	​	​	11,360,542
Accounts receivable and other assets	​	​	8,144,285	​	​	7,473,262
Receivable from affiliate	​	​	50,429	​	​	50,393
Deferred rent receivable	​	​	6,238,440	​	​	4,629,793
Origination value of acquired in-place leases, net	​	​	42,336,654	​	​	37,343,732
Acquired favorable leases, net	​	​	7,061,362	​	​	7,280,466
Real estate and other assets classified as held for sale	​	​	740,158	​	​	—
Total Assets	​	$	449,394,011	​	$	384,359,331
Liabilities and Equity	​	​	​	​	​	​
Liabilities:	​	​	​	​	​	​
Notes payable, net	​	$	161,590,853	​	$	125,725,718
Line of credit, net	​	​	14,180,302	​	​	66,180,350
Mezzanine note payable, net	​	​	83,067,793	​	​	—
Accounts payable, accrued expenses and other liabilities	​	​	11,486,551	​	​	8,163,424
Acquired unfavorable leases, net	​	​	2,546,442	​	​	2,141,651
Liabilities related to assets classified as held for sale	​	​	20,940	​	​	—
Total Liabilities	​	​	272,892,881	​	​	202,211,143
Commitments and Contingencies – See note 21	​			​
Temporary Equity:	​	​	​	​	​	​
Contingently redeemable Series E preferred shares, $0.001 par value, $0 and $55,089,037 liquidation preference, 0 and 5,750,000 shares designated, 0 and 2,754,452 shares issued and outstanding (convertible to 0 and 3,060,502 common shares) at December 31, 2020 and 2019, respectively.	​	​	—	​	​	52,478,008
Contingently redeemable Series A-1 preferred shares, $0.001 par value, 10,000,000 and 0 shares designated, 2,512,825 and 0 shares issued and outstanding (convertible to common shares) at December 31, 2020 and 2019, respectively.	​	​	47,632,738	​	​	—
Contingently redeemable Series U1 OP units, $4,147,805 and $0 liquidation preference; 181,116 and 0 units issued and outstanding (convertible to 181,116 and 0 common shares) at December 31, 2020 and 2019, respectively.	​	​	4,147,805	​	​	—
Total Temporary Equity	​	​	51,780,543	​	​	52,478,008
Permanent Equity:	​	​	​	​	​	​
Shareholders’ Equity:	​	​	​	​	​	​
Preferred shares, $0.001 par value, 87,547,309 and 100,000,000 shares authorized, 10,000,000 and 55,950,000 of which have been designated, at December 31, 2020 and 2019, respectively.	​	​	—	​	​	—

See accompanying notes to consolidated financial statements.

F-60

​	December 31,
​	2020			2019
Series A preferred shares, $0.001 par value, $0 and $57,713,480 liquidation preference, 0 and 8,200,000 shares designated, 0 and 5,771,348 shares issued and outstanding (convertible to 0 and 2,885,674 common shares) at December 31, 2020 and 2019, respectively.	​	​	—	​	​	5,771
Series B preferred shares, $0.001 par value, $0 and $13,715,366 liquidation preference, 0 and 7,000,000 shares designated, 0 and 1,275,848 shares issued and outstanding (convertible to 0 and 637,924 common shares) at December 31, 2020 and 2019, respectively.	​	​	—	​	​	1,276
Series C preferred shares, $0.001 par value, $0 and $20,902,123 liquidation preference, 0 and 12,000,000 shares designated, 0 and 1,900,193 shares issued and outstanding (convertible to 0 and 950,097 common shares) at December 31, 2020 and 2019, respectively.	​	​	—	​	​	1,900
Series D preferred shares, $0.001 par value, $0 and $57,933,790 liquidation preference, 0 and 20,000,000 shares designated, 0 and 2,896,689 shares issued and outstanding (convertible to 0 and 2,896,689 common shares) at December 31, 2020 and 2019, respectively.	​	​	—	​	​	2,897
Series DRIP 1 preferred shares, $0.001 par value, $0 and $1,608,945 liquidation preference, 0 and 3,000,000 shares designated, 0 and 82,510 shares issued and outstanding (convertible to 0 and 82,510 common shares) at December 31, 2020 and 2019, respectively.	​	​	—	​	​	82
Common shares, $0.001 par value, 504,671,451 and 500,000,000 shares authorized, 223,203 and 0 of which have been designated, 6,533,284 and 1,861,833 shares issued and outstanding at December 31, 2020 and 2019, respectively.	​	​	6,533	​	​	1,863
Non-participating common shares, $0.001 par value, 223,203 and 0 shares designated, 200,015 and 0 shares issued and outstanding (convertible to 200,015 and 0 common shares) at December 31, 2020 and 2019, respectively.	​	​	200	​	​	—
Additional paid-in capital	​	​	140,127,691	​	​	133,600,773
Accumulated other comprehensive loss	​	​	(2,670,745)	​	​	(836,257)
Cumulative dividends in excess of net income	​	​	(83,375,057)	​	​	(60,237,242)
Total shareholders’ equity	​	​	54,088,622	​	​	72,541,063
Noncontrolling Interests	​	​	70,631,965	​	​	57,129,117
Total Equity	​	​	124,720,587	​	​	129,670,180
Total Liabilities, Contingently Redeemable Interests and Equity	​	$	449,394,011	​	$	384,359,331

See accompanying notes to consolidated financial statements.

F-61

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Consolidated Statements of Operations

​	Year Ended December 31,
​	2020			2019
Revenues:	​	​	​	​	​	​
Rental	​	$	35,605,378	​	$	30,711,465
Other	​	​	131,933	​	​	32,723
Total Revenues	​	​	35,737,311	​	​	30,744,188
Expenses:	​	​	​	​	​	​
Property operating	​	​	4,704,960	​	​	3,557,428
General and administrative	​	​	5,150,505	​	​	5,362,898
Professional fees	​	​	901,842	​	​	626,962
Depreciation and amortization	​	​	13,562,035	​	​	10,630,039
Interest	​	​	12,597,272	​	​	9,567,761
Acquisition costs	​	​	236,324	​	​	55,633
Provision for impairment	​	​	535,000	​	​	—
Total Expenses	​	​	37,687,938	​	​	29,800,721
Change in fair value of conversion feature liability and warrant liability	​	​	354,898	​	​	(97,939)
Gain on sale of real estate	​	​	408,820	​	​	2,698,228
Provision for income taxes	​	​	(28,954)	​	​	(307,935)
Net (Loss) Income	​	​	(1,215,863)	​	​	3,235,821
Net Loss (Income) Attributable to Noncontrolling Interests	​	​	75,741	​	​	(948,836)
Net (Loss) Income Attributable to Four Springs Capital Trust	​	​	(1,140,122)	​	​	2,286,985
Preferred Share Dividends and Series U1 OP Unit Distributions	​	​	(19,705,449)	​	​	(19,247,257)
Accretion on Contingently Redeemable Preferred Shares and OP Units	​	​	(2,789,949)	​	​	(572,773)
Net Loss Attributable to Common Shareholders	​	$	(23,635,520)	​	$	(17,533,045)
Loss Per Common Share–Basic and Diluted:	​	​	​	​	​	​
Net loss per common share	​	$	(8.58)	​	$	(9.42)
Weighted average shares	​	​	2,755,280	​	​	1,861,833

See accompanying notes to consolidated financial statements.

F-62

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Consolidated Statements of Comprehensive (Loss) Income

​	Year Ended December 31,
​	2020			2019
Net (Loss) Income	​	$	(1,215,863)	​	$	3,235,821
Other comprehensive loss	​	​	​	​	​	​
Change in net realized and unrealized loss on hedging instruments	​	​	(1,970,564)	​	​	(888,893)
Income tax benefit related to other comprehensive loss	​	​	98,528	​	​	44,445
Other comprehensive loss, net of tax	​	​	(1,872,036)	​	​	(844,448)
Comprehensive (Loss) Income	​	​	(3,087,899)	​	​	2,391,373
Loss (Income) Attributable to Noncontrolling Interests	​	​	75,741	​	​	(948,836)
Other Comprehensive Loss Attributable to Noncontrolling Interests	​	​	37,548	​	​	8,191
Comprehensive (Loss) Income Attributable to Four Springs Capital Trust	​	$	(2,974,610)	​	$	1,450,728

See accompanying notes to consolidated financial statements.

F-63

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Consolidated Statements of Changes in Contingently Redeemable Preferred Shares and OP Units
and Changes in Equity

​

Contingently Redeemable Preferred Shares and OP Units

Series A, Series B, Series C, Series D and Series DRIP 1 Preferred Shares

Common Shares and non - participating common shares

Additional Paid-In Capital

Cumulative Dividends and Net Losses

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Noncontrolling Interests

Total Equity

​

Shares / Units

Amount

Shares

Amount

Shares

Amount

Balance, December 31, 2018

​

2,338,659

​

$

43,597,770

​

10,556,693

​

$

10,557

​

1,861,833

​

$

1,863

​

$

109,633,128

​

$

(43,233,227)

​

$

—

​

$

66,412,321

​

$

49,065,320

​

$

115,477,641

Gross proceeds from issuance of Series D preferred shares

​

—

​

​

—

​

1,244,099

​

​

1,244

​

—

​

​

—

​

​

24,472,258

​

​

—

​

​

—

​

​

24,473,502

​

​

—

​

​

24,473,502

Dividend shares issued in-kind to Series D preferred shareholders

​

—

​

​

—

​

67,160

​

​

67

​

—

​

​

—

​

​

1,343,133

​

​

(1,343,200)

​

​

—

​

​

—

​

​

—

​

​

—

Gross proceeds from issuance of Series DRIP 1 preferred shares

​

—

​

​

—

​

64,886

​

​

65

​

—

​

​

—

​

​

1,265,218

​

​

—

​

​

—

​

​

1,265,283

​

​

—

​

​

1,265,283

Dividend shares issued in-kind to contingently redeemable Series E preferred shareholders

​

415,793

​

​

8,315,851

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(8,315,851)

​

​

—

​

​

(8,315,851)

​

​

—

​

​

(8,315,851)

Cost of issuing contingently redeemable Series E preferred shares

​

—

​

​

(8,386)

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Accretion of contingently redeemable Series E preferred shares

​

—

​

​

572,773

​

—

​

​

—

​

—

​

​

—

​

​

(572,773)

​

​

—

​

​

—

​

​

(572,773)

​

​

—

​

​

(572,773)

Repurchase of Series A preferred shares

​

—

​

​

—

​

(6,250)

​

​

(7)

​

—

​

​

—

​

​

—

​

​

(43,743)

​

​

—

​

​

(43,750)

​

​

—

​

​

(43,750)

Share-based compensation

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

54,312

​

​

—

​

​

—

​

​

54,312

​

​

—

​

​

54,312

Proceeds from issuing DST beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

11,840,340

​

​

11,840,340

Cost of issuing Series D preferred shares and DST beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

(2,594,503)

​

​

—

​

​

—

​

​

(2,594,503)

​

​

(1,101,923)

​

​

(3,696,426)

Net income

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

2,286,985

​

​

—

​

​

2,286,985

​

​

948,836

​

​

3,235,821

Other comprehensive loss

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

(836,257)

​

​

(836,257)

​

​

(8,191)

​

​

(844,448)

See accompanying notes to consolidated financial statements.

F-64

​

Contingently Redeemable Preferred Shares and OP Units

Series A, Series B, Series C, Series D and Series DRIP 1 Preferred Shares

Common Shares and non - participating common shares

Additional Paid-In Capital

Cumulative Dividends and Net Losses

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Noncontrolling Interests

Total Equity

​

Shares / Units

Amount

Shares

Amount

Shares

Amount

Dividends on Series A, B, C, D and DRIP 1 preferred shares and OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(9,588,206)

​

​

—

​

​

(9,588,206)

​

​

(143,068)

​

​

(9,731,274)

Distributions on DSTs beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(3,472,197)

​

​

(3,472,197)

Balance, December 31, 2019

​

2,754,452

​

$

52,478,008

​

11,926,588

​

$

11,926

​

1,861,833

​

$

1,863

​

$

133,600,773

​

$

(60,237,242)

​

$

(836,257)

​

$

72,541,063

​

$

57,129,117

​

$

129,670,180

Gross proceeds from issuance of Series D preferred shares

​

—

​

​

—

​

523,209

​

​

524

​

—

​

​

—

​

​

10,323,740

​

​

—

​

​

—

​

​

10,324,264

​

​

—

​

​

10,324,264

Dividend shares issued in-kind to Series D preferred shareholders

​

—

​

​

—

​

84,105

​

​

84

​

—

​

​

—

​

​

1,682,016

​

​

(1,682,100)

​

​

—

​

​

—

​

​

—

​

​

—

Gross proceeds from issuance of Series DRIP 1 preferred shares

​

—

​

​

—

​

21,288

​

​

21

​

—

​

​

—

​

​

415,091

​

​

—

​

​

—

​

​

415,112

​

​

—

​

​

415,112

Dividend shares issued in-kind to contingently redeemable Series E preferred shareholders

​

396,491

​

​

7,929,812

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(7,929,812)

​

​

—

​

​

(7,929,812)

​

​

—

​

​

(7,929,812)

Accretion of contingently redeemable Series E preferred shares

​

—

​

​

2,611,027

​

—

​

​

—

​

—

​

​

—

​

​

(2,611,027)

​

​

—

​

​

—

​

​

(2,611,027)

​

​

—

​

​

(2,611,027)

Redemption of contingently redeemable Series E preferred shares

​

(3,150,943)

​

​

(63,018,847)

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Bifurcated proceeds from issuance of contingently redeemable Series A-1 preferred shares

​

2,500,000

​

​

47,559,399

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Cost of issuing contingently redeemable Series A-1 preferred shares

​

—

​

​

(190,158)

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

Dividends paid on contingently redeemable Series A-1 preferred shareholders

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(399,012)

​

​

—

​

​

(399,012)

​

​

—

​

​

(399,012)

See accompanying notes to consolidated financial statements.

F-65

​	Contingently Redeemable Preferred Shares and OP Units				Series A, Series B, Series C, Series D and Series DRIP 1 Preferred Shares				Common Shares and non - participating common shares				Additional Paid-In Capital		Cumulative Dividends and Net Losses		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity		Noncontrolling Interests		Total Equity
​	Shares / Units		Amount		Shares		Amount		Shares		Amount
Bifurcated dividend shares issued in-kind of contingently redeemable Series A-1 preferred shares	​	12,825	​	247,828	​	—	​	—	​	—	​	—	​	—	​	(256,501)	​	—	​	(256,501)	​	—	​	(256,501)
Accretion of contingently redeemable Series A-1 preferred shares	​	—	​	15,669	​	—	​	—	​	—	​	—	​	(15,669)	​	—	​	—	​	(15,669)	​	—	​	(15,669)
Gross proceeds from issuance of contingently redeemable Series U1 OP units	​	181,116	​	3,984,552	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—
Distributions on contingently redeemable Series U1 OP units	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	(116,220)	​	—	​	(116,220)	​	—	​	(116,220)
Accretion of contingently redeemable Series U1 OP units	​	—	​	163,253	​	—	​	—	​	—	​	—	​	(163,253)	​	—	​	—	​	(163,253)	​	—	​	(163,253)
OP acquisition of net assets of noncontrolling interests in DSTs	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	(3,980,536)	​	(3,980,536)
Consideration in excess of net assets acquired from noncontrolling interests in DSTs	​	—	​	—	​	—	​	—	​	—	​	—	​	(1,743,418)	​	—	​	—	​	(1,743,418)	​	—	​	(1,743,418)
Repurchase of Series A preferred shares	​	—	​	—	​	(2,500)	​	(2)	​	—	​	—	​	—	​	(17,998)	​	—	​	(18,000)	​	—	​	(18,000)
Repurchase of Series C preferred shares	​	—	​	—	​	(100,000)	​	(100)	​	—	​	—	​	—	​	(749,900)	​	—	​	(750,000)	​	—	​	(750,000)
Share-based compensation	​	—	​	—	​	—	​	—	​	—	​	—	​	29,066	​	—	​	—	​	29,066	​	—	​	29,066
Restructuring	​	—	​	—	​	(12,452,690)	​	(12,453)	​	4,871,466	​	4,870	​	7,583	​	—	​	—	​	—	​	—	​	—
Cost of restructuring	​	—	​	—	​	—	​	—	​	—	​	—	​	(800,073)	​	—	​	—	​	(800,073)	​	—	​	(800,073)
Proceeds from issuing DST beneficial interests	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	23,775,438	​	23,775,438
Cost of issuing Series D preferred shares and DST beneficial interests	​	—	​	—	​	—	​	—	​	—	​	—	​	(597,138)	​	—	​	—	​	(597,138)	​	(2,268,108)	​	(2,865,246)
Net loss	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	(1,140,122)	​	—	​	(1,140,122)	​	(75,741)	​	(1,215,863)
Other comprehensive loss	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	—	​	(1,834,488)	​	(1,834,488)	​	(37,548)	​	(1,872,036)

See accompanying notes to consolidated financial statements.

F-66

​

Contingently Redeemable Preferred Shares and OP Units

Series A, Series B, Series C, Series D and Series DRIP 1 Preferred Shares

Common Shares and non - participating common shares

Additional Paid-In Capital

Cumulative Dividends and Net Losses

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Noncontrolling Interests

Total Equity

​

Shares / Units

Amount

Shares

Amount

Shares

Amount

Dividends on Series A, B, C, D and DRIP 1 preferred shares and OP units and Series A preferred OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(9,321,804)

​

​

—

​

​

(9,321,804)

​

​

(119,224)

​

​

(9,441,028)

Dividends on common shares and common OP units

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

(1,524,346)

​

​

—

​

​

(1,524,346)

​

​

(15,314)

​

​

(1,539,660)

Distributions on DSTs beneficial interests

​

—

​

​

—

​

—

​

​

—

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(3,776,119)

​

​

(3,776,119)

Balance, December 31, 2020

​

2,693,941

​

$

51,780,543

​

—

​

$

—

​

6,733,299

​

$

6,733

​

$

140,127,691

​

$

(83,375,057)

​

$

(2,670,745)

​

$

54,088,622

​

$

70,631,965

​

$

124,720,587

See accompanying notes to consolidated financial statements.

F-67

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Consolidated Statements of Cash Flows

​	Year Ended December 31,
​	2020			2019
Cash Flows from Operating Activities:	​	​	​	​	​	​
Net (loss) income	​	$	(1,215,863)	​	$	3,235,821
Adjustments to reconcile net (loss) income to net cash provided by operating activities:	​	​	​	​	​	​
Impairment loss	​	​	535,000	​	​	—
Gain from sale of real estate	​	​	(408,820)	​	​	(2,698,228)
Depreciation	​	​	9,768,020	​	​	7,555,816
Amortization of deferred financing costs	​	​	2,193,493	​	​	1,219,074
Change in fair value of conversion feature liability and warrant liability	​	​	(354,898)	​	​	97,939
Amortization of interest rate hedge payoff	​	​	213,500	​	​	—
Capitalized interest on mezzanine note payable	​	​	670,693	​	​	—
Amortization of origination value of acquired in-place leases	​	​	3,761,412	​	​	3,074,223
Amortization of acquired favorable (unfavorable) leases, net	​	​	292,129	​	​	286,289
Amortization of leasing commissions	​	​	32,606	​	​	—
Amortization of mortgage premium	​	​	(91,891)	​	​	(91,446)
Share-based compensation	​	​	29,066	​	​	54,312
Write-off of deferred costs	​	​	59,869	​	​	—
Changes in operating assets and liabilities:	​	​	​	​	​	​
Accounts receivable and other assets	​	​	(1,904,795)	​	​	(649,386)
Deferred rent receivable	​	​	(1,608,647)	​	​	(1,335,716)
Accounts payable, accrued expenses and other liabilities	​	​	1,215,348	​	​	917,016
Receivable from affiliate	​	​	(36)	​	​	42,586
Net Cash Provided by Operating Activities	​	​	13,186,186	​	​	11,708,300
Cash Flows from Investing Activities:	​	​	​	​	​	​
Acquisitions and additions to real estate	​	​	(85,196,774)	​	​	(94,494,637)
Equipment additions	​	​	(28,716)	​	​	(43,495)
Proceeds from sale of real estate	​	​	7,857,173	​	​	19,815,010
Net Cash Used in Investing Activities	​	​	(77,368,317)	​	​	(74,723,122)
Cash Flows from Financing Activities:	​	​	​	​	​	​
Proceeds from notes payable	​	​	36,620,000	​	​	38,636,602
Principal repayments of notes payable	​	​	(556,225)	​	​	(369,391)
Proceeds from line of credit	​	​	99,380,953	​	​	25,500,000
Repayments on line of credit	​	​	(150,130,953)	​	​	(13,000,000)
Proceeds from mezzanine note payable	​	​	85,000,000	​	​	—
Proceeds from issuance of Series A-1 preferred shares	​	​	49,250,000	​	​	—
Cost of issuing Series A-1 preferred shares	​	​	(190,158)	​	​	—
Redemption Series E preferred shares	​	​	(63,018,847)	​	​	—
Payments on deferred equity costs	​	​	(66,818)	​	​	(160,966)

See accompanying notes to consolidated financial statements.

F-68

​	Year Ended December 31,
​	2020			2019
Debt issuance costs	​	​	(6,153,192)	​	​	(1,739,878)
Interest rate hedge payoff	​	​	(1,281,000)	​	​	—
Payments to acquire beneficial interest from noncontrolling interests	​	​	(1,739,402)	​	​	—
Proceeds from issuance of Series D and Series DRIP 1 preferred shares	​	​	10,739,376	​	​	25,738,785
Proceeds from issuing DST beneficial interests	​	​	23,775,438	​	​	11,840,340
Cost of restructuring	​	​	(800,073)	​	​	—
Cost of issuing Series D and Series E preferred shares	​	​	(597,138)	​	​	(2,602,889)
Cost of issuing DST beneficial interests	​	​	(2,268,108)	​	​	(1,101,923)
Repurchase of preferred shares	​	​	(768,000)	​	​	(43,750)
Dividends paid on Series A, B, C, D and DRIP 1 preferred shares and OP units	​	​	(9,441,028)	​	​	(9,731,274)
Dividends paid on Series A-1 preferred shares	​	​	(399,012)	​	​	—
Dividends paid on common shares and common OP units	​	​	(1,539,660)	​	​	—
Distributions paid on Series U1 OP units	​	​	(116,220)	​	​	—
Distributions paid on DST beneficial interests	​	​	(3,776,119)	​	​	(3,472,197)
Net Cash Provided by Financing Activities	​	​	61,923,814	​	​	69,493,459
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash	​	​	(2,258,317)	​	​	6,478,637
Cash, Cash Equivalents and Restricted Cash, Beginning of Year	​	​	14,737,081	​	​	8,258,444
Cash, Cash Equivalents and Restricted Cash, End of Year	​	$	12,478,764	​	$	14,737,081
Supplemental Disclosures of Cash Flow Information:	​	​	​	​	​	​
Cash paid for interest	​	$	8,868,574	​	$	8,522,780
Cash paid for income taxes (net of refunds)	​	$	375,397	​	$	261,860
Supplemental Disclosures of Non-Cash Investing and Financing Activities:	​	​	​	​	​	​
Series U1 OP units issued in UPREIT to acquire noncontrolling interests in real estate	​	$	3,984,552	​	$	—
Series U1 OP units accretion	​	$	163,253	​	$	—
Discount on Series A-1 preferred shares	​	$	750,000	​	$	—
Series A-1 preferred share dividends paid in-kind	​	$	256,501	​	$	—
Series A-1 preferred share accretion	​	$	15,669	​	$	—
Series D preferred share dividends paid in-kind	​	$	1,682,100	​	$	1,343,200
Series E preferred share dividends paid in-kind	​	$	7,929,812	​	$	8,315,851
Series E preferred share accretion	​	$	2,611,029	​	$	572,773
Warrants for common shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . .	​	$	1,481,357	​	$	—

See accompanying notes to consolidated financial statements.

F-69

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements

1. Organization and Business

Four Springs Capital Trust, a Maryland real estate investment trust (the “Trust”), is a real estate investment trust (“REIT”) which was formed on July 5, 2012. The Trust is the sole general partner of and owned 97.34% of Four Springs Capital Trust Operating Partnership, L.P. (the “Operating Partnership” or “OP”) as of December 31, 2020 and 99.16% as of December 31, 2019. The principal business of the Trust and the Operating Partnership (collectively, the “company,” “we,” “our,” or “us”) is the ownership, acquisition and management of net leased real estate.

The company owns substantially all of its real estate properties through the Operating Partnership and Delaware Statutory Trusts (“DSTs”). However, properties may be owned directly, through other subsidiaries of the Operating Partnership, or through other entities. FSCT OP, LLC is the initial limited partner of the Operating Partnership. The company’s ownership of properties through the Operating Partnership is referred to as an “UPREIT” structure. An UPREIT structure may enable sellers of properties to transfer their properties to the Operating Partnership in exchange for limited partnership units of the Operating Partnership (“OP units”) and defer potential gain recognition for tax purposes with respect to such transfers of properties.

Beginning in July 2012, the company commenced a private placement of Series A preferred shares at a price of $10 per share that also included a quarter of one warrant. The Series A preferred shares offering ended in February 2014. From March 2014 through December 2014, the company offered a private placement of Series B preferred shares at a price of $10.75 per share that also included fifteen-hundredths of one warrant. The company commenced an offering of Series C preferred shares at $11 per share in November 2015 that also included warrants on a discretionary basis. The Series C preferred shares offering ended in March 2017.

On June 21, 2017, the company amended its declaration of trust to effect a one-for-two reverse split of the company’s common shares (the “Reverse Share Split”). In connection with the Reverse Share Split, the Operating Partnership effected a one-for-two reverse split on the common OP units (the “Reverse Common OP Unit Split,” and together with the Reverse Share Split, the “Reverse Split”). The number of authorized common shares were not adjusted as a result of the Reverse Share Split. As a result of the Reverse Split, the Series A, B and C preferred share conversion rate, the Series A, B and C preferred OP unit conversion rate, and the warrant and option prices and ratios likewise, as applicable to the Series A, B and C preferred shares, were adjusted, as follows:

•

upon a conversion, every two outstanding Series A, B or C preferred shares converts into one common share;

•

upon a conversion, every two outstanding Series A, B or C preferred OP units converts into one OP unit;

•

the exercise price per share of each outstanding warrant to purchase Series A, B or C preferred shares increased to twice its original exercise price per share and the number of common shares issuable upon conversion of each Series A, B or C preferred share issued in connection with a warrant exercise decreased by one-half; and

•

the exercise price per share of each option, outstanding as of June 21, 2017, to purchase common shares increased to twice its original exercise price per share and the number of common shares issuable upon exercise of each outstanding option decreased by one-half.

In January 2018, the company completed a private placement of Series E preferred shares at an offering price of $20.00 per share. In May 2018, the company commenced a private placement offering of Series D preferred shares at $20.00 per share. The Series D preferred shares offering ended in October 2020.

On October 23, 2020, the Trust amended its declaration of trust to effect a restructuring of its outstanding common shares and OP units and certain of its preferred shares (the “Restructuring”) such that the following occurred:

•

each common share outstanding immediately before the Restructuring was exchanged for 0.10742102 of a non-participating common share;

F-70

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

1. Organization and Business (Continued)

•

each Series A, B, C, D and DRIP 1 preferred share was exchanged for 0.3209537, 0.3450252, 0.3530491, 1.0000000, and 0.9750000 of a common share, respectively;

•

options and warrants outstanding immediately before the Restructuring exercisable for common shares were adjusted as follows: (1) the class of shares issuable upon exercise of such options and warrants will be non-participating common shares; (2) the number of non-participating common shares will be determined by multiplying the original number of shares issuable upon exercise of such instruments by 0.10742102; and (3) the exercise price per non-participating common share will be determined by multiplying the original exercise price per share as set forth in such instruments by 9.3091650; and

•

warrants outstanding immediately before the Restructuring exercisable for Series A, B and C preferred shares were adjusted as follows: (1) the class of shares issuable upon exercise of such warrants will be common shares; (2) the number of shares issuable upon exercise of such warrants will be determined by multiplying the original number of shares issuable upon exercise of such instruments by 0.3209537, 0.3450252, 0.3530491, respectively; and (3) the exercise price per common share will be $31.1571429.

In connection with the Restructuring, the Operating Partnership effected a similar exchange of its common OP units, Series A, B, C, D and DRIP 1 preferred OP units outstanding immediately before the Restructuring.

The company commenced a private placement offering of Series A-1 preferred shares at $20 per share in November 2020.

Summary of Activity

We operate our business in two segments: the real estate ownership and operating segment (the “Real Estate Segment”) and the real estate investment syndication and management segment (the “Investment Management Segment”). We define our reportable segments to be aligned with our method of internal reporting and the way our Chief Executive Officer, who is also our Chief Operating Decision Maker (“CODM”), makes key operating decisions, evaluates financial results, allocates resources and manages our business. Accordingly, we aggregate our operating segments into these two reportable segments based on the economic characteristics and nature of our assets and services.

In the Real Estate Segment, during the year ended December 31, 2020, the company acquired eight properties and sold three properties. During the year ended December 31, 2019, the company acquired twenty properties and sold eleven properties. As of December 31, 2020, the company wholly owns or has an ownership interest in 101 properties which are located in twenty eight states and leased to forty nine tenants operating in thirty seven different industries. As of December 31, 2020, the weighted average remaining lease term of the properties in the company’s portfolio is approximately 10 years. The properties in the portfolio are 100% leased as of December 31, 2020 and 2019.

In the Investment Management Segment, the company commenced or completed syndicating two properties during the year ended December 31, 2020 and four properties during the year ended December 31, 2019.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. One of the most significant risks and uncertainties is the potential adverse effect of COVID-19. The COVID-19 pandemic has had repercussions across regional and global economies and financial markets. The outbreak of COVID-19 in many countries, including the United States, has significantly adversely impacted economic activity and has contributed to significant volatility and negative pressure in financial markets.

The COVID-19 pandemic could have material and adverse effects on our financial condition, results of operations and cash flows in the near term due to, but not limited to the following:

F-71

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

1. Organization and Business (Continued)

•

reduced economic activity severely impacts our tenants’ businesses, financial condition and liquidity and may cause tenants to be unable to fully meet their obligations to us;

•

the negative financial impact of the pandemic could impact our future compliance with financial covenants of our credit facility and other debt agreements; and

•

weaker economic conditions could cause us to recognize impairment in value of our tangible or intangible assets.

As of December 31, 2020, the company has not granted any requests for rent deferral or rent abatement during this pandemic. The company has collected 100% of base rent originally contracted for the year ended December 31, 2020.

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on the company’s financial condition, liquidity and future results of operations. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, and cash flows.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Application of these estimates and assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from those estimates.

The accompanying consolidated financial statements include the accounts of the company and its controlling investments in subsidiaries. Results of operations of properties acquired are included in the consolidated statements of operations from the date of acquisition. All intercompany transactions, balances and accounts have been eliminated in consolidation. The company determines whether it has a controlling interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”) under GAAP.

Voting interest entities are entities in which the total equity investment at risk is sufficient to enable the entity to finance itself independently and which provide the equity holders with the obligation to absorb losses, the right to receive residual returns and the right or power to make decisions about or direct the entity’s activities that most significantly impact the entity’s economic performance. Voting interest entities, where the company has a majority interest, are consolidated in accordance with GAAP. The guidance states that the usual condition for a controlling financial interest in an entity is ownership of a majority voting interest. Accordingly, the company consolidates voting interest entities in which it has a majority of the voting interests.

VIEs are entities that lack one or more of the characteristics of a voting interest entity. The primary beneficiary of a VIE is required to consolidate the VIE. The company determines whether it is the primary beneficiary of a VIE by performing a qualitative analysis of the VIE that includes, among other factors, an evaluation of which enterprise has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could be significant to the VIE. The company identified the Operating Partnership as a VIE that continues to be

F-72

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

consolidated by the company as the primary beneficiary because the company has a controlling financial interest in this VIE. We evaluated the DSTs and determined they are VIEs. We evaluated the company’s interests in the DSTs and determined we have the power to direct activities that most significantly impact these VIEs and are the primary beneficiary of these VIEs.

A noncontrolling interest in a consolidated subsidiary is defined as the portion of the equity (net assets) in a subsidiary not attributable, directly or indirectly, to us. Noncontrolling interests are required to be presented as a separate component of equity in the consolidated balance sheets and the presentation of net income was modified to present earnings and other comprehensive income attributed to controlling and noncontrolling interests.

Square footage, acreage, occupancy and other measures used to describe real estate included in these notes to the consolidated financial statements are presented on an unaudited basis.

Contingently Redeemable Series A-1 Preferred Shares

The Series A-1 preferred shares provide for contingent conversion and redemption features that may be exercisable by either the company or the holder, may result in conversion into a variable number of common shares upon a qualified listing event or may result in conversion or redemption at a fixed date should an earlier conversion or redemption not occur. The Series A-1 preferred shares are presented as temporary equity in an account presented between liabilities and equity on the consolidated balance sheets because they contain redemption and conversion features outside of the company’s control. This accounting treatment is in accordance with Accounting Standards Codification (“ASC”) 480-10-S99, “Distinguishing Liabilities from Equity.” The issuance costs and discount are being accreted to the carrying value of the Series A-1 preferred shares over the redemption period. The conversion feature is bifurcated from the Series A-1 preferred share host instrument and included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets. Cumulative dividends are accrued as change in value and recognized as part of preferred share dividends and Series U1 OP Unit distributions in the consolidated statements of operations.

Contingently Redeemable Series E Preferred Shares

In connection with the private placement offering of the Series E preferred shares, we entered into put and call arrangements wherein we may be required or elect to redeem the shares for cash at a later date. In accounting for these arrangements we are required to make estimates with regard to the final amount we will eventually pay for the shares that we may redeem. In the put arrangements, the final settlement values are based on liquidation preferences as an estimate for the final value that will eventually be paid to settle the arrangement. We account for the put arrangement as temporary equity in an account presented between liabilities and equity on the consolidated balance sheets. This classification is appropriate because the instruments are contingently redeemable based on events outside the company’s control. This accounting treatment is in accordance with ASC 480-10-S99, “Distinguishing Liabilities from Equity.” Redeemable noncontrolling interests are accreted to their redemption value over the period from the date of issuance to the first date on which the put option is exercisable. The issuance costs and discount are being accreted to the carrying value of the Series E preferred shares over the redemption period. Cumulative dividends are accrued as change in value and recognized as part of preferred share dividends and Series U1 OP Unit distributions in the consolidated statements of operations. The Series E preferred shares were fully redeemed in the year ended December 31, 2020.

Accounting for Real Estate Investments

Real estate properties comprise all tangible assets we hold for rent or for administrative purposes. Real property is recognized at cost less accumulated depreciation. Betterments, major renovations and certain costs directly

F-73

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

related to the improvement of real properties are capitalized. Direct costs incurred in acquiring completed properties that meet the classification of a business for accounting purposes are charged to expense as incurred. Acquired completed properties that do not meet the classification of a business are accounted for as asset acquisitions with direct costs of the acquisitions capitalized and allocated to acquired tangible and intangible assets on a relative fair value basis. Accordingly, asset acquisitions are recorded on a relative fair value basis. Maintenance and repair expenses are charged to expense as incurred.

Depreciation of an asset begins when it is available for use and is calculated using the straight-line method over the estimated useful lives. Each period, depreciation is charged to expense and credited to the related accumulated depreciation account. A used asset acquired is depreciated over its estimated remaining useful life, not to exceed the life of a new asset. The range of useful lives for depreciable assets are as follows:

Category	Term
Buildings	19 – 50 years
Building and site improvements	5 – 40 years
Tenant improvements	Shorter of remaining life of the lease or useful life
Furniture and equipment	3 – 20 years

Tenant improvements are capitalized in real property when we own the improvement. If the improvements are deemed to be owned by the tenant and we assume its payments (such as an upfront cash payment to the lessee or by assuming the payment or reimbursement of all or part of those costs) then we recognize the inducements as a deferred lease incentive.

Assets and liabilities of properties that meet various held-for-sale criteria, including that it is probable that a sale will occur within 12 months, are presented separately in the consolidated balance sheets, with assets and liabilities being separately stated. Properties that the company has determined are held for sale cease depreciating and are also required to be simultaneously reviewed for impairment and carried on the company’s consolidated balance sheets at the lower of net carrying value or estimated fair value less costs to sell.

Acquisitions of rental real estate that meet the definition of a business are accounted for as business combinations and the purchase price is allocated among the above components based on their estimated fair values at the date of acquisition and all transaction costs are expensed as incurred. Acquisitions of rental real estate not meeting the definition of a business are accounted for as asset acquisitions and the purchase price and direct costs are allocated among the below components based on their relative fair values at the date of acquisition. The company’s acquisitions of rental real estate are generally accounted for as asset acquisitions. Subsequent to the company’s adoption of ASC 842 effective on January 1, 2019, for real estate assets acquired through a sale-leaseback transaction and subject to a lease contract which contains a purchase option, the company will account for such acquisition as a financing arrangement and record the investment in the consolidated balance sheets.

The company allocates the purchase price of rental real estate acquired to the following:

•

acquired tangible assets, consisting of land, building and improvements; and

•

identified intangible assets and liabilities, consisting of favorable and unfavorable leases, in-place leases, tenant relationships and debt premiums and discounts

In estimating the fair value of the tangible and intangible assets acquired, the company considers information obtained about each property as a result of its due diligence activities and other market data, and utilizes various valuation methods, such as estimated cash flow projections utilizing appropriate discount and capitalization rates, estimates of replacement costs, and available market information. The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant.

F-74

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

Lease intangibles, if any, acquired in conjunction with the purchase of real estate represent the value of in-place leases and the value of favorable and unfavorable leases. For real estate acquired subject to existing leases, in-place lease values are based on our estimate of costs related to tenant acquisition and carrying costs during the time it would take to locate a tenant if the property were vacant, considering current market conditions and costs to execute similar leases at the time of acquisition. The value assigned to in-place leases is amortized as a component of depreciation and amortization in the accompanying consolidated statements of operations on a straight-line basis over the remaining initial term of the related lease. Factors considered by us in our analysis of in-place lease intangibles include market rents, real estate taxes, insurance, and other operating expenses and costs to execute similar leases during the expected lease-up period. The value of tenant relationship intangibles, if any, is amortized as a component of depreciation and amortization expense over the anticipated life of the relationships.

Favorable lease values, including premium on at-the-money contracts, and unfavorable lease values are recorded based on the present value of the difference between the contractual amounts to be paid pursuant to in-place leases at the time of acquisition and our estimate of current market lease rates for each corresponding in-place lease or the estimated return on cost for at-market leases, measured over a period equal to the remaining initial term of the lease. Capitalized favorable lease values are amortized over the remaining term of the respective leases as a decrease to rental revenue. Unfavorable lease values are amortized as an increase in rental revenue over the remaining term of the respective leases.

Assessment of the recoverability of lease intangibles must be made when we have reason to believe that a tenant might not be able to perform under the terms of the lease as originally expected. This requires us to make estimates as to the recoverability of such amounts. Should a lease terminate early, the unamortized portion of any related lease intangible is immediately recognized in our consolidated statements of operations.

For property acquisitions where the company assumes existing mortgage debt, the debt is recorded at its estimated fair value, based on management’s estimate of current borrowing rates available to the company for comparable financing. The company amortizes any discount or premium as part of interest expense on the related debt using the effective interest method.

Impairment

The company reviews its owned real properties for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If impairment indicators are present, the evaluation may include estimating and reviewing anticipated future undiscounted cash flows to be derived from the asset. Estimating future cash flows is highly subjective and includes an evaluation of factors such as the anticipated cash flows from the property, which may include rent from current leases in place and projected future leases, estimated capital expenditures, and an estimate of proceeds to be realized upon sale of the property. If such cash flows are less than the asset’s net carrying value, an impairment charge is recognized to earnings to the extent by which the asset’s carrying value exceeds the estimated fair value. The company’s estimates could differ materially from actual results. The company recognized $535,000 in impairment loss on one property during the year ended December 31, 2020 in order to reduce the carrying value of the property to its estimated fair value minus cost to sell. The fair value measurement for this property approximated its estimated selling price; the property sold in December 2020. The company did not recognize any impairment losses on long-lived assets during the year ended December 31, 2019.

Revenue Recognition

Rental revenues are recorded as income when earned and when they can be reasonably estimated. The company recognizes the effects of any scheduled rent increases and rent abatements on a straight-line basis over the term of the lease. This requires that rental income be recognized in equal annual amounts over the term of the

F-75

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

lease. Deferred rent receivable represents the cumulative effect of straight-lining leases and is computed as the difference between income accrued on a straight-line basis and contractual rent payments. The company reviews its straight-line operating lease receivables for collectability on a contract by contract basis and any amounts not considered substantially collectible are written off against rental revenues and the tenant revenues are recorded on a cash basis. Leases generally require tenants to reimburse the company for certain operating expenses applicable to their leased premises. These lessee-reimbursed costs and lessee reimbursements are recorded as incurred and earned, respectively, and have been included in property operating expenses and rental revenues, respectively, in the accompanying consolidated statements of operations. Lessor costs paid by lessees directly to third parties are not recognized in the consolidated statements of operations. Rental income also includes the amortization of favorable and unfavorable leases as an adjustment to rental income over the terms of the respective leases.

Offering Costs

During the years ended December 31, 2020 and 2019, the company incurred offering costs consisting primarily of issuing equity-based warrants, legal costs and sales commissions related to prospective equity offerings and the private placements of the company’s preferred shares and DSTs formed by the company to offer beneficial ownership interests in the trusts to unrelated third party investors. The costs of future offerings are deferred and included in accounts receivable and other assets in the consolidated balance sheets. Deferred offering costs are recognized as either a reduction of future equity offering proceeds or expensed if such costs no longer provide a future benefit or if such respective future offering is aborted. Offering costs of beneficial interests in DSTs are recorded as reductions of the equity proceeds from the sale of beneficial interests in the consolidated statements of changes in contingently redeemable preferred shares and OP units and changes in equity. Offering costs of the Series D preferred share private placement offering are recognized as a reduction of the related equity proceeds. Offering costs of the Series A-1 preferred share and Series E preferred share offerings are recognized as a reduction of the related equity proceeds received and are accreted to the carrying value of the preferred shares, recognized as temporary equity in the consolidated balance sheets.

Warrant Liability

The Company accounts for warrants on preferred shares and common shares with staggered expiration provisions contingent upon a qualified listing event as liability-classified instruments based on an assessment of the warrants’ specific terms and applicable authoritative guidance. Warrants that are required to be classified as a liability are recorded at their initial fair value on the date of issuance and are valued at each balance sheet date thereafter. Changes in the estimated fair value of liability-classified warrants are recognized as a non-cash gain or loss on the accompanying consolidated statements of operations.

Noncontrolling Interests

Due to the company’s control through its general partner interest in the Operating Partnership and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, is consolidated with the company and the limited partner interests, other than those held by the company, are reflected as noncontrolling interests on the accompanying consolidated balance sheets.

The beneficial ownership interests in the DSTs, excluding beneficial ownership by the company’s wholly-owned subsidiaries and the Operating Partnership, are reflected as noncontrolling interests on the accompanying consolidated balance sheets.

The company evaluates individual noncontrolling interests for the ability to recognize the noncontrolling interests as permanent equity on the consolidated balance sheets at the time such interests are issued and on a continual basis. We report such noncontrolling interests within equity in the consolidated balance sheets, but

F-76

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

separate from total shareholders’ equity. Any noncontrolling interests that fail to qualify as permanent equity will be reclassified as temporary equity and adjusted to the greater of (1) the carrying amount or (2) its redemption value as of the end of the period in which the determination is made.

The limited partners of the Operating Partnership that held Series A preferred OP units, other than the company, had the right to cause the Operating Partnership to redeem their OP units for cash or, at the sole option of the company, the company exchanged the OP units by issuing one share of the company’s Series A preferred shares for each Series A preferred OP unit. These redemption rights were not exercised under certain circumstances which would have caused the company to lose its REIT status. The Series A preferred OP units, other than those held by the company, were included in noncontrolling interests in the accompanying consolidated balance sheets, and statements of changes in contingently redeemable preferred shares and OP units and changes in equity.

The limited partners of the Operating Partnership holding Series U1 OP units have the right to cause the Operating Partnership to redeem their OP units for cash. This redemption right may be exercised only from May 31, 2026 through November 30, 2026. The Series U1 OP units are classified as temporary equity in the accompanying consolidated balance sheets. This classification is appropriate because the instruments are contingently redeemable based on events outside the company’s control. This accounting treatment is in accordance with ASC 480-10-S99, “Distinguishing Liabilities from Equity.” Redeemable noncontrolling interests are accreted for the excess of accreted redemption value over the initial carrying value adjusted for distributions and their allocable share of net income and other comprehensive losses over the period from the date of issuance to the first date on which the put option is exercisable.

Share-Based Compensation

Our 2014 Equity Incentive Plan (the “2014 Equity Plan”) is designed to promote the success and enhance the value of the company by linking the personal interests of the employees, officers, trustees and consultants of the company and its subsidiaries to those of the company shareholders and by providing such persons with an incentive for outstanding performance. The 2014 Equity Plan is further intended to provide flexibility to the company in its ability to motivate, attract and retain the services of employees, officers, trustees and consultants upon whose judgment, interest and special effort the successful conduct of the company’s operation is largely dependent. Accordingly, the 2014 Equity Plan permits the grant of options, share appreciation rights, restricted shares, restricted share units, long term incentive unit awards, performance awards and other awards from time to time to selected employees, officers, trustees and consultants of the company and its subsidiaries.

Income Taxes

The company has made an election to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. As such, we will generally not be subject to federal income tax on that portion of our taxable income that is distributed to shareholders if we distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain to our shareholders by prescribed dates and comply with various other requirements of the Internal Revenue Code of 1986, as amended (the “Code”). If the company fails to qualify as a REIT in any taxable year, we will be subject to federal income tax on the company’s taxable income at regular corporate rates.

The company, excluding the company’s taxable REIT subsidiaries, recognized certain state, local and franchise tax expense of $344,044 and tax benefit of $10,064 included in provision for income taxes in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively. Under certain circumstances, federal income and excise taxes may be due with respect to certain portions of the company’s net income and/or undistributed taxable income.

F-77

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

The company has elected, and may elect in the future, to treat certain of its existing or newly created corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may perform non-customary services for the tenants of the company, hold assets that the company cannot hold directly and generally may engage in any real estate or non-real estate related business. The TRSs generate income, resulting in federal and state income tax liability for these entities. The company does not expect to incur any corporate federal income tax liability outside of the TRSs, as we believe we have maintained our qualification as a REIT. During the year ended December 31, 2020, the company’s TRSs recognized federal income tax benefit of $161,136 and state, local and franchise tax benefit of $153,954 which are included as reductions to provision for income taxes on the accompanying consolidated statements of operations of the company. During year ended December 31, 2019, the company’s TRSs recognized provisions for federal income tax of $133,943 and provisions for state, local and franchise tax of $184,056 which are included in provisions for income taxes on the accompanying consolidated statements of operations of the company.

Uncertain tax positions are assessed by the company to determine whether a tax position of the company is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit with a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. We have assessed the federal and state tax positions and have concluded that we have no material uncertain tax liabilities to be recognized or disclosed.

The company’s federal income tax returns are subject to examination by the Internal Revenue Service, generally for three years after they are filed. The company’s state tax returns are subject to examination by state tax authorities depending upon the statute of limitations for tax audit in the respective states. The related state tax returns are subject to examination by state tax authorities depending upon the statute of limitations for tax audit in the respective states.

The components of our income tax provision are as follows:

​	Year Ended December 31,
​	2020			2019
Current income tax provision:	​	​	​	​	​	​
Federal	​	$	121,909	​	$	133,943
State and local	​	​	196,277	​	​	288,197
​	​	​	318,186	​	​	422,140
Deferred income tax benefit:	​	​	​	​	​	​
Federal	​	​	(283,045)	​	​	—
State and local	​	​	(6,187)	​	​	(114,205)
​	​	​	(289,232)	​	​	(114,205)
Total income tax provision	​	$	28,954	​	$	307,935

F-78

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

The income tax provision for the company differs from the amount computed from applying the statutory federal income tax rate to income before income taxes as follows:

​	Year Ended December 31,
​	2020			2019
Federal tax (benefit) provision at statutory tax rate	​	$	(329,860)	​	$	700,090
Non-taxable REIT loss (income)	​	​	106,788	​	​	(415,079)
Noncontrolling interests in DSTs	​	​	(1,131)	​	​	(272,514)
State and local tax	​	​	190,090	​	​	173,992
Permanent differences	​	​	104,603	​	​	31,411
Other	​	​	(41,536)	​	​	90,035
Total income tax provision	​	$	28,954	​	$	307,935

Deferred income taxes consist of the following:

​	December 31,
​	2020			2019
Deferred Tax Assets	​	​	​	​	​	​
Net operating losses	​	$	306,681	​	$	120,028
Basis differences–real estate properties	​	​	121,237	​	​	17,448
Basis differences–interest rate hedges	​	​	80,331	​	​	50,098
​	​	$	508,249	​	$	187,574
Deferred Tax Liabilities	​	​	​	​	​	​
Basis differences–interest rate hedges	​	$	—	​	$	5,653
Deferred charges	​	​	24,481	​	​	11,530
Other temporary differences	​	​	1,142	​	​	5,918
​	​	$	25,623	​	$	23,101

Our deferred tax assets and liabilities are primarily the result of temporary differences related to net operating losses; basis differences between tax and GAAP for certain real estate investments generated by differences in capitalized acquisition costs, allocated purchase price and terms of depreciable lives, basis differences between tax and GAAP for unrealized gains or losses on interest rate hedges; and timing differences generated by differences in the GAAP basis and the tax basis of assets such as those related to straight-lined rents, deferred charges and unearned revenue.

Cash and Cash Equivalents

The company defines cash equivalents as highly liquid investments purchased with maturities of three months or less at date of purchase. From time to time, the company’s account balance held at financial institutions exceeds Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related to the balance on deposit in excess of FDIC insurance coverage. We believe that the risk of loss is not significant and we have never experienced any losses related to these balances.

Accounts Receivable

The company's rental revenues are recognized based on contractual arrangements with its tenants. From the inception of a lease, if collection of substantially all of the lease payments is probable for a tenant, then rental

F-79

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

revenue is recognized as earned over the life of the lease agreement on a straight-line basis. If management determines that collection of substantially all of a lease’s payments is not probable, it will revert to recognizing such lease payments on a cash basis and will reverse any recorded receivables related to that lease. In the event that management subsequently determines collection of substantially all of that lease’s receivable is probable, management will reinstate and record all such receivables for the lease in accordance with the lease.

Restricted Cash

Pursuant to certain debt agreements, the company maintains escrows for real estate taxes, insurance and other reserves. Restricted cash is included in accounts receivable and other assets in the consolidated balance sheets. Restricted cash is included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the consolidated statements of cash flows. The following is a reconciliation of cash, cash equivalents, and restricted cash as presented in the consolidated statements of cash flows:

​	2020			2019
As of January 1,	​	​	​	​	​	​
Cash and cash equivalents	​	$	11,360,542	​	$	6,524,880
Escrows and certificate of deposit	​	​	3,376,539	​	​	1,733,564
Cash, cash equivalents, and restricted cash	​	$	14,737,081	​	$	8,258,444
As of December 31,	​	​	​	​	​	​
Cash and cash equivalents	​	$	10,323,785	​	$	11,360,542
Escrows and certificate of deposit	​	​	2,154,979	​	​	3,376,539
Cash, cash equivalents, and restricted cash	​	$	12,478,764	​	$	14,737,081

Fair Value Measurements

Fair value is defined by ASC 820, “Fair Value Measurement,” as the exit price, which is the amount that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three levels. Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access; Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as interest rates and yield curves that are observable at commonly quoted intervals; Level 3 inputs are unobservable inputs for the asset or liability that are typically based on an entity’s own assumptions as there is little, if any, related market activity.

Financial and non-financial assets and liabilities measured at fair value on a nonrecurring basis in the consolidated financial statements consist of real estate and related assets acquired and liabilities assumed related to acquisitions and assets classified as held for sale. The fair values of these assets and liabilities were determined as of the acquisition dates using widely accepted valuation techniques, including (1) discounted cash flow analysis, which considers, among other things, leasing assumptions, growth rates, discount rates and terminal capitalization rates, (2) income capitalization approach, which considers prevailing market capitalization rates, and (3) comparable sales activity. In general, multiple valuation techniques were considered when measuring fair values. However, in certain circumstances, a single valuation technique may be appropriate. All of the fair values of the assets and liabilities as of the acquisition dates were derived using Level 3 inputs.

We are also required by GAAP to disclose fair value information about financial instruments, which are not otherwise reported at fair value in our consolidated balance sheet, to the extent it is practicable to estimate a

F-80

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

fair value for those instruments. These disclosure requirements exclude certain financial instruments and all non-financial instruments. Cash and cash equivalents represent a Level 1 measurement due to their liquidity. The company believes that the fair value of the financial instruments consisting of accounts receivable, accounts payable and accrued expenses approximates their carrying value due to their short-term nature. The company believes that the fair value of the line of credit approximates the carrying value due to the variable rate basis of the instrument. The financial instruments for which it is practicable to estimate fair value include the company’s nonrecourse mortgage notes payable and mezzanine note payable. The fair value of the notes payable and mezzanine note payable are estimated by discounting future cash flows utilizing a discount rate equivalent to the estimated market interest rates as of the reporting date. The company has determined this is a Level 3 measurement due to the significant unobservable inputs.

The interest rate swaps are derivative instruments whose fair values are measured on a recurring basis using market-standard valuation models. Such models involve using market-based observable inputs, including interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and respective counterparty’s nonperformance risk in the fair value measurements, which we have concluded are not material to the valuation. Due to these derivative instruments being custom, over-the-counter contracts with various bank counterparties that are not traded in an active market, the fair value is classified as Level 2.

The conversion feature liability and warrant liability are instruments measured at fair value on a recurring basis using valuation models that incorporate significant unobservable inputs. The conversion feature fair value is calculated based on the discounted difference of probable host instrument outcomes with and without the conversion feature utilizing discount rates ranging from 16.6% to 16.7%. The warrant liability fair value is calculated using an option pricing model (refer to “Note 16. Equity” for unobservable inputs). We classified these fair values as Level 3 because of significant unobservable inputs.

The following table presents the company’s financial instruments measured at fair value on a recurring basis:

​

As of December 31, 2020

As of December 31, 2019

​

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Derivative hedging instruments

​

$

—

​

$

—

​

$

—

​

$

—

​

$

113,066

​

$

—

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Derivative hedging instruments

​

$

—

​

$

1,791,957

​

$

—

​

$

—

​

$

1,001,959

​

$

—

Conversion feature liability

​

$

—

​

$

—

​

$

1,741,694

​

$

—

​

$

—

​

$

—

Warrant liability

​

$

—

​

$

—

​

$

259,880

​

$

—

​

$

—

​

$

657,198

F-81

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

The following table reconciles the beginning and end of period balances of financial instruments measured on a recurring basis categorized as Level 3 in the fair value hierarchy:

​	Year Ended December 31, 2020			Year Ended December 31, 2019
Conversion feature liability	​	​	​	​	​	​
Balance at beginning of year	​	$	—	​	$	—
Bifurcated original issuance	​	​	1,690,601	​	​	—
Bifurcated PIK Issuances	​	​	8,673	​	​	—
Change in fair value	​	​	42,420	​	​	—
Balance at end of year	​	$	1,741,694	​	$	—
Warrant liability	​	​	​	​	​	​
Balance at beginning of year	​	$	657,198	​	$	559,259
Change in fair value	​	​	(397,318)	​	​	97,939
Balance at end of year	​	$	259,880	​	$	657,198

The table below presents fair values measured on a nonrecurring basis for certain of our financial instruments for which it is practicable to estimate fair value. The carrying values and fair values of these financial instruments were as follows:

​

​

​

As of December 31, 2020

As of December 31, 2019

​

Level

Face Value

Fair Value

Face Value

Fair Value

Liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Nonrecourse mortgage notes payable

​

3

​

$

163,111,013

​

$

171,694,374

​

$

127,047,236

​

$

128,902,905

Mezzanine note payable

​

3

​

$

85,670,693

​

$

85,670,693

​

$

—

​

$

—

Deferred Financing Costs

The company defers costs incurred associated with the issuance of its debt obligations. Deferred financing costs are presented as deductions from the carrying value of the related debt obligation in the consolidated balance sheets and are amortized as a component of interest expense using the straight-line method, which approximates the effective interest method, over the terms of the respective financing agreements. As of December 31, 2020 and 2019, accumulated amortization of deferred financing costs totaled $1,376,340 and $1,734,370, respectively. During the years ended December 31, 2020 and 2019, $2,567,192 and $46,109, respectively, in fully-amortized deferred financing costs were written-off.

Derivative Instruments and Hedging Activities

We may enter into derivative contracts as part of our overall financing strategy to manage our exposure to changes in interest rates associated with current and/or future debt issuances. We do not use derivatives for trading or speculative purposes. These derivative instruments are measured on a recurring basis and recorded on the consolidated balance sheets at fair value as either an asset or liability using Level 2 inputs. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge

F-82

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

accounting generally provides for the matching of the earnings effect of the hedged forecasted transactions in a cash flow hedge. The company entered into twelve and eight derivative contracts as of December 31, 2020 and 2019, respectively, consisting of interest rate swap agreements designated by the company as qualifying cash flow hedges.

The changes in the fair value of derivatives that qualify and are designated as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2020 and 2019, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. As of December 31, 2020 and 2019, the Company did not have any derivatives that were not designated as hedges of qualifying hedging relationships.

The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the company may also have other financial relationships. The company does not anticipate that any of the counterparties will fail to meet their obligations.

The Series A-1 preferred shares contain an embedded conversion feature meeting the criteria for a derivative instrument that is bifurcated from the host instrument and recognized at fair value continuously as a conversion feature liability included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets.

Lessee Costs and Sublease Revenue

In connection with the company’s solar equipment lease, the company, as a lessee, recognizes a right-of-use asset and a lease obligation for this long-term lease classified as an operating lease. The operating lease asset and corresponding operating lease liability is recognized based on the present value of the lease payments. The company uses its estimated incremental borrowing rate, which is the estimated rate at which the company could borrow on a collateralized basis with similar payments over a similar term, in determining the present value of the lease payments. The company recognizes lease expense on the solar equipment lease on a straight-line basis included in property operating expense in the consolidated statements of operations. The company, as sublessor, leases the solar equipment to a tenant of the company, the sublessee, that is responsible for making payments directly to solar equipment lessors. Sublease revenue from the solar equipment lease is classified as an operating lease and recognized on a straight-line basis included in rental revenues in the consolidated statements of operations.

Segment Reporting

We operate our business in two segments: the Real Estate Segment and the Investment Management Segment.

Real Estate Segment

Rental revenue from real estate investments generate the vast majority of our earnings. We invest primarily in commercial properties located in the United States that are leased to companies on a net lease basis. We consider all of the company’s assets, liabilities and real estate operational expenses as part of the Real Estate Segment. The Real Estate Segment activities consist of acquiring real estate properties for long-term holding periods, and we actively manage our portfolio. We believe our proactive approach to asset management and property management helps enhance the performance of our portfolio through risk mitigation strategies and opportunistic sales. We seek to reinvest net disposition proceeds in single-tenant net lease properties that improve our portfolio by enhancing diversification and improve key metrics such as tenant credit quality, weighted average remaining lease term and property age.

F-83

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

Investment Management Segment

Through one of our TRSs, we provide investment management services, including (1) sourcing and syndicating investments in net lease properties (the “ Investment Programs”) for third-party investors, including those reinvesting proceeds from the sale of investment properties and are seeking to qualify for tax deferred treatment under Section 1031 of the Code, and (2) managing the Investment Programs, for which we earn acquisition, financing and asset management revenue. At December 31, 2020, the Investment Management Segment manages the Investment Programs’ 16 net leased properties (all of which we also have an ownership interest) totaling approximately 1.8 million square feet, with an occupancy rate of 100.0%. Assets, liabilities, rental revenues and property operating expenses of the Investment Programs are included in the Real Estate Segment.

Certain of our intercompany transactions that have been eliminated in consolidation for financial accounting purposes are subject to taxation.

The CODM measures and evaluates the performance of our Real Estate Segment based on the cash net operating income of properties within the segment. The CODM measures and evaluates the performance of our Investment Management Segment based on the recurring and nonrecurring revenues generated by this business segment.

Recently Issued Accounting Pronouncements

During June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. ASU 2016-13 is effective for interim and annual periods beginning after December 15, 2019 for public reporting entities except for those meeting the definition by the Securities and Exchange Commission (“SEC”) of a smaller reporting company. For other entities, this guidance is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, as amended by ASU 2019-10. The amendments in ASU 2016-13 replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Retrospective adjustments shall be applied through a cumulative-effect adjustment to retained earnings. In November 2018, the FASB issued ASU 2018-19, Codification of Topic 326, Financial Instruments—Credit Losses, to amend the effective date requirements and to clarify the scope of the guidance in the ASU 2016-13. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. Management does not believe the guidance will have a significant impact on the company’s consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, to expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date. The guidance was adopted in 2020 and did not have an impact on the company’s consolidated financial statements.

F-84

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

2. Summary of Significant Accounting Policies (Continued)

In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), Targeted Improvements for Related Party Guidance for Variable Interest Entities, to improve consideration of indirect interests held through related parties under common control in order to align determining whether fees paid to decision makers and service providers are variable interests and determining whether a reporting entity within a related party group is the primary beneficiary of a VIE. ASU 2018-17 is effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this update are effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted. The ASU is required to be applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. We are currently evaluating the impact of the adoption of ASU 2018-17 on our consolidated financial statements, including the timing of adopting this standard.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. Election to apply the amendments for contract modifications and eligible hedging relationships may be made as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact of the guidance on our LIBOR-based debt and derivative contracts and the timing of adopting this standard.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in the ASU are effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the effect the adoption will have on the company’s consolidated financial statements.

Reclassifications

Certain amounts included in the December 31, 2019 consolidated financial statements have been reclassified to conform to the December 31, 2020 presentation. There was no effect on net (loss)/income or equity related to these reclassifications.

3. Real Estate

The company’s held-and-used real estate assets consist of the following as of December 31, 2020 and 2019:

​	December 31,
​	2020			2019
Land	​	$	84,544,959	​	$	76,987,456
Building and improvements	​	​	324,583,326	​	​	264,726,194
​	​	​	409,128,285	​	​	341,713,650
Accumulated depreciation	​	​	(34,629,387)	​	​	(25,492,507)
​	​	$	374,498,898	​	$	316,221,143

F-85

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

3. Real Estate (Continued)

Depreciation expense on building and improvements for the years ended December 31, 2020 and 2019 was $9,726,799 and $7,520,100, respectively.

During the year ended December 31, 2020, the company purchased eight fully occupied, single tenant net-lease properties which were determined to be treated as asset acquisitions. Of these properties, seven properties acquired for $78,100,294 were treated as held and used and one property acquired for $4,701,199 was classified as held for sale at the time of acquisition. The seven properties classified as held and used had a weighted average initial lease term of approximately 11 years.

During the year ended December 31, 2019, the company purchased twenty fully occupied, single tenant net-lease properties which were determined to be treated as asset acquisitions. Of these properties, eighteen properties acquired for $79,204,961 were treated as held and used and two properties acquired for $3,877,755 were classified as held for sale at the time of acquisition. The eighteen properties classified as held and used had a weighted average initial lease term of 14 years.

The table below summarizes the allocation of the purchase price and capitalized acquisition costs of properties acquired and classified as held and used during the years ended December 31, 2020 and 2019.

​	Year Ended December 31,
​	2020			2019
Land	​	$	11,108,965	​	$	14,681,101
Building	​	​	52,306,930	​	​	42,990,543
Site improvements	​	​	4,525,969	​	​	4,612,620
Tenant improvements	​	​	2,116,046	​	​	3,373,106
Equipment	​	​	—	​	​	1,098,787
Origination value of acquired in-place leases	​	​	8,526,685	​	​	10,646,975
Acquired favorable in-place leases	​	​	105,574	​	​	2,672,385
Acquired unfavorable in-place leases	​	​	(589,875)	​	​	(919,351)
Indemnity Asset	​	​	—	​	​	48,795
​	​	$	78,100,294	​	$	79,204,961

Asset Sales

Management of the company determined that one property met the criteria for held-for-sale treatment as of December 31, 2020.

The table below summaries the assets and liabilities of the property held for sale as of December 31, 2020.

​	December 31, 2020
Real estate, net	​	$	726,318
Accounts receivable and other assets	​	​	13,840
Total Assets	​	$	740,158
Accounts payable, accrued expenses and other liabilities	​	$	20,940
Total Liabilities	​	$	20,940

During the year ended December 31, 2020 the company sold three properties recognizing, total revenues and net loss before gain on sale on these three properties of $442,779 and $427,262, respectively and net loss before gain on sale attributable to Four Springs Capital Trust of $418,759. One of the three properties sold in 2020 was also acquired in 2020. During the year ended December 31, 2019, the company recognized total revenues

F-86

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

3. Real Estate (Continued)

and net income from these two properties sold in 2020 of $435,338 and $227,866, respectively, and net income attributable to Four Springs Capital Trust of $225,656.

During the year ended December 31, 2019, the company sold eleven properties recognizing total revenues and net income before gain on sale on these eleven properties of $318,745 and $235,922, respectively, and net income, before gain on sale, attributable to Four Springs Capital Trust of $233,633. Two of the eleven properties sold in 2019 were also acquired in 2019.

4. Leases

Lessor

The company has entered into lease agreements with various tenants for real estate. The following are the future minimum rentals to be received under non-cancelable operating leases in effect at December 31, 2020, excluding solar equipment sublease revenue:

Year ending December 31,	Amount
2021	​	$	33,202,493
2022	​	​	33,609,410
2023	​	​	33,719,527
2024	​	​	32,730,723
2025	​	​	29,685,328
Thereafter	​	​	192,260,752
​	​	$	355,208,233

The preceding future minimum rental payments do not include option or renewal periods. In addition to the minimum lease payments, leases require tenants to reimburse the company for certain operating expenses, which have been included in rental revenues, and amounted to $4,282,190 and $2,819,219 for the years ended December 31, 2020 and 2019, respectively.

Lessee

In connection with an acquisition of an industrial property in 2018, the company assumed a solar equipment lease as the lessee. The company’s tenant at the industrial property is obligated to perform all responsibilities under the solar equipment lease as the sublessee including making solar lease installment payments. The company recognized solar equipment lease expense of $95,440 for both years ended December 31, 2020 and 2019 and sublease revenue of $95,440 for each of the years ended December 31, 2020 and 2019. The company recognized a right-of-use asset and related lease obligation for the solar equipment lease in accounts receivable and other assets and accounts payable, accrued expenses and other liabilities, respectively, on the consolidated balance sheets as of December 31, 2020 and 2019.

The following are the future minimum rentals under the non-cancelable operating lease for the solar equipment, as lessee, in effect at December 31, 2020:

F-87

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

4. Leases (Continued)

Year ending December 31,	Amount
2021	​	$	82,774
2022	​	​	84,430
2023	​	​	86,118
2024	​	​	87,840
2025	​	​	89,598
Thereafter	​	​	1,225,723
Solar lease payments	​	​	1,656,483
Less interest	​	​	(485,387)
Present value of solar operating lease liability	​	$	1,171,096

5. Identified Intangible Assets

The following is a summary of the company’s identified intangible assets as of December 31, 2020 and 2019:

Origination Value of Acquired In-Place Leases

​	December 31,
​	2020			2019
Origination value of acquired in-place leases	​	$	55,288,079	​	$	46,737,882
Accumulated amortization	​	​	(12,951,425)	​	​	(9,394,150)
​	​	$	42,336,654	​	$	37,343,732

The estimated annual amortization of origination value of acquired in-place leases as of December 31, 2020 is as follows:

Year ending December 31,	Amount
2021	​	$	4,222,712
2022	​	​	4,194,183
2023	​	​	4,151,573
2024	​	​	3,995,472
2025	​	​	3,754,249
Thereafter	​	​	22,018,465
​	​	$	42,336,654

Acquired Favorable In-Place Leases

​	December 31,
​	2020			2019
Acquired favorable in-place leases	​	$	8,357,891	​	$	8,099,782
Accumulated amortization	​	​	(1,296,529)	​	​	(819,316)
​	​	$	7,061,362	​	$	7,280,466

F-88

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

5. Identified Intangible Assets (Continued)

Acquired Unfavorable In-Place Leases

​	December 31,
​	2020			2019
Acquired unfavorable in-place leases	​	$	3,059,417	​	$	2,469,542
Accumulated amortization	​	​	(512,975)	​	​	(327,891)
​	​	$	2,546,442	​	$	2,141,651

Amortization of acquired favorable and unfavorable in-place leases resulted in a net decrease in rental income of $292,129 and $286,289 for the years ended December 31, 2020 and 2019, respectively. The estimated net amortization of acquired favorable and unfavorable leases at December 31, 2020 is as follows:

Year ending December 31,	Amount
2021	​	$	198,072
2022	​	​	198,072
2023	​	​	198,072
2024	​	​	201,284
2025	​	​	211,428
Thereafter	​	​	3,507,992
Net acquired favorable leases	​	$	4,514,920

6. Variable Interest Entity Financial Information

Substantially all of the assets and liabilities of the company are held through the Operating Partnership and DSTs, which have been determined to be VIEs. The Trust and the Operating Partnership provided certain non-recourse carve-out loan guarantees on acts or events that would result in recourse liability only to the extent that a lender suffers a loss from certain carve-out events. The following table presents certain assets and liabilities of the DSTs, which are included in the consolidated balance sheets as of December 31, 2020 and 2019. The liabilities in the table below include third-party liabilities of the DSTs only, and exclude intercompany balances that are eliminated in consolidation.

​	December 31,
​	2020			2019
Assets of the DSTs that can only be used to settle obligations of the DSTs:	​	​	​	​	​	​
Real estate, net	​	$	129,255,112	​	$	104,186,784
Cash and cash equivalents	​	​	4,753,467	​	​	4,197,715
Accounts receivable and other assets	​	​	1,895,787	​	​	3,826,809
Deferred rent receivable	​	​	1,871,615	​	​	1,550,416
Origination value of acquired in-place leases, net	​	​	13,747,713	​	​	10,439,200
Acquired favorable leases, net	​	​	164,592	​	​	240,286
​	​	$	151,688,286	​	$	124,441,210

F-89

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

6. Variable Interest Entity Financial Information (Continued)

​	December 31,
​	2020			2019
Liabilities of the DSTs for which creditors or beneficial interest holders do not have recourse to the general credit of the company:	​	​	​	​	​	​
Notes payable, net	​	$	74,990,519	​	$	59,316,046
Accounts payable	​	​	2,022,613	​	​	2,567,090
Acquired unfavorable leases, net	​	​	225,810	​	​	—
​	​	$	77,238,942	​	$	61,883,136

7. Accounts Receivable and Other Assets

Accounts receivable and other assets in the consolidated balance sheets as of December 31, 2020 and 2019 consist of the following:

​	December 31,
​	2020			2019
Accounts receivable, net	​	$	2,487,730	​	$	1,204,907
Prepaid expenses, deferred costs and deposits	​	​	1,787,644	​	​	1,317,404
Escrows and certificate of deposit	​	​	2,154,979	​	​	3,376,539
Right-of-use asset	​	​	1,171,096	​	​	1,204,646
Furniture, fixtures and equipment, net	​	​	74,050	​	​	86,574
Deferred tax asset	​	​	482,626	​	​	170,126
Interest rate hedge	​	​	—	​	​	113,066
​	​	​	8,158,125	​	​	7,473,262
Less accounts receivable and other assets of real estate assets classified as held-for-sale	​	​	(13,840)	​	​	—
​	​	$	8,144,285	​	$	7,473,262

F-90

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

8. Notes Payable

The following is a summary of the terms of the company’s mortgage notes payable as of December 31, 2020 and 2019 included in notes payable, net on the consolidated balance sheets:

Entity

Lender

Date of Loan

Maturity Date(2)

Periodic Payment

Interest Rate

Balloon Payment Amount

Carrying Value(1) at:

12/31/2020

12/31/19

FSC MON Morton IL, LLC

Heartland Bank & Trust Co.

12/26/2013

2/8/2022

Principal and Interest

4.15%

​

$

2,615,441

​

$

2,691,722

​

$

2,757,743

FSC BJ Tilton NH, DST

Deutsche Mortgage & Asset Receiving Corp.

1/4/2013

1/6/2023

Interest Only

4.75%

​

​

4,440,000

​

​

4,446,562

​

​

4,449,799

FSC AS Jonesboro AR, DST

J.P. Morgan Chase Comm. Mortgage Securities Trust

10/26/2012

11/6/2022

Interest Only

4.85%

​

​

5,460,000

​

​

5,516,583

​

​

5,548,421

FSC AS Mt Juliet TN, DST

Deutsche Mortgage & Asset Receiving Corp.

11/29/2012

12/6/2022

Interest Only

5.00%

​

​

6,000,000

​

​

6,079,449

​

​

6,122,147

FSC DG Middleburg FL, LLC

J.P. Morgan Chase Comm. Mortgage Securities Trust

4/19/2012

5/6/2022

Interest Only

5.35%

​

​

773,500

​

​

870,162

​

​

876,099

FSC DG Yulee FL, LLC

Ladder Capital Finance, LLC

7/9/2012

8/6/2022

Interest Only

5.25%

​

​

875,000

​

​

887,489

​

​

895,670

FSC GM Lebanon IN DST, LLC

J.P. Morgan Chase Bank

10/20/2014

11/1/2024

Interest Only

4.30%

​

​

6,228,750

​

​

6,228,750

​

​

6,228,750

FSC Care Mt. Prospect IL, LLC

UBS Real Estate Securities Inc.

12/31/2014

1/6/2025

Interest Only

4.15%

​

​

8,580,000

​

​

8,580,000

​

​

8,580,000

FSC DOM Odenton MD, LLC

J.P. Morgan Chase Bank

5/22/2015

6/1/2025

Interest Only

3.77%

​

​

6,215,000

​

​

6,215,000

​

​

6,215,000

FSC CES Oklahoma City OK, LLC

J.P. Morgan Chase Bank

5/29/2015

6/1/2025

Interest Only First 5 Years

4.02%

​

​

1,979,802

​

​

2,158,674

​

​

2,176,850

FSC MRC Odessa TX, DST

Deutsche Mortgage & Asset Receiving Corp.

9/4/2015

9/6/2025

Principal and Interest

4.74%

​

​

5,418,478

​

​

6,410,543

​

​

6,595,000

FSC ITW St. Charles MO, LLC

Simmons Bank

10/28/2015

11/5/2022

Principal and Interest

4.25%

​

​

3,484,424

​

​

3,691,840

​

​

3,798,470

FSC FMC Lubbock TX, DST

KeyBank National Assoc.

7/28/2016

8/1/2026

Interest Only First 3 Years

4.60%

​

​

2,514,151

​

​

2,802,080

​

​

2,845,857

FSC FMC Carbondale IL, DST

KeyBank National Assoc.

7/28/2016

8/1/2026

Interest Only First 3 Years

4.60%

​

​

2,057,033

​

​

2,292,611

​

​

2,328,429

FSC HBCBS Mt. Laurel NJ, LLC

Wells Fargo Bank Northwest N.A.

9/29/2016

12/15/2026

Interest Only First 5 Years

3.41%

​

​

9,569,348

​

​

11,750,000

​

​

11,750,000

FSC Healthcare III, DST

UBS AG

10/19/2017

11/6/2027

Interest Only First 5 Years

4.96%

​

​

3,969,393

​

​

4,300,000

​

​

4,300,000

FSC Healthcare IV, DST

GreenState Credit Union

6/1/2018

7/15/2028

Interest Only First 2 Years

4.70%

​

​

11,328,472

​

​

13,184,690

​

​

13,286,035

GPM Properties(3)

Capital One, N.A.

5/17/2019

5/17/2024

Interest Only First 2 Years

L + 2.15%

​

​

10,537,133

​

​

11,352,001

​

​

11,352,000

FSC Industrial II DST, LLC

Provident Bank

6/11/2019

6/1/2026

Interest Only First 4 Years

4.16%

​

​

3,322,182

​

​

3,575,000

​

​

3,575,000

FSC Plattsburgh NY, LLC(4)

People’s United Bank, N.A.

9/18/2019

9/18/2029

Interest Only First 5 Years

L + 1.70%

​

​

2,216,478

​

​

2,567,777

​

​

2,567,777

FSC Industrial III, DST

Provident Bank

7/12/2019

8/1/2026

Interest Only First 4 Years

3.98%

​

​

4,493,944

​

​

4,753,650

​

​

4,753,650

FSC AB Blaine MN, LLC(5)

M&T Bank

8/22/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

2,479,584

​

​

2,691,392

​

​

2,691,392

FSC AB Brighton CO, LLC(5)

M&T Bank

8/22/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

2,779,381

​

​

3,016,798

​

​

3,016,798

FSC AB Middleton WI, LLC(5)

M&T Bank

8/22/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

​

2,533,717

​

​

2,750,149

​

​

2,750,149

FSC STU North Canton OH, LLC(6)

Chemical Bank

8/23/2019

8/22/2024

Interest Only First 3 Years

L + 2.10%

​

​

4,600,679

​

​

4,839,175

​

​

4,839,175

F-91

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

8. Notes Payable (Continued)

Entity

Lender

Date of Loan

Maturity Date(2)

Periodic Payment

Interest Rate

Balloon Payment Amount

Carrying Value(1) at:

12/31/2020

12/31/19

FSC AB Bordentown NJ, LLC(7)

M&T Bank

9/20/2019

8/1/2024

Interest Only First 2 Years

L + 1.90%

​

2,852,937

​

​

3,090,661

​

​

3,090,661

FSC FE Cincinnati OH, LLC

Provident Bank

2/20/2020

2/1/2027

Interest Only First 3 Years

3.60%

​

2,311,598

​

​

2,500,000

​

​

—

FSC GW Muncie IN, LLC(8)

OceanFirst Bank N.A.

3/18/2020

3/1/2030

Interest Only First 5 Years

L + 2%

​

1,304,631

​

​

1,468,500

​

​

—

FSC GW Greenwood IN, LLC(8)

OceanFirst Bank N.A.

3/18/2020

3/1/2030

Interest Only First 5 Years

L + 2%

​

1,138,499

​

​

1,281,500

​

​

—

FSC Healthcare V, DST

Provident Bank

6/9/2020

7/1/2027

Interest Only First 4 Years

3.50%

​

3,123,363

​

​

3,320,000

​

​

—

FSC Industrial IV, DST

OceanFirst Bank N.A.

11/10/2020

11/10/2027

Interest Only First 5 Years

3.05%

​

21,688,354

​

​

22,550,000

​

​

—

FSC Industrial V, DST

Provident Bank

12/22/2020

1/1/2028

Interest Only First 2 Years

3.50%

​

4,947,378

​

​

5,500,000

​

​

—

Subtotal

​

​

​

​

​

​

​

​

​

163,362,758

​

​

127,390,872

Deferred Financing Costs, Net

​

​

​

​

​

​

​

​

​

(1,771,905)

​

​

(1,665,154)

​

​

​

​

​

​

​

​

​

$

161,590,853

​

$

125,725,718

(1)

Carrying value represents principal outstanding plus unamortized debt premiums. Debt premium amortization of $91,891 and $91,446 is included as a reduction of interest expense in the consolidated statements of operations for the years ended December 31, 2020 and 2019, respectively.

(2)

Reflected is the earlier of the stated maturity dates as defined in the respective loan agreements. Should the loan not be repaid at the anticipated repayment date, the loan will require monthly principal and interest and the applicable interest rate would increase as specified in the respective loan agreement until the extended maturity date.

(3)

Capital One, N.A.’s loan is cross collateralized with FSC EPP Colony TX, LLC; FSC EPP Elkhart IN, LLC; FSC EPP Eufaula OK, LLC; FSC EPP Granger IL, LLC; FSC EPP Irving TX, LLC; FSC EPP Mishawaka IN, LLC; FSC EPP Richland Hills TX, LLC; FSC EPP Utica MI, LLC (collectively, the “GPM Properties”). The GPM Properties’ loan requires interest at LIBOR plus 2.15% per annum. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.855% on the loan at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loan is 4.005% per annum.

(4)

FSC Plattsburgh NY, LLC with People’s United Bank, N.A. requires interest at LIBOR plus 1.70%. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.66% on this loan at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loan is 3.36% per annum.

(5)

FSC AB Blaine MN, LLC, FSC AB Brighton CO, LLC and FSC AB Middletown WI, LLC’s loans with M&T Bank require interest at LIBOR plus 1.90%. In connection with these loans, the company entered into interest rate swap agreements to fix LIBOR at 1.443% on these loans at notional values equivalent to the loans’ scheduled amortized principal balances through the loans’ maturity dates. The effective interest rate on the loans is 3.343% per annum.

(6)

FSC STU North Canton OH, LLC’s loans with Chemical Bank require interest at LIBOR plus 2.10%. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.40% on these loans at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loans is 3.50% per annum.

(7)

FSC AB Bordentown NJ, LLC’s loan with M&T Bank requires interest at LIBOR plus 1.90%. In connection with this loan, the company entered into an interest rate swap agreement to fix LIBOR at 1.54% on this loan at notional values equivalent to the loan’s scheduled amortized principal balance through the loan’s maturity date. The effective interest rate on the loan is 3.44% per annum.

(8)

FSC GW Muncie IN, LLC and FSC GW Greenwood IN, LLC’s loan with OceanFirst Bank N.A. requires interest at LIBOR plus 2%. In connection with these loans, the company entered into interest rate swap agreements to fix LIBOR at 0.84% for the first five year of these loans at notional values equal to each loan’s scheduled principal balance for the first five years. The effective interest rate on the loan is 2.84% per annum

The above notes are secured by the related mortgage/deed of trust and assignment of rents and leases on real estate having a carrying value of $242,926,828 and $186,295,048 as of December 31, 2020 and 2019, respectively, and are subject to prepayment penalties as defined in the related loan agreements.

F-92

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

8. Notes Payable (Continued)

The weighted average interest rate pursuant to fixed effective rates via interest swap agreements (see “Note 2. Summary of Significant Accounting Policies—Derivative Instruments and Hedging Activities”) on the above notes payable was 4.08% and 4.20% as of December 31, 2020 and 2019, respectively.

The company is subject to certain loan covenants per the mortgage notes payable agreements, which require a debt service coverage ratio of 1.50 to 1.00 or lower, determined quarterly. As of and for the years ended December 31, 2020 and 2019, the company was compliant with the mortgage notes payable covenants.

The following are the future principal payments on the mortgage notes payable as of December 31, 2020 (including principal amortization and balloon payments):

Year ending December 31,	Amount
2021	​	$	1,049,631
2022	​	​	20,844,104
2023	​	​	6,385,827
2024	​	​	33,819,814
2025	​	​	23,741,789
Thereafter	​	​	77,269,848
Total principal payments	​	​	163,111,013
Unamortized debt premiums, net	​	​	251,745
Total notes payable before deferred financing costs, net	​	$	163,362,758

The estimated amortization of the debt premiums as of December 31, 2020 is as follows:

Year ending December 31,	Amount
2021	​	$	93,216
2022	​	​	73,748
2023	​	​	5,952
2024	​	​	5,952
2025	​	​	5,952
Thereafter	​	​	66,925
​	​	$	251,745

9. Line of Credit, Net

The company’s revolving credit facility with Citizens Bank, National Association (“Citizens”) and other participating lenders (the “Citizens Facility”) originally provided the company with up to a $125 million borrowing capacity with an additional $75 million expansion feature. The Citizens Facility bore interest based on the company’s option of LIBOR plus 2.5% to 3% per annum or the base rate plus 1.50% to 2% per annum, with the interest rate spread determined based on the company’s election of LIBOR or base rate borrowings and the ratio of debt to value. The base rate was the greater of Citizens’ prime rate, the average Federal Reserve Bank of Cleveland’s overnight rate, or the one-month LIBOR plus 1%. The Credit Facility also required an unused fee of 0.25% per annum and was scheduled to mature on October 23, 2021. Pursuant to the terms of the Citizens Facility, the company was required to comply with covenants including those to maintain a minimum fixed charge coverage ratio of 1.50 to 1.00, maintain minimum borrowing base and net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield, maintain a diversified portfolio, and maintain distribution rates.

F-93

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

9. Line of Credit, Net (Continued)

On October 30, 2020, the company amended and restated the Citizens Facility with M&T Bank, a participating lender under the former-Citizens Facility. Citizens resigned as agent and lender and M&T Bank replaced Citizens as the agent on the facility. The amended and restated borrowing facility (the “M&T Credit Facility”) provides the company with a $100,000,000 borrowing capacity with an additional $50,000,000 expansion feature. The M&T Credit Facility redefined certain terms and covenants including providing for covenants relating to a mezzanine loan of up to $100,000,000. The M&T Credit Facility bears interest based on the company’s option of LIBOR, with a LIBOR floor of 1% on unhedged LIBOR, plus 2.50% to 2.75% per annum or the base rate plus 1.50% to 1.75% per annum, with the interest rate spread determined based on the company’s election of LIBOR or base rate borrowings and the ratio of debt to value (2.69% as of December 31, 2020, inclusive of the credit facility interest rate swaps; see “Note 2. Summary of Significant Accounting Policies—Derivative Instruments and Hedging Activities”). The base rate is the greater of M&T Bank’s prime rate, the Federal Funds Effective Rate plus 0.5%, or 1% plus the greater of one-month LIBOR or 1% on the unhedged borrowing. The M&T Credit Facility matures on October 30, 2022 and maturity may be extended to October 30, 2023 with a 0.25% extension fee on the total commitment and the company meeting certain conditions including completing a qualified listing event. Pursuant to the terms of the M&T Credit Facility, the company shall comply with covenants including those to maintain a minimum fixed charge coverage ratio, maintain minimum borrowing base and net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield, maintain a diversified portfolio, and maintain distribution rates. The M&T Credit Facility is secured by mortgages/deeds of trust and assignments of rents and leases on 50 properties having real estate net book value of approximately $96.4 million as of December 31, 2020 and 50 properties having real estate book value of approximately $99.3 million as of December 31, 2019. As a result of Citizens National Association exiting the credit facility, the company exited its interest rate swap with Citizens National Association with a payment of $1,281,000 recognized in other comprehensive loss of which $213,500 was reclassified from other comprehensive loss as an increase to interest expense during the year ended December 31, 2020. As of and for the years ended December 31, 2020 and 2019, the company was compliant with the credit facility covenants. 

The outstanding balance of the M&T Credit Facility as of December 31, 2020 and 2019 was $17,380,953 and $68,130,953, respectively. Deferred financing costs, net of accumulated amortization, of $3,200,651 and $1,950,603 are presented as deductions of the lines of credit balances as of December 31, 2020 and 2019, respectively, in the consolidated balance sheets. The credit facility weighted average interest rate during the years ended December 31, 2020 and 2019 is 3.47% and 5.01%, respectively

10. Mezzanine Note Payable, Net

On October 30, 2020, the company entered into a $100,000,000 loan agreement (the “Mezzanine Loan”) secured by a pledge of the company’s equity interest in the Operating Partnership. The loan requires (1) monthly interest only payments at 7% per annum plus (2) interest capitalized quarterly as additional principal at a rate of 4.5% per annum. The Mezzanine Loan provides that upon repayment a minimum of $23,000,000 in aggregate interest through the earlier of the loan’s full satisfaction or maturity on October 30, 2025 is payable, provided, however, the company is not subject to such minimum interest provision if the Mezzanine Loan is repaid in connection with the initial public offering of the company’s common shares. The Mezzanine Loan provides for adjustments to interest payments due in order to not be treated as an applicable high yield discount obligation under the Code. A portion of the Mezzanine Loan may be prepaid with a minimum principal payment of $10,000,000. Pursuant to the terms of Mezzanine Loan, the company shall comply with covenants including those to maintain a minimum fixed charge coverage ratio of 1.50 to 1.00, maintain net worth, limit debt to value, maintain a net operating income to debt ratio, maintain a minimum debt yield of 9%, and maintain a diversified portfolio. The Mezzanine Loan is subordinate to the M&T Credit Facility. The company borrowed $85,000,000 at closing of the Mezzanine Loan. As of December 31, 2020 the Mezzanine Loan had an outstanding balance of $85,670,693. Deferred financing costs, net of accumulated

F-94

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

10. Mezzanine Note Payable, Net (Continued)

amortization, of $2,602,900 are presented as deductions of the Mezzanine Loan as of December 31, 2020 in the consolidated balance sheets.

11. Contingently Redeemable Series A-1 Preferred Shares

On November 20, 2020, the company issued 2,500,000 convertible Series A-1 preferred shares, $0.001 par value per share, in a private offering for $49,250,000 in proceeds at a 1.5% discount from the $20.00 per share offering price’s stated value. The Series A-1 preferred shares rank senior to the company’s common shares and non-participating common shares with respect to payment of dividends and distributions upon liquidation of the company. The Series A-1 preferred shares’ liquidation value as of December 31, 2020 is $50,392,144 based on the greater of $20.00 per share or payment providing for the holders a 15% internal rate of return. Upon a qualifying listing event of the company, the Series A-1 preferred shares automatically convert into a number of common shares based on the company’s option of either (1) the Series A-1 preferred shares’ stated value divided by 90% of the per common share listing event price or (2) the Series A-1 preferred shares’ stated value divided by the undiscounted price per common share at the listing event plus a cash fee to holders of Series A-1 preferred shares equal to 10% of the Series A-1 preferred shares’ stated value. The company has an option to redeem all of the Series A-1 preferred shares prior to November 20, 2025 with a payment providing the holders with a 15% internal rate of return (the “Series A-1 preferred share call option”). The company is required to redeem the Series A-1 preferred shares on November 20, 2025 at $19.70 per share. At any time, including upon the company’s exercise of the Series A-1 preferred share call option, the majority holders of Series A-1 preferred share have the option to convert their shares into common shares of the company at the lower of the stated value per Series A-1 preferred share or the stated value adjusted for additional issuances of common shares and instruments convertible into common shares of the company. In the event that the holders of Series A-1 preferred shares would own greater than 20.0% of the float following a qualifying listing event, the company may either, in its sole and absolute discretion, (1) redeem for cash the excess shares so that such holders hold 19.9% of the outstanding shares, at the greater of the offering price in such qualifying listing event or the liquidation preference of the Series A-1 preferred shares, or (2) permit such holders to include for sale in such qualifying listing event a number of shares so that such holders will hold 19.9% of the outstanding common shares following such qualifying listing event. Holders of Series A-1 preferred shares are entitled to vote on any matters together as a single class with holders of common shares with the number of Series A-1 preferred shareholder votes calculated on an as-converted basis. Dividends on Series A-1 preferred shares are cumulative at 11.5% per annum (7% cash, 4.5% paid-in-kind) on the stated value per share through April 19, 2022, 12% (7% cash, 5% paid-in-kind) commencing on April 20, 2022, 13% (8% cash, 5% paid-in-kind) commencing on November 20, 2022 and 15% (9% cash, 6% paid-in-kind) commencing on November 20, 2023 and are included as interest expense in the consolidated statement of operations. There were no unpaid dividends on Series A-1 preferred shares as of December 31, 2020. The outstanding balance of contingently redeemable Series A-1 preferred shares of $50,256,500 as of December 31, 2020, reduced by the initial fair value of bifurcated conversion feature of $1,699,274 and unaccreted offering costs and unaccreted issuance discount of $924,488, is presented as temporary equity in the consolidated balance sheets.

The holders of a majority of the outstanding Series A-1 preferred shares have the right to designate a trustee to the board of trustees. The holders of Series A-1 preferred shares have designated an observer to the company’s board of trustees. The holders of Series A-1 preferred shares have the right to approve certain of the company’s actions.

12. Derivatives and Hedging Activities

The company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the company uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve

F-95

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

12. Derivatives and Hedging Activities (Continued)

the receipt of variable-rate amounts from a counterparty in exchange for the company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive loss or income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2020 and 2019, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.

Amounts reported in accumulated other comprehensive loss or income related to derivatives will be reclassified to interest expense as interest payments are made on the company’s variable-rate debt. During the next twelve months ending December 31, 2021 and 2020, the company estimates that $475,903 and $1,186,102 will be reclassified from other comprehensive income as increases to interest expense for the swaps on the mortgage rate payable and M&T Credit Facility, respectively.

As of December 31, 2020 and 2019, the company had the following derivatives that were designated as cash flow hedges of interest rate risk.

​	December 31,
​	2020					2019
Interest Rate Derivative	Number of Instruments		Notional Amounts			Number of Instruments		Notional Amounts
Mortgage notes payable swaps	​	9	​	$	33,057,952	​	7	​	$	30,307,952
M&T Credit Facility swaps	​	3	​	$	50,000,000	​	1	​	$	50,000,000

As of December 31, 2020, the conversion feature embedded in the Series A-1 preferred shares was not designated as a qualifying hedge. As of December 31, 2019, the company did not have any derivatives that were not designated as hedges in qualifying hedging relationships.

The table below presents the fair value of the company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2020 and 2019.

​

December 31, 2020

December 31, 2019

​

Asset Derivatives

Liability

Asset Derivatives

Liability Derivatives

Derivatives designated as hedging instruments:

​

​

​

​

​

​

​

​

​

​

​

​

Mortgage notes payable swaps

​

$

—

​

$

1,606,611

​

$

113,066

​

$

132,322

M&T Credit Facility swaps

​

​

—

​

​

185,346

​

​

—

​

​

869,637

Interest rate hedge liability included in accounts payable, accrued expenses and other liabilities in the consolidated balance sheets

​

​

—

​

​

1,791,957

​

​

113,066

​

​

1,001,959

Derivatives not designated as hedging instruments:

​

​

​

​

​

​

​

​

​

​

​

​

Series A-1 preferred share conversion feature included in accounts payable, accrued expense and other liabilities in the consolidated balance sheets

​

​

—

​

​

1,741,694

​

​

—

​

​

—

​

​

$

—

​

$

3,533,651

​

$

113,066

​

$

1,001,959

The table below details the location in the consolidated financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the years ended December 31, 2020 and 2019 for the interest rate swaps on the mortgage notes payable and the M&T Credit Facility.

F-96

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

12. Derivatives and Hedging Activities (Continued)

​

December 31, 2020

December 31, 2019

​

Mortgage notes payable swaps

M&T Credit Facility swaps

Mortgage notes payable swaps

M&T Credit Facility swaps

Mortgage notes payable swaps

​

​

​

​

​

​

​

​

​

​

​

​

Amount of (loss) gain recognized in accumulated other comprehensive income on interest rate derivatives

​

$

(1,910,627)

​

$

(1,272,619)

​

$

19,904

​

$

(993,502)

Amount of (loss) gain reclassified from accumulated other comprehensive income as (increase) decrease in interest expense

​

$

(323,272)

​

$

(889,410)

​

$

39,159

​

$

(123,865)

The company has agreements with each of its derivative counterparties that contain a provision where if the company either defaults or is capable of being declared in default on any of its indebtedness, then the company could also be declared in default on its derivative obligations.

The interest swap agreements provide for cross default provisions with the company’s other debt obligations. As of December 31, 2020 and 2019, the fair value of derivatives in a net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $1,838,582 and $919,082, respectively. As of December 31, 2020 and 2019, the company has not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value of $1,838,582 and $919,082 as of December 31, 2020 and 2019, respectively.

13. Accounts Payable, Accrued Expenses and Other Liabilities

Accounts payable, accrued expenses and other liabilities in the consolidated balance sheets as of December 31, 2020 and 2019 consist of the following:

​	December 31,
​	2020			2019
Accounts payable and accrued expenses	​	$	4,691,921	​	$	3,767,154
Prepaid rents	​	​	1,850,943	​	​	1,532,467
Lease obligation of right-of-use asset	​	​	1,171,096	​	​	1,204,646
Conversion feature liability	​	​	1,741,694	​	​	—
Interest rate hedges	​	​	1,791,957	​	​	1,001,959
Warrant liability	​	​	259,880	​	​	657,198
​	​	​	11,507,491	​	​	8,163,424
Less accounts payable, accrued expenses and other liabilities of real estate assets classified as held-for-sale	​	​	(20,940)	​	​	—
​	​	$	11,486,551	​	$	8,163,424

14. Noncontrolling Interests

On December 28, 2012, the Operating Partnership issued 204,500 of Series A preferred OP units (the “UPREIT Series A preferred OP units”; convertible into 102,250 common OP units or 102,250 common shares of the Trust as of December 31, 2019) in connection with the purchase of a property. The UPREIT

F-97

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

14. Noncontrolling Interests (Continued)

Series A preferred OP units receive priority distributions on a cumulative basis at a per annum rate of $0.70 per unit. In addition, in the event of the liquidation or dissolution of the Operating Partnership or the company, the holders of the units will be entitled to receive a liquidation preference of $10 per unit plus an amount equal to all accumulated and unpaid distributions whether or not declared. The UPREIT Series A preferred OP unit holders have the right to require the Operating Partnership to redeem the units in whole or in part, at any time and from time to time, by delivering a notice of redemption to the general partner, in an amount equal to the holder’s capital account as adjusted in accordance with and subject to the terms of the partnership agreement. The general partner may, in its sole and absolute discretion, elect to assume the redemption directly and satisfy the UPREIT Series A preferred OP unit redemption right by paying the redeeming partner in cash or in the form of Series A preferred shares of the Trust by issuing one Series A preferred share for each UPREIT Series A preferred OP unit. The company has adopted a policy of issuing shares in exchange for all units submitted for redemption. There have been no UPREIT Series A preferred OP unit redemption requests.

In connection with the Restructuring on October 23, 2020, the 204,500 UPREIT Series A preferred OP units were converted into 65,636 common OP units (the “UPREIT common OP units”). The UPREIT common OP unit holders have the right to require the Operating Partnership to redeem the units in whole or in part, at any time and from time to time, by delivering a notice of redemption to the general partner, in an amount equal to the holder’s capital account as adjusted in accordance with and subject to the terms of the partnership agreement. The general partner may, in its sole and absolute discretion, elect to assume the redemption directly and satisfy the UPREIT common OP unit redemption right by paying the redeeming partner in cash or in the form of common shares of the Trust by issuing one common share for each UPREIT common OP unit. The company has adopted a policy of issuing shares in exchange for all units submitted for redemption. There have been no UPREIT common OP unit redemption requests as of December 31, 2020.

On May 31, 2020, the Operating Partnership issued 181,116 of Series U1 OP units (the “Series U1 OP units”; convertible into 181,116 common shares of the Trust) at $22 per unit in exchange for acquiring 90% of the beneficial ownership interest in FSC GM Lebanon IN, DST (“GMLI DST”) previously held by third party investors thereby wholly-owning GMLI DST. The Operating Partnership retained control of GMLI DST subsequent to this UPREIT transaction. The Series U1 OP units receive cumulative distributions at a per annum rate of $1.10, $1.26, $1.41, $1.57, $1.72 and $1.88 per unit commencing on May 31, 2020 and each anniversary thereof through May 31, 2025. In addition, in the event of the liquidation or dissolution of the Operating Partnership or the company, the holders of Series U1 OP units will be entitled to receive a liquidation amount per unit of $22.00, $23.87, $25.73, $27.60, $29.46 and $31.34 commencing on May 31, 2020 and each anniversary thereof through May 31, 2025. Commencing May 31, 2021, holders of Series U1 OP units have the option to convert the Series U1 OP units for a corresponding number of common shares of the Trust and the general partner of the Operating Partnership may, in its sole and absolute discretion, elect to redeem the partner in cash at the liquidation amount or, if the common shares have been listed on a national securities exchange, the close price per common share. During the period May 31, 2026 through November 30, 2026, the Series U1 OP unit holders have the right to require the Operating Partnership to redeem the units in whole or in part, at the liquidation amount in cash.

With respect to distributions and liquidation rights and prior to the Restructuring, the Series U1 OP units rank (1) junior to the Series D, Series DRIP 1 and Series E preferred OP units and (2) senior to the Series A, Series B and Series C preferred OP units and common OP units. Subsequent to the Restructuring, the Series U1 OP units rank (1) junior to the Series A-1 preferred OP units, (2) on parity with the common OP units and (3) senior to the non-participating common OP units. Any liquidation proceeds remaining shall be distributed on a pro rata and pari passu basis with common OP unit holders, including the Series U1 OP units, and preferred OP units on an as-converted basis.

F-98

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

14. Noncontrolling Interests (Continued)

On June 26, 2020, the Operating Partnership acquired 48.6% of the beneficial ownership interest in FSC Industrial II, DST previously held by third party investors for $1,739,402 thereby wholly-owning FSC Industrial II, DST and retaining control of the acquiree subsequent to this acquisition.

The company formed DSTs to offer beneficial ownership interests in the trusts to third-party investors. As of December 31, 2020 and 2019, third-party beneficial ownership interests in the DSTs are presented below.

​	Year Acquired	December 31,
Trust		2020		2019
FSC BJ Tilton NH, DST	2014	​	75.0%	​	75.0%
FSC GM Lebanon IN DST, LLC (formerly FSC GM Lebanon IN, DST)	2014	​	—	​	90.0%
FSC AS Mt. Juliet TN, DST	2014	​	74.4%	​	74.4%
FSC AS Jonesboro AR, DST	2014	​	74.4%	​	74.4%
FSC MRC Odessa TX, DST	2015	​	90.0%	​	90.0%
FSC Healthcare I, DST	2014 & 2015	​	90.0%	​	90.0%
FSC Healthcare II, DST	2017	​	95.0%	​	95.0%
FSC Healthcare III, DST	2016	​	95.0%	​	95.0%
FSC Industrial I, DST	2018	​	95.0%	​	95.0%
FSC Healthcare IV, DST	2018	​	95.0%	​	95.0%
FSC Automotive I, DST	2018	​	95.0%	​	95.0%
FSC Industrial II DST, LLC (formerly FSC Industrial II, DST)	2019	​	—	​	48.6%
FSC Industrial III, DST	2019	​	94.4%	​	94.4%
FSC Healthcare V, DST	2020	​	95.0%	​	—%
FSC Industrial IV, DST	2020	​	89.1%	​	—%

Four Springs TEN31 Xchange, LLC (“TEN31”) and GMLI DST, both consolidated into the Trust, entered into an unsecured loan agreement (the “TEN31-GMLI DST Loan”) with TEN31 as the lender and GMLI DST as the borrower to provide GMLI DST with working capital and releasing reserves after its sole tenant terminated its lease agreement in 2017. The loan provided for up to $1.8 million of advances of which $1.8 million was advanced and outstanding as of December 31, 2019. The loan required monthly interest payments at 9% per annum and the related interest revenue and interest expense were eliminated in consolidation of the Trust. The unsecured loan was subordinate to GMLI DST’s mortgage loan. The TEN31-GMLI DST Loan was satisfied in connection with the Operating Partnership’s UPREIT acquisition of the 90% interest in GMLI DST.

Net (loss) income attributable to noncontrolling interests on the consolidated statements of operations and changes in contingently redeemable preferred shares and OP units and changes in equity consisted of the following:

​	Year Ended December 31,
​	2020			2019
Holders of Series A preferred OP units	​	$	5,514	​	$	23,525
Holders of Series U1 OP units	​	​	13,806	​	​	—
Holders of common OP units	​	​	1,380	​	​	—
DST beneficial interests	​	​	(96,441)	​	​	925,311
Net (loss) income attributable to noncontrolling interests	​	$	(75,741)	​	$	948,836

15. Contingently Redeemable Series E Preferred Shares

On January 22, 2018, the board of trustees of the company adopted resolutions to reclassify and redesignate 5,750,000 preferred shares as Series E preferred shares authorized for issuance. The company issued 2,000,000

F-99

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

15. Contingently Redeemable Series E Preferred Shares (Continued)

Series E preferred shares (convertible into 2,222,222 common shares) in a private offering for $39.4 million in gross proceeds on January 22, 2018 at a discount from the $20.00 per share offering price. The company incurred approximately $3.1 million in costs in connection with this offering. The issuance discount and issuance costs are accreted to the carrying value of the Series E preferred shares over the 6.5 year redemption period.

Ranking

The Series E preferred shares ranked senior to the Series A, B, C, D and DRIP 1 preferred shares and common shares with respect to the payment of dividends and distributions upon liquidation of the company. All Series E preferred shares had equal dividend, distribution, liquidation and other rights.

Redemption

Holders of Series E preferred shares had no exchange or redemption rights or preemptive rights to subscribe to any of our securities. The company may offer Series E preferred shareholders an option to redeem their shares on January 22, 2021. If a majority of Series E preferred shareholders (the “Series E Majority”) accepted a redemption offer by us, we would redeem the shares at the Series E preferred shares’ liquidation value calculated at $20.00 per Series E preferred share plus accumulated and unpaid dividends. If the Series E Majority rejected our redemption offer, the dividend rate on the Series E preferred shares would have adjusted to 8%. At any time after January 22, 2023, we may have exercised an option to redeem all of the Series E preferred shares outstanding and the redemption price would have been the greater of the liquidation value and the fair market value of such Series E preferred shares.

From and after July 22, 2024, the Series E Majority may have required us to redeem all of the Series E preferred shares. Under certain circumstances of noncompliance with the terms of the Series E preferred shares, the company would have been obligated to redeem all of the Series E preferred shares at the liquidation value. As of December 31,2019, the Series E preferred shares redemption amount is the liquidation value.

On October 30, 2020, the company redeemed all 3,150,943 Series E preferred shares issued and outstanding plus unissued paid-in-kind shares accruing for the period October 1, 2020 through October 30, 2020 for $63,018,847 utilizing a portion of the proceeds of the Mezzanine Loan. Unaccreted Series E preferred share offering costs and issue discount of $2,133,504 were accelerated at redemption and are recognized in accretion on contingently redeemable preferred shares and OP units in the consolidated statements of operations for the year ended December 31, 2020.

Conversion

The Series E preferred shares were convertible into common shares at any time at the option of the holder. The Series E preferred shares were to automatically convert into common shares upon a qualified listing event of the company or upon the election of the Series E Majority to convert into common shares. The Series E preferred shares were to be converted into a number of common shares computed by multiplying the number of Series E preferred shares to be converted by the Series E preferred share liquidation value and dividing such result by the Series E preferred share conversion price of $18.00 per share, subject to adjustment. As of December 31, 2019, 2,754,452 Series E preferred shares were issued and outstanding (convertible into 3,060,502 common shares).

Dividends

Dividends on the Series E preferred shares compounded quarterly on a cumulative basis at an initial annual rate of 17% of the liquidation value. The dividend rate was to be adjusted downward upon raising additional equity or if the company calls the Series E preferred shares and such call notice is rejected. The dividend rate

F-100

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

15. Contingently Redeemable Series E Preferred Shares (Continued)

may have increased upon the occurrence of an event of noncompliance under the terms of the Series E preferred shares. As of September 28, 2018, the dividend rate was reduced to 16.75% per annum. As of October 25, 2019, the dividend rate was reduced to 16.5% per annum. The company had the option to pay any dividends accruing on the Series E preferred shares in-kind by issuing additional Series E preferred shares that have an aggregate liquidation value equal to the amount of dividend to be paid in complete or partial satisfaction of the accrued dividend. We were required to pay to the holders of Series E preferred shares an amount in cash or in-kind shares, with the form of payment at the holder’s option, equal to the amount of the accrued and unpaid dividends on the Series E preferred shares if the company had free cash flow in excess of $5 million per calendar year.

Prior to the Series E redemption, 354,444 Series E preferred shares (convertible into 393,827 common shares) were issued as dividend shares paid in-kind for the nine months ended September 30, 2020 and 42,047 Series E preferred shares (convertible into 46,718 common shares) were accrued for the period as dividend shares for the period October 1, 2020 through October 23, 2020. During the year ended December 31, 2019, 415,793 Series E preferred shares (convertible into 461,992 common shares) were issued as dividend shares paid in-kind. As of December 31, 2019, there were no unpaid dividends on Series E preferred shares.

In the event that the company did not have funds sufficient to make a full distribution of the respective prescribed preferential dividend to the holders of Series E preferred shares and other series of Preferred Shares ranked on parity with the Series E preferred shares, then holders of such shares shall share ratably in such distributions based on the number of common shares into which such shares are then convertible. Subject to such preferential rights as may be granted by the board of trustees in future issuances of one or more series of preferred shares, cumulative dividends were to be payable (1) on a date each month set by the board of trustees (subject to each such dividend payment being authorized and declared), (2) upon the liquidation, dissolution or winding-up of the company, or (3) upon a qualified listing event.

Voting

Each outstanding Series E preferred share entitled the holder to a number of votes equal to the number of common shares into which each preferred share was convertible. The Series E preferred shareholders voted as a single class with the Series A, Series B, Series C, Series D, and Series DRIP 1 preferred shares and common shares. The holders of Series E preferred shares elected one trustee to serve on the company’s board of trustees (the “Series E Trustee”). The Series E Trustee may only be removed by the holders of Series E preferred shares. The Series E Majority had the right to appoint an observer to the board of trustees. The holders of Series E preferred shares had the right to approve certain of the company’s actions.

Liquidation

In the event of any liquidation, dissolution or winding-up of our affairs, subject to such preferential rights as may be granted by the board of trustees in future issuances of one or more series of preferred shares and subject to the rights of holders of any preferred shares on a parity with Series E preferred shares, holders of Series E preferred shares were entitled to receive, in priority to any shares that rank junior to the Series E preferred shares, an amount equal to the liquidation value. After the holders of the Series A, B, C, D, DRIP 1 and E preferred shares have each received their full respective liquidation preference, the holders of common shares were entitled to receive a common share participation amount. If any liquidation distribution proceeds remained after making such distributions, the remaining proceeds were to be distributed on a pro rata basis and pari passu to the holders of Series A, B, C, D, DRIP 1 and E preferred shares, any other series of preferred shares entitled to participate in any such liquidation proceeds and common shares on a pro rata basis.

16. Equity

On October 23, 2020, in connection with and as a result of the Restructuring, the company (1) adopted resolutions to reclassify and designated 223,203 common shares as non-participating common shares

F-101

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

16. Equity (Continued)

authorized for issuance, (2) exchanged 1,861,833 previously issued and then-outstanding common shares for non-participating common shares, (3) exchanged 12,452,690 previously issued and then-outstanding Series A, B, C, D and DRIP 1 preferred shares for common shares, (4) redesignated and reclassified 37,747,309 unissued Series A, B, C, D and DRIP 1 preferred shares as preferred shares made available for future issuance or designation and (5) authorized an additional 6,533,284 common shares for issuance. On October 30, 2020, in connection with the redemption of the outstanding Series E preferred shares, 5,750,000 previously issued and unissued Series E preferred shares were redesignated and reclassified as preferred shares made available for future issuance or designation. On November 19, 2020, the board of trustees of the company adopted a resolution to designate and classify 10,000,000 preferred shares as Series A-1 preferred shares authorized for issuance; see “Note 11. Contingently Redeemable Series A-1 Preferred Shares” above.

Series A, B, C, D and DRIP 1 Preferred Shares

The company’s Series A, B, C, D and DRIP 1 preferred shares had the following characteristics:

Ranking

Prior to the Restructuring, the Series A, B, C, D and DRIP 1 preferred shares ranked junior to Series E preferred shares and senior to the common shares with respect to the payment of dividends and distributions upon liquidation of the company while the Series D preferred shares and Series DRIP 1 preferred shares ranked senior to the Series A, B and C preferred shares.

Redemption

Holders of Series A, B and C preferred shares had no exchange or redemption rights or preemptive rights to subscribe to any of the company’s securities. Series D and DRIP 1 preferred shares were redeemable subject to certain restrictions and limitations, including a one-year holding period for redemptions unrelated to the death of a shareholder, a declining redemption fee, a cap on the maximum number of Series D preferred shares and Series DRIP 1 preferred shares that may have been redeemed in any quarter and year, and the availability of cash to fund such redemptions.

Conversion

The Series A, B and C preferred shares were convertible into common shares at an amended conversion rate of one common share for two Series A, B and C preferred shares at any time at the option of the holder. The Series D and DRIP 1 preferred shares were convertible into common shares at a conversion rate of one common share for one Series D or DRIP 1 preferred share at any time at the option of the holder. Upon the occurrence of the following events, the Series A, B, C, D and DRIP 1 preferred shares were to automatically convert into common shares, without any further action of the holder: (1) upon a listing of the common shares on a national security exchange (a “Listing Event”) or (2) upon the election of holders of a majority of the then outstanding preferred shares to convert into common shares.

Dividends

Dividends on preferred shares accrued on the Series A and B preferred shares at an annual rate of $0.70 per share and on Series C preferred shares at an annual rate of $0.77 per share. Dividends on the Series D preferred shares accrued at an annual rate of $1.40 per share plus dividend shares paid in-kind at a rate of 3% per annum. Dividends on the Series D preferred shares accrued at an annual rate of $1.365 per share. During the year ended December 31, 2020 and 2019, 84,105 and 67,160 Series D preferred shares (convertible into 84,105 and 67,160 common shares), respectively, were issued as dividend shares paid in-kind.

F-102

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

16. Equity (Continued)

The dividends were cumulative and were payable monthly, if authorized and declared by the board of trustees. There were no unpaid dividends on Series A, B, C, D and DRIP 1 preferred shares as of December 31, 2019. Upon conversion of the Series A, B, C, D and DRIP 1 preferred shares to common shares (other than pursuant to a Listing Event), all rights to accumulated and unpaid dividends on such preferred shares were to be cancelled and terminated.

Liquidation

Prior to the Restructuring, Series A, B, C, D and DRIP 1 preferred shares ranked junior to Series E preferred shares and any other class or series of our capital stock, the terms of which expressly provided that it ranked senior to the preferred shares, and subject to payment of or provision for our debts and other liabilities, the Series D preferred shares and Series DRIP 1 preferred shares ranked senior to the Series A, B and C preferred shares and the Series A, B and C preferred shares had parity with respect to the payment of dividends and distributions upon liquidation of the company. All outstanding Series A, B, C, D and DRIP 1 preferred shares were fully paid and non-assessable. After preferred shareholders were to receive their respective liquidation preference amount, common shareholders would receive a common share participation amount. If any liquidation proceeds remained after making both of these distributions, the remaining proceeds were to be distributed to the preferred shareholders and any other series of preferred shares and common shares on a pro rata, as if converted basis.

Transactions related to Series A, B, C, D and DRIP 1 preferred shares: During the year ended December 31, 2020, the company issued 523,209 Series D preferred shares (convertible into 523,209 common shares) for gross proceeds of $10,324,264 not including 84,105 Series D preferred shares (convertible into 84,105 common shares) issued as paid in-kind dividend shares. During the year ended December 31, 2019, the company issued 1,244,099 Series D preferred shares (convertible into 1,244,099 common shares) for gross proceeds of $24,473,502 not including 67,160 Series D preferred shares (convertible into 67,160 common shares) issued as paid in-kind dividend shares. Each Series D preferred share had a price of $20.00 with a par value of $0.001.

Under the company’s Distribution Reinvestment Program (“DRIP”), as described below, the company issued 21,288 Series DRIP 1 preferred shares (convertible into 21,288 common shares) for gross proceeds of $415,112 during the year ended December 31, 2020; the company issued 64,886 Series DRIP 1 preferred shares (convertible into 64,886 common shares) for gross proceeds of $1,265,283 during the year ended December 31, 2019. Each Series DRIP 1 preferred share had a price of $19.50 with a par value of $0.001.

Non-participating Common Shares

The non-participating common shares, $0.001 par value per share, have no right to participate in any distributions, including any distributions upon liquidation of the company, and will automatically convert into common shares on a one-for-one basis upon a qualified listing event of the company.

Voting

Holders of Series A-1 preferred shares, Series A, B, C, D and DRIP 1 preferred shares, Series E preferred shares and non-participating common shares vote as a single class with holders of common shares. Each outstanding preferred share entitles the holder to a number of votes equal to the number of common shares into which each preferred share is convertible. Subsequent to the Restructuring and as of December 31, 2020, each outstanding non-participating common share entitles the holder to 9.33091650 votes. Prior to the Restructuring and as of December 30, 2019, each Series A, B and C preferred share is convertible into one-half of a common share and each Series D preferred share and Series DRIP 1 preferred share is convertible into one common share.

F-103

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

16. Equity (Continued)

Warrants

Warrants to purchase Series A, B and C preferred shares were issued with the Series A, B and C preferred shares, respectively. Each of these warrants gave the record holder the right to purchase one Series A, B or C preferred share at the strike price of $10.00, $10.75 or $11.00 per preferred share, respectively. The warrants for Series A, B and C preferred shares were classified in liabilities and presented at fair value in the consolidated balance sheets. In connection with the issuance of the Series E preferred shares, the company issued warrants to the procuring broker which are classified in equity. Each warrant gave the record holder the right to purchase one common share at an exercise price of $20.00 per preferred share. As a result of the Restructuring, (1) warrants to purchase Series A, B and C preferred shares prior to the Restructuring were converted into warrants to purchase common shares at $31.16 per common share and (2) warrants to purchase common shares prior to the Restructuring were converted into warrants to purchase non-participating common shares at $186.18 per common share. The Restructuring did not affect these warrants’ classifications. Subsequent to the Restructuring, in October 2020, the company issued warrants, classified in equity, to purchase 333,873 common shares at an exercise price of $20.00 per share to procuring brokers of the Series D preferred share offering at a fair value of $1,481,357 which was estimated using the Black-Scholes Model based on an expected life of 5.5 years, risk-free rate of 0.35% and expected share price volatility of 50%. The exercise period for the warrants shall expire on the earlier to occur of: (1) the third anniversary date of the closing of the listing event and (2) seven years from the date of issuance of the original warrants.

The fair value of the warrant liability included in accounts payable, accrued expenses and other liabilities in the consolidated balances sheets was estimated as of December 31, 2020 based on a hybrid model with Black-Scholes Model inputs based on a weighted average life of 1.2 years, risk-free rate of 0.11% and expected share price volatility of 88.2%. The fair value of the warrant liability was estimated as of December 31, 2019 based on an option-pricing method with Black-Scholes Model inputs based on expected lives of 3 years, risk free rate of 1.6% and expected share price volatility of 31%.

As of December 31, 2020, warrants to purchase 650,183 common shares and 10,743 non-participating common shares were outstanding. As of December 31, 2019, warrants to purchase 779,901 Series A preferred shares (convertible into 389,951 common shares), 155,314 Series B preferred shares (convertible into 77,657 common shares), 279,930 Series C preferred shares (convertible into 139,965 common shares) and 100,000 common shares were outstanding.

Dividend Reinvestment Program (DRIP)

The board of trustees of the company authorized and approved the DRIP for the Company relating to the sale and issuance of the Series B preferred shares, Series C preferred shares, and Series DRIP 1 preferred shares. The DRIP has been designed to provide shareholders in the company a convenient way of investing in additional shares of beneficial interest of the company without incurring transaction costs such as commissions, service charges or brokerage fees. Shareholders may elect to reinvest either their full dividend or half of their dividend. The board of trustees shall determine, in its sole discretion, which class and/or series of shares will be made available for purchase pursuant to the DRIP, as well as the price at which the DRIP shares will be sold.

Share Repurchase Program

On March 19, 2014, the board of trustees of the company authorized and approved the Share Repurchase Program (the “SRP”) of the company whereby upon death, disability or other involuntary exigent circumstances of a shareholder, the shareholder may request that the company repurchase his or her shares. Shares that qualify for repurchase are subject to timing and percentage limitations, minimum repurchase, priority of requests and SRP share price calculations based upon the length of time the shareholder has

F-104

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

16. Equity (Continued)

continually held the applicable shares. During the year ended December 31, 2020, the company repurchased 2,500 Series A preferred shares and 100,000 Series C preferred shares for $768,000 under the SRP. During the year ended December 31, 2019, the company repurchased 6,250 Series A preferred shares for $43,750 under the SRP.

The board of trustees may also amend, suspend or terminate the program upon 30 days’ notice or reject any request for repurchase if it determines that the funds allocated to the SRP are needed for other purposes, such as the acquisition, maintenance or repair of properties, or for use in making a declared distribution. Additionally, the board of trustees reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase, change the purchase price for repurchases, or otherwise amend, suspend or terminate the terms of our share repurchase program.

17. Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations:

​	Year Ended December 31,
​	2020			2019
Basic and Diluted:	​	​	​	​	​	​
Net loss attributable to common shareholders	​	$	(23,635,520)	​	$	(17,533,045)
Weighted-average number of common shares outstanding	​	​	2,755,280	​	​	1,861,833
Net loss per common share:	​	​	​	​	​	​
Net loss attributable to common shareholders	​	$	(8.58)	​	$	(9.42)

For per common share amounts, all incremental shares are considered anti-dilutive for periods that have a loss from continuing operations attributable to common shareholders. In addition, other common share equivalents may be anti-dilutive in certain periods. The weighted average number of potentially dilutive securities excluded from the EPS computation consist of the following:

​	Year Ended December 31,
​	2020		2019
Pre-Restructuring convertible Series A preferred shares; 4,681,620, and 5,771,588 for the years ended December 31, 2020 and 2019, respectively	​	2,340,810	​	2,885,794
Post-Restructuring convertible Series A-1 preferred shares; 471,311 and 0 for the years ended December 31, 2020 and 2019, respectively	​	471,311	​	—
Pre-Restructuring convertible Series B preferred shares; 1,035,319, and 1,275,848 for the years ended December 31, 2020 and 2019, respectively	​	517,660	​	637,924
Pre-Restructuring convertible Series C preferred shares; 1,511,086, and 1,900,193 for the years ended December 31, 2020 and 2019, respectively	​	755,543	​	950,097
Pre-Restructuring convertible Series D preferred shares; 2,738,855, and 2,248,105 for the years ended December 31, 2020 and 2019, respectively	​	2,738,855	​	2,248,105
Pre-Restructuring convertible Series DRIP 1 preferred shares; 81,555, and 47,302 for the years ended December 31, 2020 and 2019, respectively	​	81,555	​	47,302
Pre-Restructuring convertible Series E preferred shares; 2,402,973, and 2,489,696 for the years ended December 31, 2020 and 2019, respectively	​	2,669,970	​	2,766,329

F-105

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

17. Earnings Per Share (Continued)

​	Year Ended December 31,
​	2020		2019
Post-Restructuring convertible non-participating common shares; 37,708, and 0 for the years ended December 31, 2020 and 2019, respectively	​	37,708	​	—
Pre-Restructuring warrants exercisable for convertible Series A preferred shares; 559,322, and 1,294,329 for the years ended December 31, 2020 and 2019, respectively	​	279,661	​	647,165
Pre-Restructuring warrants exercisable for convertible Series B preferred shares; 126,033, and 151,543 for the years ended December 31, 2020 and 2019, respectively	​	63,017	​	75,772
Pre-Restructuring warrants exercisable for convertible Series C preferred shares; 227,156, and 279,930 for the years ended December 31, 2020 and 2019, respectively	​	113,578	​	139,965
Post-Restructuring warrants exercisable for common shares; 122,477, and 0 for the years ended December 31, 2020 and 2019, respectively	​	122,477	​	—
Pre-Restructuring options for common shares–convertible at 1:2; 32,459, and 40,000 for the years ended December 31, 2020 and 2019, respectively	​	16,230	​	20,000
Pre-Restructuring options for common shares–convertible at 1:1	​	77,532	​	89,956
Pre-Restructuring warrants for common shares at 1:1	​	81,148	​	100,000
Post-Restructuring options for convertible non-participating common shares at 1:1	​	2,264	​	—
Post-Restructuring warrants for convertible non-participating common shares at 1:1	​	2,025	​	—
Pre-Restructuring Series A preferred OP units exchangeable for common shares at 1:2; 165,947, and 204,500 for the years ended December 31, 2020 and 2019, respectively	​	82,973	​	102,250
Pre-Restructuring Series U1 OP units exchangeable for common shares at 1:1	​	105,898	​	—
Post-Restructuring common OP units exchangeable for common shares at 1:1	​	12,374	​	—
Post-Restructuring non-participating common OP units convertible into common shares at 1:1	​	4	​	—

18. Share-Based Compensation and Employee Benefits

On March 19, 2014, the board of trustees of the company adopted a resolution to authorize and approve the 2014 Equity Plan designed to promote the success and enhance the value of the company by linking the personal interests of the employees, officers, trustees and consultants of the company and its subsidiaries to those of the company shareholders and by providing such persons with an incentive for outstanding performance. The 2014 Equity Plan is further intended to provide flexibility to the company in its ability to motivate, attract and retain the services of employees, officers, trustees and consultants upon whose judgment, interest and special effort the successful conduct of the company’s operation is largely dependent. Accordingly, the 2014 Equity Plan permits the grant of share options, share appreciation rights, restricted shares, restricted share units, LTIP Unit awards, performance awards and other awards from time to time to selected employees, officers, trustees and consultants of the company and its subsidiaries. The trustees have reserved 500,000 shares of previously authorized but unissued common shares to be available to the 2014 Equity Plan. As a result of the Restructuring, the number of common shares authorized under the 2014 Equity Plan is 53,711.

F-106

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

18. Share-Based Compensation and Employee Benefits (Continued)

The company uses the Black-Scholes option pricing model to estimate the fair value of a share-based award. This model requires inputs such as expected term, expected volatility, and risk-free interest rate, which are highly complex and subjective and generally require significant analysis and judgment to develop. The company does not estimate a forfeiture rate for unvested shares. Accordingly, forfeitures will lower share-based compensation expense as they occur during the applicable period.

The following weighted average assumptions were used for common shares options granted as share-based compensation during the year ended December 31, 2019: expected life of option of 10 years, risk-free interest rate of 2.09% and 2.64%, and expected share price volatility of 21% and 24.4%. The weighted average grant date fair values of share-based awards issued during the year ended December 31, 2019 was determined to be $0.69 and $0.94 per common share option.

The total fair value of share-based awards vested during the years ended December 31, 2020 and 2019 is $29,066 and $54,312, respectively, and is included in general and administrative expenses in the consolidated statements of operations.

Common shares granted to officers and employees as part of their performance bonuses and in connection with an employment agreement pursuant to the 2014 Equity Plan are subject to time-based and performance-based vesting provisions. No common shares or non-participating common shares vested during the year ended December 31, 2020. During the year ended December 31, 2019, 15,752 common shares vested under the 2014 Equity Plan. There were no common share forfeitures during the year ended December 31, 2020 and 2019. As of December 31, 2020, as a result of the Restructuring, 448 convertible non-participating common shares issued under the 2014 Equity Plan are unvested. As of December 31, 2019, 4,167 common shares issued under the 2014 Equity Plan before the Restructuring are unvested.

The company granted non-qualified stock options to certain members of the board of trustees, officers and employees under the 2014 Equity Plan to purchase common shares at a conversion rate of 1:1 for options granted in 2019 and 2018 and at a conversion rate of 1:2 for options granted prior to 2017 pursuant to the reverse share split. Each option is subject to time-based vesting and expires on June 7, 2029. As a result of the Restructuring, each option for one common share converted into an option for 0.10742102 convertible non-participating common shares, with an exercise price equal to the options’ original exercise price multiplied by 9.3091650.

No common share options or non-participating common share options were awarded during the year ended December 31, 2020. During the year ended December 31, 2019, 24,875 common share options with conversion rates of 1:1 (exercisable for 24,875 common shares before the Restructuring) were granted with a vesting period of 3 years. During the years ended December 31, 2020 and 2019, 23,086 and 15,918 common share options with a conversion rate of 1:1 (exercisable for 23,086 and 15,918 common shares) vested, respectively, and are exercisable with a weighted average exercise price of $5 per common share. During the year ended December 31, 2019, 5,001 common share options with conversion rates of 1:2 (exercisable for 2,500 common shares) vested and are exercisable with a weighted average exercise price of $0.002 per share. During the year ended December 31, 2020, 2,998 common share options with a conversion rate of 1:1 were forfeited prior to the Restructuring and 362 non-participating common share options were forfeited subsequent to the restructuring. During the year ended December 31, 2019, 1,375 common share options with a conversion rate of 1:1 were forfeited.

As of December 31, 2020, there are options outstanding, for 11,829 non-participating common shares, that have vested or are expected to vest with a weighted average remaining contractual term of approximately seven years and a weighted average exercise price of $38.87 per non-participating common share.

As of December 31, 2019, there were 96,250 and 40,000 common share options outstanding with conversion rates of 1:1 and 1:2 (exercisable for 96,250 and 20,000 common shares) that have vested or are expected to vest

F-107

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

18. Share-Based Compensation and Employee Benefits (Continued)

with a weighted average remaining contractual term of eight years and six years and a weighted average exercise price of $5.00 and $0.002 per common share, respectively.

As of December 31, 2020 and 2019, there was $21,234 and $58,957, respectively, of total unrecognized compensation cost related to unvested share-based compensation granted under the 2014 Equity Plan. As of December 31, 2020 and 2019, the weighted average period over which the unrecognized compensation expense will be recorded is approximately one year.

The company made $85,515 and $90,704 in gross contributions to a company-sponsored 401(k) post-retirement plan for eligible employees during the years ended December 31, 2020 and 2019, respectively.

19. Related Party Transactions

The company entered into an operating lease for its corporate office space commencing October 1, 2012 with a related party. The lease requires monthly rent of $6,500. The lease term continues on a year-to-year basis and can be terminated by either party with 30 days’ notice. Lease expense incurred from the related party during the years ended December 31, 2020 and 2019 of $78,000 is included in general and administrative expenses in the consolidated statements of operations.

Pursuant to an amended and restated marketing agreement, effective January 1, 2018, the company advances an affiliate up to $25,000 per month. The advances are reconciled based on the earnings of the affiliate wherein the affiliate’s net earnings in excess of $0, if any, are repaid up to the amount advanced by the company. The agreement has an indefinite term; provided, however, that the agreement may be terminated by either party upon 30 days written notice. Certain of the company’s officers and trustees are principals and officers in the affiliate. During the year ended December 31, 2020, the board of trustees approved an increase in the monthly advance to $80,000 for a period of up to three months with such increase fully utilized during the three months ended June 30, 2020. During the years ended December 31, 2020 and 2019, the company incurred expenses of $315,000 and $75,595, respectively, pursuant to the marketing agreement, included in general and administrative expenses within the consolidated statements of operations.

The company was owed $50,429 and $50,393 from the affiliate entity as of December 31, 2020 and 2019. The short-term balances relate to various operating activities including advanced marketing fees. Reconciled marketing fees advanced to the affiliate of $32,450 is included in receivable from affiliate in the consolidated balance sheets as of December 31, 2020 and 2019.

In connection with private placement offerings of its securities, the company paid a registered broker-dealer selling commissions and dealer manager fees of $929,669 and $1,256,340 during the years ended December 31, 2020 and 2019, respectively. Pursuant to a broker-dealer agreement, the registered broker-dealer further passes these amounts as payments to brokers overseen by an affiliate of the company as their Office of Supervisory Jurisdiction. Certain of the company’s officers and employees are registered representatives of the broker-dealer.

20. Segments

We evaluate our results from operations by our two business segments: the Real Estate Segment and the Investment Management Segment.

Real Estate Segment

Rental revenue from real estate investments generate the vast majority of our earnings. We invest primarily in commercial properties located in the United States that are leased to companies on a net lease basis. We consider all of the company’s assets, liabilities and real estate operational expenses as part of the Real Estate Segment.

F-108

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

20. Segments (Continued)

The Real Estate Segment activities consist of acquiring real estate properties for long-term holding periods, and we actively manage our portfolio. We believe our proactive approach to asset management and property management helps enhance the performance of our portfolio through risk mitigation strategies and opportunistic sales. We seek to reinvest net disposition proceeds in single-tenant net lease properties that improve our portfolio by enhancing diversification and improve key metrics such as tenant credit quality, weighted average remaining lease term and property age. The Real Estate Segment includes rental revenues from real estate investments in the Investment Programs.

Investment Management Segment

We earn revenue for investment services that we provide related to the Investment Programs. For the periods presented, we provided investment management services, including structuring, syndicating and managing various Investment Programs. As of December 31, 2020, we managed total assets of $161,840,666 on behalf of the Investment Programs.

Acquisition Fee Revenue

We earn acquisition fees for sourcing and syndicating new investments on behalf of the Investment Programs. During the periods presented, we earned acquisition fees from various Investment Programs based on the purchase price of the net lease properties acquired by each Investment Program. For the year ended December 31, 2020, acquisition fees were (1) $1,330,737 for structuring and syndicating Investment Programs to third-party beneficial owners for an aggregate property purchase price of $39,124,278 and (2) $141,000 for the Operating Partnership’s ownership interest in the Investment Programs. For the year ended December 31, 2019, acquisition fees were (1) $397,500 for structuring and syndicating Investment Programs to third-party beneficial owners for an aggregate property purchase price of $15,797,088 and (2) $21,116 for the Operating Partnership’s ownership interest in the Investment Programs. We earn acquisition fees when and as the Investment Programs are syndicated to the investors.

Asset Management Revenue

We earn asset management revenue from the Investment Programs based on the purchase price of the managed property owned by each Investment Program. Asset management revenue from an Investment Program may decrease depending upon changes in such Investment Program’s asset base as a result of sales of assets owned by such Investment Program. For the year ended December 31, 2020, asset management fees were (1) $387,777 for managing Investment Programs that owned assets with an aggregate purchase price to syndicated third-party investors of $139,794,886 as of December 31, 2020 and (2) $63,770 for managing the Operating Partnership’s ownership interest in these Investment Programs. For the year ended December 31, 2019, asset management fees were (1) $369,806 for managing Investment Programs that owned assets with an aggregate purchase price to syndicated third-party investors of $110,863,108 as of December 31, 2019 and (2) $69,353 for managing the Operating Partnership’s ownership interest in these Investment Programs.

F-109

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

20. Segments (Continued)

The following table presents a summary of revenue and expenses in our reportable segments:

​

Year Ended December 31, 2020

​

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Rental

​

$

35,605,378

​

$

—

​

$

—

​

$

—

​

$

35,605,378

Less: Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

(1,316,518)

​

​

—

​

​

—

​

​

—

​

​

(1,316,518)

Acquisition fees earned by the Investment Management Segment incurred by the Real Estate Segment(a)

​

​

—

​

​

1,471,737

​

​

—

​

​

(1,471,737)

​

​

—

Other syndication revenue earned by the Investment Management Segment incurred by the Real Estate Segment(a)

​

​

—

​

​

111,145

​

​

—

​

​

(111,145)

​

​

—

Asset management fees earned by the Investment Management Segment incurred by the Real Estate Segment

​

​

—

​

​

451,547

​

​

—

​

​

(451,547)

​

​

—

Other

​

​

131,933

​

​

—

​

​

—

​

​

—

​

​

131,933

Total Revenues by Segment

​

​

34,420,793

​

​

2,034,429

​

​

—

​

​

(2,034,429)

​

​

34,420,793

Property Operating Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property operating–asset management fee incurred by Real Estate Segment and earned by the Investment Management Segment

​

​

451,547

​

​

—

​

​

—

​

​

(451,547)

​

​

—

Property operating–other

​

​

4,704,960

​

​

—

​

​

—

​

​

—

​

​

4,704,960

Total Property Operating Expenses

​

​

5,156,507

​

​

—

​

​

—

​

​

(451,547)

​

​

4,704,960

Cash Net Operating Income by Segment

​

$

29,264,286

​

$

2,034,429

​

$

—

​

$

(1,582,882)

​

$

29,715,833

Reconciliation of Cash Net Operating Income to reported net income (loss) attributable to Four Springs Capital Trust

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash Net Operating Income by Segment

​

$

29,264,286

​

$

2,034,429

​

$

—

​

$

(1,582,882)

​

$

29,715,833

Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

1,316,518

​

​

—

​

​

—

​

​

—

​

​

1,316,518

F-110

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

20. Segments (Continued)

​

Year Ended December 31, 2020

​

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

General and administrative–directly attributable to segment

​

​

(185,565)

​

​

(382,937)

​

​

—

​

​

—

​

​

(568,502)

General and administrative–unallocated(b)

​

​

—

​

​

—

​

​

(4,582,003)

​

​

—

​

​

(4,582,003)

Professional fees–directly attributable to segment

​

​

(122,518)

​

​

(317,763)

​

​

—

​

​

—

​

​

(440,281)

Professional fees–unallocated(b)

​

​

—

​

​

—

​

​

(461,561)

​

​

—

​

​

(461,561)

Depreciation and amortization

​

​

(13,562,035)

​

​

—

​

​

—

​

​

—

​

​

(13,562,035)

Interest–mortgages notes payable

​

​

(5,926,528)

​

​

—

​

​

—

​

​

—

​

​

(5,926,528)

Interest–unallocated(c)

​

​

—

​

​

—

​

​

(6,670,744)

​

​

—

​

​

(6,670,744)

Acquisition costs

​

​

(222,066)

​

​

(14,258)

​

​

—

​

​

—

​

​

(236,324)

Provision for impairment

​

​

(535,000)

​

​

—

​

​

—

​

​

—

​

​

(535,000)

Change in fair value of conversion feature liability and warrant liability

​

​

—

​

​

—

​

​

354,898

​

​

—

​

​

354,898

Gain on sale of real estate

​

​

408,820

​

​

—

​

​

—

​

​

—

​

​

408,820

Provision for income taxes–unallocated

​

​

—

​

​

—

​

​

(28,954)

​

​

—

​

​

(28,954)

Net (Loss) Income by Segment

​

​

10,435,912

​

​

1,319,471

​

​

(11,388,364)

​

​

(1,582,882)

​

​

(1,215,863)

Net (Income) Loss by Segment Attributable to Noncontrolling Interests

​

​

93,112

​

​

(10,253)

​

​

(7,118)

​

​

—

​

​

75,741

Net Income (Loss) by Segment Attributable to Four Springs Capital Trust

​

$

10,529,024

​

$

1,309,218

​

$

(11,395,482)

​

$

(1,582,882)

​

$

(1,140,122)

Real Estate Segment’s acquisition fee capitalized and other syndication costs recognized as reduction of equity proceeds in the balance sheet and eliminated in consolidation:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Acquisition fee(a)

​

$

1,471,737

​

​

​

​

​

​

​

​

​

​

​

​

Other syndication costs(a)

​

​

111,145

​

​

​

​

​

​

​

​

​

​

​

​

​

​

$

1,582,882

​

​

​

​

​

​

​

​

​

​

​

​

F-111

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

20. Segments (Continued)

​

Year Ended December 31, 2019

​

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

Revenues:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Rental

​

$

30,711,465

​

$

—

​

$

—

​

$

—

​

$

30,711,465

Less: Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

(1,049,427)

​

​

—

​

​

—

​

​

—

​

​

(1,049,427)

Acquisition fees earned by the Investment Management Segment Incurred by the Real Estate Segment(a)

​

​

—

​

​

418,616

​

​

—

​

​

(418,616)

​

​

—

Other syndication revenue earned by the Investment Management Segment incurred by the Real Estate Segment(a)

​

​

—

​

​

279,317

​

​

—

​

​

(279,317)

​

​

—

Asset management fees earned by the Investment Management Segment incurred by the Real Estate Segment

​

​

—

​

​

439,159

​

​

—

​

​

(439,159)

​

​

—

Other

​

​

32,723

​

​

—

​

​

—

​

​

—

​

​

32,723

Total Revenues by Segment

​

​

29,694,761

​

​

1,137,092

​

​

—

​

​

(1,137,092)

​

​

29,694,761

Property Operating Expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Property operating–asset management fee incurred by the Real Estate Segment and earned by the Investment Management Segment

​

​

439,159

​

​

—

​

​

—

​

​

(439,159)

​

​

—

Property operating–other

​

​

3,557,428

​

​

—

​

​

—

​

​

—

​

​

3,557,428

Total Property Operating Expenses

​

​

3,996,587

​

​

—

​

​

—

​

​

(439,159)

​

​

3,557,428

Cash Net Operating Income by Segment

​

$

25,698,174

​

$

1,137,092

​

$

—

​

$

(697,933)

​

$

26,137,333

Reconciliation of Cash Net Operating Income to reported net income (loss) attributable to Four Springs Capital Trust

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash Net Operating Income by Segment

​

$

25,698,174

​

$

1,137,092

​

$

—

​

$

(697,933)

​

$

26,137,333

Straight-line rent adjustment and amortization of acquired favorable leases, net

​

​

1,049,427

​

​

—

​

​

—

​

​

—

​

​

1,049,427

F-112

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

20. Segments (Continued)

​

Year Ended December 31, 2019

​

Real Estate Segment

Investment Management Segment

Unallocated

Eliminations in Consolidation

Total

General and administrative– directly attributable to segment

​

​

(234,555)

​

​

(213,637)

​

​

—

​

​

—

​

​

(448,192)

General and administrative–unallocated(b)

​

​

—

​

​

—

​

​

(4,914,706)

​

​

—

​

​

(4,914,706)

Professional fees–directly attributable to segment

​

​

(136,283)

​

​

(173,140)

​

​

—

​

​

—

​

​

(309,423)

Professional fees–unallocated(b)

​

​

—

​

​

—

​

​

(317,539)

​

​

—

​

​

(317,539)

Depreciation and amortization

​

​

(10,630,039)

​

​

—

​

​

—

​

​

—

​

​

(10,630,039)

Interest–mortgages notes payable

​

​

(5,055,898)

​

​

—

​

​

—

​

​

—

​

​

(5,055,898)

Interest–unallocated(c)

​

​

—

​

​

—

​

​

(4,511,863)

​

​

—

​

​

(4,511,863)

Acquisition costs

​

​

(55,633)

​

​

—

​

​

—

​

​

—

​

​

(55,633)

Change in fair value of conversion feature liability and warrant liability

​

​

​

​

​

​

​

​

(97,939)

​

​

​

​

​

(97,939)

Gain on sale of real estate

​

​

2,698,228

​

​

—

​

​

—

​

​

—

​

​

2,698,228

Provision for income taxes–unallocated

​

​

—

​

​

—

​

​

(307,935)

​

​

—

​

​

(307,935)

Net (Loss) Income by Segment

​

​

13,333,421

​

​

750,315

​

​

(10,149,982)

​

​

(697,933)

​

​

3,235,821

Net (Income) Loss by Segment Attributable to Noncontrolling Interests

​

​

(951,579)

​

​

1,793

​

​

950

​

​

—

​

​

(948,836)

Net Income (Loss) by Segment Attributable to Four Springs Capital Trust

​

$

12,381,842

​

$

752,108

​

$

(10,149,032)

​

$

(697,933)

​

$

2,286,985

Real Estate Program’s acquisition fee capitalized and other syndication costs recognized as reduction of equity proceeds in the balance sheet and eliminated in consolidation:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Acquisition fee(a)

​

$

418,616

​

​

​

​

​

​

​

​

​

​

​

​

Other syndication costs(a)

​

​

279,317

​

​

​

​

​

​

​

​

​

​

​

​

​

​

$

697,933

​

​

​

​

​

​

​

​

​

​

​

​

(a)

The Real Estate Segment capitalizes the acquisition fee expended as direct costs of property acquisition and recognizes other syndication-related costs incurred and paid to the Investment Management Segment as cost of issuing equity in the DSTs. These fees are eliminated in the company’s consolidation.

(b)

Unallocated expenses consist of general and administrative expenses and professional fees not directly attributable to a segment.

(c)

Unallocated interest expense consists of interest on the M&T Credit Facility and Mezzanine Loan.

F-113

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

21. Commitments and Contingencies

The company entered into employment agreements with senior executives of the company. The employment agreements provide for minimum annual base salaries, severance payments ranging from 6 months to 2.5 years of base salary and bonuses and up to 2.5 years of continued health and insurance coverage, employment periods, and incentive compensation. The employment agreements contain standard confidentiality provisions, which apply indefinitely and noncompetition and non-solicitation provisions for one year following termination under certain circumstances.

The company entered into purchase agreements to acquire three single-tenant occupied, net lease real estate properties for approximately $18.7 million as of December 31, 2020. Consummation of these acquisitions is subject to customary closing conditions, including completion of our due diligence, and no assurance can be given that we will complete these acquisitions on these terms or at all. The company deposited $500,000 pursuant to these purchase agreements.

The company is periodically subject to claims or litigation in the ordinary course of business, including claims generated from business conducted by tenants and/or accidents occurring on real estate owned by the company. In these instances, the company is typically indemnified by the tenant against any losses that might be suffered, and the company and/or the tenant are insured against such claim.

22. Subsequent Events

The following events occurred subsequent to December 31, 2020:

On May 4, 2021 and August 11, 2021, the company issued an aggregate of 7,500,000 convertible Series A-2 preferred shares, $0.001 par value per share, resulting in for $147.8 million in gross proceeds at a 1.5% discount to the $20.00 per share stated value. The Series A-2 shares rank senior to the company’s common shares and non-participating common shares with respect to payment of dividends and distributions upon liquidation of the company. The Series A-2 preferred shares automatically convert upon a qualifying listing event of the company into a number of common shares based on the company’s option of either (1) the Series A-2 preferred shares’ stated value divided by 90% of the per common share listing event price or (2) the Series A-2 preferred shares’ stated value divided by the undiscounted price per common share at the listing event plus a cash fee to holders of Series A-2 preferred share at 10% of the Series A-2 preferred shares’ stated value. Holders also have the option to convert their shares into common shares at the lower of the stated value per Series A-2 preferred share or the stated value adjusted for additional issuances of common shares and instruments convertible into common shares of the company. The company may not redeem the Series A-2 preferred shares before May 4, 2026. The company has an option to redeem all of the Series A-2 preferred shares with a payment providing the holders with the greater of (1) a 15% internal rate of return (the “Series A-2 preferred share call option”) and (2) the amount the holders of the Series A-2 preferred Shares would have received as if such Series A-2 preferred Shares were converted. The company has an option to limit the holders of Series A-2 preferred shares to less than 25% of the float following a qualifying listing event by the company by redeeming the excess for cash at the greater of the offering price following a qualifying listing event or the liquidation preference. Holders of Series A-2 preferred shares are entitled to the number of votes on an as converted basis as to any matters together as a single class with holders of common shares. Dividends on Series A-2 preferred shares are cumulative at 11.5% per annum (7% cash, 4.5% accretion dividend added to the Series A-2 preferred shares’ stated value) on the stated value per share through April 19, 2022, 12% (7% cash, 5% accretion dividend) commencing on April 20, 2022, 13% (8% cash, 5% accretion dividend) commencing on November 20, 2022 and 15% (9% cash, 6% accretion dividend) commencing on November 20, 2023.

On May 4, 2021, the terms of the Series A-1 preferred shares were amended to replace the paid-in-kind dividends with accretion dividends that are added to the Series A-1 preferred shares’ stated value at the same yields terms as the former paid-in-kind dividends.

F-114

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

22. Subsequent Events (Continued)

The board of trustees of the company adopted a resolution to authorize and approve the 2021 Equity Incentive Plan and reserved 3,000,000 shares of previously authorized but unissued common shares to be available to the 2021 Equity Incentive Plan. The board of trustees granted to executives and employees of the company 895,500 of LTIP Units profits interests in the Operating Partnership that provide for the following: two-thirds vested upon granting, one-sixth vests over two years from the grant date, and one-sixth vests over three years from grant date. Holders of vested and unvested LTIP Units will receive, prior to a qualified listing event of the company, 10% of the dividends in cash and 90% of the dividends will accrue until payout upon a qualified listing event, and subsequent to a qualified listing event, holders will receive 100% of dividends in cash. Each LTIP Unit is convertible into one common share of the Trust.

Pursuant to the three purchase agreements entered into as of December 31, 2020, the company acquired three net lease properties for $18,670,710. Subsequent to December 31, 2020, the company entered into purchase agreements to acquire thirty-eight net lease properties for an aggregate purchase price of approximately $359.9 million subject to customary closing conditions and review prior to consummation. Of these, we completed acquisitions on 26 properties for approximately $296.3 million in purchase price. The company deposited $1.8 million pursuant to these purchase agreements not yet consummated. Of these properties acquired by the company, ten properties were acquired under the company’s Delaware Statutory Trusts:

•

FSC Industrial 6, DST acquired one property for $37,077,227. In connection with this acquisition, the company entered into a note payable for $20,392,475 maturing March 2028 and requiring monthly interest-only payments at 3.10% for the first five years and monthly principal and interest thereafter;

•

FSC Industrial 7, DST acquired one property for $44,290,278. In connection with this acquisition, the company entered into a note payable for $24,359,653 maturing March 2028 and requiring monthly interest-only payments at 3.15% for the first five years and monthly principal and interest thereafter;

•

FSC Industrial 8, DST acquired one property for $70,000,000. In connection with this acquisition, the company entered into a note payable for $37,100,000 maturing June 2026 and requiring monthly interest-only payments at 2.31%;

•

FSC Healthcare 6, DST that acquired three properties for $29,401,941. In connection with this acquisition, the company entered into notes payable for $15,730,000 maturing May 2028 and requiring monthly interest-only payments at 3.25% for the first five years and monthly principal and interest thereafter; and

•

FSC Diversified 1, DST that acquired four properties for $37,981,200.

The company borrowed $157,000,000 on the M&T Credit Facility to acquire real estate properties and repaid $174,380,953 utilizing proceeds from the issuance of Series of A-2 preferred shares and DST syndications. There is no outstanding balance on the M&T Credit Facility as of August 24, 2021.

We sold six real estate properties for $11,882,375 resulting in net gain on sale of approximately $1,610,000. One of the sold properties was classified as held-for-sale as of December 31, 2020.

We issued beneficial interests in our DSTs:

•

5.9% beneficial interest in FSC Industrial 4, DST for gross proceeds of $1,357,684 resulting in 95% third-party ownership interest in this DST.

•

95% beneficial interest in FSC Industrial 5, DST for gross proceeds of $5,466,000 resulting in 95% third-party ownership interest in this DST.

•

95% beneficial interest in FSC Industrial 6, DST for gross proceeds of $20,084,000 resulting in 95% third-party ownership interest in this DST.

F-115

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Notes to Consolidated Financial Statements (Continued)

22. Subsequent Events (Continued)

•

95% beneficial interest in FSC Industrial 7, DST for gross proceeds of $23,532,000 resulting in 95% third-party ownership interest in this DST.

•

92.1% beneficial interest in FSC Industrial 8, DST for gross proceeds of 36,978,248 resulting in 92.1% third-party ownership interest in this DST.

•

95% beneficial interest in FSC Healthcare 6, DST for gross proceeds of $16,620,000 resulting in 95% third-party ownership interest in this DST.

The company paid dividends of $6,097,385 to holders of common shares and $3,773,170 to holders of Series A-1 and A-2 preferred shares, made distributions of $243,823 to holders of OP units and $5,026,363 to third-party beneficial interest owners of DSTs, and issued 37,905 Series A-1 preferred shares as dividends paid-in-kind.

F-116

Four Springs Capital Trust
(A Maryland Real Estate Investment Trust)

Schedule III—Real Estate and Accumulated Depreciation

Description(a)

Encumbrances

Initial Costs

Costs Capitalized Subsequent to Acquisition

Gross Amounts at December 31, 2020(b)(c)(g)

Accumulated Depreciation(d)(e)(g)

Year Constructed/​ Renovated

Date of Acquisition

Tenant Industry

City

St

Land

Building and Improvements

Land

Building and Improvements

Total

Retail

Midway

GA

​

$

—(f)

​

$

314,600

​

$

749,757

​

$

—

​

$

314,600

​

$

749,757

​

$

1,064,357

​

$

223,810

2010

Jul-10

Retail

Charlotte

NC

​

​

—(f)

​

​

568,265

​

​

772,547

​

​

—

​

​

568,265

​

​

772,547

​

​

1,340,812

​

​

294,092

2010

Nov-10

Retail

Winter Haven

FL

​

​

—(f)

​

​

113,944

​

​

1,257,442

​

​

—

​

​

113,944

​

​

1,257,442

​

​

1,371,386

​

​

408,116

2010

Dec-10

Retail

Elizabeth City

NC

​

​

—(f)

​

​

212,768

​

​

867,847

​

​

—

​

​

212,768

​

​

867,847

​

​

1,080,615

​

​

321,265

2010

Jan-11

Retail

Eden

NC

​

​

—(f)

​

​

113,394

​

​

800,717

​

​

—

​

​

113,394

​

​

800,717

​

​

914,111

​

​

281,803

2011

Mar-11

Retail

Garner

NC

​

​

—(f)

​

​

350,000

​

​

995,352

​

​

—

​

​

350,000

​

​

995,352

​

​

1,345,352

​

​

335,310

2011

Mar-11

Retail

Savannah

GA

​

​

—(f)

​

​

304,040

​

​

799,491

​

​

—

​

​

304,040

​

​

799,491

​

​

1,103,531

​

​

210,600

2011

Jun-11

Retail

Fort Braden

FL

​

​

—(f)

​

​

149,925

​

​

769,598

​

​

—

​

​

149,925

​

​

769,598

​

​

919,523

​

​

313,490

2011

Sep-11

Retail

Pensacola

FL

​

​

—(f)

​

​

133,267

​

​

893,055

​

​

—

​

​

133,267

​

​

893,055

​

​

1,026,322

​

​

313,998

2008

Nov-11

Retail

Atmore

AL

​

​

—(f)

​

​

60,233

​

​

566,903

​

​

—

​

​

60,233

​

​

566,903

​

​

627,136

​

​

163,779

2006

Mar-12

Retail

Milledgeville

GA

​

​

—(f)

​

​

135,692

​

​

1,018,205

​

​

—

​

​

135,692

​

​

1,018,205

​

​

1,153,897

​

​

286,071

1994/2011

Mar-12

Retail

Memphis

TN

​

​

—(f)

​

​

279,910

​

​

920,681

​

​

—

​

​

279,910

​

​

920,681

​

​

1,200,591

​

​

277,555

2012

May-12

Retail

Wichita

KS

​

​

—(f)

​

​

190,413

​

​

749,059

​

​

—

​

​

190,413

​

​

749,059

​

​

939,472

​

​

205,850

2012

Oct-12

Industrial

Alamosa

CO

​

​

—(f)

​

​

64,993

​

​

1,047,935

​

​

—

​

​

64,993

​

​

1,047,935

​

​

1,112,928

​

​

288,689

2012

Nov-12

Retail

Wichita

KS

​

​

—(f)

​

​

311,054

​

​

781,731

​

​

—

​

​

311,054

​

​

781,731

​

​

1,092,785

​

​

221,718

2012

Dec-12

Retail

Burlington

NC

​

​

—(f)

​

​

1,316,590

​

​

531,939

​

​

—

​

​

1,316,590

​

​

531,939

​

​

1,848,529

​

​

155,833

1999

Dec-12

Retail

Tyler

GA

​

​

—(f)

​

​

151,455

​

​

885,211

​

​

—

​

​

151,455

​

​

885,211

​

​

1,036,666

​

​

222,454

2012

Dec-12

Medical

Mentor

OH

​

​

—(f)

​

​

275,000

​

​

1,100,274

​

​

94,682

​

​

275,000

​

​

1,194,956

​

​

1,469,956

​

​

236,724

1990/2008

Feb-13

Retail

Aurora

IL

​

​

—(f)

​

​

213,883

​

​

1,169,817

​

​

—

​

​

213,883

​

​

1,169,817

​

​

1,383,700

​

​

237,403

2005

May-13

Retail

Bloomington

IL

​

​

—(f)

​

​

169,964

​

​

707,320

​

​

—

​

​

169,964

​

​

707,320

​

​

877,284(g)

​

​

150,965

1967/2012

May-13

Industrial

Jackson

MI

​

​

—(f)

​

​

29,897

​

​

1,321,687

​

​

—

​

​

29,897

​

​

1,321,687

​

​

1,351,584

​

​

267,818

1998/2013

Jul-13

Retail

Lisle

IL

​

​

—(f)

​

​

995,184

​

​

671,382

​

​

—

​

​

995,184

​

​

671,382

​

​

1,666,566

​

​

173,278

2001/2011

Aug-13

Industrial

Morton

IL

​

​

2,691,722

​

​

995,548

​

​

4,690,720

​

​

—

​

​

995,548

​

​

4,690,720

​

​

5,686,268

​

​

972,795

2013

Dec-13

Retail

Snyder

TX

​

​

—(f)

​

​

99,438

​

​

896,873

​

​

—

​

​

99,438

​

​

896,873

​

​

996,311

​

​

200,002

2013

Feb-14

Retail

Tilton

NH

​

​

4,440,000

​

​

732,338

​

​

7,196,477

​

​

—

​

​

732,338

​

​

7,196,477

​

​

7,928,815

​

​

1,537,285

1996

May-14

Retail

Brooksville

FL

​

​

—(f)

​

​

544,463

​

​

2,142,787

​

​

—

​

​

544,463

​

​

2,142,787

​

​

2,687,250

​

​

500,755

2002

Jun-14

Industrial

Lebanon

IN

​

​

6,228,750

​

​

1,689,603

​

​

8,871,249

​

​

1,291,975

​

​

1,689,603

​

​

10,163,224

​

​

11,852,827

​

​

1,612,392

2000

Sep-14

Retail

Jonesboro

AR

​

​

5,460,000

​

​

2,590,251

​

​

6,305,975

​

​

—

​

​

2,590,251

​

​

6,305,975

​

​

8,896,226

​

​

1,114,915

2012

Sep-14

Retail

Mt. Juliet

TN

​

​

6,000,000

​

​

2,813,757

​

​

6,884,811

​

​

—

​

​

2,813,757

​

​

6,884,811

​

​

9,698,568

​

​

1,251,714

2012

Sep-14

Retail

Middleburg

FL

​

​

773,500

​

​

195,389

​

​

1,144,376

​

​

—

​

​

195,389

​

​

1,144,376

​

​

1,339,765

​

​

281,368

2011

Sep-14

Retail

Yulee

FL

​

​

875,000

​

​

329,432

​

​

1,105,661

​

​

—

​

​

329,432

​

​

1,105,661

​

​

1,435,093

​

​

268,704

2012

Sep-14

Office

Mt. Prospect

IL

​

​

8,580,000

​

​

5,438,643

​

​

8,790,781

​

​

604,212

​

​

5,438,643

​

​

9,394,993

​

​

14,833,636

​

​

1,930,013

1980/2014

Dec-14

Industrial

Oklahoma City

OK

​

​

2,158,674

​

​

400,156

​

​

4,178,693

​

​

—

​

​

400,156

​

​

4,178,693

​

​

4,578,849

​

​

728,930

2015

Mar-15

Industrial

Odenton

MD

​

​

6,215,000

​

​

1,251,211

​

​

9,282,662

​

​

—

​

​

1,251,211

​

​

9,282,662

​

​

10,533,873

​

​

1,357,518

2001

Apr-15

Industrial

St. Charles

MO

​

​

3,691,840

​

​

1,675,540

​

​

4,785,379

​

​

113,927

​

​

1,675,540

​

​

4,899,306

​

​

6,574,846

​

​

875,661

1994

Jun-15

Industrial

Odessa

TX

​

​

6,410,543

​

​

597,925

​

​

10,168,346

​

​

—

​

​

597,925

​

​

10,168,346

​

​

10,766,271

​

​

1,426,086

1981/2015

Jul-15

Medical

Lubbock

TX

​

​

2,802,080

​

​

266,524

​

​

3,864,063

​

​

—

​

​

266,524

​

​

3,864,063

​

​

4,130,587

​

​

729,226

1966/2013

Jul-16

Medical

Carbondale

IL

​

​

2,292,611

​

​

1,294,874

​

​

2,165,842

​

​

—

​

​

1,294,874

​

​

2,165,842

​

​

3,460,716

​

​

415,566

1999/2013

Jul-16

Office

Mt. Laurel

NJ

​

​

11,750,000

​

​

3,107,502

​

​

11,213,763

​

​

—

​

​

3,107,502

​

​

11,213,763

​

​

14,321,265

​

​

1,369,449

2001

Aug-16

Medical

Longmont

CO

​

​

—(f)

​

​

1,712,763

​

​

6,356,501

​

​

—

​

​

1,712,763

​

​

6,356,501

​

​

8,069,264

​

​

862,302

2015

Sep-16

Medical

American Fork

UT

​

​

—(f)

​

​

2,016,308

​

​

5,507,134

​

​

—

​

​

2,016,308

​

​

5,507,134

​

​

7,523,442

​

​

737,195

2015

Sep-16

Medical

Riverton

UT

​

​

4,300,000

​

​

1,412,079

​

​

5,653,216

​

​

—

​

​

1,412,079

​

​

5,653,216

​

​

7,065,295

​

​

772,899

2015

Sep-16

Medical

Baton Rouge

LA

​

​

—(f)

​

​

1,108,802

​

​

2,098,156

​

​

—

​

​

1,108,802

​

​

2,098,156

​

​

3,206,958

​

​

264,150

1991/2017

Sep-17

F-117

Description(a)

Encumbrances

Initial Costs

Costs Capitalized Subsequent to Acquisition

Gross Amounts at December 31, 2020(b)(c)(g)

Accumulated Depreciation(d)(e)(g)

Year Constructed/​ Renovated

Date of Acquisition

Tenant Industry

City

St

Land

Building and Improvements

Land

Building and Improvements

Total

Retail

Mentor

OH

​

—(f)

​

561,332

​

—

​

—

​

561,332

​

—

​

561,332

​

—

N/A

Dec-17

Industrial

Sterling Hts.

MI

​

—(f)

​

430,003

​

2,687,316

​

—

​

430,003

​

2,687,316

​

3,117,319

​

246,089

2000

Jan-18

Industrial

Van Buren

MI

​

—(f)

​

191,198

​

4,481,130

​

—

​

191,198

​

4,481,130

​

4,672,328

​

364,025

1994/2018

Jan-18

Industrial

Manchester

CT

​

—(f)

​

2,012,112

​

5,669,390

​

—

​

2,012,112

​

5,669,390

​

7,681,503

​

557,298

1980/1984/​ 2002/2011

Feb-18

Medical

Iowa City

IA

​

13,184,690

​

2,365,020

​

19,205,346

​

—

​

2,365,020

​

19,205,346

​

21,570,366

​

1,605,046

2017

May-18

Retail

N. Syracuse

NY

​

—(f)

​

482,055

​

2,246,045

​

—

​

482,055

​

2,246,045

​

2,728,100

​

374,193

1989

Jun-18

Retail

Milford

OH

​

—(f)

​

662,127

​

1,159,722

​

—

​

662,127

​

1,159,722

​

1,821,849

​

89,203

2009

Jul-18

Medical

Waukesha

WI

​

—(f)

​

547,917

​

3,667,268

​

—

​

547,917

​

3,667,268

​

4,215,185

​

257,642

2016

Aug-18

Retail

Bloomington

MN

​

—(f)

​

878,308

​

2,391,320

​

—

​

878,308

​

2,391,320

​

3,269,628

​

214,145

1967/2012

Aug-18

Retail

Chandler

AZ

​

—(f)

​

1,312,382

​

4,183,127

​

—

​

1,312,382

​

4,183,127

​

5,495,509

​

333,544

1997

Aug-18

Industrial

Seabrook

NH

​

—(f)

​

1,073,657

​

2,108,530

​

—

​

1,073,657

​

2,108,530

​

3,182,187

​

152,517

1997

Sep-18

Retail

Nacogdoches

TX

​

—(f)

​

1,038,136

​

510,503

​

—

​

1,038,136

​

510,503

​

1,548,639

​

41,420

1998

Oct-18

Retail

Lufkin

TX

​

—(f)

​

1,011,234

​

2,068,506

​

—

​

1,011,234

​

2,068,506

​

3,079,740

​

143,079

2009

Oct-18

Retail

Nacogdoches

TX

​

—(f)

​

188,247

​

960,710

​

—

​

188,247

​

960,710

​

1,148,957

​

66,484

1998

Oct-18

Retail

Lufkin

TX

​

—(f)

​

176,627

​

446,388

​

—

​

176,627

​

446,388

​

623,015

​

31,152

1999

Oct-18

Retail

Jasper

TX

​

—(f)

​

335,895

​

1,478,926

​

—

​

335,895

​

1,478,926

​

1,814,821

​

102,321

1998

Oct-18

Retail

Woodville

TX

​

—(f)

​

83,973

​

573,200

​

—

​

83,973

​

573,200

​

657,173

​

49,483

2000

Oct-18

Retail

Lufkin

TX

​

—(f)

​

654,894

​

655,102

​

—

​

654,894

​

655,102

​

1,309,996

​

50,410

2011

Oct-18

Retail

Tyler

TX

​

—(f)

​

341,521

​

424,284

​

—

​

341,521

​

424,284

​

765,805

​

33,082

2015

Oct-18

Retail

Minneapolis

MN

​

—(f)

​

976,103

​

2,621,236

​

—

​

976,103

​

2,621,236

​

3,597,339

​

194,171

2011

Oct-18

Retail

Minneapolis

MN

​

—(f)

​

817,366

​

837,586

​

—

​

817,366

​

837,586

​

1,654,952

​

65,573

1947

Oct-18

Industrial

St. Louis

MO

​

—(f)

​

728,631

​

2,546,964

​

—

​

728,631

​

2,546,964

​

3,275,595

​

192,181

1997/2016

Oct-18

Retail

Lynchburg

VA

​

—(f)

​

467,310

​

2,571,264

​

—

​

467,310

​

2,571,264

​

3,038,574

​

251,952

2015

Nov-18

Retail

Roanoke

VA

​

—(f)

​

431,058

​

2,196,942

​

—

​

431,058

​

2,196,942

​

2,628,000

​

198,659

2009

Nov-18

Retail

Troy

NY

​

—(f)

​

401,987

​

573,607

​

—

​

401,987

​

573,607

​

975,594

​

52,900

2012

Dec-18

Retail

Eufaula

OK

​

1,259,461

​

547,113

​

1,039,868

​

—

​

547,113

​

1,039,868

​

1,586,981

​

102,313

1998

Dec-18

Retail

Mishawaka

IN

​

2,029,774

​

592,711

​

2,531,411

​

—

​

592,711

​

2,531,411

​

3,124,122

​

179,584

1990

Dec-18

Retail

Elkhart

IN

​

1,490,966

​

598,910

​

1,752,691

​

—

​

598,910

​

1,752,691

​

2,351,601

​

129,411

1996

Dec-18

Retail

Irving

TX

​

1,257,119

​

456,740

​

1,347,798

​

—

​

456,740

​

1,347,798

​

1,804,538

​

153,945

1983

Dec-18

Retail

The Colony

TX

​

2,168,360

​

980,165

​

2,155,195

​

—

​

980,165

​

2,155,195

​

3,135,360

​

185,711

1999

Dec-18

Retail

Utica

MI

​

988,850

​

405,045

​

1,068,486

​

—

​

405,045

​

1,068,486

​

1,473,531

​

92,953

2007

Dec-18

Retail

Richland Hills

TX

​

810,164

​

113,573

​

1,071,758

​

—

​

113,573

​

1,071,758

​

1,185,331

​

127,156

1981

Dec-18

Retail

Granger

IN

​

1,347,304

​

332,618

​

1,572,370

​

—

​

332,618

​

1,572,370

​

1,904,988

​

109,814

1984

Dec-18

Retail

Birmingham

AL

​

—(f)

​

979,848

​

1,276,599

​

—

​

979,848

​

1,276,599

​

2,256,447

​

81,889

2014

Jan-19

Retail

Whitmore Lake

MI

​

—(f)

​

1,170,654

​

2,638,719

​

—

​

1,170,654

​

2,638,719

​

3,809,373

​

172,119

2007

Feb-19

Retail

Escanaba

MI

​

—(f)

​

1,028,919

​

1,649,350

​

—

​

1,028,919

​

1,649,350

​

2,678,269

​

106,854

2008

Feb-19

Retail

St. Charles

MO

​

—(f)

​

505,105

​

746,871

​

—

​

505,105

​

746,871

​

1,251,976

​

71,249

2005

Apr-19

Retail

St. Peters

MO

​

—(f)

​

525,824

​

1,453,997

​

—

​

525,824

​

1,453,997

​

1,979,821

​

107,991

2004

Apr-19

Retail

Charlotte

NC

​

—(f)

​

896,495

​

2,069,294

​

—

​

896,495

​

2,069,294

​

2,965,789

​

150,164

2012

May-19

Retail

Charlotte

NC

​

—(f)

​

1,099,385

​

2,316,349

​

—

​

1,099,385

​

2,316,349

​

3,415,734

​

165,770

2014

May-19

Industrial

Omaha

NE

​

3,575,000

​

1,513,143

​

4,028,652

​

870,373

​

1,513,143

​

4,899,025

​

6,412,167

​

353,940

1964

May-19

Industrial

Plattsburgh

NY

​

2,567,777

​

724,699

​

3,429,463

​

—

​

724,699

​

3,429,463

​

4,154,162

​

311,501

1980

Jun-19

Retail

Muncie

IN

​

1,468,500

​

346,739

​

2,234,058

​

—

​

346,739

​

2,234,058

​

2,580,797

​

102,671

2009

Jul-19

Industrial

Greenwood

IN

​

4,753,650

​

1,267,276

​

6,386,193

​

—

​

1,267,276

​

6,386,193

​

7,653,469

​

295,874

2019

Jul-19

Retail

Blaine

MN

​

2,691,392

​

656,622

​

3,332,572

​

—

​

656,622

​

3,332,572

​

3,989,194

​

136,890

2018

Jul-19

Retail

Brighton

CO

​

3,016,798

​

943,793

​

3,528,393

​

—

​

943,793

​

3,528,393

​

4,472,186

​

132,854

2019

Aug-19

Retail

Middleton

WI

​

2,750,149

​

844,936

​

3,249,716

​

—

​

844,936

​

3,249,716

​

4,094,652

​

115,885

2018

Aug-19

F-118

Description(a)

Encumbrances

Initial Costs

Costs Capitalized Subsequent to Acquisition

Gross Amounts at December 31, 2020(b)(c)(g)

Accumulated Depreciation(d)(e)(g)

Year Constructed/​ Renovated

Date of Acquisition

Tenant Industry

City

St

Land

Building and Improvements

Land

Building and Improvements

Total

Industrial

North Canton

OH

​

​

4,839,175

​

​

528,362

​

​

6,946,340

​

​

—

​

​

528,362

​

​

6,946,340

​

​

7,474,702

​

​

262,293

2019

Aug-19

Retail

Greenwood

IN

​

​

1,281,500

​

​

384,610

​

​

1,762,254

​

​

—

​

​

384,610

​

​

1,762,254

​

​

2,146,864

​

​

62,415

2016

Sep-19

Retail

Bordentown

NJ

​

​

3,090,661

​

​

997,194

​

​

3,546,213

​

​

—

​

​

997,194

​

​

3,546,213

​

​

4,543,407

​

​

124,768

2019

Sep-19

Retail

Edwardsville

IL

​

​

—(f)

​

​

269,369

​

​

1,286,094

​

​

—

​

​

269,369

​

​

1,286,094

​

​

1,555,463

​

​

89,106

1991

Oct-19

Retail

Cincinnati

OH

​

​

2,500,000

​

​

1,899,081

​

​

2,108,442

​

​

—

​

​

1,899,081

​

​

2,108,442

​

​

4,007,523

​

​

67,004

2019

Feb-20

Medical

Brownsville

TX

​

​

3,320,000

​

​

830,679

​

​

4,571,080

​

​

—

​

​

830,679

​

​

4,571,080

​

​

5,401,759

​

​

76,283

1998/2019

Jun-20

Medical

Tucson

AZ

​

​

—(f)

​

​

2,079,863

​

​

5,789,355

​

​

—

​

​

2,079,863

​

​

5,789,355

​

​

7,869,218

​

​

61,079

2020

Aug-20

Industrial

Grand Rapids

MI

​

​

22,550,000

​

​

2,023,595

​

​

35,204,827

​

​

—

​

​

2,023,595

​

​

35,204,827

​

​

37,228,422

​

​

175,627

1974/2020

Nov-20

Industrial

Athens

OH

​

​

—(f)

​

​

712,210

​

​

2,185,793

​

​

—

​

​

712,210

​

​

2,185,793

​

​

2,898,003

​

​

9,122

2019

Dec-20

Medical

Jackson

TN

​

​

—(f)

​

​

890,025

​

​

2,686,696

​

​

—

​

​

890,025

​

​

2,686,696

​

​

3,576,721

​

​

—

2018/2020

Dec-20

Industrial

Clearwater

FL

​

​

5,500,000

​

​

2,673,512

​

​

6,402,752

​

​

—

​

​

2,673,512

​

​

6,402,752

​

​

9,076,264

​

​

—

1994

Dec-20

Total

​

​

​

$

163,111,013

​

$

84,714,923

​

$

322,315,475

​

$

2,975,169

​

$

84,714,923

​

$

325,290,644

​

$

410,005,567

​

$

34,780,352

​

​

(a)

As of December 31, 2020, we had investments in 101 net leased real estate property locations accounted for as operating leases. Initial costs exclude intangible lease assets totaling $1.9 million and liabilities totaling 3.1 million.

(b)

The aggregate cost basis for federal income tax purposes was approximately $434.7 million at December 31, 2020.

(c)

The following is a reconciliation of total real estate carrying value for the years ended December 31, 2020 and 2019:

​	Year ended December 31,
​	2020			2019
Balance, beginning of year	​	$	338,967,942	​	$	287,958,220
Add: Acquisitions	​	​	74,759,110	​	​	64,296,719
Add: Improvements	​	​	4,493,448	​	​	—
Less: Cost of real estate sold	​	​	(8,214,933)	​	​	(13,286,997)
Balance, end of year	​	$	410,005,567	​	$	338,967,942

(d)

The following is a reconciliation of accumulated depreciation for the years ended December 31, 2020 and 2019:

​	Year ended December 31,
​	2020			2019
Balance, beginning of year	​	$	25,492,508	​	$	18,940,912
Add: Depreciation expense	​	​	9,726,779	​	​	7,520,101
Less: Accumulated depreciation associated with real estate sold	​	​	(438,935)	​	​	(968,505)
Balance, end of year	​	$	34,780,352	​	$	25,492,508

(e)

The company’s real estate assets are depreciated using the straight-line method over the estimated useful lives of the properties—19 to 50 years for buildings and from 5 to 40 years for improvements.

(f)

Property was collateral for non-recourse debt obligations totaling $17.4 million issued under the credit facility.

(g)

Property held for sale as of December 31, 2020.

F-119

Independent Auditor’s Report

Shareholders and Board of Trustees
Four Springs Capital Trust
Lake Como, New Jersey

Opinion

We have audited the Statement of Revenues and Certain Operating Expenses (the “Statement”) of the property located at 7000 Metropolis Drive, Austin, TX 78744 (the “Amazon Property”) for the year end December 31, 2020, and the related notes to the Statement.

In our opinion, the accompanying Statement presents fairly, in all material respects, the revenues and certain operating expenses of the Amazon Property for the year ended December 31, 2020, in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Statement section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter

The accompanying Statement of Revenues and Certain Operating Expenses was prepared for the purpose of complying with rules and regulations of the U.S. Securities and Exchange Commission, as described in Note 2 to the Statement and is not intended to be a complete presentation of the Amazon Property’s revenues and expenses. Our opinion is not modified in this respect.

Responsibilities of Management for the Statement

Management is responsible for the preparation and fair presentation of the Statement in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Statement that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Audit of the Statement

Our objectives are to obtain reasonable assurance about whether the Statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the Statement.

In performing an audit in accordance with GAAS, we:

•

Exercise professional judgment and maintain professional skepticism throughout the audit.

•

Identify and assess the risks of material misstatement of the Statement, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the Statement.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Amazon Property’s internal control. Accordingly, no such opinion is expressed.

F-120

•

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the Statement.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

/s/ BDO USA, LLP

New York, New York

August 24, 2021

F-121

AMAZON PROPERTY
AUSTIN, TX

Statements of Revenues and Certain Operating Expenses

​	Three Months Ended March 31, 2021 (Unaudited)			Year Ended December 31, 2020
Revenues:	​	​	​	​	​	​
Rental income	​	$	648,516	​	$	2,080,580
Expenses:	​	​	​	​	​	​
Property operating expenses	​	​	284,596	​	​	1,122,164
Revenues and Certain Operating Expenses	​	$	363,920	​	$	958,416

F-122

AMAZON PROPERTY
AUSTIN, TX

Notes to Statements of Revenues and Certain Operating Expenses
For the Three Months Ended March 31, 2021 (Unaudited) and the
Year Ended December 31, 2020

1. Description of Real Estate Property

Four Springs Capital Trust (“FSCT”) is a Maryland real estate investment trust formed to invest in, manage and operate net-leased real estate. On May 18, 2021, FSCT, through its subsidiary Four Springs Capital Trust Operating Partnership, L.P. (“FSCTOP”), acquired from Mohr Met Center, LLC and Mohr Met Land, LLC (collectively, the “Seller”), a one-story industrial building containing approximately 160,000 rentable square feet and an adjacent parking lot in Austin, Texas (the “Amazon Property”). The Seller is not affiliated with FSCT. The purchase price of the Amazon Property was $70 million plus closing costs.

2. Basis of Presentation

The accompanying statements of revenues and certain operating expenses have been prepared to comply with the rules and regulations of the Securities and Exchange Commission (“SEC”) including the instructions to Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended (“Rule 3-14”).

The Amazon Property is not a legal entity and the accompanying statements of revenues and certain operating expenses are not representative of the actual operations for the periods presented, as certain revenues and expenses have been excluded that may not be comparable to the revenues and expenses FSCT expects to incur in the future operations of the Amazon Property. Excluded items include depreciation and amortization expense, interest expense and interest income not directly comparable to the future operations of the Amazon Property.

The accompanying statements of revenues and certain operating expenses have been prepared for the purpose of complying with Rule 3-14. In the opinion of management, the statement of revenues and certain operating expenses for the unaudited interim period presented includes all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such period. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Square footage, acreage, occupancy and other measures used to describe real estate included in these notes to the statements of revenues and certain operating expenses are presented on an unaudited basis.

3. Significant Accounting Policies

Rental Revenues

Minimum rent, including rental abatements, lease incentives and contractual fixed increases attributable to operating leases, is recognized on a straight-line basis over the term of the related lease and amounts expected to be received in later years are recorded as deferred rent. The adjustment to record deferred rent increased rental revenue by approximately $26,000 for the three months ended March 31, 2021 (unaudited) and increased rental revenue by $115,000 for the year ended December 31, 2020. Rental income includes $179,366 (unaudited) and $588,329 in tenant reimbursements received for the three months ended March 31, 2021 and year ended December 31, 2020, respectively.

Certain Property Operating Expenses

Certain property operating expenses include only those costs expected to be comparable to the proposed future operations of the Amazon Property. Certain property operating expenses include real estate taxes, insurance, utilities, janitorial, repairs and maintenance, landscaping, management fees and other expenses which are charged to operations as incurred. For the three months ended March 31, 2021 and the year ended December 31, 2020, real estate tax expense was $168,953 (unaudited) and $675,810, respectively. Insurance

F-123

AMAZON PROPERTY
AUSTIN, TX

Notes to Statements of Revenues and Certain Operating Expenses
For the Three Months Ended March 31, 2021 (Unaudited) and the
Year Ended December 31, 2020 (Continued)

3. Significant Accounting Policies (Continued)

expense for the three months ended March 31, 2021 and the year ended December 31, 2020 was $18,643 (unaudited) and $51,687, respectively.

Use of Estimates

The preparation of the statements of revenue and certain operating expenses, as described in Note 2 and in accordance with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

4. Description of Leasing Arrangements

As of March 31, 2021 and December 31, 2020, the Amazon Property’s building was 60% leased to one tenant, Amazon.com Services LLC (“Amazon”), that also leased a portion of the Amazon Property’s parking lot. The original building and parking lot lease agreements were to expire on April 30, 2029. Amazon leased approximately 96,000 square feet of the 160,000 square foot building from January 2020 through March 2021. In April 2021, the building lease was modified such that Amazon will lease the entire 160,000 square feet and extend the term of the building lease to April 30, 2031 (see Note 7). Additionally, through March 2021, the Amazon Property’s parking lot was under construction and had two completion phases. Phase one was completed in June 2020 with a portion of the parking lot leased to Amazon. In October 2020, the parking lot lease agreement was amended increasing the base rent per annum upon the date of completion. Phase two of the parking lot construction was completed in March 2021, and the entire parking lot was then leased to Amazon. Both the building and parking lot leases have the option to extend the lease term for three additional terms of five years.

5. Future Minimum Rental Commitments

As of December 31, 2020, the future minimum rental payments due under non-cancelable operating leases of the Amazon Property for the years ending December 31 and thereafter are as follows:

2021	$	2,210,376
2022	​	2,380,433
2023	​	2,411,598
2024	​	2,443,698
2025	​	2,476,761
Thereafter	​	8,503,457
​	$	20,426,323

Leases generally require reimbursement of the tenant’s proportional share of common area, real estate taxes, insurance and management fees, which are excluded from the amounts above.

6. Commitments and Contingencies

Landlord Contribution

The building lease provides Amazon with a landlord contribution of $1,150,000 to be applied, at Amazon’s option, against (a) the base rent coming due following April 21, 2021, (b) against the cost of any tenant-made

F-124

AMAZON PROPERTY
AUSTIN, TX

Notes to Statements of Revenues and Certain Operating Expenses
For the Three Months Ended March 31, 2021 (Unaudited) and the
Year Ended December 31, 2020 (Continued)

6. Commitments and Contingencies (Continued)

alterations and (c) against the cost of furniture, fixtures, and equipment. The allowance is available through February 8, 2022, after which, the landlord will pay the remaining balance to the tenant. As of August 24, 2021, the entire balance is outstanding.

7. Subsequent Events

FSCT evaluated subsequent events up through August 24, 2021 the date the statements of revenues and certain operating expenses were available to be issued.

In April 2021, Amazon amended its building lease agreement to lease the entire 160,000 square feet building increasing base rent by $826,880 per annum with annual increases of approximately 2.4% on the expansion space and extended the building lease expiration to April 30, 2031.

F-125

 

         Common Shares

Four Springs Capital Trust

Prospectus

Morgan Stanley

Goldman Sachs & Co. LLC

Wells Fargo Securities

Mizuho Securities

Scotiabank

Wolfe | Nomura Alliance

Berenberg

R. Seelaus & Co., LLC

      , 2021

Until            , 2021 (25 days after the date of this prospectus), all dealers that effect transactions in our common shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31.   Other Expenses of Issuance and Distribution.

The following table itemizes the expenses incurred by us in connection with the issuance and registration of the securities being registered hereunder (excluding the underwriters’ discount and commission). All amounts shown are estimates except for the SEC registration fee, the FINRA filing fee and the NYSE listing fee.

SEC Registration Fee	$	*
FINRA Filing Fee	​	*
NYSE Listing Fees	​	*
Accounting Fees and Expenses	​	*
Legal Fees and Expenses	​	*
Printing Fees and Expenses	​	*
Transfer Agent and Registrar Fees	​	*
Miscellaneous	​	*
Total	$	*

*

To be completed by amendment.

Item 32.   Sales to Special Parties.

None.

Item 33.   Recent Sales of Unregistered Securities.

During the past three years, we have issued and sold the following securities in transactions that were not registered under the Securities Act:

•

On November 20, 2020, we issued an aggregate of 2,500,000 Series A-1 preferred shares in a private placement offering at an offering price of $19.70 per share for aggregate gross proceeds of approximately $49,250,000.

•

On May 4, 2021 and August 11, 2021, we issued an aggregate of 7,500,000 Series A-2 preferred shares in a private placement offering at an offering price of $19.70 per share for aggregate gross proceeds of approximately $147,750,000.

•

From April 1, 2018 through the date of this registration statement, we issued 103,798 Series DRIP 1 shares to certain shareholders pursuant to our DRIP.

•

From April 1, 2018 through March 19, 2020, we issued 3,338,727 Series D preferred shares to certain shareholders pursuant to their terms of our Series D preferred shares in private placement offerings at an offering price of $20.00 per share for aggregate gross proceeds of approximately $66,700,000.

•

From April 1, 2018 through the date of this registration statement, we granted non-qualified share options to purchase 1,076 non-participating common shares at an exercise price of $46.47 per share to certain members of our board of trustees under the 2014 Equity Plan.

•

From April 29, 2021 through the date of this registration statement, we granted 895,500 LTIP Units to senior management and employees under the 2021 Equity Incentive Plan.

The issuances of securities set forth above did not involve a public offering and were made in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act or Rule 506 promulgated thereunder, or pursuant to, Rule 701 promulgated under the Securities Act. All of the persons who purchased securities in the private placements listed above were, at the time of purchase, “accredited investors” as defined under Regulation D of the Securities Act.

II-1

Item 34.   Indemnification of Directors and Officers.

The Maryland REIT Law permits a Maryland REIT to include in its charter a provision limiting the liability of its trustees and officers to the trust and its shareholders for money damages except for liability resulting from (1) actual receipt of an improper benefit or profit in money, property or services or (2) active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains a provision which eliminates such liability to the maximum extent permitted by the Maryland REIT Law.

The Maryland REIT Law permits a Maryland REIT to indemnify and advance expenses to its trustees and officers to the same extent as permitted for directors and officers of a Maryland corporation under the MGCL. In the case of directors and officers of a Maryland corporation, the MGCL permits a Maryland corporation to indemnify present and former directors and officers against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of such service, unless it is established that either: (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and either (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; (2) the director or officer actually received an improper personal benefit in money, property or services; or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

Our bylaws require us to indemnify, without a preliminary determination of the ultimate entitlement to indemnification: (1) any present or former trustee, officer or shareholder who has been successful, on the merits or otherwise, in the defense of a proceeding to which he was made a party by reason of such status, against reasonable expenses incurred by him in connection with the proceeding; (2) any present or former trustee or officer against any claim or liability to which he may become subject by reason of such status unless it is established that (a) his act or omission was committed in bad faith or was the result of active and deliberate dishonesty, (b) he actually received an improper personal benefit in money, property or services or (c) in the case of a criminal proceeding, he had reasonable cause to believe that his act or omission was unlawful; and (3) each shareholder or former shareholder against any claim or liability to which he may be subject by reason of such status as a shareholder or former shareholder.

In addition, our bylaws require us to pay or reimburse, in advance of final disposition of a proceeding, reasonable expenses incurred by a present or former trustee or officer made a party to a proceeding by reason of his status as a trustee or officer provided that, in the case of a trustee or officer, we shall have received (1) a written affirmation by the trustee or officer of his good faith belief that he has met the applicable standard of conduct necessary for indemnification by us as authorized by the bylaws and (2) a written undertaking by him or on his behalf to repay the amount paid or reimbursed by us if it shall ultimately be determined that the applicable standard of conduct was not met. The bylaws also (1) permit us, with the approval of our trustees, to provide indemnification and payment or reimbursement of expenses to a present or former trustee or officer who served our predecessor in such capacity, and to any of our employees or agents of our predecessor, (2) provide that any indemnification or payment or reimbursement of the expenses permitted by our bylaws shall be furnished in accordance with the procedures provided for indemnification and payment or reimbursement of expenses under Section 2-418 of the MGCL for directors of Maryland corporations and (3) permit us to provide such other and further indemnification or payment or reimbursement of expenses as may be permitted by the MGCL for directors of Maryland corporations.

The Partnership Agreement of the Operating Partnership also provides for indemnification by the Operating Partnership of us, as general partner, for any costs, expenses or liabilities incurred by it by reason of any act performed by it for or on behalf of the Operating Partnership; provided that such person’s actions were taken in good faith and in the belief that such conduct was in the best interests of the Operating Partnership and that such person was not guilty of fraud, willful misconduct or gross negligence.

In addition to the indemnity provided in our charter, our by-laws, under Maryland law and the Partnership Agreement, we have entered into an Indemnification Agreement with each of our trustees which provides that we agree to reimburse the trustee for losses incurred in legal proceedings related to the trustee’s service as trustee and to advance funds to the trustee or officer to pay expenses as they are incurred.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our trustees and officers pursuant to the foregoing provisions or otherwise, we have been advised that, although the validity

II-2

and scope of the governing statute has not been tested in court, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In addition, state securities laws may limit indemnification.

Item 35.   Treatment of Proceeds from Shares Being Registered.

Not applicable.

Item 36.   Financial Statements and Exhibits.

(a)

Financial Statements. See Index to Financial Statements.

(b)

EXHIBIT INDEX

Exhibit	​
1.1*	Form of Underwriting Agreement
3.1*	Form of Amended and Restated Declaration of Trust of Four Springs Capital Trust, to be in effect upon completion of this offering
3.2*	Form of Second Amended and Restated Bylaws of Four Springs Capital Trust, to be in effect upon completion of this offering
3.3*	Form of Third Amended and Restated Agreement of Limited Partnership of Four Springs Capital Trust Operating Partnership, L.P., to be in effect upon completion of this offering
4.1*	Form of Common Share Certificate of Four Springs Capital Trust
5.1*	Opinion of Duane Morris LLP regarding the legality of the common shares being registered
8.1*	Opinion of Duane Morris LLP regarding certain tax matters
10.1†	Four Springs Capital Trust 2014 Equity Incentive Plan, dated March 19, 2014
10.2†	Form of Restricted Share Award Certificate for the 2014 Equity Incentive Plan
10.3†	Four Springs Capital Trust 2021 Equity Incentive Plan
10.4†	Form of Stock Option Agreement for the 2021 Equity Incentive Plan
10.5†	Form of LTIP Award Agreement
10.6†	Nonqualified Option Agreement between Four Springs Capital Trust and James S. Vaccaro, dated March 31, 2014
10.7†	Nonqualified Option Agreement between Four Springs Capital Trust and Stephen R. Petersen, dated March 31, 2014
10.8†	Nonqualified Option Agreement between Four Springs Capital Trust and James S. Vaccaro, dated September 17, 2015
10.9†	Nonqualified Option Agreement between Four Springs Capital Trust and Stephen R. Petersen, dated September 17, 2015
10.10†	Nonqualified Option Agreement between Four Springs Capital Trust and Peter S. Reinhart, dated October 1, 2015
10.11†	Amended and Restated Employment Agreement between Four Springs Capital Trust and William Dioguardi, dated May 19, 2017
10.12†	Amended and Restated Employment Agreement between Four Springs Capital Trust and Coby Johnson, dated May 19, 2017
10.13†	Employment Agreement between Four Springs Capital Trust and John E. Warch, dated December 3, 2014
10.14†	Employment Agreement between Four Springs Capital Trust and Cynthia M. Daly, dated December 3, 2014
10.15†	Employment Agreement between Four Springs Capital Trust and Jared W. Morgan, dated August 1, 2016

II-3

Exhibit	​
10.16†	Form of Indemnification Agreement between Four Springs Capital Trust and each of its trustees and executive officers
10.17	Amended and Restated Credit Agreement, dated as of October 30, 2020, by and among Four Springs Capital Trust Operating Partnership, L.P., Four Springs Capital Trust, the other guarantors party thereto, M&T Bank and the other lenders party thereto
10.18	Amended and Restated Guaranty, dated October 30, 2020, by and among Four Springs Capital Trust and the other guarantors party thereto
10.19	Credit Agreement, dated October 30, 2020, by and among Four Springs Capital Trust, Magnetar Constellation Master Fund, Ltd, the other lenders party thereto Magnetar Financial LLC, and U.S. Bank National Association
10.20	Amended and Restated Series A-1 Preferred Share Investor Rights Agreement, dated May 3, 2021, by and among Four Springs Capital Trust, Goldman Sachs Asset Management, L.P. and the other signatories thereto.
10.21	Series A-2 Preferred Share Investor Rights Agreement, dated May 3, 2021, by and among Four Springs Capital Trust and the signatories thereto
10.22	Form of Amended and Restated DST Trust Agreement
10.23*	Form of Credit Agreement, by and among
21.1	List of Subsidiaries of Four Springs Capital Trust
23.1	Consent of BDO USA, LLP, independent registered public accounting firm
23.2*	Consent of Duane Morris LLP (included in Exhibit 5.1)
23.3*	Consent of Duane Morris LLP (included in Exhibit 8.1)
23.4	Consent to be Named as Trustee Nominee (Elizabeth A. Picklo-Smith)
23.5	Consent of Rosen Consulting Group
24.1	Power of Attorney (on Signature Page of the Registration Statement)

*

To be filed by amendment.

†

Indicates management contract or compensatory plan or arrangement.

Item 37.   Undertakings.

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

1.

For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

II-4

2.

For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lake Como, State of New Jersey, on this 15th day of November, 2021.

FOUR SPRINGS CAPITAL TRUST
By:	/s/ William P. Dioguardi William P. Dioguardi Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned trustees and officers of Four Springs Capital Trust constitutes and appoints each of William P. Dioguardi and Coby R. Johnson, or any of them, each acting alone, his or her true and lawful attorney-in-fact and agent, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifying and confirming all that the said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ William P. Dioguardi William P. Dioguardi	Chairman of the Board of Trustees and Chief Executive Officer (principal executive officer)	November 15, 2021
/s/ John E. Warch John E. Warch	Senior Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer)	November 15, 2021
/s/ Coby R. Johnson Coby R. Johnson	Trustee, President, Chief Operating Officer and Secretary	November 15, 2021
/s/ Spencer F. Segura Spencer F. Segura	Trustee	November 15, 2021
/s/ Stephen R. Petersen Stephen R. Petersen	Trustee	November 15, 2021
/s/ James S. Vaccaro James S. Vaccaro	Trustee	November 15, 2021

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Signature	Title	Date
/s/ Peter S. Reinhart Peter S. Reinhart	Trustee	November 15, 2021
/s/ Michael S. Dana Michael S. Dana	Trustee	November 15, 2021
/s/ Matthew B. Settle Matthew B. Settle	Trustee	November 15, 2021

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EX-10.1

Exhibit 10.1

FOUR SPRINGS CAPITAL TRUST

2014 EQUITY INCENTIVE PLAN

TABLE OF CONTENTS

		Page
ARTICLE 1. PURPOSE		1
1.1.	GENERAL	1
ARTICLE 2. DEFINITIONS		1
2.1.	DEFINITIONS	1
ARTICLE 3. EFFECTIVE TERM OF PLAN		5
3.1.	EFFECTIVE DATE	5
3.2.	TERMINATION OF PLAN	5
ARTICLE 4. ADMINISTRATION		5
4.1.	COMMITTEE	5
4.2.	ACTION AND INTERPRETATIONS BY THE COMMITTEE	6
4.3.	AUTHORITY OF COMMITTEE	6
4.4.	DELEGATION TO EXECUTIVE OFFICERS	7
4.5.	AWARD AGREEMENT	7
ARTICLE 5. SHARES SUBJECT TO THE PLAN		7
5.1.	PLAN LIMITS	7
5.2.	SHARES DISTRIBUTED	8
ARTICLE 6. ELIGIBILITY		8
6.1.	GENERAL	8
ARTICLE 7. OPTIONS		8
7.1.	GENERAL	8
7.2.	INCENTIVE OPTIONS	8
ARTICLE 8. SHARE APPRECIATION RIGHTS		10
8.1.	GRANT OF SHARE APPRECIATION RIGHTS	10
ARTICLE 9. RESTRICTED SHARES AND RESTRICTED SHARE UNIT AWARDS		10
9.1.	GRANT OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS	10
9.2.	ISSUANCE AND RESTRICTIONS	10
9.3.	FORFEITURE	10
9.4.	DELIVERY OF RESTRICTED SHARES	11
ARTICLE 10. EQUITY OR OTHER EQUITY-BASED AWARDS		11
10.1.	GRANT OF EQUITY OR OTHER EQUITY-BASED AWARDS	11
ARTICLE 11. LTIP UNITS		11
11.1.	GRANT OF LTIP UNITS	11

ARTICLE 12. PERFORMANCE AWARDS		12
12.1.	GRANT OF PERFORMANCE AWARDS	12
12.2.	PERFORMANCE AWARDS UNDER SECTION 162(M) OF THE CODE	12
ARTICLE 13. PROVISIONS APPLICABLE TO AWARDS		16
13.1.	STAND-ALONE AND TANDEM AWARDS	16
13.2.	TERM OF AWARD	16
13.3.	FORM OF PAYMENT FOR AWARDS	16
13.4.	LIMITS ON TRANSFER	16
13.5.	BENEFICIARIES	16
13.6.	SHARE CERTIFICATES	17
13.7.	TERMINATION OF EMPLOYMENT	17
13.8.	FORFEITURE EVENTS	17
13.9.	SUBSTITUTE AWARDS	17
13.10.	CHANGE IN CONTROL/ IPO	17
13.11.	RIGHT OF FIRST REFUSAL/RIGHT OF REPURCHASE	17
ARTICLE 14. CHANGES IN CAPITAL STRUCTURE		17
14.1.	GENERAL	17
14.2.	ACTIONS BY THE COMMITTEE	18
ARTICLE 15. AMENDMENT, MODIFICATION AND TERMINATION		19
15.1.	AMENDMENT, MODIFICATION AND TERMINATION	19
15.2.	OPTIONS PREVIOUSLY GRANTED	19
ARTICLE 16. GENERAL PROVISIONS		20
16.1.	NO RIGHTS TO AWARDS; NON-UNIFORM DETERMINATIONS	20
16.2.	NO SHAREHOLDER RIGHTS	20
16.3.	WITHHOLDING	20
16.4.	NO RIGHT TO CONTINUED SERVICE	20
16.5.	UNFUNDED STATUS OF AWARDS	20
16.6.	RELATIONSHIP TO OTHER BENEFITS	21
16.7.	REIT STATUS	21
16.8.	EXPENSES	21
16.9.	TITLES AND HEADINGS	21
16.10.	GENDER AND NUMBER	21
16.11.	FRACTIONAL SHARES	21
16.12.	GOVERNMENT AND OTHER REGULATIONS	21
16.13.	GOVERNING LAW	22
16.14.	ADDITIONAL PROVISIONS	22
16.15.	ADDENDA	22
16.16.	NO LIMITATIONS ON RIGHTS OF COMPANY	22
16.17.	INDEMNIFICATION	22

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN

ARTICLE 1.
PURPOSE

1.1. GENERAL. The purpose of the Four Springs Capital Trust 2014 Equity Incentive Plan (the “Plan”) is to promote the success, and enhance the value of, Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”) by linking the personal interests of employees, officers, trustees and consultants of the Company or any Subsidiary (as defined below) to those of Company shareholders and by providing such persons with an incentive for outstanding performance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, officers, trustees and consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent. Accordingly, the Plan permits the grant of share options, share appreciation rights, restricted shares, restricted share units, long term incentive unit awards, performance awards, and other awards from time to time to selected employees, officers, trustees and consultants of the Company and its Subsidiaries.

ARTICLE 2.
DEFINITIONS

2.1. DEFINITIONS. When a word or phrase appears in this Plan or in an Award Agreement with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be given the meaning ascribed to it in this Section or in Section 1.1 unless otherwise defined. The following words and phrases shall have the following meanings:

(a) “Affiliate” means (i) any entity that, directly or indirectly, is controlled by or under common control with the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee; provided, however, that no entity will be considered an Affiliate for purposes of an Award of Nonstatutory Options or SARs to an employee or director of, or consultant to, the entity unless the Shares would be considered “service recipient stock” within the meaning of Section 409A of the Code, in the context of such an Award.

(b) “Award” means any Option, SARs, Restricted Share Award, Restricted Share Unit Award, Other Equity-Based Award, LTIP Units, Performance Awards or any other right or interest relating to Shares or cash, granted to a Participant under the Plan.

(c) “Award Agreement” means a written document, in such form as the Committee prescribes from time to time, setting forth the terms and conditions of an Award. Award Agreements may be in the form of individual award agreements or certificates or a program document describing the terms and provisions of Awards or series of Awards under the Plan as approved by the Committee.

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(d) “Board” means the Board of Trustees of the Company.

(e) “Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

(i) any sale, lease, exclusive license or other transfer of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole by means of a single transaction or series of related transactions, except where such sale, lease, exclusive license or other transfer is to a wholly owned Subsidiary of the Company; or

(ii) a merger (including a reverse merger) (each, a “Merger”) in which the Company is the surviving corporation where (A) the outstanding shares of the Company outstanding immediately preceding the merger are converted by virtue of the merger into other property (whether in the form of securities, cash or otherwise) or (B) the voting securities of the Company outstanding immediately preceding the Merger represent less than fifty percent (50%) of the total voting power represented by the voting securities of the entity surviving such Merger (other than, with respect to events otherwise described in this item (ii), the formation of a holding company by the Company, a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change after the Merger in the shareholders of the Company or their relative share holdings, or in which the management of the Company continues in substantially the same manner as prior to any such corporate transaction to manage the entity surviving such transaction).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur on account of (1) the sale of Shares in an IPO or any restructuring of the Company or the Board in contemplation of an IPO, or (2) acquisition of securities of the Company by an investor, any affiliate thereof or any other person that acquires the Company’s securities in a transaction or series of related transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity securities.

(f) “Code” means the Internal Revenue Code of 1986 and the underlying regulations, as amended from time to time.

(g) “Committee” means the committee of the Board described in Article 4.

(h) “Company” means the “Company” as defined in Section 1.1, or any successor corporation.

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(i) “Continuous Status as a Participant” means the absence of any interruption or termination of service as an employee, officer, director or consultant of the Company; provided, however, that for purposes of an Incentive Option, or a SAR issued in tandem with an Incentive Option, “Continuous Status as a Participant” means the absence of any interruption or termination of service as an employee of the Company or any Subsidiary, as applicable, pursuant to applicable tax regulations. Continuous Status as a Participant shall not be considered interrupted in the case of any leave of absence authorized in writing by the Company prior to its commencement; provided, however, that for purposes of Incentive Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 91st day of such leave any Incentive Option held by the Participant shall cease to be treated as an Incentive Option and shall be treated for tax purposes as a Nonstatutory Option.

(j) “Corporate Transaction” has the meaning defined in Section 14.1.

(k) “Disability” or “Disabled” has the same meaning as provided in the long-term disability plan or policy maintained by the Company or if applicable, most recently maintained, by the Company or if applicable, a Subsidiary, for the Participant, whether or not such Participant actually receives disability benefits under such plan or policy. If no long-term disability plan or policy was ever maintained on behalf of Participant or if the determination of Disability relates to an Incentive Option, Disability means Permanent and Total Disability as defined in Section 22(e)(3) of the Code. Notwithstanding the foregoing, the Committee may, in its discretion, determine that for a particular Award the term “Disability” shall have such meaning as to enable such Award to be exempt from or to comply with Section 409A of the Code. In the event of a dispute, the determination whether a Participant is Disabled will be made by the Committee.

(l) “Effective Date” has the meaning assigned such term in Section 3.1.

(m) “Fair Market Value” means (i) when the Shares are not traded on an established securities market, the fair market value of a Share as determined by the Committee in accordance with a valuation methodology approved by the Committee and in compliance with Section 409A of the Code and the regulations issued thereunder, and (ii) when the Shares are traded on an established securities market, the fair market value as determined pursuant to a method selected by the Committee using actual transactions in Shares as reported in such securities market.

(n) “Grant Date” of an Award means the first date on which all necessary corporate action has been taken to approve the grant of the Award as provided in the Plan or, if later, the date specified as part of such action as the “Grant Date” for the Award. Notice of the grant shall be provided to the grantee within a reasonable time after the Grant Date.

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(o) “Incentive Option” means an Option that is intended to be an incentive stock option and meets the requirements of Section 422 of the Code or any successor provision thereto.

(p) “IPO” means the first day as of which sales of Shares are made public pursuant to the first firm commitment underwritten public offering of Shares registered under the Securities Act.

(q) “LTIP Unit” means an Award under Article 11 of an interest in the operating partnership affiliated with the Company, if any.

(r) “Nonstatutory Option” means an Option that is not an Incentive Option.

(s) “Option” means a right granted to a Participant under Article 7 of the Plan to purchase Shares at a specified price during specified time periods. An Option may be either an Incentive Option or a Nonstatutory Option.

(t) “Other Equity-Based Award” means a right, granted to a Participant under Article 10, that relates to or is valued by reference to Shares or other Awards relating to Shares.

(u) “Parent” means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company. Notwithstanding the above, with respect to an Incentive Option, “Parent” shall have the meaning set forth in Section 424(e) of the Code.

(v) “Participant” means a person who, as an employee, officer, director or consultant of the Company or any Subsidiary, has been granted an Award under the Plan; provided that in the case of the death of a Participant, the term “Participant” refers to a beneficiary designated under the Plan or the legal guardian or other legal representative acting in a fiduciary capacity on behalf of the Participant under applicable state law and/or court supervision.

(w) “Performance Awards” means an Award granted to a Participant under Article 12 subject to the attainment of performance goals (as described in Article 12) over a Performance Period.

(x) “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

(y) “Plan” means the Four Springs Capital Trust 2014 Equity Incentive Plan, as amended from time to time.

(z) “Restricted Share Award” means Shares granted to a Participant under Article 9 that is subject to certain restrictions and to risk of forfeiture.

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(aa) “Restricted Share Unit Award” means the right granted to a Participant under Article 9 to receive Shares (or the equivalent value in cash or other property if the Committee so provides) in the future, which right is subject to certain restrictions and to risk of forfeiture.

(bb) “Shares” means common shares the Company par value $0.001. If there has been an adjustment or substitution pursuant to Article 14, the term “Shares” shall also include any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted pursuant to Article 14.

(cc) “Share Appreciation Right” or “SAR” means a right granted to a Participant under Article 8 to receive a payment equal to the difference between the Fair Market Value of a Share as of the date of exercise of the SAR over the grant price of the SAR, all as determined pursuant to Article 8.

(dd) “Subsidiary” means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company. Notwithstanding the above, with respect to an Incentive Option, “Subsidiary” shall have the meaning set forth in Section 424(f) of the Code.

(ee) “1933 Act” means the Securities Act of 1933, as amended from time to time.

ARTICLE 3.
EFFECTIVE TERM OF PLAN

3.1. EFFECTIVE DATE. The Plan shall be effective as of the date it is approved by both the Board and the shareholders of the Company (the “Effective Date”).

3.2. TERMINATION OF PLAN. The Plan shall terminate on the tenth anniversary of the Effective Date unless earlier terminated as provided herein. The termination of the Plan on such date shall not affect the validity of any Award outstanding on the date of termination.

ARTICLE 4.
ADMINISTRATION

4.1. COMMITTEE. The Plan shall be administered by a Committee appointed by the Board (which Committee shall consist of at least two trustees) or, at the discretion of the Board from time to time, the Plan may be administered by the Board. After an IPO, none of the members of the Committee shall be an officer or other salaried employee of the Company, and each of member shall (i) qualify in all respects as a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), (ii) meet such other requirements as may be established from time to time by the Securities and Exchange Commission for plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act, (iii) comply with the independence requirements of the stock exchange on which the Shares are listed and (iv) qualify as an “outside director” for purposes of Code Section 162(m). The members of the Committee shall be appointed by, and may be changed at any time and from time to time in the discretion of, the Board. The Board may reserve to itself any or all of the authority and responsibility of the Committee under the Plan or may act as administrator of the Plan for any and all purposes. To the extent the Board has reserved any authority and responsibility or during any time that the Board is acting as administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1) shall include the Board. To the extent any action of the Board under the Plan conflicts with actions taken by the Committee, the actions of the Board shall control.

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4.2. ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering the Plan, the Committee may from time to time adopt rules, regulations, guidelines and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Committee may deem appropriate. The Committee’s interpretation of the Plan, any Awards granted under the Plan, any Award Agreements and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company’s or any Subsidiary’s independent certified public accountants, Company counsel or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

4.3. AUTHORITY OF COMMITTEE. Except as provided below, the Committee has the exclusive power, authority and discretion to:

(a) Grant Awards;

(b) Designate Participants;

(c) Determine the type or types of Awards to be granted to each Participant;

(d) Determine the number of Awards to be granted and the number of Shares, the dollar amount or other property to which an Award will relate;

(e) Determine the terms and conditions of any Award granted under the Plan, including but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines;

(f) Determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards, or other property;

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(g) Determine whether an Award may be canceled, forfeited, or surrendered;

(h) Prescribe the form of each Award Agreement, which need not be identical for each Participant;

(i) Decide all other matters that must be determined in connection with an Award;

(j) Establish, adopt or revise any rules, regulations, guidelines or procedures as it may deem necessary or advisable to administer the Plan;

(k) Make all other decisions and determinations that may be required under the Plan or as the Committee deems necessary or advisable to administer the Plan; and

(l) Amend the Plan, any outstanding Award or any Award Agreement as provided herein.

4.4. DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to grant Awards to employees or officers of the Company or any of its present or future Subsidiaries and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of the Awards to be granted by such executive officers (including the exercise price of any Options to be granted, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the executive officers may grant; provided further, however, that no executive officer shall be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act).

4.5. AWARD AGREEMENT. Each Award shall be evidenced by an Award Agreement. Each Award Agreement shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee.

ARTICLE 5.
SHARES SUBJECT TO THE PLAN

5.1. PLAN LIMITS. Subject to adjustment as provided in Article 14 herein, the maximum number of Shares that may be delivered pursuant to Awards under the Plan shall be Five Hundred Thousand (500,000) Shares, provided that

(a) Shares potentially deliverable under an Award granted under the Plan that is canceled, forfeited, settled in cash, expires or is otherwise terminated without delivery of such Shares shall not be counted as having been delivered under the Plan for purposes of determining such maximum number of Shares.

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(b) Shares that have been issued in connection with an Award of Restricted Shares that is canceled or forfeited prior to vesting or settled in cash, causing the Shares to be returned to the Company, shall not be counted as having been delivered under the Plan for purposes of determining such maximum number of Shares.

Any or all of the Shares reserved for issuance under the Plan shall be authorized for issuance pursuant to Incentive Options or other Awards.

5.2. SHARES DISTRIBUTED. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury Shares or Shares purchased on the open market.

ARTICLE 6.
ELIGIBILITY

6.1. GENERAL. Awards may be granted to employees, officers, trustees and consultants of the Company, any Subsidiary or Affiliate, except that Incentive Options may be granted only to an individual who has the status of an employee of the Company or a Subsidiary.

ARTICLE 7.
OPTIONS

7.1. GENERAL. The Committee is authorized to grant Options to Participants on the following terms and conditions:

(a) EXERCISE PRICE. The exercise price per Share under an Option shall not be less than the Fair Market Value as of the Grant Date.

(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, subject to Section 7.1(d). The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised or vested.

(c) PAYMENT. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation, cash, Shares, or other property (including “cashless exercise” arrangements), and the methods by which Shares shall be delivered or deemed to be delivered to Participants.

(d) EXERCISE TERM. In no event may any Option be exercisable for more than ten years from the Grant Date.

7.2. INCENTIVE OPTIONS. In addition to the requirements set forth in Section 7.1, the terms of any Incentive Options granted under the Plan must comply with the following additional rules:

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(a) TERMINATION OF OPTION. Subject to any earlier termination provision contained in the Award Agreement, an Incentive Option shall lapse upon the earliest of the following circumstances; provided, however, that the Committee may, prior to the lapse of the Incentive Option under the circumstances described in subsections (3), (4) or (5) below, provide in writing that the Option will extend until a later date, but if an Option is so extended and is exercised after the dates specified in subsections (3), (4) or (5) below, it will automatically become a Nonstatutory Option:

(1) The expiration date set forth in the Award Agreement;

(2) The tenth anniversary of the Grant Date;

(3) Three months after termination of the Participant’s Continuous Status as a Participant for any reason other than the Participant’s Disability or death;

(4) One year after termination of the Participant’s Continuous Status as a Participant by reason of the Participant’s Disability; or

(5) One year after the Participant’s death if the Participant dies (i) while employed, (ii) during the three-month period described in paragraph (3) or (iii) during the one-year period described in paragraph (4) and before the Option otherwise lapses.

(b) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of the Grant Date) of all Shares with respect to which Incentive Options are first exercisable by a Participant in any calendar year may not exceed $100,000.00.

(c) TEN PERCENT OWNERS. No Incentive Option shall be granted to any individual who, at the Grant Date, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary unless the exercise price per share of such Option is at least one hundred and ten percent (110%) of the Fair Market Value per Share at the Grant Date and the Option expires no later than five (5) years after the Grant Date.

(d) RIGHT TO EXERCISE. During a Participant’s lifetime, an Incentive Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative.

(e) ELIGIBLE PARTICIPANTS. The Committee may not grant an Incentive Option to a Participant who is not at the Grant Date an employee of the Company or a Subsidiary.

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ARTICLE 8.
SHARE APPRECIATION RIGHTS

8.1. GRANT OF SHARE APPRECIATION RIGHTS. The Committee is authorized to grant Share Appreciation Rights to Participants on the following terms and conditions:

(a) RIGHT TO PAYMENT. Upon the exercise of a Share Appreciation Right, the Participant to whom it is granted has the right to receive, with respect to each Share underlying such Share Appreciation Right, the excess, if any, of:

1. The Fair Market Value of one Share on the date of exercise; over

2. The base price of the Share Appreciation Right as determined by the Committee, which shall not be less than the Fair Market Value of one Share on the Grant Date.

(b) OTHER TERMS. All awards of Share Appreciation Rights shall be evidenced by an Award Agreement. The terms, methods of exercise, methods of settlement, form of consideration payable in settlement, and any other terms and conditions of any Share Appreciation Right shall be determined by the Committee at the time of the grant of the Award and shall be reflected in the Award Agreement.

ARTICLE 9.
RESTRICTED SHARES AND RESTRICTED SHARE UNIT AWARDS

9.1. GRANT OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS. The Committee is authorized to make Awards of Restricted Shares or Restricted Share Units to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. An Award of Restricted Shares or Restricted Share Units shall be evidenced by an Award Agreement setting forth the terms, conditions, and restrictions applicable to the Award.

9.2. ISSUANCE AND RESTRICTIONS. Restricted Shares or Restricted Share Units shall be subject to such restrictions on transferability and other restrictions as the Committee may determine. These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the time of the grant of the Award or thereafter. Except as otherwise provided in an Award Agreement, the Participant shall have all of the rights of a shareholder with respect to the Restricted Shares, and the Participant shall have none of the rights of a stockholder with respect to Restricted Share Units until such time as Shares are paid in settlement of the Restricted Share Units.

9.3. FORFEITURE. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of Continuous Status as a Participant during the applicable restriction period or upon failure to satisfy a requirement during the applicable restriction period, Restricted Shares or Restricted Share Units that are at that time subject to restrictions shall be forfeited; provided, however, that the Committee may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Shares or Restricted Share Units will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Shares or Restricted Share Units.

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9.4. DELIVERY OF RESTRICTED SHARES. Shares of Restricted Shares shall be delivered to the Participant at the time of grant either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees) designated by the Committee, a share certificate or certificates registered in the name of the Participant. If physical certificates representing shares of Restricted Shares are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares.

ARTICLE 10.
EQUITY OR OTHER EQUITY-BASED AWARDS

10.1. GRANT OF EQUITY OR OTHER EQUITY-BASED AWARDS. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, Shares awarded purely as a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, and Awards valued by reference to book value of Shares or the value of securities of or the performance of the Company or any Subsidiary. The Committee shall determine the terms and conditions of such Awards.

ARTICLE 11.
LTIP UNITS

11.1. GRANT OF LTIP UNITS. LTIP Units are intended to be profits interests in the operating partnership affiliated with the Company, if any (such operating partnership, if any, the “Operating Partnership”), the rights and features of which, if applicable, will be set forth in the agreement of limited partnership for the Operating Partnership (the “Operating Partnership Agreement”). Subject to the terms and provisions of the Plan and the Operating Partnership Agreement, the Committee, at any time and from time to time, may grant LTIP Units to Participants in such amounts and upon such terms and conditions as the Committee shall determine.

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ARTICLE 12.
PERFORMANCE AWARDS

12.1. GRANT OF PERFORMANCE AWARDS. The Committee is authorized to grant any Award in the form of a Performance Awards to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. An Award of Performance Awards shall be evidenced by an Award Agreement setting forth the terms, conditions, and restrictions applicable to the Award. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. After the end of each Performance Period, the Committee shall determine the amount, if any, of the Performance Award for that performance period payable to each Participant. The Committee may, in its discretion, determine that the amount payable to any Participant as a Performance Award shall be reduced from the amount of his or her potential Performance Award, including a determination to make no final Award whatsoever, and may exercise its discretion to increase the amounts payable under any Performance Award, except as limited under Section 12.3 (relating to Performance Awards intended to qualify as “performance-based compensation” under Section 162(m)) of the Code.

12.2. PERFORMANCE AWARDS UNDER SECTION 162(M) OF THE CODE. Section 162(m) of the Code does not apply to the Plan prior to an IPO. Following the IPO, to the extent determined by the Company, the Plan and Awards issued thereunder, are intended to be exempt from the application of Section 162(m) of the Code. If the Committee determines that a Performance Award should qualify as “performance-based compensation” for purposes of Section 162(m) of the Code, the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement of one or more preestablished performance goals and shall be subject to other terms set forth in this Section 12.2.

(a) PERFORMANCE GOAL GENERALLY. The performance goal for Performance Awards intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code shall consist of one or more of the business criteria listed in Section 12.3, including or excluding the adjustments described in Section 12.3, and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Article 12. The Performance Award may also have threshold levels of performance (below which no Performance Award shall be paid) and maximum levels of Performance Award, regardless of the degree to which the actual performance exceeds the target level. The performance goal shall be objective. Any performance goal may be established for one Performance Period or averaged over time, as the Committee may deem appropriate. Performance may, but need not be, based on a change or an increase or positive result. The targeted level or levels of performance with respect to such business criteria may be established at such levels and in such terms as the Committee may determine, in its discretion, including in absolute terms, as a goal relative to performance in prior periods, or as a goal compared to the performance of one or more comparable companies or an index covering multiple companies.

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(b) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING PERFORMANCE GOALS. Achievement of performance goals in respect of a Performance Award intended to qualify for the “performance-based compensation” exception under Section 162(m) of the Code shall be measured over a performance period specified by the Committee. A performance goal shall be established not later than the earlier of (A) 90 days after the beginning of any performance period applicable to such Performance Award or (B) the time 25% of such performance period has elapsed. The level of attainment of performance goals shall be substantially uncertain at the time such goals are established, as required under Treas. Reg. s 1.162-27. In all cases, the maximum Performance Award of any Participant intended to qualify for the “performance-based compensation” exception under Section 162(m) of the Code shall be subject to the per person limitation set forth in 12.2(c) below.

(c) PER PERSON AWARD LIMITS. Subject to adjustment as provided in Article 14 herein, the aggregate number of Shares subject to Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code granted during any calendar year to any one Participant (taking into account the maximum number payable based on performance exceeding target objectives) shall not exceed One Hundred Thousand (100,000). This per person share maximum also applies to options and SARs. The maximum amount payable as a cash Award for any performance period to a Participant that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code shall be Ten Million Dollars ($10,000,000) per calendar year. In the case of an award with a multi-year performance period, the per person Award limit shall apply to each calendar year (or portion thereof) in the performance period.

(d) PERFORMANCE AWARD POOL. The Committee may establish a Performance Award pool, which shall be an unfunded pool, for purposes of measuring performance in connection with Performance Awards. The amount of such Performance Award pool shall be based upon the achievement of one or more performance goals based on one or more of the business criteria during the performance period, as specified by the Committee.

(e) PERFORMANCE CRITERIA. If the Committee determines that a Performance Award should qualify as “performance-based compensation” for purposes of Section 162(m) of the Code, the performance criteria shall be selected from among the following:

(i) Sales, on a corporate, divisional or unit basis, including (A) net sales, (B) unit sales volume, (C) aggregate product price, (D) same store sales or (v) comparable store sales;

(ii) Share price, including (A) market price per share; and (B) share price appreciation;

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(iii) Earnings, on a corporate, divisional or unit basis, including (A) earnings per share, reflecting dilution of shares; (B) gross or pre-tax profits, (C) post-tax profits, (D) operating profit; (E) earnings net of or including dividends; (F) earnings net of or including the after-tax cost of capital, (G) earnings before (or after) interest and taxes (“EBIT”); (H) earnings per share from continuing operations, diluted or basic; (I) earnings before (or after) interest, taxes, depreciation and amortization (“EBITDA”); (J) pre-tax operating earnings after interest and before incentives, service fees and extraordinary or special items; (K) operating earnings; (L) growth in earnings or growth in earnings per share; (M) total earnings; (N) funds from operations (“FFO”); and (O) adjusted funds from operations (“AFFO”).

(iv) Return on equity, on a corporate, divisional or unit basis; including (A) return on equity, (B) return on invested capital, (C) return or net return on assets; (D) return on net assets; (E) return on equity, (F) return on gross sales; (G) return on investment; (H) return on capital; (I) return on invested capital; (J) return on committed capital; (K) financial return ratios; (L) value of assets; and (M) change in assets;

(v) Cash flow(s), on a corporate, divisional or unit basis, including (A) operating cash flow; (B) net cash flow, (C) free cash flow, (iv) cash flow on investment;

(vi) Revenue, on a corporate, divisional or unit basis, including (A) gross or net revenue, and (B) changes in annual revenues;

(vii) Margins, on a corporate, divisional or unit basis, including (A) adjusted pre-tax margin; and (B) operating margins;

(viii) Income, on a corporate, divisional or unit basis, including (A) net income; and (B) consolidated net income;

(ix) Economic value added;

(x) Costs, on a corporate, divisional or unit basis, including (A) operating or administrative expenses, (B) operating expenses as a percentage of revenue, (C) expense or cost levels; (D) reduction of losses, loss ratios or expense ratios; (E) reduction in fixed costs; (F) expense reduction levels; (G) operating cost management; and (H) cost of capital;

(xi) Financial ratings, on a corporate, divisional or unit basis, including (A) credit rating, (B) capital expenditures, (C) debt; (D) debt reduction, (E) working capital; (F) average invested capital; and (G) attainment of balance sheet or income statement objectives;

(xii) Market or category share, on a corporate, divisional or unit basis, including (A) market share, (B) volume; (C) unit sales volume; (D) market share or market penetration with respect to specific designated products or product groups and/or specific geographic areas;

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(xiii) Shareholder return, including (A) total shareholder return, (B) stockholder return based on growth measures or the attainment of a specified share price for a specified period of time; and (C) dividends; and

(xiv) Objective nonfinancial performance criteria on a corporate, divisional or unit basis, including (A) attainment of strategic and business goals, (B) regulatory compliance; (C) productivity and productivity improvements; (D) inventory turnover, average inventory turnover or inventory controls; (E) net asset turnover; (F) customer satisfaction based on specified objective goals or company-sponsored customer surveys; (G) employee satisfaction based on specified objective goals or company-sponsored employee surveys; (H) objective employee diversity goals; (I) employee turnover; (J) specified objective environmental goals; (xi) specified objective social goals, (K) specified objective goals in corporate ethics and integrity; (L) specified objective safety goals; (M) specified objective business integration goals; (N) specified objective business expansion goals or goals relating to acquisitions or divestitures; (O) succession plan development and implementation.

The Committee may provide in any Performance Award that any evaluation of performance shall include or exclude any of the following items: (1) asset write-downs; (2) litigation or claim judgments or settlements; (3) the effect of changes in tax laws, accounting principles, regulations, or other laws or regulations affecting reported results; (4) any reorganization and restructuring programs; (5) acquisitions or divestitures; (6) unusual nonrecurring or extraordinary items identified in the Company’s audited financial statements, including footnotes; (7) annual incentive payments or other bonuses; or (8) capital charges.

(f) SETTLEMENT OF PERFORMANCE AWARDS. Prior to settlement of a Performance Award intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code, the Committee shall certify the level of attainment of performance goals and the satisfaction of other material terms of the Award upon which settlement of the Award was conditioned. The Committee may not exercise discretion to increase the amount payable to a covered employee (as defined in Section 162(m)(3)) of the Code in respect of a Performance Award intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. Any settlement which changes the form of payment from that originally specified shall be implemented in a manner such that the Performance Award and other related Awards intended to qualify for the “performance-based compensation” exception under Section 162(m) of the Code do not, solely for that reason, fail to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code.

(g) WRITTEN DETERMINATIONS. Determinations by the Committee as to the establishment of performance goals, the amount potentially payable in respect of Performance Awards, the level of actual achievement of the specified performance goals, and the amount of any actual Performance Award shall be recorded in writing in the case of Performance Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

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ARTICLE 13.
PROVISIONS APPLICABLE TO AWARDS

13.1. STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, or in tandem with, any other Award granted under the Plan. Subject to Section 13.2, Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

13.2. TERM OF AWARD. The term of each Award shall be for the period as determined by the Committee, provided that in no event shall the term of any Option or a Share Appreciation Right exceed a period of ten years from its Grant Date (or, if Section 7.2(c) applies, five years from its Grant Date).

13.3. FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any applicable law or Award Agreement, payments or transfers to be made by the Company on the grant or exercise of an Award may be made in such form as the Committee determines at or after the Grant Date, including without limitation, cash, Shares, other Awards, or other property, or any combination, and may be made in a single payment or transfer, in installments, in each case determined in accordance with rules adopted by, and at the discretion of, the Committee.

13.4. LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or restricted Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company. No unexercised or restricted Award shall be assignable or transferable by a Participant other than by will or the laws of descent and distribution or, except in the case of an Incentive Option, pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award under the Plan; provided, however, that the Committee may (but need not) permit other transfers where the Committee concludes that such transferability (i) does not result in accelerated taxation, (ii) does not cause any Option intended to be an Incentive Option to fail to be described in Code Section 422(b), and (iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including without limitation, state or federal tax or securities laws applicable to transferable Awards.

13.5. BENEFICIARIES. Notwithstanding Section 13.4, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been designated or survives the Participant, payment shall be made to the Participant’s estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

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13.6. SHARE CERTIFICATES. All Shares issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Shares is listed, quoted, or traded. The Committee may place legends on any Share certificate or issue instructions to the transfer agent to reference restrictions applicable to the Shares.

13.7. TERMINATION OF EMPLOYMENT. Each Participant’s Award Agreement shall set forth the treatment of the Awards following termination of the Participant’s employment or, if the Participant is a director or consultant, service with the Company. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Awards and may reflect distinctions based on the reasons for termination or employment or service.

13.8. FORFEITURE EVENTS. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events shall include, but shall not be limited to, termination of employment, violation of Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company.

13.9. SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in substitution for equity and equity-based awards held by employees of another entity who become employees of the Company as a result of a merger or consolidation of the former employing entity with the Company or the acquisition by the Company of property or equity of the former employing corporation. The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances.

13.10. CHANGE IN CONTROL/ IPO. Each Participant’s Award Agreement shall set forth the treatment of the Awards in the event of a Change in Control or IPO. Such provisions shall be determined in the sole discretion of the Committee and need not be uniform among all Awards.

13.11. RIGHT OF FIRST REFUSAL/RIGHT OF REPURCHASE. The Committee may provide in a Participant’s Award Agreement that the grant of an Award shall be conditioned upon the Participant’s (or any other interested person’s) execution of a shareholder agreement in such form as is satisfactory to the Committee with respect to any Shares delivered or deliverable pursuant to such Award. Without limiting the foregoing, the Committee may provide in a Participant’s Award Agreement that while Shares are not traded on an established securities market that the Company may have certain repurchase rights or rights of first refusal with respect to the Shares subject to an Award Agreement and Shares issued to the Participant pursuant to Awards under the Plan. In addition, at the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement or any other document a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided, that such right of first refusal terminates upon an IPO.

ARTICLE 14.
CHANGES IN CAPITAL STRUCTURE

14.1. GENERAL. In the event of a corporate event or transaction involving the Company (including, without limitation, any equity dividend, equity split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares (each a “Corporate Transaction”), the Committee in its sole discretion may take the actions set forth in Section 14.2. Notwithstanding the foregoing, in the event of any equity split, reverse equity split, equity dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Shares other than an ordinary cash dividend, the authorization limit under Article 5 shall be adjusted proportionately, and the Committee shall make such other adjustments to the Awards and to any provisions of the Plan as the Committee deems necessary.

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14.2. ACTIONS BY THE COMMITTEE. Action by the Committee in the event of a Corporate Transaction may include: (i) adjustment of the number and kind of shares which may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards or the measure to be used to determine the amount of the benefit payable on an Award; and (iv) any other adjustments that the Committee determines. In addition, upon the occurrence or in anticipation of such an event that is a Change in Control, the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Shares, (ii) that Awards will become immediately vested and exercisable and will expire after a designated period of time to the extent not then exercised, (iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Shares, if any, as of a specified date associated with the transaction, over the exercise or base price of the Award, and with the understanding that if the exercise or base price of any Awards exceeds such Fair Market Value, then the value of such Award shall be zero and subject to settlement and cancellation for no consideration, or (v) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated. To the extent that any adjustments made pursuant to this Article 14 cause Incentive Options to cease to qualify as Incentive Options, such Options shall be deemed to be Nonstatutory Options. Notwithstanding the foregoing, as may be determined by the Committee, any such adjustment shall not (i) cause an Award which is exempt from Section 409A of the Code to become subject to Section 409A of the Code or (ii) cause an Award subject to Section 409A of the Code not to comply with the requirements of Section 409A of the Code. Notwithstanding any other provision of this Plan to the contrary, unless expressly provided otherwise in the Award Agreement, if the right to receive or benefit from an Award under this Plan, either alone or together with payments that a Participant has a right to receive from the Company, would constitute a “parachute payment” (as defined in Section 280G of the Code), all such payments will be reduced to the largest amount that will result in no portion being subject to the excise tax imposed by Section 4999 of the Code.

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ARTICLE 15.
AMENDMENT, MODIFICATION AND TERMINATION

15.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan without shareholder approval; provided, however, the Board or Committee may condition any other amendment or modification on the approval of shareholders of the Company for any reason, including by reason of such approval being necessary or deemed advisable to satisfy any other tax, securities or other applicable laws, policies or regulations.

15.2. OPTIONS PREVIOUSLY GRANTED. At any time and from time to time, the Committee may amend, modify or terminate any outstanding Award without approval of the Participant; provided, however:

(a) Subject to the terms of the applicable Award Agreement, such amendment, modification or termination shall not, without the Participant’s consent, reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed out or otherwise settled on the date of such amendment or termination (with the per-share value of an Option or Share Appreciation Right for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment or termination over the exercise or base price of such Award); and

(b) No termination, amendment, or modification of the Plan shall adversely affect any Award previously granted under the Plan, without the written consent of the Participant affected thereby. An outstanding Award shall not be deemed to be “adversely affected” by a Plan amendment if such amendment would not reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment (with the per-share value of an Option or Share Appreciation Right for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment over the exercise or base price of such Award, and with the understanding that if the exercise or base price of such Awards exceeds such Fair Market Value, then the value of such Award shall be zero and subject to settlement and cancellation for no consideration).

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ARTICLE 16.
GENERAL PROVISIONS

16.1. NO RIGHTS TO AWARDS; NON-UNIFORM DETERMINATIONS. No Participant shall have any claim to be granted any Award under the Plan. Neither the Company nor the Committee is obligated to treat Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Eligible Participants who receive, or are eligible to receive, Awards (whether or not such Eligible Participants are similarly situated).

16.2. NO SHAREHOLDER RIGHTS. No Award gives a Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.

16.3. WITHHOLDING. The Company shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. If Shares are surrendered to the Company to satisfy tax obligations in excess of the minimum tax withholding obligation, such Shares must have been held by the Participant as fully vested shares for such period of time, if any, as necessary to avoid the recognition of an expense under generally accepted accounting principles. The Company shall have the authority to require a Participant to remit cash to the Company in lieu of the surrender of Shares for taxes if the surrender of Shares for such purpose would result in the Company’s recognition of expense under generally accepted accounting principles. With respect to withholding required upon any taxable event under the Plan, the Committee may, at the time the Award is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by withholding from the Award Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes.

16.4. NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan, any Award Agreement or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or status as an officer, director or consultant at any time, nor confer upon any Participant any right to continue as an employee, officer, director or consultant of the Company, whether for the duration of a Participant’s Award or otherwise.

16.5. UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company. This Plan is intended not to be subject to the Employee Retirement Income Security Act of 1974, as amended.

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16.6. RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company unless provided otherwise in such other plan.

16.7. REIT STATUS. This Plan shall be interpreted and construed in a manner consistent with the Company’s status as a Real Estate Investment Trust as defined under the Code (“REIT”). No award shall be granted or awarded, and with respect to any award granted under this Plan, such award shall not vest, be exercisable or be settled (i) to the extent that the grant, vesting, exercise or settlement could cause the Participant or any other person to be in violation of the share ownership limit or any other limitation on ownership or transfer prescribed by the Company’s charter, or (ii) if, in the discretion of the Committee, the grant, vesting, exercise or settlement of the award could impair the Company’s status as a REIT.

16.8. EXPENSES. The expenses of administering the Plan shall be borne by the Company.

16.9. TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

16.10. GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

16.11. FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down.

16.12. GOVERNMENT AND OTHER REGULATIONS.

(a) Notwithstanding any other provision of the Plan, no Participant who acquires Shares pursuant to the Plan may, during any period of time that such Participant is an affiliate of the Company (within the meaning of the rules and regulations of the Securities and Exchange Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i) pursuant to an effective registration statement under the 1933 Act, which is current and includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated under the 1933 Act.

(b) Notwithstanding any other provision of the Plan, if at any time the Committee shall determine that the registration, listing or qualification of the Shares covered by an Award upon any exchange or under any foreign, federal, state or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the purchase or receipt of Shares thereunder, no Shares may be purchased, delivered or received pursuant to such Award unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Committee. Any Participant receiving or purchasing Shares pursuant to an Award shall make such representations and agreements and furnish such information as the Committee may request to assure compliance with the foregoing or any other applicable legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to the Committee’s determination that all related requirements have been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign law or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.

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16.13. GOVERNING LAW. To the extent not governed by federal law, the Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Maryland.

16.14. ADDITIONAL PROVISIONS. Each Award Agreement may contain such other terms and conditions as the Committee may determine; provided that such other terms and conditions are not inconsistent with the provisions of the Plan. Notwithstanding the foregoing, any Award Agreement for a resident in any state shall contain such other terms and conditions as are necessary to comply with the laws of such state.

16.15. ADDENDA. Subject to Section 16.13, the Committee may approve such addenda to the Plan as it may consider necessary or appropriate for the purpose of granting Awards to Participants, which Awards may contain such terms and conditions as the Committee deems necessary or appropriate to accommodate differences in local law, tax policy or custom, which, if so required under applicable laws, may deviate from the terms and conditions set forth in this Plan.

16.16. NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or with respect to any person.

16.17. INDEMNIFICATION. Each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated in accordance with Article 4 shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

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The foregoing is hereby acknowledged as being the Four Springs Capital Trust 2014 Equity Incentive Plan adopted by the Board on March 19, 2014.

By:	/s/ William P. Dioguardi
William P. Dioguardi, Chief Executive Officer

The foregoing is hereby acknowledged as being the Four Springs Capital Trust 2014 Equity Incentive Plan adopted by the shareholders of the Company on March , 2014.

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EX-10.2

Exhibit 10.2

FOUR SPRINGS CAPITAL , LLC 

SHARE AWARD CERTIFICATE

[Name] 

[Address] 

[Telephone]: (___) ____-_____ 

Dear ________:

You (the “Recipient”) have been granted common shares of Four Springs Capital Trust, a Maryland real estate investment trust (the “Trust”), by Four Springs Capital, LLC, a Delaware limited liability company (the “Company”). This Restricted Share Award Certificate (the “Award Certificate”) sets forth the aggregate number of common shares under this award (the “Award”) and its terms and conditions. This Award is contingent upon your acknowledgement and acceptance of the terms and conditions as set forth in this Award Certificate.

Grant Date:	________, 2014
Number of Shares:	_____________(the “Award Shares”)
Vesting:	You are receiving this Award in your capacity as an employee or a registered representative of the Company arising from your work related to the Trust, or as an employee of the Trust (each, as the case may be, “Relationship”). Therefore, your award will vest provided that you continue in your Relationship, through the following: First Anniversary of Grant Date 1/3 of Shares Second Anniversary of Grant Date 1/3 of Shares Third Anniversary of the Grant Date 1/3 of Shares Additionally, (a) if your Relationship is with the Company, all of your unvested Award Shares will vest if either (i) the Company undergoes a Change in Control (as defined in Schedule 1) and your Relationship is terminated within one year of such Change in Control, or (b) the Trust undergoes a Change in Control; or (b) if your Relationship is with the Trust, all of your Award Shares will vest if the Trust undergoes a Change in Control and your Relationship is terminated within one year of such Change in Control.
	If your Relationship terminates by reason of death or Disability, then your Award Shares will become fully vested. Acceleration as a result of a Change of Control, death or Disability are collectively referred to herein as an “Acceleration Event.”

	In the event that your Relationship terminates prior to the full vesting of your Award Shares for any reason other than an Acceleration Event, you shall forfeit any remaining unvested Award Shares as of the date your Relationship terminates. Upon a forfeiture, unvested Award Shares and related dividends shall be transferred to the Company. For the avoidance of doubt, the term “Award Shares” refers to all such Award Shares presently held by the Recipient and to all securities received on account of the Award Shares or in replacement thereof pursuant to or in consequence of any stock dividend, stock split, recapitalization, merger, reorganization, exchange of Award Shares or other similar event, but shall exclude any Award Shares that have vested in accordance with this Award Certificate and all securities received on account of such vested Award Shares or in replacement thereof pursuant to or in consequence of any stock dividend, stock split, recapitalization, merger, reorganization, exchange of shares or other similar event.
Repurchase Rights	The Award Shares shall be subject to a right (but not an obligation) of repurchase in favor of the Company on the following terms and conditions: in the event that the Recipient’s Relationship is terminated for any reason or no reason, the Company may purchase the then unvested Award Shares at a purchase price of $.001 per Incentive Share, except and to the extent, however, that the Relationship terminates because of an Acceleration Event (the “Right of Repurchase”). The first date on which the Recipient’s Relationship terminates is hereinafter referred to as the “Relationship Termination Date.”
Repurchase Procedure:	The Company’s Right of Repurchase shall be deemed exercised effective as of the Relationship Termination Date with respect to the number of Award Shares then subject to the Right of Repurchase upon payment of the total repurchase price to the Recipient for such Award Shares and without any further action on the part of the Company, unless the Company provides written notice to the Recipient within five (5) business days of the Relationship Termination Date of the Company’s intention not to exercise its Right of Repurchase. The Recipient hereby authorizes the endorsement and delivery to the Company of the share certificate(s) representing the Award Shares being repurchased upon a deemed exercise by the Company of its Right of Repurchase in accordance with the foregoing sentence.
Escrow of Award Shares	For purposes of facilitating the enforcement of the provisions of Right of Repurchase above, concurrently with the execution of this Award Certificate, the Recipient shall deliver the certificate(s) representing the Award Shares that are subject to the Right of Repurchase, together with an Assignment Separate from Certificate in the form attached hereto as Exhibit A executed by the Recipient in blank, to the Secretary of the Company, or the Secretary’s designee, to hold such certificate(s) and Assignment Separate from Certificate in escrow and to take all such actions and to effectuate all such transfers and/or releases as are in accordance with the terms of this Agreement. The Recipient hereby acknowledges that the Secretary of the Company, or the Secretary’s designee, is so appointed as the escrow holder with the foregoing authorities as a material inducement to make this Agreement and that such appointment is coupled with an interest and is accordingly irrevocable. The Recipient agrees that such escrow holder shall not be liable to any party hereof (or to any other party). The escrow holder may rely upon any letter, notice or other document executed by any signature purported to be genuine and may resign at any time. The Recipient agrees that, if the Secretary of the Company, or the Secretary’s designee, resigns as escrow holder for any or no reason, the Company shall have the power to appoint a successor to serve as escrow holder pursuant to the terms of this Agreement.

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Rights a Shareholder:	Except as otherwise provided in this Award Certificate, you shall have all the rights of a shareholder of the Trust with respect to the Award Shares, subject to the restrictions, including, without limitation, voting rights and allocation of cash or stock dividends, in respect of the Award Shares subject to the vesting of the Award. The Company and/or the Trust may require you to execute an “Investment Representation Statement” and enter into a shareholder’s agreement or any other agreement required by the Board of Trustees or shareholders in general, with such terms and conditions as the Company may prescribe.
Stock Certificate Restrictive Legend:	Stock certificates evidencing Award Shares may bear such restrictive legends as the Company and/or the Trust and the Company’s and/or the Trust’s counsel deem necessary or advisable under applicable law or pursuant to this Award Certificate, or any other agreement to which the Recipient is a party, including, without limitation, the following legends: THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE SUBJECT TO A RIGHT OF REPURCHASE BY FOUR SPRINGS CAPITAL, LLC, PURSUANT TO THE PROVISIONS OF A SHARE RESTRICTION AGREEMENT BETWEEN THE COMPANY AND THE ORIGINAL HOLDER OF SUCH SECURITIES RELATING TO SUCH SECURITIES, AND SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IF SUCH SECURITIES ARE SUBJECT TO SUCH RIGHT OF REPURCHASE. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.
Tax Liability of the Participant and Payment of Taxes:	You acknowledge and agree that any income or other taxes due from you with respect to the Award Shares issued pursuant to this Award Certificate shall be your responsibility. Upon vesting, you may elect to have a portion of your vested shares withheld in order to satisfy your tax obligations.

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	Upon execution of this Award Certificate, you may file an election under Section 83(b) of the Code of the Internal Revenue Code. You have been given the opportunity to obtain the advice of your tax advisors with respect to the tax consequences of the Award Shares and the provisions of this Award Certificate. You assume all responsibility for filing the Section 83(b) election and paying any taxes resulting from such election or from failure to file the election and paying taxes resulting from the lapse of the restrictions on the unvested shares. Tax obligations arising from the Section 83(b) election must be paid by you and cannot be satisfied by withholding shares.
Transferability:	The Recipient may not transfer, assign, hypothecate, donate, encumber or otherwise dispose of any Award Shares, and any such attempted transfer shall be null and void; provided, however, that the foregoing restrictions shall not apply to a transfer of Award Shares by the Recipient for bona fide estate planning purposes to his/her spouse, child (natural or adopted), or any other direct lineal descendant or ascendant of the shareholder (or his/her spouse) (all of the foregoing collectively referred to as “Family Members”), or any custodian or trustee of any trust, partnership or limited liability company set up for the benefit of, or the ownership interests of which are owned wholly by, the Recipient or any such Family Member(s), so long as the transferee shall enter into an agreement with the Company on terms and conditions substantially equivalent, mutatis mutandis, to the terms and conditions of this Agreement. The Company shall not be required (a) to transfer on its books any Award Shares that shall have been transferred in violation of any of the provisions set forth in this Award Certificate, or (b) to treat as owner of such Award Shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such Award Shares shall have been so transferred.
Restrictions on Resale:	By accepting this Award Certificate, you agree not to sell any Award Shares acquired under this Award Certificate at a time when applicable laws, Trust or Company policies, any agreement to which you are a party or any agreement between the Company and its underwriters, prohibit a sale.
Miscellaneous:	As a condition of the granting of this Award, you agree, for yourself and your legal representatives and/or guardians, that this Award Certificate shall be interpreted by the Company (or a committee thereof) and that any such interpretation of the terms of this Award Certificate and any determination made by the Company (or a committee thereof) pursuant to this Award Certificate shall be final, binding and conclusive. This Award Certificate may be executed in counterparts. This Award Certificate and the Award Shares granted hereunder shall be governed by Maryland Law.

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This Award Certificate and the Award Shares granted hereunder are granted under and governed by the terms and conditions of this Award Certificate. The invalidity or unenforceability of any provisions of this Award Certificate shall not affect the validity or enforceability of any other provision of this Award Certificate, which shall remain in full force and effect. In the event that any provision of this Award Certificate or any word, phrase, clause, sentence, or other portion hereof (or omission thereof) should be held to be unenforceable or invalid for any reason, such provision or portion thereof shall be modified or deleted in such a manner so as to make this Award Certificate as so modified legal and enforceable to the fullest extent permitted under applicable law.

BY SIGNING BELOW AND ACCEPTING THIS AWARD CERTIFICATE AND THE AWARD SHARES GRANTED HEREUNDER, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED HEREIN.

FOUR SPRINGS CAPITAL, LLC

By:
	William P. Dioguardi, CEO	Recipient

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SCHEDULE 1 TO THE SHARE RESTRICTION AGREEMENT

Notwithstanding anything to the contrary set forth above, the Right of Repurchase shall terminate under each of the followings circumstances (each, an “Acceleration Event”):

1. As to all of the Award Shares, immediately prior to the consummation of the Company’s first firm commitment underwritten public offering registered under the Securities Act of 1933, as amended, or a Change of Control (as defined below).

2. As to all of the Award Shares, in the event of the Recipient’s death or Disability (as defined below).

3. As used in this Agreement, the following terms shall have the meanings set forth below.

(a) “Disability” shall mean the failure or inability of the Recipient to substantially perform, with or without reasonable accommodation, his/her duties to the Company or the Trust, as the case may be, for an aggregate of ninety (90) calendar days during any consecutive three hundred sixty-five (365) day period as a result of a physical or mental illness or injury, as determined in good faith by the Company upon the advice of an independent physician experienced in treating the condition(s) allegedly giving rise to the disability.

(b) “Change of Control” shall mean, in each case as approved by the Board of Trustees of the Trust and the requisite shareholders of the Trust, or the Managers and the requisite members of the Company, as the case may be:

(i) any consolidation or merger of the Trust or the Company, as the case may be (the “Subject Entity”), with or into any other corporation or other entity or person, or any other corporate reorganization, in which the shareholders of the Subject Entity immediately prior to such consolidation, merger or reorganization, own, in the aggregate, less than (50%) of the surviving entity’s voting power and/or outstanding capital stock immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions (including any transaction which results from an option agreement or binding letter of intent with a third party) to which the Subject Entity is a party in which in excess of (50%) of the Subject Entity’s voting power and/or outstanding capital stock is transferred, or pursuant to which any person or group of affiliated persons obtains in excess of 50% of the Subject Entity’s voting power and/or outstanding capital stock, excluding any consolidation or merger effected exclusively to change the domicile of the Subject Entity; or

(ii) a merger (including a reverse merger) (each, a “Merger”) in which the Subject Entity is the surviving corporation but (A) the outstanding capital stock of Subject Entity outstanding immediately preceding the merger are converted by virtue of the merger into other property (whether in the form of securities, cash or otherwise) or (B) the voting securities of the Subject Entity outstanding immediately preceding the Merger represent less than fifty percent (50%) of the total voting power represented by the voting securities of the entity surviving such Merger (other than, with respect to events otherwise described in this item (ii), the formation of a holding company by the Subject Entity, a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Subject Entity in a different jurisdiction, or other transaction in which there is no substantial change after the Merger in the shareholders of the Subject Entity or their relative stock holdings, and the management of the Subject Entity continues in substantially the same manner as prior to the Merger to manage the entity surviving the Merger ); or

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(iii) any sale, lease or other disposition (including through a Board of Trustees or Manager, as the case may be, and shareholder approved division or spin-off transaction) of all or substantially all of the assets of the Subject Entity and/or any of its subsidiaries; provided, however that none of the following shall constitute a Change of Control: (A) transfers of capital stock by an existing shareholder as a result of death or otherwise for estate planning purposes or to such shareholders affiliates or to any of the Subject Entity’s other existing shareholders, and (B) issuances of equity securities of the Subject Entity in connection with financings for working capital and other general corporate purposes.

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ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED and pursuant to that certain Award Shares Award Certificate between the undersigned (the “Recipient”) and Four Springs Capital, LLC (the “Company”) dated , 2014 (the “Agreement”), the Recipient hereby sells, assigns and transfers unto the Company ( ) common shares of Four Springs Capital Trust (the “Trust”), standing in the Recipient’s name on the books of the Trust and represented by Certificate No. and does hereby irrevocably constitute and appoint to transfer said stock on the books of the Trust with full power of substitution in the premises. THIS ASSIGNMENT MAY BE USED ONLY AS AUTHORIZED BY THE AGREEMENT AND THE ATTACHMENTS THERETO.

Dated:
Witness:	Signature of Recipient:
	Name of Recipient:

Instruction: Please do not fill in any blanks other than the signature line. The purpose of this assignment is to enable the Company to exercise its Right of Repurchase set forth in the Agreement without requiring additional signatures on the part of the Recipient.

EX-10.3

Exhibit 10.3

FOUR SPRINGS CAPITAL TRUST

2021 Equity incentive PLAN

TABLE OF CONTENTS

Page

ARTICLE 1. PURPOSE 1

1.1. GENERAL 1

ARTICLE 2. DEFINITIONS 1

2.1. DEFINITIONS 1

ARTICLE 3. EFFECTIVE TERM OF PLAN 6

3.1.	EFFECTIVE DATE	6
3.2.	TERMINATION OF PLAN	6

ARTICLE 4. ADMINISTRATION 6

4.1.	COMMITTEE	6
4.2.	ACTION AND INTERPRETATIONS BY THE COMMITTEE	7
4.3.	AUTHORITY OF COMMITTEE	7
4.4.	DELEGATION TO EXECUTIVE OFFICERS	8
4.5.	AWARD AGREEMENT	8

ARTICLE 5. SHARES SUBJECT TO THE PLAN 8

5.1.	Plan Limits	8
5.2.	SHARES DISTRIBUTED	9

ARTICLE 6. ELIGIBILITY 9

6.1. GENERAL 9

ARTICLE 7. OPTIONS 9

7.1. GENERAL 9

7.2. INCENTIVE OPTIONS 10

ARTICLE 8. SHARE APPRECIATION RIGHTS 11

8.1. GRANT OF SHARE APPRECIATION RIGHTS 11

ARTICLE 9. RESTRICTED SHARES AND RESTRICTED SHARE UNIT AWARDS 11

9.1.	GRANT OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS	11
9.2.	ISSUANCE AND RESTRICTIONS	11
9.3.	FORFEITURE	11
9.4.	DELIVERY OF RESTRICTED SHARES	11

ARTICLE 10. EQUITY OR OTHER EQUITY-BASED AWARDS 12

10.1. GRANT OF EQUITY OR OTHER EQUITY-BASED AWARDS 12

ARTICLE 11. LTIP UNITS 12

11.1. GRANT OF LTIP UNITS 12

ARTICLE 12. PERFORMANCE AWARDS 12

12.1. Grant of Performance Awards 12

ARTICLE 13. PROVISIONS APPLICABLE TO AWARDS 12

13.1.	STAND-ALONE AND TANDEM AWARDS	12
13.2.	TERM OF AWARD	12
13.3.	FORM OF PAYMENT FOR AWARDS	12
13.4.	LIMITS ON TRANSFER	12
13.5.	BENEFICIARIES	13
13.6.	SHARE CERTIFICATES	13
13.7.	TERMINATION OF EMPLOYMENT	13
13.8.	FORFEITURE EVENTS	13
13.9.	SUBSTITUTE AWARDS	13
13.10.	CHANGE IN CONTROL/ IPO	13
13.11.	RIGHT OF FIRST REFUSAL/RIGHT OF REPURCHASE	13

ARTICLE 14. CHANGES IN CAPITAL STRUCTURE 14

14.1.	GENERAL	14
14.2.	ACTIONS BY THE COMMITTEE	14

ARTICLE 15. AMENDMENT, MODIFICATION AND TERMINATION 14

15.1.	AMENDMENT, MODIFICATION AND TERMINATION	14
15.2.	OPTIONS PREVIOUSLY GRANTED	14

ARTICLE 16. GENERAL PROVISIONS 15

16.1.	NO RIGHTS TO AWARDS; NON-UNIFORM DETERMINATIONS	15
16.2.	NO SHAREHOLDER RIGHTS	15
16.3.	WITHHOLDING	15
16.4.	NO RIGHT TO CONTINUED SERVICE	15
16.5.	UNFUNDED STATUS OF AWARDS	15
16.6.	RELATIONSHIP TO OTHER BENEFITS	15
16.7.	REIT STATUS	15
16.8.	EXPENSES	15
16.9.	TITLES AND HEADINGS	15
16.10.	GENDER AND NUMBER	15
16.11.	FRACTIONAL SHARES	15
16.12.	GOVERNMENT AND OTHER REGULATIONS	16
16.13.	GOVERNING LAW	16
16.14.	ADDITIONAL PROVISIONS	16
16.15.	Addenda	16
16.16.	NO LIMITATIONS ON RIGHTS OF COMPANY	16
16.17.	INDEMNIFICATION	16

FOUR SPRINGS CAPITAL TRUST
2021 EQUITY INCENTIVE PLAN

ARTICLE 1.
PURPOSE

1.1.GENERAL. The purpose of the Four Springs Capital Trust 2021 Equity Incentive Plan (the “Plan”) is to promote the success, and enhance the value of, Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”) by providing select company leaders and trustees equity stakes in the Company in order to (i) foster an “ownership mentality” and re-align interests with the Company’s shareholders, (ii) promote retention of key members of the management team and (iii) motivate company leaders to effectively manage the portfolio and continue to deliver strong results. Given the small ownership stake current of management and trustees, Initial Grants are believed to be of critical importance. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees, officers, trustees and consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent. Accordingly, the Plan permits the grant of share options, share appreciation rights, restricted shares, restricted share units, long term incentive unit awards, performance awards, and other awards from time to time to selected employees, officers, trustees and consultants of the Company and its Subsidiaries.

ARTICLE 2.
DEFINITIONS

2.1.DEFINITIONS. When a word or phrase appears in this Plan or in an Award Agreement with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase shall generally be given the meaning ascribed to it in this Section or in Section 1.1 unless otherwise defined. The following words and phrases shall have the following meanings:

(a)“Affiliate” means (i) any entity that, directly or indirectly, is controlled by or under common control with the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Committee; provided, however, that no entity will be considered an Affiliate for purposes of an Award of Nonstatutory Options or SARs to an employee or director of, or consultant to, the entity unless the Shares would be considered “service recipient stock” within the meaning of Section 409A of the Code, in the context of such an Award.

(b)“Award” means any Option, SARs, Restricted Share Award, Restricted Share Unit Award, Other Equity-Based Award, LTIP Units, Performance Awards or any other right or interest relating to Shares or cash, granted to a Participant under the Plan.

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(c) “Award Agreement” means a written document, in such form as the Committee prescribes from time to time, setting forth the terms and conditions of an Award. Award Agreements may be in the form of individual award agreements or certificates or a program document describing the terms and provisions of Awards or series of Awards under the Plan as approved by the Committee.

(d)“Board” means the Board of Trustees of the Company.

(e)“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

(i)       The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership”) of 20% or more of either (A) the then outstanding Common Shares of beneficial interest of the Company (including preferred shares or other securities of the Company convertible into common shares) (the “Outstanding Company Common Shares”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of trustees (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (i) of this Section 2.1(e); or

(ii)       Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a trustee subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the trustees then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of trustees or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii)       Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the Persons who had Beneficial Ownership, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Business Combination have Beneficial Ownership of more than 50%, respectively, of the then outstanding Common Shares of beneficial interest and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of trustees, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) acquires Beneficial Ownership of 20% or more of, respectively, the then outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of trustees or board of trustees, as the case may be, of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement with the successor or purchasing entity in respect of such Business Combination, or of the action of the Board, providing for such Business Combination; or

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(iv)       Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(f)“Code” means the Internal Revenue Code of 1986 and the underlying regulations, as amended from time to time.

(g)“Committee” means the committee of the Board described in Article 4.

(h)“Company” means the “Company” as defined in Section 1.1, or any successor corporation.

(i)“Continuous Status as a Participant” means the absence of any interruption or termination of service as an employee, officer, director or consultant of the Company; provided, however, that for purposes of an Incentive Option, or a SAR issued in tandem with an Incentive Option, “Continuous Status as a Participant” means the absence of any interruption or termination of service as an employee of the Company or any Subsidiary, as applicable, pursuant to applicable tax regulations. Continuous Status as a Participant shall not be considered interrupted in the case of any leave of absence authorized in writing by the Company prior to its commencement; provided, however, that for purposes of Incentive Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 91st day of such leave any Incentive Option held by the Participant shall cease to be treated as an Incentive Option and shall be treated for tax purposes as a Nonstatutory Option.

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(j)“Corporate Transaction” has the meaning defined in Section 14.1.

(k)“Disability” or “Disabled” has the same meaning as provided in the long-term disability plan or policy maintained by the Company or if applicable, most recently maintained, by the Company or if applicable, a Subsidiary, for the Participant, whether or not such Participant actually receives disability benefits under such plan or policy. If no long-term disability plan or policy was ever maintained on behalf of Participant or if the determination of Disability relates to an Incentive Option, Disability means Permanent and Total Disability as defined in Section 22(e)(3) of the Code. Notwithstanding the foregoing, the Committee may, in its discretion, determine that for a particular Award the term “Disability” shall have such meaning as to enable such Award to be exempt from or to comply with Section 409A of the Code. In the event of a dispute, the determination whether a Participant is Disabled will be made by the Committee.

(l)“Effective Date” has the meaning assigned such term in Section 3.1.

(m)“Fair Market Value” means (i) when the Shares are not traded on an established securities market, the fair market value of a Share as determined by the Committee in accordance with a valuation methodology approved by the Committee and in compliance with Section 409A of the Code and the regulations issued thereunder, and (ii) when the Shares are traded on an established securities market, the fair market value as determined pursuant to a method selected by the Committee using actual transactions in Shares as reported in such securities market.

(n)“Grant Date” of an Award means the first date on which all necessary corporate action has been taken to approve the grant of the Award as provided in the Plan or, if later, the date specified as part of such action as the “Grant Date” for the Award. Notice of the grant shall be provided to the grantee within a reasonable time after the Grant Date.

(o)“Incentive Option” means an Option that is intended to be an incentive stock option and meets the requirements of Section 422 of the Code or any successor provision thereto.

(p)“IPO” means (i) a public offering of primary Common Shares in a firm commitment underwritten offering (other than a public offering pursuant to a registration statement on Form S-8) under the Securities Act in which the Trust receives gross proceeds of not less than $200,000,000, (ii) or the listing of the Trust’s Common Shares on a national securities exchange which public float of the Common Shares constitutes at least fifteen percent (15%) of the issued and outstanding beneficial interests and other equity interests of the Trust on a fully diluted basis as of such listing date or (iii) the merger of the Trust with, or the acquisition of all or substantially all of equity interests of the Trust by, any special purpose acquisition company, in which the Trust receives gross proceeds of not less than $200,000,000, and following which the common stock of the surviving company or acquirer (or any parent thereof) is listed on a national securities exchange.

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(q)“LTIP Unit” means an Award under Article 11 of an interest in the operating partnership affiliated with the Company, if any.

(r)“Nonstatutory Option” means an Option that is not an Incentive Option.

(s)“Option” means a right granted to a Participant under Article 7 of the Plan to purchase Shares at a specified price during specified time periods. An Option may be either an Incentive Option or a Nonstatutory Option.

(t)“Other Equity-Based Award” means a right, granted to a Participant under Article 10, that relates to or is valued by reference to Shares or other Awards relating to Shares.

(u)“Parent” means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company. Notwithstanding the above, with respect to an Incentive Option, “Parent” shall have the meaning set forth in Section 424(e) of the Code.

(v)“Participant” means a person who, as an employee, officer, director or consultant of the Company or any Subsidiary, has been granted an Award under the Plan; provided that in the case of the death of a Participant, the term “Participant” refers to a beneficiary designated under the Plan or the legal guardian or other legal representative acting in a fiduciary capacity on behalf of the Participant under applicable state law and/or court supervision.

(w)“Performance Awards” means an Award granted to a Participant under Article 12 subject to the attainment of performance goals (as described in Article 12) over a Performance Period.

(x)“Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

(y)“Plan” means the Four Springs Capital Trust 2021 Equity Incentive Plan, as amended from time to time.

(z)“Restricted Share Award” means Shares granted to a Participant under Article 9 that is subject to certain restrictions and to risk of forfeiture.

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(aa) “Restricted Share Unit Award” means the right granted to a Participant under Article 9 to receive Shares (or the equivalent value in cash or other property if the Committee so provides) in the future, which right is subject to certain restrictions and to risk of forfeiture.

(bb)“Shares” or “Common Shares” means common shares the Company par value $0.001. If there has been an adjustment or substitution pursuant to Article 14, the term “Shares” shall also include any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted pursuant to Article 14.

(cc)“Share Appreciation Right” or “SAR” means a right granted to a Participant under Article 8 to receive a payment equal to the difference between the Fair Market Value of a Share as of the date of exercise of the SAR over the grant price of the SAR, all as determined pursuant to Article 8.

(dd)“Subsidiary” means any corporation, limited liability company, partnership or other entity of which a majority of the outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company. Notwithstanding the above, with respect to an Incentive Option, “Subsidiary” shall have the meaning set forth in Section 424(f) of the Code.

(ee)“1933 Act” means the Securities Act of 1933, as amended from time to time.

ARTICLE 3.
EFFECTIVE TERM OF PLAN

3.1.EFFECTIVE DATE. The Plan shall be effective as of the date it is approved by both the Board and the shareholders of the Company (the “Effective Date”).

3.2.TERMINATION OF PLAN. The Plan shall terminate on the tenth anniversary of the Effective Date unless earlier terminated as provided herein. The termination of the Plan on such date shall not affect the validity of any Award outstanding on the date of termination.

ARTICLE 4.
ADMINISTRATION

4.1.COMMITTEE. The Plan shall be administered by a Committee appointed by the Board (which Committee shall consist of at least two trustees) or, at the discretion of the Board from time to time, the Plan may be administered by the Board. After an IPO, none of the members of the Committee shall be an officer or other salaried employee of the Company, and each of member shall (i) qualify in all respects as a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”), (ii) meet such other requirements as may be established from time to time by the Securities and Exchange Commission for plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act, and (iii) comply with the independence requirements of the stock exchange on which the Shares are listed. The members of the Committee shall be appointed by, and may be changed at any time and from time to time in the discretion of, the Board. The Board may reserve to itself any or all of the authority and responsibility of the Committee under the Plan or may act as administrator of the Plan for any and all purposes. To the extent the Board has reserved any authority and responsibility or during any time that the Board is acting as administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in this Section 4.1) shall include the Board. To the extent any action of the Board under the Plan conflicts with actions taken by the Committee, the actions of the Board shall control.

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4.2.ACTION AND INTERPRETATIONS BY THE COMMITTEE. For purposes of administering the Plan, the Committee may from time to time adopt rules, regulations, guidelines and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Committee may deem appropriate. The Committee’s interpretation of the Plan, any Awards granted under the Plan, any Award Agreements and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company’s or any Subsidiary’s independent certified public accountants, Company counsel or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

4.3.AUTHORITY OF COMMITTEE. Except as provided below, the Committee has the exclusive power, authority and discretion to:

(a)Grant Awards;

(b)Designate Participants;

(c)Determine the type or types of Awards to be granted to each Participant;

(d)Determine the number of Awards to be granted and the number of Shares, the dollar amount or other property to which an Award will relate;

(e)Determine the terms and conditions of any Award granted under the Plan, including but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, based in each case on such considerations as the Committee in its sole discretion determines;

(f)Determine whether, to what extent, and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other Awards, or other property;

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(g) Determine whether an Award may be canceled, forfeited, or surrendered;

(h)Prescribe the form of each Award Agreement, which need not be identical for each Participant;

(i)Decide all other matters that must be determined in connection with an Award;

(j)Establish, adopt or revise any rules, regulations, guidelines or procedures as it may deem necessary or advisable to administer the Plan;

(k)Make all other decisions and determinations that may be required under the Plan or as the Committee deems necessary or advisable to administer the Plan; and

(l)Amend the Plan, any outstanding Award or any Award Agreement as provided herein.

4.4.DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable law, the Board may delegate to one or more executive officers of the Company the power to grant Awards to employees or officers of the Company or any of its present or future Subsidiaries and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of the Awards to be granted by such executive officers (including the exercise price of any Options to be granted, which may include a formula by which the exercise price will be determined) and the maximum number of shares subject to Awards that the executive officers may grant; provided further, however, that no executive officer shall be authorized to grant Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act).

4.5.AWARD AGREEMENT. Each Award shall be evidenced by an Award Agreement. Each Award Agreement shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee.

ARTICLE 5.
SHARES SUBJECT TO THE PLAN

5.1.Plan Limits. Subject to adjustment as provided in Article 14 herein, the maximum number of Shares that may be delivered pursuant to Awards under the Plan shall be Three Million (3,000,000) Shares, provided that

(a)Shares potentially deliverable under an Award granted under the Plan that is canceled, forfeited, settled in cash, expires or is otherwise terminated without delivery of such Shares shall not be counted as having been delivered under the Plan for purposes of determining such maximum number of Shares.

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(b) Shares that have been issued in connection with an Award of Restricted Shares that is canceled or forfeited prior to vesting or settled in cash, causing the Shares to be returned to the Company, shall not be counted as having been delivered under the Plan for purposes of determining such maximum number of Shares.

Any or all of the Shares reserved for issuance under the Plan shall be authorized for issuance pursuant to Incentive Options or other Awards.

5.2. SHARES DISTRIBUTED. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury Shares or Shares purchased on the open market.

ARTICLE 6.
ELIGIBILITY

6.1.GENERAL. Awards may be granted to employees, officers, trustees and consultants of the Company, any Subsidiary or Affiliate, except that Incentive Options may be granted only to an individual who has the status of an employee of the Company or a Subsidiary.

ARTICLE 7.
OPTIONS

7.1.GENERAL. The Committee is authorized to grant Options to Participants on the following terms and conditions:

(a)EXERCISE PRICE. The exercise price per Share under an Option shall not be less than the Fair Market Value as of the Grant Date.

(b)TIME AND CONDITIONS OF EXERCISE. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, subject to Section 7.1(d). The Committee shall also determine the performance or other conditions, if any, that must be satisfied before all or part of an Option may be exercised or vested.

(c)PAYMENT. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation, cash, Shares, or other property (including “cashless exercise” arrangements), and the methods by which Shares shall be delivered or deemed to be delivered to Participants.

(d)EXERCISE TERM. In no event may any Option be exercisable for more than ten years from the Grant Date.

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7.2.INCENTIVE OPTIONS. In addition to the requirements set forth in Section 7.1, the terms of any Incentive Options granted under the Plan must comply with the following additional rules:

(a) TERMINATION OF OPTION. Subject to any earlier termination provision contained in the Award Agreement, an Incentive Option shall lapse upon the earliest of the following circumstances; provided, however, that the Committee may, prior to the lapse of the Incentive Option under the circumstances described in subsections (iii), (iv) or (v) below, provide in writing that the Option will extend until a later date, but if an Option is so extended and is exercised after the dates specified in subsections (iii), (iv) or (v) below, it will automatically become a Nonstatutory Option:

(i)The expiration date set forth in the Award Agreement;

(ii)The tenth anniversary of the Grant Date;

(iii)Three months after termination of the Participant’s Continuous Status as a Participant for any reason other than the Participant’s Disability or death;

(iv)One year after termination of the Participant’s Continuous Status as a Participant by reason of the Participant’s Disability; or

(v)One year after the Participant’s death if the Participant dies (A) while employed, (B) during the three-month period described in paragraph (3) or (C) during the one-year period described in paragraph (4) and before the Option otherwise lapses.

(b)INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of the Grant Date) of all Shares with respect to which Incentive Options are first exercisable by a Participant in any calendar year may not exceed $100,000.00.

(c)TEN PERCENT OWNERS. No Incentive Option shall be granted to any individual who, at the Grant Date, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary unless the exercise price per share of such Option is at least one hundred and ten percent (110%) of the Fair Market Value per Share at the Grant Date and the Option expires no later than five (5) years after the Grant Date.

(d)RIGHT TO EXERCISE. During a Participant’s lifetime, an Incentive Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative.

(e)ELIGIBLE PARTICIPANTS. The Committee may not grant an Incentive Option to a Participant who is not at the Grant Date an employee of the Company or a Subsidiary.

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ARTICLE 8.
SHARE APPRECIATION RIGHTS

8.1.GRANT OF SHARE APPRECIATION RIGHTS. The Committee is authorized to grant Share Appreciation Rights to Participants on the following terms and conditions:

(a)RIGHT TO PAYMENT. Upon the exercise of a Share Appreciation Right, the Participant to whom it is granted has the right to receive, with respect to each Share underlying such Share Appreciation Right, the excess, if any, of:

 (i)The Fair Market Value of one Share on the date of exercise; over

    The base price of the Share Appreciation Right as determined by the Committee, which shall not be less than the Fair Market Value of one Share on the Grant Date.

(b)OTHER TERMS. All awards of Share Appreciation Rights shall be evidenced by an Award Agreement. The terms, methods of exercise, methods of settlement, form of consideration payable in settlement, and any other terms and conditions of any Share Appreciation Right shall be determined by the Committee at the time of the grant of the Award and shall be reflected in the Award Agreement.

ARTICLE 9.
RESTRICTED SHARES AND RESTRICTED SHARE UNIT AWARDS

9.1.GRANT OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS. The Committee is authorized to make Awards of Restricted Shares or Restricted Share Units to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. An Award of Restricted Shares or Restricted Share Units shall be evidenced by an Award Agreement setting forth the terms, conditions, and restrictions applicable to the Award.

9.2.ISSUANCE AND RESTRICTIONS. Restricted Shares or Restricted Share Units shall be subject to such restrictions on transferability and other restrictions as the Committee may determine. These restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, upon the satisfaction of performance goals or otherwise, as the Committee determines at the time of the grant of the Award or thereafter. Except as otherwise provided in an Award Agreement, the Participant shall have all of the rights of a shareholder with respect to the Restricted Shares, and the Participant shall have none of the rights of a stockholder with respect to Restricted Share Units until such time as Shares are paid in settlement of the Restricted Share Units.

9.3.FORFEITURE. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of Continuous Status as a Participant during the applicable restriction period or upon failure to satisfy a requirement during the applicable restriction period, Restricted Shares or Restricted Share Units that are at that time subject to restrictions shall be forfeited; provided, however, that the Committee may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Shares or Restricted Share Units will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Shares or Restricted Share Units.

9.4.DELIVERY OF RESTRICTED SHARES. Shares of Restricted Shares shall be delivered to the Participant at the time of grant either by book-entry registration or by delivering to the Participant, or a custodian or escrow agent (including, without limitation, the Company or one or more of its employees) designated by the Committee, a share certificate or certificates registered in the name of the Participant. If physical certificates representing shares of Restricted Shares are registered in the name of the Participant, such certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares.

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ARTICLE 10.
EQUITY OR OTHER EQUITY-BASED AWARDS

10.1.GRANT OF EQUITY OR OTHER EQUITY-BASED AWARDS. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, Shares awarded purely as a “bonus” and not subject to any restrictions or conditions, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, and Awards valued by reference to book value of Shares or the value of securities of or the performance of the Company or any Subsidiary. The Committee shall determine the terms and conditions of such Awards.

ARTICLE 11.
LTIP UNITS

11.1.GRANT OF LTIP UNITS. LTIP Units are intended to be profits interests in the operating partnership affiliated with the Company, if any (such operating partnership, if any, the “Partnership”), the rights and features of which, if applicable, will be set forth in the agreement of limited partnership for the Partnership (the “Partnership Agreement”). Subject to the terms and provisions of the Plan and the Operating Partnership Agreement, the Committee, at any time and from time to time, may grant LTIP Units to Participants in such amounts and upon such terms and conditions as the Committee shall determine.

ARTICLE 12.
PERFORMANCE AWARDS

12.1.Grant of Performance Awards. The Committee is authorized to grant any Award in the form of a Performance Awards to Participants in such amounts and subject to such terms and conditions as may be selected by the Committee. An Award of Performance Awards shall be evidenced by an Award Agreement setting forth the terms, conditions, and restrictions applicable to the Award. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. After the end of each Performance Period, the Committee shall determine the amount, if any, of the Performance Award for that performance period payable to each Participant. The Committee may, in its discretion, determine that the amount payable to any Participant as a Performance Award shall be reduced from the amount of his or her potential Performance Award, including a determination to make no final Award whatsoever, and may exercise its discretion to increase the amounts payable under any Performance Award.

ARTICLE 13.
PROVISIONS APPLICABLE TO AWARDS

13.1.STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, or in tandem with, any other Award granted under the Plan. Subject to Section 13.2, Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

13.2.TERM OF AWARD. The term of each Award shall be for the period as determined by the Committee, provided that in no event shall the term of any Option or a Share Appreciation Right exceed a period of ten years from its Grant Date (or, if Section 7.2(c) applies, five years from its Grant Date).

13.3.FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any applicable law or Award Agreement, payments or transfers to be made by the Company on the grant or exercise of an Award may be made in such form as the Committee determines at or after the Grant Date, including without limitation, cash, Shares, other Awards, or other property, or any combination, and may be made in a single payment or transfer, in installments, in each case determined in accordance with rules adopted by, and at the discretion of, the Committee.

13.4.LIMITS ON TRANSFER. No right or interest of a Participant in any unexercised or restricted Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company. No unexercised or restricted Award shall be assignable or transferable by a Participant other than by will or the laws of descent and distribution or, except in the case of an Incentive Option, pursuant to a domestic relations order that would satisfy Section 414(p)(1)(A) of the Code if such Section applied to an Award under the Plan; provided, however, that the Committee may (but need not) permit other transfers where the Committee concludes that such transferability (i) does not result in accelerated taxation, (ii) does not cause any Option intended to be an Incentive Option to fail to be described in Code Section 422(b), and (iii) is otherwise appropriate and desirable, taking into account any factors deemed relevant, including without limitation, state or federal tax or securities laws applicable to transferable Awards.

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13.5.BENEFICIARIES. Notwithstanding Section 13.4, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary, legal guardian, legal representative, or other person claiming any rights under the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If no beneficiary has been designated or survives the Participant, payment shall be made to the Participant’s estate. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.

13.6.SHARE CERTIFICATES. All Shares issuable under the Plan is subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Shares is listed, quoted, or traded. The Committee may place legends on any Share certificate or issue instructions to the transfer agent to reference restrictions applicable to the Shares.

13.7.TERMINATION OF EMPLOYMENT. Each Participant’s Award Agreement shall set forth the treatment of the Awards following termination of the Participant’s employment or, if the Participant is a director or consultant, service with the Company. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Awards and may reflect distinctions based on the reasons for termination or employment or service.

13.8.FORFEITURE EVENTS. The Committee may specify in an Award Agreement that the Participant’s rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events shall include, but shall not be limited to, termination of employment, violation of Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company.

13.9.SUBSTITUTE AWARDS. The Committee may grant Awards under the Plan in substitution for equity and equity-based awards held by employees of another entity who become employees of the Company as a result of a merger or consolidation of the former employing entity with the Company or the acquisition by the Company of property or equity of the former employing corporation. The Committee may direct that the substitute awards be granted on such terms and conditions as the Committee considers appropriate in the circumstances.

13.10.CHANGE IN CONTROL/ IPO. Each Participant’s Award Agreement shall set forth the treatment of the Awards in the event of a Change in Control or IPO. Such provisions shall be determined in the sole discretion of the Committee and need not be uniform among all Awards.

13.11.RIGHT OF FIRST REFUSAL/RIGHT OF REPURCHASE. The Committee may provide in a Participant’s Award Agreement that the grant of an Award shall be conditioned upon the Participant’s (or any other interested person’s) execution of a shareholder agreement in such form as is satisfactory to the Committee with respect to any Shares delivered or deliverable pursuant to such Award. Without limiting the foregoing, the Committee may provide in a Participant’s Award Agreement that while Shares are not traded on an established securities market that the Company may have certain repurchase rights or rights of first refusal with respect to the Shares subject to an Award Agreement and Shares issued to the Participant pursuant to Awards under the Plan. In addition, at the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement or any other document a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided, that such right of first refusal terminates upon an IPO.

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ARTICLE 14.
CHANGES IN CAPITAL STRUCTURE

14.1.GENERAL. In the event of a corporate event or transaction involving the Company (including, without limitation, any equity dividend, equity split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares (each a “Corporate Transaction”), the Committee in its sole discretion may take the actions set forth in Section 14.2. Notwithstanding the foregoing, in the event of any equity split, reverse equity split, equity dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Shares other than an ordinary cash dividend, the authorization limit under Article 5 shall be adjusted proportionately, and the Committee shall make such other adjustments to the Awards and to any provisions of the Plan as the Committee deems necessary.

14.2.ACTIONS BY THE COMMITTEE. Action by the Committee in the event of a Corporate Transaction may include: (i) adjustment of the number and kind of shares which may be delivered under the Plan; (ii) adjustment of the number and kind of shares subject to outstanding Awards; (iii) adjustment of the exercise price of outstanding Awards or the measure to be used to determine the amount of the benefit payable on an Award; and (iv) any other adjustments that the Committee determines. In addition, upon the occurrence or in anticipation of such an event that is a Change in Control, the Committee may, in its sole discretion, provide (i) that Awards will be settled in cash rather than Shares, (ii) that Awards will become immediately vested and exercisable and will expire after a designated period of time to the extent not then exercised, (iii) that Awards will be assumed by another party to a transaction or otherwise be equitably converted or substituted in connection with such transaction, (iv) that outstanding Awards may be settled by payment in cash or cash equivalents equal to the excess of the Fair Market Value of the underlying Shares, if any, as of a specified date associated with the transaction, over the exercise or base price of the Award, and with the understanding that if the exercise or base price of any Awards exceeds such Fair Market Value, then the value of such Award shall be zero and subject to settlement and cancellation for no consideration, or (v) any combination of the foregoing. The Committee’s determination need not be uniform and may be different for different Participants whether or not such Participants are similarly situated. To the extent that any adjustments made pursuant to this Article 14 cause Incentive Options to cease to qualify as Incentive Options, such Options shall be deemed to be Nonstatutory Options. Notwithstanding the foregoing, as may be determined by the Committee, any such adjustment shall not (i) cause an Award which is exempt from Section 409A of the Code to become subject to Section 409A of the Code or (ii) cause an Award subject to Section 409A of the Code not to comply with the requirements of Section 409A of the Code. Notwithstanding any other provision of this Plan to the contrary, unless expressly provided otherwise in the Award Agreement, if the right to receive or benefit from an Award under this Plan, either alone or together with payments that a Participant has a right to receive from the Company, would constitute a “parachute payment” (as defined in Section 280G of the Code), all such payments will be reduced to the largest amount that will result in no portion being subject to the excise tax imposed by Section 4999 of the Code.

ARTICLE 15.
AMENDMENT, MODIFICATION AND TERMINATION

15.1.AMENDMENT, MODIFICATION AND TERMINATION. The Board or the Committee may, at any time and from time to time, amend, modify or terminate the Plan without shareholder approval; provided, however, the Board or Committee may condition any other amendment or modification on the approval of shareholders of the Company for any reason, including by reason of such approval being necessary or deemed advisable to satisfy any other tax, securities or other applicable laws, policies or regulations.

15.2.OPTIONS PREVIOUSLY GRANTED. At any time and from time to time, the Committee may amend, modify or terminate any outstanding Award without approval of the Participant; provided, however:

(a)Subject to the terms of the applicable Award Agreement, such amendment, modification or termination shall not, without the Participant’s consent, reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed out or otherwise settled on the date of such amendment or termination (with the per-share value of an Option or Share Appreciation Right for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment or termination over the exercise or base price of such Award); and

(b)No termination, amendment, or modification of the Plan shall adversely affect any Award previously granted under the Plan, without the written consent of the Participant affected thereby. An outstanding Award shall not be deemed to be “adversely affected” by a Plan amendment if such amendment would not reduce or diminish the value of such Award determined as if the Award had been exercised, vested, cashed in or otherwise settled on the date of such amendment (with the per-share value of an Option or Share Appreciation Right for this purpose being calculated as the excess, if any, of the Fair Market Value as of the date of such amendment over the exercise or base price of such Award, and with the understanding that if the exercise or base price of such Awards exceeds such Fair Market Value, then the value of such Award shall be zero and subject to settlement and cancellation for no consideration).

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ARTICLE 16.
GENERAL PROVISIONS

16.1.NO RIGHTS TO AWARDS; NON-UNIFORM DETERMINATIONS. No Participant shall have any claim to be granted any Award under the Plan. Neither the Company nor the Committee is obligated to treat Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Eligible Participants who receive, or are eligible to receive, Awards (whether or not such Eligible Participants are similarly situated).

16.2.NO SHAREHOLDER RIGHTS. No Award gives a Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.

16.3.WITHHOLDING. The Company shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including the Participant’s FICA obligation) required by law to be withheld with respect to any exercise, lapse of restriction or other taxable event arising as a result of the Plan. If Shares are surrendered to the Company to satisfy tax obligations in excess of the minimum tax withholding obligation, such Shares must have been held by the Participant as fully vested shares for such period of time, if any, as necessary to avoid the recognition of an expense under generally accepted accounting principles. The Company shall have the authority to require a Participant to remit cash to the Company in lieu of the surrender of Shares for taxes if the surrender of Shares for such purpose would result in the Company’s recognition of expense under generally accepted accounting principles. With respect to withholding required upon any taxable event under the Plan, the Committee may, at the time the Award is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by withholding from the Award Shares having a Fair Market Value on the date of withholding equal to the minimum amount (and not any greater amount) required to be withheld for tax purposes, all in accordance with such procedures as the Committee establishes.

16.4.NO RIGHT TO CONTINUED SERVICE. Nothing in the Plan, any Award Agreement or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment or status as an officer, director or consultant at any time, nor confer upon any Participant any right to continue as an employee, officer, director or consultant of the Company, whether for the duration of a Participant’s Award or otherwise.

16.5.UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company. This Plan is intended not to be subject to the Employee Retirement Income Security Act of 1974, as amended.

16.6.RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or benefit plan of the Company unless provided otherwise in such other plan.

16.7.REIT STATUS. This Plan shall be interpreted and construed in a manner consistent with the Company’s status as a Real Estate Investment Trust as defined under the Code (“REIT”). No award shall be granted or awarded, and with respect to any award granted under this Plan, such award shall not vest, be exercisable or be settled (i) to the extent that the grant, vesting, exercise or settlement could cause the Participant or any other person to be in violation of the share ownership limit or any other limitation on ownership or transfer prescribed by the Company’s charter, or (ii) if, in the discretion of the Committee, the grant, vesting, exercise or settlement of the award could impair the Company’s status as a REIT.

16.8.EXPENSES. The expenses of administering the Plan shall be borne by the Company.

16.9.TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

16.10.GENDER AND NUMBER. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

16.11.FRACTIONAL SHARES. No fractional Shares shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down.

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16.12.GOVERNMENT AND OTHER REGULATIONS.

(a)Notwithstanding any other provision of the Plan, no Participant who acquires Shares pursuant to the Plan may, during any period of time that such Participant is an affiliate of the Company (within the meaning of the rules and regulations of the Securities and Exchange Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i) pursuant to an effective registration statement under the 1933 Act, which is current and includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated under the 1933 Act.

(b)Notwithstanding any other provision of the Plan, if at any time the Committee shall determine that the registration, listing or qualification of the Shares covered by an Award upon any exchange or under any foreign, federal, state or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Award or the purchase or receipt of Shares thereunder, no Shares may be purchased, delivered or received pursuant to such Award unless and until such registration, listing, qualification, consent or approval shall have been effected or obtained free of any condition not acceptable to the Committee. Any Participant receiving or purchasing Shares pursuant to an Award shall make such representations and agreements and furnish such information as the Committee may request to assure compliance with the foregoing or any other applicable legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to the Committee’s determination that all related requirements have been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state or foreign law or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.

16.13.GOVERNING LAW. To the extent not governed by federal law, the Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Maryland.

16.14.ADDITIONAL PROVISIONS. Each Award Agreement may contain such other terms and conditions as the Committee may determine; provided that such other terms and conditions are not inconsistent with the provisions of the Plan. Notwithstanding the foregoing, any Award Agreement for a resident in any state shall contain such other terms and conditions as are necessary to comply with the laws of such state.

16.15.Addenda. Subject to Section 16.13, the Committee may approve such addenda to the Plan as it may consider necessary or appropriate for the purpose of granting Awards to Participants, which Awards may contain such terms and conditions as the Committee deems necessary or appropriate to accommodate differences in local law, tax policy or custom, which, if so required under applicable laws, may deviate from the terms and conditions set forth in this Plan.

16.16.NO LIMITATIONS ON RIGHTS OF COMPANY. The grant of any Award shall not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume awards, other than under the Plan, to or with respect to any person.

16.17. INDEMNIFICATION. Each person who is or shall have been a member of the Committee, or of the Board, or an officer of the Company to whom authority was delegated in accordance with Article 4 shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability, or expense is a result of his or her own willful misconduct or except as expressly provided by statute. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s charter or bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

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EX-10.4

Exhibit 10.4

FOUR SPRINGS CAPITAL TRUST

2021 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

The Board of Directors of Four Springs Capital Trust (the “Grantor”) has decided to grant to you an option to purchase shares of the common stock of Grantor under the Four Springs Capital Trust 2021 Equity Incentive Plan (the “Plan”). The terms of the grant are set forth in the [Nonqualified]/[Incentive] Stock Option Grant provided to you (the “Grant”). The following provides a summary of the key terms of the Grant; however, you should read the entire Grant, along with the terms of the Plan, to fully understand the Grant.

SUMMARY OF STOCK OPTION GRANT

Grantee:

Date of Grant:

Exercisability/Vesting Schedule:

Exercise Price Per Share:

Total Number of Shares Granted:

Term/Expiration Date:

FOUR SPRINGS CAPITAL TRUST

2021 EQUITY INCENTIVE PLAN

STOCK OPTION GRANT AGREEMENT

This STOCK OPTION GRANT AGREEMENT (this “Agreement”), dated as of , 20 (the “Date of Grant”), is delivered by the Four Springs Capital Trust (the “Grantor”) to (the “Grantee”).

RECITALS

A.       The Four Springs Capital Trust 2021 Equity Incentive Plan (the “Plan”) provides for the grant of options to purchase shares of common stock of Grantor. The Board of Trustees of Grantor (the “Board”) has decided to make a stock option grant as an inducement for Grantee to promote the best interests of Grantor and its stockholders.

B.       The Board is authorized to appoint a committee to administer the Plan. If a committee is appointed, all references in this Agreement to the “Board” shall be deemed to refer to the committee.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

1.Grant of Option. Subject to the terms and conditions set forth in this Agreement and in the Plan, Grantor hereby grants to Grantee a [nonqualified] stock option (the “Option”) to purchase common shares of Grantor (“Shares”) at an exercise price of $ per Share, which represents the fair market value on the Date of Grant. The Option shall become exercisable according to Section 2 below.

2.Exercisability of Option. The Option shall become exercisable on the following dates, if Grantee is employed by, or providing service to, Grantor on the applicable date:

Date Shares for Which the Option is Exercisable

The exercisability of the Option is cumulative, but shall not exceed 100% of the Shares subject to the Option. If the foregoing schedule would produce fractional Shares, the number of Shares for which the Option becomes exercisable shall be rounded down to the nearest whole Share.

3.Term of Option. The Option shall have a term of ten (10) years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.

4.Exercise Procedures.

(a)Subject to the provisions of Sections 2 and 3 above (and to any subsequent process changes pursuant to Section 13(d) below), Grantee may exercise part or all of the exercisable Option by giving the Board written notice of intent to exercise in the manner provided in Section 13(e) of this Agreement, specifying the number of Shares as to which the Option is to be exercised. On the delivery date, Grantee shall pay the exercise price (i) in cash, (ii) with the approval of the Board, by delivering Shares of Grantor that have been previously owned for more than six (6) months, which shall be valued at their fair market value on the date of delivery, or by attestation (on a form prescribed by the Board) to ownership of Shares having a fair market value on the date of exercise equal to the exercise price, or (iii) by such other method as the Board may approve (including, but not limited to, allowing Grantee to effect a cashless exercise as payment of the option price by delivering directly to Grantor newly acquired Shares upon exercise of the Option).

(b)The obligation of Grantor to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Board, including such actions as Grantor counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations. Grantor may require that Grantee (or other person exercising the Option after Grantee’s death) represent that Grantee is purchasing Shares for Grantee’s own account and not with a view to or for sale in connection with any distribution of the Shares, or such other representation as the Board deems appropriate.

(c)All obligations of Grantor under this Agreement shall be subject to the rights of Grantor as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable. Subject to Board approval, Grantee may elect to satisfy any tax withholding obligation of Grantor with respect to the Option by having Shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.

5.Restrictions on Exercise/Transfer.

(a)Except as the Board may otherwise permit pursuant to the Plan, only Grantee may exercise the Option during Grantee’s lifetime and, after Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

(b)The Option or any part thereof shall not be transferable, and no interest therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Subject to the foregoing and the terms of the Plan, the terms of this Agreement shall be binding upon Grantee’s executors, administrators, heirs, transferees, successors and assigns.

(c)Grantor, within the limits of applicable law, shall be entitled to ignore any attempted assignment or alienation or any creditor’s process not permitted under this Section 5.

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6.Grant Subject to Plan Provisions. This Agreement is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and exercise of the Option are subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Board in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the Shares, (c) changes in capitalization of Grantor and (d) other requirements of applicable law. The Board shall have the authority to interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

7.Representations.

(a)Grantee acknowledges receipt of a copy of the Plan.

(b)Grantee represents and warrants that Grantee understands the Federal, state and local income tax consequences of the granting of the Option, the acquisition of rights to exercise the Option with respect to any Shares, the exercise of the Option and purchase of Shares and the subsequent sale or other disposition of any Shares. In addition, Grantee understands that Grantor will be required to withhold Federal, state or local taxes (including social security and Medicare taxes) in respect of any compensation income realized by Grantee as a result of the exercise of the Option, which compensation income generally will equal the excess of the fair market value of any Shares received upon exercise of the Option at the time of exercise over the exercise price of the Option. Grantee agrees that it shall be a condition to Grantor’s obligation to issue or transfer Shares upon exercise of Options that Grantee pay, or make provision satisfactory to Grantor for the payment of, any withholding taxes which Grantor is obligated to collect with respect to the issue or transfer of Options Share upon such exercise, and Grantor may deduct from any payments of any kind otherwise due to Grantee an amount equal to the total Federal, state and local taxes required to be so withheld, or if such payments are inadequate to satisfy such Federal, state and local taxes, or if no such payments are due or to become due to Grantee, then Grantee agrees to provide Grantor with cash funds or make other arrangements satisfactory to Grantor regarding such payment. It is understood that all matters with respect to the total amount of taxes to be withheld in respect of any such compensation income shall be determined by the Board in its sole discretion.

(c)Grantee acknowledges the Options are intended to be exempt from the requirements of Section 409A of the Code, and, to the extent that further guidance is issued under Section 409A of the Code after the date of this Agreement, Grantee hereby authorizes Grantor to make any changes to this Agreement as are necessary to bring this Agreement into compliance with the applicable exemptions under Section 409A of the Code and the Treasury regulations issued thereunder.

8.No Employment or Other Rights. The grant of the Option shall not confer upon Grantee any right to be retained by or in the employ or service of Grantor and shall not interfere in any way with the right of Grantor to terminate Grantee’s employment or service at any time. The right of Grantor to terminate at will Grantee’s employment or service at any time for any reason is specifically reserved.

9.No Stockholder Rights. Neither Grantee, nor any person entitled to exercise Grantee’s rights in the event of Grantee’s death, shall have any of the rights and privileges of a stockholder with respect to the Shares subject to the Option, until Shares have been issued upon the exercise of the Option.

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10.Assignment and Transfers.

(a)Except as the Board may otherwise permit pursuant to the Plan, the Option and Grantee’s rights and interest under this Agreement may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by Grantee, other than by will or the laws of descent and distribution (in which case, such transferee shall succeed to the rights and obligations of Grantee hereunder) and is exercisable during Grantee’s lifetime only by Grantee, except that (i) Grantee may designate in writing a beneficiary to exercise the Option after Grantee’s death (provided the designation has been received by Grantor prior to Grantee’s death) and (ii) Grantee may transfer the Option to any family member (as defined in Rule 701 under the Securities Act of 1933, as amended) subject to the requirement that Grantee will cause any entity included in such definition to convey the Option held by it to another family member prior to the occurrence of any event which would cause such family member to cease to qualify as a family member. If Grantee or anyone claiming under or through Grantee attempts to violate this Section 10, such attempted violation shall be null and void and without effect, and Grantor’s obligation hereunder shall terminate. If at the time of Grantee’s death, the Option has not been fully exercised, Grantee’s estate or any person who acquires the right to exercise the Option by bequest or inheritance or by reason of Grantee’s death may exercise the Option in accordance with and with respect to the number of shares set forth in Section 1 above. The applicable requirements of Section 4 above must be satisfied in full at the time of any exercise.

(b)In the event of any attempt by Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, Grantor may terminate the Option by notice to Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights and protections of Grantor hereunder shall extend to any successors or assigns of Grantor and to Grantor’s parents, subsidiaries, and affiliates. This Agreement may be assigned by Grantor without Grantee’s consent.

11.Adjustments; Reorganization, Reclassification, Consolidation, Merger or Sale.

(a)In the event that, after the date hereof, the outstanding Common Shares shall be increased or decreased or changed into or exchanged for a different number or kind of shares of stock or other securities of Grantor or of another corporation in each such case through reorganization, merger or consolidation, recapitalization, reclassification, stock split, split-up, combination or exchange of shares or declaration of any dividends payable in Common Shares, the Board may, in good faith, appropriately adjust the number of Common Shares (and the option price per share) subject to the unexercised portion of the Option (to the nearest possible full share), and such adjustment shall be effective and binding for all purposes of this Option Agreement and the Plan.

(b)If any capital reorganization or reclassification of the capital stock of Grantor or any consolidation or merger of Grantor with another corporation, or the sale of all or substantially all its assets to another corporation, shall be effected after the date hereof in such a way that holders of Common Shares shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Shares, then Grantee shall thereafter have the right to receive, in lieu of the Common Shares immediately theretofore receivable upon the exercise of the Option, such shares of stock, securities or assets (including cash) as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Shares equal to the number of shares of such stock immediately theretofore so receivable had such reorganization, reclassification, consolidation, merger or sale not taken place.

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(c)In the event that the Board shall determine that any event not specifically provided for in Sections 11(a) and 11(b) affects the Common Shares such that an adjustment is determined by the Board to be appropriate to prevent dilution or enlargement of participants’ rights under the Plan, then the Board shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of shares which may thereafter be issued under the Plan; (ii) the number and kind of shares issued or issuable in respect of outstanding grants under the Plan; and (iii) the exercise price, grant price or purchase price relating to any grants under the Plan or, if deemed appropriate, make provision for a cash payment with respect to any outstanding grants under the Plan.

12.Plan Documents. This Agreement is qualified in its entirety by reference to the provisions of the Plan, and any current or future amendments thereto, which are hereby incorporated herein by reference. Pursuant to the Plan, the Board is authorized to adopt rules and regulations concerning the administration of this Agreement and the Option granted hereunder that are not inconsistent with the Plan as it shall deem appropriate and proper. A copy of the Plan in its present form is available for inspection during business hours by Grantee or the persons entitled to exercise the Option at Grantor’s principal office. Notwithstanding the foregoing, this Agreement shall control in the event of any conflict with any terms of the Plan. Capitalized terms not explicitly defined in this Grant but defined in the Plan will have the same definitions as in the Plan.

13.General Provisions.

(a)This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. If any one or more provisions of this Agreement shall be found to be illegal or unenforceable in any respect, the validity and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

(b)This Agreement and the Plan contain the entire agreement between Grantor and Grantee relating to the Option and the Shares. Except as expressly provided in this Agreement or the Plan with respect to certain actions permitted to be taken by the Board with respect to this Agreement and the terms of the Option, this Agreement may not be amended, modified, changed or waived other than by written instrument signed by the parties hereto.

(c)This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

(d)Grantor may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means or, upon prior written notice to Grantee, adjust the exercise procedures in Section 4 in accordance with the implementation of an electronic system to manage the Plan. Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by Grantor or a third party designated by Grantor.

(e)If Grantee does not sign this Agreement and does not otherwise agree to the terms and conditions of the Options, Grantee will be deemed to have agreed to the terms and conditions of the Options unless Grantee provides Grantor with a written notice to the contrary within thirty (30) days of receipt of this Agreement and related materials.

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IN WITNESS WHEREOF, Grantor has caused its duly authorized officers to execute and attest this Agreement, and Grantee has executed this Agreement, effective as of the Date of Grant.

FOUR SPRINGS CAPITAL TRUST

By:

Name:

Title:

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement. I hereby further agree that all the decisions and determinations of the Board shall be final and binding.

Grantee:

Date:

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FOUR SPRINGS CAPITAL TRUST

2021 EQUITY INCENTIVE PLAN

OPTION EXERCISE FORM

I,             , a participant under the Four Springs Capital Trust 2021 Equity Incentive Plan (the “Plan”) or a person otherwise entitled to exercise the Option, do hereby exercise the right to purchase ___________ Common Shares of Four Springs Capital Trust. pursuant to the Option granted to me         , 20 under the Plan. Enclosed herewith is $_________, an amount equal to the total exercise price for the Common Shares being purchased pursuant to this Option Exercise Form.

Date:
	Print Name:

Send a completed copy of this Option Exercise Form addressing Grantor as noted below:

Four Springs Capital Trust

1901 Main Street

Lake Como, NJ 07719

Attention: Board of Trustees

   Notice of Exercise of Stock Options

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EX-10.5

Exhibit 10.5

FORM OF FOUR SPRINGS CAPITAL TRUST 

LTIP UNIT AWARD AGREEMENT 

(TIME-BASED VESTING)

This LTIP Unit Award Agreement (“Agreement”) made as of [DATE] (the “Award Date”) between Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), its subsidiary, Four Springs Capital Trust Operating Partnership, L.P., a Delaware limited partnership and the entity through which the Company conducts substantially all of its operations (the “Partnership”), and [NAME] (the “Grantee”).

RECITALS

WHEREAS, the Grantee is an employee, officer, trustee or consultant of the Company or one of its Subsidiaries or affiliates who provides services to the Partnership.

WHEREAS, the Board of Trustees of the Company (the “Board”) approved this award of [NUMBER OF UNITS] units of limited partnership interest of the Partnership (this “Award”) pursuant to the Company’s 2021 Equity Incentive Plan (as amended, restated or supplemented from time to time hereafter, the “Plan”), the Second Amended and Restated Agreement of Limited Partnership of the Partnership (as further amended, restated or supplemented from time to time hereafter, the “Partnership Agreement”), and the terms and conditions set forth herein, to provide select leaders and trustees of the Company and its subsidiaries equity stakes in the Company in order to (i) foster an “ownership mentality” and re-align interests with the Company’s shareholders, (ii) promote retention of key members of the management team, and (iii) motivate leaders to effectively manage the Company and continue to deliver strong results. This Award was approved by the Board pursuant to authority delegated to it by the Board as set forth in the Plan and the Partnership Agreement to make grants of interests in the Partnership intended to qualify as “profits interests” under IRS Revenue Procedures 93-27 and 2001-43 (“LTIP Units”), which may, when vested, become exchangeable for shares of Common Units of the Company in accordance with the Partnership Agreement.

NOW, THEREFORE, the Company, the Partnership and the Grantee agree as follows:

1.            Administration. This Award shall be administered by the Board, which has the powers and authority as set forth in the Plan. The Board may from time to time adopt any rules or procedures it deems necessary or desirable for the proper and efficient administration of the Award, consistent with the terms hereof and of the Plan, including delegating any and all functions to a committee appointed by the Board. The Board's determinations and interpretations with respect to the Plan and this Agreement shall be final and binding on all parties. Should there be any conflict between the terms of this Agreement and the Company’s Amended and Restated Declaration of Trust (as further amended, restated or supplemented from time to time hereafter) (“Declaration of Trust”), on the one hand, and the Plan and the Partnership Agreement, on the other hand, the terms of this Agreement and the Declaration of Trust shall prevail. The Grantee shall have no rights with respect to this Agreement (and the Award evidenced hereby) unless he or she shall have accepted this Agreement prior to the close of business on [INSERT DATE] by (a) signing and delivering to the Partnership a copy of this Agreement and (b) unless the Grantee is already a Limited Partner (as defined in the Partnership Agreement), signing, as a Limited Partner, and delivering to the Partnership a counterpart signature page to the Partnership Agreement (attached as Exhibit A).

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2.            Definitions. Capitalized terms used herein without definitions shall have the meanings given to those terms in the Plan. In addition, as used herein:

“Cause” shall mean: (A) the Grantee’s conviction of, plea of nolo contendere to, or written admission of the commission of, a felony (B) any material breach by the Grantee of this Agreement or his or her Employment and Services Agreement; (C) any act by the Grantee involving moral turpitude, fraud or misrepresentation with respect to his or her duties for the Company or its affiliates, which materially and adversely affects the Company; or (D) gross negligence or willful misconduct on the part of the Grantee in the performance of his or her duties as an employee, officer or member of the Company or its affiliates (that in only the case of gross negligence results in a material economic harm to the Company); provided, however, that the Company may not terminate the Grantee's award under clauses (B), (C) or (D) unless the Company first gives the Grantee notice of its intention to terminate and of the grounds for such termination within 90 days of such event, and in the case of a breach set forth in clause (B) above, the Grantee either (X) has not, within 30 days following receipt of such notice, cured such Cause, or (Y) in the event such Cause cannot be cured within such 30-day period, has not taken all reasonable steps to cure such Cause. No termination for Cause shall be effective unless the Board makes a Cause determination after notice to the Grantee and the Grantee has been provided with the opportunity (with counsel of his or her choice) to contest the determination at a meeting of the Board.

“Change in Control” shall have the meaning set forth in the Plan, provided that a Change in Control shall not occur in the case of an Initial Public Offering.

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Shares” means the Company’s common shares, par value $0.001 per share, either currently existing or authorized hereafter.

“Continuous Service” means the continuous service to the Company or any Subsidiary or affiliate, without interruption or termination, in any capacity of employment. Continuous Service shall not be considered interrupted in the case of: (i) any approved leave of absence; (ii) transfers among the Company and any Subsidiary or affiliate, or any successor, in any capacity of employment; or (iii) any change in status as long as the individual remains in the service of the Company and any Subsidiary or affiliate in any capacity of employment. An approved leave of absence shall include sick leave (including, due to any mental or physical disability whether or not such condition rises to the level of a Disability), military leave, or any other authorized personal leave. For purposes of determining Continuous Service, service with the Company includes service, following a Change in Control, with a surviving or successor entity (or its parent entity) that agrees to continue, assume or replace this Award, as contemplated by Section 4(c)(ii).

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“Disability” shall mean the mental or physical incapacity of the Grantee such that (A) he or she qualifies for long-term disability benefits under a Company-sponsored long-term disability policy or (B) the Grantee has been incapable as a result of illness, disease, mental or physical disability, disorder, infirmity, or impairment or similar cause of performing his or her essential duties and responsibilities for any period of one hundred eighty (180) days (whether or not consecutive) in any consecutive three hundred sixty-five (365) day period. Disability shall be determined by an approved medical doctor selected by the Company and the Grantee. If the Company and the Grantee cannot agree on a medical doctor, each party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

“Effective Date” means the close of business on April ___, 2021.

“Employment or Services Agreement” means, as of a particular date, any employment, consulting or similar service agreement, including, without limitation, management continuity agreement, then in effect between the Grantee, on the one hand, and the Company or one of its affiliates, on the other hand, as amended or supplemented through such date.

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

“Fair Market Value” means, as of any given date, the fair market value of a security determined by the Board using any reasonable method and in good faith (such determination will be made in a manner that satisfies Section 409A of the Code and in good-faith as required by Section 422(c)(1) of the Code);

“Good Reason” means the occurrence of any of the following conditions without the Grantee’s written consent, provided that Grantee shall provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence of such condition, upon the notice of which the Company shall have at least thirty (30) days within which to cure such condition, and if the Company fails to cure the condition within such cure period, the Grantee must terminate Continuous Service by sending written notice to the Company within thirty (30) days following the Company's failure to cure: (A) a material reduction of the Grantee’s authority, duties and responsibilities, or the assignment to the Grantee of duties materially inconsistent with the Grantee’s position or positions with the Company; (B) a reduction in the Grantee’s rate of Base Salary; (C) a breach by the Company of any material provision of this Agreement; or (D) a transfer of the place of Continuous Service of more than thirty (30) miles from the Company’s principal executive offices. Notwithstanding anything herein to the contrary, (x) any change of the Grantee’s position with the Company to which the Grantee consents in writing shall not constitute Good Reason and (y) retirement by the Grantee shall not constitute Good Reason.

“Initial Public Offering” means (i) a public offering of primary Common Shares in a firm commitment underwritten offering (other than a public offering pursuant to a registration statement on Form S-8) under the Securities Act in which the Trust receives gross proceeds of not less than $200,000,000, (ii) or the listing of the Trust’s Common Shares on a national securities exchange which public float of the Common Shares constitutes at least fifteen percent (15%) of the issued and outstanding beneficial interests and other equity interests of the Trust on a fully diluted basis as of such listing date or (iii) the merger of the Trust with, or the acquisition of all or substantially all of equity interests of the Trust by, any special purpose acquisition company, in which the Trust receives gross proceeds of not less than $200,000,000, and following which the common stock of the surviving company or acquirer (or any parent thereof) is listed on a national securities exchange.

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“LTIP Units” means units of limited partnership interest of the Partnership designated as “LTIP Units” in the Partnership Agreement awarded pursuant to this Agreement and under the Plan, having the rights, voting powers, restrictions, and limitations as to distributions, qualifications and terms and conditions of redemption set forth in the Partnership Agreement.

“Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, other entity or “group” (as defined in the Exchange Act).

“Qualified Termination” means a termination of the Grantee's employment due to death or Disability.

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

“Unvested LTIP Units” means LTIP Units that have been granted under this Agreement that have not yet vested in accordance with Section 3(b) or 4.

“Vested LTIP Units” means those LTIP Units that have fully vested in accordance with the time-based vesting conditions of Section 3(b) or have vested on an accelerated basis under Section 4.

3.            Award and Vesting of LTIP Units.

(a)            On the terms and conditions set forth in this Agreement as well as the terms and conditions of the Plan, the Grantee is granted as of the Award Date, the number of LTIP Units as set forth above. It is a condition to the effectiveness of this Award that the Grantee execute and deliver a fully executed copy of this Agreement and such other documents that the Company and/or the Partnership reasonably request in order to comply with all applicable legal requirements, including, without limitation, federal and state securities laws.

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(b)            The Unvested LTIP Units shall become Vested LTIP Units in the following amounts and at the following times, provided that the Continuous Service of the Grantee continues through and on the applicable vesting date or the accelerated vesting date provided in Section 4, as applicable:

(i)              sixty-six and 66/100 percent (66.66%) of the LTIP Units shall become Vested LTIP Units on the Grant Date; and

(ii)             sixteen and 67/100 percent (16.67%) of the LTIP Units shall become Vested LTIP Units on the second anniversary of the Grant Date.

(iii)            sixteen and 67/100 percent (16.67%) of the LTIP Units shall become Vested LTIP Units on the third anniversary of the Grant Date

(c)            The Vested LTIP Units may not be sold, transferred, or redeemed for a period of three (3) years after the date upon which such Vested LTIP Units vest in accordance with Section 3(b) or Section 4, provided, however, that upon the written consent of the Board, the Grantee may transfer all or any portion of the Grantee's vested LTIP Units for bona fide estate planning purposes to an immediate family member or the legal representative, estate, trustee or other successor in interest, as applicable, of the Grantee who agrees to the restrictions set forth herein. The Vested LTIP Units may be converted to Common Units of the Partnership upon satisfaction of the requirements set forth in Section 2(C) of Exhibit F of the Partnership Agreement.

(d)            Except as otherwise provided under Section 4, upon termination of Continuous Service before the applicable vesting date, any Unvested LTIP Units shall, without payment of any consideration to the Grantee, automatically and without notice be forfeited and be and become null and void, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such Unvested LTIP Units.

4.            Change in Control or Termination of Grantee's Service Relationship.

(a)            If the Grantee’s Continuous Service terminates prior to the final scheduled vesting date in Section 3(b), the provisions of Sections 4(b) through Section 4(e) shall govern the treatment of the Grantee’s LTIP Units exclusively, unless the Grantee’s Employment or Services Agreement contains provisions that expressly refer to this Section 4(a) and provides that those provisions of the Employment or Services Agreement shall instead govern the treatment of the Grantee’s LTIP Units. In the event an entity of which the Grantee is an employee ceases to be a Subsidiary or affiliate of the Company, such action shall be deemed to be a termination of employment of the Grantee for purposes of this Agreement, unless the Grantee promptly thereafter becomes an employee of the Company, a Subsidiary or any of its affiliates, provided that, the Board, in its sole and absolute discretion, may make provision in such circumstances for lapse of forfeiture restrictions and/or accelerated vesting of some or all of the Grantee’s LTIP Units that have not previously been forfeited, effective immediately prior to such event. If a Change in Control occurs, Section 4(c) shall govern the treatment of the Grantee’s LTIP Units exclusively.

(b)            Qualified Termination. In the event of Grantee’s Qualified Termination, conditioned, except in the event of death, upon the execution and delivery by the Grantee of a customary release of claims and covenant not to engage in competitive activities or solicit employees of the Company or its Subsidiaries or affiliates following termination in form and substance satisfactory to the Company, the Grantee’s Unvested LTIP Units shall become Vested LTIP Units as of the termination of Continuous Service and shall no longer be subject to forfeiture pursuant to Section 3(e).

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(c)            Change in Control.

(i)            If, in connection with the Change in Control, the Grantee’s Continuous Service is terminated by the Company without Cause or by the Grantee with Good Reason, in either case, within 12 months of such Change in Control (the “Performance Period”), then Grantee’s Unvested LTIP Units shall become Vested LTIP Units as of the termination of Continuous Service and shall no longer be subject to forfeiture pursuant to Section 3(d).

(ii)            If, in connection with the Change in Control, no Equivalent Replacement Award (as defined below) is issued or, then Grantee’s Unvested LTIP Units shall become Vested LTIP Units as of the termination of the Award and shall no longer be subject to forfeiture pursuant to Section 3(d). For purposes of this Section 4(c)(ii), an Award shall qualify as an “Equivalent Replacement Award” if, the following conditions are met in the good faith discretion of the Board:

(A)            the replacement award is of the same type as the LTIP Units being replaced, including, without limitation, income tax attributes relating to the extent and timing of recognition of taxable income, gain or loss by the Grantee;

(B)            the replacement award has a value equal to the Fair Market Value of the LTIP Units being replaced as of the effective date of the Change in Control;

(C)            the equity securities issuable upon the conversion, exercise, exchange or redemption of the replacement award, or securities underlying the replacement award, as applicable, are listed on a national stock exchange;

(D)            with respect to the measurement of total return, the compounded total annual return that would have been realized by a shareholder who bought one Common Share on the first day of the Performance Period, reinvested all dividends and other distributions, and liquidated the entire investment on the last day of the Performance Period shall be measured assuming that such shareholder participated in the transaction constituting a Change in Control on the terms applicable to the majority of shareholders and had continued to hold the investment (whether in securities of the Company or the surviving or resulting entity after the Change in Control transaction or in other property received as part of the Change in Control transaction (which in the case of cash shall be deemed reinvested at market rates of return for investments with duration and risk appropriate under the circumstances)), with appropriate adjustments to take into account share dividends, share splits, reverse share splits and the other similar events that occur during the Performance Period both before, upon and after the effective date of the Change in Control transaction;

(E)            the replacement award contains terms relating to vesting (including with respect to the Grantee's Qualified Termination, that are substantially identical to those of the LTIP Units; and

(F)            the other terms and conditions of the replacement award are not less favorable to the Grantee than the terms and conditions of the LTIP Units.

(d)            Notwithstanding the foregoing, in the event any payment to be made hereunder after giving effect to this Section 4 is determined to constitute nonqualified deferred compensation subject to Section 409A of the Code, then, to the extent the Grantee is a specified employee under Section 409A of the Code subject to the six-month delay thereunder, any such payments to be made during the six-month period commencing on the Grantee’s separation from service (as defined in Section 409A of the Code) shall be delayed until the expiration of such six-month period.

(e)            Unless the Grantee’s Employment or Services Agreement provides otherwise, in the event of a termination of the Grantee’s Continuous Service other than a Qualified Termination or a termination simultaneously with, or subsequent to a Change in Control as described in 4(c)(i), all Unvested LTIP Units shall, without payment of any consideration by the Partnership, automatically and without notice terminate, be forfeited and become null and void, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such Unvested LTIP Units.

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5.            Conversions and Distributions. Vested LTIP Units shall be converted to Common Units, as defined in the Partnership Agreement, and subsequently distributed in accordance with Section 2(C) of Exhibit F of the Partnership Agreement.

6. Miscellaneous.

(a)            Amendments; Modifications. This Agreement may be amended or modified only with the consent of the Company and the Partnership acting through the Board; provided that any such amendment or modification materially and adversely affecting the rights of the Grantee hereunder must be consented to by the Grantee to be effective as against him or her; and provided, further, that the Grantee acknowledges that the Plan may be amended or discontinued in accordance with Section 15.1 thereof and that this Agreement may be amended or canceled by the Board, on behalf of the Company and the Partnership, for the purpose of satisfying changes in law or for any other lawful purpose, so long as no such action shall impair the Grantee's rights under this Agreement without the Grantee's written consent. Notwithstanding the foregoing, this Agreement may be amended in writing signed only by the Company and the Partnership to correct any errors or ambiguities in this Agreement and/or to make such changes that do not materially adversely affect the Grantee’s rights hereunder. No promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, with respect to the subject matter hereof, have been made by the parties which are not set forth expressly in this Agreement. This grant shall in no way affect the Grantee’s participation or benefits under any other plan or benefit program maintained or provided by the Company or the Partnership or any of their subsidiaries or affiliates.

(b)            Incorporation of Plan and Board Determinations. The provisions of the Plan and are hereby incorporated by reference as if set forth herein. The Board will make the determinations and certifications required by this Award as promptly as reasonably practicable following the occurrence of the event or events necessitating such determinations or certifications. In the event of a Change in Control, the Board will make such determinations within a period of time that enables the Company to conclude whether LTIP Units become vested or are forfeited prior to the effective date of the Change in Control, which determinations could, for the avoidance of doubt, include good faith assumptions.

(c)            Status of LTIP Units; Plan Matters. This Award constitutes an incentive compensation award under the Plan. Insofar as the Plan has been established as an incentive program of the Company and the Partnership, the LTIP Units are both issued as equity securities of the Partnership and granted as awards under the Plan. The number of Common Shares reserved for issuance under the Plan underlying outstanding awards of LTIP Units will be determined by the Board in light of all applicable circumstances, including calculations made or to be made under Section 3, vesting, capital account allocations and/or balances under the Partnership Agreement, and the exchange ratio in effect between Partnership Units and Common Shares. The Company will have the right, at its option, as set forth in the Partnership Agreement, to issue Common Shares in exchange for units into which the LTIP Units may have been converted pursuant to the Partnership Agreement, subject to certain limitations set forth in the Partnership Agreement, and such Common Shares, if issued, will be issued under the Plan. The Grantee must be eligible to receive the LTIP Units in compliance with applicable federal and state securities laws. The Grantee acknowledges that the Grantee will have no right to approve or disapprove such determination by the Board.

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(d)            Legend. The records of the Partnership evidencing the LTIP Units shall bear an appropriate legend, as determined by the Partnership in its sole discretion, to the effect that such LTIP Units are subject to restrictions as set forth herein, in the Plan and in the Partnership Agreement.

(e)            Compliance With Securities Laws. The Company, the Partnership and the Grantee will make reasonable efforts to comply with all applicable securities laws. In addition, notwithstanding any provision of this Agreement to the contrary, no LTIP Units will become Vested LTIP Units at a time that such vesting or issuance would result in a violation of any such laws.

(f) Grantee Representations; Registration.

(i)            The Grantee hereby represents and warrants that (A) he or she understands that he or she is responsible for consulting his or her own tax advisor with respect to the application of the U.S. federal income tax laws, and the tax laws of any state, local or other taxing jurisdiction to which the Grantee is or by reason of this Award may become subject, to his or her particular situation; (B) the Grantee has not received or relied upon business or tax advice from the Company, the Partnership or any of their respective employees, agents, consultants or advisors, in their capacity as such; (C) the Grantee provides services to the Company, the Partnership or their subsidiaries or affiliates on a regular basis and in such capacity has access to such information, and has such experience of and involvement in the business and operations of the Company, the Partnership and their subsidiaries and affiliates, as the Grantee believes to be necessary and appropriate to make an informed decision to accept this Award; (D) LTIP Units are subject to substantial risks; (E) the Grantee has been furnished with, and has reviewed and understands, information relating to this Award; (F) the Grantee has been afforded the opportunity to obtain such additional information as he or she deemed necessary before accepting this Award; and (G) the Grantee has had an opportunity to ask questions of representatives of the Company, the Partnership, their subsidiaries and affiliates, or persons acting on their behalf, concerning this Award.

(ii)            The Grantee hereby acknowledges that: (A) there is no public market for the LTIP Units or units of limited partnership interest of the Partnership into which Vested LTIP Units may be converted (solely for purposes of this subsection 6(f)(ii), “Conversion Units”) and neither the Partnership nor the Company has any obligation or intention to create such a market; (B) sales of LTIP Units and Conversion Units are subject to restrictions under the Securities Act and applicable state securities laws; (C) because of the restrictions on transfer or assignment of LTIP Units and Conversion Units set forth in the Partnership Agreement and in this Agreement, the Grantee may have to bear the economic risk of his or her ownership of the LTIP Units covered by this Award for an indefinite period of time; (D) Common Shares issued under the Plan in exchange for LTIP Units or Conversion Units, if any, will be covered by a Registration Statement on Form S-8 (or a successor form under applicable rules and regulations of the Securities and Exchange Commission) under the Securities Act, to the extent that the Grantee is eligible to receive such shares under the Plan at the time of such issuance and such Registration Statement is then effective under the Securities Act; and (E) resales of Common Shares issued under the Plan in exchange for LTIP Units or Conversion Units, if any, shall only be made in compliance with all applicable restrictions (including in certain cases “blackout periods” forbidding sales of Company securities) set forth in the then applicable Company employee manual or insider trading policy and in compliance with the registration requirements of the Securities Act or pursuant to an applicable exemption therefrom.

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(g)            Section 83(b) Election. In connection with the issuance of LTIP Units under this Award pursuant to Section 3 hereof the Grantee shall make an election to include the LTIP Units in gross income in the year in which the LTIP Units are issued pursuant to Section 83(b) of the Code substantially in the form attached hereto as Exhibit B, and supply to the Company such other information as the Company is required to maintain or file in accordance with the regulations promulgated thereunder. The Grantee agrees to file such election (or to permit the Partnership to file such election on the Grantee’s behalf) within thirty (30) days after the Award Date with the IRS Service Center where the Grantee files his or her personal income tax returns, to provide a copy of such election to the Partnership and the Company, and to file a copy of such election with the Grantee’s U.S. federal income tax return for the taxable year in which the LTIP Units are issued to the Grantee. So long as the Grantee holds any LTIP Units, the Grantee shall disclose to the Partnership in writing such information as may be reasonably requested with respect to ownership of LTIP Units as the Partnership may deem reasonably necessary to ascertain and to establish compliance with provisions of the Code applicable to the Partnership or to comply with requirements of any other appropriate taxing authority.

(i)            Tax Consequences. The Grantee acknowledges that (i) neither the Company nor the Partnership has made any representations or given any advice with respect to the tax consequences of acquiring, holding, selling or converting LTIP Units or making any tax election (including the election pursuant to Section 83(b) of the Code) with respect to the LTIP Units and (ii) the Grantee is relying upon the advice of his or her own tax advisor in determining such tax consequences.

(j)            Severability. If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not so held invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision not held so invalid, and the rest of such provision, together with all other provisions of this Agreement, shall to the full extent consistent with law continue in full force and effect.

(k)            Governing Law. This Agreement is made under, and will be construed in accordance with, the laws of the State of Delaware, without giving effect to the principles of conflict of laws of such state.

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(l)            No Obligation to Continue Position as an Employee, Consultant or Advisor. Neither the Company, the Partnership nor any subsidiary or affiliate is obligated by or as a result of this Agreement to continue to have the Grantee as an employee, consultant or advisor and this Agreement shall not interfere in any way with the right of the Company, the Partnership or any subsidiary or affiliate to terminate the Grantee’s employment at any time.

(m)            Notices. Any notice to be given to the Company or the Partnership shall be addressed to the Secretary of the Company at its principal place of business and any notice to be given to the Grantee shall be addressed to the Grantee at the Grantee’s address as it appears on the employment records of the Company, or at such other address as the Company or the Grantee may hereafter designate in writing to the other.

(n)            Withholding and Taxes. No later than the date as of which an amount first becomes includible in the gross income of the Grantee for income tax purposes or subject to the Federal Insurance Contributions Act withholding with respect to this Award, the Grantee will pay to the Company, the Partnership or, if appropriate, any of its subsidiaries or affiliates, or make arrangements satisfactory to the Board regarding the payment of, any United States federal, state or local or foreign taxes of any kind required by law to be withheld with respect to such amount; provided, however, that if any LTIP Units or Conversion Units are withheld (or returned), the number of LTIP Units or Conversion Units so withheld (or returned) shall be limited to the number which have a Fair Market Value on the date of withholding equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income. The obligations of the Company and the Partnership under this Agreement will be conditional on such payment or arrangements, and the Company, the Partnership and their subsidiaries and affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Grantee.

(o)            Headings. The headings of paragraphs of this Agreement are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

(p)            Counterparts. This Agreement may be executed in multiple counterparts with the same effect as if each of the signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument.

(q)            Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and any successors to the Company and the Partnership, on the one hand, and any successors to the Grantee, on the other hand, by will or the laws of descent and distribution, but this Agreement shall not otherwise be assignable or otherwise subject to hypothecation by the Grantee.

(r)            Section 409A. This Agreement shall be construed, administered and interpreted in accordance with a good faith interpretation of Section 409A of the Code, to the extent applicable. Any provision of this Agreement that is inconsistent with applicable provisions of Section 409A of the Code, or that may result in penalties under Section 409A of the Code, shall be amended, with the reasonable cooperation of the Grantee and the Company, in the least restrictive manner necessary to (i) exclude the applicable payment or benefit under this Agreement from the definition of deferred compensation within the meaning of such Section 409A or (ii) comply with the provisions of Section 409A, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions, in each case without diminution in the value of the benefits granted hereby to the Grantee. Notwithstanding anything herein to the contrary, in the event the amounts payable under this Agreement are determined to constitute nonqualified deferred compensation subject to Section 409A of the Code, then, to the extent the Grantee is a specified employee under Section 409A of the Code subject to the six-month delay thereunder, any such vesting or related payments to be made during the six-month period commencing on the Grantee's separation from service (as defined in Section 409A of the Code) shall be delayed until the expiration of such six-month period.

(s)            Complete Agreement. This Agreement (together with those agreements and documents expressly referred to herein, for the purposes referred to herein) embody the complete and entire agreement and understanding between the parties with respect to the subject matter hereof, and supersede any and all prior promises, assurances, commitments, agreements, undertakings or representations, whether oral, written, electronic or otherwise, and whether express or implied, which may relate to the subject matter hereof in any way.

[Remainder of page left intentionally blank]

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IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to be executed as of this ___ day of _____________, 2021.

FOUR SPRINGS CAPITAL TRUST, INC., a Maryland Real Estate Investment Trust

By:

Name:

Title:

FOUR SPRINGS CAPITAL TRUST OPERATING PARTNERSHIP, L.P.,

a Delaware limited partnership

By:

Name:

Title:

GRANTEE

[Name]

EXHIBIT A

FORM OF LIMITED PARTNER SIGNATURE PAGE

The Grantee, desiring to become one of the within named Limited Partners of Four Springs Capital Trust Operating Partnership, L.P., hereby accepts all of the terms and conditions of and becomes a party to, the Second Amended and Restated Agreement of Limited Partnership, dated as of November 20, 2020, of Four Springs Capital Trust Operating Partnership, L.P., as further amended, restated or supplemented from time to time (the “Partnership Agreement”). The Grantee agrees that this signature page may be attached to any counterpart of the Partnership Agreement

Signature Line for Limited Partner:

Name:

Date:

Address of Limited Partner:

EXHIBIT B

ELECTION TO INCLUDE IN GROSS INCOME IN YEAR OF TRANSFER OF PROPERTY PURSUANT TO SECTION 83(b) OF THE INTERNAL REVENUE CODE

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, Treasury Regulations Section 1.83-2 promulgated thereunder, and Rev. Proc. 2012-29, 2012-28 IRB, 06/26/2012, to include in gross income as compensation for services the excess (if any) of the fair market value of the property described below over the amount paid for such property.

1.            The name, address and taxpayer identification number of the undersigned are:

Name: [NAME] (the “Taxpayer”)

Address:

Social Security No./Taxpayer Identification No.:                        -      -    

Taxable Year: Calendar Year [ ]

2.             Description of property with respect to which the election is being made: LTIP Units in Four Springs Capital Trust Operating Partnership, L.P. (the “Partnership”).

3.            The date on which the LTIP Units were issued:_____________

4.            Nature of restrictions to which the LTIP Units are subject:

(a)            Until a period of three years after the LTIP Units vest, the Taxpayer may not transfer in any manner any portion of the LTIP Units without the consent of the Partnership.

(b)            The Taxpayer’s LTIP Units are subject to forfeiture until they vest in accordance with the provisions in the applicable Award Agreement and Certificate of Designation for the LTIP Units.

5.            The Fair Market Value at time of issue (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the LTIP Units with respect to which this election is being made was $0.001 per LTIP Unit.

6.            The amount paid by the Taxpayer for the LTIP Units was $0.001 per LTIP Unit.

7.            The amount to include in gross income is $0.001.

The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred. A copy of this statement has been furnished to the Partnership and Four Springs Capital Trust.

Dated:

Name:

EX-10.6

Exhibit 10.6

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN 

FORM OF NONQUALIFIED OPTION AGREEMENT

This Nonqualified Option Agreement (the “Agreement”) is between Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), and James S. Vaccaro (the “Participant”), pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”). All capitalized terms used in this Agreement shall have the meaning ascribed to such terms in the Plan unless otherwise defined herein. The Company and the Participant agree as follows:

1.            Grant of Nonqualified Options. The terms and conditions of the Nonqualified Option Award set forth in this Agreement and the terms and conditions of the Plan are incorporated into and made a part of this Agreement. The Nonqualified Option is not intended to be an incentive stock option within the meaning of Section 422 of the Code.

Name of Participant:	James S. Vaccaro
Number of Shares subject to Option:	Five Thousand (5,000)
Exercise Price per Share:	$0.001
Grant Date:	March 31, 2014
Expiration Date:	þ 10 years after Grant Date
Vesting Schedule:	The Nonqualified Option granted under this Agreement shall vest on the following dates as follows (each a “Vesting Date”): ·    33 1/3% shall vest on the first anniversary of the Grant Date; ·    33 1/3% shall vest on the second anniversary of the Grant Date; and ·    33 1/3% shall vest on the third anniversary of the Grant Date.

2.            Time of Exercise of Nonqualified Option. Until the Nonqualified Option expires or terminates as provided in this Agreement, the Participant may exercise the Nonqualified Option from time to time to purchase whole Shares as to which the Nonqualified Option is exercisable. The Nonqualified Option becomes exercisable, to the extent vested, on the Vesting Dates as set forth in the Vesting Schedule in Section 1 of this Agreement.

3.            Termination of Continuous Status as a Participant

(a)            General Rule. Except as provided in this Section 3, the Nonqualified Option may not be exercised unless at the time of exercise the Participant is in Continuous Status as a Participant.

(b)            Termination of Continuous Status as a Participant.

(i)            In the event of termination of the Participant’s Continuous Status as a Participant for any reason other than Cause, the Participant shall have the right to exercise the Nonqualified Option at any time within 90 days following such termination to the extent the Participant was entitled to exercise such Nonqualified Option on the date of such termination of the Participant’s Continuous Status as a Participant.

(ii)            In the event of termination of the Participant’s Continuous Status as a Participant for Cause, all outstanding Shares subject to the Nonqualified Option shall be forfeited as of date of the determination by the Board or Committee that Cause to terminate the Participant exists.

(c)            Failure to Exercise Nonqualified Option. To the extent that following termination of Continuous Status as a Participant, the Participant does not exercise the Nonqualified Option within the applicable post-employment periods described above in this Section 3, all rights to purchase Shares pursuant to the Nonqualified Option cease and terminate as of the date of expiration of the applicable post-employment period for exercise, and the Participant shall have no rights or interest with respect to such Nonqualified Option following such expiration date.

(d)            Change in Control. Upon a Change in Control, the Nonqualified Option will automatically become One Hundred Percent (100%) vested and exercisable no later than immediately prior to such Change in Control.

4.            Method of Exercise of Nonqualified Option. Unless otherwise authorized by the Committee or its authorized designee, the Nonqualified Option may only be exercised by using the exercise notice attached to this Agreement as Exhibit A by:

(a)            Cash;

(b)            Check payable to the Company; or

(c)            A payment of such other lawful consideration as the Committee may determine.

5.            Securities Laws Restrictions and Other Restrictions on Transfer of Shares. The Participant represents and warrants that if and when the Participant exercises the Nonqualified Option, the Participant shall purchase Shares only for the Participant’s own account and not on behalf of any others. The Participant understands and acknowledges that federal and state securities laws govern and restrict the Participant’s right to offer, sell or otherwise dispose of any Shares unless the Participant’s offer, sale or other disposition thereof is registered or qualified under the 1933 Act and applicable state securities laws, or in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. The Participant agrees that the Participant shall not offer, sell or otherwise dispose of any Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the 1933 Act, the rules and regulations promulgated thereunder or any other state or federal law. The Participant further understands that the certificates for any Shares the Participant purchases shall bear such legends as the Company deems necessary or desirable in connection with the 1933 Act or other rules, regulations or laws.

6.            Nontransferability. Except as provided in this Section 6, no right or interest of the Participant in the Nonqualified Option may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company. During a Participant’s lifetime, the Nonqualified Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative. The Nonqualified Option is assignable and transferable by the Participant by will and pursuant to the laws of descent and distribution, provided, however, that any such assignment or transfer is permitted under any agreement between the Company and the Participant.

7.            No Rights to Awards; Non-Uniform Determinations. The Participant shall not have any claim to be granted any Nonqualified Option under the Plan. Neither the Company nor the Committee is obligated to treat Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Participants who receive, or are eligible to receive, Nonqualified Options (whether or not such Participants are similarly situated).

8.            No Right to Continued Status as a Participant. Nothing in the Plan, this Agreement or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment or status as an officer, director or consultant at any time, nor confer upon the Participant any right to continue as an employee, officer, director or consultant of the Company, whether for the duration of the Participant’s Nonqualified Option or otherwise.

9.            Notices.

(i)            Notices to the Company. Notices intended for the Company shall be deemed validly given only if delivered in person to, or duly sent, postage and fees prepaid, by registered mail or national courier service addressed to the Company at its principal office and to the attention of the [Chief Financial Officer] or another person as designated by the Committee, or to such other address or officer as the Company or its successors may hereafter designate by written notice.

(ii)            Notice to the Participant. Notices intended for the Participant (or any transferee of the Participant) shall be deemed validly given only if delivered in person or duly sent, postage and fees prepaid, by mail or national courier service to the last known address of the Participant (or such transferee) as it appears on the records of the Company or to such other address as the Participant (or such transferee) shall designate by written notice.

(iii)            General. Notices under this Agreement must be in writing. Notices may be sent by nationally or internationally recognized overnight couriers (UPS, Fedex, DHL or other commercial delivery service). Notices are effective when actually delivered or, if mailed (A) by the United States Postal Service, three days after deposit into the United States mail by registered or certified mail, postage prepaid or (B) by a nationally or internationally recognized overnight courier, the next business day after deposit if within the United States, or the second business day after deposit, if not within the United States.

10.          No Shareholder Rights. This Nonqualified Option does not give the Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Nonqualified Option.

11.          Other Agreements. The Participant hereby voluntarily agrees to sign any shareholder’s agreement of the Company which applies to similarly-situated stockholders or to Participants under the Plan or any similar agreement as prescribed by the Committee and in the form approved by the Committee in its sole discretion. Participant hereby expressly acknowledges that the Nonqualified Option has been granted to Participant conditioned upon Participant’s agreement and actual execution of documents in accordance with the immediately preceding sentence and upon Participant’s agreement that any transferee of Shares that have been acquired by the Participant pursuant to the Nonqualified Option shall be subject to the terms of the Plan and this Agreement, including without limitation this Section 11, as if such transferee was or is the Participant. Accordingly, if the Participant (or transferee of Shares, as the case may be) does not sign the shareholder’s agreement of the Company which applies to similarly-situated stockholders or other documents, all of the Shares subject to any outstanding Nonqualified Option and all of the Shares granted pursuant to any Nonqualified Option shall be forfeited hereby.

12.          Amendments. This Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Participant. Notwithstanding the foregoing or Section 15.1 of the Plan, neither the requirement that the Participant (or a transferee of Shares) execute any shareholders agreement of the Company which applies to similarly-situated stockholders or similar agreement pursuant to Section 11 of this Agreement, nor the actual execution of any such agreement shall be considered to adversely affect the Nonqualified Option, even if such agreement contains provisions which are more restrictive than the Plan or this Agreement.

13.          Governing Law. To the extent not governed by federal law, this Agreement shall be construed in accordance with and governed by the laws of the State of Maryland.

14.          Complete Agreement. This Agreement constitutes the entire agreement between the Participant and the Company, both oral and written concerning the matters addressed in this Agreement, and all prior agreements or representations concerning the matters addressed in this Agreement, whether written or oral, express or implied, are terminated and of no further effect. In the event of any dispute or disagreement as to the interpretation of the Plan or this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising or related to the Plan o this Agreement, the decision of the Committee shall be final and binding upon all persons.

15.          Severability. If any one or more of the provisions contained in this Agreement is invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

By executing this Agreement, the Participant agrees to be bound by all of the terms and conditions of the Plan. In addition, the Participant recognizes and agrees that all determinations, interpretations, or other actions respecting the Plan and this Agreement will be made by the Committee or any authorized designee, and shall be final, conclusive and binding on all parties.

fOUR SPRINGS CAPITAL TRUST
By:	/s/ William P. Dioguardi
	Name: William P. Dioguardi
	Title: Chief Executive Officer

I agree to the terms of this Agreement and the Plan.

By:	/s/ James S. Vaccaro
Name: James S. Vaccaro

Exhibit A 

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN 

Nonqualified Option Exercise Notice

Four Springs Capital Trust 

1901 Main Street
Lake Como, NJ 07719

Subject to acceptance by the Committee, effective as of today, _____________, 20___, this constitutes notice under my Nonqualified Option referenced below that I elect to purchase the number of shares for the price set forth below. I hereby elect to exercise my Nonqualified Option. I represent and warrant that I am buying the shares for investment purposes only and without any intention of selling of distributing them. All capitalized terms used herein shall have the meaning ascribed to such terms in the Plan or applicable Award Agreement unless otherwise defined herein.

Type of Option:

Grant Date:

Number of shares as to which the option is exercised:

Exercise Price:

Total Exercise Price:

¨   Cash ¨   Check ¨   Promissory Note ¨   Other Permitted Method: 

By this exercise, I agree (i) to provide such other documents as Four Springs Capital Trust (the “Company”) may require pursuant to the Company’s 2014 Equity Incentive Plan, and (ii) to provide for the payment by me to you (in the manner designated by you) of the withholding obligation, if any, relating to the exercise of this Nonqualified Option.

	Accepted by:
Participant:	Four Springs Capital Trust
By:	By:

Print Name:  Name: 

Address:                         Title: 

EX-10.7

Exhibit 10.7

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN

FORM OF NONQUALIFIED OPTION AGREEMENT

This Nonqualified Option Agreement (the “Agreement”) is between Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), and Stephen R. Petersen (the “Participant”), pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”). All capitalized terms used in this Agreement shall have the meaning ascribed to such terms in the Plan unless otherwise defined herein. The Company and the Participant agree as follows:

1.            Grant of Nonqualified Options. The terms and conditions of the Nonqualified Option Award set forth in this Agreement and the terms and conditions of the Plan are incorporated into and made a part of this Agreement. The Nonqualified Option is not intended to be an incentive stock option within the meaning of Section 422 of the Code.

Name of Participant:	Stephen R. Petersen
Number of Shares subject to Option:	Five Thousand (5,000)
Exercise Price per Share:	$0.001
Grant Date:	March 31, 2014
Expiration Date:	þ 10 years after Grant Date
Vesting Schedule:	The Nonqualified Option granted under this Agreement shall vest on the following dates as follows (each a “Vesting Date”):
	·	33 1/3% shall vest on the first anniversary of the Grant Date;
	·	33 1/3% shall vest on the second anniversary of the Grant Date; and
	·	33 1/3% shall vest on the third anniversary of the Grant Date.

2.             Time of Exercise of Nonqualified Option. Until the Nonqualified Option expires or terminates as provided in this Agreement, the Participant may exercise the Nonqualified Option from time to time to purchase whole Shares as to which the Nonqualified Option is exercisable. The Nonqualified Option becomes exercisable, to the extent vested, on the Vesting Dates as set forth in the Vesting Schedule in Section 1 of this Agreement.

3.             Termination of Continuous Status as a Participant

(a)           General Rule. Except as provided in this Section 3, the Nonqualified Option may not be exercised unless at the time of exercise the Participant is in Continuous Status as a Participant.

(b)            Termination of Continuous Status as a Participant.

(i)            In the event of termination of the Participant’s Continuous Status as a Participant for any reason other than Cause, the Participant shall have the right to exercise the Nonqualified Option at any time within 90 days following such termination to the extent the Participant was entitled to exercise such Nonqualified Option on the date of such termination of the Participant’s Continuous Status as a Participant.

(ii)            In the event of termination of the Participant’s Continuous Status as a Participant for Cause, all outstanding Shares subject to the Nonqualified Option shall be forfeited as of date of the determination by the Board or Committee that Cause to terminate the Participant exists.

(c)            Failure to Exercise Nonqualified Option. To the extent that following termination of Continuous Status as a Participant, the Participant does not exercise the Nonqualified Option within the applicable post-employment periods described above in this Section 3, all rights to purchase Shares pursuant to the Nonqualified Option cease and terminate as of the date of expiration of the applicable post-employment period for exercise, and the Participant shall have no rights or interest with respect to such Nonqualified Option following such expiration date.

(d)            Change in Control. Upon a Change in Control, the Nonqualified Option will automatically become One Hundred Percent (100%) vested and exercisable no later than immediately prior to such Change in Control.

4.            Method of Exercise of Nonqualified Option. Unless otherwise authorized by the Committee or its authorized designee, the Nonqualified Option may only be exercised by using the exercise notice attached to this Agreement as Exhibit A by:

(a)            Cash;

(b)            Check payable to the Company; or

(c)            A payment of such other lawful consideration as the Committee may determine.

5.            Securities Laws Restrictions and Other Restrictions on Transfer of Shares. The Participant represents and warrants that if and when the Participant exercises the Nonqualified Option, the Participant shall purchase Shares only for the Participant’s own account and not on behalf of any others. The Participant understands and acknowledges that federal and state securities laws govern and restrict the Participant’s right to offer, sell or otherwise dispose of any Shares unless the Participant’s offer, sale or other disposition thereof is registered or qualified under the 1933 Act and applicable state securities laws, or in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. The Participant agrees that the Participant shall not offer, sell or otherwise dispose of any Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the 1933 Act, the rules and regulations promulgated thereunder or any other state or federal law. The Participant further understands that the certificates for any Shares the Participant purchases shall bear such legends as the Company deems necessary or desirable in connection with the 1933 Act or other rules, regulations or laws.

6.             Nontransferability. Except as provided in this Section 6, no right or interest of the Participant in the Nonqualified Option may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company. During a Participant’s lifetime, the Nonqualified Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative. The Nonqualified Option is assignable and transferable by the Participant by will and pursuant to the laws of descent and distribution, provided, however, that any such assignment or transfer is permitted under any agreement between the Company and the Participant.

7.             No Rights to Awards; Non-Uniform Determinations. The Participant shall not have any claim to be granted any Nonqualified Option under the Plan. Neither the Company nor the Committee is obligated to treat Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Participants who receive, or are eligible to receive, Nonqualified Options (whether or not such Participants are similarly situated).

8.             No Right to Continued Status as a Participant. Nothing in the Plan, this Agreement or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment or status as an officer, director or consultant at any time, nor confer upon the Participant any right to continue as an employee, officer, director or consultant of the Company, whether for the duration of the Participant’s Nonqualified Option or otherwise.

9.             Notices.

(i)            Notices to the Company. Notices intended for the Company shall be deemed validly given only if delivered in person to, or duly sent, postage and fees prepaid, by registered mail or national courier service addressed to the Company at its principal office and to the attention of the [Chief Financial Officer] or another person as designated by the Committee, or to such other address or officer as the Company or its successors may hereafter designate by written notice.

(ii)            Notice to the Participant. Notices intended for the Participant (or any transferee of the Participant) shall be deemed validly given only if delivered in person or duly sent, postage and fees prepaid, by mail or national courier service to the last known address of the Participant (or such transferee) as it appears on the records of the Company or to such other address as the Participant (or such transferee) shall designate by written notice.

(iii)            General. Notices under this Agreement must be in writing. Notices may be sent by nationally or internationally recognized overnight couriers (UPS, Fedex, DHL or other commercial delivery service). Notices are effective when actually delivered or, if mailed (A) by the United States Postal Service, three days after deposit into the United States mail by registered or certified mail, postage prepaid or (B) by a nationally or internationally recognized overnight courier, the next business day after deposit if within the United States, or the second business day after deposit, if not within the United States.

10.          No Shareholder Rights. This Nonqualified Option does not give the Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Nonqualified Option.

11.          Other Agreements. The Participant hereby voluntarily agrees to sign any shareholder’s agreement of the Company which applies to similarly-situated stockholders or to Participants under the Plan or any similar agreement as prescribed by the Committee and in the form approved by the Committee in its sole discretion. Participant hereby expressly acknowledges that the Nonqualified Option has been granted to Participant conditioned upon Participant’s agreement and actual execution of documents in accordance with the immediately preceding sentence and upon Participant’s agreement that any transferee of Shares that have been acquired by the Participant pursuant to the Nonqualified Option shall be subject to the terms of the Plan and this Agreement, including without limitation this Section 11, as if such transferee was or is the Participant. Accordingly, if the Participant (or transferee of Shares, as the case may be) does not sign the shareholder’s agreement of the Company which applies to similarly-situated stockholders or other documents, all of the Shares subject to any outstanding Nonqualified Option and all of the Shares granted pursuant to any Nonqualified Option shall be forfeited hereby.

12.          Amendments. This Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Participant. Notwithstanding the foregoing or Section 15.1 of the Plan, neither the requirement that the Participant (or a transferee of Shares) execute any shareholders agreement of the Company which applies to similarly-situated stockholders or similar agreement pursuant to Section 11 of this Agreement, nor the actual execution of any such agreement shall be considered to adversely affect the Nonqualified Option, even if such agreement contains provisions which are more restrictive than the Plan or this Agreement.

13.          Governing Law. To the extent not governed by federal law, this Agreement shall be construed in accordance with and governed by the laws of the State of Maryland.

14.          Complete Agreement. This Agreement constitutes the entire agreement between the Participant and the Company, both oral and written concerning the matters addressed in this Agreement, and all prior agreements or representations concerning the matters addressed in this Agreement, whether written or oral, express or implied, are terminated and of no further effect. In the event of any dispute or disagreement as to the interpretation of the Plan or this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising or related to the Plan o this Agreement, the decision of the Committee shall be final and binding upon all persons.

15.          Severability. If any one or more of the provisions contained in this Agreement is invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

By executing this Agreement, the Participant agrees to be bound by all of the terms and conditions of the Plan. In addition, the Participant recognizes and agrees that all determinations, interpretations, or other actions respecting the Plan and this Agreement will be made by the Committee or any authorized designee, and shall be final, conclusive and binding on all parties.

fOUR SPRINGS CAPITAL TRUST
By:	/s/ William P. Dioguardi
	Name: William P. Dioguardi
	Title: Chief Executive Officer

I agree to the terms of this Agreement and the Plan.

By: /s/ Stephen R. Peterson

Name: Stephen R. Petersen

Exhibit A

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN

Nonqualified Option Exercise Notice

Four Springs Capital Trust

1901 Main Street
Lake Como, NJ 07719

Subject to acceptance by the Committee, effective as of today, _____________, 20___, this constitutes notice under my Nonqualified Option referenced below that I elect to purchase the number of shares for the price set forth below. I hereby elect to exercise my Nonqualified Option. I represent and warrant that I am buying the shares for investment purposes only and without any intention of selling of distributing them. All capitalized terms used herein shall have the meaning ascribed to such terms in the Plan or applicable Award Agreement unless otherwise defined herein.

Type of Option:

Grant Date:

Number of shares as to which the option is exercised:

Exercise Price:

Total Exercise Price:

¨    Cash ¨    Check ¨    Promissory Note ¨    Other Permitted Method:

By this exercise, I agree (i) to provide such other documents as Four Springs Capital Trust (the “Company”) may require pursuant to the Company’s 2014 Equity Incentive Plan, and (ii) to provide for the payment by me to you (in the manner designated by you) of the withholding obligation, if any, relating to the exercise of this Nonqualified Option.

	Accepted by:
Participant:	Four Springs Capital Trust

By: By:

Print Name: Name:

Address: Title:

EX-10.8

Exhibit 10.8

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN
FORM OF NONQUALIFIED OPTION AGREEMENT

This Nonqualified Option Agreement (the “Agreement”) is between Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), and James S. Vaccaro (the “Participant”), pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”). All capitalized terms used in this Agreement shall have the meaning ascribed to such terms in the Plan unless otherwise defined herein. The Company and the Participant agree as follows:

1. Grant of Nonqualified Options. The terms and conditions of the Nonqualified Option Award set forth in this Agreement and the terms and conditions of the Plan are incorporated into and made a part of this Agreement. The Nonqualified Option is not intended to be an incentive stock option within the meaning of Section 422 of the Code.

Name of Participant:	James S. Vaccaro
Number of Shares subject to Option:	Five Thousand (5,000)
Exercise Price per Share:	$0.001
Grant Date:	September 17, 2015
Expiration Date:	x 10 years after Grant Date
Vesting Schedule:	The Nonqualified Option granted under this Agreement shall vest on the following dates as follows (each a “Vesting Date”): · 33 1/3% shall vest on March 31, 2016; · 33 1/3% shall vest on March 31, 2017; and · 33 1/3% shall vest on March 31, 2018.

2. Time of Exercise of Nonqualified Option. Until the Nonqualified Option expires or terminates as provided in this Agreement, the Participant may exercise the Nonqualified Option from time to time to purchase whole Shares as to which the Nonqualified Option is exercisable. The Nonqualified Option becomes exercisable, to the extent vested, on the Vesting Dates as set forth in the Vesting Schedule in Section 1 of this Agreement.

3. Termination of Continuous Status as a Participant.

(a) General Rule. Except as provided in this Section 3, the Nonqualified Option may not be exercised unless at the time of exercise the Participant is in Continuous Status as a Participant.

(b) Termination of Continuous Status as a Participant.

(i) In the event of termination of the Participant’s Continuous Status as a Participant for any reason other than Cause, the Participant shall have the right to exercise the Nonqualified Option at any time within 90 days following such termination to the extent the Participant was entitled to exercise such Nonqualified Option on the date of such termination of the Participant’s Continuous Status as a Participant.

(ii) In the event of termination of the Participant’s Continuous Status as a Participant for Cause, all outstanding Shares subject to the Nonqualified Option shall be forfeited as of date of the determination by the Board or Committee that Cause to terminate the Participant exists.

(c) Failure to Exercise Nonqualified Option. To the extent that following termination of Continuous Status as a Participant, the Participant does not exercise the Nonqualified Option within the applicable post-employment periods described above in this Section 3, all rights to purchase Shares pursuant to the Nonqualified Option cease and terminate as of the date of expiration of the applicable post-employment period for exercise, and the Participant shall have no rights or interest with respect to such Nonqualified Option following such expiration date.

(d) Change in Control. Upon a Change in Control, the Nonqualified Option will automatically become One Hundred Percent (100%) vested and exercisable no later than immediately prior to such Change in Control.

4. Method of Exercise of Nonqualified Option. Unless otherwise authorized by the Committee or its authorized designee, the Nonqualified Option may only be exercised by using the exercise notice attached to this Agreement as Exhibit A by:

(a) Cash;

(b) Check payable to the Company; or

(c) A payment of such other lawful consideration as the Committee may determine.

5. Securities Laws Restrictions and Other Restrictions on Transfer of Shares. The Participant represents and warrants that if and when the Participant exercises the Nonqualified Option, the Participant shall purchase Shares only for the Participant’s own account and not on behalf of any others. The Participant understands and acknowledges that federal and state securities laws govern and restrict the Participant’s right to offer, sell or otherwise dispose of any Shares unless the Participant’s offer, sale or other disposition thereof is registered or qualified under the 1933 Act and applicable state securities laws, or in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. The Participant agrees that the Participant shall not offer, sell or otherwise dispose of any Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the 1933 Act, the rules and regulations promulgated thereunder or any other state or federal law. The Participant further understands that the certificates for any Shares the Participant purchases shall bear such legends as the Company deems necessary or desirable in connection with the 1933 Act or other rules, regulations or laws.

2

6. Nontransferability. Except as provided in this Section 6, no right or interest of the Participant in the Nonqualified Option may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company. During a Participant’s lifetime, the Nonqualified Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative. The Nonqualified Option is assignable and transferable by the Participant by will and pursuant to the laws of descent and distribution, provided, however, that any such assignment or transfer is permitted under any agreement between the Company and the Participant.

7. No Rights to Awards; Non-Uniform Determinations. The Participant shall not have any claim to be granted any Nonqualified Option under the Plan. Neither the Company nor the Committee is obligated to treat Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Participants who receive, or are eligible to receive, Nonqualified Options (whether or not such Participants are similarly situated).

8. No Right to Continued Status as a Participant. Nothing in the Plan, this Agreement or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment or status as an officer, director or consultant at any time, nor confer upon the Participant any right to continue as an employee, officer, director or consultant of the Company, whether for the duration of the Participant’s Nonqualified Option or otherwise.

9. Notices.

(i) Notices to the Company. Notices intended for the Company shall be deemed validly given only if delivered in person to, or duly sent, postage and fees prepaid, by registered mail or national courier service addressed to the Company at its principal office and to the attention of the [Chief Financial Officer] or another person as designated by the Committee, or to such other address or officer as the Company or its successors may hereafter designate by written notice.

(ii) Notice to the Participant. Notices intended for the Participant (or any transferee of the Participant) shall be deemed validly given only if delivered in person or duly sent, postage and fees prepaid, by mail or national courier service to the last known address of the Participant (or such transferee) as it appears on the records of the Company or to such other address as the Participant (or such transferee) shall designate by written notice.

(iii) General. Notices under this Agreement must be in writing. Notices may be sent by nationally or internationally recognized overnight couriers (UPS, Fedex, DHL or other commercial delivery service). Notices are effective when actually delivered or, if mailed (A) by the United States Postal Service, three days after deposit into the United States mail by registered or certified mail, postage prepaid or (B) by a nationally or internationally recognized overnight courier, the next business day after deposit if within the United States, or the second business day after deposit, if not within the United States.

3

10. No Shareholder Rights. This Nonqualified Option does not give the Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Nonqualified Option.

11. Other Agreements. The Participant hereby voluntarily agrees to sign any shareholder’s agreement of the Company which applies to similarly-situated stockholders or to Participants under the Plan or any similar agreement as prescribed by the Committee and in the form approved by the Committee in its sole discretion. Participant hereby expressly acknowledges that the Nonqualified Option has been granted to Participant conditioned upon Participant’s agreement and actual execution of documents in accordance with the immediately preceding sentence and upon Participant’s agreement that any transferee of Shares that have been acquired by the Participant pursuant to the Nonqualified Option shall be subject to the terms of the Plan and this Agreement, including without limitation this Section 11, as if such transferee was or is the Participant. Accordingly, if the Participant (or transferee of Shares, as the case may be) does not sign the shareholder’s agreement of the Company which applies to similarly-situated stockholders or other documents, all of the Shares subject to any outstanding Nonqualified Option and all of the Shares granted pursuant to any Nonqualified Option shall be forfeited hereby.

12. Amendments. This Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Participant. Notwithstanding the foregoing or Section 15.1 of the Plan, neither the requirement that the Participant (or a transferee of Shares) execute any shareholders agreement of the Company which applies to similarly-situated stockholders or similar agreement pursuant to Section 11 of this Agreement, nor the actual execution of any such agreement shall be considered to adversely affect the Nonqualified Option, even if such agreement contains provisions which are more restrictive than the Plan or this Agreement.

13. Governing Law. To the extent not governed by federal law, this Agreement shall be construed in accordance with and governed by the laws of the State of Maryland.

14. Complete Agreement. This Agreement constitutes the entire agreement between the Participant and the Company, both oral and written concerning the matters addressed in this Agreement, and all prior agreements or representations concerning the matters addressed in this Agreement, whether written or oral, express or implied, are terminated and of no further effect. In the event of any dispute or disagreement as to the interpretation of the Plan or this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising or related to the Plan o this Agreement, the decision of the Committee shall be final and binding upon all persons.

15. Severability. If any one or more of the provisions contained in this Agreement is invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

4

By executing this Agreement, the Participant agrees to be bound by all of the terms and conditions of the Plan. In addition, the Participant recognizes and agrees that all determinations, interpretations, or other actions respecting the Plan and this Agreement will be made by the Committee or any authorized designee, and shall be final, conclusive and binding on all parties.

FOUR SPRINGS CAPITAL TRUST
By:	/s/ William P. Dioguardi
	Name: William P. Dioguardi
	Title: Chief Executive Officer

I agree to the terms of this Agreement and the Plan.  

By:	/s/ James S. Vaccaro
	Name: James S. Vaccaro
Address:
613 North Edgemere Drive
West Allenhurst, NJ 07711

5

Exhibit A
FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN
Nonqualified Option Exercise Notice

Four Springs Capital Trust
1901 Main Street
Lake Como, NJ 07719

Subject to acceptance by the Committee, effective as of today, , 20 , this constitutes notice under my Nonqualified Option referenced below that I elect to purchase the number of shares for the price set forth below. I hereby elect to exercise my Nonqualified Option. I represent and warrant that I am buying the shares for investment purposes only and without any intention of selling of distributing them. All capitalized terms used herein shall have the meaning ascribed to such terms in the Plan or applicable Award Agreement unless otherwise defined herein.

Type of Option:

Grant Date:

Number of shares as to which the option is exercised:

Exercise Price:

Total Exercise Price:

¨ Cash ¨ Check ¨ Promissory Note ¨ Other Permitted Method:

By this exercise, I agree (i) to provide such other documents as Four Springs Capital Trust (the “Company”) may require pursuant to the Company’s 2014 Equity Incentive Plan, and (ii) to provide for the payment by me to you (in the manner designated by you) of the withholding obligation, if any, relating to the exercise of this Nonqualified Option.

	Accepted by:
Participant:	Four Springs Capital Trust
By:	By:
Print Name:	Name:
Address:	Title:

EX-10.9

Exhibit 10.9

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN
FORM OF NONQUALIFIED OPTION AGREEMENT

This Nonqualified Option Agreement (the “Agreement”) is between Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), and Stephen R. Petersen (the “Participant”), pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”). All capitalized terms used in this Agreement shall have the meaning ascribed to such terms in the Plan unless otherwise defined herein. The Company and the Participant agree as follows:

1. Grant of Nonqualified Options. The terms and conditions of the Nonqualified Option Award set forth in this Agreement and the terms and conditions of the Plan are incorporated into and made a part of this Agreement. The Nonqualified Option is not intended to be an incentive stock option within the meaning of Section 422 of the Code.

Name of Participant:	Stephen R. Petersen
Number of Shares subject to Option:	Five Thousand (5,000)
Exercise Price per Share:	$0.001
Grant Date:	September 17, 2015
Expiration Date:	x10 years after Grant Date
Vesting Schedule:	The Nonqualified Option granted under this Agreement shall vest on the following dates as follows (each a “Vesting Date”): · 33 1/3% shall vest on March 31, 2016; · 33 1/3% shall vest on March 31, 2017; and · 33 1/3% shall vest on March 31, 2018.

2. Time of Exercise of Nonqualified Option. Until the Nonqualified Option expires or terminates as provided in this Agreement, the Participant may exercise the Nonqualified Option from time to time to purchase whole Shares as to which the Nonqualified Option is exercisable. The Nonqualified Option becomes exercisable, to the extent vested, on the Vesting Dates as set forth in the Vesting Schedule in Section 1 of this Agreement.

3. Termination of Continuous Status as a Participant.

(a) General Rule. Except as provided in this Section 3, the Nonqualified Option may not be exercised unless at the time of exercise the Participant is in Continuous Status as a Participant.

1 

(b) Termination of Continuous Status as a Participant.

(i) In the event of termination of the Participant’s Continuous Status as a Participant for any reason other than Cause, the Participant shall have the right to exercise the Nonqualified Option at any time within 90 days following such termination to the extent the Participant was entitled to exercise such Nonqualified Option on the date of such termination of the Participant’s Continuous Status as a Participant.

(ii) In the event of termination of the Participant’s Continuous Status as a Participant for Cause, all outstanding Shares subject to the Nonqualified Option shall be forfeited as of date of the determination by the Board or Committee that Cause to terminate the Participant exists.

(c) Failure to Exercise Nonqualified Option. To the extent that following termination of Continuous Status as a Participant, the Participant does not exercise the Nonqualified Option within the applicable post-employment periods described above in this Section 3, all rights to purchase Shares pursuant to the Nonqualified Option cease and terminate as of the date of expiration of the applicable post-employment period for exercise, and the Participant shall have no rights or interest with respect to such Nonqualified Option following such expiration date.

(d) Change in Control. Upon a Change in Control, the Nonqualified Option will automatically become One Hundred Percent (100%) vested and exercisable no later than immediately prior to such Change in Control.

4. Method of Exercise of Nonqualified Option. Unless otherwise authorized by the Committee or its authorized designee, the Nonqualified Option may only be exercised by using the exercise notice attached to this Agreement as Exhibit A by:

(a) Cash;

(b) Check payable to the Company; or

(c) A payment of such other lawful consideration as the Committee may determine.

5. Securities Laws Restrictions and Other Restrictions on Transfer of Shares. The Participant represents and warrants that if and when the Participant exercises the Nonqualified Option, the Participant shall purchase Shares only for the Participant’s own account and not on behalf of any others. The Participant understands and acknowledges that federal and state securities laws govern and restrict the Participant’s right to offer, sell or otherwise dispose of any Shares unless the Participant’s offer, sale or other disposition thereof is registered or qualified under the 1933 Act and applicable state securities laws, or in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. The Participant agrees that the Participant shall not offer, sell or otherwise dispose of any Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the 1933 Act, the rules and regulations promulgated thereunder or any other state or federal law. The Participant further understands that the certificates for any Shares the Participant purchases shall bear such legends as the Company deems necessary or desirable in connection with the 1933 Act or other rules, regulations or laws.

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6. Nontransferability. Except as provided in this Section 6, no right or interest of the Participant in the Nonqualified Option may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company. During a Participant’s lifetime, the Nonqualified Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative. The Nonqualified Option is assignable and transferable by the Participant by will and pursuant to the laws of descent and distribution, provided, however, that any such assignment or transfer is permitted under any agreement between the Company and the Participant.

7. No Rights to Awards; Non-Uniform Determinations. The Participant shall not have any claim to be granted any Nonqualified Option under the Plan. Neither the Company nor the Committee is obligated to treat Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Participants who receive, or are eligible to receive, Nonqualified Options (whether or not such Participants are similarly situated).

8. No Right to Continued Status as a Participant. Nothing in the Plan, this Agreement or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment or status as an officer, director or consultant at any time, nor confer upon the Participant any right to continue as an employee, officer, director or consultant of the Company, whether for the duration of the Participant’s Nonqualified Option or otherwise.

9. Notices.

(i) Notices to the Company. Notices intended for the Company shall be deemed validly given only if delivered in person to, or duly sent, postage and fees prepaid, by registered mail or national courier service addressed to the Company at its principal office and to the attention of the [Chief Financial Officer] or another person as designated by the Committee, or to such other address or officer as the Company or its successors may hereafter designate by written notice.

(ii) Notice to the Participant. Notices intended for the Participant (or any transferee of the Participant) shall be deemed validly given only if delivered in person or duly sent, postage and fees prepaid, by mail or national courier service to the last known address of the Participant (or such transferee) as it appears on the records of the Company or to such other address as the Participant (or such transferee) shall designate by written notice.

(iii) General. Notices under this Agreement must be in writing. Notices may be sent by nationally or internationally recognized overnight couriers (UPS, Fedex, DHL or other commercial delivery service). Notices are effective when actually delivered or, if mailed (A) by the United States Postal Service, three days after deposit into the United States mail by registered or certified mail, postage prepaid or (B) by a nationally or internationally recognized overnight courier, the next business day after deposit if within the United States, or the second business day after deposit, if not within the United States.

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10. No Shareholder Rights. This Nonqualified Option does not give the Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Nonqualified Option.

11. Other Agreements. The Participant hereby voluntarily agrees to sign any shareholder’s agreement of the Company which applies to similarly-situated stockholders or to Participants under the Plan or any similar agreement as prescribed by the Committee and in the form approved by the Committee in its sole discretion. Participant hereby expressly acknowledges that the Nonqualified Option has been granted to Participant conditioned upon Participant’s agreement and actual execution of documents in accordance with the immediately preceding sentence and upon Participant’s agreement that any transferee of Shares that have been acquired by the Participant pursuant to the Nonqualified Option shall be subject to the terms of the Plan and this Agreement, including without limitation this Section 11, as if such transferee was or is the Participant. Accordingly, if the Participant (or transferee of Shares, as the case may be) does not sign the shareholder’s agreement of the Company which applies to similarly-situated stockholders or other documents, all of the Shares subject to any outstanding Nonqualified Option and all of the Shares granted pursuant to any Nonqualified Option shall be forfeited hereby.

12. Amendments. This Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Participant. Notwithstanding the foregoing or Section 15.1 of the Plan, neither the requirement that the Participant (or a transferee of Shares) execute any shareholders agreement of the Company which applies to similarly-situated stockholders or similar agreement pursuant to Section 11 of this Agreement, nor the actual execution of any such agreement shall be considered to adversely affect the Nonqualified Option, even if such agreement contains provisions which are more restrictive than the Plan or this Agreement.

13. Governing Law. To the extent not governed by federal law, this Agreement shall be construed in accordance with and governed by the laws of the State of Maryland.

14. Complete Agreement. This Agreement constitutes the entire agreement between the Participant and the Company, both oral and written concerning the matters addressed in this Agreement, and all prior agreements or representations concerning the matters addressed in this Agreement, whether written or oral, express or implied, are terminated and of no further effect. In the event of any dispute or disagreement as to the interpretation of the Plan or this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising or related to the Plan o this Agreement, the decision of the Committee shall be final and binding upon all persons.

15. Severability. If any one or more of the provisions contained in this Agreement is invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

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By executing this Agreement, the Participant agrees to be bound by all of the terms and conditions of the Plan. In addition, the Participant recognizes and agrees that all determinations, interpretations, or other actions respecting the Plan and this Agreement will be made by the Committee or any authorized designee, and shall be final, conclusive and binding on all parties.

	FOUR SPRINGS CAPITAL TRUST
	By:	/s/ William P. Dioguardi
		Name: William P. Dioguardi
		Title: Chief Executive Officer
I agree to the terms of this Agreement and the Plan.
	By:	/s/ Stephen R. Petersen
		Name: Stephen R. Petersen
	Address:
	211 Westerly Road
	Weston, MA 02493

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EX-10.10

Exhibit 10.10

FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN
FORM OF NONQUALIFIED OPTION AGREEMENT

This Nonqualified Option Agreement (the “Agreement”) is between Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), and Peter S. Reinhart (the “Participant”), pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”). All capitalized terms used in this Agreement shall have the meaning ascribed to such terms in the Plan unless otherwise defined herein. The Company and the Participant agree as follows:

1. Grant of Nonqualified Options. The terms and conditions of the Nonqualified Option Award set forth in this Agreement and the terms and conditions of the Plan are incorporated into and made a part of this Agreement. The Nonqualified Option is not intended to be an incentive stock option within the meaning of Section 422 of the Code.

Name of Participant:	Peter S. Reinhart
Number of Shares subject to Option:	Five Thousand (5,000)
Exercise Price per Share:	$0.001
Grant Date:	October 1, 2015
Expiration Date:	x 10 years after Grant Date
Vesting Schedule:	The Nonqualified Option granted under this Agreement shall vest on the following dates as follows (each a “Vesting Date”): · 33 1/3% shall vest on the first anniversary of the Grant Date; · 33 1/3% shall vest on the second anniversary of the Grant Date; and · 33 1/3% shall vest on the third anniversary of the Grant Date.

2. Time of Exercise of Nonqualified Option. Until the Nonqualified Option expires or terminates as provided in this Agreement, the Participant may exercise the Nonqualified Option from time to time to purchase whole Shares as to which the Nonqualified Option is exercisable. The Nonqualified Option becomes exercisable, to the extent vested, on the Vesting Dates as set forth in the Vesting Schedule in Section 1 of this Agreement.

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3. Termination of Continuous Status as a Participant.

(a) General Rule. Except as provided in this Section 3, the Nonqualified Option may not be exercised unless at the time of exercise the Participant is in Continuous Status as a Participant.

(b) Termination of Continuous Status as a Participant.

(i) In the event of termination of the Participant’s Continuous Status as a Participant for any reason other than Cause, the Participant shall have the right to exercise the Nonqualified Option at any time within 90 days following such termination to the extent the Participant was entitled to exercise such Nonqualified Option on the date of such termination of the Participant’s Continuous Status as a Participant.

(ii) In the event of termination of the Participant’s Continuous Status as a Participant for Cause, all outstanding Shares subject to the Nonqualified Option shall be forfeited as of date of the determination by the Board or Committee that Cause to terminate the Participant exists.

(c) Failure to Exercise Nonqualified Option. To the extent that following termination of Continuous Status as a Participant, the Participant does not exercise the Nonqualified Option within the applicable post-employment periods described above in this Section 3, all rights to purchase Shares pursuant to the Nonqualified Option cease and terminate as of the date of expiration of the applicable post-employment period for exercise, and the Participant shall have no rights or interest with respect to such Nonqualified Option following such expiration date.

(d) Change in Control. Upon a Change in Control, the Nonqualified Option will automatically become One Hundred Percent (100%) vested and exercisable no later than immediately prior to such Change in Control.

4. Method of Exercise of Nonqualified Option. Unless otherwise authorized by the Committee or its authorized designee, the Nonqualified Option may only be exercised by using the exercise notice attached to this Agreement as Exhibit A by:

(a) Cash;

(b) Check payable to the Company; or

(c) A payment of such other lawful consideration as the Committee may determine.

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5. Securities Laws Restrictions and Other Restrictions on Transfer of Shares. The Participant represents and warrants that if and when the Participant exercises the Nonqualified Option, the Participant shall purchase Shares only for the Participant’s own account and not on behalf of any others. The Participant understands and acknowledges that federal and state securities laws govern and restrict the Participant’s right to offer, sell or otherwise dispose of any Shares unless the Participant’s offer, sale or other disposition thereof is registered or qualified under the 1933 Act and applicable state securities laws, or in the opinion of the Company’s counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. The Participant agrees that the Participant shall not offer, sell or otherwise dispose of any Shares in any manner which would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the 1933 Act, the rules and regulations promulgated thereunder or any other state or federal law. The Participant further understands that the certificates for any Shares the Participant purchases shall bear such legends as the Company deems necessary or desirable in connection with the 1933 Act or other rules, regulations or laws.

6. Nontransferability. Except as provided in this Section 6, no right or interest of the Participant in the Nonqualified Option may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company. During a Participant’s lifetime, the Nonqualified Option may be exercised only by the Participant or, in the case of the Participant’s Disability, by the Participant’s guardian or legal representative. The Nonqualified Option is assignable and transferable by the Participant by will and pursuant to the laws of descent and distribution, provided, however, that any such assignment or transfer is permitted under any agreement between the Company and the Participant.

7. No Rights to Awards; Non-Uniform Determinations. The Participant shall not have any claim to be granted any Nonqualified Option under the Plan. Neither the Company nor the Committee is obligated to treat Participants uniformly, and determinations made under the Plan may be made by the Committee selectively among Participants who receive, or are eligible to receive, Nonqualified Options (whether or not such Participants are similarly situated).

8. No Right to Continued Status as a Participant. Nothing in the Plan, this Agreement or any other document or statement made with respect to the Plan, shall interfere with or limit in any way the right of the Company to terminate the Participant’s employment or status as an officer, director or consultant at any time, nor confer upon the Participant any right to continue as an employee, officer, director or consultant of the Company, whether for the duration of the Participant’s Nonqualified Option or otherwise.

9. Notices.

(i) Notices to the Company. Notices intended for the Company shall be deemed validly given only if delivered in person to, or duly sent, postage and fees prepaid, by registered mail or national courier service addressed to the Company at its principal office and to the attention of the [Chief Financial Officer] or another person as designated by the Committee, or to such other address or officer as the Company or its successors may hereafter designate by written notice.

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(ii) Notice to the Participant. Notices intended for the Participant (or any transferee of the Participant) shall be deemed validly given only if delivered in person or duly sent, postage and fees prepaid, by mail or national courier service to the last known address of the Participant (or such transferee) as it appears on the records of the Company or to such other address as the Participant (or such transferee) shall designate by written notice.

(iii) General. Notices under this Agreement must be in writing. Notices may be sent by nationally or internationally recognized overnight couriers (UPS, Fedex, DHL or other commercial delivery service). Notices are effective when actually delivered or, if mailed (A) by the United States Postal Service, three days after deposit into the United States mail by registered or certified mail, postage prepaid or (B) by a nationally or internationally recognized overnight courier, the next business day after deposit if within the United States, or the second business day after deposit, if not within the United States.

10. No Shareholder Rights. This Nonqualified Option does not give the Participant any of the rights of a shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Nonqualified Option.

11. Other Agreements. The Participant hereby voluntarily agrees to sign any shareholder’s agreement of the Company which applies to similarly-situated stockholders or to Participants under the Plan or any similar agreement as prescribed by the Committee and in the form approved by the Committee in its sole discretion. Participant hereby expressly acknowledges that the Nonqualified Option has been granted to Participant conditioned upon Participant’s agreement and actual execution of documents in accordance with the immediately preceding sentence and upon Participant’s agreement that any transferee of Shares that have been acquired by the Participant pursuant to the Nonqualified Option shall be subject to the terms of the Plan and this Agreement, including without limitation this Section 11, as if such transferee was or is the Participant. Accordingly, if the Participant (or transferee of Shares, as the case may be) does not sign the shareholder’s agreement of the Company which applies to similarly-situated stockholders or other documents, all of the Shares subject to any outstanding Nonqualified Option and all of the Shares granted pursuant to any Nonqualified Option shall be forfeited hereby.

12. Amendments. This Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Participant. Notwithstanding the foregoing or Section 15.1 of the Plan, neither the requirement that the Participant (or a transferee of Shares) execute any shareholders agreement of the Company which applies to similarly-situated stockholders or similar agreement pursuant to Section 11 of this Agreement, nor the actual execution of any such agreement shall be considered to adversely affect the Nonqualified Option, even if such agreement contains provisions which are more restrictive than the Plan or this Agreement.

13. Governing Law. To the extent not governed by federal law, this Agreement shall be construed in accordance with and governed by the laws of the State of Maryland.

14. Complete Agreement. This Agreement constitutes the entire agreement between the Participant and the Company, both oral and written concerning the matters addressed in this Agreement, and all prior agreements or representations concerning the matters addressed in this Agreement, whether written or oral, express or implied, are terminated and of no further effect. In the event of any dispute or disagreement as to the interpretation of the Plan or this Agreement or of any rule, regulation or procedure, or as to any question, right or obligation arising or related to the Plan o this Agreement, the decision of the Committee shall be final and binding upon all persons.

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15. Severability. If any one or more of the provisions contained in this Agreement is invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.

By executing this Agreement, the Participant agrees to be bound by all of the terms and conditions of the Plan. In addition, the Participant recognizes and agrees that all determinations, interpretations, or other actions respecting the Plan and this Agreement will be made by the Committee or any authorized designee, and shall be final, conclusive and binding on all parties.

	FOUR SPRINGS CAPITAL TRUST
	By:	/s/ William P. Dioguardi
		Name: William P. Dioguardi
		Title: Chief Executive Officer
I agree to the terms of this Agreement and the Plan.
	By:	/s/ Peter S. Reinhart
		Name: Peter S. Reinhart
	Address:
	28 Mayfair Ct
	Little Silver, NJ 07739

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Exhibit A
FOUR SPRINGS CAPITAL TRUST
2014 EQUITY INCENTIVE PLAN
Nonqualified Option Exercise Notice

Four Springs Capital Trust
1901 Main Street
Lake Como, NJ 07719

Subject to acceptance by the Committee, effective as of today, , 20 , this constitutes notice under my Nonqualified Option referenced below that I elect to purchase the number of shares for the price set forth below. I hereby elect to exercise my Nonqualified Option. I represent and warrant that I am buying the shares for investment purposes only and without any intention of selling of distributing them. All capitalized terms used herein shall have the meaning ascribed to such terms in the Plan or applicable Award Agreement unless otherwise defined herein.

Type of Option:

Grant Date:

Number of shares as to which the option is exercised:

Exercise Price:

Total Exercise Price:

¨ Cash ¨ Check ¨ Promissory Note ¨Other Permitted Method:

By this exercise, I agree (i) to provide such other documents as Four Springs Capital Trust (the “Company”) may require pursuant to the Company’s 2014 Equity Incentive Plan, and (ii) to provide for the payment by me to you (in the manner designated by you) of the withholding obligation, if any, relating to the exercise of this Nonqualified Option.

	Accepted by:
Participant:	Four Springs Capital Trust
By:	By:
Print	Name:
Name:
Address:	Title:

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EX-10.11

Exhibit 10.11

AMENDED AND RESTATED 

EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), effective as of May 19, 2017 (the “Effective Date”), by and between Four Springs Capital Trust (the “Company”) and William P. Dioguardi (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Trustees of the Company (the “Board”), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive and to provide the Executive with compensation and benefits arrangements which are competitive with those of other real estate investment trusts;

WHEREAS, Executive desires to be so employed;

WHEREAS, the Company and the Executive previously entered into that certain Employment Agreement dated as of March 19, 2014 (the “Original Agreement”); and

WHEREAS, the Company and the Executive have agreed to modifications to the Executive’s terms of employment and each party now desires to amend and restate the terms of the Original Agreement as set forth in this Agreement.

NOW, THEREFORE, in order to accomplish these objectives and in consideration of the mutual covenants and promises contained herein, the parties hereto, each intending to be legally bound hereby, agree as follows:

1. Employment. Subject to the terms and conditions set forth herein, the Company shall employ the Executive as Chief Executive Officer, and the Executive accepts such employment for the Employment Period (as defined below). During the Employment Period, the Executive shall perform the duties of the Chief Executive Officer and such other duties consistent with such position as may from time to time be assigned to him by the Board. The Executive shall also serve without additional compensation as a Trustee of the Board if elected or appointed as a trustee and as Chairman of the Board to the extent requested by the Board.

2. Performance. Except as provided below, the Executive will serve the Company faithfully and to the best of his ability and will devote substantially all of his business time, energy, experience and talents to the business of the Company and its affiliates; provided, however, that it shall not be considered a violation of the foregoing for the Executive to (a) manage his personal or his family’s investments; or (b) to serve as an employee, officer, director or owner of Four Springs Capital, LLC; (c) to serve on civic or charitable boards or committees; or (d) with the advance written approval of the Board, to serve on industry boards or committees; or (e) to participate in any activity approved by the Board, so long as any of such activities in (a) through (e) do not interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

3. Employment Period. Unless earlier terminated pursuant to Section 5 below (including, but not limited to, the Executive’s termination of employment due to death, resignation, or Disability (as defined in Section 5(b)(iii) below)), the term of employment of the Executive pursuant to this Agreement shall begin upon the Effective Date, and shall continue until May 1, 2018 (the “Employment Term”). This Agreement and the Executive’s employment hereunder shall automatically renew for a one-year term on May 1, 2018 and on the anniversary date of any subsequent one year-term (“Renewal Term”), unless earlier terminated pursuant to Section 5 below (including, but not limited to, the Executive’s termination of employment due to death, resignation, or Disability (as defined in Section 5(b)(iii) below)). The Employment Term, together with any Renewal Term(s), shall hereinafter be referred to as the “Employment Period.”

4. Compensation and Benefits.

(a) Base Salary. As compensation for services hereunder and in consideration of the Executive’s other agreements hereunder, during the Employment Period, the Company shall pay the Executive a base salary, payable in equal installments in accordance with the Company’s procedures at an annual rate of Three Hundred Forty-Five Thousand Dollars ($345,000), less applicable withholdings and deductions, subject to review by the Company no less frequently than annually for increase (but not to be decreased) (such base salary, as may be increased from time to time being hereinafter referred to as “Base Salary”).

(b) Bonuses and Incentive Compensation. During the Employment Period, the Executive shall have opportunities for bonuses and shall have opportunities for incentive compensation comparable to those provided to other senior executives of the Company and shall be eligible to participate in all bonus and incentive compensation plans, including the Company’s 2014 Stock Incentive Plan, made available by the Company, from time to time, for its senior executives.

(c) Medical, Dental, Disability, Life Insurance, Pension and Other Benefits. During the Employment Period, the Executive shall, in accordance with the terms and conditions of the applicable plan documents and all applicable laws, be eligible to participate in the various medical, dental, disability, life insurance, pension and other employee benefit plans made available by the Company, from time to time, for its senior executives.

(d) Vacation, Sick Leave. During the Employment Period, the Executive shall be entitled to vacation and sick leave in accordance with the Company’s established practices with respect to its senior executives.

(e) Expenses. The Executive shall be reimbursed by the Company for all reasonable expenses actually incurred by him in connection with the performance of his duties hereunder in accordance with policies established by the Company from time to time and upon receipt of appropriate documentation. Expenses reimbursable under this paragraph shall be reimbursed within a reasonable period of time following Executive’s submission of the reimbursement request and any supporting documentation reasonably requested by the Company and no later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

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5. Termination. (a) During the Employment Period, the employment of the Executive may be terminated at any time (i) by the Company with or without Cause (as defined in Section 5(b)(i) below); (ii) by the Executive with or without Good Reason (as defined in Section 5(b)(ii) below); or (iii) by the Company without Cause or by the Executive with Good Reason, in either case, within 12 months of a Change in Control (a “Double Trigger Termination”). At any time after a Disability (as defined in Section 5(b)(iii) below) occurs, provided that the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, determines that the Executive remains incapable of performing his essential duties and responsibilities hereunder, subject to applicable legal requirements, the Company may terminate the Executive’s employment effective forthwith after giving notice to the Executive of such termination. Further, if the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, shall reasonably determine that the Executive has become physically or mentally incapable of performing his essential duties and responsibilities as provided in this Agreement and such incapacity is likely to last for a period of at least one hundred eighty (180) days from the onset of such incapacity, the Company may, at its discretion at any time thereafter while the Executive remains incapable of performing his material duties hereunder, and subject to applicable legal requirements, remove the Executive from his then position with the Company; provided, further, that if he returns to full time employment, with the permission of the Board, prior to the time he is determined to have incurred a Disability, he shall be restored to his position or positions with the Company.

(b) For purposes of this Agreement,

(i) “Cause” shall mean: (A) the Executive’s conviction of, plea of nolo contendere to, or written admission of the commission of, a felony (B) any material breach by the Executive of Section 7 of this Agreement; (C) any act by the Executive involving moral turpitude, fraud or misrepresentation with respect to his duties for the Company or its affiliates, which materially and adversely affects the Company; or (D) gross negligence or willful misconduct on the part of the Executive in the performance of his duties as an employee, officer or member of the Company or its affiliates (that in only the case of gross negligence results in a material economic harm to the Company); provided, however, that the Company may not terminate the Executive’s employment under clauses (B), (C) or (D) unless the Company first gives the Executive notice of its intention to terminate and of the grounds for such termination within 90 days of such event, and in the case of a breach set forth in clause (B) above, the Executive either (X) has not, within 30 days following receipt of such notice, cured such Cause, or (Y) in the event such Cause cannot be cured within such 30-day period, has not taken all reasonable steps to cure such Cause. No termination for Cause shall be effective unless the Board makes a Cause determination after notice to the Executive and the Executive has been provided with the opportunity (with counsel of his choice) to contest the determination at a meeting of the Board.

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(ii) “Good Reason” shall mean the occurrence of any of the following conditions without the Executive’s written consent, provided that Executive shall provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence of such condition, upon the notice of which the Company shall have at least thirty (30) days within which to cure such condition, and if the Company fails to cure the condition within such cure period, the Executive must terminate employment by sending written notice to the Company within thirty (30) days following the Company’s failure to cure: (A) a material reduction of the Executive’s authority, duties and responsibilities, or the assignment to the Executive of duties materially inconsistent with the Executive’s position or positions with the Company; (B) a reduction in the Executive’s rate of Base Salary; (C) a breach by the Company of any material provision of this Agreement; or (D) a transfer of the place of employment of more than thirty (30) miles from the Company’s principal executive offices. Notwithstanding anything herein to the contrary, (x) any change of the Executive’s position with the Company to which the Executive consents in writing shall not constitute Good Reason and (y) retirement by the Executive shall not constitute Good Reason and no compensation, benefits or payments shall be due to the Executive hereunder as a result of retirement by the Executive.

(iii) “Disability” shall mean the mental or physical incapacity of the Executive such that (A) he qualifies for long-term disability benefits under a Company-sponsored long-term disability policy or (B) the Executive has been incapable as a result of illness, disease, mental or physical disability, disorder, infirmity, or impairment or similar cause of performing his essential duties and responsibilities for any period of one hundred eighty (180) days (whether or not consecutive) in any consecutive three hundred sixty-five (365) day period. Disability shall be determined by an approved medical doctor selected by the Company and the Executive. If the Company and the Executive cannot agree on a medical doctor, each party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

(iv) “Change in Control” shall mean:

(A) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership”) of 20% or more of either (i) the then outstanding common shares of beneficial interest of the Company (including preferred shares or other securities of the Company convertible into common shares) (the “Outstanding Company Common Shares”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of trustees (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (C) of this Section 5(b)(iv); or

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(B) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a trustee subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the trustees then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of trustees or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(C) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the Persons who had Beneficial Ownership, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Business Combination have Beneficial Ownership of more than 50%, respectively, of the then outstanding common shares of beneficial interest and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of trustees, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) acquires Beneficial Ownership of 20% or more of, respectively, the then outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of trustees or board of trustees, as the case may be, of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement with the successor or purchasing entity in respect of such Business Combination, or of the action of the Board, providing for such Business Combination; or

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(D) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(v) “Long-Term Incentive Award” shall mean any long-term incentive award previously granted to the Executive, including but not limited to restricted shares, deferred share awards, and share option awards, whether or not issued pursuant to an equity award plan.

6. Severance. (a) If, during the Employment Period,

1) the Executive terminates his employment with the Company for Good Reason;

2) the Executive’s employment is terminated by the Company without Cause; or

3) the Executive’s employment is terminated in a Double Trigger Termination;

then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(e):

(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”);

(iii) within 60 days of such termination of employment, severance pay (the “Severance Pay”) in a lump sum cash payment equal to two and one half (2.5) times the sum of: (x) the Executive’s Base Salary at termination (disregarding a reduction in Base Salary that constitutes Good Reason), and (y) the average of the last two annual cash bonuses the Company has paid to or agreed to pay to (if such payment has not yet been made) the Executive (the “Average Bonus”);

(iv) within 60 days of such termination of employment, a lump sum cash payment of a pro rata annual bonus, without duplication of any Entitlements, determined by (x) the number of days the Executive was employed by the Company during the fiscal year divided by 365, and multiplied by (y) the Average Bonus (the “Pro Rata Cash Bonus”); and

Additionally, upon a termination of the Executive’s employment under Section 6(a)(1), 6(a)(2) or 6(a)(3) above, (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

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Additionally, medical, dental, disability, life insurance and other employee welfare benefits (the “Welfare Plans”) then provided to senior executives of the Company shall be continued following the date of termination for a period of two and one half (2.5) years and, if the Executive is precluded from participating in any Welfare Plan by its terms or applicable law during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar Welfare Plan coverage, but only to the extent Executive’s requested reimbursement of expenses for similar Welfare Plan coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay under the terms of this Agreement as of the date of the Executive’s termination, or date of payment if later, to continue Executive’s participation in the underlying Welfare Plan for the period the expenses were incurred by the Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year.

Except in the case of a Double Trigger Termination, as a condition of and upon receiving the Severance Pay under Section 6(a)(iii) and the Pro Rata Cash Bonus under Section 6(a)(iv) and the vesting of Long-Term Incentive Awards and Welfare Plan benefits continuation under Section 6(a) (collectively, the “Forfeitable Payments”), the Executive agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Declaration of Trust, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive does not execute the release and the release does not become irrevocable within 60 days of his termination of employment, the Executive shall forfeit his right to the Forfeitable Payments.

(b) If during the Employment Period the Executive’s employment is terminated on account of death or Disability, the Company shall have no liability or further obligation to the Executive except as follows: the Executive (and his estate or designated beneficiaries under any Company-sponsored employee benefit plan in the event of his death) shall be entitled to receive, subject to Section 6(e):

(i) any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans;

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(ii) within 60 days of such termination of employment, Severance Pay in a lump sum cash payment of one (1) times the Executive’s Base Salary at termination; and

(iii) within 60 days of such termination, the Pro Rata Cash Bonus.

Additionally, (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

Additionally, the group health plan then provided to senior executives of the Company shall be continued following the date of termination for a period of two and one half (2.5) years and, during such period, if the Executive is precluded from participating in such group health plan by its terms or applicable law at any time during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar coverage, but only to the extent Executive’s requested reimbursement of expenses for such similar coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay as of the date of the Executive’s termination to continue the Executive’s participation in the group health plan for the period the expenses for similar coverage are incurred by Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year. Notwithstanding the foregoing, the continuation period for group health benefits under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) by reason of the Executive’s termination of employment with the Company shall be measured from his actual date of termination of employment.

As a condition of receiving the Severance Pay under Section 6(b)(ii) and the Pro Rata Cash Bonus under Section 6(b)(iii) and the vesting of Long-Term Incentive Awards and Welfare Plan benefits continuation under Section 6(b) (collectively, the “Forfeitable Payments-Death/Disability”), the Executive, or the representative of his estate if he has died, agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Declaration of Trust, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive or the representative of his estate does not execute the release and the release does not become irrevocable within 60 days of his termination of employment or death, the Executive or the estate shall forfeit the right to the Forfeitable Payments-Death/Disability.

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(c) If during the Employment Period the Executive’s employment is terminated by the Company for Cause or by the Executive without Good Reason, (i) all non-vested and/or unexercised Long-Term Incentive Awards shall be forfeited, terminated and cancelled and (ii) the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans.

(d) The payments made pursuant to this Section 6 shall be excluded from all pension and benefit calculations under the employee benefit plans of the Company and its affiliates, except as otherwise provided in the applicable employee benefit plan.

(e) Notwithstanding anything in this Section 6 to the contrary, if any amounts or benefits payable under this Agreement in the event of Executive’s termination of employment constitute “nonqualified deferred compensation” within the meaning of Code Section 409A, payment of such amounts and benefits shall commence when the Executive incurs a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h), without regard to any of the optional provisions thereunder, from the Company and any entity that would be considered a single employer with the Company under Code Section 414(b) or 414(c) (“Separation from Service”). Such payments or benefits shall be provided in accordance with the timing provisions of this Agreement by substituting the Agreement’s references to “termination of employment” or “termination” with Separation from Service. Notwithstanding the foregoing, if at the time of Executive’s Separation from Service the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), any amount or benefits that the constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A that becomes payable to Executive on account of the Executive’s Separation from Service will not be paid until after the earlier of (i) first business day of the seventh month following Executive’s Separation from Service, or (ii) the date of the Executive’s death (the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period, the Executive shall be paid a cash lump sum payment equal to any payments (including interest on any such payments, at an interest rate of not less than the prime interest rate, as published in the Wall Street Journal, over the period such payment is restricted from being paid to the Executive) and benefits that the Company would otherwise have been required to provide under this Section 6 but for the imposition of the 409A Suspension Period delayed because of the preceding sentence. Thereafter, the Executive shall receive any remaining payments and benefits due under this Section 6 in accordance with the terms of this Section (as if there had not been any Suspension Period beforehand). For the purposes of this Agreement, each payment that is part of a series of installment payments shall treated be as a separate payment for purposes of Code Section 409A.

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7. Covenants of the Executive. (a) During the Employment Period, and for a period of one (1) year thereafter, (i) the Executive shall not, within any jurisdiction or marketing area in which the Company or any of its affiliates is doing business, directly or indirectly, own, manage, operate, control, consult with, be employed by or participate in the ownership, management, operation or control of any business of the type and character engaged in or competitive with that conducted by the Company or any of its affiliates, which for purposes of this paragraph 7 shall mean a real estate investment trust or other investment vehicle that owns properties that are net leased to single tenants; (ii) the Executive shall not, directly or indirectly, employ, solicit for employment or otherwise contract for the services of any employee of the Company or any of its affiliates at the time of this Agreement or who shall subsequently become an employee of the Company or any such affiliate; and (iii) the Executive will not solicit, in competition with the Company or its affiliates, any person who is, or was at any time within the twelve months prior to his termination of employment, a customer of the business conducted by the Company or any of its affiliates. For purposes of determining whether to permanently withhold, or recover, payments from the Executive pursuant to Section 7(d) hereof, the Board shall determine what constitutes a competing business; provided that (x) the scope of businesses and the jurisdictions and marketing areas within which the Executive has agreed not to compete pursuant to clause (a)(i) of this Section 7 shall, for any challenged activity of the Executive, be determined as of the date of any such activity and (y) the Executive’s ownership of securities of two percent (2%) or less of any publicly traded class of securities of a public company shall not be considered to be competition with the Company or any of its affiliates.

(b) For the Employment Period and thereafter, (i) the Executive will not divulge, transmit or otherwise disclose (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, other than in the regular and proper course of business of the Company, any confidential knowledge or information with respect to the operations, finances, organization or employees of the Company or with respect to confidential or secret processes, services, techniques, customers or plans with respect to the Company; and (ii) the Executive will not use (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, any confidential information for the benefit of anyone other than the Company; provided, however, that the Executive has no obligation, express or implied, to refrain from using or disclosing to others any such knowledge or information which is or hereafter shall become available to the public other than through disclosure by the Executive. All new processes, techniques, know-how, inventions, plans, products, patents and devices developed, made or invented by the Executive, alone or with others, while an employee of the Company which are related to the business of the Company shall be and become the sole property of the Company, unless released in writing by the Company, and the Executive hereby assigns any and all rights therein or thereto to the Company.

(c) All files, records, correspondence, memoranda, notes or other documents (including, without limitation, those in computer-readable form) or property relating or belonging to the Company or its affiliates, whether prepared by the Executive or otherwise coming into his possession in the course of the performance of his services under this Agreement, shall be the exclusive property of Company and shall be delivered to Company and not retained by the Executive (including, without limitations, any copies thereof) upon termination of the Executive’s employment for any reason whatsoever (whether initiated by the Company or by the Executive).

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(d) The Executive acknowledges that a breach of his covenants contained in this Section 7 may cause irreparable damage to the Company and its affiliates, the exact amount of which will be difficult to ascertain, that the remedies at law for any such breach will be inadequate and that the amounts payable to the Executive pursuant to the provisions of Section 6(a)(iii), (iv) and the paragraphs following 6(a)(iv) and /or 6(b)(ii), (iii) and (iv) hereunder are additional consideration for the covenants contained in this Section 7. Accordingly, the Executive agrees that if he breaches any of the covenants contained in this Section 7, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief, without posting of a bond. In addition, the breach of any of the covenants contained in this Section 7 shall entitle the Company to permanently withhold, and to recover from the Executive any amounts paid to the Executive pursuant to the provisions of Section 6(a)(iii), (iv) and the paragraphs following 6(a)(iv) and/or 6(b)(ii) and (iii) and the paragraphs following 6(b)(iii) of this Agreement. The Company shall provide the Executive with at least five days prior written notice before withholding of any payment provided for in the immediately preceding sentence.

(e) The Company and the Executive further acknowledge that the time, scope, geographic area and other provisions of this Section 7 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement. In the event that the agreements in this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

(f) The Executive agrees to cooperate with the Company, during the Employment Period and thereafter (including following the Executive’s termination of employment for any reason, whether initiated by the Company or by the Executive), by making himself reasonably available to testify on behalf of the Company or any of its affiliates in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any affiliate, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Company’s Board or its representatives or counsel, or representatives or counsel to the Company, or any affiliate as reasonably requested; provided, however that the same does not materially interfere with his then current professional activities or important personal activities and is not contrary to the best interests of the Executive. The Company agrees to reimburse the Executive, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance, and, if during the period following the Employment Period, the Company requests the Executive’s cooperation for a period of greater than 8 hours per month, the Company agrees to reimburse the Executive at a rate of $250.00 per hour. Expenses reimbursable under this paragraph must be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

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(g) The Executive agrees that, during the Employment Period and at any time thereafter (including following the Executive’s termination of employment for any reason, whether initiated by the Company or by the Executive) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any of its affiliates or their respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Employment Term, and at any time thereafter (including following the Executive’s termination of employment for any reason, whether initiated by the Company or by the Executive) it will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Executive’s reputation. Notwithstanding the foregoing, nothing in this Agreement shall preclude the Executive or a representative of the Company from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

(h) Retained Rights.

(i) Nothing in this Section 7 or any other provision of this Agreement is intended to or shall be interpreted: (i) to restrict or otherwise interfere with the Executive’s obligation to testify truthfully in any forum; (ii) to restrict or otherwise interfere with the Executive’s right and/or obligation to contact, cooperate with, provide information to, or testify or otherwise participate in any action, investigation or proceeding of, any government agency or commission (including, but not limited, to the Equal Employment Opportunity Commission (“EEOC”)); or (iii) to disclose any information or produce any documents as is required by law or legal process.

(ii) Further, and to be more specific, nothing in this Agreement is intended to prohibit the Executive from reporting possible violations of federal, state or local law, ordinance or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the U.S. Securities and Exchange Commission, the EEOC, the Congress and any agency Inspector General, or otherwise taking action or making disclosures that are protected under the whistleblower provisions of any federal, state or local law, ordinance or regulation, including, but not limited to, Rule 21F-17 promulgated under the Securities Exchange Act of 1934, as amended. The Executive is entitled to make reports and disclosures or otherwise take action under this provision without the prior authorization from or subsequent notification to the Company and may do so with the express understanding that the Company shall not engage in or tolerate retaliation of any kind. The Executive is entitled to make reports and disclosures or otherwise take action under this provision without fear of retaliation of any kind.

8. Notices. Any notices required or permitted hereunder shall be in writing and shall be deemed to have been given when personally delivered or when mailed, certified or registered mail, postage prepaid, to the following addresses:

If to the Executive: 

William P. Dioguardi 

205 Lincoln Avenue 

Avon-by-the-Sea, NJ 07717 

If to the Company:  

Four Springs Capital Trust 

1901 Main Street 

Lake Como, NJ 07719

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9. General.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey applicable to contracts executed and to be performed entirely within said State.

(b) Construction and Severability. Nothing in this Agreement is intended to violate any law or shall be interpreted to violate any law. If any paragraph or part or subpart of any paragraph in this Agreement or the application thereof is held overbroad, invalid, illegal and/or unenforceable in any jurisdiction, the parties undertake, to the extent permitted by law, to implement all efforts which are necessary, desirable and sufficient to amend, supplement or substitute all and any such overbroad, invalid, illegal and/or unenforceable provisions with enforceable and valid provisions which would produce as nearly as may be possible the result previously intended by the parties without renegotiation of any material terms and conditions stipulated herein. The parties further agree that the court making such determination (i.e., that any paragraph or part or subpart of any paragraph in this Agreement or the application thereof is overbroad, invalid, illegal and/or unenforceable) shall have the authority to narrow the paragraph or part or subpart of the paragraph as necessary to make it enforceable and the paragraph or part or subpart of the paragraph shall then be enforceable in its/their narrowed form. Moreover, each paragraph or part or subpart of each paragraph in this Agreement is independent of and severable (separate) from each other. In the event that any paragraph or part or subpart of any paragraph in this Agreement is determined to be legally invalid or unenforceable by a court and is not modified by a court to be enforceable, the affected paragraph or part or subpart of such paragraph shall be stricken from the Agreement, and the remaining paragraphs or parts or subparts of such paragraphs of this Agreement shall remain in full, force and effect.

(c) Assignability. The Executive may not assign his interest in or delegate his duties under this Agreement. This Agreement is for the employment of the Executive, personally, and the services to be rendered by him under this Agreement must be rendered by him and no other person. The Executive represents and warrants to the Company that the Executive has no contracts or agreements of any nature that the Executive has entered into with any other person, firm or corporation that contain any restraints on the Executive’s ability to perform his obligations under this Agreement. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. Notwithstanding anything else in this Agreement to the contrary, the Company will assign this Agreement to and all rights hereunder shall inure to the benefit of any person, firm or corporation resulting from the reorganization of the Company or succeeding to the business or assets of the Company by purchase, merger or consolidation.

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(d) Enforcement Costs. If any contest or dispute shall arise under this Agreement involving the termination of the Executive’s employment with the Company and its affiliates or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall advance the Executive or pay directly on his behalf, all reasonable legal fees and expenses, if any, incurred or, in the case of fees and expenses for which payment is required before the services are rendered, to be incurred within the next 30 days, by the Executive in connection with such contest or dispute upon presentation of an itemized bill to the Company regarding any such fees and expenses along with proof reasonably satisfactory to the Company that such expenses have been incurred or will be incurred within the next 30 days by the Executive; provided, however, that in the event the resolution of any such contest or dispute includes a finding that the Executive’s claims in such contest or dispute are frivolous or brought in bad faith, the Executive shall be required to reimburse the Company, for all sums advanced to the Executive pursuant to this Section 10(d) in connection with such contest or dispute, together with interest in an amount equal to the prime rate, as published in the Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company makes payment to the Executive hereunder through the date of the Executive’s repayment thereof. Notwithstanding the foregoing, any reimbursements under this paragraph following the Executive’s termination of employment with the Company shall be subject to the payment limitations described in Section 6(e) of this Agreement.

(e) Compliance with Rules and Policies. The Executive shall perform all services in all material respects in accordance with the applicable policies, procedures and rules established by the Company, including, but not limited to, the By-Laws of the Company. In addition, the Executive, where applicable, shall comply in all material respects with all laws, rules and regulations that are generally applicable to the Company, its affiliates and their employees, directors and officers.

(f) Taxes. The Company shall withhold from all amounts due hereunder any applicable withholding taxes payable to federal, state, local or foreign taxing authorities. Except as set forth in Section 6, the Company shall have no obligation to indemnify or hold the Executive harmless from any taxes he may incur from any amounts payable under this Agreement.

(g) Entire Agreement; Modification. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, supersedes all prior agreements and undertakings, both written and oral.

(h) Duration. Notwithstanding the Employment Period hereunder, the applicable sections of this Agreement shall continue for so long as any obligations remain under this Agreement.

(i) Survival. All of the rights and covenants set forth in Sections 5, 6, 7, 8, and 9 of this Agreement shall survive and shall continue to be binding upon the Executive notwithstanding the termination of this Agreement for any reason whatsoever. It is expressly agreed that the remedy at law for the breach or threatened breach of any such covenant is inadequate and that the Company, in addition to any other remedies that may be available to it, in law or in equity, shall be entitled to injunctive relief to prevent the breach or any threatened breach thereof without bond or other security or a showing that monetary damages will not provide an adequate remedy.

(j) Waiver. No waiver by either party hereto of any of the requirements imposed by this Agreement on, or any breach of any condition or provision of this Agreement to be performed by, the other party shall be deemed a waiver of a similar or dissimilar requirement, provision or condition of this Agreement at the same or any prior or subsequent time. Any such waiver shall be express and in writing, and there shall be no waiver by conduct.

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(k) Indemnification. The Company shall indemnify the Executive, to the maximum extent permitted by applicable law, and in the same or better manner and to the same or better extent with respect to each aspect of the indemnification as provided to any other executive of the Company, against all costs, charges and expenses incurred or sustained by the Executive in connection with any action, suit or proceeding to which the Executive may be made a party, brought by any shareholder of the Company directly or derivatively or by any third party by reason of any act or omission of the Executive as an officer, director or employee of the Company or of any subsidiary or affiliate of the Company.

(l) Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

(m) Counterparts. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.

(n) Compliance with Code Section 409A. This Agreement is intended to be exempt from (or comply with) Code Section 409A, and the Company shall have complete discretion to interpret and construe this Agreement and any associated documents in any manner that establishes an exemption from (or otherwise conforms them to) the requirements of Code Section 409A. If, for any reason including imprecision in drafting, the Agreement does not accurately reflect its intended establishment of an exemption from (or compliance with) Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, the provision shall be considered ambiguous and shall be interpreted by the Company in a fashion consistent herewith, as determined in the sole and absolute discretion of the Company. Nevertheless, and notwithstanding any other provision of this Agreement, neither the Company nor any of its employees, trustees, or their agents shall have any obligation to mitigate, nor to hold the Executive harmless from, any or all taxes (including any imposed under Code Section 409A) arising under this Agreement.

(o) Parachute Provisions. Notwithstanding anything herein to the contrary, in the event that the Executive receives any payments or distributions, whether payable, distributed or distributable pursuant to the terms of this Agreement or otherwise, that constitute “parachute payments” within the meaning of Section 280G of the Code, and the net after tax amount of the parachute payment is less than the net after-tax amount if the aggregate payment to be made to the Executive were three times the “base amount” (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts constituting the parachute payment shall be reduced to an amount that will equal three times the Executive’s base amount, less $1.00. To the extent the aggregate of the amounts constituting the parachute payments are required to be so reduced, the amounts provided under this Agreement shall be reduced (if necessary, to zero) with amounts that are payable first reduced first; provided, however, that, in all events the payments provided under this Agreement which are not subject to Section 409A shall be reduced first. The determinations to be made with respect to this Section shall be made by a certified public accounting firm mutually agreed upon by the Executive and the Company.

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this Agreement effective as of the day and year first written above.

Date: May 19, 2017	FOUR SPRINGS CAPITAL TRUST
	By:	/s/ John E. Warch
	Name:	John E. Warch
	Title:	Authorized Officer
	EXECUTIVE
Date: May 19, 2017	/s/ William P. Dioguardi
	William P. Dioguardi

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EX-10.12

Exhibit 10.12

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), effective as of May 19, 2017 (the “Effective Date”), by and between Four Springs Capital Trust (the “Company”) and Coby R. Johnson (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Trustees of the Company (the “Board”), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive and to provide the Executive with compensation and benefits arrangements which are competitive with those of other real estate investment trusts;

WHEREAS, Executive desires to be so employed;

WHEREAS, the Company and the Executive previously entered into that certain Employment Agreement dated as of March 19, 2014 (the “Original Agreement”); and

WHEREAS, the Company and the Executive have agreed to modifications to the Executive’s terms of employment and each party now desires to amend and restate the terms of the Original Agreement as set forth in this Agreement.

NOW, THEREFORE, in order to accomplish these objectives and in consideration of the mutual covenants and promises contained herein, the parties hereto, each intending to be legally bound hereby, agree as follows:

1. Employment. Subject to the terms and conditions set forth herein, the Company shall employ the Executive as President and Chief Operating Officer, and the Executive accepts such employment for the Employment Period (as defined below). During the Employment Period, the Executive shall perform the duties of the President and Chief Operating Officer and such other duties consistent with such position as may from time to time be assigned to him by the Board. The Executive shall also serve without additional compensation as a Trustee of the Board if elected or appointed as a trustee and as Chairman of the Board to the extent requested by the Board.

2. Performance. Except as provided below, the Executive will serve the Company faithfully and to the best of his ability and will devote substantially all of his business time, energy, experience and talents to the business of the Company and its affiliates; provided, however, that it shall not be considered a violation of the foregoing for the Executive to (a) manage his personal or his family’s investments; or (b) to serve as an employee, officer, director or owner of Four Springs Capital, LLC; (c) to serve on civic or charitable boards or committees; or (d) with the advance written approval of the Board, to serve on industry boards or committees; or (e) to participate in any activity approved by the Board, so long as any of such activities in (a) through (e) do not interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

3. Employment Period. Unless earlier terminated pursuant to Section 5 below (including, but not limited to, the Executive’s termination of employment due to death, resignation, or Disability (as defined in Section 5(b)(iii) below)), the term of employment of the Executive pursuant to this Agreement shall begin upon the Effective Date, and shall continue until May 1, 2018 (the “Employment Term”). This Agreement and the Executive’s employment hereunder shall automatically renew for a one-year term on May 1, 2018 and on the anniversary date of any subsequent one year-term (“Renewal Term”), unless earlier terminated pursuant to Section 5 below (including, but not limited to, the Executive’s termination of employment due to death, resignation, or Disability (as defined in Section 5(b)(iii) below)). The Employment Term, together with any Renewal Term(s), shall hereinafter be referred to as the “Employment Period.”

4. Compensation and Benefits.

(a) Base Salary. As compensation for services hereunder and in consideration of the Executive’s other agreements hereunder, during the Employment Period, the Company shall pay the Executive a base salary, payable in equal installments in accordance with the Company’s procedures at an annual rate of Two Hundred Seventy-Six Thousand Dollars ($276,000), less applicable withholdings and deductions, subject to review by the Company no less frequently than annually for increase (but not to be decreased) (such base salary, as may be increased from time to time being hereinafter referred to as “Base Salary”).

(b) Bonuses and Incentive Compensation. During the Employment Period, the Executive shall have opportunities for bonuses and shall have opportunities for incentive compensation comparable to those provided to other senior executives of the Company and shall be eligible to participate in all bonus and incentive compensation plans, including the Company’s 2014 Stock Incentive Plan, made available by the Company, from time to time, for its senior executives.

(c) Medical, Dental, Disability, Life Insurance, Pension and Other Benefits. During the Employment Period, the Executive shall, in accordance with the terms and conditions of the applicable plan documents and all applicable laws, be eligible to participate in the various medical, dental, disability, life insurance, pension and other employee benefit plans made available by the Company, from time to time, for its senior executives.

(d) Vacation, Sick Leave. During the Employment Period, the Executive shall be entitled to vacation and sick leave in accordance with the Company’s established practices with respect to its senior executives.

(e) Expenses. The Executive shall be reimbursed by the Company for all reasonable expenses actually incurred by him in connection with the performance of his duties hereunder in accordance with policies established by the Company from time to time and upon receipt of appropriate documentation. Expenses reimbursable under this paragraph shall be reimbursed within a reasonable period of time following Executive’s submission of the reimbursement request and any supporting documentation reasonably requested by the Company and no later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

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5. Termination. (a) During the Employment Period, the employment of the Executive may be terminated at any time (i) by the Company with or without Cause (as defined in Section 5(b)(i) below); (ii) by the Executive with or without Good Reason (as defined in Section 5(b)(ii) below); or (iii) by the Company without Cause or by the Executive with Good Reason, in either case, within 12 months of a Change in Control (a “Double Trigger Termination”). At any time after a Disability (as defined in Section 5(b)(iii) below) occurs, provided that the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, determines that the Executive remains incapable of performing his essential duties and responsibilities hereunder, subject to applicable legal requirements, the Company may terminate the Executive’s employment effective forthwith after giving notice to the Executive of such termination. Further, if the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, shall reasonably determine that the Executive has become physically or mentally incapable of performing his essential duties and responsibilities as provided in this Agreement and such incapacity is likely to last for a period of at least one hundred eighty (180) days from the onset of such incapacity, the Company may, at its discretion at any time thereafter while the Executive remains incapable of performing his material duties hereunder, and subject to applicable legal requirements, remove the Executive from his then position with the Company; provided, further, that if he returns to full time employment, with the permission of the Board, prior to the time he is determined to have incurred a Disability, he shall be restored to his position or positions with the Company.

(b) For purposes of this Agreement,

(i) “Cause” shall mean: (A) the Executive’s conviction of, plea of nolo contendere to, or written admission of the commission of, a felony (B) any material breach by the Executive of Section 7 of this Agreement; (C) any act by the Executive involving moral turpitude, fraud or misrepresentation with respect to his duties for the Company or its affiliates, which materially and adversely affects the Company; or (D) gross negligence or willful misconduct on the part of the Executive in the performance of his duties as an employee, officer or member of the Company or its affiliates (that in only the case of gross negligence results in a material economic harm to the Company); provided, however, that the Company may not terminate the Executive’s employment under clauses (B), (C) or (D) unless the Company first gives the Executive notice of its intention to terminate and of the grounds for such termination within 90 days of such event, and in the case of a breach set forth in clause (B) above, the Executive either (X) has not, within 30 days following receipt of such notice, cured such Cause, or (Y) in the event such Cause cannot be cured within such 30-day period, has not taken all reasonable steps to cure such Cause. No termination for Cause shall be effective unless the Board makes a Cause determination after notice to the Executive and the Executive has been provided with the opportunity (with counsel of his choice) to contest the determination at a meeting of the Board.

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(ii) “Good Reason” shall mean the occurrence of any of the following conditions without the Executive’s written consent, provided that Executive shall provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence of such condition, upon the notice of which the Company shall have at least thirty (30) days within which to cure such condition, and if the Company fails to cure the condition within such cure period, the Executive must terminate employment by sending written notice to the Company within thirty (30) days following the Company’s failure to cure: (A) a material reduction of the Executive’s authority, duties and responsibilities, or the assignment to the Executive of duties materially inconsistent with the Executive’s position or positions with the Company; (B) a reduction in the Executive’s rate of Base Salary; (C) a breach by the Company of any material provision of this Agreement; or (D) a transfer of the place of employment of more than thirty (30) miles from the Company’s principal executive offices. Notwithstanding anything herein to the contrary, (x) any change of the Executive’s position with the Company to which the Executive consents in writing shall not constitute Good Reason and (y) retirement by the Executive shall not constitute Good Reason and no compensation, benefits or payments shall be due to the Executive hereunder as a result of retirement by the Executive.

(iii) “Disability” shall mean the mental or physical incapacity of the Executive such that (A) he qualifies for long-term disability benefits under a Company-sponsored long-term disability policy or (B) the Executive has been incapable as a result of illness, disease, mental or physical disability, disorder, infirmity, or impairment or similar cause of performing his essential duties and responsibilities for any period of one hundred eighty (180) days (whether or not consecutive) in any consecutive three hundred sixty-five (365) day period. Disability shall be determined by an approved medical doctor selected by the Company and the Executive. If the Company and the Executive cannot agree on a medical doctor, each party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

(iv) “Change in Control” shall mean:

(A) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership”) of 20% or more of either (i) the then outstanding common shares of beneficial interest of the Company (including preferred shares or other securities of the Company convertible into common shares) (the “Outstanding Company Common Shares”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of trustees (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (C) of this Section 5(b)(iv); or

(B) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a trustee subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the trustees then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of trustees or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(C) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the Persons who had Beneficial Ownership, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Business Combination have Beneficial Ownership of more than 50%, respectively, of the then outstanding common shares of beneficial interest and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of trustees, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) acquires Beneficial Ownership of 20% or more of, respectively, the then outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of trustees or board of trustees, as the case may be, of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement with the successor or purchasing entity in respect of such Business Combination, or of the action of the Board, providing for such Business Combination; or

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(D) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(v) “Long-Term Incentive Award” shall mean any long-term incentive award previously granted to the Executive, including but not limited to restricted shares, deferred share awards, and share option awards, whether or not issued pursuant to an equity award plan.

6. Severance. (a) If, during the Employment Period,

1) the Executive terminates his employment with the Company for Good Reason;

2) the Executive’s employment is terminated by the Company without Cause; or

3) the Executive’s employment is terminated in a Double Trigger Termination;

then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(e):

(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”);

(iii) within 60 days of such termination of employment, severance pay (the “Severance Pay”) in a lump sum cash payment equal to two and one half (2.5) times the sum of: (x) the Executive’s Base Salary at termination (disregarding a reduction in Base Salary that constitutes Good Reason), and (y) the average of the last two annual cash bonuses the Company has paid to or agreed to pay to (if such payment has not yet been made) the Executive (the “Average Bonus”);

(iv) within 60 days of such termination of employment, a lump sum cash payment of a pro rata annual bonus, without duplication of any Entitlements, determined by (x) the number of days the Executive was employed by the Company during the fiscal year divided by 365, and multiplied by (y) the Average Bonus (the “Pro Rata Cash Bonus”); and

Additionally, upon a termination of the Executive’s employment under Section 6(a)(1), 6(a)(2) or 6(a)(3) above, (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

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Additionally, medical, dental, disability, life insurance and other employee welfare benefits (the “Welfare Plans”) then provided to senior executives of the Company shall be continued following the date of termination for a period of two and one half (2.5) years and, if the Executive is precluded from participating in any Welfare Plan by its terms or applicable law during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar Welfare Plan coverage, but only to the extent Executive’s requested reimbursement of expenses for similar Welfare Plan coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay under the terms of this Agreement as of the date of the Executive’s termination, or date of payment if later, to continue Executive’s participation in the underlying Welfare Plan for the period the expenses were incurred by the Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year.

Except in the case of a Double Trigger Termination, as a condition of and upon receiving the Severance Pay under Section 6(a)(iii) and the Pro Rata Cash Bonus under Section 6(a)(iv) and the vesting of Long-Term Incentive Awards and Welfare Plan benefits continuation under Section 6(a) (collectively, the “Forfeitable Payments”), the Executive agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Declaration of Trust, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive does not execute the release and the release does not become irrevocable within 60 days of his termination of employment, the Executive shall forfeit his right to the Forfeitable Payments.

(b) If during the Employment Period, the Executive’s employment is terminated on account of death or Disability, the Company shall have no liability or further obligation to the Executive except as follows: the Executive (and his estate or designated beneficiaries under any Company-sponsored employee benefit plan in the event of his death) shall be entitled to receive, subject to Section 6(e):

(i) any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans;

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(ii) within 60 days of such termination of employment, Severance Pay in a lump sum cash payment of one (1) times the Executive’s Base Salary at termination; and

(iii) within 60 days of such termination, the Pro Rata Cash Bonus.

Additionally, (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

Additionally, the group health plan then provided to senior executives of the Company shall be continued following the date of termination for a period of two and one half (2.5) years and, during such period, if the Executive is precluded from participating in such group health plan by its terms or applicable law at any time during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar coverage, but only to the extent Executive’s requested reimbursement of expenses for such similar coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay as of the date of the Executive’s termination to continue the Executive’s participation in the group health plan for the period the expenses for similar coverage are incurred by Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year. Notwithstanding the foregoing, the continuation period for group health benefits under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) by reason of the Executive’s termination of employment with the Company shall be measured from his actual date of termination of employment.

As a condition of receiving the Severance Pay under Section 6(b)(ii) and the Pro Rata Cash Bonus under Section 6(b)(iii) and the vesting of Long-Term Incentive Awards and Welfare Plan benefits continuation under Section 6(b) (collectively, the “Forfeitable Payments-Death/Disability”), the Executive, or the representative of his estate if he has died, agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Declaration of Trust, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive or the representative of his estate does not execute the release and the release does not become irrevocable within 60 days of his termination of employment or death, the Executive or the estate shall forfeit the right to the Forfeitable Payments-Death/Disability.

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(c) If during the Employment Period, the Executive’s employment is terminated by the Company for Cause or by the Executive without Good Reason, (i) all non-vested and/or unexercised Long-Term Incentive Awards shall be forfeited, terminated and cancelled and (ii) the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans.

(d) The payments made pursuant to this Section 6 shall be excluded from all pension and benefit calculations under the employee benefit plans of the Company and its affiliates, except as otherwise provided in the applicable employee benefit plan.

(e) Notwithstanding anything in this Section 6 to the contrary, if any amounts or benefits payable under this Agreement in the event of Executive’s termination of employment constitute “nonqualified deferred compensation” within the meaning of Code Section 409A, payment of such amounts and benefits shall commence when the Executive incurs a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h), without regard to any of the optional provisions thereunder, from the Company and any entity that would be considered a single employer with the Company under Code Section 414(b) or 414(c) (“Separation from Service”). Such payments or benefits shall be provided in accordance with the timing provisions of this Agreement by substituting the Agreement’s references to “termination of employment” or “termination” with Separation from Service. Notwithstanding the foregoing, if at the time of Executive’s Separation from Service the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), any amount or benefits that the constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A that becomes payable to Executive on account of the Executive’s Separation from Service will not be paid until after the earlier of (i) first business day of the seventh month following Executive’s Separation from Service, or (ii) the date of the Executive’s death (the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period, the Executive shall be paid a cash lump sum payment equal to any payments (including interest on any such payments, at an interest rate of not less than the prime interest rate, as published in the Wall Street Journal, over the period such payment is restricted from being paid to the Executive) and benefits that the Company would otherwise have been required to provide under this Section 6 but for the imposition of the 409A Suspension Period delayed because of the preceding sentence. Thereafter, the Executive shall receive any remaining payments and benefits due under this Section 6 in accordance with the terms of this Section (as if there had not been any Suspension Period beforehand). For the purposes of this Agreement, each payment that is part of a series of installment payments shall treated be as a separate payment for purposes of Code Section 409A.

7. Covenants of the Executive. (a) During the Employment Period, and for a period of one (1) year thereafter, (i) the Executive shall not, within any jurisdiction or marketing area in which the Company or any of its affiliates is doing business, directly or indirectly, own, manage, operate, control, consult with, be employed by or participate in the ownership, management, operation or control of any business of the type and character engaged in or competitive with that conducted by the Company or any of its affiliates, which for purposes of this paragraph 7 shall mean a real estate investment trust or other investment vehicle that owns properties that are net leased to single tenants; (ii) the Executive shall not, directly or indirectly, employ, solicit for employment or otherwise contract for the services of any employee of the Company or any of its affiliates at the time of this Agreement or who shall subsequently become an employee of the Company or any such affiliate; and (iii) the Executive will not solicit, in competition with the Company or its affiliates, any person who is, or was at any time within the twelve months prior to his termination of employment, a customer of the business conducted by the Company or any of its affiliates. For purposes of determining whether to permanently withhold, or recover, payments from the Executive pursuant to Section 7(d) hereof, the Board shall determine what constitutes a competing business; provided that (x) the scope of businesses and the jurisdictions and marketing areas within which the Executive has agreed not to compete pursuant to clause (a)(i) of this Section 7 shall, for any challenged activity of the Executive, be determined as of the date of any such activity and (y) the Executive’s ownership of securities of two percent (2%) or less of any publicly traded class of securities of a public company shall not be considered to be competition with the Company or any of its affiliates.

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(b) For the Employment Period and thereafter, (i) the Executive will not divulge, transmit or otherwise disclose (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, other than in the regular and proper course of business of the Company, any confidential knowledge or information with respect to the operations, finances, organization or employees of the Company or with respect to confidential or secret processes, services, techniques, customers or plans with respect to the Company; and (ii) the Executive will not use (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, any confidential information for the benefit of anyone other than the Company; provided, however, that the Executive has no obligation, express or implied, to refrain from using or disclosing to others any such knowledge or information which is or hereafter shall become available to the public other than through disclosure by the Executive. All new processes, techniques, know-how, inventions, plans, products, patents and devices developed, made or invented by the Executive, alone or with others, while an employee of the Company which are related to the business of the Company shall be and become the sole property of the Company, unless released in writing by the Company, and the Executive hereby assigns any and all rights therein or thereto to the Company.

(c) All files, records, correspondence, memoranda, notes or other documents (including, without limitation, those in computer-readable form) or property relating or belonging to the Company or its affiliates, whether prepared by the Executive or otherwise coming into his possession in the course of the performance of his services under this Agreement, shall be the exclusive property of Company and shall be delivered to Company and not retained by the Executive (including, without limitations, any copies thereof) upon termination of the Executive’s employment for any reason whatsoever (whether initiated by the Company or by the Executive).

(d) The Executive acknowledges that a breach of his covenants contained in this Section 7 may cause irreparable damage to the Company and its affiliates, the exact amount of which will be difficult to ascertain, that the remedies at law for any such breach will be inadequate and that the amounts payable to the Executive pursuant to the provisions of Section 6(a)(iii), (iv) and the paragraphs following 6(a)(iv) and /or 6(b)(ii), (iii) and (iv) hereunder are additional consideration for the covenants contained in this Section 7. Accordingly, the Executive agrees that if he breaches any of the covenants contained in this Section 7, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief, without posting of a bond. In addition, the breach of any of the covenants contained in this Section 7 shall entitle the Company to permanently withhold, and to recover from the Executive any amounts paid to the Executive pursuant to the provisions of Section 6(a)(iii), (iv) and the paragraphs following 6(a)(iv) and /or 6(b)(ii) and (iii) and the paragraphs following 6(b)(iii) of this Agreement. The Company shall provide the Executive with at least five days prior written notice before withholding of any payment provided for in the immediately preceding sentence.

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(e) The Company and the Executive further acknowledge that the time, scope, geographic area and other provisions of this Section 7 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement. In the event that the agreements in this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

(f) The Executive agrees to cooperate with the Company, during the Employment Period and thereafter (including following the Executive’s termination of employment for any reason, whether initiated by the Company or by the Executive), by making himself reasonably available to testify on behalf of the Company or any of its affiliates in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any affiliate, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Company’s Board or its representatives or counsel, or representatives or counsel to the Company, or any affiliate as reasonably requested; provided, however that the same does not materially interfere with his then current professional activities or important personal activities and is not contrary to the best interests of the Executive. The Company agrees to reimburse the Executive, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance, and, if during the period following the Employment Period, the Company requests the Executive’s cooperation for a period of greater than 8 hours per month, the Company agrees to reimburse the Executive at a rate of $250.00 per hour. Expenses reimbursable under this paragraph must be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

(g) The Executive agrees that, during the Employment Period and at any time thereafter (including following the Executive’s termination of employment for any reason, whether initiated by the Company or by the Executive) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any of its affiliates or their respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Employment Term, and at any time thereafter, (including following the Executive’s termination of employment for any reason, whether initiated by the Company or by the Executive) it will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Executive’s reputation. Notwithstanding the foregoing, nothing in this Agreement shall preclude the Executive or a representative of the Company from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

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(h) Retained Rights.

(i) Nothing in this Section 7 or any other provision of this Agreement is intended to or shall be interpreted: (i) to restrict or otherwise interfere with the Executive’s obligation to testify truthfully in any forum; (ii) to restrict or otherwise interfere with the Executive’s right and/or obligation to contact, cooperate with, provide information to, or testify or otherwise participate in any action, investigation or proceeding of, any government agency or commission (including, but not limited, to the Equal Employment Opportunity Commission (“EEOC”)); or (iii) to disclose any information or produce any documents as is required by law or legal process.

(ii) Further, and to be more specific, nothing in this Agreement is intended to prohibit the Executive from reporting possible violations of federal, state or local law, ordinance or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the U.S. Securities and Exchange Commission, the EEOC, the Congress and any agency Inspector General, or otherwise taking action or making disclosures that are protected under the whistleblower provisions of any federal, state or local law, ordinance or regulation, including, but not limited to, Rule 21F-17 promulgated under the Securities Exchange Act of 1934, as amended. The Executive is entitled to make reports and disclosures or otherwise take action under this provision without the prior authorization from or subsequent notification to the Company and may do so with the express understanding that the Company shall not engage in or tolerate retaliation of any kind. The Executive is entitled to make reports and disclosures or otherwise take action under this provision without fear of retaliation of any kind.

8. Notices. Any notices required or permitted hereunder shall be in writing and shall be deemed to have been given when personally delivered or when mailed, certified or registered mail, postage prepaid, to the following addresses:

If to the Executive:

Coby Johnson

547 Sussex Road

Wynnewood, PA 19096

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If to the Company:

Four Springs Capital Trust

1901 Main Street

Lake Como, NJ 07719

9. General.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey applicable to contracts executed and to be performed entirely within said State.

(b) Construction and Severability. Nothing in this Agreement is intended to violate any law or shall be interpreted to violate any law. If any paragraph or part or subpart of any paragraph in this Agreement or the application thereof is held overbroad, invalid, illegal and/or unenforceable in any jurisdiction, the parties undertake, to the extent permitted by law, to implement all efforts which are necessary, desirable and sufficient to amend, supplement or substitute all and any such overbroad, invalid, illegal and/or unenforceable provisions with enforceable and valid provisions which would produce as nearly as may be possible the result previously intended by the parties without renegotiation of any material terms and conditions stipulated herein. The parties further agree that the court making such determination (i.e., that any paragraph or part or subpart of any paragraph in this Agreement or the application thereof is overbroad, invalid, illegal and/or unenforceable) shall have the authority to narrow the paragraph or part or subpart of the paragraph as necessary to make it enforceable and the paragraph or part or subpart of the paragraph shall then be enforceable in its/their narrowed form. Moreover, each paragraph or part or subpart of each paragraph in this Agreement is independent of and severable (separate) from each other. In the event that any paragraph or part or subpart of any paragraph in this Agreement is determined to be legally invalid or unenforceable by a court and is not modified by a court to be enforceable, the affected paragraph or part or subpart of such paragraph shall be stricken from the Agreement, and the remaining paragraphs or parts or subparts of such paragraphs of this Agreement shall remain in full, force and effect.

(c) Assignability. The Executive may not assign his interest in or delegate his duties under this Agreement. This Agreement is for the employment of the Executive, personally, and the services to be rendered by him under this Agreement must be rendered by him and no other person. The Executive represents and warrants to the Company that the Executive has no contracts or agreements of any nature that the Executive has entered into with any other person, firm or corporation that contain any restraints on the Executive’s ability to perform his obligations under this Agreement. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. Notwithstanding anything else in this Agreement to the contrary, the Company will assign this Agreement to and all rights hereunder shall inure to the benefit of any person, firm or corporation resulting from the reorganization of the Company or succeeding to the business or assets of the Company by purchase, merger or consolidation.

(d) Enforcement Costs. If any contest or dispute shall arise under this Agreement involving the termination of the Executive’s employment with the Company and its affiliates or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall advance the Executive or pay directly on his behalf, all reasonable legal fees and expenses, if any, incurred or, in the case of fees and expenses for which payment is required before the services are rendered, to be incurred within the next 30 days, by the Executive in connection with such contest or dispute upon presentation of an itemized bill to the Company regarding any such fees and expenses along with proof reasonably satisfactory to the Company that such expenses have been incurred or will be incurred within the next 30 days by the Executive; provided, however, that in the event the resolution of any such contest or dispute includes a finding that the Executive’s claims in such contest or dispute are frivolous or brought in bad faith, the Executive shall be required to reimburse the Company, for all sums advanced to the Executive pursuant to this Section 10(d) in connection with such contest or dispute, together with interest in an amount equal to the prime rate, as published in the Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company makes payment to the Executive hereunder through the date of the Executive’s repayment thereof. Notwithstanding the foregoing, any reimbursements under this paragraph following the Executive’s termination of employment with the Company shall be subject to the payment limitations described in Section 6(e) of this Agreement.

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(e) Compliance with Rules and Policies. The Executive shall perform all services in all material respects in accordance with the applicable policies, procedures and rules established by the Company, including, but not limited to, the By-Laws of the Company. In addition, the Executive, where applicable, shall comply in all material respects with all laws, rules and regulations that are generally applicable to the Company, its affiliates and their employees, directors and officers.

(f) Taxes. The Company shall withhold from all amounts due hereunder any applicable withholding taxes payable to federal, state, local or foreign taxing authorities. Except as set forth in Section 6, the Company shall have no obligation to indemnify or hold the Executive harmless from any taxes he may incur from any amounts payable under this Agreement.

(g) Entire Agreement; Modification. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, supersedes all prior agreements and undertakings, both written and oral.

(h) Duration. Notwithstanding the Employment Period hereunder, the applicable sections of this Agreement shall continue for so long as any obligations remain under this Agreement.

(i) Survival. All of the rights and covenants set forth in Sections 5, 6, 7, 8, and 9 of this Agreement shall survive and shall continue to be binding upon the Executive notwithstanding the termination of this Agreement for any reason whatsoever. It is expressly agreed that the remedy at law for the breach or threatened breach of any such covenant is inadequate and that the Company, in addition to any other remedies that may be available to it, in law or in equity, shall be entitled to injunctive relief to prevent the breach or any threatened breach thereof without bond or other security or a showing that monetary damages will not provide an adequate remedy.

(j) Waiver. No waiver by either party hereto of any of the requirements imposed by this Agreement on, or any breach of any condition or provision of this Agreement to be performed by, the other party shall be deemed a waiver of a similar or dissimilar requirement, provision or condition of this Agreement at the same or any prior or subsequent time. Any such waiver shall be express and in writing, and there shall be no waiver by conduct.

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(k) Indemnification. The Company shall indemnify the Executive, to the maximum extent permitted by applicable law, and in the same or better manner and to the same or better extent with respect to each aspect of the indemnification as provided to any other executive of the Company, against all costs, charges and expenses incurred or sustained by the Executive in connection with any action, suit or proceeding to which the Executive may be made a party, brought by any shareholder of the Company directly or derivatively or by any third party by reason of any act or omission of the Executive as an officer, director or employee of the Company or of any subsidiary or affiliate of the Company.

(l) Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

(m) Counterparts. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.

(n) Compliance with Code Section 409A. This Agreement is intended to be exempt from (or comply with) Code Section 409A, and the Company shall have complete discretion to interpret and construe this Agreement and any associated documents in any manner that establishes an exemption from (or otherwise conforms them to) the requirements of Code Section 409A. If, for any reason including imprecision in drafting, the Agreement does not accurately reflect its intended establishment of an exemption from (or compliance with) Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, the provision shall be considered ambiguous and shall be interpreted by the Company in a fashion consistent herewith, as determined in the sole and absolute discretion of the Company. Nevertheless, and notwithstanding any other provision of this Agreement, neither the Company nor any of its employees, trustees, or their agents shall have any obligation to mitigate, nor to hold the Executive harmless from, any or all taxes (including any imposed under Code Section 409A) arising under this Agreement.

(o) Parachute Provisions. Notwithstanding anything herein to the contrary, in the event that the Executive receives any payments or distributions, whether payable, distributed or distributable pursuant to the terms of this Agreement or otherwise, that constitute “parachute payments” within the meaning of Section 280G of the Code, and the net after tax amount of the parachute payment is less than the net after-tax amount if the aggregate payment to be made to the Executive were three times the “base amount” (as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate of the amounts constituting the parachute payment shall be reduced to an amount that will equal three times the Executive’s base amount, less $1.00. To the extent the aggregate of the amounts constituting the parachute payments are required to be so reduced, the amounts provided under this Agreement shall be reduced (if necessary, to zero) with amounts that are payable first reduced first; provided, however, that, in all events the payments provided under this Agreement which are not subject to Section 409A shall be reduced first. The determinations to be made with respect to this Section shall be made by a certified public accounting firm mutually agreed upon by the Executive and the Company.

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this Agreement effective as of the day and year first written above.

	FOUR SPRINGS CAPITAL TRUST
Date: May 19, 2017
	By:	/s/ John E. Warch
	Name:	John E. Warch
	Title:	Authorized Officer
	EXECUTIVE
Date: May 19, 2017	/s/ Coby R. Johnson
	Coby R. Johnson

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EX-10.13

Exhibit 10.13

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”), effective as of December 3, 2014 (the “Effective Date”), by and between Four Springs Capital Trust (the “Company”) and John E. Warch (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Trustees of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive and to provide the Executive with compensation and benefits arrangements which are competitive with those of other real estate investment trusts;

WHEREAS, Executive desires to be so employed;

NOW, THEREFORE, in order to accomplish these objectives and in consideration of the mutual covenants and promises contained herein, the parties hereto, each intending to be legally bound hereby, agree as follows:

1. Employment. Subject to the terms and conditions set forth herein, the Company shall employ the Executive as Chief Financial Officer, and the Executive accepts such employment for the Employment Term (as defined below). During the Employment Term, the Executive shall perform the duties of the Chief Financial Officer and such other duties consistent with such position as may from time to time be assigned to him by the Board.

2. Performance. Except as provided below, the Executive will serve the Company faithfully and to the best of his ability and will devote substantially all of his business time, energy, experience and talents to the business of the Company and its affiliates; provided, however, that it shall not be considered a violation of the foregoing for the Executive to (a) manage his personal or his family’s investments; or (b) to serve on civic or charitable boards or committees; or (c) with the advance written approval of the Board, to serve on industry boards or committees; or (d) to participate in any activity approved by the Board, so long as any of such activities in (a) through (d) do not interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

3. Employment Term. Unless earlier terminated pursuant to Section 5 below (including, but not limited to, the Executive’s termination of employment due to death, resignation, or Disability (as defined in Section 5(b)(iii) below)), the employment term shall begin upon the Effective Date, and shall continue until December 31, 2015 (the “Employment Term”). The Agreement shall automatically renew for a one-year term on January 1, 2016 and on the anniversary date of any subsequent one year-term (“Renewal Term”) unless either the Company or the Executive gives the other party written notice of non-extension at least 120 days prior to the expiration of the Agreement or Renewal Term (in either case “120-Day Termination Notice”), provided that failure of either party to provide 120-Day Termination Notice shall result only in the below specified damages, and shall not result in a continuation of the Agreement. Damages for failure to provide 120-Day Termination Notice shall consist of the following: (a) in the case of the Company, payment of Executive’s Base Salary for any portion of the 120-Day Termination Notice period not observed, and (b) in the case of the Executive, forfeiture of any entitlement to the payout of accrued and unused vacation time. In the event the Company terminates the Agreement for no other reason than the expiration of the Employment Term, Executive shall be entitled to receive severance pay in an amount that is equal to one year’s Base Salary (as defined in Section 4 below), less applicable withholdings and deductions, which shall be payable in accordance with the Company’s standard payroll practices over a period of one year from the expiration of the term of this Agreement; provided, however, such severance pay payable under this section 3 shall be subject to set off by the Company for any amounts received by Executive during the one year period following the expiration of the term of this Agreement whether as an employee, consultant, partner, owner or other similar capacity.

4. Compensation and Benefits.

(a) Base Salary. As compensation for services hereunder and in consideration of the Executive’s other agreements hereunder, during the Employment Term and any Renewal Term, the Company shall pay the Executive a base salary, payable in equal installments in accordance with the Company’s procedures at an annual rate of One Hundred Seventy Five Thousand Dollars ($175,000), less applicable withholdings and deductions, subject to review by the Company no less frequently than annually for increase (but not to be decreased) (such base salary, as may be increased from time to time being hereinafter referred to as “Base Salary”).

(b) Bonuses and Incentive Compensation.

(i) During the Employment Term and any Renewal Term, the Executive shall have opportunities for bonuses and shall have opportunities for incentive compensation comparable to those provided to other senior executives of the Company and shall be eligible to participate in all bonus and incentive compensation plans, including the Company’s 2014 Stock Incentive Plan, made available by the Company, from time to time, for its senior executives.

(ii) Executive will be eligible to receive a bonus of $75,000 if the Company is able to successfully complete an initial public offering (IPO) of its capital stock while Executive is employed with the Company. Any such bonus will be payable in the first pay period following the closing of the Company’s IPO and shall be subject to applicable federal, state and local taxes, and shall be payable in accordance with the Company’s standard payroll practices.

(c) Medical, Dental, Disability, Life Insurance, Pension and Other Benefits. During the Employment Term, the Executive shall, in accordance with the terms and conditions of the applicable plan documents and all applicable laws, be eligible to participate in the various medical, dental, disability, life insurance, pension and other employee benefit plans made available by the Company, from time to time, for its senior executives.

(d) Vacation, Sick Leave. During the Employment Term and any Renewal Term, the Executive shall be entitled to vacation and sick leave in accordance with the Company’s then current established practices and policies with respect to its senior executives, provided that Executive’s annual vacation leave shall be no less than three (3) weeks.

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(e) Expenses. The Executive shall be reimbursed by the Company for all reasonable expenses actually incurred by him in connection with the performance of his duties hereunder in accordance with policies established by the Company from time to time and upon receipt of appropriate documentation. Expenses reimbursable under this paragraph shall be reimbursed within a reasonable period of time following Executive’s submission of the reimbursement request and any supporting documentation reasonably requested by the Company and no later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

5. Termination.

(a) During the Employment Term and any Renewal Term, the employment of the Executive may be terminated at any time (i) by the Company with or without Cause (as defined in Section 5(b)(i) below); (ii) by the Executive with or without Good Reason (as defined in Section 5(b)(ii) below); or (iii) by the Company without Cause or by the Executive with Good Reason, in either case, within 12 months of a Change in Control (a “Double Trigger Termination”). At any time after a Disability (as defined in Section 5(b)(iii) below) occurs, provided that the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, determines that the Executive remains incapable of performing his essential duties and responsibilities hereunder, subject to applicable legal requirements, the Company may terminate the Executive’s employment effective forthwith after giving notice to the Executive of such termination. Further, if the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, shall reasonably determine that the Executive has become physically or mentally incapable of performing his essential duties and responsibilities as provided in this Agreement and such incapacity is likely to last for a period of at least one hundred eighty (180) days from the onset of such incapacity, the Company may, at its discretion at any time thereafter while the Executive remains incapable of performing his material duties hereunder, and subject to applicable legal requirements, remove the Executive from his then position with the Company; provided, further, that if he returns to full time employment, with the permission of the Board, prior to the time he is determined to have incurred a Disability, he shall be restored to his position or positions with the Company.

(b) For purposes of this Agreement,

(i) “Cause” shall mean: (A) the Executive’s conviction of, plea of nolo contendere to, or written admission of the commission of, a felony (B) any material breach by the Executive of Section 7 of this Agreement; (C) any act by the Executive involving moral turpitude, fraud or misrepresentation with respect to his duties for the Company or its affiliates, which materially and adversely affects the Company; or (D) gross negligence or willful misconduct on the part of the Executive in the performance of his duties as an employee, officer or member of the Company or its affiliates (that in only the case of gross negligence results in a material economic harm to the Company); provided, however, that the Company may not terminate the Executive’s employment under clauses (B), (C) or (D) unless the Company first gives the Executive notice of its intention to terminate and of the grounds for such termination within 90 days of such event, and in the case of a breach set forth in clause (B) above, the Executive either (X) has not, within 30 days following receipt of such notice, cured such Cause, or (Y) in the event such Cause cannot be cured within such 30-day period, has not taken all reasonable steps to cure such Cause. No termination for Cause shall be effective unless the Board makes a Cause determination after notice to the Executive and the Executive has been provided with the opportunity (with counsel of his choice) to contest the determination at a meeting of the Board.

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(ii) “Good Reason” shall mean the occurrence of any of the following conditions without the Executive’s written consent, provided that Executive shall provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence of such condition, upon the notice of which the Company shall have at least thirty (30) days within which to cure such condition, and if the Company fails to cure the condition within such cure period, the Executive must terminate employment by sending written notice to the Company within thirty (30) days following the Company’s failure to cure: (A) a material reduction of the Executive’s authority, duties and responsibilities, or the assignment to the Executive of duties materially inconsistent with the Executive’s position or positions with the Company; (B) a reduction in the Executive’s rate of Base Salary; (C) a breach by the Company of any material provision of this Agreement; or (D) a transfer of the place of employment of more than thirty (30) miles from the Company’s principal executive offices. Notwithstanding anything herein to the contrary, (x) any change of the Executive’s position with the Company to which the Executive consents in writing shall not constitute Good Reason and (y) retirement by the Executive shall not constitute Good Reason and no compensation, benefits or payments shall be due to the Executive hereunder as a result of retirement by the Executive.

(iii) “Disability” shall mean the mental or physical incapacity of the Executive such that (A) he qualifies for long-term disability benefits under a Company-sponsored long-term disability policy or (B) the Executive has been incapable as a result of illness, disease, mental or physical disability, disorder, infirmity, or impairment or similar cause of performing his essential duties and responsibilities for any period of one hundred eighty (180) days (whether or not consecutive) in any consecutive three hundred sixty-five (365) day period. Disability shall be determined by an approved medical doctor selected by the Company and the Executive. If the Company and the Executive cannot agree on a medical doctor, each party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

(iv) “Change in Control” shall mean:

(A) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership”) of 20% or more of either (i) the then outstanding common shares of beneficial interest of the Company (including preferred shares or other securities of the Company convertible into common shares) (the “Outstanding Company Common Shares”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of trustees (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (C) of this Section 5(b)(iv); or

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(B) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a trustee subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the trustees then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of trustees or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(C) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the Persons who had Beneficial Ownership, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Business Combination have Beneficial Ownership of more than 50%, respectively, of the then outstanding common shares of beneficial interest and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of trustees, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) acquires Beneficial Ownership of 20% or more of, respectively, the then outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of trustees or board of trustees, as the case may be, of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement with the successor or purchasing entity in respect of such Business Combination, or of the action of the Board, providing for such Business Combination; or

(D) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(v) “Long-Term Incentive Award” shall mean any long-term incentive award previously granted to the Executive, including but not limited to restricted shares, deferred share awards, and share option awards, whether or not issued pursuant to an equity award plan.

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6. Severance.

(a) If, during the Employment Term and any Renewal Term and either prior to the occurrence of a Change in Control or more than 12 months after a Change in Control, the Executive’s employment is terminated by the Company without Cause, then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(f):

(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”); and

(iii) severance pay in an amount that is equal to one year’s Base Salary, less applicable withholdings and deductions, which shall be payable in accordance with the Company’s standard payroll practices over a period of one year from the termination of Executive’s employment pursuant to this Section 6(a); provided, however, such amounts payable under this section 6(a)(iii) shall be subject to set off by the Company for any amounts received by Executive during the one year period following his termination of employment with the Company as an employee, consultant, partner, owner or other similar capacity (such amounts shall be referred to herein as the “Initial Severance Pay”).

Additionally, upon a termination of the Executive’s employment without Cause under this Section 6(a), (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

As a condition of and upon receiving the severance pay under Section 6(a)(iii) and the acceleration of vesting of non-vested Long-Term Incentive Awards set forth in the immediately preceding paragraph, the Executive agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Declaration of Trust, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive does not execute the release and the release does not become irrevocable within 60 days of his termination of employment, the Executive shall forfeit his right to the severance pay under Section 6(a)(iii) and the acceleration of vesting of his non-vested Long-Term Incentive Awards.

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(b) If, during the Employment Term and any Renewal Term, the Executive’s employment is terminated in a Double Trigger Termination, then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(f):

(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”);

(iii) within 60 days of such termination of employment, severance pay (the “Post-CoC Severance Pay”) in a lump sum cash payment equal to two and one half (2.5) times the sum of: (x) the Executive’s Base Salary at termination (disregarding a reduction in Base Salary that constitutes Good Reason), and (y) the average of the last two annual cash bonuses the Company has paid to or agreed to pay to (if such payment has not yet been made) the Executive (the “Average Bonus”);

(iv) within 60 days of such termination of employment, a lump sum cash payment of a pro rata annual bonus, without duplication of any Entitlements, determined by (x) the number of days the Executive was employed by the Company during the fiscal year divided by 365, and multiplied by (y) the Average Bonus (the “Pro Rata Cash Bonus”); and

Additionally, upon a termination of the Executive’s employment in a Double Trigger Termination under this Section 6(b), (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

Additionally, medical, dental, disability, life insurance and other employee welfare benefits (the “Welfare Plans”) then provided to senior executives of the Company shall be continued following the date of termination for a period of two and one half (2.5) years and, if the Executive is precluded from participating in any Welfare Plan by its terms or applicable law during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar Welfare Plan coverage, but only to the extent Executive’s requested reimbursement of expenses for similar Welfare Plan coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay under the terms of this Agreement as of the date of the Executive’s termination, or date of payment if later, to continue Executive’s participation in the underlying Welfare Plan for the period the expenses were incurred by the Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year.

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(c) If during the Employment Term, the Executive’s employment is terminated on account of death or Disability, the Company shall have no liability or further obligation to the Executive except as follows: the Executive (and his estate or designated beneficiaries under any Company-sponsored employee benefit plan in the event of his death) shall be entitled to receive, subject to Section 6(f):

(i) any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans; and

(ii) Initial Severance Pay, which shall be payable in accordance with the Company’s standard payroll practices over a period of one year from the date of the termination of Executive’s employment pursuant to this Section 6(c).

Additionally, (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

Additionally, the group health plan then provided to senior executives of the Company shall be continued following the date of termination for a period of one year and, during such period, if the Executive is precluded from participating in such group health plan by its terms or applicable law at any time during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar coverage, but only to the extent Executive’s requested reimbursement of expenses for such similar coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay as of the date of the Executive’s termination to continue the Executive’s participation in the group health plan for the period the expenses for similar coverage are incurred by Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year. Notwithstanding the foregoing, the continuation period for group health benefits under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) by reason of the Executive’s termination of employment with the Company shall be measured from his actual date of termination of employment.

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As a condition of receiving the Initial Severance Pay under Section 6(c)(ii), the Executive, or the representative of his estate if he has died, agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Certificate of Incorporation, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive or the representative of his estate does not execute the release and the release does not become irrevocable within 60 days of his termination of employment or death, the Executive or the estate shall forfeit the right to the Initial Severance Pay under Section 6(c)(ii) and the acceleration of vesting of his non-vested Long-Term Incentive Awards.

(d) If during the Employment Term and any Renewal Term, the Executive’s employment is terminated by the Company for Cause or by the Executive for any reason, (i) all non-vested and/or unexercised Long-Term Incentive Awards shall be forfeited, terminated and cancelled and (ii) the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans.

(e) The payments made pursuant to this Section 6 shall be excluded from all pension and benefit calculations under the employee benefit plans of the Company and its affiliates, except as otherwise provided in the applicable employee benefit plan.

(f) Notwithstanding anything in this Section 6 to the contrary, if any amounts or benefits payable under this Agreement in the event of Executive’s termination of employment constitute “nonqualified deferred compensation” within the meaning of Code Section 409A, payment of such amounts and benefits shall commence when the Executive incurs a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h), without regard to any of the optional provisions thereunder, from the Company and any entity that would be considered a single employer with the Company under Code Section 414(b) or 414(c) (“Separation from Service”). Such payments or benefits shall be provided in accordance with the timing provisions of this Agreement by substituting the Agreement’s references to “termination of employment” or “termination” with Separation from Service. Notwithstanding the foregoing, if at the time of Executive’s Separation from Service the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), any amount or benefits that the constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A that becomes payable to Executive on account of the Executive’s Separation from Service will not be paid until after the earlier of (i) first business day of the seventh month following Executive’s Separation from Service, or (ii) the date of the Executive’s death (the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period, the Executive shall be paid a cash lump sum payment equal to any payments (including interest on any such payments, at an interest rate of not less than the prime interest rate, as published in the Wall Street Journal, over the period such payment is restricted from being paid to the Executive) and benefits that the Company would otherwise have been required to provide under this Section 6 but for the imposition of the 409A Suspension Period delayed because of the preceding sentence. Thereafter, the Executive shall receive any remaining payments and benefits due under this Section 6 in accordance with the terms of this Section (as if there had not been any Suspension Period beforehand). For the purposes of this Agreement, each payment that is part of a series of installment payments shall treated be as a separate payment for purposes of Code Section 409A.

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7. Covenants of the Executive. (a) During the Employment Term and Renewal Term and for a period of one (1) year thereafter, (i) the Executive shall not, within any jurisdiction or marketing area in which the Company or any of its affiliates is doing business, directly or indirectly, own, manage, operate, control, consult with, be employed by or participate in the ownership, management, operation or control of any business of the type and character engaged in or competitive with that conducted by the Company or any of its affiliates, which for purposes of this paragraph 7 shall mean a real estate investment trust or other investment vehicle that owns properties that are net leased to single tenants; (ii) the Executive shall not, directly or indirectly, employ, solicit for employment or otherwise contract for the services of any employee of the Company or any of its affiliates at the time of this Agreement or who shall subsequently become an employee of the Company or any such affiliate; and (iii) the Executive will not solicit, in competition with the Company or its affiliates, any person who is, or was at any time within the twelve months prior to his termination of employment, a customer of the business conducted by the Company or any of its affiliates. For purposes of determining whether to permanently withhold, or recover, payments from the Executive pursuant to Section 7(d) hereof, the Board shall determine what constitutes a competing business; provided that (x) the scope of businesses and the jurisdictions and marketing areas within which the Executive has agreed not to compete pursuant to clause (a)(i) of this Section 7 shall, for any challenged activity of the Executive, be determined as of the date of any such activity and (y) the Executive’s ownership of securities of two percent (2%) or less of any publicly traded class of securities of a public company shall not be considered to be competition with the Company or any of its affiliates. Notwithstanding the foregoing, the post-employment covenant in this paragraph 7(a) shall not apply in the event of termination of this Agreement for no other reason than the expiration of the Employment Term or any Renewal Term.

(b) For the Employment Term and thereafter, (i) the Executive will not divulge, transmit or otherwise disclose (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, other than in the regular and proper course of business of the Company, any confidential knowledge or information with respect to the operations, finances, organization or employees of the Company or with respect to confidential or secret processes, services, techniques, customers or plans with respect to the Company; and (ii) the Executive will not use (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, any confidential information for the benefit of anyone other than the Company; provided, however, that the Executive has no obligation, express or implied, to refrain from using or disclosing to others any such knowledge or information which is or hereafter shall become available to the public other than through disclosure by the Executive. All new processes, techniques, know-how, inventions, plans, products, patents and devices developed, made or invented by the Executive, alone or with others, while an employee of the Company which are related to the business of the Company shall be and become the sole property of the Company, unless released in writing by the Company, and the Executive hereby assigns any and all rights therein or thereto to the Company.

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(c) All files, records, correspondence, memoranda, notes or other documents (including, without limitation, those in computer-readable form) or property relating or belonging to the Company or its affiliates, whether prepared by the Executive or otherwise coming into his possession in the course of the performance of his services under this Agreement, shall be the exclusive property of Company and shall be delivered to Company and not retained by the Executive (including, without limitations, any copies thereof) upon termination of the Executive’s employment for any reason whatsoever.

(d) The Executive acknowledges that a breach of his covenants contained in this Section 7 may cause irreparable damage to the Company and its affiliates, the exact amount of which will be difficult to ascertain, that the remedies at law for any such breach will be inadequate and that the amounts payable to the Executive pursuant to the provisions of Section 6(a)(iii) and the paragraphs following 6(a)(iii) and/or 6(b)(ii), (iii) and (iv) hereunder are additional consideration for the covenants contained in this Section 7. Accordingly, the Executive agrees that if he breaches any of the covenants contained in this Section 7, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief, without posting of a bond. In addition, the breach of any of the covenants contained in this Section 7 shall entitle the Company to permanently withhold, and to recover from the Executive any amounts paid to the Executive pursuant to the provisions of Section 6(a)(iii) and the paragraphs following 6(a)(iii) and/or 6(b)(ii), (iii) and (iv) of this Agreement. The Company shall provide the Executive with at least five days prior written notice before withholding of any payment provided for in the immediately preceding sentence.

(e) The Company and the Executive further acknowledge that the time, scope, geographic area and other provisions of this Section 7 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement. In the event that the agreements in this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

(f) The Executive agrees to cooperate with the Company, during the Term of Employment and thereafter (including following the Executive’s termination of employment for any reason), by making himself reasonably available to testify on behalf of the Company or any of its affiliates in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any affiliate, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Company’s Board or its representatives or counsel, or representatives or counsel to the Company, or any affiliate as reasonably requested; provided, however that the same does not materially interfere with his then current professional activities or important personal activities and is not contrary to the best interests of the Executive. The Company agrees to reimburse the Executive, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance, and, if during the period following the Employment Term or Renewal Term, the Company requests the Executive’s cooperation for a period of greater than 8 hours per month, the Company agrees to reimburse the Executive at a rate of $250.00 per hour. Expenses reimbursable under this paragraph must be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

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(g) The Executive agrees that, during the Term of Employment and at any time thereafter (including following the Executive’s termination of employment for any reason) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any of its affiliates or their respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Employment Term, and at any time thereafter, (including following the Executive’s termination of employment for any reason) it will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Executive’s reputation. Notwithstanding the foregoing, nothing in this Agreement shall preclude the Executive or a representative of the Company from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

8. Notices. Any notices required or permitted hereunder shall be in writing and shall be deemed to have been given when personally delivered or when mailed, certified or registered mail, postage prepaid, to the following addresses:

If to the Executive: 

John E. Warch 

11 Blueberry Lane 

Oyster Bay, NY 11771 

If to the Company: 

Four Springs Capital Trust 

1901 Main St. 

Lake Como, NJ 07719

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9. General.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey applicable to contracts executed and to be performed entirely within said State.

(b) Construction and Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired, and the parties undertake to implement all efforts which are necessary, desirable and sufficient to amend, supplement or substitute all and any such invalid, illegal or unenforceable provisions with enforceable and valid provisions which would produce as nearly as may be possible the result previously intended by the parties without renegotiation of any material terms and conditions stipulated herein.

(c) Assignability. The Executive may not assign his interest in or delegate his duties under this Agreement. This Agreement is for the employment of the Executive, personally, and the services to be rendered by him under this Agreement must be rendered by him and no other person. The Executive represents and warrants to the Company that the Executive has no contracts or agreements of any nature that the Executive has entered into with any other person, firm or corporation that contain any restraints on the Executive’s ability to perform his obligations under this Agreement. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. Notwithstanding anything else in this Agreement to the contrary, the Company will assign this Agreement to and all rights hereunder shall inure to the benefit of any person, firm or corporation resulting from the reorganization of the Company or succeeding to the business or assets of the Company by purchase, merger or consolidation.

(d) Enforcement Costs. If any contest or dispute shall arise under this Agreement involving the termination of the Executive’s employment with the Company and its affiliates or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall advance the Executive or pay directly on his behalf, all reasonable legal fees and expenses, if any, incurred or, in the case of fees and expenses for which payment is required before the services are rendered, to be incurred within the next 30 days, by the Executive in connection with such contest or dispute upon presentation of an itemized bill to the Company regarding any such fees and expenses along with proof reasonably satisfactory to the Company that such expenses have been incurred or will be incurred within the next 30 days by the Executive; provided, however, that in the event the resolution of any such contest or dispute includes a finding that the Executive’s claims in such contest or dispute are frivolous or brought in bad faith, the Executive shall be required to reimburse the Company, for all sums advanced to the Executive pursuant to this Section 9(d) in connection with such contest or dispute, together with interest in an amount equal to the prime rate, as published in the Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company makes payment to the Executive hereunder through the date of the Executive’s repayment thereof. Notwithstanding the foregoing, any reimbursements under this paragraph following the Executive’s termination of employment with the Company shall be subject to the payment limitations described in Section 6(f) of this Agreement.

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(e) Compliance with Rules and Policies. The Executive shall perform all services in all material respects in accordance with the applicable policies, procedures and rules established by the Company, including, but not limited to, the By-Laws of the Company. In addition, the Executive, where applicable, shall comply in all material respects with all laws, rules and regulations that are generally applicable to the Company, its affiliates and their employees, directors and officers.

(f) Taxes. The Company shall withhold from all amounts due hereunder any applicable withholding taxes payable to federal, state, local or foreign taxing authorities. Except as set forth in Section 6, the Company shall have no obligation to indemnify or hold the Executive harmless from any taxes he may incur from any amounts payable under this Agreement.

(g) Entire Agreement; Modification. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, supersedes all prior agreements and undertakings, both written and oral.

(h) Duration. Notwithstanding the Employment Term hereunder, the applicable sections of this Agreement shall continue for so long as any obligations remain under this Agreement.

(i) Survival. All of the rights and covenants set forth in Sections 5, 6, 7, 8, and 9 of this Agreement shall survive and shall continue to be binding upon the Executive notwithstanding the termination of this Agreement for any reason whatsoever. It is expressly agreed that the remedy at law for the breach or threatened breach of any such covenant is inadequate and that the Company, in addition to any other remedies that may be available to it, in law or in equity, shall be entitled to injunctive relief to prevent the breach or any threatened breach thereof without bond or other security or a showing that monetary damages will not provide an adequate remedy.

(j) Waiver. No waiver by either party hereto of any of the requirements imposed by this Agreement on, or any breach of any condition or provision of this Agreement to be performed by, the other party shall be deemed a waiver of a similar or dissimilar requirement, provision or condition of this Agreement at the same or any prior or subsequent time. Any such waiver shall be express and in writing, and there shall be no waiver by conduct.

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(k) Indemnification. The Company shall indemnify the Executive, to the maximum extent permitted by applicable law, and in the same or better manner and to the same or better extent with respect to each aspect of the indemnification as provided to any other executive of the Company, against all costs, charges and expenses incurred or sustained by the Executive in connection with any action, suit or proceeding to which the Executive may be made a party, brought by any shareholder of the Company directly or derivatively or by any third party by reason of any act or omission of the Executive as an officer, director or employee of the Company or of any subsidiary or affiliate of the Company.

(l) Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

(m) Counterparts. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.

(n) Compliance with Code Section 409A. This Agreement is intended to be exempt from (or comply with) Code Section 409A, and the Company shall have complete discretion to interpret and construe this Agreement and any associated documents in any manner that establishes an exemption from (or otherwise conforms them to) the requirements of Code Section 409A. If, for any reason including imprecision in drafting, the Agreement does not accurately reflect its intended establishment of an exemption from (or compliance with) Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, the provision shall be considered ambiguous and shall be interpreted by the Company in a fashion consistent herewith, as determined in the sole and absolute discretion of the Company. Nevertheless, and notwithstanding any other provision of this Agreement, neither the Company nor any of its employees, trustees, or their agents shall have any obligation to mitigate, nor to hold the Executive harmless from, any or all taxes (including any imposed under Code Section 409A) arising under this Agreement.

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this Agreement effective as of the day and year first written above.

Date: December 3, 2014	FOUR SPRINGS CAPITAL TRUST
	By:	/s/ William P. Dioguardi
	Name: William P. Dioguardi
	Title: Chairman and CEO
Date: December 3, 2014	EXECUTIVE
	/s/ John E. Warch
	John E. Warch

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EX-10.14

Exhibit 10.14

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”), effective as of December 3, 2014 (the “Effective Date”), by and between Four Springs Capital Trust (the “Company”) and Cynthia M. Daly (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Trustees of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive and to provide the Executive with compensation and benefits arrangements which are competitive with those of other real estate investment trusts;

WHEREAS, Executive desires to be so employed;

NOW, THEREFORE, in order to accomplish these objectives and in consideration of the mutual covenants and promises contained herein, the parties hereto, each intending to be legally bound hereby, agree as follows:

1. Employment. Subject to the terms and conditions set forth herein, the Company shall employ the Executive as Director of Acquisitions, and the Executive accepts such employment for the Employment Term (as defined below). During the Employment Term, the Executive shall perform the duties of the Director of Acquisitions and such other duties consistent with such position as may from time to time be assigned to her by the Board.

2. Performance. Except as provided below, the Executive will serve the Company faithfully and to the best of her ability and will devote substantially all of her business time, energy, experience and talents to the business of the Company and its affiliates; provided, however, that it shall not be considered a violation of the foregoing for the Executive to (a) manage her personal or her family’s investments; or (b) to serve on civic or charitable boards or committees; or (c) with the advance written approval of the Board, to serve on industry boards or committees; or (d) to participate in any activity approved by the Board, so long as any of such activities in (a) through (d) do not interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

3. Employment Term. Unless earlier terminated pursuant to Section 5 below (including, but not limited to, the Executive’s termination of employment due to death, resignation, or Disability (as defined in Section 5(b)(iii) below)), the employment term shall begin upon the Effective Date, and shall continue until December 31, 2015 (the “Employment Term”). The Agreement shall automatically renew for a one-year term on January 1, 2016 and on the anniversary date of any subsequent one year-term (“Renewal Term”) unless either the Company or the Executive gives the other party written notice of non-extension at least 120 days prior to the expiration of the Agreement or Renewal Term (in either case “120-Day Termination Notice”), provided that failure of either party to provide 120-Day Termination Notice shall result only in the below specified damages, and shall not result in a continuation of the Agreement. Damages for failure to provide 120-Day Termination Notice shall consist of the following: (a) in the case of the Company, payment of Executive’s Base Salary for any portion of the 120-Day Termination Notice period not observed, and (b) in the case of the Executive, forfeiture of any entitlement to the payout of accrued and unused vacation time. In the event the Company terminates the Agreement for no other reason than the expiration of the Employment Term, Executive shall be entitled to receive severance pay in an amount that is equal to one year’s Base Salary (as defined in Section 4 below), less applicable withholdings and deductions, which shall be payable in accordance with the Company’s standard payroll practices over a period of one year from the expiration of the term of this Agreement; provided, however, such severance pay payable under this section 3 shall be subject to set off by the Company for any amounts received by Executive during the one year period following the expiration of the term of this Agreement whether as an employee, consultant, partner, owner or other similar capacity.

4. Compensation and Benefits.

(a) Base Salary. As compensation for services hereunder and in consideration of the Executive’s other agreements hereunder, during the Employment Term and any Renewal Term, the Company shall pay the Executive a base salary, payable in equal installments in accordance with the Company’s procedures at an annual rate of One Hundred Twenty Five Thousand Dollars ($125,000), less applicable withholdings and deductions, subject to review by the Company no less frequently than annually for increase (but not to be decreased) (such base salary, as may be increased from time to time being hereinafter referred to as “Base Salary”).

(b) Bonuses and Incentive Compensation. During the Employment Term and any Renewal Term, the Executive shall have opportunities for bonuses and shall have opportunities for incentive compensation comparable to those provided to other senior executives of the Company and shall be eligible to participate in all bonus and incentive compensation plans, including the Company’s 2014 Stock Incentive Plan, made available by the Company, from time to time, for its senior executives.

(c) Medical, Dental, Disability, Life Insurance, Pension and Other Benefits. During the Employment Term, the Executive shall, in accordance with the terms and conditions of the applicable plan documents and all applicable laws, be eligible to participate in the various medical, dental, disability, life insurance, pension and other employee benefit plans made available by the Company, from time to time, for its senior executives.

(d) Vacation, Sick Leave. During the Employment Term and any Renewal Term, the Executive shall be entitled to vacation and sick leave in accordance with the Company’s then current established practices and policies with respect to its senior executives, provided that Executive’s annual vacation leave shall be no less than three (3) weeks.

(e) Expenses. The Executive shall be reimbursed by the Company for all reasonable expenses actually incurred by him in connection with the performance of his duties hereunder in accordance with policies established by the Company from time to time and upon receipt of appropriate documentation. Expenses reimbursable under this paragraph shall be reimbursed within a reasonable period of time following Executive’s submission of the reimbursement request and any supporting documentation reasonably requested by the Company and no later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

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5. Termination. (a) During the Employment Term and any Renewal Term, the employment of the Executive may be terminated at any time (i) by the Company with or without Cause (as defined in Section 5(b)(i) below); (ii) by the Executive with or without Good Reason (as defined in Section 5(b)(ii) below); or (iii) by the Company without Cause or by the Executive with Good Reason, in either case, within 12 months of a Change in Control (a “Double Trigger Termination”). At any time after a Disability (as defined in Section 5(b)(iii) below) occurs, provided that the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, determines that the Executive remains incapable of performing his essential duties and responsibilities hereunder, subject to applicable legal requirements, the Company may terminate the Executive’s employment effective forthwith after giving notice to the Executive of such termination. Further, if the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, shall reasonably determine that the Executive has become physically or mentally incapable of performing his essential duties and responsibilities as provided in this Agreement and such incapacity is likely to last for a period of at least one hundred eighty (180) days from the onset of such incapacity, the Company may, at its discretion at any time thereafter while the Executive remains incapable of performing his material duties hereunder, and subject to applicable legal requirements, remove the Executive from his then position with the Company; provided, further, that if he returns to full time employment, with the permission of the Board, prior to the time he is determined to have incurred a Disability, he shall be restored to his position or positions with the Company.

(b) For purposes of this Agreement,

(i) “Cause” shall mean: (A) the Executive’s conviction of, plea of nolo contendere to, or written admission of the commission of, a felony (B) any material breach by the Executive of Section 7 of this Agreement; (C) any act by the Executive involving moral turpitude, fraud or misrepresentation with respect to his duties for the Company or its affiliates, which materially and adversely affects the Company; or (D) gross negligence or willful misconduct on the part of the Executive in the performance of his duties as an employee, officer or member of the Company or its affiliates (that in only the case of gross negligence results in a material economic harm to the Company); provided, however, that the Company may not terminate the Executive’s employment under clauses (B), (C) or (D) unless the Company first gives the Executive notice of its intention to terminate and of the grounds for such termination within 90 days of such event, and in the case of a breach set forth in clause (B) above, the Executive either (X) has not, within 30 days following receipt of such notice, cured such Cause, or (Y) in the event such Cause cannot be cured within such 30-day period, has not taken all reasonable steps to cure such Cause. No termination for Cause shall be effective unless the Board makes a Cause determination after notice to the Executive and the Executive has been provided with the opportunity (with counsel of his choice) to contest the determination at a meeting of the Board.

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(ii) “Good Reason” shall mean the occurrence of any of the following conditions without the Executive’s written consent, provided that Executive shall provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence of such condition, upon the notice of which the Company shall have at least thirty (30) days within which to cure such condition, and if the Company fails to cure the condition within such cure period, the Executive must terminate employment by sending written notice to the Company within thirty (30) days following the Company’s failure to cure: (A) a material reduction of the Executive’s authority, duties and responsibilities, or the assignment to the Executive of duties materially inconsistent with the Executive’s position or positions with the Company; (B) a reduction in the Executive’s rate of Base Salary; (C) a breach by the Company of any material provision of this Agreement; or (D) a transfer of the place of employment of more than thirty (30) miles from the Company’s principal executive offices. Notwithstanding anything herein to the contrary, (x) any change of the Executive’s position with the Company to which the Executive consents in writing shall not constitute Good Reason and (y) retirement by the Executive shall not constitute Good Reason and no compensation, benefits or payments shall be due to the Executive hereunder as a result of retirement by the Executive.

(iii) “Disability” shall mean the mental or physical incapacity of the Executive such that (A) he qualifies for long-term disability benefits under a Company-sponsored long-term disability policy or (B) the Executive has been incapable as a result of illness, disease, mental or physical disability, disorder, infirmity, or impairment or similar cause of performing his essential duties and responsibilities for any period of one hundred eighty (180) days (whether or not consecutive) in any consecutive three hundred sixty-five (365) day period. Disability shall be determined by an approved medical doctor selected by the Company and the Executive. If the Company and the Executive cannot agree on a medical doctor, each party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

(iv) “Change in Control” shall mean:

(A) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership”) of 20% or more of either (i) the then outstanding common shares of beneficial interest of the Company (including preferred shares or other securities of the Company convertible into common shares) (the “Outstanding Company Common Shares”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of trustees (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (C) of this Section 5(b)(iv); or

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(B) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board;

provided, however, that any individual becoming a trustee subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the trustees then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of trustees or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(C) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the Persons who had Beneficial Ownership, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Business Combination have Beneficial Ownership of more than 50%, respectively, of the then outstanding common shares of beneficial interest and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of trustees, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) acquires Beneficial Ownership of 20% or more of, respectively, the then outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of trustees or board of trustees, as the case may be, of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement with the successor or purchasing entity in respect of such Business Combination, or of the action of the Board, providing for such Business Combination; or

(D) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

(v) “Long-Term Incentive Award” shall mean any long-term incentive award previously granted to the Executive, including but not limited to restricted shares, deferred share awards, and share option awards, whether or not issued pursuant to an equity award plan.

6. Severance.

(a) If, during the Employment Term and any Renewal Term and either prior to the occurrence of a Change in Control or more than 12 months after a Change in Control, the Executive’s employment is terminated by the Company without Cause, then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(f):

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(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”); and

(iii) severance pay in an amount that is equal to one year’s Base Salary, less applicable withholdings and deductions, which shall be payable in accordance with the Company’s standard payroll practices over a period of one year from the termination of Executive’s employment pursuant to this Section 6(a); provided, however, such amounts payable under this section 6(a)(iii) shall be subject to set off by the Company for any amounts received by Executive during the one year period following his termination of employment with the Company as an employee, consultant, partner, owner or other similar capacity (such amounts shall be referred to herein as the “Initial Severance Pay”).

Additionally, upon a termination of the Executive’s employment without Cause under this Section 6(a), (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

As a condition of and upon receiving the severance pay under Section 6(a)(iii) and the acceleration of vesting of non-vested Long-Term Incentive Awards set forth in the immediately preceding paragraph, the Executive agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Declaration of Trust, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive does not execute the release and the release does not become irrevocable within 60 days of his termination of employment, the Executive shall forfeit his right to the severance pay under Section 6(a)(iii) and the acceleration of vesting of his non-vested Long-Term Incentive Awards.

(b) If, during the Employment Term and any Renewal Term, the Executive’s employment is terminated in a Double Trigger Termination, then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(f):

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(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”);

(iii) within 60 days of such termination of employment, severance pay (the “Post-CoC Severance Pay”) in a lump sum cash payment equal to two and one half (2.5) times the sum of: (x) the Executive’s Base Salary at termination (disregarding a reduction in Base Salary that constitutes Good Reason), and (y) the average of the last two annual cash bonuses the Company has paid to or agreed to pay to (if such payment has not yet been made) the Executive (the “Average Bonus”);

(iv) within 60 days of such termination of employment, a lump sum cash payment of a pro rata annual bonus, without duplication of any Entitlements, determined by (x) the number of days the Executive was employed by the Company during the fiscal year divided by 365, and multiplied by (y) the Average Bonus (the “Pro Rata Cash Bonus”); and

Additionally, upon a termination of the Executive’s employment in a Double Trigger Termination under this Section 6(b), (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

Additionally, medical, dental, disability, life insurance and other employee welfare benefits (the “Welfare Plans”) then provided to senior executives of the Company shall be continued following the date of termination for a period of two and one half (2.5) years and, if the Executive is precluded from participating in any Welfare Plan by its terms or applicable law during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar Welfare Plan coverage, but only to the extent Executive’s requested reimbursement of expenses for similar Welfare Plan coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay under the terms of this Agreement as of the date of the Executive’s termination, or date of payment if later, to continue Executive’s participation in the underlying Welfare Plan for the period the expenses were incurred by the Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year.

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(c) If during the Employment Term, the Executive’s employment is terminated on account of death or Disability, the Company shall have no liability or further obligation to the Executive except as follows: the Executive (and his estate or designated beneficiaries under any Company-sponsored employee benefit plan in the event of his death) shall be entitled to receive, subject to Section 6(f):

(i) any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans; and

(ii) Initial Severance Pay, which shall be payable in accordance with the Company’s standard payroll practices over a period of one year from the date of the termination of Executive’s employment pursuant to this Section 6(c).

Additionally, (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

Additionally, the group health plan then provided to senior executives of the Company shall be continued following the date of termination for a period of one year and, during such period, if the Executive is precluded from participating in such group health plan by its terms or applicable law at any time during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar coverage, but only to the extent Executive’s requested reimbursement of expenses for such similar coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay as of the date of the Executive’s termination to continue the Executive’s participation in the group health plan for the period the expenses for similar coverage are incurred by Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year. Notwithstanding the foregoing, the continuation period for group health benefits under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) by reason of the Executive’s termination of employment with the Company shall be measured from his actual date of termination of employment.

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As a condition of receiving the Initial Severance Pay under Section 6(c)(ii), the Executive, or the representative of his estate if he has died, agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Certificate of Incorporation, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive or the representative of his estate does not execute the release and the release does not become irrevocable within 60 days of his termination of employment or death, the Executive or the estate shall forfeit the right to the Initial Severance Pay under Section 6(c)(ii) and the acceleration of vesting of his non-vested Long-Term Incentive Awards.

(d) If during the Employment Term and any Renewal Term, the Executive’s employment is terminated by the Company for Cause or by the Executive for any reason, (i) all non-vested and/or unexercised Long-Term Incentive Awards shall be forfeited, terminated and cancelled and (ii) the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans.

(e) The payments made pursuant to this Section 6 shall be excluded from all pension and benefit calculations under the employee benefit plans of the Company and its affiliates, except as otherwise provided in the applicable employee benefit plan.

(f) Notwithstanding anything in this Section 6 to the contrary, if any amounts or benefits payable under this Agreement in the event of Executive’s termination of employment constitute “nonqualified deferred compensation” within the meaning of Code Section 409A, payment of such amounts and benefits shall commence when the Executive incurs a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h), without regard to any of the optional provisions thereunder, from the Company and any entity that would be considered a single employer with the Company under Code Section 414(b) or 414(c) (“Separation from Service”). Such payments or benefits shall be provided in accordance with the timing provisions of this Agreement by substituting the Agreement’s references to “termination of employment” or “termination” with Separation from Service. Notwithstanding the foregoing, if at the time of Executive’s Separation from Service the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), any amount or benefits that the constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A that becomes payable to Executive on account of the Executive’s Separation from Service will not be paid until after the earlier of (i) first business day of the seventh month following Executive’s Separation from Service, or (ii) the date of the Executive’s death (the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period, the Executive shall be paid a cash lump sum payment equal to any payments (including interest on any such payments, at an interest rate of not less than the prime interest rate, as published in the Wall Street Journal, over the period such payment is restricted from being paid to the Executive) and benefits that the Company would otherwise have been required to provide under this Section 6 but for the imposition of the 409A Suspension Period delayed because of the preceding sentence. Thereafter, the Executive shall receive any remaining payments and benefits due under this Section 6 in accordance with the terms of this Section (as if there had not been any Suspension Period beforehand). For the purposes of this Agreement, each payment that is part of a series of installment payments shall treated be as a separate payment for purposes of Code Section 409A.

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7. Covenants of the Executive. (a) During the Employment Term and Renewal Term and for a period of one (1) year thereafter, (i) the Executive shall not, within any jurisdiction or marketing area in which the Company or any of its affiliates is doing business, directly or indirectly, own, manage, operate, control, consult with, be employed by or participate in the ownership, management, operation or control of any business of the type and character engaged in or competitive with that conducted by the Company or any of its affiliates, which for purposes of this paragraph 7 shall mean a real estate investment trust or other investment vehicle that owns properties that are net leased to single tenants; (ii) the Executive shall not, directly or indirectly, employ, solicit for employment or otherwise contract for the services of any employee of the Company or any of its affiliates at the time of this Agreement or who shall subsequently become an employee of the Company or any such affiliate; and (iii) the Executive will not solicit, in competition with the Company or its affiliates, any person who is, or was at any time within the twelve months prior to his termination of employment, a customer of the business conducted by the Company or any of its affiliates. For purposes of determining whether to permanently withhold, or recover, payments from the Executive pursuant to Section 7(d) hereof, the Board shall determine what constitutes a competing business; provided that (x) the scope of businesses and the jurisdictions and marketing areas within which the Executive has agreed not to compete pursuant to clause (a)(i) of this Section 7 shall, for any challenged activity of the Executive, be determined as of the date of any such activity and (y) the Executive’s ownership of securities of two percent (2%) or less of any publicly traded class of securities of a public company shall not be considered to be competition with the Company or any of its affiliates. Notwithstanding the foregoing, the post-employment covenant in this paragraph 7(a) shall not apply in the event of termination of this Agreement for no other reason than the expiration of the Employment Term or any Renewal Term.

(b) For the Employment Term and thereafter, (i) the Executive will not divulge, transmit or otherwise disclose (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, other than in the regular and proper course of business of the Company, any confidential knowledge or information with respect to the operations, finances, organization or employees of the Company or with respect to confidential or secret processes, services, techniques, customers or plans with respect to the Company; and (ii) the Executive will not use (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, any confidential information for the benefit of anyone other than the Company; provided, however, that the Executive has no obligation, express or implied, to refrain from using or disclosing to others any such knowledge or information which is or hereafter shall become available to the public other than through disclosure by the Executive. All new processes, techniques, know-how, inventions, plans, products, patents and devices developed, made or invented by the Executive, alone or with others, while an employee of the Company which are related to the business of the Company shall be and become the sole property of the Company, unless released in writing by the Company, and the Executive hereby assigns any and all rights therein or thereto to the Company.

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(c) All files, records, correspondence, memoranda, notes or other documents (including, without limitation, those in computer-readable form) or property relating or belonging to the Company or its affiliates, whether prepared by the Executive or otherwise coming into his possession in the course of the performance of his services under this Agreement, shall be the exclusive property of Company and shall be delivered to Company and not retained by the Executive (including, without limitations, any copies thereof) upon termination of the Executive’s employment for any reason whatsoever.

(d) The Executive acknowledges that a breach of his covenants contained in this Section 7 may cause irreparable damage to the Company and its affiliates, the exact amount of which will be difficult to ascertain, that the remedies at law for any such breach will be inadequate and that the amounts payable to the Executive pursuant to the provisions of Section 6(a)(iii) and the paragraphs following 6(a)(iii) and/or 6(b)(ii), (iii) and (iv) hereunder are additional consideration for the covenants contained in this Section 7. Accordingly, the Executive agrees that if he breaches any of the covenants contained in this Section 7, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief, without posting of a bond. In addition, the breach of any of the covenants contained in this Section 7 shall entitle the Company to permanently withhold, and to recover from the Executive any amounts paid to the Executive pursuant to the provisions of Section 6(a)(iii) and the paragraphs following 6(a)(iii) and/or 6(b)(ii), (iii) and (iv) of this Agreement. The Company shall provide the Executive with at least five days prior written notice before withholding of any payment provided for in the immediately preceding sentence.

(e) The Company and the Executive further acknowledge that the time, scope, geographic area and other provisions of this Section 7 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement. In the event that the agreements in this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

(f) The Executive agrees to cooperate with the Company, during the Term of Employment and thereafter (including following the Executive’s termination of employment for any reason), by making himself reasonably available to testify on behalf of the Company or any of its affiliates in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any affiliate, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Company’s Board or its representatives or counsel, or representatives or counsel to the Company, or any affiliate as reasonably requested; provided, however that the same does not materially interfere with his then current professional activities or important personal activities and is not contrary to the best interests of the Executive. The Company agrees to reimburse the Executive, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance, and, if during the period following the Employment Term or Renewal Term, the Company requests the Executive’s cooperation for a period of greater than 8 hours per month, the Company agrees to reimburse the Executive at a rate of $250.00 per hour. Expenses reimbursable under this paragraph must be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

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(g) The Executive agrees that, during the Term of Employment and at any time thereafter (including following the Executive’s termination of employment for any reason) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any of its affiliates or their respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Employment Term, and at any time thereafter, (including following the Executive’s termination of employment for any reason) it will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Executive’s reputation. Notwithstanding the foregoing, nothing in this Agreement shall preclude the Executive or a representative of the Company from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

8. Notices. Any notices required or permitted hereunder shall be in writing and shall be deemed to have been given when personally delivered or when mailed, certified or registered mail, postage prepaid, to the following addresses:

If to the Executive:

Cynthia M. Daly

265 Cedar Avenue

Manasquan, NJ 08736

If to the Company:

Four Springs Capital Trust

1901 Main St. 

Lake Como, NJ 07719

9. General.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey applicable to contracts executed and to be performed entirely within said State.

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(b) Construction and Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired, and the parties undertake to implement all efforts which are necessary, desirable and sufficient to amend, supplement or substitute all and any such invalid, illegal or unenforceable provisions with enforceable and valid provisions which would produce as nearly as may be possible the result previously intended by the parties without renegotiation of any material terms and conditions stipulated herein.

(c) Assignability. The Executive may not assign his interest in or delegate his duties under this Agreement. This Agreement is for the employment of the Executive, personally, and the services to be rendered by him under this Agreement must be rendered by him and no other person. The Executive represents and warrants to the Company that the Executive has no contracts or agreements of any nature that the Executive has entered into with any other person, firm or corporation that contain any restraints on the Executive’s ability to perform his obligations under this Agreement. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. Notwithstanding anything else in this Agreement to the contrary, the Company will assign this Agreement to and all rights hereunder shall inure to the benefit of any person, firm or corporation resulting from the reorganization of the Company or succeeding to the business or assets of the Company by purchase, merger or consolidation.

(d) Enforcement Costs. If any contest or dispute shall arise under this Agreement involving the termination of the Executive’s employment with the Company and its affiliates or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall advance the Executive or pay directly on his behalf, all reasonable legal fees and expenses, if any, incurred or, in the case of fees and expenses for which payment is required before the services are rendered, to be incurred within the next 30 days, by the Executive in connection with such contest or dispute upon presentation of an itemized bill to the Company regarding any such fees and expenses along with proof reasonably satisfactory to the Company that such expenses have been incurred or will be incurred within the next 30 days by the Executive; provided, however, that in the event the resolution of any such contest or dispute includes a finding that the Executive’s claims in such contest or dispute are frivolous or brought in bad faith, the Executive shall be required to reimburse the Company, for all sums advanced to the Executive pursuant to this Section 9(d) in connection with such contest or dispute, together with interest in an amount equal to the prime rate, as published in the Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company makes payment to the Executive hereunder through the date of the Executive’s repayment thereof. Notwithstanding the foregoing, any reimbursements under this paragraph following the Executive’s termination of employment with the Company shall be subject to the payment limitations described in Section 6(f) of this Agreement.

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(e) Compliance with Rules and Policies. The Executive shall perform all services in all material respects in accordance with the applicable policies, procedures and rules established by the Company, including, but not limited to, the By-Laws of the Company. In addition, the Executive, where applicable, shall comply in all material respects with all laws, rules and regulations that are generally applicable to the Company, its affiliates and their employees, directors and officers.

(f) Taxes. The Company shall withhold from all amounts due hereunder any applicable withholding taxes payable to federal, state, local or foreign taxing authorities. Except as set forth in Section 6, the Company shall have no obligation to indemnify or hold the Executive harmless from any taxes he may incur from any amounts payable under this Agreement.

(g) Entire Agreement; Modification. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, supersedes all prior agreements and undertakings, both written and oral.

(h) Duration. Notwithstanding the Employment Term hereunder, the applicable sections of this Agreement shall continue for so long as any obligations remain under this Agreement.

(i) Survival. All of the rights and covenants set forth in Sections 5, 6, 7, 8, and 9 of this Agreement shall survive and shall continue to be binding upon the Executive notwithstanding the termination of this Agreement for any reason whatsoever. It is expressly agreed that the remedy at law for the breach or threatened breach of any such covenant is inadequate and that the Company, in addition to any other remedies that may be available to it, in law or in equity, shall be entitled to injunctive relief to prevent the breach or any threatened breach thereof without bond or other security or a showing that monetary damages will not provide an adequate remedy.

(j) Waiver. No waiver by either party hereto of any of the requirements imposed by this Agreement on, or any breach of any condition or provision of this Agreement to be performed by, the other party shall be deemed a waiver of a similar or dissimilar requirement, provision or condition of this Agreement at the same or any prior or subsequent time. Any such waiver shall be express and in writing, and there shall be no waiver by conduct.

(k) Indemnification. The Company shall indemnify the Executive, to the maximum extent permitted by applicable law, and in the same or better manner and to the same or better extent with respect to each aspect of the indemnification as provided to any other executive of the Company, against all costs, charges and expenses incurred or sustained by the Executive in connection with any action, suit or proceeding to which the Executive may be made a party, brought by any shareholder of the Company directly or derivatively or by any third party by reason of any act or omission of the Executive as an officer, director or employee of the Company or of any subsidiary or affiliate of the Company.

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(l) Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

(m) Counterparts. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.

(n) Compliance with Code Section 409A. This Agreement is intended to be exempt from (or comply with) Code Section 409A, and the Company shall have complete discretion to interpret and construe this Agreement and any associated documents in any manner that establishes an exemption from (or otherwise conforms them to) the requirements of Code Section 409A. If, for any reason including imprecision in drafting, the Agreement does not accurately reflect its intended establishment of an exemption from (or compliance with) Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, the provision shall be considered ambiguous and shall be interpreted by the Company in a fashion consistent herewith, as determined in the sole and absolute discretion of the Company. Nevertheless, and notwithstanding any other provision of this Agreement, neither the Company nor any of its employees, trustees, or their agents shall have any obligation to mitigate, nor to hold the Executive harmless from, any or all taxes (including any imposed under Code Section 409A) arising under this Agreement.

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this Agreement effective as of the day and year first written above.

Date: December 3, 2014	FOUR SPRINGS CAPITAL TRUST
	By:	/s/ William P. Dioguardi
	Name: William P. Dioguardi
	Title: Chairman and CEO
Date: December 3, 2014	EXECUTIVE
	/s/ Cynthia M. Daly
	Cynthia M. Daly

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EX-10.15

Exhibit 10.15

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”), effective as of August 1, 2016 (the “Effective Date”), by and between Four Springs Capital Trust (the “Company”) and Jared W. Morgan (the “Executive”).

WITNESSETH:

WHEREAS, the Board of Trustees of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive and to provide the Executive with compensation and benefits arrangements which are competitive with those of other real estate investment trusts;

WHEREAS, Executive desires to be so employed;

NOW, THEREFORE, in order to accomplish these objectives and in consideration of the mutual covenants and promises contained herein, the parties hereto, each intending to be legally bound hereby, agree as follows:

1. Employment. Subject to the terms and conditions set forth herein, the Company shall employ the Executive as Senior Vice President, Head of Acquisitions, and the Executive accepts such employment for the Employment Term (as defined below). During the Employment Term, the Executive shall perform the duties of Senior Vice President, Head of Acquisitions and such other duties consistent with such position as may from time to time be assigned to him by the Board. The Executive shall report directly to the Company’s President.

2. Performance. Except as provided below, the Executive will serve the Company faithfully and to the best of his ability and will devote substantially all of his business time, energy, experience and talents to the business of the Company and its affiliates; provided, however, that it shall not be considered a violation of the foregoing for the Executive to (a) manage his personal or his family’s investments; or (b) to serve on civic or charitable boards or committees; or (c) with the advance written approval of the Board, to serve on industry boards or committees; or (d) to participate in any activity approved by the Board, so long as any of such activities in (a) through (d) do not interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

3. Employment Term. Unless earlier terminated pursuant to Section 5 below (including, but not limited to, the Executive’s termination of employment due to death, resignation, or Disability (as defined in Section 5(b)(iii) below)), the employment term shall begin upon the Effective Date, and shall continue until December 31, 2017 (the “Employment Term”). The Agreement shall automatically renew for a one-year term on January 1, 2018 and on the anniversary date of any subsequent one year-term (“Renewal Term”) unless either the Company or the Executive gives the other party written notice of non-extension at least 120 days prior to the expiration of the Agreement or Renewal Term (in either case “120-Day Termination Notice”), provided that failure of either party to provide 120-Day Termination Notice shall result only in the below specified damages, and shall not result in a continuation of the Agreement. Damages for failure to provide 120-Day Termination Notice shall consist of the following: (a) in the case of the Company, payment of Executive’s Base Salary for any portion of the 120-Day  Termination Notice period not observed, and (b) in the case of the Executive, forfeiture of any entitlement to the payout of accrued and unused vacation time. In the event the Company terminates the Agreement for no other reason than the expiration of the Employment Term, Executive shall be entitled to receive severance pay in an amount that is equal to six month’s Base Salary (as defined in Section 4 below), less applicable withholdings and deductions, which shall be payable in accordance with the Company’s standard payroll practices over a period of six months from the expiration of the term of this Agreement; provided, however, such severance pay payable under this section 3 shall be subject to set off by the Company for any amounts received by Executive during the six month period following the expiration of the term of this Agreement whether as an employee, consultant, partner, owner or other similar capacity.

4. Compensation and Benefits.

(a) Base Salary. As compensation for services hereunder and in consideration of the Executive’s other agreements hereunder, during the Employment Term and any Renewal Term, the Company shall pay the Executive a base salary, payable in equal installments in accordance with the Company’s procedures at an annual rate of Two Hundred Ten Thousand Dollars ($210,000), less applicable withholdings and deductions, subject to review by the Company no less frequently than annually for increase (but not to be decreased) (such base salary, as may be increased from time to time being hereinafter referred to as “Base Salary”).

(b) Bonuses and Incentive Compensation.

(i) During the Employment Term and any Renewal Term, the Executive shall have opportunities for bonuses, based on a target bonus opportunity equal to fifty percent (50%) of the Executive’s Base Salary, and shall have opportunities for incentive compensation comparable to those provided to other senior executives of the Company and shall be eligible to participate in all bonus and incentive compensation plans, including the Company’s 2014 Stock Incentive Plan, made available by the Company, from time to time, for its senior executives.

(ii) Executive will be eligible to receive a bonus of $50,000 if the Company is able to successfully complete an initial public offering (IPO) of its capital stock while Executive is employed with the Company. Any such bonus will be payable in the first pay period following the closing of the Company’s IPO and shall be subject to applicable federal, state and local taxes, and shall be payable in accordance with the Company’s standard payroll practices.

(c) Medical, Dental, Disability, Life Insurance, Pension and Other Benefits. During the Employment Term, the Executive shall, in accordance with the terms and conditions of the applicable plan documents and all applicable laws, be eligible to participate in the various medical, dental, disability, life insurance, pension and other employee benefit plans made available by the Company, from time to time, for its senior executives.

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(d) Vacation, Sick Leave. During the Employment Term and any Renewal Term, the Executive shall be entitled to vacation and sick leave in accordance with the Company’s then current established practices and policies with respect to its senior executives, provided that Executive’s annual vacation leave shall be no less than four (4) weeks.

(e) Expenses. The Executive shall be reimbursed by the Company for all reasonable expenses actually incurred by him in connection with the performance of his duties hereunder in accordance with policies established by the Company from time to time and upon receipt of appropriate documentation. Expenses reimbursable under this paragraph shall be reimbursed within a reasonable period of time following Executive’s submission of the reimbursement request and any supporting documentation reasonably requested by the Company and no later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

5. Termination. (a) During the Employment Term and any Renewal Term, the employment of the Executive may be terminated at any time (i) by the Company with or without Cause (as defined in Section 5(b)(i) below); (ii) by the Executive with or without Good Reason (as defined in Section 5(b)(ii) below); or (iii) by the Company without Cause or by the Executive with Good Reason, in either case, within 12 months of a Change in Control (a “Double Trigger Termination”). At any time after a Disability (as defined in Section 5(b)(iii) below) occurs, provided that the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, determines that the Executive remains incapable of performing his essential duties and responsibilities hereunder, subject to applicable legal requirements, the Company may terminate the Executive’s employment effective forthwith after giving notice to the Executive of such termination. Further, if the Board, upon advice of a medical doctor selected in accordance with Section 5(b)(iii) hereof, shall reasonably determine that the Executive has become physically or mentally incapable of performing his essential duties and responsibilities as provided in this Agreement and such incapacity is likely to last for a period of at least one hundred eighty (180) days from the onset of such incapacity, the Company may, at its discretion at any time thereafter while the Executive remains incapable of performing his material duties hereunder, and subject to applicable legal requirements, remove the Executive from his then position with the Company; provided, further, that if he returns to full time employment, with the permission of the Board, prior to the time he is determined to have incurred a Disability, he shall be restored to his position or positions with the Company.

(b) For purposes of this Agreement,

(i) “Cause” shall mean: (A) the Executive’s conviction of, plea of nolo contendere to, or written admission of the commission of, a felony (B) any material breach by the Executive of Section 7 of this Agreement; (C) any act by the Executive involving moral turpitude, fraud or misrepresentation with respect to his duties for the Company or its affiliates, which materially and adversely affects the Company; or (D) gross negligence or willful misconduct on the part of the Executive in the performance of his duties as an employee, officer or member of the Company or its affiliates (that in only the case of gross negligence results in a material economic harm to the Company); provided, however, that the Company may not terminate the Executive’s employment under clauses (B), (C) or (D) unless the Company first gives the Executive notice of its intention to terminate and of the grounds for such termination within 90 days of such event, and in the case of a breach set forth in clause (B) above, the Executive either (X) has not, within 30 days following receipt of such notice, cured such Cause, or (Y) in the event such Cause cannot be cured within such 30-day period, has not taken all reasonable steps to cure such Cause. No termination for Cause shall be effective unless the Board makes a Cause determination after notice to the Executive and the Executive has been provided with the opportunity (with counsel of his choice) to contest the determination at a meeting of the Board.

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(ii) “Good Reason” shall mean the occurrence of any of the following conditions without the Executive’s written consent, provided that Executive shall provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence of such condition, upon the notice of which the Company shall have at least thirty (30) days within which to cure such condition, and if the Company fails to cure the condition within such cure period, the Executive must terminate employment by sending written notice to the Company within thirty (30) days following the Company’s failure to cure: (A) a material reduction of the Executive’s authority, duties and responsibilities, or the assignment to the Executive of duties materially inconsistent with the Executive’s position or positions with the Company; (B) a reduction in the Executive’s rate of Base Salary; (C) a breach by the Company of any material provision of this Agreement; or (D) a transfer of the place of employment of more than thirty (30) miles from the Company’s principal executive offices. Notwithstanding anything herein to the contrary, (x) any change of the Executive’s position with the Company to which the Executive consents in writing shall not constitute Good Reason and (y) retirement by the Executive shall not constitute Good Reason and no compensation, benefits or payments shall be due to the Executive hereunder as a result of retirement by the Executive.

(iii) “Disability” shall mean the mental or physical incapacity of the Executive such that (A) he qualifies for long-term disability benefits under a Company-sponsored long-term disability policy or (B) the Executive has been incapable as a result of illness, disease, mental or physical disability, disorder, infirmity, or impairment or similar cause of performing his essential duties and responsibilities for any period of one hundred eighty (180) days (whether or not consecutive) in any consecutive three hundred sixty-five (365) day period. Disability shall be determined by an approved medical doctor selected by the Company and the Executive. If the Company and the Executive cannot agree on a medical doctor, each party shall select a medical doctor and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

(iv) “Change in Control” shall mean:

(A) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership”) of 20% or more of either (i) the then outstanding common shares of beneficial interest of the Company (including preferred shares or other securities of the Company convertible into common shares) (the “Outstanding Company Common Shares”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of trustees (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (A), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (C) of this Section 5(b)(iv); or

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(B) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a trustee subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the trustees then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of trustees or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(C) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the Persons who had Beneficial Ownership, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such Business Combination have Beneficial Ownership of more than 50%, respectively, of the then outstanding common shares of beneficial interest and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of trustees, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Shares and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) acquires Beneficial Ownership of 20% or more of, respectively, the then outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination and (3) at least a majority of the members of the board of trustees or board of trustees, as the case may be, of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement with the successor or purchasing entity in respect of such Business Combination, or of the action of the Board, providing for such Business Combination; or

(D) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

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(v) “Long-Term Incentive Award” shall mean any long-term incentive award previously granted to the Executive, including but not limited to restricted shares, deferred share awards, and share option awards, whether or not issued pursuant to an equity award plan.

6. Severance.

(a) If, during the Employment Term and any Renewal Term and either prior to the occurrence of a Change in Control or more than 12 months after a Change in Control, the Executive’s employment is terminated by the Company without Cause, then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(f):

(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”); and

(iii) severance pay in an amount that is equal to six month’s Base Salary, less applicable withholdings and deductions, which shall be payable in accordance with the Company’s standard payroll practices over a period of six months from the termination of Executive’s employment pursuant to this Section 6(a); provided, however, such amounts payable under this section 6(a)(iii) shall be subject to set off by the Company for any amounts received by Executive during the six month period following his termination of employment with the Company as an employee, consultant, partner, owner or other similar capacity (such amounts shall be referred to herein as the “Initial Severance Pay”).

Additionally, upon a termination of the Executive’s employment without Cause under this Section 6(a), (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

As a condition of and upon receiving the severance pay under Section 6(a)(iii) and the acceleration of vesting of non-vested Long-Term Incentive Awards set forth in the immediately preceding paragraph, the Executive agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Declaration of Trust, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive does not execute the release and the release does not become irrevocable within 60 days of his termination of employment, the Executive shall forfeit his right to the severance pay under Section 6(a)(iii) and the acceleration of vesting of his non-vested Long-Term Incentive Awards.

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(b) If, during the Employment Term and any Renewal Term, the Executive’s employment is terminated in a Double Trigger Termination, then, the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive, subject to Section 6(f):

(i) within 30 days of such termination of employment, any earned but unpaid Base Salary for the period prior to termination and any earned but unpaid bonuses, in cash, for prior periods which have ended at the time of such termination (“Entitlements”);

(ii) at the time provided in such plan, any rights to which he is entitled in accordance with such applicable plan or program provisions under any employee benefit plan, program or arrangement, fringe benefit or incentive plan (“Rights”);

(iii) within 60 days of such termination of employment, severance pay (the “Post-CoC Severance Pay”) in a lump sum cash payment equal to two and one half (2.5) times the sum of: (x) the Executive’s Base Salary at termination (disregarding a reduction in Base Salary that constitutes Good Reason), and (y) the average of the last two annual cash bonuses the Company has paid to or agreed to pay to (if such payment has not yet been made) the Executive (the “Average Bonus”);

(iv) within 60 days of such termination of employment, a lump sum cash payment of a pro rata annual bonus, without duplication of any Entitlements, determined by (x) the number of days the Executive was employed by the Company during the fiscal year divided by 365, and multiplied by (y) the Average Bonus (the “Pro Rata Cash Bonus”); and

Additionally, upon a termination of the Executive’s employment in a Double Trigger Termination under this Section 6(b), (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

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Additionally, medical, dental, disability, life insurance and other employee welfare benefits (the “Welfare Plans”) then provided to senior executives of the Company shall be continued following the date of termination for a period of two and one half (2.5) years and, if the Executive is precluded from participating in any Welfare Plan by its terms or applicable law during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar Welfare Plan coverage, but only to the extent Executive’s requested reimbursement of expenses for similar Welfare Plan coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay under the terms of this Agreement as of the date of the Executive’s termination, or date of payment if later, to continue Executive’s participation in the underlying Welfare Plan for the period the expenses were incurred by the Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year.

(c) If during the Employment Term, the Executive’s employment is terminated on account of death or Disability, the Company shall have no liability or further obligation to the Executive except as follows: the Executive (and his estate or designated beneficiaries under any Company-sponsored employee benefit plan in the event of his death) shall be entitled to receive, subject to Section 6(f):

(i) any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans; and

(ii) Initial Severance Pay, which shall be payable in accordance with the Company’s standard payroll practices over a period of six months from the date of the termination of Executive’s employment pursuant to this Section 6(c).

Additionally, (x) all non-vested time based Long-Term Incentive Awards and all non-vested but earned performance based Long-Term Incentive Awards shall accelerate, become fully earned and vested, and (y) the end of the performance period for all non-vested but unearned performance based Long-Term Incentive Awards shall be the date of such termination and a pro rata amount of any of such awards then deemed to be earned awards (determined by the number of completed days of the performance period for such award divided by the total number of days in such performance period) shall accelerate, become fully earned and vested; provided, that all unexercised share option awards shall terminate within six months of such termination of employment.

Additionally, the group health plan then provided to senior executives of the Company shall be continued following the date of termination for a period of six months and, during such period, if the Executive is precluded from participating in such group health plan by its terms or applicable law at any time during such period, the Company shall reimburse expenses actually incurred by the Executive during such period to obtain similar coverage, but only to the extent Executive’s requested reimbursement of expenses for such similar coverage does not exceed the Company’s premiums or contributions that the Company would otherwise pay as of the date of the Executive’s termination to continue the Executive’s participation in the group health plan for the period the expenses for similar coverage are incurred by Executive. Expenses reimbursable under this paragraph shall be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive. The expenses eligible for reimbursement under this paragraph during any calendar year shall not affect the expenses eligible for reimbursement under this paragraph in any other calendar year. Notwithstanding the foregoing, the continuation period for group health benefits under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) by reason of the Executive’s termination of employment with the Company shall be measured from his actual date of termination of employment.

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As a condition of receiving the Initial Severance Pay under Section 6(c)(ii), the Executive, or the representative of his estate if he has died, agrees to execute a release thereby releasing the Company and its affiliates from any and all obligations and liabilities to the Executive arising from or in connection with the Executive’s employment or termination of employment with the Company and its affiliates and any disagreements with respect to such employment, except that such release shall not apply with respect to any rights of the Executive to indemnification under the Company’s Certificate of Incorporation, By-Laws or a separate agreement, or to any rights of the Executive to indemnification or directors’ and officers’ liability insurance coverage of the Company and its affiliates. If the Executive or the representative of his estate does not execute the release and the release does not become irrevocable within 60 days of his termination of employment or death, the Executive or the estate shall forfeit the right to the Initial Severance Pay under Section 6(c)(ii) and the acceleration of vesting of his non-vested Long-Term Incentive Awards.

(d) If during the Employment Term and any Renewal Term, the Executive’s employment is terminated by the Company for Cause or by the Executive for any reason, (i) all non-vested and/or unexercised Long-Term Incentive Awards shall be forfeited, terminated and cancelled and (ii) the Company shall have no liability or further obligation to the Executive except as follows: the Executive shall be entitled to receive any Entitlements within 30 days of such termination of employment or, if later, the date such Entitlement would otherwise be paid to active employees of the Company, and any Rights at the time provided in the relevant plans.

(e) The payments made pursuant to this Section 6 shall be excluded from all pension and benefit calculations under the employee benefit plans of the Company and its affiliates, except as otherwise provided in the applicable employee benefit plan.

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(f) Notwithstanding anything in this Section 6 to the contrary, if any amounts or benefits payable under this Agreement in the event of Executive’s termination of employment constitute “nonqualified deferred compensation” within the meaning of Code Section 409A, payment of such amounts and benefits shall commence when the Executive incurs a “separation from service” within the meaning of Treasury Regulation 1.409A-1(h), without regard to any of the optional provisions thereunder, from the Company and any entity that would be considered a single employer with the Company under Code Section 414(b) or 414(c) (“Separation from Service”). Such payments or benefits shall be provided in accordance with the timing provisions of this Agreement by substituting the Agreement’s references to “termination of employment” or “termination” with Separation from Service. Notwithstanding the foregoing, if at the time of Executive’s Separation from Service the Executive is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i), any amount or benefits that the constitutes “nonqualified deferred compensation” within the meaning of Code Section 409A that becomes payable to Executive on account of the Executive’s Separation from Service will not be paid until after the earlier of (i) first business day of the seventh month following Executive’s Separation from Service, or (ii) the date of the Executive’s death (the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension Period, the Executive shall be paid a cash lump sum payment equal to any payments (including interest on any such payments, at an interest rate of not less than the prime interest rate, as published in the Wall Street Journal, over the period such payment is restricted from being paid to the Executive) and benefits that the Company would otherwise have been required to provide under this Section 6 but for the imposition of the 409A Suspension Period delayed because of the preceding sentence. Thereafter, the Executive shall receive any remaining payments and benefits due under this Section 6 in accordance with the terms of this Section (as if there had not been any Suspension Period beforehand). For the purposes of this Agreement, each payment that is part of a series of installment payments shall treated be as a separate payment for purposes of Code Section 409A.

7. Covenants of the Executive. (a) During the Employment Term and Renewal Term and for a period of one (1) year thereafter, (i) the Executive shall not, within any jurisdiction or marketing area in which the Company or any of its affiliates is doing business, directly or indirectly, own, manage, operate, control, consult with, be employed by or participate in the ownership, management, operation or control of any business of the type and character engaged in or competitive with that conducted by the Company or any of its affiliates, which for purposes of this paragraph 7 shall mean a real estate investment trust or other investment vehicle that owns properties that are net leased to single tenants; provided, however, such covenant shall not apply to Executive’s right to participate in the ownership of entities and receive fees and other compensation pursuant to prior existing agreements concerning 100 Washington, North Haven, Connecticut and Cerwin Holdings (a Burger King franchisee with 5 locations in Delaware market); (ii) the Executive shall not, directly or indirectly, employ, solicit for employment or otherwise contract for the services of any employee of the Company or any of its affiliates at the time of this Agreement or who shall subsequently become an employee of the Company or any such affiliate; and (iii) the Executive will not solicit, in competition with the Company or its affiliates, any person who is, or was at any time within the twelve months prior to his termination of employment, a customer of the business conducted by the Company or any of its affiliates. For purposes of determining whether to permanently withhold, or recover, payments from the Executive pursuant to Section 7(d) hereof, the Board shall determine what constitutes a competing business; provided that (x) the scope of businesses and the jurisdictions and marketing areas within which the Executive has agreed not to compete pursuant to clause (a)(i) of this Section 7 shall, for any challenged activity of the Executive, be determined as of the date of any such activity and (y) the Executive’s ownership of securities of two percent (2%) or less of any publicly traded class of securities of a public company shall not be considered to be competition with the Company or any of its affiliates. Notwithstanding the foregoing, the post-employment covenant in this paragraph 7(a) shall not apply in the event of termination of this Agreement for no other reason than the expiration of the Employment Term or any Renewal Term.

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(b) For the Employment Term and thereafter, (i) the Executive will not divulge, transmit or otherwise disclose (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, other than in the regular and proper course of business of the Company, any confidential knowledge or information with respect to the operations, finances, organization or employees of the Company or with respect to confidential or secret processes, services, techniques, customers or plans with respect to the Company; and (ii) the Executive will not use (except as legally compelled by court order, and then only to the extent required, after prompt notice to the Company of any such order), directly or indirectly, any confidential information for the benefit of anyone other than the Company; provided, however, that the Executive has no obligation, express or implied, to refrain from using or disclosing to others any such knowledge or information which is or hereafter shall become available to the public other than through disclosure by the Executive. All new processes, techniques, know-how, inventions, plans, products, patents and devices developed, made or invented by the Executive, alone or with others, while an employee of the Company which are related to the business of the Company shall be and become the sole property of the Company, unless released in writing by the Company, and the Executive hereby assigns any and all rights therein or thereto to the Company.

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(c) All files, records, correspondence, memoranda, notes or other documents (including, without limitation, those in computer-readable form) or property relating or belonging to the Company or its affiliates, whether prepared by the Executive or otherwise coming into his possession in the course of the performance of his services under this Agreement, shall be the exclusive property of Company and shall be delivered to Company and not retained by the Executive (including, without limitations, any copies thereof) upon termination of the Executive’s employment for any reason whatsoever.

(d) The Executive acknowledges that a breach of his covenants contained in this Section 7 may cause irreparable damage to the Company and its affiliates, the exact amount of which will be difficult to ascertain, that the remedies at law for any such breach will be inadequate and that the amounts payable to the Executive pursuant to the provisions of Section 6(a)(iii) and the paragraphs following 6(a)(iii) and/or 6(b)(ii), (iii) and (iv) hereunder are additional consideration for the covenants contained in this Section 7. Accordingly, the Executive agrees that if he breaches any of the covenants contained in this Section 7, in addition to any other remedy which may be available at law or in equity, the Company shall be entitled to specific performance and injunctive relief, without posting of a bond. In addition, the breach of any of the covenants contained in this Section 7 shall entitle the Company to permanently withhold, and to recover from the Executive any amounts paid to the Executive pursuant to the provisions of Section 6(a)(iii) and the paragraphs following 6(a)(iii) and/or 6(b)(ii), (iii) and (iv) of this Agreement. The Company shall provide the Executive with at least five days prior written notice before withholding of any payment provided for in the immediately preceding sentence.

(e) The Company and the Executive further acknowledge that the time, scope, geographic area and other provisions of this Section 7 have been specifically negotiated by sophisticated commercial parties and agree that all such provisions are reasonable under the circumstances of the activities contemplated by this Agreement. In the event that the agreements in this Section 7 shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, they shall be interpreted to extend only over the maximum period of time for which they may be enforceable and/or over the maximum geographical area as to which they may be enforceable and/or to the maximum extent in all other respects as to which they may be enforceable, all as determined by such court in such action.

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(f) The Executive agrees to cooperate with the Company, during the Term of Employment and thereafter (including following the Executive’s termination of employment for any reason), by making himself reasonably available to testify on behalf of the Company or any of its affiliates in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company, or any affiliate, in any such action, suit, or proceeding, by providing information and meeting and consulting with the Company’s Board or its representatives or counsel, or representatives or counsel to the Company, or any affiliate as reasonably requested; provided, however that the same does not materially interfere with his then current professional activities or important personal activities and is not contrary to the best interests of the Executive. The Company agrees to reimburse the Executive, on an after-tax basis, for all expenses actually incurred in connection with his provision of testimony or assistance, and, if during the period following the Employment Term or Renewal Term, the Company requests the Executive’s cooperation for a period of greater than 8 hours per month, the Company agrees to reimburse the Executive at a rate of $250.00 per hour. Expenses reimbursable under this paragraph must be reimbursed within thirty (30) days following Executive’s submission to the Company of the reimbursement request and supporting documentation reasonably requested by the Company and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred by Executive.

(g) The Executive agrees that, during the Term of Employment and at any time thereafter (including following the Executive’s termination of employment for any reason) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or any of its affiliates or their respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Employment Term, and at any time thereafter, (including following the Executive’s termination of employment for any reason) it will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Executive’s reputation. Notwithstanding the foregoing, nothing in this Agreement shall preclude the Executive or a representative of the Company from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

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8. Notices. Any notices required or permitted hereunder shall be in writing and shall be deemed to have been given when personally delivered or when mailed, certified or registered mail, postage prepaid, to the following addresses:

If to the Executive:

Jared W. Morgan

51 Willow Road

Lawrenceville, NJ 08648

If to the Company:

Four Springs Capital Trust

1901 Main St.

Lake Como, NJ 07719

9. General.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New Jersey applicable to contracts executed and to be performed entirely within said State.

(b) Construction and Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired, and the parties undertake to implement all efforts which are necessary, desirable and sufficient to amend, supplement or substitute all and any such invalid, illegal or unenforceable provisions with enforceable and valid provisions which would produce as nearly as may be possible the result previously intended by the parties without renegotiation of any material terms and conditions stipulated herein.

(c) Assignability. The Executive may not assign his interest in or delegate his duties under this Agreement. This Agreement is for the employment of the Executive, personally, and the services to be rendered by him under this Agreement must be rendered by him and no other person. The Executive represents and warrants to the Company that the Executive has no contracts or agreements of any nature that the Executive has entered into with any other person, firm or corporation that contain any restraints on the Executive’s ability to perform his obligations under this Agreement. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns. Notwithstanding anything else in this Agreement to the contrary, the Company will assign this Agreement to and all rights hereunder shall inure to the benefit of any person, firm or corporation resulting from the reorganization of the Company or succeeding to the business or assets of the Company by purchase, merger or consolidation.

(d) Enforcement Costs. If any contest or dispute shall arise under this Agreement involving the termination of the Executive’s employment with the Company and its affiliates or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall advance the Executive or pay directly on his behalf, all reasonable legal fees and expenses, if any, incurred or, in the case of fees and expenses for which payment is required before the services are rendered, to be incurred within the next 30 days, by the Executive in connection with such contest or dispute upon presentation of an itemized bill to the Company regarding any such fees and expenses along with proof reasonably satisfactory to the Company that such expenses have been incurred or will be incurred within the next 30 days by the Executive; provided, however, that in the event the resolution of any such contest or dispute includes a finding that the Executive’s claims in such contest or dispute are frivolous or brought in bad faith, the Executive shall be required to reimburse the Company, for all sums advanced to the Executive pursuant to this Section 9(d) in connection with such contest or dispute, together with interest in an amount equal to the prime rate, as published in the Wall Street Journal, but in no event higher than the maximum legal rate permissible under applicable law, such interest to accrue from the date the Company makes payment to the Executive hereunder through the date of the Executive’s repayment thereof. Notwithstanding the foregoing, any reimbursements under this paragraph following the Executive’s termination of employment with the Company shall be subject to the payment limitations described in Section 6(f) of this Agreement.

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(e) Compliance with Rules and Policies. The Executive shall perform all services in all material respects in accordance with the applicable policies, procedures and rules established by the Company, including, but not limited to, the By-Laws of the Company. In addition, the Executive, where applicable, shall comply in all material respects with all laws, rules and regulations that are generally applicable to the Company, its affiliates and their employees, directors and officers.

(f) Taxes. The Company shall withhold from all amounts due hereunder any applicable withholding taxes payable to federal, state, local or foreign taxing authorities. Except as set forth in Section 6, the Company shall have no obligation to indemnify or hold the Executive harmless from any taxes he may incur from any amounts payable under this Agreement.

(g) Entire Agreement; Modification. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, supersedes all prior agreements and undertakings, both written and oral.

(h) Duration. Notwithstanding the Employment Term hereunder, the applicable sections of this Agreement shall continue for so long as any obligations remain under this Agreement.

(i) Survival. All of the rights and covenants set forth in Sections 5, 6, 7, 8, and 9 of this Agreement shall survive and shall continue to be binding upon the Executive notwithstanding the termination of this Agreement for any reason whatsoever. It is expressly agreed that the remedy at law for the breach or threatened breach of any such covenant is inadequate and that the Company, in addition to any other remedies that may be available to it, in law or in equity, shall be entitled to injunctive relief to prevent the breach or any threatened breach thereof without bond or other security or a showing that monetary damages will not provide an adequate remedy.

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(j) Waiver. No waiver by either party hereto of any of the requirements imposed by this Agreement on, or any breach of any condition or provision of this Agreement to be performed by, the other party shall be deemed a waiver of a similar or dissimilar requirement, provision or condition of this Agreement at the same or any prior or subsequent time. Any such waiver shall be express and in writing, and there shall be no waiver by conduct.

(k) Indemnification. The Company shall indemnify the Executive, to the maximum extent permitted by applicable law, and in the same or better manner and to the same or better extent with respect to each aspect of the indemnification as provided to any other executive of the Company, against all costs, charges and expenses incurred or sustained by the Executive in connection with any action, suit or proceeding to which the Executive may be made a party, brought by any shareholder of the Company directly or derivatively or by any third party by reason of any act or omission of the Executive as an officer, director or employee of the Company or of any subsidiary or affiliate of the Company.

(l) Headings. The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

(m) Counterparts. This Agreement may be executed in two or more counterparts, all of which taken together shall constitute one instrument.

(n) Compliance with Code Section 409A. This Agreement is intended to be exempt from (or comply with) Code Section 409A, and the Company shall have complete discretion to interpret and construe this Agreement and any associated documents in any manner that establishes an exemption from (or otherwise conforms them to) the requirements of Code Section 409A. If, for any reason including imprecision in drafting, the Agreement does not accurately reflect its intended establishment of an exemption from (or compliance with) Code Section 409A, as demonstrated by consistent interpretations or other evidence of intent, the provision shall be considered ambiguous and shall be interpreted by the Company in a fashion consistent herewith, as determined in the sole and absolute discretion of the Company. Nevertheless, and notwithstanding any other provision of this Agreement, neither the Company nor any of its employees, trustees, or their agents shall have any obligation to mitigate, nor to hold the Executive harmless from, any or all taxes (including any imposed under Code Section 409A) arising under this Agreement.

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have hereunto executed this Agreement effective as of the day and year first written above.

Date: August 1, 2016	FOUR SPRINGS CAPITAL TRUST
	By:	/s/ William P. Dioguardi
	Name:	William P. Dioguardi
	Title:	Chairman and CEO
Date: August 1, 2016	EXECUTIVE
	/s/ Jared W. Morgan
	Jared W. Morgan

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EX-10.16

Exhibit 10.16

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of , 20 between FOUR SPRINGS CAPITAL TRUST, a Maryland real estate investment trust (the “Company”), and [NAME] (“Indemnitee”). All terms capitalized but not defined herein shall have the meaning as set forth in Section 13 hereof.

WITNESSETH THAT:

WHEREAS, highly competent persons have become more reluctant to serve real estate investment trusts (REITs) as trustees or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the REIT;

WHEREAS, the Board of Trustees of the Company (the “Board”) has determined that, in order to attract and retain qualified individuals to serve on its Board as a Trustee, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based REITs and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may not be available to it on terms that the Company considers to be commercially reasonable or, if available to it on commercially reasonable terms during some period of time, may be available to it in the future only at higher premiums and with more exclusions. At the same time, trustees, officers, and other persons in service to REITs or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The By-laws and Declaration of Trust, as amended, of the Company require indemnification of the officers and trustees of the Company. Indemnitee may also be entitled to indemnification pursuant to the Maryland REIT Law, which permits a Maryland REIT to indemnify its officers and trustees to the same extent as provided under the Maryland General Corporation Law (“MGCL”). The By-laws and the MGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the board of trustees, officers and other persons with respect to indemnification;

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons to serve on the Board;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s shareholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve on the Board free from undue concern that they will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the Declaration of Trust, as amended, and By-laws of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

WHEREAS, Indemnitee does not regard the protection available under the Company’s Declaration of Trust, as amended, and By-laws and insurance, if any, as adequate in the present circumstances, and may not be willing to serve as a trustee without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified; and

WHEREAS, Indemnitee has certain rights to indemnification and/or insurance provided by Argonaut Insurance Company or its affiliates (collectively, “ARGO”) which Indemnitee and ARGO intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgement and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve on the Board.

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a trustee after the date hereof, the parties hereto agree as follows:

1. Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

(a) Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(a) if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

(b) Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that a Maryland court shall determine that such indemnification may be made.

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(c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

(d) If (i) Indemnitee is or was affiliated with one or more investors that have invested in the Company and such investor(s) have the right to designate a Trustee (an “Appointing Stockholder”), (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a participant in any Proceeding, and (iii) the Appointing Stockholder’s involvement in the Proceeding results from any claim based on the Indemnitee’s service to the Company as a trustee or other fiduciary of the Company, the Appointing Stockholder will be entitled to indemnification hereunder for Expenses to the same extent as Indemnitee, and the terms of this Agreement as they relate to procedures for indemnification of Indemnitee and advancement of Expenses shall apply to any such indemnification of Appointing Stockholder.The rights provided to the Appointing Stockholder under this Section 1 shall (i) be suspended during any period during which the Appointing Stockholder does not have a representative on the Company’s Board and (ii) terminate on an initial public offering of the Company’s Common Stock; provided, however, that in the event of any such suspension or termination, the Appointing Stockholder’s rights to indemnification will not be suspended or terminated with respect to any Proceeding based in whole or in part on facts and circumstances occurring at any time prior to such suspension or termination regardless of whether the Proceeding arises before or after such suspension or termination. The Company and Indemnitee agree that the Appointing Stockholder is an express third party beneficiary of the terms of this Section 1(d).

2. Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

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3. Contribution.

(a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of expenses (including reasonable attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, trustees or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, trustees or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, trustees or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, trustees or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

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(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its trustees, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

4. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

5. Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

6. Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the Maryland REIT Law and MGCL and public policy of the State of Maryland. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

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(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the Board: (1) by a majority vote of the disinterested Trustees, even though less than a quorum, (2) by a committee of disinterested trustees designated by a majority vote of the disinterested trustees, even though less than a quorum, (3) if there are no disinterested trustees or if the disinterested trustees so direct, by independent legal counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board, by the shareholders of the Company. For purposes hereof, disinterested trustees are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.

(c) If the determination of entitlement to indemnification is to be made by Independent Counsel (as hereinafter defined) pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by the Board. Indemnitee may, within ten (10) days after such written notice of selection shall have been given, deliver to the Company, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition a Maryland court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed.

(d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence that either: (1) the act or omission of the Indemnitee was material to the matter giving rise to the claim for which Indemnitee is seeking indemnification, and either (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; (2) the Indemnitee actually received an improper personal benefit in money, property or services; or (3) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Neither the failure of the Company (including by its trustees or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its trustees or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

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(e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any trustee, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company unless such presumption has been overcome as set forth in Section 6(d). Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(f) If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f) shall not apply if the determination of entitlement to indemnification is to be made by the shareholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board or the Disinterested Trustees (as hereinafter defined), if appropriate, resolve to submit such determination to the shareholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of shareholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.

(g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement. Any costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

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(h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

(i) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

7. Remedies of Indemnitee.

(a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b) of this Agreement within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Maryland, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication.

8

(b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b).

(c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any trustees’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

(e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any trustees’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

(f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

8. Non-Exclusivity; Survival of Rights; Insurance, Primacy of Indemnification; Subrogation.

(a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Declaration of Trust, as amended, of the Company, the By-laws, any agreement, a vote of shareholders, a resolution of trustees of the Company, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the MGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

9

(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for trustees, officers, employees, or agents or fiduciaries of the Company or of any other corporation, partnership, REIT, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any trustee, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has trustee and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable actions to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c) The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by ARGO and certain of its affiliates (collectively, the “Purchaser Indemnitors”). The Company hereby agrees (i) that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Purchaser Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Declaration of Trust, as amended, or By-laws of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Purchaser Indemnitors, and, (iii) that it irrevocably waives, relinquishes and releases the Purchaser Indemnitors from any and all claims against the Purchaser Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Purchaser Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Purchaser Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Purchaser Indemnitors are express third party beneficiaries of the terms of this Section 8(c).

(d) Except as provided in paragraph (c) above, in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (other than against the Purchaser Indemnitors), who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

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(e) Except as provided in paragraph (c) above, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(f) Except as provided in paragraph (c) above, the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a trustee, officer, employee or agent of any other corporation, partnership, REIT, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, partnership, REIT, joint venture, trust, employee benefit plan or other enterprise.

9. Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing shall not affect the rights of Indemnitee or the Purchaser Indemnitors set forth in Section 8(c) above; or

(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or

(c) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its trustees, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

10. Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or trustee of the Company (or is or was serving at the request of the Company as a trustee, officer, employee or agent of another corporation, partnership, REIT, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

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11. Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

12. Enforcement.

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or trustee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or trustee of the Company.

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

(c) The Company shall not seek from a court, or agree to, a “bar order” which would have the effect, of prohibiting or limiting the Indemnitee’s rights to receive advancement of expenses which Indemnitee is entitled to receive under Section 5 of this Agreement.

13. Definitions. For purposes of this Agreement:

(a) “Corporate Status” describes the status of a person who is or was a trustee or officer of the Company or of any other corporation, partnership, REIT, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

(b) “Disinterested Trustee” means a trustee of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(c) “Enterprise” shall mean the Company and any other corporation, partnership, REIT, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a trustee, officer, employee, agent or fiduciary.

(d) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

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(e) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(f) “Maryland REIT Law” means Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland.

(g) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of such Indemnitee’s Corporate Status, by reason of any action taken by such Indemnitee or of any inaction on such Indemnitee’s part while acting in such Indemnitee’s Corporate Status, or by reason of the fact that he is or was serving at the request of the Company as a trustee, officer, employee, agent or fiduciary of another corporation, partnership, REIT, joint venture, trust or other Enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

14. Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Further, the invalidity or unenforceability of any provision hereof as to either Indemnitee or Appointing Stockholder shall in no way affect the validity or enforceability of any provision hereof as to the other.

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Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee and Appointing Stockholder indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

15. Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

16. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay actually and materially prejudices the interests of the Company.

17. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

(a) To Indemnitee at the address set forth below Indemnitee’s signature hereto.

(b) To the Company at:

Four Springs Capital Trust

1901 Main Street

Lake Como, NJ 07719

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by electronic mail (including pdf) or facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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19. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

20. Governing Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in a Court of the State of Maryland (the “Maryland Courts”), and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Maryland Courts for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Maryland Courts, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Maryland Courts has been brought in an improper or inconvenient forum.

SIGNATURE PAGE TO FOLLOW

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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.

COMPANY
By:
	Name:
	Title:
INDEMNITEE
Name:
Address:
With a copy (which shall not constitute notice) to:

SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT

EX-10.17

Exhibit 10.17

AMENDED AND RESTATED CREDIT AGREEMENT

DATED AS OF October 30, 2020

by and among

FOUR SPRINGS CAPITAL TRUST OPERATING PARTNERSHIP, L.P.

AS BORROWER,

THE guarantorS FROM TIME TO TIME PARTY HERETO,

M&T BANK,

THE OTHER LENDERS WHICH ARE PARTIES TO THIS AGREEMENT

AND

OTHER LENDERS THAT MAY BECOME 

PARTIES TO THIS AGREEMENT, 

M&T BANK,

AS AGENT, AND

M&T BANK,

AS SOLE LEAD ARRANGER AND AS SYNDICATION AGENT

TABLE OF CONTENTS

§1. DEFINITIONS AND RULES OF INTERPRETATION 1

§1.1	Definitions	1
§1.2	Rules of Interpretation	37
§1.3	Interest; LIBOR Notification	38
§1.4	Amending and Restating	39

§2. THE CREDIT FACILITY 39

§2.1	Revolving Credit Loans	39
§2.2	Record	39
§2.3	Notes	39
§2.4	Facility Unused Fee	40
§2.5	Reduction and Termination of the Revolving Credit Commitments	40
§2.6	RESERVED	40
§2.7	Interest on Loans	40
§2.8	Requests for Revolving Credit Loans	41
§2.9	Funds for Loans	42
§2.10	Use of Proceeds	42
§2.11	RESERVED	42
§2.12	Increase in Total Commitment	43
§2.13	Extension of Revolving Credit Maturity Date	45

§3. REPAYMENT OF THE LOANS 46

§3.1	Stated Maturity	46
§3.2	Mandatory Prepayments	46
§3.3	Optional Prepayments	46
§3.4	Partial Prepayments	47
§3.5	Effect of Prepayments	47

§4. CERTAIN GENERAL PROVISIONS 47

§4.1	Conversion Options	47
§4.2	Fees	48
§4.3	Funds for Payment	48
§4.4	Taxes	48
§4.5	Computations	52
§4.6	Temporary and Permanent Suspension of LIBOR Rate Loans	52
§4.7	Illegality	54
§4.8	Additional Interest	54
§4.9	Additional Costs, Etc.	54
§4.10	Capital Adequacy	55
§4.11	Breakage Costs	56
§4.12	Default Interest	56
§4.13	Certificate	56
§4.14	Limitation on Interest	56
§4.15	Certain Provisions Relating to Increased Costs and Other Lenders	57

§5. COLLATERAL SECURITY 57

§5.1	Collateral	57
§5.2	Appraisals; Adjusted Value	57
§5.3	Addition of Borrowing Base Properties	58
§5.4	Release of Borrowing Base Property	59
§5.5	Additional Subsidiary Guarantors	60
§5.6	Release of Certain Subsidiary Guarantors	60
§5.7	Release of Collateral	60

§6. REPRESENTATIONS AND WARRANTIES 61

§6.1	Corporate Authority, Etc.	61
§6.2	Governmental Approvals	62
§6.3	Title to Borrowing Base Properties	62
§6.4	Financial Statements	62
§6.5	No Material Changes	63
§6.6	Franchises, Patents, Copyrights, Etc.	63
§6.7	Litigation	63
§6.8	No Material Adverse Contracts, Etc.	63
§6.9	Compliance with Other Instruments, Laws, Etc.	63
§6.10	Tax Status	63
§6.11	No Event of Default	64
§6.12	Investment Company Act	64
§6.13	Absence of UCC Financing Statements, Etc.	64
§6.14	Setoff, Etc.	64
§6.15	Certain Transactions	64
§6.16	Employee Benefit Plans	65
§6.17	Disclosure	65
§6.18	Trade Name; Place of Business	65
§6.19	Regulations T, U and X	66
§6.20	Environmental Compliance	66
§6.21	Subsidiaries; Organizational Structure	67
§6.22	Leases	67
§6.23	Property	68
§6.24	Brokers	69
§6.25	Other Debt	69
§6.26	Solvency	69
§6.27	No Bankruptcy Filing	70
§6.28	No Fraudulent Intent	70
§6.29	Transaction in Best Interests of Credit Parties; Consideration	70
§6.30	OFAC	70
§6.31	Regarding Representations and Warranties	71

§7. AFFIRMATIVE COVENANTS 71

§7.1	Punctual Payment	71
§7.2	Maintenance of Office	71
§7.3	Records and Accounts	71
§7.4	Financial Statements, Certificates and Information	71
§7.5	Notices	74

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§7.6	Existence; Maintenance of Properties	76
§7.7	Insurance; Condemnation	76
§7.8	Taxes; Liens	81
§7.9	Inspection of Borrowing Base Properties and Books	82
§7.10	Compliance with Laws, Contracts, Licenses, and Permits	82
§7.11	Further Assurances	82
§7.12	Management	82
§7.13	Leases of the Property	83
§7.14	Business Operations	84
§7.15	Registered Service Mark	84
§7.16	Ownership of Real Estate	84
§7.17	Beneficial Ownership Information	84
§7.18	Cash Management	85
§7.19	Plan Assets	85
§7.20	Guarantor Covenants	85
§7.21	Borrowing Base Properties	85
§7.22	REIT Guarantor	86
§7.23	Sanctions Laws and Regulations	86
§7.24	New York Mortgage Limitation	86
§7.25	Escrow Account	87

§8. NEGATIVE COVENANTS 87

§8.1	Restrictions on Indebtedness	87
§8.2	Restrictions on Liens, Etc.	88
§8.3	Restrictions on Investments	90
§8.4	Merger, Consolidation	91
§8.5	Restrictions on Prepayment of Indebtedness	91
§8.6	Compliance with Environmental Laws	92
§8.7	Distributions	93
§8.8	Asset Sales	94
§8.9	Borrowing Base Properties	94
§8.10	Derivatives Contracts	95
§8.11	Transactions with Affiliates	95
§8.12	Management Fees	95
§8.13	Changes to Organizational Documents	95
§8.14	Restrictions on Preferred Equity Issuances	95

§9. FINANCIAL COVENANTS 96

§9.1	Maximum Leverage Ratio	96
§9.2	Minimum Consolidated Fixed Charge Ratio	96
§9.3	Minimum Tangible Net Worth	96
§9.4	Minimum Debt Yield	97
§9.5	Variable Rate Debt	97
§9.6	Borrowing Base Covenants	97
§9.7	Liquidity	97

iii

§10. CLOSING CONDITIONS 97

§10.1 Loan Documents 98

§10.2	Certified Copies of Organizational Documents	98
§10.3	Resolutions	98
§10.4	Incumbency Certificate; Authorized Signers	98
§10.5	Opinion of Counsel	98
§10.6	Payment of Fees	98
§10.7	Insurance	98
§10.8	Performance; No Default	98
§10.9	Representations and Warranties	98
§10.10	Proceedings and Documents	99
§10.11	Eligible Real Estate Qualification Documents	99
§10.12	Compliance Certificate	99
§10.13	Appraisals	99
§10.14	Beneficial Ownership Certification	99

§10.15	Consents	99
§10.16	Patriot Act; Anti-Money Laundering Laws	99
§10.17	Mezzanine Loan	100
§10.18	Other	100

§11. CONDITIONS TO ALL BORROWINGS 100

§11.1	Representations True; No Default	100
§11.2	Borrowing Documents	100
§11.3	Future Advances Tax Payment	100

§12. EVENTS OF DEFAULT; ACCELERATION; ETC. 100

§12.1	Events of Default and Acceleration	100
§12.2	Certain Cure Periods	104
§12.3	Termination of Commitments	104
§12.4	Remedies	104
§12.5	Distribution of Collateral Proceeds	105

§13. SETOFF 105

§14. THE AGENT 106

§14.1 Authorization 106

§14.2 Employees and Agents 106

§14.3	No Liability	106
§14.4	No Representations	107
§14.5	Payments	107
§14.6	Holders of Notes	108
§14.7	Indemnity	108
§14.8	Agent as Lender	108
§14.9	Resignation	108
§14.10	Duties in the Case of Enforcement	109

§14.11	Bankruptcy	109
§14.12	Request for Agent Action	110
§14.13	Reliance by Agent	110
§14.14	Approvals	110
§14.15	Borrower Not Beneficiary	111

iv

§14.16	Defaulting Lenders	111
§14.17	Reliance on Hedge Provider	113

§15.	EXPENSES	113
§16.	INDEMNIFICATION	114
§17.	SURVIVAL OF COVENANTS, ETC.	115
§18.	ASSIGNMENT AND PARTICIPATION	115

§18.1	Conditions to Assignment by Lenders	115
§18.2	Register	116
§18.3	New Notes	116
§18.4	Participations	117
§18.5	Pledge by Lender	117
§18.6	No Assignment by Borrower	117
§18.7	Disclosure	118
§18.8	Titled Agents	118
§18.9	Amendments to Loan Documents	118

§19.	NOTICES	119
§20.	RELATIONSHIP	120
§21.	GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE	120
§22.	HEADINGS	120

§23.	COUNTERPARTS	120
§24.	ENTIRE AGREEMENT, ETC.	121
§25.	WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS	121
§26.	DEALINGS WITH BORROWER	121
§27.	CONSENTS, AMENDMENTS, WAIVERS, ETC.	122
§28.	SEVERABILITY	123
§29.	TIME OF THE ESSENCE	123
§30.	NO UNWRITTEN AGREEMENTS	123
§31.	REPLACEMENT NOTES	123
§32.	NO THIRD PARTIES BENEFITED	123
§33.	PATRIOT ACT	124
§34.	[Intentionally Omitted.]	124
§35.	JOINT AND SEVERAL LIABILITY	124

v

§36. ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF CREDIT PARTIES 124

§36.1	Reserved	124
§36.2	Waiver of Defenses	124
§36.3	Waiver	126
§36.4	Subordination	126
§36.5	Waiver of Rights Under Anti-Deficiency Rules	127
§36.6	Further Waivers	127

§37.	ACKNOWLEDGMENT OF BENEFITS; EFFECT OF AVOIDANCE PROVISIONS	128
§38.	ACKNOWLEDGEMENT AND CONSENT TO BAIL-IN OF EEA FINANCIAL INSTITUTIONS	130
§39.	Not Co-Borrower	130

vi

EXHIBITS AND SCHEDULES

Exhibit A	FORM OF AMENDED AND RESTATED REVOLVING CREDIT NOTE
Exhibit B	RESERVED
Exhibit C	FORM OF JOINDER AGREEMENT
Exhibit D	FORM OF REQUEST FOR REVOLVING CREDIT LOAN
Exhibit E	RESERVED
Exhibit F	FORM OF BORROWING BASE AVAILABILITY CERTIFICATE
Exhibit G	FORM OF COMPLIANCE CERTIFICATE
Exhibit H	FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
Exhibit I	TAX COMPLIANCE CERTIFICATES
Schedule 1.1	LENDERS AND COMMITMENTS
Schedule 1.2	ELIGIBLE REAL ESTATE QUALIFICATION DOCUMENTS
Schedule 6.3	LIST OF ALL ENCUMBRANCES ON ASSETS
Schedule 6.5	NO MATERIAL CHANGES
Schedule 6.7	PENDING LITIGATION
Schedule 6.15	CERTAIN TRANSACTIONS
Schedule 6.20(d)	REQUIRED ENVIRONMENTAL ACTIONS
Schedule 6.21	SUBSIDIARIES
Schedule 6.22	EXCEPTIONS TO RENT ROLL
Schedule 6.23	PROPERTY
Schedule 6.25	MATERIAL LOAN AGREEMENTS
Schedule 8.14	GOLDMAN EQUITY INVESTMENT TERM SHEET
Schedule 9.4	INITIAL BORROWING BASE PROPERTIES
Schedule 19	NOTICE ADDRESSES

vii

amended and restated CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of the 30^th day of October, 2020, by and among FOUR SPRINGS CAPITAL TRUST OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“Borrower”), the Subsidiary Guarantors hereafter becoming a party hereto, FOUR SPRINGS CAPITAL TRUST, as REIT Guarantor, M&T BANK (“M&T”), the other lending institutions which are parties to this Agreement as “Lenders”, and the other lending institutions that may become parties hereto pursuant to §18, M&T BANK, as administrative agent for the Lenders (the “Agent”), and M&T BANK, as Sole Lead Arranger and Syndication Agent.

R E C I T A L S

WHEREAS, Borrower, certain of the Lenders, and Agent are parties to the Existing Credit Agreement (as defined below), pursuant to which the lenders thereunder provided an up to $200,000,000 revolving loan facility to Borrower and each Subsidiary Guarantor from time to time, in accordance with the terms and conditions contained therein;

WHEREAS, pursuant to the transactions intended to be completed on or about the date of effectiveness of this Agreement and as further set forth in the Mezzanine Loan Agreement (as defined below) and the Mezzanine Intercreditor Agreement (as defined below), Borrower and certain of the Lenders have agreed to amend and restate the Existing Credit Agreement in its entirety; and

WHEREAS, as part of the foregoing transactions and as further set forth in the Resignation, Assignment of Rights, and Amendment and Restatement of Credit Agreement of even date, Citizens Bank, National Association (“Citizens”), the agent under the Existing Credit Agreement has resigned in its capacity as agent and as a lender under the Existing Credit Agreement and M&T Bank has been appointed as the Agent for the amended and restated revolving credit facility which is the subject of this Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the Agent and the Lenders are willing to provide a revolving loan facility to Borrower, and each Subsidiary Guarantor from time to time and to amend and restate the Existing Credit Agreement as follows:

§1.          DEFINITIONS AND RULES OF INTERPRETATION.

§1.1Definitions. The following terms shall have the meanings set forth in this §1 or elsewhere in the provisions of this Agreement referred to below:

Account Pledge Agreement. Each account pledge agreement executed by Borrower in favor of Agent, for the benefit of the Lenders, granting a lien on the deposit accounts of such Borrower maintained with Agent.

Additional Commitment Request Notice. See §2.12(a)

Additional Subsidiary Guarantor. Each additional Subsidiary of Borrower which becomes a Subsidiary Guarantor pursuant to §5.5 subsequent to the date hereof.

Adjusted Net Operating Income. Net Operating Income from the Borrowing Base Properties for the immediately preceding fiscal quarter, annualized, net of (a) the Capital Reserve, and (b) the Property Management Fees. For the purposes of calculating Adjusted Net Operating Income for the Borrowing Base Properties not owned and operated by Borrower or a Subsidiary Guarantor for the full prior fiscal quarter most recently ended, the Adjusted Net Operating Income attributable to such Borrowing Base Properties shall be calculated by using the actual historical results for such Borrowing Base Properties for the full fiscal quarter most recently ended as if the Borrowing Base Properties had been owned by Borrower or a Subsidiary Guarantor during such period. Additionally, for Borrowing Base Properties that have been disposed of during the period of the prior fiscal quarter most recently ended, the Adjusted Net Operating Income attributable to such Borrowing Base Properties shall be excluded from the calculation of Adjusted Net Operating Income. Notwithstanding anything contained herein to the contrary, for purposes of calculating Senior Debt Yield and Total Debt Yield, (a) following the term Borrowing Base Properties as used in this definition (each time such term is used), the following provision shall be added: “or any other Real Estate owned, directly or indirectly, by any of the Consolidated Entities”; and (b) the phrase “Borrower or any Subsidiary Guarantor” shall be replaced with “any Consolidated Entity”.

Affiliate. An Affiliate, as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means (a) the possession, directly or indirectly, of the power to vote more than ten percent (10%) of the stock, shares, voting trust certificates, beneficial interest, partnership interests, member interests or other interests having voting power for the election of directors of such Person or otherwise to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise, or (b) the ownership of (i) a general partnership interest, (ii) a managing member’s or manager’s interest in a limited liability company or (iii) a limited partnership interest or Preferred Securities (or other ownership interest) representing more than twenty percent (20%) of the outstanding limited partnership interests, Preferred Securities or other ownership interests of such Person; provided as to the REIT Guarantor the term Affiliates shall only include Persons which otherwise meet the definition of an Affiliate and in which the REIT Guarantor owns a direct or indirect Equity Interest.

Agent. M&T Bank, acting as administrative agent for the Lenders, and its permitted successors and assigns.

Agent’s Head Office. The Agent’s head office located at One M&T Plaza, Buffalo, New York 14203 or at such other location as the Agent may designate from time to time by notice to Borrower and the Lenders.

Agent’s Special Counsel. Riemer & Braunstein LLP or such other counsel as selected by Agent.

2 

Aggregate Borrowing Base Value. The sum of the Borrowing Base Property Value for all Borrowing Base Properties as of any date of determination.

Agreement. This Amended and Restated Credit Agreement, as the same may be amended, modified, supplemented and/or extended from time to time, including the Schedules and Exhibits hereto.

Agreement Regarding Fees. Collectively, that certain fee letter between Borrower and M&T dated as of the date hereof, and any other fee letter that may be executed after the Closing Date between Borrower and M&T in connection with the transactions contemplated hereby.

Allocable Principal Balance. See §37(b).

Alternate Base Rate. For any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% per annum and (c) one-month LIBOR (which at no time shall be less than one percent (1.00%) per annum on the unhedged portion of the Loan) on such day plus 1.00% per annum. If the Agent shall have in good faith determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate or one-month LIBOR for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms of the definition of the term Federal Funds Effective Rate, the Base Rate shall be determined without regard to clause (b) or (c), as applicable, of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or one-month LIBOR shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or one-month LIBOR, respectively.

Anti-Corruption Laws. All laws, rules, and regulations of any jurisdiction applicable to REIT Guarantor or its Subsidiaries from time to time concerning or relating to bribery or corruption.

Anti-Money Laundering Laws. All Applicable Law related to the financing of terrorism or money laundering, including without limitation, any applicable provision of the Patriot Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and 12U.S.C. §§ 1818(s), 1820(b) and 1951-1959).

Applicable Contribution. See §37(d).

Applicable Law. All applicable provisions of constitutions, statutes, rules, regulations, guidelines and orders of all Governmental Authorities and all orders and decrees of all courts, tribunals and arbitrators.

Applicable Margin. The Applicable Margin for LIBOR Rate Loans and Base Rate Loans shall be as set forth below based on the Senior Leverage Ratio as set forth in the most recent Compliance Certificate pursuant to §7.4(c):

Pricing Level	Senior Leverage Ratio	LIBOR Rate Loans			Base Rate Loans
Pricing Level 1	Less than or equal to 50%		2.50	%		1.50	%
Pricing Level 2	Greater than 50% but less than or equal to 55%		2.75	%		1.75	%

3 

The Applicable Margin shall not be adjusted based upon Senior Leverage Ratio, if at all, until the third (3^rd) Business Day following receipt of any updated Compliance Certificate. In the event that Borrower shall fail to deliver to the Agent a quarterly Compliance Certificate on or before the date required by §7.4(c), then without limiting any other rights of the Agent and the Lenders under this Agreement, the Applicable Margin for Revolving Credit Loans shall be at Pricing Level 2 commencing on the first (1^st) Business Day following the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until such Compliance Certificate is delivered. The Applicable Rate in effect from the date hereof through the date of the next change in the Applicable Rate pursuant to the provisions hereof shall be determined based upon Pricing Level 2. The provisions of this definition shall be subject to §2.7(e).

Appraisal. An MAI appraisal of the value of a parcel of Real Estate, performed by an independent appraiser with experience appraising commercial properties, with any such Appraisal for a Borrowing Base Property or other Real Estate being performed by an independent appraiser selected by the Agent who is not an employee of the REIT Guarantor or any of its Subsidiaries, the Agent or a Lender, the form and substance of such appraisal and the identity of the appraiser to be in compliance with the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules and regulations adopted pursuant thereto and all other regulatory laws and policies (both regulatory and internal) applicable to the Lenders and approved by the Agent in its good faith business judgment.

Appraised Value. The “as-is” value of Real Estate determined by the most recent applicable Appraisal of such Real Estate obtained pursuant to this Agreement; as the same may have been reasonably adjusted by Agent contemporaneously with the date obtained based upon its reasonable internal review of such Appraisal which is based on criteria and factors then generally used and reasonably considered by Agent in determining the value of similar real estate properties in similar credit facilities, which review shall be conducted prior to acceptance of such Appraisal by Agent. The Appraised Value of a Borrowing Base Property will be the “go dark” value of such Real Estate as determined by the most recent Appraisal applicable to such Real Estate in the following instances: (a) in the event that the tenant vacates such Borrowing Base Property and is no longer paying rent, or (b) in the event the tenant vacates a Borrowing Base Property, continues to pay 100% of such tenant’s rent obligations, and it has been more than six months since such tenant has vacated its space.

4 

Approved Fund. Any Fund that is administered or managed by (a) a Lender, or (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Approved Leases. (a) Each of the Leases in effect on the Closing Date with respect to an Initial Borrowing Base Property, and (b) any Lease approved in connection with the addition of a Borrowing Base Property.

Arranger. M&T.

Assignment and Acceptance Agreement. See §18.1.

Assignment of Interest Rate Protection Agreement. Individually and collectively, the amended and restated assignments of Hedge Obligations from REIT Guarantor or Borrower to Agent and other Lenders, as applicable, now or hereafter delivered to secure the Obligations.

Assignment of Leases and Rents. Each of (a) the amended and restated assignments of leases and rents dated on the date hereof from a Subsidiary Guarantor to the Agent for the benefit of the Lenders with respect to the Initial Borrowing Base Properties, and (b) the assignments of leases and rents given after the Closing Date from Borrower or a Subsidiary Guarantor to the Agent for the benefit of the Lenders with respect to any Newly Acquired Borrowing Base Property, in each case to secure the Obligations, as may be modified or amended.

Authorized Officer. With respect to any Credit Party, the president, chief executive officer or other principal executive officer, the chief operating officer, the general counsel or secretary, the chief financial officer, or other principal financial officer, the treasurer or a vice president of such Credit Party (or if such Credit Party is managed by its member, the president of such member), and, in each case, such other Persons as REIT Guarantor shall designate in a written notice to Agent.

Bail-In Action. The exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

Bail-In Legislation. With respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

Balance Sheet Date. As of any date, the date of the most recent financial statements delivered pursuant to 7.4, as applicable.

Bankruptcy Code. Title 11, U.S.C., as amended from time to time or any successor statute thereto.

Base Rate. On any day, the greatest of (a) the fluctuating annual rate of interest announced from time to time by Agent at Agent’s Head Office as its “prime rate” in effect on such day, (b) one half of one percent (0.5%) above the Federal Funds Effective Rate in effect on such day, and (c) the then-current one month LIBOR (which at no time shall be less than one percent (1.00%) per annum on the unhedged portion of the Loan) plus 1.0% per annum. The Base Rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. Any change in the rate of interest payable hereunder resulting from a change in the Base Rate shall become effective as of the opening of business on the day on which such change in the Base Rate becomes effective, without notice or demand of any kind.

5 

Base Rate Loans. Loans bearing interest calculated by reference to the Base Rate.

Benchmark Replacement. The sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected by Lender and Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the published LIBOR Rate for U.S. dollar-denominated syndicated credit facilities, and (b) the Benchmark Replacement Adjustment; provided that, (x) except to the extent provided in (y) below, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Note, and (y) it is intended that the Benchmark Replacement be the same rate as the “Floating Rate Option” (as specified in any swap confirmation under a Hedge) pursuant to any replacement of the Published LIBOR Rate that becomes effective under any Hedge (e.g., if the published LIBOR Rate replacement is effectuated by adoption of an ISDA protocol by Borrower and Lender). Notwithstanding the foregoing, for purposes of this Agreement, the Benchmark Replacement shall at no time be less than (x) zero percent (0.00%) per annum for any portion of the Loans which are the subject of outstanding Hedge Obligations and (y) one percent (1.00%) per annum for any other portion of the Loans.

Benchmark Replacement Adjustment. With respect to any replacement of LIBOR with an Unadjusted Benchmark Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Agent giving due consideration to: (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of LIBOR with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities at such time.

Benchmark Replacement Conforming Changes. With respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Alternate Base Rate,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Agent in a manner substantially consistent with market practice (or, if the Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Agent decides is reasonably necessary in connection with the administration of this Agreement).

6 

Benchmark Replacement Date. The earlier to occur of the following events with respect to LIBOR:

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of LIBOR permanently or indefinitely ceases to provide LIBOR; or

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.

Benchmark Transition Event. The occurrence of one or more of the following events with respect to LIBOR:

(1) a public statement or publication of information by or on behalf of the administrator of LIBOR announcing that such administrator has ceased or will cease to provide LIBOR, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBOR;

(2) a public statement or publication of information by the regulatory supervisor for the administrator of LIBOR, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for LIBOR, a resolution authority with jurisdiction over the administrator for LIBOR or a court or an entity with similar insolvency or resolution authority over the administrator for LIBOR, which states that the administrator of the LIBOR Rate has ceased or will cease to provide LIBOR permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide LIBOR; or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of LIBOR in effect announcing that LIBOR is no longer representative.

Benchmark Transition Start Date. (a) In the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 180th day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective event is fewer than 180 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in Election, the date specified by the Agent or the Required Lenders, as applicable, by notice to the Borrower, the Agent (in the case of such notice by the Required Lenders) and the Lenders.

Benchmark Unavailability Period. If a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the LIBOR Rate and solely to the extent that the LIBOR Rate has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the LIBOR Rate for all purposes hereunder in accordance with Section 4.6(b) and (y) ending at the time that a Benchmark Replacement has replaced the LIBOR Rate for all purposes hereunder pursuant to Section 4.6.

7 

Beneficial Ownership Certification. A certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association.

Beneficial Ownership Regulation. 31 C.F.R. §1010.230.

Borrower. Four Springs Capital Trust Operating Partnership, L.P., a Delaware limited partnership.

Borrowing Base. The Borrowing Base Properties from time to time included as Collateral for the Obligations.

Borrowing Base Availability. As of any time of determination, the lesser of (i) the maximum principal amount which would not cause outstanding Loans to be greater than or equal to fifty-five percent (55.0%) of the Aggregate Borrowing Base Value and (ii) the maximum principal amount which would not cause the ratio of (i) the Adjusted Net Operating Income divided by (ii) the Implied Debt Service to be less than or equal to 1.50 to 1.00.

Borrowing Base Property or Borrowing Base Properties. The Eligible Real Estate owned by Borrower or any of the Subsidiary Guarantors which is security for the Obligations pursuant to the Mortgages.

Borrowing Base Leverage Ratio. The Consolidated Borrowing Base Debt of the Borrower and its Subsidiaries divided by the Aggregate Borrowing Base Value.

Borrowing Base Property Value. (1) For each Newly Acquired Borrowing Base Properties, the lesser of (a) Appraised Value for such Newly Acquired Borrowing Base Property as contained within an Appraisal, or (b) the acquisition cost of such Newly Acquired Borrowing Base Property; and (2) for all Initial Borrowing Base Properties, Borrowing Base Property Value shall mean the Appraised Value of the same as set forth in the applicable Appraisals.

Breakage Costs. The commercially reasonable and documented cost to any Lender of re-employing funds bearing interest at LIBOR incurred (or reasonably expected to be incurred during such Interest Period) in connection with (i) any payment of any portion of the Loans bearing interest at LIBOR prior to the termination of any applicable Interest Period, (ii) the conversion of a LIBOR Rate Loan to any other applicable interest rate on a date other than the last day of the relevant Interest Period, or (iii) the failure of Borrower to draw down, on the first day of the applicable Interest Period, any amount as to which Borrower has elected a LIBOR Rate Loan.

Building. With respect to each Borrowing Base Property or parcel of Real Estate, all of the buildings, structures and improvements now or hereafter located thereon.

Business Day. Any day on which banking institutions located in the same city and State as the Agent’s Head Office are located are open for the transaction of banking business and, in the case of LIBOR Rate Loans, which also is a LIBOR Business Day.

8 

Capital Lease Obligations. With respect to the Consolidated Entities for any period, the obligations of Borrower or any Subsidiary to pay rent or other amounts under any Capitalized Lease of real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as liabilities on a balance sheet of the Consolidated Entities under GAAP and the amount of which obligations shall be the capitalized amount thereof determined in accordance with GAAP, all as determined based on the Borrower’s Percentage of each Subsidiary or Affiliate.

Capital Reserve. For any period and with respect to any of the Borrowing Base Properties, an amount equal to $0.10 per annum multiplied by the weighted average total square footage of the Buildings in Real Estate that was a Borrowing Base Property during such period.

Capitalized Lease. A lease (other than an operating lease) under which the discounted future rental payment obligations of the lessee or the obligor are required to be capitalized on the balance sheet of such Person in accordance with GAAP.

Cash Equivalents. As of any date, (a) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than one year from such date, (b) time deposits and certificates of deposits having maturities of not more than one year from such date and issued by any domestic commercial bank having, (i) senior long term unsecured debt rated at least A or the equivalent thereof by S&P or A2 or the equivalent thereof by Moody’s and (ii) capital and surplus in excess of $100,000,000; (c) commercial paper rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing within one hundred eighty (180) days from such date, (d) shares of any money market mutual fund rated at least AAA or the equivalent thereof by S&P or at least AAA or the equivalent thereof by Moody’s, and (e) demand deposits, certificates of deposit, bankers acceptances and time deposits of United States banks having total assets in excess of $100,000,000; provided, however, that the aggregate amount at any time so invested with any single bank having total assets of less than $1,000,000,000 will not exceed $200,000.

CERCLA. The Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq.

Change in Law. The occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

9 

Change of Control. A Change of Control shall exist upon the occurrence of any of the following:

(a)            During any twelve month period on or after the date of this Agreement, individuals who at the beginning of such period constituted the Board of Directors or Trustees of the REIT Guarantor (the “Board”) (together with any new directors whose election by the Board or whose nomination for election by the shareholders of the REIT Guarantor was approved by a vote of at least a majority of the members of the Board then in office who either were members of the Board at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of the REIT Guarantor then in office;

(b)            Any Person (including a Person’s Affiliates and associates) or group (as that term is understood under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder), shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of a percentage (based on voting power, in the event different classes of stock or voting interests shall have different voting powers) of the voting stock or voting interests of REIT Guarantor equal to at least forty percent (40%) who did not hold such beneficial ownership as of the date of this Agreement;

(c)            REIT Guarantor shall fail to own at least seventy-five percent (75%) of the limited partner Equity Interests of Borrower and own and control the general partner of Borrower, in each instance free of any Lien, or shall fail to control management and policies of Borrower;

(d)            Borrower or Guarantor consolidates with, is acquired by, or merges into or with any Person (other than a merger permitted by §8.4);

(e)            Borrower fails to own directly or indirectly, free of any Lien, one hundred percent (100%) of the economic, voting and beneficial interest of each Subsidiary Guarantor;

(f)            The failure of two (2) out of three (3) of William Dioguardi, Coby Johnson and/or John E. Warch to hold the titles of Chairman and CEO, President and/or CFO of the REIT Guarantor, unless replacement officers reasonably acceptable to the Agent and the Required Lenders have been appointed within ninety (90) days of such occurrence; or

(g)            Only if and to the extent consented to by the Agent and the Lenders in accordance with the terms of the Mezzanine Intercreditor Agreement, upon acceleration of the Mezzanine Loan, Mezzanine Lender shall have acquired any then-present (as distinguished from contingent) voting and/or beneficial interest in Borrower (for example and for the sake of clarity, the mere pledge of the REIT Guarantor’s Equity Interest in the Borrower shall not constitute a “present voting and/or beneficial interest in Borrower”).

Closing Date. The date agreed to by the parties hereto on which all of the conditions set forth in §10 and §11 have been satisfied.

Code. The Internal Revenue Code of 1986, as amended from time to time, any successor statute and the rules, regulations and published interpretations thereof.

10 

Collateral. All of the property, rights and interests of Borrower and Subsidiary Guarantors which are subject to the security interests, security title, liens and mortgages created by the Security Documents, including, without limitation, the Borrowing Base Properties.

Commitment. As to each Lender, the amount set forth on Schedule 1.1 hereto as such Lender’s commitment to fund the Loans from time to time to Borrower in accordance with the terms of this Agreement, as the same may be changed from time to time in accordance with the terms of this Agreement.

Commitment Increase. An increase in the Total Commitment to not more than $150,000,000 after giving effect to any such increase pursuant to §2.12.

Commitment Increase Date. See §2.12(a).

Commitment Percentage. With respect to each Lender, the percentage set forth on Schedule 1.1 hereto as such Lender’s percentage of the aggregate Commitments of all of the Lenders, as the same may be changed from time to time in accordance with the terms of this Agreement; provided that if the Commitments of the Lenders have been terminated as provided in this Agreement, then the Commitment of each Lender shall be determined based on the Commitment Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.

Commodity Exchange Act. The Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute.

Compliance Certificate. See §7.4(c).

Condemnation Proceeds. All compensation, awards, damages, judgments and proceeds awarded to Credit Party by reason of any Taking, net of all reasonable and customary amounts actually expended to collect the same and/or to maximize the total amount of the same.

Connection Income Taxes. Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

Consolidated. With reference to any term defined herein, that term as applied to the accounts of a Person and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

Consolidated Borrowing Base Debt. The sum (without duplication) of Consolidated Total Debt relating solely to the Borrowing Base Properties which are subject to Mortgages under/securing the Loans (e.g., excluding Indebtedness under the Mezzanine Loan Documents).

Consolidated Depreciation and Amortization Expense. For any period, all depreciation and amortization expenses of the Consolidated Entities, all as determined for the Consolidated Entities on a consolidated basis in accordance with GAAP.

Consolidated EBITDA. For each fiscal quarter annualized, the Consolidated Entities’ Net Income for such period, plus (i) the sum of the amounts for such period included in determining such Net Income of (A) Consolidated Interest Expense, PIK Payments and amortization expense for financing costs, (B) Consolidated Income Tax Expense, (C) Consolidated Depreciation and Amortization Expense, (D) losses and expenses that are properly classified under GAAP as extraordinary and other non-recurring non-cash losses and expenses, including with respect to the sale or other disposition of assets or debt restructurings, (E) the portion of payments received pursuant to leases classified as financing leases that is characterized as a principal payment by GAAP, and (F) other Non-Recurring and Non-Cash Expenses, less gains on sales of assets and gains that are properly classified under GAAP as extraordinary and other nonrecurring non-cash gains, all as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate. Consolidated EBITDA shall include 1031 acquisition revenues on a pro rata basis as recognized by the REIT Guarantor, and gain on sales, so long as each shall not exceed 10% of total EBITDA for any period.

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Consolidated Entities. The REIT Guarantor and its Subsidiaries.

Consolidated Fixed Charges. For each fiscal quarter, annualized, as determined on a consolidated basis and in accordance with GAAP, based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate, without duplication, means, the aggregate of (i) Consolidated Interest Expense, but excluding PIK Payments on or relating to the Mezzanine Loan, and (ii) scheduled principal payments on all Indebtedness due during the three months preceding the measurement date (other than (a) balloon payments of principal due upon the stated maturity of any Indebtedness of the Consolidated Entities, and (b) prepayments of the Loans).

Consolidated Income Tax Expense. For any period, the aggregate amount of taxes based on income or profits for such period with respect to the operations of the REIT Guarantor and its Subsidiaries and Affiliates (including, without limitation, all corporate franchise, capital stock, net worth and value added taxes assessed by state and local governments, but excluding sales taxes, determined in accordance with GAAP on a consolidated basis (to the extent such income and profits were included in computing Net Income), all as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate.

Consolidated Interest Expense. For any period, total interest expense (including, without limitation, that which is capitalized and that which is attributable to Capitalized Leases) for the Consolidated Entities (as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate) with respect to all outstanding Indebtedness of the Consolidated Entities (whether direct, indirect or contingent, and including, without limitation, interest on all convertible debt but excluding amortization of financing costs), but excluding PIK Payments on or relating to the Mezzanine Loan.

Consolidated Senior Debt. The sum (without duplication) of all Consolidated Total Debt (excluding Indebtedness under the Mezzanine Loan Documents, but including all other Indebtedness of the Consolidated Entities), all as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate.

Consolidated Tangible Net Worth. As of any date of determination, for Consolidated Entities, an amount equal to (a) the Total Asset Value less (b) the Consolidated Total Debt.

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Consolidated Total Debt. The sum (without duplication) of all Indebtedness of the Consolidated Entities, all as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate.

Construction in Progress. Real Estate as to which construction of the associated or contemplated improvements has commenced (either new construction or substantial renovation) but has not yet been completed such that a certificate of occupancy (or the local equivalent) for a substantial portion of the intended improvements has not yet been issued or, for any completed project, until one hundred eighty (180) days after completion.

Control. The possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

Conversion/Continuation Request. A notice given by Borrower to the Agent of its election to convert or continue a Loan in accordance with §4.1.

Credit Party(ies). Individually and collectively, Borrower, the REIT Guarantor and each Subsidiary Guarantor.

Debtor Relief Laws. The Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

Default. See §12.1.

Default Rate. See §4.12.

Defaulting Lender. Any Lender that: (a) has failed to: (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies Agent and REIT Guarantor in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent or any Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due; (b) has notified REIT Guarantor or Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent shall be specifically identified in such writing or public statement) cannot be satisfied); (c) has failed, within three (3) Business Days after written request by Agent or REIT Guarantor, to confirm in writing to Agent and REIT Guarantor that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and REIT Guarantor); or (d) has, or has a direct or indirect parent company that has, other than via an Undisclosed Administration, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-in Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to §14.16) as of the date established therefor by Agent in a written notice of such determination, which shall be delivered by Agent to REIT Guarantor and each other Lender promptly following such determination.

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Derivatives Contract. Any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement. Not in limitation of the foregoing, the term “Derivatives Contract” includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement.

Derivatives Termination Value. In respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement applicable to such Derivatives Contract(s), (a) for any date on or after the date such Derivatives Contracts have been closed out or terminated and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Derivatives Contracts, as determined based upon one or more mid-market quotations or other valuations provided by any recognized dealer in, or the counterparty to, such Derivatives Contract(s) (which, in either case, may include Agent or any Lender).

Designated Jurisdiction. At any time, a country, territory or region which is, or whose government is, the subject or target of country-wide or territory-wide Sanctions (currently, Cuba, Iran, Syria, North Korea, and the Crimea region of Ukraine).

Disqualifying Environmental Event. Any release or threatened release of Hazardous Substances in violation of Environmental Laws, any violation of Environmental Law or any claim under any Environmental Laws with respect to any Borrowing Base Property that could reasonably be expected to cost, with respect to any single event, in excess of $500,000 to fully address to Agent's reasonable satisfaction or, which, with respect to all of the Borrowing Base Properties taken as an entirety, could reasonably be expected to cost, in the aggregate (taking into account all such events), in excess of the greater of (x) $1,000,000 and (y) 7.5% of the then-current Aggregate Borrowing Base Value, to fully address to Agent's reasonable satisfaction.

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Disqualifying Structural Event. Any actual structural defect (ordinary wear and tear and reasonably anticipated replacements excepted) with respect to any Borrowing Base Property which, with respect to any single Borrowing Base Property, could reasonably be expected to cost in excess of $500,000 to fully repair to Agent's reasonable satisfaction or, which, with respect to all of the Borrowing Base Properties, could reasonably be expected to cost, in the aggregate (taking into account all such events), in excess of the greater of (x) $1,000,000 and (y) 9.0% of the then-current Aggregate Borrowing Base Value, to fully repair to Agent's reasonable satisfaction.

Distribution. Any (a) dividend or other distribution, direct or indirect, on account of any Equity Interest of any Credit Party (including any Preferred Securities), now or hereafter outstanding, except a dividend or other distribution payable solely in Equity Interests to the holders of that class; (b) redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interest of a Credit Party now or hereafter outstanding; and (c) payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interests of a Credit Party now or hereafter outstanding.

Dollars or $. Dollars in lawful currency of the United States of America.

Domestic Lending Office. Initially, the office of each Lender designated as such on Schedule 1.1 hereto; thereafter, such other office of such Lender, if any, located within the United States that will be making or maintaining Base Rate Loans.

Drawdown Date. The date on which any Loan is made or is to be made, and the date on which any Loan which is made prior to the Revolving Credit Maturity Date, is converted in accordance with §4.1.

DST Entities. Each Delaware statutory trust in which the REIT Guarantor owns, directly or indirectly, an Equity Interest for the purpose of accommodating 1031 transactions.

Early Opt-in Election. The occurrence of:

(1)            (a) a determination by the Agent or (b) a notification by the Required Lenders to the Agent (with a copy to the Borrower) that the Required Lenders have determined that U.S. dollar-denominated syndicated credit facilities being executed at such time, or that include language similar to that contained in Section 4.6 are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace LIBOR, and

(2)            (a) the election by the Agent or (b) the election by the Required Lenders to declare that an Early Opt-in Election has occurred and the provision, as applicable, by the Agent of written notice of such election to the Borrower and the Lenders or by the Required Lenders of written notice of such election to the Agent.

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EEA Financial Institution. (a) Any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country. Any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority. Any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Eligible Assignee. (a) A Lender; (b) an Affiliate of a Lender; (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) the Agent, and (ii) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (i) Borrower or any of the Borrower’s or the REIT Guarantor’s Affiliates or Subsidiaries, or (ii) unless an Event of Default shall be in existence, any Person reasonably deemed by Borrower to be a competitor of any of the Credit Parties by providing written notice thereof to the Agent.

Eligible Real Estate. Real Estate:

(a)            which is owned in fee, with such easements, rights-of-way, and other similar appurtenances required for the operation of the fee property, by Borrower or a Subsidiary Guarantor, and;

(b)            which is leased to and occupied by an acceptable tenant under a double or triple net lease with no less than 7 years remaining on the lease, located within the fifty (50) States of the continental United States or the District of Columbia, except for Initial Borrowing Base Properties;

(c)            as to which all of the representations set forth in §6 of this Agreement concerning Borrowing Base Property are true and correct in all material respects;

(d)            which is not the subject of a Disqualifying Environmental Event or Disqualifying Structural Event and which is free of all title defects or other adverse matters which would materially impact the property's value or cash flow;

(e)            as to which neither the Real Estate nor REIT Guarantor’s Equity Interests in Borrower or any Subsidiary Guarantor is subject to a Lien or negative pledge other than Permitted Liens; and

(f)            as to which the Agent has received and approved (in its reasonable discretion) all Eligible Real Estate Qualification Documents, or will receive and approve (in its reasonable discretion) them prior to inclusion of such Real Estate as a Borrowing Base Property.

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Eligible Real Estate Qualification Documents. See Schedule 1.2 attached hereto.

Employee Benefit Plan. Any employee benefit plan within the meaning of §3(3) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

Environmental Engineer. Such firm or firms of independent professional engineers or other scientists generally recognized as expert in the detection, analysis and remediation of Hazardous Substances and related environmental matters and acceptable to the Agent in its reasonable discretion.

Environmental Laws. As defined in the Indemnity Agreements.

Equity Interests. With respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

Equity Percentage. The aggregate direct or indirect ownership percentage of the Borrower in its Subsidiaries and Affiliates, without duplication.

Equity Subscription Period. See §12.1(c).

ERISA. The Employee Retirement Income Security Act of 1974, as amended and in effect from time to time.

ERISA Affiliate. Any Person that is subject to ERISA and is treated as a single employer with Borrower or its Subsidiaries under §414 of the Code.

ERISA Reportable Event. A reportable event with respect to a Guaranteed Pension Plan within the meaning of §4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived.

EU Bail-In Legislation Schedule. The EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Events of Default. See §12.1.

Exchange Act. The Securities Exchange Act of 1934.

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Excluded Hedge Obligation. With respect to any Guarantor, any Hedge Obligation, if, the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Hedge Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Hedge Obligation. If a Hedge Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Hedge Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

Excluded Taxes. Any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or its Commitment pursuant to Applicable Law in effect on the date on which (i) such Lender acquires such interest in the Loan or its Commitment (other than pursuant to an assignment request by Borrower under §4.15 as a result of costs sought to be reimbursed pursuant to §4.4 or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to §4.4, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with §4.4(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

Existing Credit Agreement. That certain Credit Agreement dated as of October 23, 2018 by and among Borrower and Citizens, as agent, and certain other lenders, as amended by that certain Joinder and First Amendment to Credit Agreement dated as of February 19, 2019 and that certain Second Amendment to Credit Agreement dated as of June 24, 2019.

Existing Notes. Those certain Promissory Notes executed by Borrower in favor of the lenders under the Existing Credit Agreement.

Extended Maturity Date. October 30, 2023.

Event of Default. See §12.1.

FATCA. Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any Legal Requirement or official practice adopted pursuant to any such intergovernmental agreement.

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Federal Funds Effective Rate. For any day, the rate per annum (rounded upward to the nearest one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of New York on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate.” Notwithstanding the foregoing, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed zero for the purposes of this Agreement.

Federal Reserve Bank of New York’s Website. The website of the Federal Reserve Bank of New York at http://www.newyorkfed.org, or any successor source.

Fixed Charge Ratio. For the applicable fiscal quarter, the ratio of (a) Consolidated EBITDA, divided by (b) Consolidated Fixed Charges.

Foreign Lender. If Borrower is a U.S. Person, a Lender that is not a U.S. Person, and if Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which Borrower is resident for tax purposes.

Fund. Any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

Funds from Operations. With respect to the Consolidated Entities including Guarantor and its Subsidiaries and Affiliates (without duplication) for any period, (a) net revenue determined on a consolidated basis for such period minus (or plus) (b) gains (or losses) from debt restructuring, mark-to-market adjustments on interest rate swaps, and sales of Specified Assets, during such period, plus (c) depreciation with respect to such Person's real estate assets and amortization (other than amortization of deferred financing costs) of such Person for such period, plus (d) the portion of payments received pursuant to leases classified as financing leases that is characterized as a principal payment by GAAP, plus (e) all Non-Recurring and Non-Cash Expenses, plus (f) the remaining unamortized portion of all prior facility fees under the Existing Credit Agreement, plus (g) all breakage/termination fees and expenses relating to the termination of the outstanding Hedge(s) with Citizens or one or more of its Affiliates relating to the Existing Credit Agreement, plus (h) PIK Payments to the extent such PIK Payments were included when calculating net revenue, ((a)-(h)) as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate; provided further that when calculating Funds from Operations (other than in connection with the determination of the Borrowing Base Availability), the Consolidated Entities shall be entitled to include net revenue and correlating Indebtedness from real estate assets owned for less than a full quarter as if such real estate had been owned for the entire quarter.

GAAP. Principles that are (a) consistent with the accounting principles generally accepted in the United States of America as promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time and (b) consistently applied with past financial statements of the Person adopting the same principles.

Goldman Closing Period. See §12.1(c).

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Goldman Preferred Equity Investment. See §8.14.

Governmental Authority. The government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Guaranteed Pension Plan. Any employee pension benefit plan within the meaning of §3(2) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.

Guarantor(s). REIT Guarantor and each Subsidiary Guarantor.

Guaranty. The amended and restated guaranty of the REIT Guarantor and the Subsidiary Guarantors dated the date hereof in favor of the Agent and the Lenders of the Obligations of Borrower hereunder, as the same may be modified or amended.

Hazardous Substances. As defined in the Indemnity Agreement(s).

Hedge. Any interest rate swap, collar, cap or floor or a forward rate agreement or other agreement regarding the hedging of interest rate risk exposure relating to the Obligations, and any confirming letter executed pursuant to such hedging agreement, and which shall include, without limitation, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act, all as amended, restated or otherwise modified.

Hedge Obligations. All obligations of Borrower to any Lender Hedge Provider to make any payments under any agreement with respect to Hedge. Under no circumstances shall any of the Hedge Obligations secured or guaranteed by any Loan Document as to a Guarantor include any obligation that constitutes an Excluded Hedge Obligation of such Guarantor.

Implied Debt Service. On any date of determination an amount equal to the annual debt service payment on a hypothetical loan in an amount equal to the then aggregate outstanding principal amount of the Loans with interest accruing at an interest rate based on the greatest of (a) the then current annual yield on ten (10) year obligations issued by the United States Treasury most recently prior to the date of determination plus two and three-quarters of one percent (2.75%), (b) the actual interest rate under this Agreement as of the last day of the most recent calendar quarter (calculated as weighted average to the extent multiple interest rates are in effect on such date), or (c) a fixed rate of seven percent (7.00%) per annum, and principal amortizing on a mortgage-style principal amortization with monthly payments over a thirty (30) year period.

Increase Notice. See §2.12(a).

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Indebtedness. Without duplication, means, as of any date of determination, for Borrower, the Guarantor and their respective Subsidiaries, all indebtedness outstanding on such date, in each case whether Recourse Indebtedness or Non-Recourse Indebtedness, secured or unsecured, (including, without limitation, the Mezzanine Loan and the TEN31 Bridge Financing); provided, however, that undrawn availability under this Agreement on such date shall not be included in calculating Indebtedness, and provided, further, that (without double-counting), each of the following shall be included in Indebtedness: (a) all amounts of guarantees, indemnities for borrowed money, stop-loss agreements and the like provided by Borrower, the Guarantors and their respective Subsidiaries, in each case in connection with and guarantying repayment of amounts outstanding under any other Indebtedness (excluding traditional carve-outs relating to non-recourse debt obligations); (b) all amounts available to be drawn under an undrawn letter of credit has been issued for the account of Borrower, the Guarantors or any of their respective Subsidiaries; (c) all available or unutilized amounts of bonds posted by Borrower, the Guarantors or any of their respective Subsidiaries guaranteeing performance or payment obligations (excluding traditional carve-outs relating to non-recourse debt obligations); (d) all Capital Lease Obligations and (e) all liabilities of Borrower, the Guarantors or any of their respective Subsidiaries as partners, members or the like for liabilities (other than liabilities that are non-recourse obligations of the applicable partnership or other Person) of partnerships or other Persons in which any of them have an equity interest, which liabilities are for borrowed money or any of the matters listed in clauses (a), (b), (c) or (d) above. Without limitation of the foregoing (without double counting), with respect to any non-Wholly-Owned Subsidiary, (x) to the extent that a Subsidiary or such non-Wholly-Owned Subsidiary is providing a completion guaranty in connection with a construction loan entered into by a non-Wholly-Owned Subsidiary, total Indebtedness shall include such Subsidiary’s pro rata liability under the Indebtedness relating to such completion guaranty (or, if greater, Borrower’s, the Guarantors’ or such Subsidiary’s potential liability under such completion guaranty) and (y) in connection with the liabilities described in clauses (a) and (d) above (other than completion guarantees, which are referred to in clause (x)), the total Indebtedness shall include the portion of the liabilities of such non-Wholly-Owned Subsidiary which are attributable to Borrower’s, the Guarantors’ or such Subsidiary’s percentage equity interest in such non-Wholly-Owned Subsidiary or such greater amount of such liabilities for which Borrower, the Guarantors or their respective Subsidiaries are, or have agreed to be, liable by way of guaranty, indemnity for borrowed money, stop-loss agreement or the like, it being agreed that, in any case, Indebtedness of a non-Wholly-Owned Subsidiary shall not be excluded from Total Indebtedness by virtue of the liability of such non-Wholly-Owned Subsidiary being non-recourse. For purposes hereof, the amount of borrowed money shall equal the sum of (1) the amount of borrowed money as determined in accordance with GAAP plus (2) the amount of those contingent liabilities for borrowed money set forth in subsections (a) through (e) above, but shall exclude any adjustment for so called “straight line” interest accounting.

Any operating lease asset or liability required by FASB AC, GAAP or otherwise to be recognized as an obligation or indebtedness on any Person’s balance sheet shall not be deemed to constitute “Indebtedness” for any purpose under this Agreement.

Indemnified Taxes. (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower or any Guarantor under any Loan Document and (b) to the extent not otherwise described in the immediately preceding clause (a), Other Taxes.

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Indemnity Agreements. The Amended and Restated Environmental Indemnity Agreement dated the date hereof regarding Hazardous Substances made by Borrower and each Guarantor in favor of the Agent and the Lenders, as the same may be modified or amended.

Initial Borrowing Base Properties. See Schedule 9.4.

Initial Maturity Date. October 30, 2022.

Insurance Proceeds. All insurance proceeds, damages and claims and the right thereto under any insurance policies relating to any portion of any Collateral, net of all reasonable and customary amounts actually expended to collect the same and/or to maximize the total amount of the same.

Interest Payment Date. As to each Loan, the first day of each calendar month, beginning with an initial Interest Payment Date of December 1, 2020.

Interest Period. With respect to each LIBOR Rate Loan (a) initially, the period commencing on the Drawdown Date of such LIBOR Rate Loan and ending one, two, or three, months thereafter and (b) thereafter, each period commencing on the day following the last day of the next preceding Interest Period applicable to such Loan and ending on the last day of one of the periods set forth above, as selected by Borrower in a Loan Request or Conversion/Continuation Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following:

(i)            if any Interest Period with respect to a LIBOR Rate Loan would otherwise end on a day that is not a LIBOR Business Day, such Interest Period shall end on the next succeeding LIBOR Business Day, unless such next succeeding LIBOR Business Day occurs in the next calendar month, in which case such Interest Period shall end on the next preceding LIBOR Business Day;

(ii)            if Borrower shall fail to give notice as provided in §4.1, Borrower shall be deemed to have requested a continuation of the affected LIBOR Rate Loan as a LIBOR Rate Loan for an interest period of one month on the last day of the then current Interest Period with respect thereto as provided in and subject to the terms of §4.1(c);

(iii)            any Interest Period pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the applicable calendar month at the end of such Interest Period; and

(iv)            no Interest Period relating to any LIBOR Rate Loan shall extend beyond the Revolving Credit Maturity Date, as applicable.

Interpolated Screen Rate. At any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBOR) determined by the Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBOR for the longest period for which the LIBOR is available that is shorter than the requested Interest Period; and (b) the LIBOR for the shortest period for which that LIBOR is available that exceeds the requested Interest Period, in each case, at such time.

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Investments. With respect to any Person, all shares of capital stock, evidences of Indebtedness and other securities issued by any other Person and owned by such Person, all loans, advances, or extensions of credit to, or contributions to the capital of, any other Person, all purchases of the securities or business or integral part of the business of any other Person and commitments and options to make such purchases, all interests in real property, and all other investments; provided, however, that the term “Investment” shall not include (i) equipment, inventory and other tangible personal property acquired in the ordinary course of business, or (ii) current trade and customer accounts receivable for services rendered in the ordinary course of business and payable in accordance with customary trade terms. In determining the aggregate amount of Investments outstanding at any particular time: (a) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (b) there shall be deducted in respect of each Investment any amount received as a return of capital; (c) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (a) may be deducted when paid; and (d) there shall not be deducted in respect of any Investment any decrease in the value thereof.

IPO Event. The registration, listing and issuance by the REIT Guarantor of publicly-traded common equity with gross proceeds in an amount not less than $75,000,000.

Joinder Agreement. The Joinder Agreement with respect to this Agreement, the Notes (or the Guaranty) and Indemnity Agreement to be executed and delivered pursuant to §5.5 by any Additional Subsidiary Guarantor, such Joinder Agreement to be substantially in the form of Exhibit C hereto.

Land Assets. Real Estate constituting raw or undeveloped land as to which construction of contemplated improvements has not commenced.

Leases. Leases, licenses and agreements, whether written or oral, relating to the use or occupation of space in any Building or of any Real Estate owned, directly or indirectly, by REIT Guarantor or its Subsidiaries.

Legal Requirements. All applicable federal, state, county and local laws, rules, regulations, codes and ordinances, and the requirements in each case of any governmental agency or authority having or claiming jurisdiction with respect thereto, including, but not limited to, those applicable to zoning, subdivision, building, health, fire, safety, sanitation, the protection of the handicapped, and environmental matters and shall also include all orders and directives of any court, governmental agency or authority having or claiming jurisdiction with respect thereto.

Lender Hedge Provider. With respect to any Hedge Obligations, any counterparty thereto that, at the time the applicable hedge agreement was entered into, was a Lender or an Affiliate of a Lender.

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Lenders. M&T, the other lending institutions which are party hereto and any other Person which becomes an assignee of any rights of a Lender pursuant to §18 (but not including any participant as described in §18); and collectively, the Revolving Credit Lenders. Except as otherwise expressly provided herein, the term “Lender” shall exclude any Lender (or its Affiliates) in its capacity as a Lender Hedge Provider.

LIBOR. (a) With respect to each day during each Interest Period pertaining to an applicable LIBOR Rate Loan in Dollars, the rate per annum determined by the Agent to be the arithmetic average of the London Interbank Offered Rates administered by the ICE Benchmark Administration (or any Person that takes over administration of such rate) for deposits in Dollars for a duration equal to or comparable to the duration of such Interest Period which appear on the relevant Bloomberg page (or such other commercially available source providing quotations of the London Interbank Offered Rates for deposits in Dollars as may be designated by the Agent from time to time) at or about 11:00 a.m. (London time), two LIBOR Business Days prior to the commencement of such Interest Period; or

(b)            for any interest calculation with respect to an Base Rate Loan on any day, the rate per annum determined by the Agent to be the arithmetic average of the London Interbank Offered Rates administered by the ICE Benchmark Administration (or any Person that takes over administration of such rate) for deposits in Dollars with a term of one (1) month commencing such day which appear on the relevant Bloomberg page (or such other commercially available source providing quotations of the London Interbank Offered Rates for deposits in Dollars as may be designated by the Agent from time to time), at or about 11:00 am (London time) on such day;

provided that if such rate is not available at such time for any reason, then “LIBOR” with respect to such Loan for such period shall be the Interpolated Screen Rate, where applicable. Each calculation by the Agent of LIBOR hereunder shall be conclusive and binding on the parties hereto for all purposes, absent clearly manifest error. Notwithstanding the foregoing, for purposes of this Agreement, LIBOR shall at no time be less than (x) zero percent (0.00%) per annum for any portion of the Loans which are the subject of outstanding Hedge Obligations and (y) one percent (1.00%) per annum for any other Loans.

LIBOR Business Day. Any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London, England.

LIBOR Lending Office. Initially, the office of each Lender designated as such on Schedule 1.1 hereto; thereafter, such other office of such Lender, if any, that shall be making or maintaining LIBOR Rate Loans.

LIBOR Rate Loans. Loans bearing interest calculated by reference to LIBOR.

Lien. See §8.2.

Liquidity. At any time of determination, the aggregate of (a) any unfunded Borrowing Base Availability plus (b) any Unrestricted Cash and Cash Equivalents of the REIT Guarantor or any of its Subsidiaries.

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Loan and Loans. An individual loan or the aggregate loans (including a Revolving Credit Loan (or Loans)), as the case may be, to be made by the Lenders hereunder. All Loans shall be made in Dollars.

Loan Documents. This Agreement, the Notes, the Security Documents, the Assignment of Interest Rate Protection Agreement, the Mezzanine Intercreditor Agreement and all other documents, instruments or agreements now or hereafter executed or delivered by or on behalf of Borrower or Subsidiary Guarantor or Guarantor in connection with the Loans and intended to constitute a Loan Document.

Loan Request. See §2.7.

Magnetar. Magnetar Financial LLC, a limited liability company formed under the laws of the State of Delaware.

Magnetar Funds. Any of Magnetar, any of its Affiliates and any funds or partnerships managed or advised by Magnetar or any of its Affiliates.

Major Lease. Each Lease in a Borrowing Base Property.

Major Tenant. Each tenant under a Major Lease.

Management Agreements. Written property management agreements providing for the management of the Borrowing Base Properties or any of them.

Material Acquisition. The acquisition of Real Estate pursuant to one transaction or a series of related transactions occurring substantially contemporaneously that is greater than or equal to 10% of Total Asset Value.

Material Adverse Effect. A material adverse effect on (a) the business, properties, assets, condition (financial or otherwise) or results of operations of REIT Guarantor and its Subsidiaries considered as a whole; (b) the ability of Borrower or Guarantors to perform any of its material obligations under the Loan Documents; (c) compliance of the Borrowing Base Property with any Requirements, which causes a material adverse effect on the business, properties, assets, condition (financial or otherwise), or results of operations of REIT Guarantor and its Subsidiaries considered as a whole; (d) the value or condition of the Borrowing Base Property which causes a material adverse effect on the business, properties, assets, condition (financial or otherwise), prospects or results of operations of REIT Guarantor and its Subsidiaries considered as a whole; (e) the validity or enforceability of any of the Loan Documents or (f) the rights or remedies of Agent or the Lenders thereunder.

Mezzanine Intercreditor Agreement. The Subordination and Intercreditor Agreement dated as of the date hereof by and between the Agent and the Mezzanine Lender, as such agreement may be amended, restated, supplemented, or otherwise modified from time to time.

Mezzanine Lender. Magnetar and/or any Magnetar Funds.

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Mezzanine Loan. The up to $100,000,000.00 (for the sake of clarity, exclusive of PIK Payments) subordinated loan from Mezzanine Lender to REIT Guarantor, subject to the terms of the Mezzanine Intercreditor Agreement.

Mezzanine Loan Agreement. That certain Loan Agreement dated as of the date hereof by and among REIT Guarantor, as borrower, and the Mezzanine Lender, as such agreement may be amended, restated, supplemented, or otherwise modified from time to time.

Mezzanine Loan Documents. The Mezzanine Loan Agreement and the other “Loan Documents”, as defined therein.

Mezzanine Loan Interest Payments. Interest payments due and payable under the Mezzanine Loan Agreement.

Minimum Liquidity Requirement. See §9.7.

Moody’s. Moody’s Investor Service, Inc.

Mortgages. Each of (a) the amended and restated mortgages, deeds to secure debt and deeds of trust dated on the date hereof from a Subsidiary Guarantor to the Agent for the benefit of the Lenders (or to trustees named therein acting on behalf of the Agent for the benefit of the Lenders) with respect to the Initial Borrowing Base Properties, and (b) the mortgages, deeds to secure debt and/or deeds of trust given after the Closing Date from Borrower or a Subsidiary Guarantor to the Agent for the benefit of the Lenders (or to trustees named therein acting on behalf of the Agent for the benefit of the Lenders) with respect to any Newly Acquired Borrowing Base Property, in each case to secure the Obligations, as may be modified or amended.

Multiemployer Plan. Any multiemployer plan within the meaning of §3(37) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate.

Net Income. For any period, the net income (or loss) of the Consolidated Entities attributable to all Leases, on a consolidated basis, for such period taken as a single accounting period determined in conformity with GAAP (before minority interest and excluding the adjustment of rent to straight-line rent), calculated without regard to gains or losses on early retirement of debt or debt restructuring, debt modification charges, and prepayment premiums.

Net Operating Income. With respect to any Real Estate owned by any Consolidated Entity for any period, “property rental and other income” (after adjusting for straight-lining of rents and excluding the rents from any tenant under a lease with respect to which a monetary default exists for any period exceeding four consecutive months) attributable to such real estate asset accruing for such period minus the amount of all expenses incurred and unreimbursed by any other Person in connection with and directly attributable to the ownership and operation of such real estate asset for such period, including, without limitation, Property Management Fees and amounts accrued for the payment of real estate taxes and insurance premiums, but excluding interest expense or other debt service charges and any non-cash charges such as depreciation or amortization of financing costs plus acquisition costs for consummated acquisitions. As used herein, “other income” as described above includes any portion of payments received pursuant to a lease that would be characterized by GAAP as interest income or principal payments under the terms of a lease classified as a financing lease.

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Net Rentable Area. With respect to any Real Estate, the net rentable square footage as determined in accordance with the Appraisal.

Newly Acquired Borrowing Base Property. Any Borrowing Base Property which is not one of the Initial Borrowing Base Properties.

Non-Recurring and Non-Cash Expenses. With respect to any Person, such Person’s: (i) non-cash equity compensation expenses; (ii) reasonable fees and expenses related to this Agreement; (iii) reasonable costs, fees and expenses related to acquisitions, including opening balance sheet audit and valuations; (iv) reasonable one-time fees, charges and expenses related to an initial public offering of the REIT; (v) reasonable back audit expenses; (vi) costs associated with recruiting new officers or senior managers; (vii) non-cash impairment charges related to goodwill, intangible assets and long-lived assets required to be recognized under GAAP, (viii) costs and expenses reimbursed by a tenant, and (ix) other cash items and expenses approved in the reasonable discretion of the Agent.

Non-Recourse Exclusions. With respect to any Non-Recourse Indebtedness of any Person, any industry standard exclusions from the non-recourse limitations governing such Indebtedness, including, without limitation, exclusions for claims that (i) are based on fraud, intentional misrepresentation, misapplication or misappropriation of funds, gross negligence or willful misconduct, (ii) result from intentional mismanagement of or physical waste at the Real Estate securing such Non-Recourse Indebtedness, (iii) arise from the presence of Hazardous Substances on the Real Estate securing such Non-Recourse Indebtedness (whether contained in a loan agreement, promissory note, indemnity agreement or other document), or (iv) are the result of any unpaid real estate taxes and assessments if sufficient cash flow from the Real Estate exists (whether contained in a loan agreement, promissory note, indemnity agreement or other document).

Non-Recourse Indebtedness. Indebtedness of REIT Guarantor, Borrower, their respective Subsidiaries, or an Unconsolidated Affiliate of any such Person, which is secured by one or more parcels of Real Estate (other than a Borrowing Base Property) or interests therein or equipment and which is not a general obligation of REIT Guarantor, Borrower or such Subsidiary or Unconsolidated Affiliate, the holder of such Indebtedness having recourse solely to the parcels of Real Estate, or interests therein, or equipment securing such Indebtedness or to the direct owner of such real estate, the leases thereon and the rents, profits and equity thereof or equipment, as applicable (except for recourse against the general credit of the Person obligated thereon for any Non-Recourse Exclusions), provided that in calculating the amount of Non-Recourse Indebtedness at any time, Borrower’s reasonable estimate of the amount of any Non-Recourse Exclusions which are the subject of a claim and action shall not be included in the Non-Recourse Indebtedness but shall constitute Recourse Indebtedness. Non-Recourse Indebtedness shall also include Indebtedness of a Subsidiary of Guarantor or Borrower that is not a Subsidiary Guarantor or of an Unconsolidated Affiliate which is a special purpose entity that is recourse solely to such Subsidiary or Unconsolidated Affiliate, which is not cross-defaulted to other Indebtedness of Borrower and which does not constitute Indebtedness of any other Person (other than such Subsidiary or Unconsolidated Affiliate which is Borrower thereunder).

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Notes. Collectively, the Revolving Credit Notes.

Notice. See §19.

Obligations. The term "Obligations" shall mean and include:

A.            The payment of the principal sum, interest at variable rates, charges and indebtedness evidenced by the Notes including any extensions, renewals, replacements, increases, modifications and amendments thereof, given by Borrower to the order of the respective Lenders;

B.            Any Hedge Obligations to any Lender Hedge Provider, provided, however, that under no circumstances shall any of the Hedge Obligations to any Lender Hedge Provider secured or guaranteed by any Loan Document as to a surety or guarantor thereof include any obligation that constitutes Excluded Hedge Obligations of such Person;

C.            The payment, performance, discharge and satisfaction of each covenant, warranty, representation, undertaking and condition to be paid, performed, satisfied and complied with by Borrower under and pursuant to this Credit Agreement or the other Loan Documents;

D.            Subject to Article 16, the payment of all costs, expenses, legal fees and liabilities incurred by Agent and the Lenders in connection with the enforcement of any of Agent's or any Lender's rights or remedies under this Credit Agreement or the other Loan Documents, or any other instrument, agreement or document which evidences or secures any other obligations or collateral therefor, whether now in effect or hereafter executed; and

E.            The payment, performance, discharge and satisfaction of all other liabilities and obligations of Borrower to Agent or any Lender, whether now existing or hereafter arising, direct or indirect, absolute or contingent, under any one or more of the Loan Documents and any amendment, extension, modification, replacement or recasting of any one or more of the instruments, agreements and documents referred to in this Credit Agreement or any other Loan Document or executed in connection with the transactions contemplated by this Credit Agreement or any other Loan Document; provided however that notwithstanding anything to the contrary set forth in the definition of Obligations, with respect to any indemnification, contingent or other similar obligations, such matters shall be considered “Obligations” only to the extent a reasonable good faith claim has been made on such indemnification, contingent or similar obligation on or before the date that all other Obligations are satisfied in full.

OFAC. Office of Foreign Asset Control of the Department of the Treasury of the United States of America.

Other Charges. All ground rents, common area maintenance charges, impositions (other than Taxes) and similar charges (including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Borrowing Base Property), now or hereafter assessed or imposed against the Borrowing Base Property, or any part thereof, together with any penalties thereon.

Other Connection Taxes. With respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

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Other Lenders. See §4.15.

Other Taxes. All present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to §4.15 as a result of costs sought to be reimbursed pursuant to §4.4).

Outstanding. With respect to the Loans, the aggregate unpaid principal thereof as of any date of determination.

Overnight Rate. For any day, the Federal Funds Effective Rate.

Participant Register. See §18.4.

Partnership Agreement. The Amended and Restated Agreement of Limited Partnership of Borrower dated February 13, 2019, as amended.

Patriot Act. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.

PBGC. The Pension Benefit Guaranty Corporation created by §4002 of ERISA and any successor entity or entities having similar responsibilities.

Permitted Liens. Liens, security interests and other encumbrances permitted by §8.2.

Permitted Mezzanine Lien. Pledge of the Equity Interests of the Borrower for the benefit of the Mezzanine Lender to secure Permitted Mezzanine Obligations, so long as they are subject to the Mezzanine Intercreditor Agreement.

Permitted Mezzanine Obligations. Indebtedness to the Mezzanine Lender under the Mezzanine Loan Documents in an aggregate principal amount not to exceed $100,000,000 (exclusive of the PIK Payment component thereof).

Person. Any individual, corporation, limited liability company, partnership, trust, unincorporated association, or other legal entity, and any government or any governmental agency or political subdivision thereof.

PIK Payments. Accrued interest payments in the form of an increase in the principal amount of Indebtedness evidenced by the Mezzanine Loan Agreement in accordance with the terms of the Mezzanine Loan Agreement and as subordinated pursuant to the terms of the Mezzanine Intercreditor Agreement.

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Plan Assets. Assets of any employee benefit plan subject to Part 4, Subtitle B, Title I of ERISA.

Potential Collateral. Any property of Borrower or a Subsidiary Guarantor which is not at the time included in the Collateral and which consists of (i) Eligible Real Estate, or (ii) Real Estate which is capable of becoming Eligible Real Estate through the completion and delivery of Eligible Real Estate Qualification Documents.

Preferred Securities. With respect to any Person, Equity Interests in such Person which are entitled to preference or priority over any other Equity Interest in such Person in respect of the payment of dividends or distribution of assets upon liquidation, or both.

Property Management Fees. With respect to each Borrowing Base Property asset for any period, an assumed amount equal to the greater of (i) two percent (2%) per annum of the aggregate base rent and percentage rent due and payable under leases with tenants at such Real Estate, and (ii) actual management fees, excluding amounts that can be reclassified as Regional, Executive Management, or General & Administrative expenses.

Quotation Date. With respect to any Interest Period, means, two (2) Business Days prior to the commencement of such Interest Period (or such other day as is generally treated as the rate fixing day by market practice in such interbank market, as reasonably determined by the Agent; provided that to the extent such market practice is not administratively feasible for the Agent, then Quotation Date means such other day as otherwise reasonably determined by the Agent).

Real Estate. All real property at any time owned or leased (as lessor or sublessor) by REIT Guarantor or any of its respective Subsidiaries and Affiliates, including, without limitation, the Borrowing Base Properties and any real property owned by DST Entities.

Recipient. The Agent and any Lender.

Recourse Indebtedness. As of any date of determination, any Indebtedness (whether secured or unsecured) of a Person other than Non-Recourse Indebtedness.

Register. See §18.2.

REIT Guarantor. Four Springs Capital Trust, a Maryland real estate investment trust.

Release. See §6.20(c)(iii).

Relevant Governmental Body. The Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.

Rent Roll. A report prepared by Borrower showing for each Borrowing Base Property owned or leased by Borrower or a Subsidiary Guarantor, its occupancy, tenants, lease expiration dates, lease rent and other information in substantially the form presented to Agent on or prior to the date hereof.

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Replacement Equity Investment. An investment in REIT Guarantor which meets the Replacement Equity Investment Criteria and has been approved by the Lenders in their sole but reasonable discretion.

Replacement Equity Investment Criteria. A Preferred Securities investment in REIT Guarantor which (1) has the same or substantially the same terms as set forth on the Goldman Equity Investment Term Sheet attached as Schedule 8.14, (2) is provided by a qualified equity investor approved by the Lenders in their sole but reasonable discretion, which (x) demonstrates the financial strength and institutional ability to provide a term sheet within the Equity Subscription Period and (y) evidences the ability to complete the Replacement Equity Investment within the timeframe set forth in §12.1(c), (3) will provide an initial equity investment of at least $50,000,000.00 and (4) will not require any amendment to the terms of the Loan Documents or the Mezzanine Loan Documents.

Required Lenders. As of any date, the Lender or Lenders whose aggregate Commitment Percentage is equal to or greater than fifty one percent (51%) of the Total Commitment; provided that in determining said percentage at any given time, all then-existing Defaulting Lenders will be disregarded and excluded, and the Commitment Percentages of the Lenders shall be redetermined for voting purposes only to exclude the Commitment Percentages of such Defaulting Lenders, and provided further that at all times when two or more Lenders are party to this Agreement, then Required Lenders shall mean at least two (2) unaffiliated Lenders that are non-Defaulting Lenders (or if there shall not be two (2) non-Defaulting Lenders, then such fewer number of Lenders as are non-Defaulting Lenders.

Reserve Percentage. For any Interest Period, that percentage which is specified two (2) LIBOR Business Days before the first day of such Interest Period by the Board of Governors of the Federal Reserve System (or any successor) or any other governmental or quasi-governmental authority with jurisdiction over Agent or any Lender for determining the maximum reserve requirement (including, but not limited to, any marginal reserve requirement) for Agent or any Lender with respect to liabilities constituting of or including (among other liabilities) Eurocurrency liabilities in an amount equal to that portion of the Loan affected by such Interest Period and with a maturity equal to such Interest Period.

Revolving Credit Base Rate Loans. Revolving Credit Loans bearing interest calculated by reference to the Base Rate.

Revolving Credit Commitment. With respect to each Revolving Credit Lender, the amount set forth on Schedule 1.1 hereto as the amount of such Revolving Credit Lender’s Revolving Credit Commitment to make or maintain Revolving Credit Loans to Borrower, as the same may be changed from time to time in accordance with the terms of this Agreement; provided that if the Revolving Credit Commitments of the Revolving Credit Lenders have been terminated as provided in this Agreement, then the Revolving Credit Commitment of each Revolving Credit Lender shall be determined based on the Revolving Credit Commitment Percentage of such Revolving Credit Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.

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Revolving Credit Commitment Percentage. With respect to each Revolving Credit Lender, the percentage set forth on Schedule 1.1 hereto as such Revolving Credit Lender’s percentage of the Total Commitment, as the same may be changed from time to time in accordance with the terms of this Agreement.

Revolving Credit Exposure. From time to time, the aggregate Revolving Credit Loans.

Revolving Credit Lender. Collectively, the Lenders which have a Revolving Credit Commitment, the initial Revolving Credit Lenders being identified on Schedule 1.1 hereto.

Revolving Credit LIBOR Rate Loans. Revolving Credit Loans bearing interest calculated by reference to LIBOR.

Revolving Credit Loan or Loans. An individual Revolving Credit Loan or the aggregate Revolving Credit Loans, as the case may be, in the maximum principal amount of $100,000,000 (subject to increase as provided in §2.12 or decrease pursuant to § 2.5) to be made by the Revolving Credit Lenders (or other lenders hereunder as more particularly described under §2.12).

Revolving Credit Maturity Date. The Initial Maturity Date, as such date may be extended as provided in §2.13 to the Extended Maturity Date, or such earlier date on which the Loans shall become due and payable pursuant to the terms hereof.

Revolving Credit Notes. See §2.3.

Sanctioned Person. Any Person that is (a) any Person listed in any Sanctions-related list of designated Persons maintained by any Governmental Authority of the United States of America, including without limitation, OFAC or the U.S. Department of State, or by the United Nations Security Council, Her Majesty’s Treasury, or the European Union, (b) any Person located, operating, organized or resident in a Designated Jurisdiction, (c) an agency of the government of a Designated Jurisdiction, or (d) any Person owned or controlled by any Person or agency described in any of the preceding clauses (a) through (c).

Sanction(s). Any economic or trade sanction administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union, or Her Majesty’s Treasury, in each case, solely to the extent applicable to REIT Guarantor or any of its Subsidiaries.

SEC. The federal Securities and Exchange Commission.

Security Documents. Collectively, the Joinder Agreements, the Mortgages, the Assignments of Leases and Rents, the Indemnity Agreements, the Account Pledge Agreement, UCC-1 financing statements and any further collateral security agreements or assignments to the Agent for the benefit of the Lenders.

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Senior Debt Yield. As of any determination date, the (a) Adjusted Net Operating Income for the Consolidated Entities (all as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate) calculated for the prior fiscal quarter, then annualized, divided by (b) all Consolidated Senior Debt.

Senior Leverage Ratio. The Consolidated Senior Debt (without duplication) divided by the Total Asset Value (without duplication).

S&P. Standard & Poor’s Ratings Group.

SOFR. With respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator), on the Federal Reserve Bank of New York’s Website.

Specified Assets. Real Estate assets purchased with cash and owned for less than one hundred eighty (180) days.

State. A state of the United States of America and the District of Columbia.

Subordination, Attornment and Non-Disturbance Agreement. An agreement among the Agent, a Subsidiary Guarantor and a tenant under a Lease pursuant to which such tenant agrees to subordinate its rights under the Lease to the lien or security title of the applicable Mortgage and agrees to recognize the Agent or its successor in interest as landlord under the Lease in the event of a foreclosure under such Mortgage, and the Agent agrees to not disturb the possession of such tenant, such agreement to be in form and substance reasonably satisfactory to Agent.

Subsidiary. For any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons the accounts of which are consolidated with those of such Person pursuant to GAAP. For purposes of this Agreement, any DST Entity shall be considered a “Subsidiary” (based upon Borrower’s Equity Percentage of the subject DST Entity).

Subsidiary Guarantor(s). Collectively, each Person which is a Subsidiary Guarantor as of the Closing Date and each Additional Subsidiary Guarantor that is the direct or indirect owner of a Borrowing Base Property.

Super Majority Lenders. As of any date, the Lender or Lenders whose aggregate Commitment Percentage is equal to or greater than seventy five percent (75%) of the Total Commitment; provided that in determining said percentage at any given time, all then-existing Defaulting Lenders will be disregarded and excluded and the Commitment Percentages of the Lenders shall be redetermined for voting purposes only to exclude the Commitment Percentages of such Defaulting Lenders and provided further that at all times when two or more Lenders are party to this Agreement, then Super Majority Lenders shall mean at least two (2) unaffiliated Lenders that are non-Defaulting Lenders (or if there shall not be two (2) non-Defaulting Lenders, then such fewer number of Lenders as are non-Defaulting Lenders.

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Survey. An ALTA instrument survey of each parcel of Borrowing Base Property prepared by a registered land surveyor which shall show the location of all buildings, structures, easements and utility lines on such property, shall be sufficient to remove (or endorse over) the standard survey exception from the applicable Title Policy, shall show that all buildings and structures are within the lot lines of the Borrowing Base Property and shall not show any encroachments by others (or to the extent any encroachments are shown, such encroachments shall be acceptable to the Agent in its reasonable discretion), shall show rights of way, adjoining sites, establish building lines and street lines, the distance to and names of the nearest intersecting streets and such other details as the Agent may reasonably require; and shall show whether or not the Borrowing Base Property is located in a flood hazard district as established by the Federal Emergency Management Agency or any successor agency or is located in any flood plain, flood hazard or wetland protection district established under federal, state or local law and shall otherwise be in form and substance reasonably satisfactory to the Agent.

Surveyor Certification. With respect to each parcel of Borrowing Base Property, a certificate executed by the surveyor who prepared the Survey with respect thereto, containing such information relating to such parcel as the Agent may reasonably require, such certificate to be reasonably satisfactory to the Agent in form and substance.

Swap Obligation. With respect to any Credit Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

Syndication Agent. M&T.

Taking. The taking or appropriation (including by deed in lieu of condemnation) of any Borrowing Base Property, or any part thereof or interest therein, whether permanently or temporarily, for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation proceeding, or in any other manner or any customarily recognized and compensated damage or injury or diminution in value through condemnation, inverse condemnation or other exercise of the power of eminent domain.

Taxes. All present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges (other than the Other Charges) imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

TEN31 Bridge Financing. The proposed bridge financing to a Subsidiary of Borrower owning various Equity Interests or other Investments in Real Estate held by DST Entities which are not interests in Borrowing Base Properties, which bridge financing: (1) shall not be repaid from Loans, (2) shall be Non-Recourse to the Borrower or any Credit Party, and (3) the terms of which shall be reviewed and approved by all Lenders in their sole and absolute discretion prior to any financing being approved and permitted hereunder.

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Term SOFR. The forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body.

Titled Agents. The Arranger, the Syndication Agent, and any co-syndication agents or documentation agent.

Title Insurance Company. Any title insurance company or companies reasonably approved by the Agent and Borrower.

Title Policy. With respect to each parcel of Borrowing Base Property, an ALTA standard form title insurance policy (or, if such form is not available, an equivalent, legally promulgated form of mortgagee title insurance policy reasonably acceptable to the Agent) issued by a Title Insurance Company in an amount as the Agent may reasonably require based upon the Appraised Value of the applicable Borrowing Base Property as of the date of the Mortgage encumbering such Borrowing Base Property insuring the priority of the Mortgage thereon and that Borrower or Subsidiary Guarantor holds marketable fee simple title or a valid and subsisting leasehold interest to such parcel, subject only to the encumbrances acceptable to Agent in its reasonable discretion and which shall not contain standard exceptions for mechanics liens, persons in occupancy (other than tenants as tenants only under Leases and liens for taxes not yet due and payable) or matters which would be shown by a survey, shall not insure over any matter except to the extent that any such affirmative insurance is reasonably acceptable to the Agent in its reasonable discretion, and shall contain if available and customarily obtained by other commercial lenders in the State in which the Real Estate is located, (a) a future advance endorsement and (b) such other endorsements and affirmative insurance as the Agent may reasonably require, including but not limited to (i) a comprehensive endorsement, (ii) a variable rate of interest endorsement, (iii) a usury endorsement, (iv) a doing business endorsement, (v) an ALTA form 3.1 zoning endorsement, (vi) a “tie-in” endorsement relating to all Title Policies issued by such Title Insurance Company in respect of other Borrowing Base Property, (vii) a “first loss” endorsement, and (viii) a utility location endorsement; it being agreed, however, that for those Mortgages described in clause (a) of the definition thereof, Agent shall, to the extent available in the applicable state in which the Real Estate is located, accept a down dated endorsement to existing title policies issued to Citizens, as agent, under the Existing Credit Agreement.

Total Asset Value. As of any date of determination, the sum of the (a) the Aggregate Borrowing Base Value of all Borrowing Base Properties, (b) the undepreciated value of all other Real Estate of the REIT Guarantor or any of its Subsidiaries or its Affiliates (based on the Borrower’s Equity Percentage of the subject Subsidiary or Affiliate) including portions of the purchase price allocated to intangible assets for GAAP, and (c) all cash and Cash Equivalents (based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate). Agent shall retain the right to appraise (at the Borrower’s expense) all non-Borrowing Base Properties once prior to the Initial Maturity Date if an Event of Default shall be in existence. In such an event the appraised values are lower (higher) than purchase price, the lower (or higher) valuation shall be used.

Total Commitment. As of the date of this Agreement, the Total Commitment is One Hundred Million and No/100 Dollars ($100,000,000.00). The Total Commitment may increase in accordance with §2.12 or decrease in accordance with §2.5.

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Total Debt Yield. As of any determination date), the (a) Adjusted Net Operating Income for the Consolidated Entities (all as determined based on the Borrower’s Equity Percentage of each Subsidiary or Affiliate) (without duplication) calculated for the prior fiscal quarter, then annualized, divided by (b) all Consolidated Total Debt.

Total Leverage. The Consolidated Total Debt of the Consolidated Entities (without duplication) divided by the Total Asset Value of the Consolidated Entities (without duplication).

Type. As to any Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.

Unadjusted Benchmark Replacement. The Benchmark Replacement excluding the Benchmark Replacement Adjustment.

Undisclosed Administration. In relation to a Lender or its parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be disclosed.

U.S. Person. Any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate. See §4.4(g)(ii)(B).

Unconsolidated Affiliate. In respect of any Person, any other Person in whom such Person holds an Investment, (a) whose financial results would not be consolidated under GAAP with the financial results of such first Person on the consolidated financial statements of such first Person, and (b) which is not a Subsidiary of such first Person.

Unconsolidated Subsidiary. In respect of any Person, any other Person in whom such Person holds an Investment, whose financial results would not be consolidated under GAAP with the financial results of such first Person on the consolidated financial statements of such first Person.

Unrestricted. As used in conjunction with cash and Cash Equivalents, ‘Unrestricted” shall mean the specified asset is not subject to any escrow, reserves or Liens or similar restrictions or claims of any kind in favor of any Person (other than any statutory right of set off).

Unrestricted Cash and Cash Equivalents. As of any date of determination, the sum of (a) the aggregate amount of Unrestricted Cash and (b) the aggregate amount of Unrestricted Cash Equivalents.

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Unused Fee Rate. A per annum rate equal to 0.25% per annum on the actual daily unused amount of the Commitment.

Wholly Owned Subsidiary. As to Borrower, any Subsidiary of Borrower that is directly or indirectly owned 100% by Borrower.

Withholding Agent. Borrower and/or the Agent.

Write-Down and Conversion Powers. With respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

§1.2      Rules of Interpretation.

(a)        A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and the terms of this Agreement.

(b)        The singular includes the plural and the plural includes the singular.

(c)         A reference to any law includes any amendment or modification of such law.

(d)        A reference to any Person includes its permitted successors and permitted assigns.

(e)        Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of REIT Guarantor or any of its Subsidiaries at “fair value”, as defined therein, and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the audited financial statements provided under §6.4(a) for all purposes of this Agreement, notwithstanding any change in GAAP related thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

(f)         The words “include”, “includes” and “including” are not limiting.

(g)        The words “approval” and “approved”, as the context requires, means an approval in writing given to the party seeking approval.

(h)        All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the State of New York, have the meanings assigned to them therein.

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(i)          Reference to a particular “§”, refers to that section of this Agreement unless otherwise indicated.

(j)          The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement.

(k)         The words “the date hereof” or words of like import shall mean the date that this Agreement is fully executed by all parties.

(l)          In the event of any change in GAAP after the date hereof or any other change in accounting procedures pursuant to §7.3 which would affect the computation of any financial covenant, ratio or other requirement set forth in any Loan Document, then upon the request of Borrower or Agent, Borrower and the Agent shall negotiate promptly, diligently and in good faith in order to amend the provisions of the Loan Documents such that such financial covenant, ratio or other requirement shall continue to provide substantially the same financial tests or restrictions of Borrower as in effect prior to such accounting change, as determined by the Agent in its good faith judgment. Until such time as such amendment shall have been executed and delivered by Borrower and the Required Lender, such financial covenants, ratio and other requirements, and all financial statements and other documents required to be delivered under the Loan Documents, shall be calculated and reported as if such change had not occurred.

§1.3      Interest; LIBOR Notification. The interest rate on LIBOR Rate Loans is determined by reference to the LIBOR Rate, which is derived from the London interbank offered rate. The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate. As a result, it is possible that, in the future, the London interbank offered rate may become unavailable or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on LIBOR Rate Loans. In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate. In the event that the London interbank offered rate is no longer available or in certain other circumstances as set forth in Section 4.6(b), an alternative rate of interest may be selected and implemented in accordance with the mechanism contained in such Section. The Agent will notify the Borrower, pursuant to Section 4.6(b), in advance of any change to the reference rate upon which the interest rate on LIBOR Rate Loans is based. However, the Agent does not warrant, nor accept responsibility, nor shall the Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “LIBOR” or with respect to any comparable or successor rate thereto or replacement rate thereof, including, without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjusted pursuant to Section 4.6(b), will be similar to, or produce the same value or economic equivalence of, LIBOR or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

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§1.4     Amending and Restating. This Agreement amends and restates the Existing Credit Agreement in its entirety. The obligations of Borrower under the Existing Credit Agreement and the Existing Notes shall continue in full force and effect as obligations under, respectively, this Agreement and the Notes, and are not paid, satisfied, released, discharged or novated.

§2.       THE CREDIT FACILITY.

§2.1      Revolving Credit Loans. Subject to the terms and conditions set forth in this Agreement, each of the Revolving Credit Lenders severally agrees to lend to Borrower, and Borrower may borrow (and repay and reborrow) from time to time from and after the Closing Date and the Revolving Credit Maturity Date upon notice by Borrower to the Agent given in accordance with §2.8, such sums as are requested by Borrower for the purposes set forth in §2.10 up to a maximum aggregate principal amount outstanding (after giving effect to all amounts requested) at any one time equal to the lesser of (i) such Revolving Credit Lender’s Revolving Credit Commitment and (ii) such Revolving Credit Lender’s Revolving Credit Commitment Percentage of the Borrowing Base Availability; provided, that, in all events no Default or Event of Default shall have occurred and be continuing. The Revolving Credit Loans shall be made pro rata in accordance with each Revolving Credit Lender’s Revolving Credit Commitment Percentage. Each request for a Revolving Credit Loan hereunder shall constitute a representation and warranty by Borrower that all of the conditions required of Borrower set forth in §10 and §11 have been satisfied on the date of such request (or if such condition is required to have been satisfied or waived only as of the Closing Date, that such condition was satisfied as of the Closing Date). No Revolving Credit Lender shall have any obligation to make Revolving Credit Loans to Borrower in the maximum aggregate principal outstanding balance of more than the principal face amount of its Revolving Credit Note or its Commitment, as applicable.

§2.2      Record. Borrower irrevocably authorizes Agent to make or cause to be made, at or about the time of the Drawdown Date of any Loan or the time of receipt of any payment of principal thereof, an appropriate notation on Agent’s books and records reflecting the making of such Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Loans set forth on Agent’s books and records shall be prima facie evidence (absent manifest error) of the principal amount thereof owing and unpaid to each Lender, but the failure to record, or any error in so recording, any such amount on Agent’s books and records shall not limit or otherwise affect the obligations of Borrower hereunder or under any Note to make payments of principal of or interest on any Loan when due.

§2.3      Notes. The Revolving Credit Loans shall, if requested by each Lender, be evidenced by separate amended and restated promissory notes of Borrower in substantially the form of Exhibit A hereto (collectively, the “Revolving Credit Notes”), dated of even date with this Agreement (except as otherwise provided in §18.3) and completed with appropriate insertions. One Revolving Credit Note shall be payable to the order of each Revolving Credit Lender which so requests the issuance of a Revolving Credit Note in the principal amount equal to such Revolving Credit Lender’s Revolving Credit Commitment or, if less, the outstanding amount of all Revolving Credit Loans made by such Revolving Credit Lender, plus interest accrued thereon, as set forth below.

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§2.4      Facility Unused Fee. Borrower agrees to pay to the Agent for the account of the Revolving Credit Lenders (other than any Defaulting Lender) in accordance with their respective Revolving Credit Commitment Percentages a facility unused fee calculated at the Unused Fee Rate on the actual daily amount by which the Total Commitment exceeds the outstanding principal amount of Revolving Credit Exposure during each calendar quarter or portion thereof commencing on the date hereof and ending on the Revolving Credit Maturity Date. The facility unused fee shall be payable quarterly in arrears on the first (1^st) day of each calendar quarter for the immediately preceding calendar quarter or portion thereof, and on any earlier date on which the Revolving Credit Commitments shall be reduced or shall terminate as provided in §2.5, with a final payment on the Revolving Credit Maturity Date.

§2.5      Reduction and Termination of the Revolving Credit Commitments. Borrower shall have the right at any time and from time to time upon five (5) Business Days’ prior written notice to the Agent to reduce, by not less than $10,000,000, or an integral multiple of $1,000,000 in excess thereof (provided that in no event shall the Total Commitment thereafter be reduced in such manner to an amount less than $50,000,000), or to terminate entirely the Revolving Credit Commitments, whereupon the Revolving Credit Commitments of the Revolving Credit Lenders shall be reduced pro rata in accordance with their respective Revolving Credit Commitment Percentages of the amount specified in such notice or, as the case may be, terminated, any such termination or reduction to be without penalty except as otherwise set forth in §4.8; provided, however, that no such termination or reduction shall be permitted if, after giving effect thereto, the sum of Outstanding Revolving Credit Loans would exceed the Revolving Credit Commitments of the Revolving Credit Lenders as so terminated or reduced. Promptly after receiving any notice from Borrower delivered pursuant to this §2.5, the Agent will notify the Revolving Credit Lenders of the substance thereof. Upon the effective date of any such reduction or termination, Borrower shall pay to the Agent for the respective accounts of the Revolving Credit Lenders the full amount of any unused facility unused fee under §2.4 then accrued on the amount of the reduction. No reduction or termination of the Revolving Credit Commitments may be reinstated.

§2.6      RESERVED.

§2.7      Interest on Loans.

(a)        Each Revolving Credit Base Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the date on which such Revolving

Credit Base Rate Loan (or Alternate Base Rate Loan pursuant to §4.6) is repaid or converted to a Revolving Credit LIBOR Rate Loan at the rate per annum equal to the sum of the Base Rate (or the Alternate Base Rate, as applicable) plus the Applicable Margin for Revolving Credit Base Rate Loans.

(b)        Each Revolving Credit LIBOR Rate Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of each Interest Period with respect thereto at the rate per annum equal to the sum of LIBOR determined for such Interest Period plus the Applicable Margin for Revolving Credit LIBOR Rate Loans.

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(c)        Borrower promise to pay interest on each Loan in arrears on each Interest Payment Date with respect thereto.

(d)        Base Rate Loans and LIBOR Rate Loans may be converted to Loans of the other Type as provided in §4.1.

(e)        The parties understand that the applicable interest rate for the Loans and certain fees set forth herein may be determined and/or adjusted from time to time based upon certain financial ratios and/or other information to be provided or certified to the Lenders by Borrower (the “Borrower Information”). If it is subsequently determined that any such Borrower Information was incorrect (for whatever reason, including without limitation because of a subsequent restatement of earnings by Borrower) at the time it was delivered to the Agent, and if the applicable interest rate or fees calculated for any period were different than they should have been had the correct information been timely provided, then, such interest rate and such fees for such period shall be automatically recalculated using correct Borrower Information. The Agent shall promptly notify Borrower in writing of any additional interest and fees due because of such recalculation, and Borrower shall pay such additional interest or fees due to the Agent, for the account of each Lender, within five (5) Business Days of receipt of such written notice. Borrower shall receive a credit or refund of any overpayment promptly after such determination. Any recalculation of interest or fees required by this provision shall survive the termination of this Agreement for a period of 180 days, and this provision shall not in any way limit any of the Agent’s or any Lender’s other rights under this Agreement.

§2.8      Requests for Revolving Credit Loans. Except with respect to any initial Revolving Credit Loan on the Closing Date, Borrower shall give to the Agent written notice executed by an Authorized Officer in the form of Exhibit D hereto (or telephonic notice confirmed in writing in the form of Exhibit D hereto) of each Revolving Credit Loan requested hereunder (a “Loan Request”) by 1:00 p.m. (Eastern time) one (1) Business Day prior to the proposed Drawdown Date with respect to Revolving Credit Base Rate Loans and three (3) Business Days prior to the proposed Drawdown Date with respect to Revolving Credit LIBOR Rate Loans, together with an executed Borrowing Base Availability Certificate in the form of Exhibit F. Each such notice shall specify with respect to the requested Revolving Credit Loan the proposed principal amount of such Revolving Credit Loan, the Type of Revolving Credit Loan, the initial Interest Period (if applicable) for such Revolving Credit Loan and the Drawdown Date. Promptly upon receipt of any such notice, the Agent shall notify each of the Revolving Credit Lenders thereof. Each such Loan Request shall be irrevocable and binding on Borrower and shall obligate Borrower to accept the Revolving Credit Loan requested from the Revolving Credit Lenders on the proposed Drawdown Date. Nothing herein shall prevent Borrower from seeking recourse against any Revolving Credit Lender that fails to advance its proportionate share of a requested Revolving Credit Loan as required by this Agreement. Each Loan Request shall be (a) for a Revolving Credit Base Rate Loan in a minimum aggregate amount of $100,000; or (b) for a Revolving Credit LIBOR Rate Loan in a minimum aggregate amount of $500,000 and minimum increments of $250,000 in excess thereof; provided, however, that there shall be no more than eight (8) Revolving Credit LIBOR Rate Loans outstanding at any one time.

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§2.9      Funds for Loans.

(a)     Not later than noon (Eastern time) on the proposed Drawdown Date of any Revolving Credit Loans, each of the Revolving Credit Lenders will make available to the Agent, at the Agent’s Head Office, in immediately available funds, the amount of such Lender’s Commitment Percentage of the amount of the requested Loans which may be disbursed pursuant to §2.1. Upon receipt from each such Revolving Credit Lender of such amount, and upon receipt of the documents required by §10 and §11 and the satisfaction of the other conditions set forth therein to the extent applicable, the Agent will make available to Borrower the aggregate amount of such Revolving Credit Loans made available to the Agent by the Revolving Credit Lenders by crediting such amount to the account of Borrower maintained at the Agent’s Head Office or wiring such funds in accordance with Borrower’s written instructions. The failure or refusal of any Revolving Credit Lender to make available to the Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Loans shall not relieve any other Revolving Credit Lender from its several obligation hereunder to make available to the Agent the amount of such other Lender’s Commitment Percentage of any requested Loans, including any additional Revolving Credit Loans that may be requested subject to the terms and conditions hereof to provide funds to replace those not advanced by the Lender so failing or refusing.

(b)     Unless the Agent shall have been notified by any Lender prior to the applicable Drawdown Date that such Lender will not make available to Agent such Lender’s Commitment Percentage of a proposed Loan, Agent may in its discretion assume that such Lender has made such Loan available to Agent in accordance with the provisions of this Agreement and the Agent may, if it chooses, in reliance upon such assumption make such Loan available to Borrower, and such Lender shall be liable to the Agent for the amount of such advance. If such Lender does not pay such corresponding amount upon the Agent’s demand therefor, the Agent will promptly notify Borrower, and Borrower shall promptly pay such corresponding amount to the Agent. The Agent shall also be entitled to recover from the Lender or Borrower (without duplication), as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Agent to Borrower to the date such corresponding amount is recovered by the Agent at a per annum rate equal to (i) from Borrower at the applicable rate for such Loan or (ii) from a Lender at the Federal Funds Effective Rate.

§2.10    Use of Proceeds. Borrower and their Subsidiaries will use the proceeds of the Loans solely to (a) pay closing costs in connection with this Agreement; (b) repay existing loans, (c) fund acquisitions of Eligible Real Estate, (d) fund capital and construction expenditures, tenant improvements, leasing commissions and property and equipment acquisitions for Borrowing Base Properties; and (e) for general working capital purposes (including without limitation to finance direct and indirect acquisitions and other investments in real estate, interest shortfalls, general operating expenses).

§2.11     RESERVED.

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§2.12     Increase in Total Commitment.

(a)         Provided that no Default or Event of Default has occurred and is continuing, subject to the terms and conditions set forth in this §2.12, Borrower shall have the option at any time and from time to time before at least three (3) months prior to the Revolving Credit Maturity Date to request an increase in the Total Commitment to not more than $150,000,000 (after giving effect to each such increase) by giving written notice to the Agent (an “Increase Notice”; and the amount of such requested increase is the “Commitment Increase”), provided that any such individual increase must be in a minimum amount of $10,000,000. Upon receipt of any Increase Notice, the Agent shall consult with Arrangers and within ten (10) days shall notify Borrower of the amount of facility fees to be paid to any Revolving Credit Lenders who provide an additional Revolving Credit Commitment in connection with such increase in the Total Commitment (which shall be in addition to the fees to be paid to Agent or Arrangers pursuant to the Agreement Regarding Fees); provided that any such facility fees shall not be greater than the lesser of (i) the facility fees (on a percentage basis) payable in connection with the transactions contemplated hereby on the Closing Date, and (ii) facility fees at the then prevailing market rate in connection with commitment increases of the size and type contemplated hereby, with the Agent having no liability for payment of any incremental amounts in the facility fees required to be paid. The Agent promptly shall send a notice to all Revolving Credit Lenders (the “Additional Commitment Request Notice”) informing them of Borrower’ request to increase the Total Commitment and of the facility fees to be paid with respect thereto. Each Revolving Credit Lender who desires to provide an additional Revolving Credit Commitment upon such terms shall provide Agent with a written commitment letter specifying the amount of the additional Revolving Credit Commitment by which it is willing to provide prior to such deadline as may be specified in the Additional Commitment Request Notice not to exceed ten (10) days. If the requested increase is oversubscribed then the Agent and the Arrangers shall allocate the Commitment Increase among the Revolving Credit Lenders who provide such commitment letters on such basis mutually acceptable to each of Borrower, Agent and Arrangers. If the additional Revolving Credit Commitments so provided are not sufficient to provide the full amount of the Commitment Increase requested by Borrower, then the Agent, Arrangers or Borrower will seek one or more banks or lending institutions (which banks or lending institutions shall be reasonably acceptable to Agent, Arrangers and Borrower) to become a Revolving Credit Lender and provide an additional Revolving Credit Commitment. The Agent shall provide all Revolving Credit Lenders with a notice setting forth the amount, if any, of the additional Revolving Credit Commitment to be provided by each Revolving Credit Lender and the revised Revolving Credit Commitment Percentages which shall be applicable after the effective date of the Commitment Increase specified by Borrower therein (the “Commitment Increase Date”). In no event shall any Revolving Credit Lender be obligated to provide an additional Revolving Credit Commitment.

(b)         On any Commitment Increase Date the outstanding principal balance of the Revolving Credit Loans shall be reallocated among the Revolving Credit Lenders such that after the applicable Commitment Increase Date the outstanding principal amount of Revolving Credit Loans owed to each Revolving Credit Lender shall be equal to such Revolving Credit Lender’s Revolving Credit Commitment Percentage (as in effect after the applicable Commitment Increase Date) of the outstanding principal amount of all Revolving Credit Loans. On any Commitment Increase Date those Revolving Credit Lenders whose Revolving Credit Commitment Percentage is increasing shall advance the funds to the Agent and the funds so advanced shall be distributed among the Revolving Credit Lenders whose Revolving Credit Commitment Percentage is decreasing as necessary to accomplish the required reallocation of the outstanding Revolving Credit Loans. The funds so advanced shall be Revolving Credit Base Rate Loans until converted to Revolving Credit LIBOR Rate Loans which are allocated among all Revolving Credit Lenders based on their Revolving Credit Commitment Percentages.

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(c)         Upon the effective date of each increase in the Total Commitment pursuant to this §2.12 the Agent may unilaterally revise Schedule 1.1 and Borrower shall, if requested by such Lender, execute and deliver to the Agent new Revolving Credit Notes for each Revolving Credit Lender whose Revolving Credit Commitment has changed so that the principal amount of such Revolving Credit Lender’s Revolving Credit Note shall equal its Revolving Credit Commitment. The Agent shall deliver such replacement Revolving Credit Notes to the respective Revolving Credit Lenders in exchange for the Revolving Credit Notes replaced thereby which shall be surrendered by such Revolving Credit Lenders and delivered to Borrower. Such new Revolving Credit Notes shall provide that they are replacements for the surrendered Revolving Credit Notes and that they do not constitute a novation, shall be dated as of the Commitment Increase Date and shall otherwise be in substantially the form of the replaced Revolving Credit Notes.

(d)        Notwithstanding anything to the contrary contained herein, any increase in the Total Commitment pursuant to this §2.12 shall be conditioned upon satisfaction or waiver of the following conditions precedent which must be satisfied or waived prior to the effectiveness of any increase of the Total Commitment:

(i)            Payment of Activation Fee. Borrower shall pay (A) to the Agent those fees described in and contemplated by the Agreement Regarding Fees with respect to the applicable Commitment Increase, and (B) to the Arranger such facility fees as the Revolving Credit Lenders who are providing an additional Revolving Credit Commitment may require Subject to Borrower’s agreement as reference in § 2.12(a) above to increase the aggregate Revolving Credit Commitment, which fees shall, when paid, be fully earned and non-refundable under any circumstances. The Arranger shall pay to the Revolving Credit Lenders acquiring the increased Revolving Credit Commitment certain fees pursuant to their separate agreement; and

(ii)            No Default. On the date any Increase Notice is given and on the date such increase becomes effective, both immediately before and after the Total Commitment is increased, there shall exist no Event of Default; and

(iii)            Representations True. The representations and warranties made by Borrower in the Loan Documents or otherwise made by or on behalf of Borrower in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects (except to the extent that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on the date of such Increase Notice and on the date the Total Commitment is increased (unless such representations are limited by their terms to a specific date), both immediately before and after the Total Commitment is increased, other than for changes in the ordinary course of business permitted by this Agreement; and

(iv)            Additional Documents and Expenses. Borrower shall execute and deliver to Agent and the Revolving Credit Lenders such additional documents (including, without limitation, amendments to the Security Documents), instruments, certifications and opinions as the Agent may reasonably require, including, without limitation, a Compliance Certificate, demonstrating compliance with all covenants set forth in the Loan Documents after giving effect to the increase, and Borrower shall pay the cost of any mortgagee’s title insurance policy or any endorsement or update thereto or any updated UCC searches, all recording costs and fees, and any and all intangible taxes or other documentary or mortgage taxes, assessments or charges or any similar reasonable fees, taxes or expenses which are reasonably requested in connection with such increase.

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§2.13    Extension of Revolving Credit Maturity Date. Borrower shall have the right and option to extend the Initial Maturity Date to the Extended Maturity Date, upon satisfaction or waiver of the following conditions precedent, which must be satisfied prior to the effectiveness of any extension of the Revolving Credit Maturity Date:

(a)         Extension Request. Borrower shall deliver written notice of such request (the “Extension Request”) to the Agent not earlier than the date which is one hundred twenty (120) days and not later than the date which is sixty (60) days prior to the then applicable Revolving Credit Maturity Date (as determined without regard to such extension). Any such Extension Request shall be irrevocable and binding on Borrower unless otherwise agreed to by the Agent in its reasonable discretion.

(b)         Payment of Extension Fee. Borrower shall pay to the Agent for the pro rata accounts of the Revolving Credit Lenders in accordance with their respective Revolving Credit Commitments an extension fee in an amount equal to 0.25% of the Total Commitment in effect on the then-applicable Revolving Credit Maturity Date, after taking into consideration any reduction in the Revolving Credit Commitments as of such date (as determined without regard to such extension), which fee shall, when paid, be fully earned and non-refundable under any circumstances.

(c)         No Default. On the date the Extension Request is given there shall exist no Default or Event of Default and on the then applicable Revolving Credit Maturity Date (as determined without regard to such extension) there shall exist no Default or Event of Default.

(d)        IPO Event. The IPO Event shall have occurred.

(e)         Representations and Warranties. The representations and warranties made by Borrower in the Loan Documents or otherwise made by or on behalf of Borrower in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the date the Extension Request is made and on the then-applicable Revolving Credit Maturity Date (as determined without regard to such extension), except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date, and that any representation or warranty that is qualified by any materiality standard shall be required to be true and correct in all respects).

(f)          Compliance with Financial Covenants. Borrower shall have provided Agent with a Compliance Certificate certified by an Authorized Officer or the chief financial officer or chief accounting officer of Guarantor in the form of Exhibit G hereto (or in such other form as the Agent may reasonably approve from time to time) setting forth in reasonable detail computations evidencing compliance or non-compliance (as the case may be) with the covenants contained in §9, based on the updated appraisals commissioned by the Agent.

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(g)            Updated Appraisals. Agent shall have obtained at Borrower’ expense updates to existing Appraisals and determined the current Appraised Values of the Borrowing Base Properties.

(h)            Mezzanine Loan. The Mezzanine Loan maturity date continues to extend beyond the Extended Maturity Date of the Loans.

§3.           REPAYMENT OF THE LOANS.

§3.1Stated Maturity. Borrower promise to pay on the Revolving Credit Maturity Date and there shall become absolutely due and payable on the Revolving Credit Maturity Date all of the Revolving Credit Loans outstanding on such date, together with any and all accrued and unpaid interest thereon.

§3.2Mandatory Prepayments. If at any time the sum of the aggregate outstanding Revolving Credit Exposure exceeds (a) the Total Commitment or (b) the sum of the Borrowing Base Availability, then Borrower shall, within ten (10) Business Days after receipt of notice from Agent of such occurrence (or in the case of an updated Appraisal to the extent that such updated Appraisal results in a change in the Borrowing Base Availability pursuant to a specific provision of this Agreement, then within ten (10) Business Days after receipt of notice from the Agent of such occurrence) pay the amount of such excess to the Agent for the respective accounts of the Revolving Credit Lenders, as applicable, for application to the Revolving Credit Loans as provided in §3.4, together with any additional amounts payable pursuant to §4.8. In the event there shall have occurred a casualty with respect to any Borrowing Base Property and Borrower is required to repay the Loans pursuant to §7.7 or a Taking and Borrower is required to repay the Loans pursuant to a Mortgage or §7.7, Borrower shall prepay the Loans concurrently with the date of receipt by a Credit Party or the Agent of any Insurance Proceeds or Condemnation Proceeds in respect of such casualty or Taking, as applicable, or as soon thereafter as is reasonably practicable, in the amount required pursuant to the relevant provisions of §7.7 or such Mortgage.

§3.3        Optional Prepayments.

(a)            Borrower shall have the right, at its election, to prepay the outstanding amount of the Revolving Credit Loans, as a whole or in part, at any time without penalty or premium; provided, that if any prepayment of the outstanding amount of any Revolving Credit LIBOR Rate Loans pursuant to this §3.3 is made on a date that is not the last day of the Interest Period relating thereto, such prepayment shall be accompanied by the payment of any amounts due pursuant to §4.8.

(b)            Borrower shall give the Agent, no later than 1:00 p.m. (Eastern time) at least three (3) Business Days prior written notice of any prepayment pursuant to this §3.3, in each case specifying the proposed date of prepayment of the Loans and the principal amount to be prepaid (provided that (i) any such notice may be revoked or modified upon one (1) day’s prior notice to the Agent) and/or (ii) any such notice or repayment may be conditioned upon the consummation of a transaction. In the absence of a Default or Event of Default, subject to §3.4 below, Borrower shall have the right to specify the order and manner of how any options prepayments of the Loan are applied.

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§3.4Partial Prepayments. Each partial prepayment of the Loans under §3.3 shall be in a minimum amount of $100,000 (unless pursuant to §3.2), shall be accompanied by the payment of accrued interest on the principal prepaid to the date of payment. Each partial payment under §3.2 and §3.3 shall be applied first to the principal of Loans (and with respect to each category of Revolving Credit Loans, first to the principal of Base Rate Loans, and then to the principal of LIBOR Rate Loans).

§3.5        Effect of Prepayments. Amounts of the Revolving Credit Loans prepaid under §3.2 and §3.3 prior to the Revolving Credit Maturity Date may be reborrowed as provided in §2.

§4.           CERTAIN GENERAL PROVISIONS.

§4.1        Conversion Options.

(a)            Borrower may elect from time to time to convert any of its outstanding Revolving Credit Loans to a Revolving Credit Loan of another Type and such Revolving Credit Loans shall thereafter bear interest as a Base Rate Loan or a LIBOR Rate Loan, as applicable; provided that (i) with respect to any such conversion of a LIBOR Rate Loan to a Base Rate Loan, Borrower shall give the Agent at least one (1) Business Day’s prior written notice of such election, and such conversion shall only be made on the last day of the Interest Period with respect to such LIBOR Rate Loan unless Borrower pay Breakage Costs as required under this Agreement; (ii) with respect to any such conversion of a Base Rate Loan to a LIBOR Rate Loan, Borrower shall give the Agent at least three (3) LIBOR Business Days’ prior written notice of such election and the Interest Period requested for such Loan, the principal amount of the Loan so converted shall be in a minimum aggregate amount of $1,000,000 and minimum increments of $250,000 in excess thereof, after giving effect to the making of such Loan, there shall be no more than eight (8) Revolving Credit LIBOR Rate Loans outstanding at any one time; and (iii) no Loan may be converted into a LIBOR Rate Loan when any Default or Event of Default has occurred and is continuing. All or any part of the outstanding Revolving Credit Loans of any Type may be converted as provided herein, provided that no partial conversion shall result in a Revolving Credit Base Rate Loan in a principal amount of less than $100,000 or a Revolving Credit LIBOR Rate Loan in a principal amount of less than $1,000,000. On the date on which such conversion is being made, each Lender shall take such action as is necessary to transfer its Commitment Percentage of such Loans to its Domestic Lending Office or its LIBOR Lending Office, as the case may be. Each Conversion/Continuation Request relating to the conversion of a Base Rate Loan to a LIBOR Rate Loan shall be irrevocable by Borrower.

(b)            Any LIBOR Rate Loan may be continued as such Type upon the expiration of an Interest Period with respect thereto by compliance by Borrower with the terms of §4.1; provided that no LIBOR Rate Loan may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Loan on the last day of the Interest Period relating thereto ending during the continuance of any Default or Event of Default.

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(c)            In the event that Borrower does not notify the Agent of their election hereunder with respect to any LIBOR Rate Loan, such Loan shall be automatically continued at the end of the applicable Interest Period as a LIBOR Rate Loan for an Interest Period of one month unless such Interest Period shall be greater than the time remaining until the Revolving Credit Maturity Date, in which case such Loan shall be automatically converted to a Base Rate Loan at the end of the applicable Interest Period.

§4.2Fees. In addition to all fees specified herein, Borrower agrees to pay to M&T and the Arranger for their own account certain fees for services rendered or to be rendered in connection with the Loans as provided pursuant to the Agreement Regarding Fees.

§4.3        Funds for Payment.

All payments of principal, interest, facility fees, closing fees and any other amounts due hereunder or under any of the other Loan Documents shall be made to the Agent, for the respective accounts of the Lenders and the Agent, as the case may be, at the Agent’s Head Office, not later than 1:00 p.m. (New York time) on the day when due, in each case in lawful money of the United States in immediately available funds. The Agent is hereby authorized to charge the accounts of Borrower with M&T, on the dates when the amount thereof shall become due and payable, with the amounts of the principal of and interest on the Loans and all fees, charges, expenses and other amounts owing to the Agent and/or the Lenders under the Loan Documents. Subject to the foregoing, all payments made to the Agent on behalf of the Lenders, and actually received by the Agent, shall be deemed received by the Lenders on the date actually received by the Agent. Agent will promptly distribute to each Lender its Commitment Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such in accordance with §14.5. If and to the extent Agent shall not make such payments to a Lender when due as set forth in the preceding sentence, then such unpaid amounts shall accrue interest, payable by Agent, at the Federal Funds Effective Rate from the due date until (but not including) the date on which Agent makes such payments to such Lender.

§4.4        Taxes.

(a)            For purposes of this §4.4, the term “Applicable Law” includes FATCA.

(b)            All payments by Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim, and free and clear of and without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower or other applicable Guarantor shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this §4.4) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

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(c)            Borrower and the Guarantors shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

(d)            Borrower and the Guarantors shall jointly and severally indemnify (but without duplication) each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this §4.4) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error; provided that the determinations in such statement are made on a reasonable basis and in good faith.

(e)            Each Lender shall severally indemnify the Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that Borrower or a Guarantor has not already indemnified the Agent for such Indemnified Taxes and without limiting the obligation of Borrower and the Guarantors to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of §18.4 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Agent to the Lender from any other source against any amount due to the Agent under this subsection.

(f)            As soon as practicable after any payment of Taxes by Borrower or any Guarantor to a Governmental Authority pursuant to this §4.4, Borrower or such Guarantor shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

(g)            (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments (or any payment) made under any Loan Document shall deliver to Borrower and the Agent, at the time or times prescribed by Applicable Law or reasonably requested by Borrower or the Agent, such properly completed and executed documentation prescribed by Applicable Law or reasonably requested by Borrower or the Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, each Lender shall timely deliver to Borrower and the Agent such other documentation prescribed by Applicable Law or reasonably requested by Borrower or the Agent as will enable Borrower or the Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in the immediately following clauses (ii)(A), (ii)(B) and (ii)(D)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

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(ii)            Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Person:

(A)            any Lender that is a U.S. Person shall deliver to Borrower and the Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Agent), an electronic copy (or an original if requested by Borrower or the Agent) of an executed IRS Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B)            any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this

Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Agent), whichever of the following is applicable:

(I)            in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, an electronic copy (or an original if requested by Borrower or the Agent) of an executed IRS Form W-8BEN, or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W 8BEN, or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(II)            an electronic copy (or an original if requested by Borrower or the Agent) of an executed IRS Form W-8ECI;

(III)            in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is the sole record and beneficial owner of the Loan(s) and is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable; or

(IV)            to the extent a Foreign Lender is not the beneficial owner, an electronic copy (or an original if requested by Borrower or the Agent) of an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W 9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;

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(C)            any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Agent), an electronic copy (or an original if requested by Borrower or the Agent) of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit Borrower or the Agent to determine the withholding or deduction required to be made; and

(D)            if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and the Agent at the time or times prescribed by Applicable Law and at such time or times reasonably requested by Borrower or the Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or the Agent as may be necessary for Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower and the Agent in writing of its legal inability to do so.

(h)            Agent shall deliver to REIT Guarantor on or prior to the date on which it becomes Agent under this Agreement (and from time to time thereafter upon the reasonable request of REIT Guarantor) an electronic copy (or an original if requested by REIT Guarantor) of an executed IRS Form W-9.

(i)            If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this §4.4 (including by the payment of additional amounts pursuant to this §4.4), it shall pay to the indemnifying party an amount equal to such refund (or the amount of any credit in lieu of refund) (but only to the extent of indemnity payments made or additional amounts paid under this §4.4 with respect to the Taxes giving rise to such refund or credit in lieu of such refund), net of all reasonable third party out-of-pocket expenses (including Taxes) of such indemnified party actually incurred and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit in lieu of such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund or credit in lieu of such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund or credit in lieu of such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it reasonably deems confidential) to the indemnifying party or any other Person.

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(j)            Each party’s obligations under this §4.4 shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

§4.5Computations. All computations of interest on the Loans and of other fees to the extent applicable shall be based on a 360-day year and paid for the actual number of days elapsed. Except as otherwise provided in the definition of the term “Interest Period” with respect to LIBOR Rate Loans, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The Outstanding Loans as reflected on the records of the Agent from time to time shall be considered prima facie evidence of such amount.

§4.6        Temporary and Permanent Suspension of LIBOR Rate Loans.

(a)            Temporary Unavailability of LIBOR. Subject to §4.6(b) (where applicable), in the event that, prior to the commencement of any Interest Period relating to any LIBOR Rate Loan, the Agent shall determine that adequate and reasonable methods do not exist for ascertaining LIBOR for such Interest Period, or the Agent shall reasonably determine (or shall receive notice from the Required Lenders that they have determined) that LIBOR will not accurately and fairly reflect the cost of the Lenders making or maintaining LIBOR Rate Loans for such Interest Period, the Agent shall forthwith give notice of such determination (which shall be conclusive and binding on Borrower and the Lenders absent manifest error) to Borrower and the Lenders. In such event, unless an alternative rate of interest is selected in accordance with §4.6(b) below, (i) any Draw Request or Conversion/Continuation, any Loan Request with respect to a LIBOR Rate Loan shall be automatically withdrawn and shall be deemed a request for a Base Rate Loan and (ii) each LIBOR Rate Loan will automatically, on the last day of the then current Interest Period applicable thereto, become a Base Rate Loan, and the obligations of the Lenders to make LIBOR Rate Loans shall be suspended until the Agent determines that the circumstances giving rise to such suspension no longer exist, whereupon the Agent shall so notify Borrower and the Lenders.

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(b)            Successor LIBOR Rate.

(i)            Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Agent and the Borrower may amend this Agreement to replace LIBOR with a Benchmark Replacement. Any such amendment with respect to a Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Agent has posted such proposed amendment to all Lenders and the Borrower so long as the Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. Any such amendment with respect to an Early Opt-in Election will become effective on the date that Lenders comprising the Required Lenders have delivered to the Agent written notice that such Required Lenders accept such amendment. No replacement of the LIBOR Rate with a Benchmark Replacement pursuant to this Section 4.6(b) will occur prior to the applicable Benchmark Transition Start Date. Borrower shall pay all reasonable out-of-pocket costs (including reasonable attorney fees) incurred by Agent in connection with any amendment and related actions contemplated in this Section.

(ii)            Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement. Agent shall not be liable to any party hereto for any Benchmark Replacement Conforming Changes it makes in good faith.

(iii)            Notices; Standards for Decisions and Determinations. The Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period, provided that the failure to give such notice under this clause (iii) shall not affect the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Agent or Lenders pursuant to this Section 4.6(b), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 4.6(b).

(iv)            Benchmark Unavailability Period. Upon the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for an Advance of, conversion to or continuation of LIBOR Rate Loans to be made, converted or continued during such Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for an Advance of or conversion to Alternate Base Rate Loans. During any Benchmark Unavailability Period, (i) the obligation of the Lenders to make or maintain LIBOR Rate Loans shall be suspended, (ii) any request for an Advance of, conversion to or continuation of LIBOR Rate Loans shall be ineffective and will be deemed to have been a request for an Advance of or conversion to Alternate Base Rate Loans, and (iii) the component of the Alternate Base Rate based upon LIBOR will not be used in any determination of the Alternate Base Rate.

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§4.7        Illegality. Notwithstanding any other provisions herein, if any Change in Law shall make it unlawful, or any central bank or other governmental authority having jurisdiction over a Lender or its LIBOR Lending Office shall assert that it is unlawful, for any Lender to make or maintain LIBOR Rate Loans, such Lender shall forthwith give notice of such circumstances to the Agent and Borrower thereupon (a) the commitment of the Lenders to make LIBOR Rate Loans shall forthwith be suspended and replaced with an obligation to make Base Rate Loans and (b) the LIBOR Rate Loans of such Lender then outstanding shall be converted automatically to Base Rate Loans on the last day of each Interest Period applicable to such LIBOR Rate Loans or within such earlier period as may be required by law. Notwithstanding the foregoing, before giving such notice, the applicable Lender shall designate a different lending office if such designation will void the need for giving such notice and will not, in the reasonable judgment of such Lender, be otherwise materially disadvantageous to such Lender or increase any costs payable by Borrower hereunder.

§4.8Additional Interest. If any LIBOR Rate Loan or any portion thereof is repaid or is converted to a Base Rate Loan for any reason on a date which is prior to the last day of the Interest Period applicable to such LIBOR Rate Loan, or if repayment of the Loans has been accelerated as provided in §12.1, Borrower will pay to the Agent within fifteen (15) days of written demand for the account of the applicable Lenders in accordance with their respective Commitment Percentages, in addition to any amounts of interest otherwise payable hereunder, the Breakage Costs. Borrower understands, agrees and acknowledges the following: (i) no Lender has any obligation to purchase, sell and/or match funds in connection with the use of LIBOR as a basis for calculating the rate of interest on a LIBOR Rate Loan; (ii) LIBOR is used merely as a reference in determining such rate; and (iii) Borrower has accepted LIBOR as a reasonable and fair basis for calculating such rate and any Breakage Costs. Borrower further agrees to pay the Breakage Costs, if any, whether or not a Lender elects to purchase, sell and/or match funds.

§4.9Additional Costs, Etc. Notwithstanding anything herein to the contrary, if any Change in Law, shall:

(a)            subject any Lender or the Agent to any Taxes with respect to this Agreement, the other Loan Documents, such Lender’s Commitment, or the Loans (other than for Indemnified Taxes, Taxes described in clauses (b) through (d) of the definition of Excluded Taxes, and Connection Income Taxes), or

(b)            materially change the basis of taxation (except for changes in taxes on gross receipts, income or profits or its franchise tax) of payments to any Lender of the principal of or the interest on any Loans or any other amounts payable to any Lender under this Agreement or the other Loan Documents, or

(c)            impose or increase or render applicable any special deposit, compulsory loan, insurance charge, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law and which are not already reflected in any amounts payable by Borrower hereunder) against assets held by, or deposits in or for the account of, or loans by, or commitments of an office of any Lender (except the reserve in respect of the Reserve Percentage), or

(d)            impose on any Lender or the Agent any other conditions or requirements with respect to this Agreement, the other Loan Documents, the Loans, such Lender’s Commitment, or any class of loans or commitments of which any of the Loans or such Lender’s Commitment forms a part; and the result of any of the foregoing is:

(i)            to increase the cost (other than Taxes) to any Lender of making, continuing, converting to, funding, issuing, renewing, extending or maintaining any of the Loans or such Lender’s Commitment, or

(ii)            to reduce the amount of principal, interest or other amount payable (other than in respect of Taxes) to any Lender or the Agent hereunder on account of such Lender’s Commitment or any of the Loans, or

(iii)            require any Lender or the Agent to make any payment or to forego any interest or other sum payable hereunder (other than in respect of Taxes), the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Lender or the Agent from the Borrower hereunder, then, and in each such case, Borrower will, within fifteen (15) days of demand made by such Lender or (as the case may be) the Agent at any time and from time to time and as often as the occasion therefor may arise, pay to such Lender or the Agent such additional amounts as such Lender or the Agent shall determine in good faith to be sufficient to compensate such Lender or the Agent for such additional cost, reduction, payment or foregone interest or other sum. Each Lender and the Agent in determining such amounts may use any reasonable averaging and attribution methods generally applied by such Lender or the Agent, in such case (a) through (d), so long as such amounts have accrued on or before the day that is one hundred and eighty (180) days prior to the date on which such Agent first made demand therefor (except that, if the event giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof). For the avoidance of doubt, the provisions of this §4.9 shall not apply with respect to Taxes, which shall be governed by §4.4.

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§4.10      Capital Adequacy. If after the date hereof any Lender in good faith determines that (a) as a result of a Change in Law, or (b) compliance by such Lender or its parent bank holding company with any directive of any such entity regarding liquidity or capital adequacy has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s commitment to make Loans hereunder to a level below that which such Lender or holding company could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender may notify Borrower thereof. Borrower agrees to pay to such Lender the amount of such reduction in the return on capital as and when such reduction is reasonably determined, upon presentation by such Lender of a statement of the amount setting forth the Lender’s calculation thereof. In determining such amount, such Lender may use any reasonable averaging and attribution methods generally applied by such Lender.

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§4.11      Breakage Costs. Borrower shall pay all Breakage Costs required to be paid by them pursuant to this Agreement and incurred from time to time by any Lender within fifteen (15) days from receipt of written notice from Agent, or such earlier date as may be required by this Agreement.

§4.12Default Interest. (a) Automatically upon the occurrence and during the continuance of an Event of Default specified in §12.1(g), §12.1(h) or §12.1(i), and (b) at the option of the Required Lenders upon the occurrence and during the continuance of any Event of Default, and regardless of whether or not the Agent or the Lenders shall have accelerated the maturity of the Loans, all Loans shall bear interest payable on demand at a rate per annum equal to four percent (4.0%) above the interest rate that would otherwise be in effect hereunder (the “Default Rate”), until such amount shall be paid in full (after as well as before judgment) until such amount shall be paid in full (after as well as before judgment), or if any of such amounts shall exceed the maximum rate permitted by law, then at the maximum rate permitted by law.

§4.13Certificate. A certificate setting forth any amounts payable pursuant to §4.8, §4.9, §4.10, §4.11 or §4.12 and a reasonably detailed explanation of such amounts which are due, submitted by any Lender or the Agent to Borrower, shall be prima facie evidence of the amount due. A Lender shall be entitled to reimbursement under §4.9, or §4.10 from and after notice to Borrower that such amounts are due given in accordance with §4.9 or §4.10 and for a period of one hundred eighty (180) days prior to receipt of such notice if such Change in Law was effective during such one hundred eighty (180) day period.

§4.14      Limitation on Interest. Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, all agreements between or among Borrower, the Lenders and the Agent, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of acceleration of the maturity of any of the Obligations or otherwise, shall the interest contracted for, charged or received by the Lenders exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, interest would otherwise be payable to the Lenders in excess of the maximum lawful amount, the interest payable to the Lenders shall be reduced to the maximum amount permitted under applicable law; and if from any circumstance the Lenders shall ever receive anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal balance of the Obligations and to the payment of interest or, if such excessive interest exceeds the unpaid balance of principal of the Obligations, such excess shall be refunded to Borrower. All interest paid or agreed to be paid to the Lenders shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal of the Obligations (including the period of any renewal or extension thereof) so that the interest thereon for such full period shall not exceed the maximum amount permitted by applicable law. This section shall control all agreements between or among Borrower, the Lenders and the Agent.

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§4.15      Certain Provisions Relating to Increased Costs and Other Lenders. If a Lender gives notice of the existence of the circumstances set forth in §4.7 or any Lender requests compensation for any losses or reasonable and documented costs to be reimbursed pursuant to any one or more of the provisions of §4.4(a)-(d) (as a result of the imposition of U.S. withholding taxes on amounts paid to such Lender under this Agreement), §4.9 or §4.10, then, upon the request of Borrower, such Lender, as applicable, shall use reasonable efforts in a manner consistent with such institution’s practice in connection with loans like the Loan of such Lender to eliminate, mitigate or reduce amounts that would otherwise be payable by Borrower under the foregoing provisions, provided that such action would not be otherwise prejudicial to such Lender, including, without limitation, by designating another of such Lender’s offices, branches or affiliates; Borrower agreeing to pay all reasonable and necessary costs and expenses incurred by such Lender in connection with any such action. Notwithstanding anything to the contrary contained herein, if no Default or Event of Default shall have occurred and be continuing, and if any Lender (a) has given notice of the existence of the circumstances set forth in §4.7 or has requested payment or compensation for any losses or costs to be reimbursed pursuant to any one or more of the provisions of §4.4(a)-(d) (as a result of the imposition of U.S. withholding taxes on amounts paid to such Lender under this Agreement), §4.9 or §4.10 and following the request of Borrower has been unable to take the steps described above to mitigate such amounts (each, an “Affected Lender”) or (b) is a Defaulting Lender or a Non-Consenting Lender, (each, an “Other Lender”), then, within ninety (90) days after such notice or request for payment or compensation or failure to fund, as applicable, Borrower shall have the right as to such Affected Lender or Other Lender, as applicable, to be exercised by delivery of written notice delivered to the Agent and the Affected Lender or Other Lender, within ninety (90) days of receipt of such notice or failure to fund, as applicable, to elect to cause the Affected Lender or Other Lender, as applicable, to transfer its Commitment. The Agent shall promptly notify the remaining Lenders that each of such Lenders shall have the right, but not the obligation, to acquire a portion of the Commitment, pro rata based upon their relevant Commitment Percentages, of the Affected Lender or Other Lender, as applicable (or if any of such Lenders does not elect to purchase its pro rata share, then to such remaining Lenders in such proportion as approved by the Agent). In the event that the Lenders do not elect to acquire all of the Affected Lender’s or Other Lender’s Commitment, then the Agent shall endeavor to obtain a new Lender to acquire such remaining Commitment. Upon any such purchase of the Commitment of the Affected Lender or Other Lender, as applicable, the Affected Lender’s or Other Lender’s interest in the Obligations and its rights hereunder and under the Loan Documents shall terminate at the date of purchase, and the Affected Lender or Other Lender, as applicable, shall promptly execute all documents reasonably requested to surrender and transfer such interest. The purchase price for the Affected Lender’s or Other Lender’s Commitment shall equal any and all amounts outstanding and owed by Borrower to the Affected Lender or Other Lender, as applicable, including principal, prepayment premium or fee, and all accrued and unpaid interest or fees.

§5.           COLLATERAL SECURITY.

§5.1        Collateral. The Obligations and the Hedge Obligations shall be secured by a perfected first priority lien and security interest to be held by the Agent for the benefit of the Lenders on the Collateral, pursuant to the terms of the Security Documents.

§5.2        Appraisals; Adjusted Value.

(a)            The Agent may or shall, for the purpose of determining the current Appraised Value of the Borrowing Base Properties, obtain new Appraisals or an update to existing Appraisals with respect to the Borrowing Base Properties, or any of them, as the Agent shall reasonably determine or if directed by the Required Lenders in their reasonable discretion solely: (i) in connection with the acceptance of such Real Estate as a Borrowing Base Property, (ii) once during the initial term of the Loan unless an Event of Default shall be in existence and continuing, (iii) in connection with any requested extension of the Revolving Credit Maturity Date, (iv) once during the period (if applicable) between the Initial Maturity Date and the Extended Maturity Date (provided that no such new Appraisal or update shall be obtained or required at any time prior to the twelve-month anniversary of the immediately preceding Appraisal relating to the subject Borrowing Base Property), (v) if requested by Borrower, (vi) at any time while an Event of Default is in existence and continuing or (vii) in connection with the material modification to a Lease at a Borrowing Base Property; it being agreed that, for purposes of this clause (vii), “material modification” shall mean a modification which changes the term of the Lease or the rental rate or creates a “right of first offer (refusal)” or changes other material terms including gross square footage of rental space, except for a modification which extends the term of the Lease to memorialize the tenant’s exercise of an extension option in the Lease. The reasonable and actual expense of such Appraisals and/or updates performed pursuant to this §5.2(a) shall be borne by Borrower and payable to Agent within ten (10) days of written demand. Additionally, the Agent may, and shall if directed by the Required Lenders, obtain such other Appraisals of the Borrowing Base Properties at such time as they may so reasonably determine, at the sole expense of the Lenders.

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(b)            Borrower acknowledges that the Agent has the right to reasonably approve any Appraisal performed pursuant to this Agreement. Borrower further agrees that the Lenders and Agent do not make any representations or warranties with respect to any such Appraisal and shall have no liability as a result of or in connection with any such Appraisal for statements contained in such Appraisal, including without limitation, the accuracy and completeness of information, estimates, conclusions and opinions contained in such Appraisal, or variance of such Appraisal from the fair value of such property that is the subject of such Appraisal given by the local tax assessor’s office, or Borrower’s idea of the value of such property.

§5.3        Addition of Borrowing Base Properties.

(a)            After the Closing Date, Borrower shall have the right, subject to the consent of the Agent and the Required Lenders (which consent shall not be unreasonably withheld or delayed), and the satisfaction by Borrower of the conditions set forth in this §5.3, to add Potential Collateral to the Collateral. In the event Borrower desires to add additional Potential Collateral as aforesaid, Borrower shall provide written notice to the Agent of such request (which the Agent shall promptly furnish to the Lenders within three (3) Business Days), together with all documentation and other information reasonably required to permit the Agent to determine whether such Real Estate is Eligible Real Estate. Notwithstanding the foregoing, no Potential Collateral shall be included as Collateral unless and until the following conditions precedent shall have been satisfied:

(i)            Unless otherwise approved by the Agent and the Required Lenders, the proposed Real Estate shall be Eligible Real Estate;

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(ii)            the owner of the Eligible Real Estate shall have executed a Joinder Agreement and satisfied the conditions of §5.5;

(iii)            Borrower or the owner of the Eligible Real Estate shall have executed and delivered to the Agent all Eligible Real Estate Qualification Documents, all of which instruments, documents or agreements shall be in form and substance reasonably satisfactory to the Agent and the Lenders together with an executed Borrowing Base Availability Certificate in the form of Exhibit F;

(iv)            after giving effect to the inclusion of such Potential Collateral in connection with each requested Advance, each of the representations and warranties made by or on behalf of Borrower or any of their respective Subsidiaries contained in this Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true in all material respects both as of the date as of which it was made and shall also be true as of the time of the addition (or any replacement) of Borrowing Base Properties, with the same effect as if made at and as of that time (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date), and no Default or Event of Default shall have occurred and be continuing, and the Agent shall have received a certificate of Borrower to such effect.

Notwithstanding the foregoing, in the event such Collateral or Potential Collateral does not qualify as Eligible Real Estate, so long as the conditions set forth in clauses (ii) and (iv) of this §5.3 have been satisfied, such Collateral or Potential Collateral shall be included as Collateral and constitute Eligible Real Estate so long as the Agent shall have received the prior written consent of the Agent and the Required Lenders in their sole discretion to the inclusion of such Real Estate as a Borrowing Base Property.

§5.4        Release of Borrowing Base Property. Provided no Default or Event of Default shall have occurred hereunder and be continuing (or would exist immediately after giving effect to the transactions contemplated by this §5.4 including any paydown of the Loans in connection with the transactions contemplated by this §5.4), subject to the consent of the Required Lenders (which consent shall not be unreasonably withheld or delayed), the Agent shall release a Borrowing Base Property from the lien or security title of the Security Documents encumbering the same upon the request of Borrower subject to and upon the following terms and conditions:

(a)            Borrower shall have provided the Agent with written notice of its intention to remove any specified Borrowing Base Property from the Collateral at least ten (10) days prior to the requested release (which notice may be revoked by Borrower at any time);

(b)            Borrower shall submit to the Agent with such request an executed Borrowing Base Availability Certificate in the form of Exhibit F and a Compliance Certificate prepared using the financial statements of Borrower most recently provided or required to be provided to the Agent under §6.4 or §7.4 adjusted in the best good faith estimate of Borrower solely to give effect to the proposed release and demonstrating that no Default or Event of Default with respect to the covenants referred to therein shall exist after giving effect to such release and if Borrower would not be in compliance, then any reduction in the outstanding amount of the Loans in connection with such release;

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(c)            all release documents to be executed by the Agent shall be in form and substance reasonably satisfactory to the Agent;

(d)            Borrower shall pay all reasonable and documented costs and expenses of the Agent in connection with such release, including without limitation, reasonable and documented attorney’s fees;

(e)            Borrower shall pay to the Agent for the account of the Lenders any payment required to comply with §3.2, which payment shall be applied to reduce the outstanding principal balance of the Loans as provided in §3.2; and

(f)            without limiting or affecting any other provision hereof, any release of a Borrowing Base Property will not cause Borrower to be in violation of the covenants set forth in §§9.1 through 9.6.

§5.5        Additional Subsidiary Guarantors. As and to the extent that Borrower shall request that certain Real Estate of a Subsidiary of REIT Guarantor be included as a Borrowing Base Property in connection with the request of any Loan as contemplated by §5.3 and such Real Estate is approved for inclusion as a Borrowing Base Property in accordance with the terms hereof, Borrower shall cause each such Subsidiary to execute and deliver to Agent a Joinder Agreement wherein, as approved by the Agent and such Subsidiary shall become a Subsidiary Guarantor hereunder. Each such Subsidiary shall be authorized, in accordance with its respective organizational documents, to be a Subsidiary Guarantor hereunder and to execute such Security Documents as Agent may reasonably require. Borrower shall further cause all representations, covenants and agreements in the Loan Documents with respect to the Subsidiary Guarantors to be true and correct with respect to each such Subsidiary from and after the date such Subsidiary executes and delivers a Joinder Agreement. In connection with the delivery of such Joinder Agreement, Borrower shall deliver to the Agent such organizational agreements, resolutions, consents, opinions and other documents and instruments as the Agent may reasonably require.

§5.6        Release of Certain Subsidiary Guarantors. In the event that all Borrowing Base Properties owned by a Subsidiary Guarantor shall have been released as Collateral for the Obligations and Hedge Obligations in accordance with the terms of this Agreement, then such Subsidiary Guarantor shall be deemed to be fully released from all Obligations and all Hedge Obligations and its obligations under its Guaranty shall terminate without the need of any further actions from Agent or any Lender.

§5.7        Release of Collateral. Upon the refinancing or repayment of the Obligations in full (other than contingent indemnification claims for which no claim has been made), then the Agent shall release the Collateral from the lien and security interest of the Security Documents and the other Loan Documents and release Borrower and Guarantors from the Loan Documents; provided that Agent has not received a notice from the “Representative” (as defined in §14.17) or the holder of the Hedge Obligations that any Hedge Obligation is then due and payable to the holder thereof.

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§6.           REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to the Agent and the Lenders as follows, each as of the Closing Date hereof, and as of the date of funding any Loan hereunder (subject to §11.1 hereof).

§6.1        Corporate Authority, Etc.

(a)            Incorporation; Good Standing. Borrower is a Delaware limited partnership duly organized pursuant to its certificate of limited partnership filed with the Delaware Secretary of State, and is validly existing and in good standing under the laws of Delaware. Borrower (i) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated, and (ii) is in good standing and is duly authorized to do business in each other jurisdiction where a failure to be so qualified in such other jurisdiction would reasonably be expected to have a Material Adverse Effect.

(b)            Other Credit Parties. Each of the other Credit Parties (i) is a corporation, limited partnership, general partnership, limited liability company or trust duly organized under the laws of its State of organization and is validly existing and in good standing under the laws thereof, (ii) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated and (iii) is in good standing and is duly authorized to do business in each jurisdiction where a Borrowing Base Property owned or leased by it is located to the extent required to do so under applicable law and in each other jurisdiction where a failure to be so qualified would reasonably be expected to have a Material Adverse Effect.

(c)            Other Subsidiaries. Except where a failure to satisfy such representation would not have a Material Adverse Effect, each of the Subsidiaries of Borrower (other than the Subsidiary Guarantors) (i) is a corporation, limited partnership, general partnership, limited liability company or trust duly organized under the laws of its State of organization and is validly existing and in good standing under the laws thereof, (ii) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated and (iii) is in good standing and is duly authorized to do business in each jurisdiction where Real Estate owned or leased by it is located.

(d)            Authorization. The execution, delivery and performance of this Agreement and the other Loan Documents to which any of Borrower is a party and the transactions contemplated hereby and thereby (i) are within the authority of the Credit Parties, (ii) have been duly authorized by all necessary actions on the part of the Credit Parties, (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which any Credit Party is subject or any judgment, order, writ, injunction, license or permit applicable to any Credit Party, except as would not reasonably be expected to result in a Material Adverse Effect, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement, articles of incorporation or other charter documents or bylaws of, or any agreement or other instrument binding upon, any Credit Party or any of its properties where, in the case of any agreement or other instrument binding upon any Credit Party or any of its properties, any conflict or default would not reasonably be expected to have a Material Adverse Effect, (v) do not and will not result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of any Credit Party other than the liens and encumbrances in favor of Agent contemplated by this Agreement and the other Loan Documents (or any other lien or encumbrance permitted by this Agreement and/or the Loan Documents), and (vi) do not require the approval or consent of any Person other than those already obtained and delivered to Agent or except as would not reasonably be expected to result in a Material Adverse Effect.

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(e)            Enforceability. The execution and delivery of this Agreement and the other Loan Documents to which any of the Credit Parties is a party are valid and legally binding obligations of the Credit Parties enforceable in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and general principles of equity.

§6.2         Governmental Approvals. The execution, delivery and performance of this Agreement and the other Loan Documents to which any Credit Party is a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing or registration with, or the giving of any notice to, any court, department, board, governmental agency or authority other than those already obtained or waived in writing and the filing of the Security Documents in the appropriate records office with respect thereto, in each case, except as would not reasonably be expected to result in a Material Adverse Effect.

§6.3         Title to Borrowing Base Properties. Except as indicated on Schedule 6.3 hereto Borrower and its Subsidiaries own all of the assets reflected in the consolidated balance sheet of Borrower as of the Balance Sheet Date or acquired since that date (except property and assets sold or otherwise disposed of in the ordinary course since that date), Subsidiary Guarantors own each subject Borrowing Base Property subject to no rights of others, including any mortgages, leases pursuant to which Subsidiary Guarantors or any of their Affiliates is the lessee, conditional sales agreements, title retention agreements, liens or other monetary encumbrances except Permitted Liens.

§6.4         Financial Statements. Guarantor has furnished to Agent: (a) the consolidated balance sheet of REIT Guarantor and its Subsidiaries as of the Balance Sheet Date and the related consolidated statement of income and cash flow for the most recent period then ended (and available) certified by an Authorized Officer or the chief financial or accounting officer of Guarantor, (b) as of the Closing Date, an unaudited statement of Net Operating Income for each of the Borrowing Base Properties (if any) for the most recent period then ended (and available) certified by the chief financial or accounting officer of Borrower, to the best of such officer’s knowledge, as fairly presenting in all material respects the Net Operating Income for such parcels for such periods, and (c) certain other financial information relating to Borrower and the Real Estate (including, without limitation, the Borrowing Base Properties). Such balance sheet and statements have been prepared in accordance with GAAP and fairly present in all material respects the consolidated financial condition of the Guarantor and its Subsidiaries as of such dates and the consolidated results of the operations of the Guarantor and its Subsidiaries for such periods. Notwithstanding the foregoing of this §6.4, projections represent Borrower’s best estimate of Borrower’s future financial performance and such assumptions are believed by Borrower to be fair and reasonably in light of current business conditions, and Borrower can give no assurances that such projections will be attained.

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§6.5         No Material Changes. Since the later of Balance Sheet Date or the date of the most recent financial statements delivered pursuant to §7.4, as applicable, except as otherwise disclosed to Agent, there has occurred no materially adverse change in the financial condition, or business of Borrower and their respective Subsidiaries taken as a whole as shown on or reflected in the consolidated balance sheet of the Guarantor as of the Balance Sheet Date, or its consolidated statement of income or cash flows for the calendar year then ended, other than changes that have not and would not reasonably be expected to have a Material Adverse Effect. As of the date hereof, except as set forth on Schedule 6.5 hereto, there has occurred no materially adverse change in the financial condition, operations or business activities of any of the Borrowing Base Properties from the condition shown on the statements of income delivered to the Agent pursuant to §6.4 other than changes in the ordinary course of business that have not had a Material Adverse Effect.

§6.6         Franchises, Patents, Copyrights, Etc. Borrower and the Subsidiary Guarantors possess all franchises, patents, copyrights, trademarks, trade names, service marks, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of their business substantially as now conducted without known conflict with any rights of others. None of the Borrowing Base Properties is owned or operated under or by reference to any registered or protected trademark, trade name, service mark or logo, except where such failure or conflict would not reasonably be expected to have a Material Adverse Effect.

§6.7         Litigation. As of the date hereof, except as stated on Schedule 6.7, there are no actions, suits, proceedings or investigations of any kind pending or to the knowledge of Borrower or the Subsidiary Guarantors threatened against Borrower or a Subsidiary Guarantor before any court, tribunal, arbitrator, mediator or administrative agency or board which question the validity of this Agreement or any of the other Loan Documents, any action taken or to be taken pursuant hereto or thereto or any lien, security title or security interest created or intended to be created pursuant hereto or thereto. As of the date hereof, except as set forth on Schedule 6.7, there are no judgments, final orders or awards outstanding against or affecting Borrower, the Subsidiary Guarantors or any Borrowing Base Property.

§6.8         No Material Adverse Contracts, Etc. None of Borrower or the Subsidiary Guarantors are subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation that has or is expected in the future to have a Material Adverse Effect. None of Borrower or the Subsidiary Guarantors are a party to any contract or agreement that has or could reasonably be expected to have a Material Adverse Effect.

§6.9         Compliance with Other Instruments, Laws, Etc. None of Borrower or any of their respective Subsidiaries is in violation of any provision of its charter or other organizational documents, bylaws, or any agreement or instrument to which it is subject or by which it or any of its properties is bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that has had or could reasonably be expected to have a Material Adverse Effect.

§6.10       Tax Status. Except as would not reasonably be expected to result in a Material Adverse Effect, each of Borrower and the Subsidiary Guarantors (a) have made or filed all federal and state income and all other Tax returns, reports and declarations required by any jurisdiction to which it is subject or has obtained an extension for filing, (b) have paid prior to delinquency all Taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings or for which any of Borrower or their respective Subsidiaries, as applicable has set aside on its books provisions reasonably adequate for the payment of such Taxes, and (c) have made provisions reasonably adequate for the payment of all accrued Taxes not yet due and payable. Except as would not reasonably be expected to result in a Material Adverse Effect, there are no unpaid Taxes claimed by the taxing authority of any jurisdiction to be due by Borrower of their respective Subsidiaries, the officers or partners of such Person know of no basis for any such claim, and as of the Closing Date, there are no audits pending or to the knowledge of Borrower threatened with respect to any Tax returns filed by Borrower or their respective Subsidiaries.

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§6.11       No Event of Default. No Default or Event of Default has occurred and is continuing.

§6.12       Investment Company Act. None of Borrower or any of their respective Subsidiaries is an “investment company”, or an “affiliated company” or a “principal underwriter” of an “investment company”, as such terms are defined in the Investment Company Act of 1940.

§6.13       Absence of UCC Financing Statements, Etc. Except with respect to Permitted Liens or as disclosed on the lien search reports delivered to and approved by the Agent, there is no financing statement (but excluding any financing statements that may be filed against Borrower or Subsidiary Guarantor without the consent or agreement of such Persons), security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any applicable filing records, registry, or other public office, that purports to cover, affect or give notice of any present or possible future lien on, or security interest or security title in, any Collateral.

§6.14       Setoff, Etc.The Collateral and the rights of the Agent and the Lenders with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses by Borrower or any of their Subsidiaries or Affiliates or, to the best knowledge of Borrower, any other Person other than Permitted Liens described in §8.2(i), (vi), (vii) and (viii).

§6.15       Certain Transactions. Except as disclosed on Schedule 6.15 hereto, none of the partners, officers, trustees, managers, members, directors, or employees of Borrower or Subsidiary Guarantor is, nor shall any such Person become, a party to any transaction with Borrower or Subsidiary Guarantor (other than for services as partners, managers, members, employees, officers and directors), including any agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any partner, officer, trustee, director or such employee or, to the knowledge of Borrower or the Subsidiary Guarantors, any corporation, partnership, trust or other entity in which any partner, officer, trustee, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, which are on terms less favorable to Borrower or the Subsidiary Guarantors than those that would be obtained in a comparable arms-length transaction.

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§6.16       Employee Benefit Plans. Except as would not reasonably be expected to have a Material Adverse Effect, Borrower and each ERISA Affiliate that is subject to ERISA has fulfilled its obligation, if any, under the minimum funding standards of ERISA and the Code with respect to each Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan. Except as would not reasonably be expected to result in a Material Adverse Effect, neither Borrower nor any ERISA Affiliate has (a) sought a waiver of the minimum funding standard under §412 of the Code in respect of any Multiemployer Plan or Guaranteed Pension Plan or (b) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under §4007 of ERISA. Neither Borrower nor any ERISA Affiliate has failed to make any contribution or payment to any Multiemployer Plan or Guaranteed Pension Plan, or made any amendment to any Multiemployer Plan or Guaranteed Pension Plan, which has resulted or would reasonably be expected to result in the imposition of a Lien. None of the Borrowing Base Properties constitutes a “plan asset” of any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan in each case that is subject to ERISA.

§6.17       Disclosure. All of the representations and warranties made by or on behalf of Borrower and the Guarantors in this Agreement and the other Loan Documents or any document or instrument delivered to the Agent or the Lenders pursuant to or in connection with any of such Loan Documents are true and correct in all material respects, and neither Borrower nor any Guarantor has failed to disclose such information as is necessary to make such representations and warranties not misleading. To the best of Borrower’s knowledge, all information contained in this Agreement, the other Loan Documents or otherwise furnished to or made available to the Agent or the Lenders by or on behalf of Borrower or any Guarantor is and will be true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading. To the best of Borrower’s knowledge, the written information, reports and other papers and data with respect to Borrower, the Guarantors, their Subsidiaries or the Borrowing Base Properties (other than projections and estimates) furnished to the Agent or the Lenders in connection with this Agreement or the obtaining of the Commitments of the Lenders hereunder was, at the time so furnished, complete and correct in all material respects, or has been subsequently supplemented by other written information, reports or other papers or data, to the extent necessary to give in all material respects a true and accurate knowledge of the subject matter in all material respects; provided that such representation shall not apply to (a) the accuracy of any appraisal, property condition assessment, zoning or code compliance report, title commitment, survey, or engineering and environmental reports prepared by third parties or legal conclusions or analysis provided by Borrower’s and Guarantors’ counsel (although Borrower and Guarantors have no reason to believe that the Agent and the Lenders may not rely on the accuracy thereof) or (b) budgets, projections and other forward-looking speculative information prepared in good faith by Borrower and the Guarantors (except to the extent the related assumptions were when made manifestly unreasonable).

§6.18       Trade Name; Place of Business. No Borrower or the Subsidiary Guarantor uses any trade name and conducts business under any name other than its actual name set forth in the Loan Documents. The principal place of business of Borrower and the other Credit Parties is 1901 Main Street, Lake Como, New Jersey, 07719.

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§6.19       Regulations T, U and X. No portion of any Loan is to be used for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 220, 221 and 224. Neither Borrower nor any other Credit Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 220, 221 and 224.

§6.20       Environmental Compliance. Except as set forth on Schedule 6.20 or as specifically set forth in the written environmental site assessment reports of the Environmental Engineer provided to the Agent on or before the date hereof, or in the case of any Borrowing Base Property acquired after the date hereof, the environmental site assessment reports with respect thereto provided to the Agent:

(a)            To Borrower’s actual knowledge, none of the Borrowing Base Properties, nor to, any tenant or operations thereon, is in violation, or alleged violation, of any Environmental Law, which violation would reasonably be expected to have a Material Adverse Effect.

(b)            None of Borrower or Subsidiary Guarantors has received written notice from any third party including, without limitation, any federal, state or local governmental authority, (i) that it has been identified by the United States Environmental Protection Agency (“EPA”) as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any Hazardous Substance(s) which it has generated, transported or disposed of have been found at any site at which a federal, state or local agency or other third party has conducted, or has demanded that Borrower conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; or (iii) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding (in each case, contingent or otherwise) arising out of any third party’s incurrence of costs, expenses, losses or damages in connection with the release of Hazardous Substances in violation of applicable Environmental Law, which in the case of clauses (i) through (iii) above which involves a Borrowing Base Property and which would reasonably be expected to have a Material Adverse Effect.

(c)            (i) No portion of the Borrowing Base Properties is used by Borrower or Subsidiary Guarantors, or to the actual knowledge of Borrower or Subsidiary Guarantors, by any tenant or operator thereon for the handling, processing, storage or disposal of Hazardous Substances except in compliance with applicable Environmental Laws, and, to the actual knowledge of Borrower, no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Borrowing Base Properties except those which are being operated and maintained, and, if required, remediated, in compliance with Environmental Laws; (ii) in the course of any business activities conducted by Borrower, their respective Subsidiaries or, to Borrower’s actual knowledge, the tenants and operators of their properties, no Hazardous Substances have been generated or are being used on the Borrowing Base Properties except in the ordinary course of Borrower’s or Subsidiary Guarantors’ or their tenants and operators’ business and in compliance with applicable Environmental Laws; (iii) to Borrower’s actual knowledge, there has been no past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping (other than in reasonable quantities to the extent necessary in the ordinary course of operation of Borrower’s, Subsidiary Guarantors’, their tenants’ or operators’ business and, in any event, in compliance with all Environmental Laws) (a “Release”) or threatened Release of Hazardous Substances on, upon, into or from the Borrowing Base Properties, which Release would reasonably be expected to have a Material Adverse Effect; (iv) to Borrower’s actual knowledge, there have been no Releases on, upon, from or into any real property in the vicinity of any of the Borrowing Base Properties which, through soil or groundwater contamination, have come to be located on the Borrowing Base Properties, and which would be reasonably anticipated to have a Material Adverse Effect; and (v) to Borrower’s actual knowledge, any Hazardous Substances that have been generated on any of the Borrowing Base Properties have been transported off-site in accordance with all applicable Environmental Laws and in a manner that would not reasonably be expected to have a Material Adverse Effect.

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(d)            Except for such matters that shall be complied with as of the Closing Date, by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the recording of the Mortgages or to the effectiveness of any other transactions contemplated hereby, none of Borrower, the Subsidiary Guarantors or the Borrowing Base Properties will become subject to any applicable Environmental Law requiring the performance of environmental site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any governmental agency or the recording or delivery to other Persons of an environmental disclosure document or statement pursuant to applicable Environmental Laws, which would reasonably be expected to have a Material Adverse Effect.

(e)            To Borrower’s actual knowledge, there are no existing or closed sanitary waste landfills, or hazardous waste treatment, storage or disposal facilities on the Borrowing Base Properties except where such existence would not reasonably be expected to have a Material Adverse Effect.

(f)            Neither Borrower nor Subsidiary Guarantors have received any written notice from any party that any use, operation, or condition of any Borrowing Base Properties has caused any adverse condition on any other property that would reasonably be expected to result in a claim under applicable Environmental Law that would have a Material Adverse Effect, nor does Borrower or Subsidiary Guarantor have actual knowledge of any existing facts or circumstances that could reasonably be expected to form the basis for such a claim.

§6.21       Subsidiaries; Organizational Structure. Schedule 6.21 sets forth, as of the Closing Date, all of the Subsidiaries and Unconsolidated Subsidiaries of Borrower, the form and jurisdiction of organization of each of the Subsidiaries and Unconsolidated Subsidiaries, and the owners of the direct and indirect ownership interests therein. No Person owns any legal, equitable or beneficial interest in any of the Persons set forth on Schedule 6.21 except as set forth on such Schedule.

§6.22       Leases. Borrower have delivered to the Agent true and complete copies of the Leases and any amendments thereto relating to each Borrowing Base Property required to be delivered as a part of the Eligible Real Estate Qualification Documents as of the date hereof. An accurate and complete Rent Roll in all material respects as of the date of inclusion of each Borrowing Base Property in the Collateral with respect to all Leases of any portion of the Borrowing Base Property has been provided to the Agent. The Leases previously delivered to Agent as described in the first sentence of this §6.22 constitute as of the date thereof the sole material agreements relating to leasing or licensing of space at such Borrowing Base Property and in the Building relating thereto. No tenant under any Lease is entitled to any free rent, partial rent, rebate of rent payments, credit, offset or deduction in rent, including, without limitation, lease support payments or lease buy-outs, except as reflected in such Leases or such Rent Roll. Except as set forth in Schedule 6.22, to Borrower’s actual knowledge, the Leases reflected therein are, as of the date of inclusion of the applicable Borrowing Base Property in the Collateral, in full force and effect in accordance with their respective terms, without any payment default or any other material default thereunder, nor are there any material defenses, counterclaims, offsets, concessions or rebates available to any tenant thereunder, and except as reflected in Schedule 6.22, no Borrower has given or made, any notice of any payment or other material default, or any claim, which remains uncured or unsatisfied, with respect to any of the Leases, and to the actual knowledge of Borrower, there is no basis for any such claim or notice of default by any tenant. Borrower knows of no condition which with the giving of notice or the passage of time or both would constitute a default on the part of any tenant with respect to the material terms under a Lease or of the respective Subsidiary Guarantor as landlord under the Lease. No security deposit or advance rental or fee payment (more than 2 months in advance) has been made by any lessee or licensee under the Leases except as may be specifically designated in the copies of the Leases furnished to the Agent or as otherwise disclosed to Agent in writing. No property other than the Borrowing Base Property which is the subject of the applicable Lease is necessary to comply with the requirements (including, without limitation, parking requirements) contained in such Lease.

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§6.23       Property. Except as set forth in Schedule 6.23 or as set forth in the written engineer reports provided to Agent on or before the date hereof, to Borrower’s actual knowledge, all of the Borrowing Base Properties, and all major building systems located thereon, are structurally sound, in good condition and working order and free from material defects, subject to ordinary wear and tear, except for such portion of such Real Estate which is not occupied by any tenant and which may not be in final working order pending final build-out of such space except where such defects have not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Borrowing Base Properties, and the use and operation thereof, to Borrower’s actual knowledge, is in material compliance with all applicable federal and state law and governmental regulations and any local ordinances, orders or regulations, including without limitation, laws, regulations and ordinances relating to zoning, building codes, subdivision, fire protection, health, safety, handicapped access, historic preservation and protection, wetlands, tidelands, and Environmental Laws except in cases that would not reasonably be expected to cause a Material Adverse Effect. To Borrower’s actual knowledge, all water, sewer, electric, gas, telephone and other utilities necessary for the use and operation of the Borrowing Base Property are installed to the property lines of the Borrowing Base Property through dedicated public rights of way or through perpetual private easements with respect to which the applicable Mortgage creates a valid and enforceable first lien subject to Permitted Liens and, except in the case of drainage facilities, are connected to the Building located thereon with valid permits and are adequate to service the Building in compliance with applicable law, and except where the failure of any of the foregoing would not reasonably be expected to have a Material Adverse Effect. There are no material unpaid or outstanding real estate or other taxes or assessments on or against any of the Borrowing Base Properties which are payable by Borrower or any tenant (except only real estate or other taxes or assessments, that are not yet delinquent or are being protested as permitted by this Agreement). Except as otherwise disclosed to Agent in writing, there are no pending, or to the actual knowledge of Borrower threatened or contemplated, eminent domain proceedings against any of the Borrowing Base Properties. Except as otherwise disclosed to Agent in writing, none of the Borrowing Base Properties is now damaged as a result of any fire, explosion, accident, flood or other casualty. Except as otherwise disclosed to Agent in writing, none of Borrower or Subsidiary Guarantors has received any outstanding written notice from any insurer or its agent requiring performance of any work with respect to any of the Borrowing Base Properties or canceling or threatening to cancel any policy of insurance, and each of the Borrowing Base Properties complies with the material requirements of all of Borrower’s and Subsidiary Guarantors’ insurance carriers, except where any of the foregoing would not reasonably be expected to have a Material Adverse Effect. Except as otherwise disclosed to Agent, Borrower and the Subsidiary Guarantors have no Management Agreements for any of the Borrowing Base Properties. To the actual knowledge of Borrower, there are no material claims or any bases for material claims in respect of any Borrowing Base Property or its operation by any party to any service agreement or Management Agreement, that would have a Material Adverse Effect. No person or entity has any right or option to acquire any Borrowing Base Property or any Building thereon or any portion thereof or interest therein, except for certain tenants pursuant to the terms of their Leases with Subsidiary Guarantors.

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§6.24       Brokers. None of the Credit Parties has engaged or otherwise dealt with any broker, finder or similar entity in connection with this Agreement or the Loans contemplated hereunder.

§6.25       Other Debt. As of the date of this Agreement, (a) none of the Credit Parties nor any of their respective Subsidiaries is in default of (i) the payment of any Indebtedness that individually or in the aggregate has an outstanding principal balance in excess of $500,000.00 (“Material Debt”), or (ii) the performance of any material obligation under any agreement, mortgage, deed of trust, security agreement, financing agreement or indenture to which any of them is a party that is related to a Material Debt, and (b) as of the Closing Date all Indebtedness of Borrower, each Guarantor and their respective Subsidiaries is current and not subject to acceleration. No Credit Party is a party to or bound by any agreement, instrument or indenture that may require the subordination in right or time or payment of any of the Obligations to any other indebtedness or obligation of any Credit Party. Schedule 6.25 attached hereto sets forth all agreements, mortgages, deeds of trust, financing agreements or other material agreements binding upon each Credit Party or their respective properties and entered into by a Credit Party as of the date of this Agreement with respect to any Indebtedness of any Credit Party in an amount greater than $500,000.00, and Borrower has provided the Agent with such true, correct and complete copies thereof as Agent has requested.

§6.26       Solvency. As of the Closing Date and after giving effect to the transactions contemplated by this Agreement and the other Loan Documents, including all Loans made or to be made hereunder, and, including, without limitation the provisions of §37, hereof, the Credit Parties, taken as a whole, are not insolvent on a balance sheet basis such that the sum of their liabilities exceeds the sum of such assets, the Credit Parties, taken as a whole, are able to pay their debts as they become due, and the Credit Parties, taken as a whole, have sufficient capital to carry on their businesses.

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§6.27       No Bankruptcy Filing. As of the Closing Date, none of the Credit Parties are contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of its assets or property, and the Credit Parties have no knowledge of any Person contemplating the filing of any such petition against it.

§6.28       No Fraudulent Intent. Neither the execution and delivery of this Agreement or any of the other Loan Documents nor the performance of any actions required hereunder or thereunder is being undertaken by the Credit Parties with or as a result of any actual intent by any of such Persons to hinder, delay or defraud any entity to which any of such Persons is now or will hereafter become indebted.

§6.29       Transaction in Best Interests of Credit Parties; Consideration. The transaction evidenced by this Agreement and the other Loan Documents is in the best interests of each Credit Party. The direct and indirect benefits to inure to Borrower and the Guarantors pursuant to this Agreement and the other Loan Documents (subject to the provisions of the Loan Documents) constitute “reasonably equivalent value” (as such term is used in §548 of the Bankruptcy Code) and “valuable consideration,” “fair value,” and “fair consideration,” (as such terms are used in any applicable state fraudulent conveyance law), in exchange for the benefits to be provided by Borrower and the Guarantors pursuant to this Agreement and the other Loan Documents, and but for the willingness of each Guarantor to be a guarantor of the Loan, Borrower and the Guarantors would be unable to obtain the financing contemplated hereunder which financing will enable Borrower and the Subsidiary Guarantors to have available financing to conduct and expand their business.

§6.30       OFAC. Borrower nor the Guarantors are (or will be) (i) a Sanctioned Person, (ii) located, organized or resident in a Designated Jurisdiction or (iii) is or has been (within the previous five (5) years) engaged in any transaction with any Sanctioned Person or any Person who is located, organized or resident in any Designated Jurisdiction to the extent that such transactions would violate Sanctions. No Loan, nor the proceeds from any Loan, has been used, directly or indirectly, or has otherwise been made available to fund any activity or business in any Designated Jurisdiction or to fund any activity or business with any Sanctioned Person, or in any other manner that will result in a violation by any Credit Party or Subsidiary thereof, or any Lender or the Agent, of Sanctions. Neither the making of the Loans hereunder nor the use of proceeds thereof will violate the Act, the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or successor statute thereto. The REIT Guarantor and its Subsidiaries are in compliance in all material respects with the Patriot Act. The Credit Parties have implemented and maintain in effect policies and procedures reasonably designed to promote and achieve compliance with the Anti-Corruption Laws and applicable Sanctions. In addition, the Credit Parties hereby agree to provide to the Lenders any additional information that a Lender reasonably deems necessary from time to time in order to ensure compliance with all applicable laws concerning money laundering and similar activities.

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§6.31       Regarding Representations and Warranties. Each request by any Borrower for an advance of Loan proceeds: (i) shall constitute an affirmation by the Credit Parties that the foregoing representations and warranties remain true and correct as of the date of such request (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date); and (ii) shall constitute the representation and warranty of the Credit Parties to Agent and each of the Lenders that the information set forth in each such request is true and correct in all material respects and omits no material fact necessary to make the same not misleading. All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by each Credit Party shall be deemed to have been relied upon by Agent and each of the Lenders notwithstanding any investigation heretofore or hereafter made by Agent and/or any of the Lenders or on its behalf.

§7.          AFFIRMATIVE COVENANTS. Borrower covenants and agrees that, so long as any Loan or Note is outstanding (other than contingent indemnification claims for which no claim has been made) or any Lender has any obligation to make any Loans:

§7.1         Punctual Payment. Borrower will duly and punctually pay or cause to be paid the principal and interest on the Loans and all interest and fees provided for in this Agreement, all in accordance with the terms of this Agreement and the Notes, as well as all other sums owing pursuant to the Loan Documents in accordance with the terms hereof.

§7.2         Maintenance of Office. Borrower will maintain its chief executive office at 1901 Main Street, Lake Como, New Jersey 07719, or at such other as Borrower shall designate upon prompt written notice to the Agent and the Lenders, where notices, presentations and demands to or upon Borrower in respect of the Loan Documents may be given or made.

§7.3         Records and Accounts. The REIT Guarantor, Borrower and the Subsidiary Guarantors will (a) keep, and cause each of their respective Subsidiaries to keep true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP (in each case, in all material respects) and (b) make adequate provision for the payment of all Taxes (including income taxes). Neither REIT Guarantor, Borrower nor any of their respective Subsidiaries shall, without the prior written consent of the Agent (which consent shall not be unreasonably withheld or delayed), (x) make any material change to the accounting policies/principles used by such Person in preparing the financial statements and other information described in §6.4 or §7.4 (unless required by GAAP or other applicable accounting standards), or (y) change its fiscal year.

§7.4         Financial Statements, Certificates and Information. Borrower will deliver or cause to be delivered to the Agent:

(a)            not later than one hundred and twenty (120) days after the end of each calendar year, the audited consolidated balance sheet of the REIT Guarantor and its Subsidiaries at the end of such year, and the related audited consolidated statements of income, changes in capital and cash flows for such year, setting forth in comparative form the figures for the previous fiscal year and all such statements to be in reasonable detail, prepared in accordance with GAAP, together with a certification (as per clause (c) below) by an Authorized Officer or the chief financial officer or accounting officer of the REIT Guarantor that the information contained in such financial statements fairly presents in all material respects the financial position of the REIT Guarantor and its Subsidiaries, and accompanied by an auditor’s report prepared without qualification as to the scope of the audit by BDO USA, LLP or another nationally recognized accounting firm reasonably acceptable to the Agent in its reasonable discretion, and any other information the Agent may reasonably request to complete a financial analysis of REIT and its Subsidiaries;

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(b)            not later than sixty (60) days after the end of each calendar quarter of each year, copies of the unaudited consolidated balance sheet of the REIT Guarantor and its Subsidiaries as at the end of such quarter, and the related unaudited consolidated statements of income and cash flows for the portion of the REIT Guarantor’s fiscal year then elapsed, all in reasonable detail and prepared in accordance with GAAP, together with a certification (as per clause (c) below) by an Authorized Officer or the chief financial officer or accounting officer of REIT Guarantor that the information contained in such financial statements fairly presents in all material respects the financial position of the REIT Guarantor and its Subsidiaries on the date thereof (subject to year-end adjustments);

(c)            simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, an executed Borrowing Base Availability Certificate in the form of Exhibit F and a statement (a “Compliance Certificate”) certified by an Authorized Officer or the chief financial officer or chief accounting officer of Guarantor in the form of Exhibit G hereto (or in such other form as the Agent may reasonably approve from time to time) setting forth in reasonable detail computations evidencing compliance or non-compliance (as the case may be) with the covenants contained in §9. All income, expense, debt and value associated with Real Estate or other Investments disposed of during any quarter will be eliminated from any calculations, where applicable. The Compliance Certificate shall be accompanied by copies of the statements of Net Operating Income for such calendar quarter for each of the Borrowing Base Properties, prepared on a basis consistent with the statements furnished to the Agent prior to the date hereof and otherwise in form and substance reasonably satisfactory to the Agent, together with a certification by an Authorized Officer or the chief financial officer or chief accounting officer of REIT Guarantor that the information contained in such statement fairly presents in all material respects Net Operating Income of the Borrowing Base Properties for such periods (subject to year-end adjustments);

(d)            simultaneously with the delivery of the financial statements referred to in clause (a) above, the statement of all contingent liabilities involving amounts of $1,000,000 or more of the Credit Parties which are not reflected in such financial statements or referred to in the notes thereto (including, without limitation, all guaranties, endorsements and other contingent obligations in respect of the indebtedness of others, and obligations to reimburse the issuer in respect of any letters of credit);

(e)            simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, (i) a Rent Roll including each of the Borrowing Base Properties in a form reasonably satisfactory to Agent as of the end of each calendar quarter (including the fourth calendar quarter in each year), (ii) an operating statement for each of the Borrowing Base Properties for each such calendar quarter and year to date and a consolidated operating statement for the Borrowing Base Properties for each such calendar quarter and year to date (such statements and reports to be in form reasonably satisfactory to Agent), including (if requested by Agent) a receivables aging, and (iii) a copy of each Lease or amendment to any Lease entered into with respect to a Borrowing Base Property during such calendar quarter (including the fourth calendar quarter in each year);

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(f)            intentionally omitted;

(g)            if reasonably requested by Agent, promptly after they are filed with the Internal Revenue Service, copies of all annual federal income tax returns and amendments thereto of Borrower;

(h)            copies of all material reports and notices reported to shareholders of the REIT Guarantor must be provided to the Agent within 15 days from the date shareholders are presented materials, provided that any item that is filed via Form 8K or otherwise publicly available through the SEC shall be treated as being delivered to the Agent;

(i)             promptly upon the filing hereof, copies of any registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and any annual, quarterly or monthly reports and other statements and reports which Borrower or any Guarantor shall file with the SEC;

(j)             not later than December 15 of each year, a budget for the Guarantor and each Borrowing Base Property for the next calendar year;

(k)            to the extent requested by Agent, evidence reasonably satisfactory to Agent of the timely payment of all real estate taxes for the Borrowing Base Properties;

(l)             from time to time such other financial data and information in the possession of the REIT Guarantor or their respective Subsidiaries (including without limitation auditors’ management letters, status of litigation or investigations against the Credit Parties and any settlement discussions relating thereto (unless Borrower in good faith believe that such disclosure could result in a waiver or loss of attorney work product, attorney-client or any other applicable privilege), property inspection and environmental reports and information as to zoning and other legal and regulatory changes affecting the Credit Parties) as the Agent may reasonably request; and

(m)           Borrower shall deliver to Agent a current property portfolio spreadsheet and an equity raise roll-forward reconciliation within twenty (20) days after the end of each calendar month.

Borrower shall reasonably cooperate with the Agent in connection with the publication of certain materials and/or information provided by or on behalf of Borrower. Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of Borrower to the Agent (collectively, “Information Materials”) pursuant to this Section and Borrower shall designate Information Materials (a) that are either available to the public or not material with respect to Borrower and its Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information.” Unless and until Agent or the Lenders receive written notification to the contrary, Borrower hereby designates all Information Materials as “Private Information” for purposes of this Section and this Agreement. Any material to be delivered pursuant to this §7.4 may be delivered electronically directly to Agent provided that such material is in a format reasonably acceptable to Agent, and such material shall be deemed to have been delivered to Agent and the Lenders upon Agent’s receipt thereof. Upon the request of Agent, Borrower shall deliver paper copies thereof to Agent. Borrower and the Guarantors authorize Agent and Arranger to disseminate any such materials, including without limitation the Information Materials through the use of Intralinks, SyndTrak or any other electronic information dissemination system (an “Electronic System”). Any such Electronic System is provided “as is” and “as available.” The Agent and the Arranger do not warrant the adequacy of any Electronic System and expressly disclaim liability for errors or omissions in any notice, demand, communication, information or other material provided by or on behalf of Borrower that is distributed over or by any such Electronic System (“Communications”). No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by Agent or the Arranger in connection with the Communications or the Electronic System. In no event shall the Agent, the Arranger or any of their directors, officers, employees, agents or attorneys have any liability to Borrower or the Guarantors, any Lender or any other Person for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of Borrower’s, any Guarantors’, the Agent’s or any Arranger’s transmission of Communications through the Electronic System, and Borrower and the Guarantors release Agent, the Arranger and the Lenders from any liability in connection therewith. Certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to Borrower, its Subsidiaries or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market related activities with respect to such Persons’ securities.

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Borrower hereby agrees that it will identify that portion of the Information Materials that may be distributed to the Public Lenders and that (i) all such Information Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Information Materials “PUBLIC,” Borrower shall be deemed to have authorized the Agent, the Lenders and the Arranger to treat such Information Materials as not containing any material non-public information with respect to Borrower, its Subsidiaries, its Affiliates or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Information Materials constitute confidential information, they shall be treated as provided in §18.7); (iii) all Information Materials marked “PUBLIC” are permitted to be made available through a portion of any electronic dissemination system designated “Public Investor” or a similar designation; and (iv) the Agent and the Arranger shall be entitled to treat any Information Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of any electronic dissemination system not designated “Public Investor” or a similar designation.

§7.5         Notices.

(a)            Defaults. The Credit Parties will promptly upon becoming aware of same notify the Agent in writing of the occurrence of any Default or Event of Default, which notice shall describe such occurrence with reasonable specificity and shall state that such notice is a “notice of default”. If any Person shall give any written notice to any Credit Party or take any other action of which Borrower becomes aware in respect of a claimed default (whether or not constituting an Event of Default) under this Agreement or under any note, evidence of indebtedness, indenture or other obligation to which or with respect to which Borrower is a party or obligor, whether as principal or surety, and such default would permit the holder of such note or obligation or other evidence of indebtedness to accelerate the maturity thereof, which acceleration would either cause a Default or have a Material Adverse Effect, the Credit Parties shall promptly thereafter give written notice thereof to the Agent and each of the Lenders, describing the notice or action and the nature of the claimed default.

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(b)            Environmental Events. The Credit Parties will give notice to the Agent within five (5) Business Days of becoming aware of (i) any known Release, or threat of Release, of any Hazardous Substances in violation of any applicable Environmental Law; (ii) any violation of any Environmental Law that a Credit Party reports in writing or is reportable by such Credit Party in writing (or for which any written report supplemental to any oral report is made) to any federal, state or local environmental agency or (iii) any written inquiry, proceeding, or investigation, including a written notice from any agency of potential environmental liability, of any federal, state or local environmental agency or board, that in the case of either clauses (i) – (iii) above involves any Borrowing Base Property and would reasonably be expected to have a Material Adverse Effect, or materially adversely affect the Agent’s liens or security title on the Collateral pursuant to the Security Documents.

(c)            Notification of Claims Against Collateral. The Credit Parties will give notice to the Agent in writing within five (5) Business Days of becoming aware of any material setoff, claims (including, with respect to the Borrowing Base Property, environmental claims), withholdings or other defenses to which any of the Collateral, or the rights of the Agent or the Lenders with respect to the Collateral, are subject, which would reasonably be expected to have a Material Adverse Effect.

(d)            Notice of Litigation and Judgments. The Credit Parties will give notice to the Agent in writing within five (5) Business Days of becoming aware of any pending litigation and proceedings affecting any Credit Party is a party involving an uninsured claim against a Credit Party that would reasonably be expected to either cause a Default or have a Material Adverse Effect and stating the nature and status of such litigation or proceedings. Borrower will give notice to the Agent, in writing, within ten (10) days of any judgment not covered by insurance, whether final or otherwise, against a Credit Party in an amount in excess of $5,000,000.

(e)            ERISA. The Credit Parties will give notice to the Agent within ten (10) Business Days after the REIT Guarantor or any ERISA Affiliate: (i) gives notice to the PBGC of any “reportable event” (as defined in §4043 of ERISA) with respect to any Guaranteed Pension Plan, Multiemployer Plan or Employee Benefit Plan, or knows that the plan administrator of any such plan has given or is required to give notice of any such reportable event; (ii) gives a copy of any notice (including any received from the trustee of a Multiemployer Plan) of complete or partial withdrawal liability under Title IV of ERISA; or (iii) receives any notice from the PBGC under Title IV or ERISA of an intent to terminate or appoint a trustee to administer any such plan, in each case if such event or occurrence would reasonably be expected to have a Material Adverse Effect.

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(f)            Notification of Lenders. Within five (5) Business Days after receiving any notice under this §7.5, the Agent will forward a copy thereof to each of the Lenders, together with copies of any certificates or other written information that accompanied such notice.

§7.6      Existence; Maintenance of Properties.

(a)            Each Credit Party will preserve and keep in full force and effect their legal existence in the jurisdiction of its incorporation or formation. Each Credit Party will preserve and keep in full force all of their rights and franchises, the preservation of which is necessary to the conduct of their business, to the extent that the failure to do so could reasonably be expected to result in a Material Adverse Effect.

(b)            Each Credit Party (i) will cause all of the Borrowing Base Properties to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted) in accordance with the terms of the Leases, and (ii) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof in accordance with the terms of the Leases in each case under (i) or (ii) above in which the failure to do so would cause a Material Adverse Effect. Borrower and the Subsidiary Guarantors shall promptly and diligently comply (or cause the tenants under the Leases to comply) with the reasonable and necessary recommendations of the Environmental Engineer contained in the environmental reports delivered to the Agent or otherwise obtained by Borrower or the Subsidiary Guarantors with respect to the Borrowing Base Property, that are required by Environmental Laws, except where the failure to comply would not reasonably be expected to result in a Material Adverse Effect.

§7.7Insurance; Condemnation.

(a)            Borrower will, maintain or cause to be maintained, insurance policies issued by financially sound and reputable insurance companies which are not Affiliates of any Borrower (other than captive insurance companies), in such amounts, with such coverages, endorsements, deductibles (including self-insurance and captive insurance companies, to the extent applicable) and expiration dates and covering such risks as are reasonably acceptable to the Agent generally consistent with the insurance required for the Initial Borrowing Base Properties and as are customarily carried or required by companies engaged in similar businesses and owning similar properties in localities where any Borrowing Base Property is located, providing the following types of insurance covering each Borrowing Base Property:

(i)            “All Risk” or “Special Form” property insurance, including coverage from loss or damage arising from flood, earthquake, and acts of terrorism, and comprehensive boiler and machinery or “breakdown” coverage on each Building in an amount not less than the full insurable replacement cost of each Building. If approved by Agent (such approval not to be unreasonably withheld, delayed or conditioned), flood, earthquake and boiler and machinery/breakdown coverages may be subject to sublimits less than the Building’s insurable replacement cost. Losses shall be valued on a replacement cost basis, and coinsurance (if any) shall be waived. The deductibles shall not exceed $25,000.00 for physical damage, a 24-hour waiting period for business interruption and five percent (5%) of the insured value per location for earthquake or named windstorm. Full insurable replacement cost as used herein means the cost of replacing the Building (exclusive of the cost of excavations, foundations and footings below the lowest basement floor) without deduction for physical depreciation thereof;

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(ii)            During the course of construction or repair of any Building, the insurance required by clause (i) above shall be written on a builders risk, completed value, non-reporting form, meeting all of the terms required by clause (i) above, covering the total value of work performed, materials, equipment, machinery and supplies furnished, existing structures, and temporary structures being erected on the Borrowing Base Property, including coverage against collapse and damage during transit or while being stored off-site, and containing a soft costs (including loss of rents) coverage endorsement and a permission to occupy endorsement;

(iii)            Flood insurance if at any time any Building is located in any federally designated “special hazard area” (including any area having special flood, mudslide and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map published by the Federal Emergency Management Agency as Zone A, AO, Al-30, AE, A99, AH, VO, V1-30, VE, V, M or E) and the broad form flood coverage required by clause (i) above is not available, in an amount of $50,000,000 in the aggregate annually with a minimum deductible of $100,000 per occurrence and per location, or the maximum amount if available under the National Flood Insurance Program;

(iv)            Rent loss insurance in an amount sufficient to recover at least the total estimated gross receipts from all sources of income, including rental income, for the Borrowing Base Property for a twelve (12) month period;

(v)            Commercial general liability insurance against claims for personal injury (to include bodily injury and personal and advertising injury) and property damage liability, all on an occurrence basis, if commercially available (including contractual liability coverage, completed operations coverage for a period of two (2) years following completion of construction of any improvements on the Borrowing Base Property, and coverages equivalent to an ISO broad form endorsement), with a general aggregate limit of not less than $2,000,000, a completed operations aggregate limit of not less than $2,000,000, and a combined single “per occurrence” limit of not less than $1,000,000 for bodily injury and property damage;

(vi)            During the course of construction or repair of any improvements on the Borrowing Base Property, the general contractor selected to oversee such improvements shall provide commercial general liability insurance naming Borrower and the applicable Subsidiary Guarantor as additional insureds, or in lieu thereof, may provide for such coverage by way of owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the insurance required by clause (v) above;

(vii)            Employer’s liability insurance with respect to any Credit Party’s employees (or if the Credit Parties have no employees, with respect to the employees of the managers under the Management Agreements);

(viii)            Umbrella liability insurance with limits of not less than the amount equal to thirty percent (30%) of the Borrowing Base Availability for such Borrowing Base Property, to be in excess of the limits of the insurance required by clauses (v), (vi) and (vii) above, with coverage at least as broad as the primary coverages of the insurance required by clauses (v), (vi) and (vii) above, with any excess liability insurance to be at least as broad as the coverages of the lead umbrella policy. All such policies shall be endorsed to provide defense coverage obligations; and

(ix)            Workers’ compensation insurance for all employees of the Credit Parties or their Subsidiaries engaged on or with respect to the Borrowing Base Property with limits as required by Applicable Law.

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Borrower shall pay or cause to be paid all premiums on insurance policies. The insurance policies with respect to all Borrowing Base Property provided for in clauses (v), (vi) and (viii) shall name Agent and each Lender as an additional insured and shall contain a cross liability/severability endorsement; provided that such obligation shall be limited to Borrower’s using commercially reasonable efforts to cause the tenants under the Leases to comply with such obligation in instances where (y) the Lease for a specific Borrowing Base Property requires the tenant to carry the insurance coverage; and (z) such Lease prohibits or does not require the tenant to name the Agent as mortgagee and/or loss payee, to include a mortgage clause, and/or for the lender’s loss payable endorsements to be issued. The insurance policies provided for in clauses (i), (ii), (iii) and (iv) above as to each Borrowing Base Property shall name Agent as mortgagee and loss payee, shall be first payable in case of loss to Agent, and shall contain mortgage clauses and lender’s loss payable endorsements in form and substance reasonably acceptable to Agent. Upon written request of Agent, Borrower shall deliver (or shall request of all such tenants under the Leases to deliver) certified binders of such policies to Agent, and Borrower shall promptly furnish to Agent all renewal notices and evidence that all premiums or portions thereof then due and payable have been paid. Prior to the expiration date of the policies, Borrower shall deliver evidence of continued coverage, including a certificate of insurance; provided, however, if Borrower is continuing insurance renewal negotiations at such date, then Borrower shall inform Agent in writing of the status of such insurance renewal negotiations and any anticipated or potential material changes in coverages, deductibles or limits at least thirty (30) days prior to the expiration date of such policies, and shall in any event provide evidence of extension, renewal or replacement prior to the expiration date of the current policies.

(b)            All policies of insurance required by this Agreement shall contain clauses or endorsements to the effect that (i) no act or omission of the Credit Parties or anyone acting for the Credit Parties (including, any representations made in the procurement of such insurance), which might otherwise result in a forfeiture of such insurance or any part thereof, no occupancy or use of the Borrowing Base Property for purposes more hazardous than permitted by the terms of the policy, and no foreclosure or any other change in title to the Borrowing Base Property or any part thereof, shall affect the validity or enforceability of such insurance insofar as Agent is concerned, (ii) the insurer waives any right of set off, counterclaim, subrogation, or any deduction in respect of any liability of Credit Parties and Agent, (iii) such insurance is primary and without right of contribution from any other insurance which may be available (except and unless the tenant under a Lease is obligated to carry the primary insurance coverage), (iv) such policies shall not be modified, canceled or terminated prior to the scheduled expiration date thereof without the insurer thereunder giving at least thirty (30) days prior written notice except in cases of non-payment of premium, ten (10) days prior written notice, to Agent shall be required, and (v) that Agent or the Lenders shall not be liable for any premiums thereon or subject to any assessments thereunder, and shall in all events be in amounts sufficient to avoid any coinsurance liability.

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(c)            The insurance required by this Agreement may be effected through a blanket policy or policies covering additional locations and property of Credit Parties and other Persons that are not Borrowing Base Properties, provided that such blanket policy or policies comply with all of the terms and provisions of this §7.7 and contain endorsements or clauses assuring that any claim recovery will not be less than that which a separate policy would provide, including a loss payable endorsement favoring Agent. The policy will be endorsed with a per location aggregate that applies to the commercial general liability insurance.

(d)            All policies of insurance required by this Agreement shall be issued by companies licensed to do business in the State where the policy is issued and also in the States where each of the Borrowing Base Property is located and having a rating in Best’s Key Rating Guide of at least “A” and a financial size category of at least “X.”

(e)            Borrower shall not carry separate insurance, concurrent in kind or form or contributing in the event of loss, with any insurance required under this Agreement unless such insurance complies with the terms and provisions of this §7.7.

(f)            In the event of any loss or damage to a Borrowing Base Property in excess of $1,000,000, Borrower or the Subsidiary Guarantors shall give prompt written notice to the insurance carrier and the Agent. Subject to the provisions of (g) below, Borrower and each Subsidiary Guarantor hereby irrevocably authorizes and empowers the Agent, at the Agent’s option and in the Agent’s sole discretion or at the request of the Required Lenders in their sole discretion, as its attorney in fact, to make proof of such loss, to appear in and prosecute any action arising from such insurance policies, to collect and receive Insurance Proceeds and Condemnation Proceeds, and to deduct therefrom the Agent’s reasonable expenses incurred in the collection of such Insurance Proceeds; provided, however, that so long as no Event of Default has occurred and is continuing and so long as Borrower or the applicable Subsidiary Guarantor shall in good faith diligently pursue such claim, Borrower or the applicable Subsidiary Guarantor may make proof of loss and appear in and prosecute any proceedings or negotiations with respect to the adjustment of such claim and collect and receive Insurance Proceeds and Condemnation Proceeds of $1,000,000 or less, except that Borrower or the applicable Subsidiary Guarantor may not settle, adjust or compromise any such claim without the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed; provided, further, that Borrower or the applicable Subsidiary Guarantor may make proof of loss and settle, adjust and compromise any claim under casualty insurance policies which is in an amount less than $1,000,000 so long as no Event of Default has occurred and is continuing and so long as the applicable Borrower shall in good faith diligently pursue such claim. Subject to the provisions of (g) below, Borrower and the Subsidiary Guarantors further authorize the Agent, at the Agent’s option, to (i) apply the balance of such Insurance Proceeds and Condemnation Proceeds to the payment of the Obligations whether or not then due, or (ii) if the Agent shall require the reconstruction or repair of the Borrowing Base Property, to hold the balance of such proceeds as trustee to be used to pay taxes, charges, sewer use fees, water rates and assessments which may be imposed on the Borrowing Base Property which are then due and payable and the Obligations as they become due during the course of reconstruction or repair of the Borrowing Base Property and to pay, in accordance with such terms and conditions as the Agent or other lenders of construction projects may prescribe, for the costs of reconstruction or repair of the Borrowing Base Property, and upon completion of such reconstruction or repair to pay the excess to Borrower.

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(g)            Notwithstanding the foregoing or anything to the contrary contained in the Mortgages, the Agent shall make Insurance Proceeds and Condemnation Proceeds available to Borrower or the applicable Subsidiary Guarantor to reconstruct and repair the Borrowing Base Property, in accordance with such customary terms and conditions as the Agent may reasonably prescribe in the Agent’s discretion for the disbursement of the proceeds, provided that (i) the cost of such reconstruction or repair is not reasonably estimated by the Agent to exceed twenty percent (20%) of the replacement cost of the damaged Building, (ii) no Event of Default shall have occurred and be continuing (other than any Event of Default occurring solely as a result of such casualty or Taking), (iii) Borrower or the Subsidiary Guarantors shall have provided to the Agent additional cash security in an amount equal to the amount reasonably estimated by the Agent to be the amount in excess of the Insurance Proceeds or Condemnation Proceeds received which will be required to complete such repair or restoration, (iv) the Agent shall have approved the plans and specifications, construction budget, construction contracts, and construction schedule for such repair or restoration, such approval not to be unreasonably withheld, delayed or conditioned, and reasonably determined that the repaired or restored Borrowing Base Property will provide the Agent with adequate security for the Obligations (which security should be deemed adequate if such security is substantially comparable to the security in place prior to such casualty or Taking) (provided that the Agent shall not disapprove such plans and specifications if the Building is to be restored to substantially its condition immediately prior to such damage), (v) Borrower or the Subsidiary Guarantors shall have delivered to the Agent written agreements binding upon not less than seventy five percent (75%) of the tenants or other parties having present or future rights to possession of any portion of the affected Borrowing Base Property or having any right to require repair, restoration or completion of the Borrowing Base Property or any portion thereof (determined by reference to those tenants in the aggregate occupying or having rights to occupy not less than seventy five percent (75%) of the Net Rentable Area of the Building so damaged), agreeing upon a date for delivery of possession of the Borrowing Base Property or their respective portions thereof, to permit time which is sufficient in the judgment of the Agent for such repair or restoration and approving the plans and specifications for such repair or restoration, or other evidence satisfactory to the Agent that none of such tenants or other parties may terminate their Leases as a result of such casualty or as a result of having a right to approve the plans and specifications for such repair or restoration, (vi) the Agent shall reasonably determine that such repair or reconstruction can be completed prior to the Revolving Credit Maturity Date, (vii) the Agent shall receive evidence reasonably satisfactory to it that any such restoration, repair or rebuilding complies in all respects with any and all applicable state, federal and local laws, ordinances and regulations, including without limitation, zoning laws, ordinances and regulations, and that all required permits, licenses and approvals relative thereto have been or will be issued in a manner so as not to materially impede the progress of restoration, (viii) the Agent shall receive customary evidence reasonably satisfactory to it that the insurer under such policies of fire or other casualty insurance does not assert any defense to payment under such policies against Borrower, the applicable Subsidiary Guarantor or the Agent (or Borrower and the Subsidiary Guarantor shall have provided security for any amounts with respect to which the insurance carrier is asserting any defense to payment), and (ix) with respect to any Taking, Agent shall determine that following such repair or restoration there shall be no more than the lesser of (i) a ten percent (10%) reduction in occupancy or rental income from the Borrowing Base Property so affected by such specific condemnation or taking (excluding any proceeds from rental loss insurance or proceeds from such award allocable to rent) or (ii) a five percent (5%) reduction in occupancy or in rental income from all of the Borrowing Base Properties (excluding any proceeds from rental loss insurance or proceeds of such award allocable to rent), after giving effect to the Taking and any previous Takings which may have occurred. Any excess Insurance Proceeds shall be paid to Borrower or the Subsidiary Guarantors, or if an Event of Default has occurred and is continuing (other than any Event of Default occurring solely as a result of such casualty or Taking), such proceeds shall be applied to the payment of the Obligations, unless in either case by the terms of the applicable insurance policy the excess proceeds are required to be returned to such insurer. Any excess Condemnation Proceeds shall be applied to the payment of the Obligations. In no event shall the provisions of this Section be construed to extend the Revolving Credit Maturity Date or to limit in any way any right or remedy of the Agent upon the occurrence of an Event of Default hereunder. If the Borrowing Base Property is acquired by the Agent, all right, title and interest of Borrower and the Subsidiary Guarantors in and to any insurance policies and unearned premiums thereon (other than in connection with any blanket policy or a policy maintained by a tenant under any of the Leases) and in and to the proceeds thereof resulting from loss or damage to the Borrowing Base Property prior to the sale or acquisition shall pass to the Agent or any other successor in interest to Borrower or the Subsidiary Guarantors or purchaser of the Borrowing Base Property.

(h)            Notwithstanding the provisions of §7.7, as long as the tenant under an Approved Lease complies with the insurance requirements of its Approved Lease (including, without limitation, with respect to self-insurance) the provisions of §7.7 as to types and amounts of coverage and as to the insurers providing same shall be deemed to be satisfied as to the Borrowing Base Property being leased under such Approved Lease.

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§7.8Taxes; Liens. Borrower or the Subsidiary Guarantors will, and will cause their respective Subsidiaries or tenants to, duly pay and discharge, or cause to be paid and discharged, before the same shall become delinquent, all taxes, assessments and other governmental charges imposed upon them or upon the Borrowing Base Properties or the other Real Estate, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials or supplies, that if unpaid might by law become a lien or charge upon any of its property or other Liens affecting any of the Collateral or other property of Borrower or the Subsidiary Guarantors, or, with respect to their respective Subsidiaries or tenants that, in case of any of the foregoing, would reasonably be expected to have a Material Adverse Effect, provided that any such tax, assessment, charge or levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings which shall suspend the collection thereof with respect to such property, neither such property nor any portion thereof or interest therein would be in any danger of sale, forfeiture or loss by reason of such proceeding and Borrower or any such Subsidiary shall have set aside on its books adequate reserves in accordance with GAAP; and provided, further, that forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor, Borrower or any such Subsidiary either (i) will provide a bond issued by a surety reasonably acceptable to the Agent and sufficient to stay all such proceedings or (ii) if no such bond is provided, will pay each such tax, assessment, charge or levy.

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§7.9      Inspection of Borrowing Base Properties and Books. The Credit Parties will, and will cause their respective Subsidiaries to, permit the Agent and the Lenders, at Borrower’ expense (subject to the limitation set forth below) and upon reasonable prior notice and subject to the terms of the respective Lease(s), to visit and inspect any of the Borrowing Base Properties during normal business hours, to examine the books of account of the Credit Parties (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of the Credit Parties with, and to be advised as to the same by, their respective officers, partners or members, all at such reasonable times and intervals as the Agent or any Lender may reasonably request, provided that so long as no Event of Default shall have occurred and be continuing, the Credit Parties shall not be required to pay for such visits and inspections more than once in any twelve (12) month period. The Agent and the Lenders shall use good faith efforts to coordinate such visits and inspections so as to minimize the interference with and disruption to the normal business operations of the tenants, Credit Parties and their respective Subsidiaries.

§7.10Compliance with Laws, Contracts, Licenses, and Permits. The Credit Parties will comply (or cause to be complied with) in all respects with (i) all applicable laws and regulations now or hereafter in effect wherever its business is conducted, (ii) the provisions of its corporate charter, partnership agreement, limited liability company agreement or declaration of trust, as the case may be, and other charter documents and bylaws, (iii) all agreements and instruments to which it is a party or by which it or any of its properties may be bound, (iv) all applicable decrees, orders, and judgments to which it is subject, and (v) all licenses and permits required by applicable laws and regulations for the conduct of its business or the ownership, use or operation of its properties, except where a failure to so comply with any of clauses (i) through (v) would not reasonably be expected to have a Material Adverse Effect. If any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that the Credit Parties or their respective Subsidiaries may fulfill any of its obligations hereunder, the Credit Parties or such Subsidiary will immediately take or cause to be taken all steps necessary to obtain such authorization, consent, approval, permit or license and furnish the Agent and the Lenders with evidence thereof, except where the failure to obtain the foregoing would not reasonably be expected to have a Material Adverse Effect. The Credit Parties and the Subsidiary Guarantors shall develop and implement such programs, policies and procedures as are necessary to comply with the Patriot Act and shall promptly advise Agent in writing in the event that the Credit Parties shall determine that any investors in REIT Guarantor or Borrower are in violation of such act.

§7.11Further Assurances. The Credit Parties will cooperate with the Agent and the Lenders and execute such further instruments and documents as the Lenders or the Agent shall reasonably request and reasonably deem necessary to carry out to their satisfaction the transactions contemplated by this Agreement and the other Loan Documents provided that such instrument and documents are consistent with the terms of the Loan Documents and do not impose any additional material obligations or expenses on the Credit Parties.

§7.12Management. Borrower and the Subsidiary Guarantors shall not enter into any Management Agreement with a third-party manager for the Borrowing Base Property without the prior written consent of the Agent (which shall not be unreasonably withheld, delayed or conditioned), except where permitted under the terms of any Lease and existing at the time of purchase, and after such approval, no such Management Agreement shall be modified in any material respect or terminated without Agent’s prior written approval, such approval not to be unreasonably withheld, delayed or conditioned. Agent may condition any approval of a new manager upon the execution and delivery to Agent of collateral assignment of such Management Agreement to Agent and a subordination of the manager’s rights thereunder to the rights of the Agent and the Lenders under the Loan Documents. The Management Agreements described on Schedule 6.23 hereto relating to the Initial Borrowing Base Properties are approved by Agent.

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§7.13      Leases of the Property.

(a)            Borrower will, and will cause the Subsidiary Guarantors to, take, or cause to be taken, all reasonable steps within the power of Borrower and Subsidiary Guarantors to market and lease the leasable area of the Borrowing Base Properties in accordance with sound and customary leasing and management practices for similar properties, as and when needed. Any such leasing activity shall be conducted in accordance with the terms of §7.13(b), below, and the Mortgages. During the existence of an Event of Default, the Agent shall have the right, and the Borrower and Subsidiary Guarantors hereby authorize the Agent, to communicate directly with any tenant under a Lease to verify any information delivered to the Agent by the Borrower or Subsidiary Guarantors concerning such tenant or such tenant’s Lease.

(b)            Borrower will not, and will not permit the Subsidiary Guarantors to, without the prior written consent of the Agent, which consent shall not be unreasonably withheld, conditioned or delayed, (i) enter into any Major Lease, (ii) amend, supplement or otherwise modify any Major Lease in a manner materially adverse to the interest of the Lenders (it being understood that, without limitation, any shortening of a lease term, reduction of rents or other payment obligations, granting of abatements, increasing allowances, contributions or otherwise providing economic concessions to the tenant thereunder, creating economic obligations of the landlord thereunder, increasing the landlord’s obligations or decreasing the landlord’s rights, altering the “triple net” or “double net” (as applicable) nature of any Lease, decreasing the Tenant’s obligations, creating additional remedies, rights of self-help, offset, termination, co-tenancy or other similar provisions for the benefit of the Tenant thereunder, or creating rights of first offer or first refusal, shall be deemed to be materially adverse to the Lenders), (iii) terminate or cancel, or accept the surrender of, any Lease, (iv) to the extent the landlord consent is required under the applicable Lease, consent to the assignment or subletting of (except where tenant remains obligated under the terms of the respective Lease), or (v)grant any concessions to or waive the performance of any obligations of, any Major Lease. To the extent the Agent’s approval or consent is required pursuant to this §7.13, Agent’s approval shall be deemed granted in the event the Agent fails to respond to Borrower’s request within ten (10) Business Days if (A) Borrower has delivered to Agent and Agent’s counsel the applicable documents, with the notation

“IMMEDIATE RESPONSE REQUIRED, FAILURE TO RESPOND TO THIS APPROVAL REQUEST WITHIN TEN (10) BUSINESS DAYS FROM RECEIPT SHALL BE DEEMED TO BE LENDER’S APPROVAL”

prominently displayed in bold, all caps and fourteen (14) point or larger font in the transmittal letter requesting approval and (B) Agent does not approve or reject the applicable request within ten (10) Business Days from the date Agent and Agent’s counsel receive the request as evidenced by a certified mail return receipt or confirmation by a reputable national overnight delivery service (e.g., Federal Express) that the same has been delivered. Borrower and Subsidiary Guarantors shall furnish the Agent with executed copies of all Leases or amendments thereto hereafter made.

(c)            Borrower shall not, and will not permit the Subsidiary Guarantors to, collect any rents, issues, profits, revenues, income or other benefits payable under any of the Leases for the Borrowing Base Properties more than one (1) month in advance (provided that the foregoing shall not prohibit the collection of security deposits and real estate taxes and insurance premiums billed to tenants annually, semiannually or quarterly). Borrower shall not, and shall not permit the Subsidiary Guarantors to, directly or indirectly, cause, any condition which would result in the termination or cancellation of, or which would relieve the performance of any material obligations of any tenant under, any Lease for all or any portion of the Borrowing Base Properties. In the event that any existing or future security deposit is in the form of a letter of credit, the Borrower shall deliver the original of such Letter of Credit to the Agent, and during the continuance of an Event of Default, Borrower or the applicable Subsidiary Guarantor shall cause Agent to be a named beneficiary thereof and shall otherwise cause such letter of credit to be in form and substance reasonably satisfactory to Agent, and shall assign to Agent its interest in such letter of credit pursuant to documents reasonably satisfactory to Agent. Without limiting any term of the Loan Documents prohibiting Borrower or the Subsidiary Guarantors from terminating Leases, any payments received by Borrower or the Subsidiary Guarantors with respect to early lease termination options or otherwise paid by tenants in consideration of an early termination of any Lease shall be promptly paid to Agent as a prepayment of the Loans.

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§7.14Business Operations. The Credit Parties will not and will not permit any of their respective Subsidiaries to engage in any business other than to acquire, own, use, operate, manage, finance, sell, lease, sublease, exchange or otherwise dispose of double or triple net commercial properties, directly or indirectly, and engage in any other activities related or incidental thereto or permitted pursuant to the terms hereof.

§7.15Registered Service Mark. Without prior written notice to the Agent, none of the Borrowing Base Properties shall be owned or operated by Borrower or the Subsidiary Guarantors under any registered or protected trademark, tradename, service mark or logo.

§7.16Ownership of Real Estate. Without the prior written consent of Agent (which consent shall not be unreasonably withheld, conditioned or delayed), all Real Estate and all interests (whether direct or indirect) of Borrower or REIT Guarantor in any real estate assets now owned or leased or acquired or leased after the date hereof shall be owned or leased directly by Borrower or a Wholly Owned Subsidiary of Borrower; provided, however that Borrower shall be permitted to directly or indirectly own or lease interests in Real Estate through non-Wholly Owned Subsidiaries and Unconsolidated Affiliates as permitted by §8.3.

§7.17Beneficial Ownership Information. Promptly following any request therefor, Borrower shall provide information and documentation reasonably requested by Agent or any Lender for purposes of compliance with applicable “know your customer” requirements under the PATRIOT Act, the Beneficial Ownership Regulation or other applicable Anti-Money Laundering Laws.

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§7.18Cash Management.

(a)            Borrower hereby confirms that it has or will establish and maintain with Agent a deposit account (the “Collateral Account”) for the purposes of receiving all payments from the tenants of the Subsidiary Guarantors, which account shall be subject to the Account Pledge Agreement.

(b)            Amounts on deposit in the Collateral Account shall be invested and reinvested by Agent in such Cash Equivalents as directed by Borrower unless an Event of Default shall have occurred and be continuing, in which instance such amounts shall be invested and reinvested as Agent shall determine in its sole discretion. Without limiting any other rights and remedies of the Agent and the Lenders hereunder, all amounts deposited in the Collateral Account shall be applied by the Agent against the Obligations while any Event of Default shall be in existence.

§7.19Plan Assets. The Credit Parties will do, or cause to be done, all things necessary to ensure that none of the Borrowing Base Properties will be deemed to be Plan Assets at any time.

§7.20Guarantor Covenants. Borrower shall cause REIT Guarantor to comply with the following covenants:

(a)            REIT Guarantor will not make or permit to be made, by voluntary or involuntary means, any transfer or encumbrance of its interest in Borrower, or any dilution of its interest in Borrower, that would result in a Change of Control (except in connection with the Mezzanine Loan (subject in all respects to the terms of the Mezzanine Intercreditor Agreement)); and

(b)            the REIT Guarantor shall not dissolve, liquidate or otherwise wind-up its business, affairs or assets.

§7.21Borrowing Base Properties. Without limiting the further covenants contained in the Security Documents, at all times Borrower and the Subsidiary Guarantors shall use commercially reasonable efforts to cause each other or the applicable tenant, to:

(a)            pay (or cause to be paid in accordance with the terms of the Leases) all real estate and personal property taxes, assessments, water rates or sewer rents, ground rents, common area maintenance charges, impositions, and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Borrowing Base Property, now or hereafter levied or assessed or imposed against any Borrowing Base Property or any part thereof (except those which are being contested in good faith by appropriate proceedings diligently conducted where the failure to pay any of the foregoing could reasonably be expected to have a Material Adverse Effect).

(b)            pay (or cause to be paid in accordance with the terms of the Leases), all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with any Borrowing Base Property (except those which are being contested in good faith by appropriate proceedings diligently conducted where the failure to pay any of the foregoing could reasonably be expected to have a Material Adverse Effect), and in any event never permit to be created or exist in respect of any Borrowing Base Property or any part thereof any other or additional Lien or security interest other than Permitted Liens.

(c)            maintain, operate and keep the Borrowing Base Properties in good condition, repair and working order (ordinary wear and tear excepted) in accordance with the terms of the Leases, and in all material respects in accordance with all Legal Requirements in accordance with Borrower’s or such Subsidiary’s prudent business judgment, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

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§7.22REIT Guarantor. Upon completion of the IPO Event, the Equity Interests of REIT Guarantor shall at all times thereafter be publicly-traded on the New York Stock Exchange, or some other comparable stock exchange. The REIT Guarantor shall at all times comply with all requirements of applicable laws to the extent necessary to maintain its status as a real estate investment trust under the Code, shall elect to be treated as a real estate investment trust and shall, subject to the provisions hereof, operate its business in compliance with the terms and conditions of this Agreement applicable to REIT Guarantor and the other Loan Documents to which it is a party.

§7.23Sanctions Laws and Regulations. Borrower shall not, directly or to its knowledge (other than in respect of any Guarantor or Subsidiary of Borrower) indirectly, use the proceeds of the Loans or lend, contribute or otherwise make available such proceeds to any Guarantor, Subsidiary, Unconsolidated Affiliate or other Person (i) to fund any activities or business of or with any Designated Person, or in any country or territory, that at the time of such funding is itself the subject of territorial sanctions under applicable Sanctions, (ii) in any manner that would result in a violation of applicable Sanctions by any party to this Agreement, or (iii) in any manner that would cause Borrower, the Guarantors or any of their respective Subsidiaries to violate the United States Foreign Corrupt Practices Act. None of the funds or assets of Borrower or Guarantors that are used to pay any amount due pursuant to this Agreement shall constitute funds obtained from transactions with or relating to Designated Persons or countries which are themselves the subject of territorial sanctions under applicable Sanctions. Borrower shall maintain policies and procedures designed to achieve compliance with Sanctions.

§7.24New York Mortgage Limitation. At any time that the outstanding amount of all Revolving Credit Loans is less than $2,019,600.00 (the “New York Real Estate Allocated Amount”), within five (5) Business Days after the request of Agent, the Borrower and the Subsidiary Guarantor that owns the Real Estate located in the State of New York will execute such documents as Agent may reasonably request so as to amend the Mortgage covering the Real Estate located in the State of New York (the “New York Mortgage”) in order that such the New York Mortgage continues to secure the New York Real Estate Allocated Amount.

To the extent that the outstanding amount of all Revolving Credit Loans is less than the New York Real Estate Allocated Amount and to the extent required by virtue of compliance with this §7.24, or to the extent otherwise required by Applicable Law, the Borrower and the Subsidiary Guarantor that owns the Real Estate located in the State of New York shall take all further actions including the payment of any additional mortgage recording taxes, fees, charges, costs and expenses required so to grant, preserve, protect or perfect the Liens created by such New York Mortgage to the maximum amount of Obligations secured by the New York Mortgage (i.e. the New York Real Estate Allocated Amount) and the validity, enforceability or priority of any such Lien.

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§7.25Escrow Account. On the Closing Date, as collateral security for the Obligations, Borrower will deposit $1,000,000 into an Agent-controlled escrow account, established in the name of Agent, on behalf of the Lenders, which will be released to Borrower upon the earlier of: (i) the Goldman Preferred Equity Investment having been completed; (ii) the Replacement Equity Investment having been completed; or (iii) Borrower and REIT Guarantor having achieved a Distributions to Funds From Operations ratio of not greater than one hundred percent (100%) as of the last calculation date for the immediately preceding fiscal quarter.

§8.NEGATIVE COVENANTS. The Credit Parties covenant and agree that, so long as any Loan or Note is outstanding (other than contingent indemnification claims for which no claim has been made) or any of the Lenders has any obligation to make any Loans:

§8.1Restrictions on Indebtedness. The Credit Parties will not create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other than:

(i)            Indebtedness to the Lenders arising under any of the Loan Documents;

(ii)            Indebtedness to the Lender Hedge Providers in respect of any Hedge Obligations;

(iii)            current liabilities of the Credit Parties and other Subsidiaries incurred in the ordinary course of business (including under surety bonds, performance bonds, etc. to secure worker’s compensation claims, bank overdrafts), but not incurred through (i) the borrowing of money, or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services;

(iv)            Indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of §7.8;

(v)            Indebtedness in respect of judgments only to the extent, for the period and for an amount not resulting in an Event of Default;

(vi)            endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business;

(vii)            Indebtedness under leases and Capital Lease obligations;

(viii)            Indebtedness incurred to any other landowners, government or quasi-government or entity or similar entity in the ordinary course of business in connection with the construction or development of any Real Estate, including, without limitation, subdivision improvement agreements, development agreements, reimbursement agreements, infrastructure development agreements, agreements to construct or pay for on-site or off-site improvements and similar agreements incurred in the ordinary course of business in connection with the development of Real Estate or construction of infrastructure in connection therewith as well as any Indebtedness for any bonds or letters of credit posted to secure the obligations under any of the foregoing;

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(ix)            Indebtedness of the Borrower or any Guarantor constituting customary non-recourse carve out guarantees and environmental indemnifications of Indebtedness permitted to be incurred by Subsidiaries of the Borrower or any Guarantor;

(x)            The Permitted Mezzanine Obligations (which for the avoidance of doubt does not allow for repayment of PIK Payments during the Loan term but does allow for accrual of such PIK Payments); or

(xi)            All obligations under the TEN31 Bridge Financing agreements and documents (if and only to the extent the terms of the same are approved by all Lenders in their sole and absolute discretion and such financing will be permitted then only to the extent of such approved terms) in an amount not to exceed $25,000,000.00.

§8.2Restrictions on Liens, Etc. The Credit Parties and their Subsidiary Guarantors will not (a) create or incur or suffer to be created or incurred or to exist any lien, security title, encumbrance, mortgage, pledge, negative pledge, charge, or other security interest of any kind upon the Borrowing Base Properties, the Equity Interests in Borrower, any Subsidiary Guarantor, or their material respective property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) except as otherwise permitted under this Agreement, transfer any of Borrower’s or any Subsidiary Guarantor’s material property or assets or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement, except for lease arrangements classified as financing leases for GAAP; (d) suffer to exist for a period of more than thirty (30) days after the same shall have been incurred any Indebtedness or claim or demand against any of them that if unpaid would by law or upon bankruptcy or insolvency, or otherwise, be given Lien priority as to the Borrowing Base Properties over any of their general creditors; (e) sell, assign, pledge or otherwise transfer any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse; or (f) incur or maintain any obligation to any holder of Indebtedness of any of such Persons which prohibits the creation or maintenance of any lien securing the Obligations (collectively, “Liens”); provided that notwithstanding anything to the contrary contained herein, Borrower, any Subsidiary Guarantor or any other Subsidiary may create or incur or suffer to be created or incurred or to exist:

(i)            Liens not yet due or payable on properties to secure taxes, assessments and other governmental charges (excluding any Lien imposed pursuant to any of the provisions of ERISA) or claims for labor, material or supplies incurred in the ordinary course of business in respect of obligations not overdue by more than 60 days or are being contested in good faith and by appropriate proceedings diligently conducted with adequate reserves being maintained by Borrower in accordance with GAAP or not otherwise required to be paid or discharged under the terms of this Agreement or any of the other Loan Documents;

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(ii)            deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, old age pensions or other social security obligations;

(iii)            deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(iv)            judgment liens and judgments that do not constitute an Event of Default;

(v)            encumbrances on Real Estate consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property and defects and irregularities in the title thereto, landlord’s or lessor’s liens under leases to which Borrower, any Subsidiary Guarantor or any other Subsidiary is a party, purchase money security interests and other liens or encumbrances, which do not individually or in the aggregate have a Material Adverse Effect;

(vi)            Liens in favor of the Agent and the Lenders under the Loan Documents to secure the Obligations and/or the Hedge Obligations;

(vii)            Liens granted by DST Entities or Subsidiaries of the REIT Guarantor that are not Credit Parties to secure Indebtedness permitted under §8.1(vi) or (viii) above;

(viii)            The Permitted Mezzanine Lien securing the Permitted Mezzanine Obligations;

(ix)            Liens and encumbrances on a Borrowing Base Property expressly permitted under the terms of the Mortgage relating thereto;

(x)            direct liens on Real Estate (other than the Borrowing Base Properties or other Collateral) to secure Indebtedness of Subsidiaries of the Borrower that are not Subsidiary Guarantors;

(xi)            rights of setoff or bankers’ liens upon deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business;

(xii)            Liens of Capitalized Leases on the property leased thereby;

(xii)            Leases permitted by this Agreement; and

(xiii)            Any transfer of any Borrowing Base Property in connection with a Taking.

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§8.3      Restrictions on Investments.

(a)            No Credit Party will make or permit to exist or to remain outstanding any Investment except Cash Equivalents or Investments in:

(i)            marketable direct or guaranteed obligations of the United States of America that mature within one (1) year from the date of purchase by Borrower or Subsidiary Guarantor;

(ii)            marketable direct obligations of any of the following: Federal Home Loan Mortgage Corporation, Student Loan Marketing Association, Federal Home Loan Banks, Federal National Mortgage Association, Government National Mortgage Association, Bank for Cooperatives, Federal Intermediate Credit Banks, Federal Financing Banks, Export-Import Bank of the United States, Federal Land Banks, or any other agency or instrumentality of the United States of America;

(iii)            demand deposits, certificates of deposit, bankers acceptances and time deposits of United States banks;

(iv)            securities commonly known as “commercial paper” issued by a corporation organized and existing under the laws of the United States of America or any State which at the time of purchase are rated by Moody’s Investors Service, Inc. or by Standard & Poor’s Corporation at not less than “P 1” if then rated by Moody’s Investors Service, Inc., and not less than “A 1”, if then rated by Standard & Poor’s Corporation;

(v)            repurchase agreements having a term not greater than ninety (90) days and fully secured by securities described in the foregoing subsection (i), (iv) and (vi) with banks described in the foregoing subsection (iii) or with financial institutions or other corporations having total assets in excess of $500,000,000;

(vi)            shares of so-called “money market funds” registered with the SEC under the Investment Company Act of 1940 which maintain a level per-share value, invest principally in investments described in the foregoing subsections (i) through (iv) and have total assets in excess of $50,000,000;

(vii)            the acquisition of fee interests and properties subject to ground leases by a Subsidiary Guarantor (directly or indirectly) in real estate and investments (including loans) incidental thereto and any and all construction and development related thereto;

(viii)            Investments in DST Entities, tenants in common or joint ventures that do not violate REIT status, test or compliance restrictions;

(ix)            Investments which constitute Indebtedness to the extent such Indebtedness is permitted pursuant to §8.1; or

(x)            Investments by Borrower in Subsidiaries that are directly or indirectly one hundred percent (100%) owned by Borrower, which in turn own Investments permitted by this §8.3.

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Notwithstanding the foregoing, the aggregate Investments of the Consolidated Entities in:

(1)        Land Assets shall not exceed ten percent (10%) of Total Asset Value;

(2)        Construction in Progress shall not exceed five percent (5%) of Total Asset Value; and;

(3)        mortgages, mezzanine loans and other debt instruments, as lender in respect thereof, shall not exceed ten percent (10%) of Total Asset Value.

Provided the aggregate amount of Investments described in clauses (1) through (3) above shall not exceed ten percent (10%) of Total Asset Value; with any violation of the foregoing limits not resulting in an Event of Default but shall result in the amount of such excess being excluded when calculating Total Asset Value.

For the purposes of this §8.3, the Investment of Borrower or Subsidiary Guarantors in any non-Wholly Owned Subsidiaries and Unconsolidated Affiliates will equal (without duplication) the sum of (i) such Person’s pro rata share of their non-Wholly Owned Subsidiary and Unconsolidated Affiliate’s Investment in Real Estate recognized at the lower of such Person’s purchase price or the Appraised Value; plus (ii) such Person’s pro rata share of any other Investments recognized at the GAAP net book value.

§8.4     Merger, Consolidation. No Credit Party will become a party to any dissolution, liquidation, disposition of all or substantially all of its assets or business, merger, reorganization, consolidation or other business combination (or agree to effect any asset acquisition, stock acquisition or other acquisition individually or in a series of transactions if it has a substantially similar effect as any of the foregoing), in each case without the prior written consent of the Required Lenders except for (i) the merger or consolidation of one or more of the Subsidiaries of Borrower with and into Borrower (it being understood and agreed that in any such event Borrower will be the surviving Person), (ii) the merger or consolidation of two or more Subsidiaries of Borrower or (iii) in connection with the release of all Collateral owned by such Subsidiary Guarantor.

§8.5     Restrictions on Prepayment of Indebtedness. The Credit Parties will not and will not permit their Subsidiaries to voluntarily prepay, redeem, defease, purchase or otherwise retire the principal amount, in whole or in part, of any material Indebtedness other than the Obligations and the Hedge Obligations after the occurrence and continuance of any Event of Default; provided, that the foregoing shall not prohibit (x) the prepayment of Indebtedness which is financed primarily from the proceeds of a new loan which would otherwise be permitted by the terms of §8.1 (excluding, except to the extent permitted under the Mezzanine Intercreditor Agreement (if at all), any prepayment of the Permitted Mezzanine Obligations); and (y) the prepayment, redemption, defeasance or other retirement of the principal of Indebtedness secured by Real Estate which is satisfied primarily from the proceeds of a sale of the Real Estate securing such Indebtedness.

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§8.6     Compliance with Environmental Laws. None of the Credit Parties will do any of the following: (a) use any of the Borrowing Base Properties or any portion thereof as a facility for the handling, processing, storage or disposal of Hazardous Substances, except for quantities of Hazardous Substances used in the ordinary course of a Subsidiary Guarantor’s or its tenants’ business and in material compliance with all applicable Environmental Laws, (b) cause or permit to be located on any of the Borrowing Base Properties any underground tank or other underground storage receptacle for Hazardous Substances except in material compliance with Environmental Laws, (c) generate any Hazardous Substances on any of the Borrowing Base Properties except in material compliance with Environmental Laws, (d) conduct any activity at any Borrowing Base Properties or use any Borrowing Base Properties in any manner that would reasonably be expected to cause a Release of Hazardous Substances on, upon or into the Borrowing Base Properties or any surrounding properties which would reasonably be expected to give rise to liability under CERCLA or any other Environmental Law, or (e) directly or indirectly transport or arrange for the transport of any Hazardous Substances (except in compliance with all Environmental Laws), except, any such use, generation, conduct or other activity described in clauses (a) to (e) of this §8.6 would not reasonably be expected to have a Material Adverse Effect.

The Credit Parties shall, except for any failure to comply that would not reasonably be expected to have a Material Adverse Effect:

(i)       in the event of any change in Environmental Laws governing the assessment, release or removal of Hazardous Substances, take all reasonable action as required by Environmental Laws, and

(ii)      if any Release or disposal of Hazardous Substances which Borrower or the Subsidiary Guarantors are legally obligated to contain, correct or otherwise remediate shall occur or shall have occurred on any Borrowing Base Property (including without limitation any such Release or disposal occurring prior to the acquisition or leasing of such Borrowing Base Property by Borrower or the Subsidiary Guarantors), the relevant Borrower or Subsidiary Guarantor shall, after obtaining knowledge thereof, cause the performance of actions required by applicable Environmental Laws at the Borrowing Base Property in material compliance with all applicable Environmental Laws; provided, that each of Borrower and the Subsidiary Guarantors shall be deemed to be in compliance with Environmental Laws for the purpose of this clause (ii) so long as it or a responsible third party with sufficient financial resources is taking reasonable action to remediate or manage such event to the reasonable satisfaction of the Agent or has taken and is diligently pursuing a challenge to any such alleged legal obligation through appropriate administrative or judicial proceedings. The Agent may engage its own Environmental Engineer to review the environmental assessments and the compliance with the covenants contained herein.

At any time that an Event of Default shall have occurred and is continuing hereunder, the Agent may at its election (and will at the request of the Required Lenders) obtain such environmental assessments of any or all of the Borrowing Base Properties prepared by an Environmental Engineer as may be reasonably necessary or advisable for the purpose of evaluating or confirming (i) whether any Hazardous Substances are present in the soil or water at any such Borrowing Base Property in a quantity or condition that is required to be contained, corrected or otherwise remediated by the owner or operator of the Borrowing Base Property pursuant to applicable Environmental Laws and (ii) whether the use and operation of any such Borrowing Base Property complies with all Environmental Laws to the extent required by the Loan Documents. Additionally, at any time that the Agent or the Required Lenders shall have reasonable and objective grounds to believe that a Release or threatened Release of Hazardous Substances may have occurred at or from any Borrowing Base Property which the owner or operator of such property would be obligated to contain, correct or otherwise remediate pursuant to Environmental Laws, or that any of the Borrowing Base Property is not in compliance with Environmental Laws to the extent required by the Loan Documents, Borrower or the Subsidiary Guarantor shall promptly upon the request of Agent obtain and deliver to Agent such environmental assessments of such Borrowing Base Property prepared by an Environmental Engineer as may be reasonably necessary or advisable for the purpose of evaluating or confirming (i) whether any Hazardous Substances are present in the soil or water at such Borrowing Base Property and (ii) whether the use and operation of such Borrowing Base Property complies with all Environmental Laws to the extent required by the Loan Documents. Environmental assessments may include detailed visual inspections of such Borrowing Base Property including, without limitation, any and all storage areas, storage tanks, drains, dry wells and leaching areas, and the taking of soil samples, as well as such other investigations or analyses as are reasonably necessary or appropriate for a complete determination of the compliance of such Borrowing Base Property and the use and operation thereof with all Environmental Laws. All reasonable expenses of environmental assessments contemplated by this §8.6 shall be at the sole cost and expense of Borrower and the Subsidiary Guarantors.

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§8.7     Distributions.

(a)         Commencing as of Closing Date, REIT Guarantor and Borrower shall not make Distributions in an amount (without duplication) exceeding: (a) one hundred and fifty percent (150%) of Funds from Operations as at the last day of the fiscal quarter of Borrower ending as of December 31, 2020, annualized, and (b) commencing January 1, 2021, one hundred and thirty five percent (135%) of Funds from Operations ending as of March 31, 2021, annualized, and (c) commencing April 1, 2021, one hundred and twenty percent (120%) of Funds from Operations ending as of June 30, 2021, annualized, and (d) commencing July 1, 2021, one hundred percent (100%) of Funds from Operations (as at the last day of each fiscal quarter of Borrower, annualized), through the Revolving Credit Maturity Date. During the three-month period ending December 31, 2020, the Borrower may make special dividends to the Series A, Series B, Series C, and Series DRIP 1 shareholders of not more than $3,000,000, which Distributions shall be excluded from the foregoing calculation. This covenant shall be tested on a trailing three (3) month basis as of any date of determination. Notwithstanding the foregoing, no dividends or distributions shall be made by the Borrower or the REIT Guarantor while any Default or Event of Default shall be in existence unless and except to the extent the right or ability to make any such dividends or distributions shall be required to be maintained by the Borrower or the REIT Guarantor as applicable, or may not be restricted as aforesaid, in order to comply with any applicable Legal Requirements and maintain the real estate investment trust status of the REIT Guarantor, provided further no such dividends or distributions shall be made if an Event of Default under §§12.1(a), (b), (g), (h) or (i) shall be in existence. No Mezzanine Loan Interest Payments shall be made upon the occurrence and during the continuance of an Event of Default under either the Loan or the Mezzanine Loan.

(b)     Borrower shall not make, nor shall Borrower permit any Credit Party to make, any dividends or distributions (i) on account of any Preferred Securities or common shares of the Borrower or any Credit Party if an Event of Default under §12.1(r) has occurred and is continuing and (ii) to make any cash payments of paid-in-kind interest that have accrued on Preferred Securities.

(c)     Neither Borrower nor any other Credit Party shall make any other Distributions not otherwise permitted by the terms of the Mezzanine Loan Agreement.

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§8.8     Asset Sales. Other than as permitted under §5.4 or in connection with a Taking, Borrower and the Subsidiary Guarantors will not sell, transfer or otherwise dispose of any material asset other than pursuant to a bona fide arm’s length transaction or if replaced with an asset(s) of reasonably equivalent or greater value, and subject in all instances to §5.4 hereof.

§8.9     Borrowing Base Properties. Borrower shall not, nor shall they permit any other Subsidiary Guarantor, directly or indirectly, to:

(a)        use or occupy or conduct any activity on, or knowingly permit the use or occupancy of or the conduct of any activity on any Borrowing Base Properties by any tenant, in any manner (i) which violates any Legal Requirement or which constitutes a public or private nuisance and has a Material Adverse Effect, or (ii) which makes void, voidable, or cancelable any insurance then in force with respect thereto or makes the maintenance of insurance in accordance with §7.7(a) commercially unreasonable (including by way of increased premium) and has a Material Adverse Effect;

(b)       without the prior written consent of Agent (which consent shall not be unreasonably withheld, conditioned or delayed), except in connection with any construction, development or redevelopment of any Borrowing Base Property pursuant to a Lease entered into in accordance with this Agreement, initiate or permit any zoning reclassification of any Borrowing Base Property, seek any variance under existing zoning ordinances applicable to any Borrowing Base Property, or in any event use or knowingly permit the use of any Borrowing Base Property in such a manner which would result in such use becoming a nonconforming use under applicable zoning ordinances or other Legal Requirements if such nonconforming use would reasonably be expected to have a Material Adverse Effect;

(c)         without the prior written consent of Agent (which consent shall not be unreasonably withheld, conditioned or delayed), except in connection with any construction, development or redevelopment of any Borrowing Base Property, (i) impose any material easement, restrictive covenant, or encumbrance upon any Borrowing Base Property, other than the easements entered into the ordinary course of business and that would customarily be agreed to by a reasonably prudent land owner, (ii) execute or file any subdivision plat or condominium declaration affecting any Borrowing Base Property, or (iii) consent to the annexation of any Borrowing Base Property to any municipality;

(d)        do any act, by Borrower or Subsidiary Guarantor which would reasonably be expected to materially decrease the value of any Borrowing Base Property as reflected in the most-recent Appraisal (including by way of negligent act); or

(e)        without the prior written consent of all the Lenders (which consent shall not be unreasonably withheld, conditioned or delayed), take any affirmative action to permit any drilling or exploration for or extraction, removal or production of any mineral, hydrocarbon, gas, natural element, compound or substance (including sand and gravel) from the surface or subsurface of any Borrowing Base Property regardless of the depth thereof or the method of mining or extraction thereof.

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§8.10   Derivatives Contracts. No Borrower or Subsidiary Guarantor shall contract, create, incur, assume or suffer to exist any Derivatives Contracts except for Derivative Contracts made in the ordinary course of business and not prohibited pursuant to §8.1 and which are not secured by any portion of the Collateral granted to the Agent under any of the Loan Documents (other than Hedge Obligations).

§8.11   Transactions with Affiliates. No Borrower or Subsidiary Guarantor shall permit to exist or enter into any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate (but not including any Subsidiary of Borrower), except (i) transactions in connection with the Management Agreements (and any amendments, waivers, renewals or extension of any of the same), (ii) transactions set forth on Schedule 6.15 attached hereto (and any amendments, waivers, renewals or extension of any of the same), (iii) transactions pursuant to the reasonable requirements of the business of such Person and upon fair and reasonable terms which are no less favorable to such Person than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate and (iv) distributions permitted under §8.7.

§8.12   Management Fees. The Credit Parties shall not pay, and shall not permit to be paid, any property management, advisory or acquisition fees or other payments under any Management Agreement for any Borrowing Base Property to any Person that is an Affiliate of the Credit Parties in the event that an Event of Default shall have occurred and be continuing.

§8.13   Changes to Organizational Documents and Other Loan Documents. Borrower shall not amend or modify, or permit the amendment or modification of, the trust agreement, limited partnership agreement, limited liability company agreements or other formation or organizational documents of Borrower, REIT Guarantor (except in connection with the Goldman Preferred Equity Investment or Replacement Equity Investment) or any Subsidiary Guarantor (x) without the prior approval of Agent and the Lenders, to the extent required by §8.14, or (y) in any material respect, without the prior written consent of Agent (which consent shall not be unreasonably withheld, conditioned or delayed). Without limiting the foregoing, none of the Borrower, REIT Guarantor, or any Subsidiary Guarantor will issue any Preferred Securities (except as set forth in §8.14) without the prior written consent of the Agent (which consent shall not be unreasonably withheld, conditioned or delayed). REIT Guarantor shall not amend or modify, or permit the amendment or modification of, the Mezzanine Loan Agreement or Mezzanine Loan Documents, except as permitted under this Agreement.

§8.14   Restrictions on Preferred Equity Issuances. Without limiting the foregoing, no Credit Party will (i) make any cash payments of paid-in-kind interest accrued on Preferred Securities or (ii) issue any Preferred Securities without the prior written consent of Agent and the Lenders other than the contemplated preferred equity investment of no more than $50,000,000.00 (plus the sum of (a) the “OID”, (b) the “Lead Investor Fee”, and (c) the amount of any “PIK” (each such term as defined in the Goldman Preferred Equity Investment term sheet attached as Schedule 8.14) paid from time to time) from (1) Goldman Sachs Asset Management’s Alternative Investments & Manager Selection Group or any of its Affiliates or designees (which shall be upon the same or substantially the same terms as those set forth in the term sheet attached as Schedule 8.14) (the “Goldman Preferred Equity Investment”) or (2) the Replacement Equity Investment investor(s). Notwithstanding the foregoing, and for the avoidance of doubt, any and all documentation related to the Goldman Preferred Equity Investment or the Replacement Equity Investment shall be subject to the prior review and approval of the Lenders in their sole but reasonable discretion. Notwithstanding anything to the contrary contained in this Agreement, the Goldman Preferred Equity Investment or the Replacement Equity Investment shall be treated as equity for the purposes of all calculations involving, or covenants relating to, debt or interest expense (including Indebtedness and Consolidated Interest Expense) regardless of GAAP accounting classifications. The issuance of any additional preferred equity interests (i.e., in excess of the $50,000,000, plus the sum of (a) the “OID,” (b) the “Lead Investor Fee,” and (c) the amount any “PIK” paid from time to time), whether in connection with the Goldman Preferred Equity Investment or otherwise, shall be subject to the sole and absolute approval of the Lenders. No Credit Party will modify or amend any of the Mezzanine Loan Documents or TEN31 Bridge Financing documents (if approved by Agent).

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§9.        FINANCIAL COVENANTS. Borrower and REIT Guarantor covenant and agree that, so long as any Loan or Note is outstanding (other than contingent indemnification claims for which no claim has been made) or any Lender has any obligation to make any Loans, Borrower and REIT Guarantor, as applicable, shall at all times comply with the following covenants which covenants shall be tested quarterly, as of the close of each fiscal quarter, commencing with the fiscal quarter ending on December 31, 2020.

§9.1     Maximum Leverage Ratio.

(a)     Total Leverage shall not exceed seventy five percent (75%).

(b)     The Borrowing Base Leverage Ratio shall not exceed fifty-five percent (55%).

(c)     The Senior Leverage Ratio shall not exceed fifty-five percent (55%).

§9.2     Minimum Consolidated Fixed Charge Ratio. The Fixed Charge Ratio shall not be less than 1.50 to 1.0.

§9.3     Minimum Tangible Net Worth. The Consolidated Tangible Net Worth shall not be less than the sum of (i) during the sixty (60) days following the Closing Date, $85,000,000.00, and thereafter, $90,000,000.00, plus (ii) an amount equal to eighty-five percent (85%) of the net proceeds from any issuance of common Equity Interests or Preferred Securities in REIT Guarantor or Borrower following the Closing Date, plus (iii) an amount equal to 85% of the equity in any Real Estate contributed to REIT Guarantor or Borrower following the Closing Date.

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§9.4     Minimum Debt Yield.

(a)        The REIT Guarantor’s Senior Debt Yield shall not be less than eleven percent (11%).

(b)        The REIT Guarantor’s Total Debt Yield shall not be less than nine percent (9%).

§9.5     Variable Rate Debt.

(a)         Indebtedness of the REIT Guarantor and its Subsidiaries (without duplication) which bears interest at a floating rate (and which is not the subject of a Hedge) may not exceed 30% of the Total Asset Value.

(b)        Borrower shall be required to Hedge a minimum of 50% of the initial outstanding Loans as of the Closing Date until the Initial Maturity Date.

§9.6     Borrowing Base Covenants. The Borrowing Base Properties shall at all times comply with the following:

(a)         Minimum Number of Properties. At no time shall there be less than 30 properties in the Borrowing Base.

(b)        Minimum Aggregate Borrowing Base Value. From and after the Closing Date, the Aggregate Borrowing Base Value at all times be greater than $130,000,000.00.

(c)         Minimum Lease Term. The Borrowing Base Properties, taken as an entirety, shall at all times be subject to Major Leases with a minimum weighted average remaining lease term in excess of seven (7) years.

(d)        Tenant Concentration. No individual tenant may constitute or contribute more than twenty five percent (25%) of the Aggregate Borrowing Base Value or Adjusted Net Operating Income, with any such excess over such limit being excluded when calculating the Aggregate Borrowing Base Value and/or Adjusted Net Operating Income.

§9.7     Liquidity. At all times, and without duplication, the Credit Parties shall maintain Liquidity of $3,000,000 (the “Minimum Liquidity Requirement”); provided that (a) not more

frequently than annually or in connection with a Material Acquisition, and (b) no Event of Default or Default shall have then occurred and be continuing, the Borrower may seek a reduction to the Minimum Liquidity Requirement, subject to approval by the Super Majority Lenders in their sole discretion. Notwithstanding anything contained herein to the contrary, at any time that Liquidity is below the Minimum Liquidity Requirement, the Borrower will have forty-five (45) days to cure such deficit prior to triggering an Event of Default.

§10.       CLOSING CONDITIONS. The obligation of the Lenders to, or on the date hereof, make the initial Loans or to initially include any Real Estate in the Borrowing Base Properties shall be subject to the satisfaction (unless waived by Agent in writing) of the following conditions precedent:

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§10.1   Loan Documents. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto and shall be in full force and effect. The Agent shall have received a fully executed counterpart of each such document.

§10.2   Certified Copies of Organizational Documents. The Agent shall have received from (a) Borrower and REIT Guarantor, a copy, certified as of a recent date by the appropriate officer of each State in which such Person is organized of its formation documents filed with such State, (b) each Credit Party, a copy, certified as of recent date by a duly authorized officer, partner or member, as applicable, of such Person to be true and complete, of the partnership agreement, corporate charter or operating agreement and/or other organizational agreements of such Credit Party, as applicable, (c) each Credit Party, a good standing or similar certificate of recent date from the State of its formation, and (d) each Subsidiary Guarantor, a good standing or similar certificate of recent date from the State where its Initial Borrowing Base Property is located.

§10.3    Resolutions. All action on the part of each Credit Party, as applicable, necessary for the valid execution, delivery and performance by such Person of this Agreement and the other Loan Documents to which such Person is or is to become a party shall have been duly and effectively taken, and evidence thereof reasonably satisfactory to the Agent shall have been provided to the Agent.

§10.4   Incumbency Certificate; Authorized Signers. The Agent shall have received from each Credit Party an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of such Person and giving the name and bearing a specimen signature of each individual who shall be authorized to sign, in the name and on behalf of such Person, each of the Loan Documents to which such Person is or is to become a party. The Agent shall have also received from each Credit Party a certificate, dated as of the Closing Date, signed by a duly authorized representative of such Credit Party and giving the name and specimen signature of each Authorized Officer who shall be authorized to make Loan Requests and Conversion/Continuation Requests and to give notices and to take other action on behalf of such Credit Party under the Loan Documents.

§10.5   Opinion of Counsel. The Agent shall have received an opinion addressed to the Lenders and the Agent and dated as of the Closing Date from counsel to each Credit Party in form and substance reasonably satisfactory to the Agent.

§10.6   Payment of Fees. Borrower shall have paid to the Agent the fees payable pursuant to §4.2.

§10.7   Insurance. The Agent shall have received certificates evidencing that the Agent and the Lenders are named as mortgagee and additional insured, as applicable, on all policies of insurance as required by this Agreement.

§10.8   Performance; No Default. Each Credit Party shall have performed and complied with all terms and conditions herein required to be performed or complied with by it on or prior to the Closing Date, and on the Closing Date there shall exist no Default or Event of Default.

§10.9   Representations and Warranties. The representations and warranties made by the Credit Parties in the Loan Documents or otherwise made by or on behalf of the Credit Parties and their respective Subsidiaries in connection therewith or after the date thereof shall have been true and correct in all material respects when made and shall also be true and correct in all material respects on the Closing Date (unless such representations and warranties are limited by their terms to a specific date).

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§10.10      Proceedings and Documents. All proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be reasonably satisfactory to the Agent and the Agent’s counsel in form and substance, and the Agent shall have received all information and such counterpart originals or certified copies of such documents and such other certificates, opinions, assurances, consents, approvals or documents as the Agent and the Agent’s counsel may reasonably require and are customarily required in connection with similar transactions.

§10.11      Eligible Real Estate Qualification Documents(a)      . The Eligible Real Estate Qualification Documents for each Borrowing Base Property included in the Collateral as of the Closing Date shall have been delivered to the Agent at Borrower’ expense and shall be in form and substance reasonably satisfactory to the Agent.

§10.12      Compliance Certificate. The Agent shall have received a Compliance Certificate dated as of the date of the Closing Date demonstrating compliance with each of the covenants calculated therein. Further, such Compliance Certificate shall include within the calculation of Net Operating Income any Borrowing Base Properties which have been owned for less than a calendar quarter, and shall be based upon financial data and information with respect to Borrowing Base Properties as of the end of the most recent calendar month as to which data and information is available.

§10.13      Appraisals. The Agent shall have received Appraisals of each of the Borrowing Base Properties being included as a Borrowing Base Property for the first time in form and substance reasonably satisfactory to the Agent and the Lenders, reflecting the Appraised Value for such Borrowing Base Properties.

§10.14      Beneficial Ownership Certification. (i) Upon the reasonable request of any Lender made at least ten (10) Business Days prior to the Closing Date, REIT Guarantor shall have provided to such Lender the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including the PATRIOT Act, in each case at least five (5) days prior to the Closing Date; and (ii) at least five (5) days prior to the Closing Date, any Borrower that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Borrower.

§10.15      Consents. The Agent shall have received evidence reasonably satisfactory to the Agent that all necessary stockholder, partner, member or other consents required in connection with the consummation of the transactions contemplated by this Agreement and the other Loan Documents have been obtained.

§10.16      Patriot Act; Anti-Money Laundering Laws. REIT Guarantor and each of the other Credit Parties shall have provided to Agent and the Lenders the documentation and other information requested by Agent at least five (5) Business Days prior to the Closing Date in order to comply with the requirements of any Anti-Money Laundering Laws, including, without limitation, the Patriot Act and any applicable “know your customer” rules and regulations.

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§10.17      Mezzanine Loan. The Agent shall have received (i) evidence that REIT Guarantor shall have received proceeds of no greater than $100,000,000 from the Mezzanine Loan and (ii) executed copies of the Mezzanine Loan Agreement, the Mezzanine Intercreditor Agreement and all related documents governing the Permitted Mezzanine Obligations, reflecting that there is no collateral for such Indebtedness other than the Permitted Mezzanine Lien.

§10.18      Other. The Agent shall have reviewed such other documents, instruments, certificates, opinions, assurances, consents and approvals as the Agent or the Agent’s Special Counsel may reasonably have requested and are customarily required in connection with similar transactions.

§11.       CONDITIONS TO ALL BORROWINGS. The obligations of the Lenders to make any Loan, whether on or after the Closing Date, shall also be subject to the satisfaction of the following conditions precedent:

§11.1        Representations True; No Default. Each of the representations and warranties made by or on behalf of the Credit Parties or any of their respective Subsidiaries contained in this Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true in all material respects both as of the date as of which they were made and shall also be true in all material respects as of the time of the making of such Loan, with the same effect as if made at and as of that time, except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date), and no Default or Event of Default shall have occurred and be continuing.

§11.2        Borrowing Documents. The Agent shall have received a fully completed Loan Request for such Loan and the other documents and information (including, without limitation, a Compliance Certificate) as required by §2.8.

§11.3        Future Advances Tax Payment. In addition to the requirements of §15 hereof, as a condition precedent to any Lender’s obligations to make any Loans available to Borrower hereunder, Borrower will obtain a letter from the Title Insurance Company or local counsel stating that any mortgage, recording, intangible, documentary stamp or other similar taxes and charges which the Agent reasonably determines to be payable as a result of such Loan to any state or any county or municipality thereof in which any of the Borrowing Base Properties are located, have been paid.

§12.      EVENTS OF DEFAULT; ACCELERATION; ETC.

§12.1       Events of Default and Acceleration. If any of the following events (“Events of Default” or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, “Defaults”) shall occur:

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(a)      Borrower shall fail to pay any principal of the Loans when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment;

(b)      Borrower shall fail to pay any interest on the Loans within five (5) days of the date that the same shall become due and payable, or any fees or other sums due hereunder (other than any voluntary prepayment) or under any of the other Loan Documents within five (5) days after notice from Agent, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment;

(c)     Borrower shall fail to complete the Goldman Preferred Equity Investment and be in receipt of all of the funds due thereunder within sixty (60) days from the Closing Date (the “Goldman Closing Period”); provided however, that notwithstanding the foregoing, Borrower shall be provided an additional one hundred twenty (120) days from the expiration of the Goldman Closing Period (the “Equity Subscription Period”) to complete a Replacement Equity Investment, in lieu of the Goldman Preferred Equity Investment, in accordance with the Replacement Equity Investment Criteria; notwithstanding the foregoing, from the end of the Goldman Closing Period through the completion of the Replacement Equity Investment, all Borrowing Base Availability shall cease and no Loans shall be advanced hereunder;

(d)     any of Borrower or the other Credit Parties or any of their respective Subsidiaries shall fail to perform any other term, covenant or agreement contained in §8 or §9;

(e)     any of Borrower or the other Credit Parties shall fail to perform any other term, covenant or agreement contained herein or in any of the other Loan Documents which they are required to perform (other than those specified in the other subclauses of this §12 (including, without limitation, §12.2 below) or in the other Loan Documents), and such failure shall continue for thirty (30) days after Borrower receives from Agent written notice thereof, and in the case of a default that cannot be cured within such thirty (30)-day period despite Borrower’s diligent efforts but is susceptible of being cured within ninety (90) days of Borrower’s receipt of Agent’s original notice, then Borrower shall have such additional time as is reasonably necessary to effect such cure, but in no event in excess of ninety (90) days from Borrower’s receipt of Agent’s original notice, or any material representation or warranty made by or on behalf of the Credit Parties or any of their respective Subsidiaries in this Agreement or any other Loan Document, or any report, certificate, financial statement, request for a Loan, or in any other document or instrument delivered pursuant to or in connection with this Agreement, any advance of a Loan, or any of the other Loan Documents shall prove to have been false in any material respect upon the date when made or deemed to have been made or repeated, except to the extent it is not reasonably expected to have a Material Adverse Effect;

(f)       Any (i) Borrower or other Credit Party defaults under any Recourse Indebtedness (exclusive of the Mezzanine Loan or Permitted Mezzanine Obligations which is subject to (iii) of this subsection) or suffers a claim under non-recourse carve-out guaranty with respect to all uncured defaults at any time, (ii) Borrower, Guarantor or any Subsidiary thereof defaults under any Non-Recourse Indebtedness, in an aggregate amount (in the case of (i) or (ii) above) equal to or greater than $25,000,000 with respect to all uncured defaults at any time, or (iii) any “Event of Default” (as defined in the Mezzanine Loan Agreement) occurs which is not (1) cured within the time period provided for cure of the same under, and in accordance with, the applicable provisions of the Mezzanine Loan Documents or (2) waived thereunder;

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(g)      any of Borrower or other Credit Party (i) shall make an assignment for the benefit of creditors, or admit in writing its general inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver for it or any substantial part of its assets, (ii) shall commence any case or other proceeding relating to it under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or (iii) shall take any action to authorize any of the foregoing;

(h)     a petition or application shall be filed for the appointment of a trustee or other custodian, liquidator or receiver of any of Borrower or other Credit Party or any substantial part of the assets of any thereof, or a case or other proceeding shall be commenced against any such Person under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, and any such Person shall indicate its approval thereof, consent thereto or acquiescence therein or such petition, application, case or proceeding shall not have been dismissed within ninety (90) days following the filing or commencement thereof;

(i)       a decree or order is entered appointing a trustee, custodian, liquidator or receiver for any of Borrower or other Credit Party or adjudicating any such Person bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of any such Person in an involuntary case under federal bankruptcy laws as now or hereafter constituted;

(j)      there shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty (30) days, one or more uninsured or unbonded final judgments against REIT Guarantor or any Subsidiary that, either individually or in the aggregate, exceed in excess of $2,500,000.00 in any calendar year;

(k)      any of the material Loan Documents shall be canceled, terminated, revoked or rescinded otherwise than in accordance with the terms thereof or the express prior written agreement, consent or approval of the Required Lenders, or any action at law, suit in equity or other legal proceeding to cancel, revoke or rescind any of the material Loan Documents shall be commenced by or on behalf of any of the Credit Parties, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination, or issue a judgment, order, decree or ruling, to the effect that any one or more of the material Loan Documents is illegal, invalid or unenforceable in accordance with the terms thereof;

(l)       REIT Guarantor ceases to be treated as a real estate investment trust under the Code in any taxable year or, after the occurrence of the IPO Event, the common Equity Interests of the REIT Guarantor shall fail to be listed and traded on the New York Stock Exchange or another publicly recognized exchange;

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(m)     with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and such event reasonably would be expected to result in liability of any of the Credit Parties to pay money to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and one of the following shall apply with respect to such event: (x) such event in the circumstances occurring reasonably would be expected to result in the termination of such Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan; or (y) a trustee shall have been appointed by the United States District Court to administer such Plan; or (z) the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan;

(n)      any dissolution, termination, partial or complete liquidation, merger or consolidation of any of Borrower or the Guarantors shall occur or any sale, transfer or other disposition of any material portion of the assets of any of Borrower or the Guarantors shall occur other than as permitted under the terms of this Agreement or the other Loan Documents;

(o)      any of Borrower, the Guarantors or any of their respective Subsidiaries or any officer, director, partner or member of any of them shall be indicted for a federal crime, a punishment for which would reasonably likely result in the forfeiture of (i) any assets of such Person which in the good faith judgment of the Required Lenders would reasonably be expected to have a Material Adverse Effect, or (ii) the Collateral;

(p)     any Guarantor denies that it has any liability or obligation under the Guaranty or any other Loan Document, or shall notify the Agent or any of the Lenders of such Guarantor’s intention to attempt to cancel or terminate any Guaranty or any other Loan Document, or shall fail to observe or comply with any term, covenant, condition or agreement under any Guaranty or any other Loan Document;

(q)     any Change of Control shall occur; or

(r)      REIT Guarantor shall default on or fail to perform any affirmative, negative or financial covenant or other obligation contained in any documentation relating to the Goldman Preferred Equity Investment or Replacement Equity Investment which default or failure to perform is not cured within any applicable cure period set forth in such documentation if (i) the effect of such default or failure is to cause, or to permit the holder or holders of the Goldman Preferred Equity Investment or Replacement Equity Investment (with or without the giving of notice, the lapse of time or both) to cause, the mandatory redemption of the Goldman Preferred Equity Investment or Replacement Equity Investment in whole or in part, or (ii) such default or failure gives the holder or holders of the Goldman Preferred Equity Investment or Replacement Equity Investment any payments, rights or remedies that could reasonably be expected to be adverse to the Lenders (as determined in their sole discretion);

then, and upon the occurrence and during the continuance of any such Event of Default, the Agent may, and upon the request of the Required Lenders shall, by notice in writing to Borrower declare all amounts owing with respect to this Agreement, the Notes, and the other Loan Documents to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower; provided that in the event of any Event of Default specified in §12.1(g), §12.1(h) or §12.1(i), all such amounts shall become immediately due and payable automatically and without any requirement of presentment, demand, protest or other notice of any kind from any of the Lenders or the Agent.

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§12.2       Certain Cure Periods. Notwithstanding anything contained herein to the contrary (including §12.1), in the event that there shall occur any Default or Event of Default that affects only certain Borrowing Base Property or the owner(s) thereof (if such owner is a Subsidiary Guarantor) or the removal of certain Borrowing Base Property would cure such Default or Event of Default, then Borrower may elect to cure such Default or Event of Default (so long as no other Default or Event of Default would arise as a result) by electing to have Agent remove such Borrowing Base Property from the calculation of the Borrowing Base Availability (and Borrower’ compliance with §3.2 as a result thereof), in which event such removal and reduction shall be completed within thirty (30) days after receipt of notice of such Default or Event of Default from the Agent.

§12.3        Termination of Commitments. If any one or more Events of Default specified in §12.1(g), §12.1(h) or §12.1(i) shall occur, then immediately and without any action on the part of the Agent or any Lender any unused portion of the credit hereunder shall terminate and the Lenders shall be relieved of all obligations to make Loans to Borrower. If any other Event of Default shall have occurred, the Agent may, and upon the election of the Required Lenders shall, by notice to Borrower terminate the obligation to make Loans to Borrower. No termination under this §12.3 shall relieve Borrower of their obligations to the Lenders arising under this Agreement or the other Loan Documents.

§12.4        Remedies. In case any one or more Events of Default shall have occurred and be continuing, and whether or not the Lenders shall have accelerated the maturity of the Loans pursuant to §12.1, the Agent on behalf of the Lenders may, and upon the direction of the Required Lenders shall, proceed to protect and enforce their rights and remedies under this Agreement, the Notes and/or any of the other Loan Documents by suit in equity, action at law or other appropriate proceeding, including to the full extent permitted by applicable law the obtaining of the ex parte appointment of a receiver, and, if any amount shall have become due, by declaration or otherwise, the enforcement of the payment thereof. No remedy herein conferred upon the Agent or the holder of any Note is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law. Notwithstanding the provisions of this Agreement providing that the Loans may be evidenced by multiple Notes in favor of the Lenders, the Lenders acknowledge and agree that only the Agent may exercise any remedies arising by reason of a Default or Event of Default. If any Credit Party fails to perform any agreement or covenant contained in this Agreement or any of the other Loan Documents beyond any applicable period for notice and cure, Agent may itself perform, or cause to be performed, any agreement or covenant of such Person contained in this Agreement or any of the other Loan Documents which such Person shall fail to perform, and the out-of-pocket costs of such performance, together with any reasonable expenses, including reasonable and documented attorneys’ fees actually incurred (including attorneys’ fees incurred in any appeal) by Agent in connection therewith, shall be payable by Borrower upon demand and shall constitute a part of the Obligations and shall if not paid within five (5) days after demand bear interest at the rate for overdue amounts as set forth in this Agreement. In the event that all or any portion of the Obligations is collected by or through an attorney-at-law, Borrower shall pay all costs of collection including, but not limited to, reasonable attorney’s fees.

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§12.5        Distribution of Collateral Proceeds. In the event that, following the occurrence and during the continuance of any Event of Default, any monies are received in connection with the enforcement of remedies under any of the Loan Documents, such monies shall be distributed for application as follows:

(a)     First, to the payment of, or (as the case may be) the reimbursement of the Agent for or in respect of, all Obligations constituting reasonable and documented out-of-pocket costs, expenses, disbursements and losses which shall have been paid, incurred or sustained by the Agent to protect or preserve the Collateral or in connection with the collection of such monies by the Agent, for the exercise, protection or enforcement by the Agent of all or any of the rights, remedies, powers and privileges of the Agent or the Lenders under this Agreement or any of the other Loan Documents or in respect of the Collateral or in support of any provision of adequate indemnity to the Agent against any taxes or liens which by law shall have, or may have, priority over the rights of the Agent or the Lenders to such monies;

(b)     Second, to all other Obligations (including any interest, expenses or other obligations incurred after the commencement of a bankruptcy) in such order or preference as the Required Lenders shall determine; provided, that (i) distributions in respect of such other Obligations shall include, on a pari passu basis, any Agent’s fee payable pursuant to §4.2; (ii) in

the event that any Lender shall have wrongfully failed or refused to make an advance under §2.9(a) and such failure or refusal shall be continuing, advances made by other Lenders during the pendency of such failure or refusal shall be entitled to be repaid as to principal and accrued interest in priority to the other Obligations except Hedge Obligations described in this subsection (b); and (iv) Obligations owing to the Lenders with respect to each type of Obligation such as interest, principal, fees and expenses shall be made among the Lenders, pro rata,; and provided, further that the Required Lenders may in their discretion make proper allowance to take into account any Obligations not then due and payable; and

(c)     Third, to the payment of the Lender Hedge Obligations, if any, which Lender Hedge Obligations shall be paid out ratably to each Lender Hedge Provider on a pari passu basis without regard to any separate arrangements under such Lender Hedge documents; and

(d)     Fourth, the excess, if any, shall be returned to Borrower or to such other Persons as are entitled thereto.

§13.      SETOFF. Regardless of the adequacy of any Collateral, during the continuance of any Event of Default, any deposits (general or specific, time or demand, provisional or final, regardless of currency, maturity, or the branch where such deposits are held) or other sums credited by or due from any Lender or any Affiliate thereof to any Credit Party and any securities or other property of such parties in the possession of such Lender or any Affiliate may, without notice to any Credit Party (any such notice being expressly waived) but with the prior written approval of Agent, be applied to or set off against the payment of Obligations. Each of the Lenders agrees with each other Lender that if such Lender shall receive from a Credit Party, whether by voluntary payment, exercise of the right of setoff, or otherwise, and shall retain and apply to the payment of the Note or Notes held by such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Notes held by all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the Notes held by it its proportionate payment as contemplated by this Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. In the event that any Defaulting Lender shall exercise any such right of setoff, (a) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of this Agreement and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agent and the Lenders, and (b) the Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.

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§14.     THE AGENT.

§14.1     Authorization. The Agent is authorized to take such action on behalf of each of the Lenders and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Agent and all other powers not specifically reserved to the Lenders, together with such powers as are reasonably incident thereto, provided that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Agent. The obligations of the Agent hereunder are primarily administrative in nature, and nothing contained in this Agreement or any of the other Loan Documents shall be construed to constitute the Agent as a trustee for any Lender or to create an agency or fiduciary relationship. Agent shall act as the contractual representative of the Lenders hereunder, and notwithstanding the use of the term “Agent”, it is understood and agreed that Agent shall not have any fiduciary duties or responsibilities to any Lender by reason of this Agreement or any other Loan Document and is acting as an independent contractor, the duties and responsibilities of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Borrower and any other Person shall be entitled to conclusively rely on a statement from the Agent that it has the authority to act for and bind the Lenders pursuant to this Agreement and the other Loan Documents.

§14.2     Employees and Agents. The Agent may exercise its powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Agreement and the other Loan Documents. The Agent may utilize the services of such Persons as the Agent may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by Borrower.

§14.3     No Liability. Neither the Agent nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent, or employee thereof, shall be liable to the Lenders for (a) any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Agent or such other Person, as the case may be, shall be liable for losses due to its willful misconduct or gross negligence as finally determined by a court of competent jurisdiction after the expiration of all applicable appeal periods or (b) any action taken or not taken by Agent with the consent or at the request of the Required Lenders. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Lenders, unless the Agent has received notice from a Lender or Borrower referring to the Loan Documents and describing with reasonable specificity such Default or Event of Default and stating that such notice is a “notice of default”.

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§14.4     No Representations. The Agent shall not be responsible for the execution or validity or enforceability of this Agreement, the Notes, any of the other Loan Documents or any instrument at any time constituting, or intended to constitute, collateral security for the Notes, or for the value of any such collateral security or for the validity, enforceability or collectability of any such amounts owing with respect to the Notes, or for any recitals or statements, warranties or representations made herein, or any agreement, instrument or certificate delivered in connection therewith or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of Borrower or any of their respective Subsidiaries, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or in any of the other Loan Documents. The Agent shall not be bound to ascertain whether any notice, consent, waiver or request delivered to it by Borrower or any holder of any of the Notes shall have been duly authorized or is true, accurate and complete. The Agent has not made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to the Lenders, with respect to the creditworthiness or financial condition of Borrower or any of their respective Subsidiaries, or the value of the Collateral or any other assets of Borrower or any of their respective Subsidiaries. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender, based upon such information and documents as it deems appropriate at the time, continue to make its own credit analysis and decisions in taking or not taking action under this Agreement and the other Loan Documents. Agent’s Special Counsel has only represented Agent and M&T in connection with the Loan Documents and the only attorney client relationship or duty of care is between Agent’s Special Counsel and Agent or M&T. Each Lender has been independently represented by separate counsel on all matters regarding the Loan Documents and the granting and perfecting of liens in the Collateral.

§14.5     Payments.

(a)            A payment by Borrower to the Agent hereunder or under any of the other Loan Documents for the account of any Lender shall constitute a payment to such Lender. The Agent agrees to distribute to each Lender not later than one Business Day after the Agent’s receipt of good funds, determined in accordance with the Agent’s customary practices, such Lender’s pro rata share of payments received by the Agent for the account of the Lenders except as otherwise expressly provided herein or in any of the other Loan Documents. In the event that the Agent fails to distribute such amounts within one Business Day as provided above, the Agent shall pay interest on such amount at a rate per annum equal to the Federal Funds Effective Rate from time to time in effect.

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(b)            If in the reasonable opinion of the Agent the distribution of any amount received by it in such capacity hereunder, under the Notes or under any of the other Loan Documents might involve it in liability, it may refrain from making such distribution until its right to make such distribution shall have been adjudicated by a court of competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court.

§14.6     Holders of Notes. Subject to the terms of §18, the Agent may deem and treat the payee of any Note as the absolute owner or purchaser thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder, assignee or transferee.

§14.7     Indemnity. The Lenders ratably agree hereby to indemnify and hold harmless the Agent from and against any and all claims, actions and suits (whether groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Agent has not been reimbursed by Borrower as required by §15), and liabilities of every nature and character arising out of or related to this Agreement, the Notes, or any of the other Loan Documents or the transactions contemplated or evidenced hereby or thereby, or the Agent’s actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by the Agent’s willful misconduct or gross negligence as finally determined by a court of competent jurisdiction after the expiration of all applicable appeal periods. The agreements in this §14.7 shall survive the payment of all amounts payable under the Loan Documents.

§14.8     Agent as Lender. In its individual capacity, M&T shall have the same obligations and the same rights, powers and privileges in respect to its Commitment and the Loans made by it, and as the holder of any of the Notes as it would have were it not also the Agent.

§14.9     Resignation. The Agent may resign at any time by giving thirty (30) calendar days’ prior written notice thereof to the Lenders and Borrower. The Required Lenders may remove the Agent from its capacity as Agent in the event of the Agent’s gross negligence or willful misconduct or if the Agent is a Defaulting Lender (with the Commitment Percentage of the Lender which is acting as Agent shall not be taken into account in the calculation of Required Lenders for the purposes of removing Agent in the event of the Agent’s willful misconduct or gross negligence). Upon any such resignation, or removal, the Required Lenders, subject to the terms of §18.1, shall have the right to appoint as a successor Agent (i) any Lender or (ii) any bank whose senior debt obligations are rated not less than “A” or its equivalent by Moody’s or not less than “A” or its equivalent by S&P and which has a net worth of not less than $500,000,000. Unless a Default or Event of Default shall have occurred and be continuing, such successor Agent Lender shall be reasonably acceptable to Borrower. If no successor Agent shall have been appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent’s giving of notice of resignation or the Required Lender’s removal of the Agent, then the retiring or removed Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be (i) any Lender or (ii) any financial institution whose senior debt obligations are rated not less than “A2” or its equivalent by Moody’s or not less than “A” or its equivalent by S&P and which has a net worth of not less than $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Agent, and the retiring or removed Agent shall be discharged from its duties and obligations hereunder as Agent. After any retiring Agent’s resignation or removal, the provisions of this Agreement and the other Loan Documents shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent under this Agreement, the resigning or removed Agent shall execute such assignments of and amendments to the Loan Documents as may be necessary to substitute the successor Agent for the resigning or removed Agent.

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§14.10     Duties in the Case of Enforcement. In case one or more Events of Default have occurred and shall be continuing, and whether or not acceleration of the Obligations shall have occurred, the Agent may and, if so requested by the Required Lenders which have provided to the Agent such additional indemnities and assurances in accordance with their respective Commitment Percentages against expenses and liabilities as the Agent may reasonably request, shall proceed to exercise all or any legal and equitable and other rights or remedies as it may have; provided, however, that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem to be in the best interests of the Lenders. Without limiting the generality of the foregoing, if Agent reasonably determines payment is in the best interest of all the Lenders, Agent may without the approval of the Lenders pay taxes and insurance premiums and spend money for maintenance, repairs or other expenses which may be necessary to be incurred, and Agent shall promptly thereafter notify the Lenders of such action. Each Lender shall, within thirty (30) days of request therefor, pay to the Agent its Commitment Percentage of the reasonable costs incurred by the Agent in taking any such actions hereunder to the extent that such costs shall not be promptly reimbursed to the Agent by Borrower or out of the Collateral within such period with respect to the Borrowing Base Properties. The Required Lenders may direct the Agent in writing as to the method and the extent of any such exercise, the Lenders hereby agreeing to indemnify and hold the Agent harmless in accordance with their respective Commitment Percentages from all liabilities incurred in respect of all actions taken or omitted in accordance with such directions, except to the extent that any of the same shall be directly caused by the Agent’s willful misconduct or gross negligence as finally determined by a court of competent jurisdiction after the expiration of all applicable appeal periods, provided that the Agent need not comply with any such direction to the extent that the Agent reasonably believes the Agent’s compliance with such direction to be unlawful in any applicable jurisdiction or commercially unreasonable under the UCC as enacted in any applicable jurisdiction.

§14.11     Bankruptcy. In the event a bankruptcy or other insolvency proceeding is commenced by or against Borrower with respect to the Obligations, the Agent shall have the sole and exclusive right to file and pursue a joint proof claim on behalf of all Lenders. Any votes with respect to such claims or otherwise with respect to such proceedings shall be subject to the vote of the Required Lenders or all of the Lenders (or each of those affected by such proceeding) as required by §27 of this Agreement. Each Lender irrevocably waives its right to file or pursue a separate proof of claim in any such proceedings unless Agent fails to file such claim within thirty (30) days after receipt of written notice from the Required Lenders requesting that Agent file such proof of claim.

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§14.12     Request for Agent Action. Agent and the Lenders acknowledge that in the ordinary course of business of Borrower, (a) Borrower will enter into leases or rental agreements covering Borrowing Base Properties that may require the execution of a Subordination, Attornment and Non-Disturbance Agreement in favor of the tenant thereunder, (b) a Borrowing Base Property may be subject to a Taking, (c) a Subsidiary Guarantor may desire to enter into easements or other agreements affecting the Borrowing Base Properties, or take other actions or enter into other agreements in the ordinary course of business which similarly require the consent, approval or agreement of the Agent. In connection with the foregoing, the Lenders hereby expressly authorize the Agent to (w) execute and deliver to Borrower Subordination, Attornment and Non-Disturbance Agreements with any tenant under a Lease upon such terms as Agent in its good faith judgment determines are appropriate (Agent in the exercise of its good faith judgment may agree to allow some or all of the casualty, condemnation, restoration or other provisions of the applicable Lease to control over the applicable provisions of the Loan Documents), (x) execute releases of liens in connection with any Taking, (y) execute consents or subordinations in form and substance satisfactory to Agent in connection with any easements or agreements affecting the Borrowing Base Property, or (z) execute consents, approvals, or other agreements in form and substance satisfactory to the Agent in connection with such other actions or agreements as may be necessary in the ordinary course of Borrower’ business.

§14.13     Reliance by Agent. The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by an Authorized Officer. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Agent may presume that such condition is satisfactory to such Lender unless the Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

§14.14     Approvals. If consent is required for some action under this Agreement, or except as otherwise provided herein an approval of the Lenders, the Super Majority Lenders or the Required Lenders (as applicable) is required or permitted under this Agreement, each Lender agrees to give the Agent, within ten (10) days of receipt of the request for action together with all reasonably requested information related thereto (or such lesser period of time required by the terms of the Loan Documents), notice in writing of approval or disapproval (collectively “Directions”) in respect of any action requested or proposed in writing pursuant to the terms hereof. To the extent that any Lender does not approve any recommendation of Agent, such Lender shall in such notice to Agent describe the actions that would be acceptable to such Lender. If consent is required for the requested action, any Lender’s failure to respond to a request for Directions within the required time period shall be deemed to constitute a Direction to take such requested action. In the event that any recommendation is not approved by the requisite number of Lenders and a subsequent approval on the same subject matter is requested by Agent, then for the purposes of this paragraph each Lender shall be required to respond to a request for Directions within ten (10) Business Days of receipt of such request. Agent and each Lender shall be entitled to assume that any officer of the other Lenders delivering any notice, consent, certificate or other writing is authorized to give such notice, consent, certificate or other writing unless Agent and such other Lenders have otherwise been notified in writing.

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§14.15     Borrower Not Beneficiary. Except for the provisions of §14.9 relating to the appointment of a successor Agent, the provisions of this §14 are solely for the benefit of the Agent and the Lenders, may not be enforced by Borrower, and except for the provisions of §14.9, may be modified or waived without the approval or consent of Borrower.

§14.16     Defaulting Lenders.

(a)            Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Legal Requirements:

(i)            That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in §27.

(ii)            Any payment of principal, interest, fees or other amounts received by the Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, or otherwise, and including any amounts made available to the Agent by that Defaulting Lender pursuant to §13), shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Agent hereunder; second, as Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; third, if so determined by the Agent and Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fourth, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists or non-Defaulting Lenders have been paid in full all amounts then due, to the payment of any amounts owing to Borrower as a result of any judgment of a court of competent jurisdiction obtained by Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction ; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans made at a time when the conditions set forth in §11 were satisfied or waived, such payment shall be applied solely to pay the Loans to all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this §14.16(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

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(iii)            That Defaulting Lender shall not be entitled to receive any facility unused fee pursuant to §2.4 for any period during which that Lender is a Defaulting Lender (and Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(iv)            During any period that a Lender is a Defaulting Lender, Borrower may, by giving written notice thereof to the Agent, such Defaulting Lender, and the other Lenders, demand that such Defaulting Lender assign its Commitment to an Eligible Assignee subject to and in accordance with the provisions of §18.1. No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. In addition, any Lender who is not a Defaulting Lender may, but shall not be obligated, in its sole discretion, to acquire the face amount of all or a portion of such Defaulting Lender’s Commitment via an assignment subject to and in accordance with the provisions of §18.1. No such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient with any applicable amounts held pursuant to the immediately preceding subsection (ii), upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of Borrower and the Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent or any Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) such Defaulting Lender’s full pro rata share of all Loans. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under any Legal Requirement without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

(b)            Defaulting Lender Cure. If Borrower and the Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their Commitment Percentages (without giving effect to §14.16(a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

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§14.17     Reliance on Hedge Provider. For purposes of applying payments received in accordance with §12.5, the Agent shall be entitled to rely upon the trustee, paying agent or other similar representative (each, a “Representative”) or, in the absence of such a Representative, upon the holder of the Hedge Obligations for a determination (which each holder of the Hedge Obligations agrees (or shall agree) to provide upon request of the Agent) of the outstanding Hedge Obligations owed to the holder thereof. Unless it has actual knowledge (including by way of written notice from such holder) to the contrary, the Agent, in acting hereunder, shall be entitled to assume that no Hedge Obligations are outstanding.

§15.     EXPENSES. Borrower agrees to pay (a) the reasonable and documented out-of-pocket costs incurred by the Agent of producing and reproducing this Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) any documented Indemnified Taxes (including any interest and penalties in respect thereto) payable by the Agent or any of the Lenders (other than taxes based upon the Agent’s or any Lender’s gross or net income, except that the Agent and the Lenders shall be entitled to indemnification for any and all amounts paid by them in respect of taxes based on income or other taxes assessed by any State in which Borrowing Base Property or other Collateral is located, such indemnification to be limited to taxes due solely on account of the granting of Collateral under the Security Documents and to be net of any credit allowed to the indemnified party from any other State on account of the payment or incurrence of such tax by such indemnified party), including any recording, mortgage, documentary or intangibles taxes in connection with the Mortgages and other Loan Documents (Borrower hereby agreeing to indemnify the Agent and each Lender with respect thereto), (c) all reasonable and documented title insurance premiums, engineer’s fees incurred by the Agent, third party environmental reviews incurred by the Agent and the reasonable fees, expenses and disbursements of the outside counsel to the Agent and any local counsel to the Agent incurred in connection with the preparation, administration, or interpretation of the Loan Documents and other instruments mentioned herein, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (d) all other reasonable and documented out-of-pocket fees (including reasonable attorneys’ fees), expenses and disbursements (other than Taxes unless such payment is otherwise required pursuant to the terms of this Agreement) of the Agent incurred by the Agent in connection with the preparation or interpretation of the Loan Documents and other instruments mentioned herein, the addition or substitution of additional Borrowing Base Properties or other Collateral (in connection with each Loan and/or otherwise), the review of leases and Subordination, Attornment and Non-Disturbance Agreements, the making of each Loan hereunder, and the third party out-of-pocket costs and expenses incurred in connection with the syndication of the Commitments pursuant to §18 hereof, and (e) without duplication, all reasonable and documented out-of-pocket expenses (including reasonable attorneys’ fees and costs, and the fees and costs of appraisers, engineers, investment bankers or other experts retained by any Lender or the Agent) incurred by any Lender or the Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Credit Parties or the administration thereof during the existence of a Default or Event of Default and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to the Agent’s or any of the Lenders’ relationship with Borrower (provided that any attorneys’ fees and costs pursuant to this clause (e) shall be limited to those incurred by the Agent, local counsel in each jurisdiction where a Borrowing Base Property is located, and one other counsel with respect to the Lenders as a group), (f) all reasonable and documented fees, expenses and disbursements of the Agent incurred in connection with UCC searches, UCC filings, title rundowns, title searches or mortgage recordings, (g) all reasonable and documented out-of-pocket fees, expenses and disbursements (including reasonable attorneys’ fees and costs) which may be incurred by Agent in connection with the execution and delivery of this Agreement and the other Loan Documents (without duplication of any of the items listed above), and (h) all expenses relating to the use of Intralinks, SyndTrak or any other similar system for the dissemination and sharing of documents and information in connection with the Loans in accordance with the terms of this Agreement. The covenants of this §15 shall survive the repayment of the Loans and the termination of the obligations of the Lenders hereunder.

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§16.     INDEMNIFICATION. Borrower and each Guarantor, jointly and severally, agree to indemnify and hold harmless the Agent, the Lenders and the Arranger and each director, officer, employee, agent and Affiliate thereof and Person who controls the Agent or any Lender or the Arranger against any and all claims, actions and suits, whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character (subject to §15) arising out of or relating to any claim, action, suit or litigation arising out of this Agreement or any of the other Loan Documents or the transactions contemplated hereby and thereby including, without limitation, (a) any and all claims for brokerage, leasing, finders or similar fees which may be made relating to the Borrowing Base Properties or the Loans by parties claiming by or through Borrower or any Guarantor, (b) any condition of the Borrowing Base Properties or any other Real Estate, (c) any actual or proposed use by Borrower or any Guarantor of the proceeds of any of the Loans, (d) any actual or alleged infringement of any patent, copyright, trademark, service mark or similar right of Borrower and each Guarantor, (e) Borrower or any Guarantor entering into or performing this Agreement or any of the other Loan Documents, (f) any actual or alleged violation of any law, ordinance, code, order, rule, regulation, approval, consent, permit or license relating to the Borrowing Base Properties or any other Real Estate, (g) with respect to Borrower or any Guarantor and their respective properties and assets, subject to any limitations set forth in the Indemnity Agreements, the violation of any Environmental Law, the Release or threatened Release of any Hazardous Substances or any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances (including, but not limited to, claims with respect to wrongful death, personal injury, nuisance or damage to property), and (h) to the extent used by Borrower or any Guarantor, any use of Intralinks, SyndTrak or any other system for the dissemination and sharing of documents and information, in each case including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding; provided, however, that Borrower and the Guarantors shall not be obligated under this §16 or otherwise to indemnify any Person for liabilities arising from such Person’s own gross negligence or willful misconduct as determined by a court of competent jurisdiction after the exhaustion of all applicable appeal periods or if arising from a dispute between Persons entitled to indemnification hereunder or a material breach of the provisions of this Agreement by such Person entitled to indemnification hereunder . In litigation, or the preparation therefor, the Lenders and the Agent shall be entitled to select a single law firm as their own counsel and, in addition to the foregoing indemnity, Borrower and the Guarantors agree to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of Borrower or any Guarantor under this §16 are unenforceable for any reason, Borrower and each Guarantor hereby agree to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The provisions of this §16 shall survive the repayment of the Loans and the termination of the obligations of the Lenders hereunder for a period of one year.

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§17.     SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and warranties made herein, in the Notes, in any of the other Loan Documents or in any documents or other papers delivered by or on behalf of Borrower or any of their respective Subsidiaries pursuant hereto or thereto shall be deemed to have been relied upon by the Lenders and the Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of any of the Loans, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Agreement or the Notes or any of the other Loan Documents remains outstanding or any Lender has any obligation to make any Loans. The indemnification obligations of Borrower and each Guarantor provided herein and in the other Loan Documents shall survive the full repayment of amounts due and the termination of the obligations of the Lenders hereunder and thereunder to the extent provided herein and therein for a period of one year. All statements contained in any certificate delivered to any Lender or the Agent at any time by or on behalf of Borrower or any of their respective Subsidiaries pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by such Person hereunder.

§18.     ASSIGNMENT AND PARTICIPATION.

§18.1     Conditions to Assignment by Lenders. Except as provided herein, each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment Percentage and Commitment and the same portion of the Loans at the time owing to it and the Notes held by it); provided that (a) the Agent shall have given its prior written consent to such assignment, which consent shall not be unreasonably withheld or delayed, (b) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Lender’s rights and obligations under this Agreement with respect to the Revolving Credit Commitment in the event an interest in the Revolving Credit Loans is assigned, (c) the parties to such assignment shall execute and deliver to the Agent, for recording in the Register (as hereinafter defined) an Assignment and Acceptance Agreement in the form of Exhibit H annexed hereto, together with any Notes subject to such assignment, (d) in no event shall any assignment be to any Person controlling, controlled by or under common control with, or which is not otherwise free from influence or control by, Borrower or Guarantor, and (e) such assignee shall acquire an interest in the Loans of not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof (or if less, the remaining Loans of the assignor), unless waived by the Agent, and so long as no Default or Event of Default exists hereunder, Borrower shall have given its prior written consent to such assignment. Upon execution, delivery, acceptance and recording of such Assignment and Acceptance Agreement, (i) the assignee thereunder shall be a party hereto and all other Loan Documents executed by the Lenders and, to the extent provided in such Assignment and Acceptance Agreement, have the rights and obligations of a Lender hereunder, (ii) the assigning Lender shall, upon payment to the Agent of the registration fee referred to in §18.2, be released from its obligations under this Agreement arising after the effective date of such assignment with respect to the assigned portion of its interests, rights and obligations under this Agreement, and (iii) the Agent may unilaterally amend Schedule 1.1 to reflect such assignment. In connection with each assignment, the assignee shall represent and warrant to the Agent, the assignor and each other Lender as to whether such assignee is controlling, controlled by, under common control with or is not otherwise free from influence or control by, Borrower and the Guarantors and whether such assignee is a Defaulting Lender or an Affiliate of a Defaulting Lender. In connection with any assignment of rights and obligations of any Defaulting Lender, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or actions, including funding, with the consent of Borrower and the Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Revolving Credit Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

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§18.2     Register. The Agent shall maintain on behalf of Borrower a copy of each assignment delivered to it and a register or similar list (the “Register”) for the recordation of the names and addresses of the Lenders and the Commitment Percentages of and principal amount of and interest on the Loans owing to the Lenders from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower and the Lenders at any reasonable time and from time to time upon reasonable prior notice. Upon each such recordation, the assigning Lender agrees to pay to the Agent a registration fee in the sum of $4,500.

§18.3     New Notes. Upon its receipt of an Assignment and Acceptance Agreement executed by the parties to such assignment, together with each Note subject to such assignment, the Agent shall record the information contained therein in the Register. Within five (5) Business Days after receipt of notice of such assignment from Agent, Borrower, at its own expense, shall execute and deliver to the Agent, in exchange for each surrendered Note, a new Note (if requested by the subject Lender) to the order of such assignee in an amount equal to the amount assigned to such assignee pursuant to such Assignment and Acceptance Agreement and, if the assigning Lender has retained some portion of its obligations hereunder, a new Note to the order of the assigning Lender in an amount equal to the amount retained by it hereunder. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Acceptance Agreement and shall otherwise be in substantially the form of the assigned Notes. The surrendered Notes shall be canceled and returned to Borrower.

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§18.4     Participations. Each Lender may sell participations to one or more Lenders or other entities in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents; provided that (a) any such sale or participation shall not affect the rights and duties of the selling Lender hereunder, (b) such participation shall not entitle such participant to any rights or privileges under this Agreement or any Loan Documents, including without limitation, rights granted to the Lenders under §4.8, §4.9 and §4.10, (c) such participation shall not entitle the participant to the right to approve waivers, amendments or modifications, (d) such participant shall have no direct rights against Borrower, (e) such participant shall be entitled to the benefits of §4.4(a) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to §18.1, but shall not be entitled to receive any greater payment under §4.4(a) than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, (f) such sale is effected in accordance with all applicable laws, (g) such participant shall not be a Person controlling, controlled by or under common control with, or which is not otherwise free from influence or control by any of Borrower, and (h) unless an Event of Default is in existence, such participant is not a Competitor; provided, however, such Lender may agree with the participant that it will not, without the consent of the participant, agree to (i) increase, or extend the term or extend the time or waive any requirement for the reduction or termination of, such Lender’s Commitment, (ii) extend the date fixed for the payment of principal of or interest on the Loans or portions thereof owing to such Lender (other than pursuant to an extension of the Revolving Credit Maturity Date pursuant to §2.13), (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest is payable thereon or (v) release Borrower (except as otherwise permitted under §5.4, §5.6 or §5.7). Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Credit Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the foregoing provisions are intended to comply with the registration requirements in U.S. Treasury Regulations Section 5f.103-1(c), or any successor provisions thereof, so that any payments made on any Loan or Note are considered to be paid on a debt instrument issued in “registered form” pursuant to such regulations, and all parties hereto shall construe the provisions of this Agreement to ensure that the Loans, Notes or other obligations will be considered to have been so issued and shall have no responsibility for maintaining a Participant Register.

§18.5     Pledge by Lender. Any Lender may at any time pledge all or any portion of its interest and rights under this Agreement (including all or any portion of its Note) to any of the twelve Federal Reserve Banks organized under §4 of the Federal Reserve Act, 12 U.S.C. §341 or any other central banking authority, or to such other Person as the Agent elects and so long as no Default or Event of Default has occurred and is continuing, Borrower may approve/disapprove any such pledge to any such other Person. No such pledge or the enforcement thereof shall release the pledgor Lender from its obligations hereunder or under any of the other Loan Documents.

§18.6     No Assignment by Borrower. Borrower shall not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of each of the Lenders.

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§18.7     Disclosure. Borrower agrees to promptly and reasonably cooperate with any Lender in connection with any proposed assignment or participation of all or any portion of its Commitment. Borrower agrees that, in addition to disclosures made in accordance with standard banking practices, any Lender may disclose information obtained by such Lender pursuant to this Agreement to assignees or participants and potential assignees or participants hereunder, but in all events subject to the terms hereof. Each Lender agrees to hold confidential all non-public information obtained from any Credit Party or any Affiliate of any such Credit Party, and shall not disclose such information to any other Person, it being understood and agreed that, notwithstanding the foregoing, a Lender may make (a) disclosures to its participants (provided such Persons are advised of the provisions of this §18.7, and agree (pursuant to customary click through confidentiality provisions or otherwise) to be bound by the provisions of this §18.7 and to destroy or return all confidential information if it does not become an assignee or participant), (b) disclosures to its directors, officers, employees, Affiliates, accountants, appraisers, legal counsel and other professional advisors of such Lender (provided that such Persons who are not employees of such Lender are advised of the provision of this §18.7 and agree (through customary click through or other customary requirements) to be bound by the provisions hereof, (c), disclosures customarily provided or reasonably required by any potential or actual bona fide assignee, transferee or participant or their respective directors, officers, employees, Affiliates, accountants, appraisers, legal counsel and other professional advisors in connection with a potential or actual assignment or transfer by such Lender of any Loans or any participations therein (provided such Persons are advised of the provisions of this §18.7 and agree (through customary click through or other customary requirements) to be bound by the provisions hereof, (d) disclosures requested by bank regulatory authorities or self-regulatory bodies with jurisdiction over such Lender, or (e) disclosures required by any other governmental authority or representative thereof or pursuant to legal process; provided that, unless specifically prohibited by applicable law or court order, each Lender shall notify Borrower of any request by any governmental authority or representative thereof prior to disclosure (other than any such request in connection with any examination of such Lender by such government authority) for disclosure of any such non-public information prior to disclosure of such information and provide (if permitted under applicable Legal Requirements) Borrower a reasonable opportunity to challenge the disclosure or require that such disclosure be made under seal. In addition, each Lender may make disclosure of such information to any contractual counterparty in swap agreements or such contractual counterparty’s professional advisors (so long as such contractual counterparty or professional advisors agree to be bound by the provisions of this §18.7). Non-public information shall not include any information which is or subsequently becomes publicly available other than as a result of a disclosure of such information by a Lender, or prior to the delivery to such Lender is within the possession of such Lender if such information is not known by such Lender to be subject to another confidentiality agreement with or other obligations of secrecy to Borrower, or is disclosed with the prior approval of Borrower. Nothing herein shall prohibit the disclosure of non-public information to the extent necessary to enforce the Loan Documents.

§18.8     Titled Agents. The Titled Agents shall not have any additional rights or obligations under the Loan Documents, except for those rights, if any, as a Lender.

§18.9     Amendments to Loan Documents. Upon any such assignment or participation, Borrower shall, upon the request of the Agent, enter into such documents as may be reasonably required by the Agent to modify the Loan Documents to reflect such assignment or participation.

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§19.     NOTICES.

(a)            Each notice, demand, election or request provided for or permitted to be given pursuant to this Agreement (hereinafter in this §19 referred to as “Notice”) must be in writing and shall be deemed to have been properly given or served by personal delivery or by telegraph, telecopy, telefax or telex or by sending same by overnight courier or by depositing same in the United States Mail, postpaid and registered or certified, return receipt requested, and addressed to the parties at the address set forth on Schedule 19.

(b)            Each Notice shall be effective upon being personally delivered or upon being sent by overnight courier or upon being deposited in the United States Mail as aforesaid, or if transmitted by telegraph, telecopy, telefax or telex is permitted, upon being sent and confirmation of receipt. The time period in which a response to such Notice must be given or any action taken with respect thereto (if any), however, shall commence to run from the date of receipt if personally delivered or the Business Day after the day sent by overnight courier (sent for next day delivery), or if so deposited in the United States Mail, the earlier of three (3) Business Days following such deposit or the date of receipt as disclosed on the return receipt. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given shall be deemed to be receipt of the Notice sent. By giving at least fifteen (15) days prior Notice thereof, Borrower, a Lender or Agent shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.

(c)            Loan Documents and notices under the Loan Documents may, with Agent’s approval, be transmitted and/or signed by facsimile and by signatures delivered in “PDF” format by electronic mail. The effectiveness of any such documents and signatures shall, subject to Applicable Law, have the same force and effect as an original copy with manual signatures and shall be binding on Borrower, the Guarantors, Agent and Lenders. Agent may also require that any such documents and signature delivered by facsimile or “PDF” format by electronic mail be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver any such manually-signed original shall not affect the effectiveness of any facsimile or “PDF” document or signature.

(d)            Notices and other communications to the Agent and the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to §2 if such Lender has notified the Agent that it is incapable of receiving notices under such section by electronic communication. The Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, e-mail or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

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§20.     RELATIONSHIP. Neither the Agent nor any Lender has any fiduciary relationship with or fiduciary duty to Borrower or their respective Subsidiaries arising out of or in connection with this Agreement or the other Loan Documents or the transactions contemplated hereunder and thereunder, and the relationship between each Lender and Agent, and Borrower is solely that of a lender and borrower, and nothing contained herein or in any of the other Loan Documents shall in any manner be construed as making the parties hereto partners, joint venturers or any other relationship other than lender and borrower.

§21.     GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401. BORROWER, THE GUARANTORS, THE AGENT AND THE LENDERS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK (INCLUDING ANY FEDERAL COURT SITTING THEREIN). BORROWER, THE GUARANTORS, THE AGENT AND THE LENDERS FURTHER ACCEPT, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT AND IRREVOCABLY (i) AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY WITH RESPECT TO THIS AGREEMENT AND (ii) WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION ANY OF THEM MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH A COURT IS AN INCONVENIENT FORUM. IN ADDITION TO THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN, THE AGENT OR ANY LENDER MAY BRING ACTION(S) FOR ENFORCEMENT ON A NONEXCLUSIVE BASIS WHERE ANY COLLATERAL OR ASSETS OF BORROWER OR THE GUARANTORS, EXIST AND BORROWER AND THE GUARANTORS, CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS. BORROWER AND THE GUARANTORS, EXPRESSLY ACKNOWLEDGE AND AGREE THAT THE FOREGOING CHOICE OF NEW YORK LAW WAS A MATERIAL INDUCEMENT TO THE AGENT AND THE LENDERS IN ENTERING INTO THIS AGREEMENT AND IN MAKING THE LOANS HEREUNDER.

§22.     HEADINGS. The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

§23.     COUNTERPARTS. This Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.

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§24.ENTIRE AGREEMENT, ETC. This Agreement and the Loan Documents are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Agreement and the Loan Documents. All prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superseded by this Agreement and the Loan Documents, and no party is relying on any promise, agreement or understanding not set forth in this Agreement and the Loan Documents. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in §27.

§25.WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. EACH OF BORROWER, THE GUARANTORS, THE AGENT AND THE LENDERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, PUNITIVE OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES (OTHER THAN AS ACTUALLY CLAIMED AGAINST THE AGENT OR ANY LENDER BY THIRD PARTIES AS A RESULT OF ANY ACTION OR OMISSION BY A CREDIT PARTY AS TO WHICH THE AGENT OR SUCH LENDER IS ENTITLED TO INDEMNIFICATION HEREUNDER (I.E., DIRECT AND ACTUAL DAMAGES OF AGENT OR ANY SUCH LENDER)). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS §25. EACH PARTY ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS §25 WITH LEGAL COUNSEL AND THAT EACH PARTY AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.

§26.DEALINGS WITH BORROWER. The Agent, the Lenders and their affiliates may accept deposits from, extend credit to, invest in, act as trustee under indentures of, serve as financial advisor of, and generally engage in any kind of banking, trust or other business with Borrower and their respective Subsidiaries or any of their Affiliates regardless of the capacity of the Agent or the Lender hereunder. The Lenders acknowledge that, pursuant to such activities, M&T or its Affiliates may receive information regarding such Persons (including information that may be subject to confidentiality obligations in favor of such Person) and acknowledge that the Agent shall be under no obligation to provide such information to them. Borrower acknowledges, on behalf of itself and its Affiliates that the Agent and each of the Lenders and their respective Affiliates may be providing debt financing, equity capital or other services (including financial advisory services) in which Borrower and its Affiliates may have conflicting interests regarding the transactions described herein and otherwise. Neither the Agent nor any Lender will use confidential information described in §18.7 obtained from Borrower by virtue of the transactions contemplated hereby or its other relationships with Borrower and its Affiliates in connection with the performance by the Agent or such Lender or their respective Affiliates of services for other companies, and neither the Agent nor any Lender nor their Affiliates will furnish any such information to other companies. Borrower, on behalf of itself and its Affiliates, also acknowledges that neither the Agent nor any Lender has any obligation to use in connection with the transactions contemplated hereby, or to furnish to Borrower, confidential information obtained from other companies. Borrower, on behalf of itself and its Affiliates, further acknowledges that one or more of the Agent and Lenders and their respective Affiliates may be a full service securities firm and may from time to time effect transactions, for its own or its Affiliates’ account or the account of customers, and hold positions in loans, securities or options on loans or securities of Borrower and its Affiliates.

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§27.      CONSENTS, AMENDMENTS, WAIVERS, ETC.. Except as otherwise expressly provided in this Agreement, any consent or approval required or permitted by this Agreement may be given, and any material term of this Agreement or of any other instrument related hereto or mentioned herein may be amended, and the performance or observance by Borrower or the Guarantors of any terms of this Agreement or such other instrument or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Required Lenders and, with respect to any amendment of any term of this Agreement or of any other instrument related hereto or mentioned herein, Borrower or the other Credit Parties, as the case may be. Notwithstanding the foregoing, none of the following may occur without the written consent of each Lender adversely affected thereby: (a) a reduction in the rate of interest on the Notes (other than a reduction or waiver of default interest); (b) an increase in the amount of the Commitments of the Lenders (except as provided in §2.12); (c) a forgiveness, reduction or waiver of the principal of any unpaid Loan or any interest thereon or fee payable under the Loan Documents; (d) a change in the amount of any fee payable to a Lender hereunder; (e) the postponement of any date fixed for any payment of principal of or interest on the Loan; (f) an extension of the Revolving Credit Maturity Date (except as provided in §2.13); (g) a change in the manner of distribution of any payments to the Lenders or the Agent; (h) the release of Borrower, other Credit Party, or any Collateral except as otherwise provided in §5.4, §5.6 or §5.7; (i) an amendment of the definition of Required Lenders or of any requirement for consent by all of the Lenders; (j) any modification to require a Lender to fund a pro rata share of a request for an advance of the Loan made by Borrower other than based on its Commitment Percentage; (k) an amendment to this §27; or (l) an amendment of any provision of this Agreement or the Loan Documents which requires the approval of all of the Lenders, the Required Lenders or the Required Lenders to require a lesser number of Lenders to approve such action. The provisions of §14 may not be amended without the written consent of the Agent. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of the Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

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Further notwithstanding anything to the contrary in this §27, if the Agent and Borrower have jointly identified an ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or the other Loan Documents or an inconsistency between provisions of this Agreement and/or the other Loan Documents, the Agent and Borrower shall be permitted to amend, modify or supplement such provision or provisions to cure such ambiguity, omission, mistake, defect or inconsistency so long as to do so would not adversely affect the interest of the Lenders. Any such amendment, modification or supplement shall become effective without any further action or consent of any of other party to this Agreement.

§28.SEVERABILITY. The provisions of this Agreement are severable, and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.

§29.TIME OF THE ESSENCE. Time is of the essence with respect to each and every covenant, agreement and obligation under this Agreement and the other Loan Documents (subject to the provisions hereof/thereof).

§30.NO UNWRITTEN AGREEMENTS. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ANY ADDITIONAL TERMS OF THE AGREEMENT BETWEEN THE PARTIES ARE SET FORTH BELOW.

§31.REPLACEMENT NOTES. Upon receipt of evidence reasonably satisfactory to Borrower of the loss, theft, destruction or mutilation of any Note, and in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to Borrower or, in the case of any such mutilation, upon surrender and cancellation of the applicable Note, Borrower will execute and deliver, in lieu thereof, a replacement Note, identical in form and substance to the applicable Note and dated as of the date of the applicable Note and upon such execution and delivery all references in the Loan Documents to such Note shall be deemed to refer to such replacement Note.

§32.NO THIRD PARTIES BENEFITED. This Agreement and the other Loan Documents are made and entered into for the sole protection and legal benefit of Borrower, the Guarantors, the Lenders, the Agent, the Lender Hedge Provider, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. All conditions to the performance of the obligations of the Agent and the Lenders under this Agreement, including the obligation to make Loans, are imposed solely and exclusively for the benefit of the Agent and the Lenders, and their permitted successors and assigns, and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that the Agent and the Lenders will refuse to make Loans in the absence of strict compliance with any or all thereof and no other Person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any and all of which may be freely waived in whole or in part by the Agent and the Lenders at any time if in their sole discretion they deem it desirable to do so. In particular, the Agent and the Lenders make no representations and assume no obligations as to third parties concerning the quality of the construction by Borrower or any of their Subsidiaries of any development or the absence therefrom of defects.

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§33.PATRIOT ACT. Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Borrower and the Guarantors, which information includes names and addresses and other information that will allow such Lender or the Agent, as applicable, to identify Borrower and the Guarantors in accordance with the Patriot Act.

§34.      [Intentionally Omitted.]

§35.JOINT AND SEVERAL LIABILITY. Each of Borrower and the Guarantors covenants and agrees that each and every covenant and obligation of Borrower and the Guarantors hereunder and under the other Loan Documents shall be the joint and several obligations of Borrower and each Guarantor

§36.      ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF CREDIT PARTIES.

§36.1      Reserved.

§36.2Waiver of Defenses. To the extent permitted by Applicable Law, each of the Credit Parties hereby waives and agrees not to assert or take advantage of any defense based upon:

(a)            Any right to require Agent or the Lenders to proceed against the other Credit Parties or any other Person or to proceed against or exhaust any security held by Agent or the Lenders at any time or to pursue any other remedy in Agent’s or any Lender’s power or under any other agreement before proceeding against a Credit Party hereunder or under any other Loan Document;

(b)            Reserved;

(c)            Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of Agent or any Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person or Persons;

(d)            Any failure on the part of Agent or any Lender to ascertain the extent or nature of any Collateral or any insurance or other rights with respect thereto, or the liability of any party liable under the Loan Documents or the obligations evidenced or secured thereby;

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(e)            Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind (except for such notices as are specifically required to be provided to Credit Parties pursuant to the Loan Documents), or the lack of any thereof, including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of any Credit Party, Agent, any Lender, any endorser or creditor of the Credit Parties or on the part of any other Person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by Agent or any Lender;

(f)            Any defense based upon an election of remedies by Agent or any Lender, including any election to proceed by judicial or nonjudicial foreclosure of any security, whether real property or personal property security, or by deed in lieu thereof, and whether or not every aspect of any foreclosure sale is commercially reasonable, or any election of remedies, including remedies relating to real property or personal property security, which destroys or otherwise impairs the subrogation rights of a Credit party or the rights of a Credit Party to proceed against the other Credit Parties for reimbursement, or both;

(g)            Any right or claim of right to cause a marshaling of the assets of the Credit Parties;

(h)            Reserved;

(i)            Any duty on the part of Agent or any Lender to disclose to any Credit Party any facts Agent or any Lender may now or hereafter know about a Credit Party or the Collateral, regardless of whether Agent or any Lender has reason to believe that any such facts materially increase the risk beyond that which such Credit Party intends to assume or has reason to believe that such facts are unknown to such Credit Party or has a reasonable opportunity to communicate such facts to any Credit Party, it being understood and agreed that each Credit Party is fully responsible for being and keeping informed of the financial condition of the other Credit Parties, of the condition of the Borrowing Base Property or the Collateral and of any and all circumstances bearing on the risk that liability may be incurred by the Credit Parties hereunder and under the other Loan Documents;

(j)            Any inaccuracy of any representation or other provision contained in any Loan Document;

(k)            Subject to compliance with the provisions of this Agreement, any sale or assignment of the Loan Documents, or any interest therein;

(l)            Subject to compliance with the provisions of this Agreement, any sale or assignment by a Credit Party or any other Person of any Collateral, or any portion thereof or interest therein, not consented to by Agent or any Lender;

(m)            Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents;

(n)            Any lack of commercial reasonableness in dealing with the Collateral;

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(o)            Any deficiencies in the Collateral or any deficiency in the ability of Agent or any Lender to collect or to obtain performance from any Persons now or hereafter liable for the payment and performance of any obligation hereby guaranteed;

(p)            Reserved;

(q)            Any modifications of the Loan Documents or any obligation of Credit Parties relating to the Loan by operation of law or by action of any court, whether pursuant to the Bankruptcy Code, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise;

(r)            Any release of a Credit Party or of any other Person from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law, Agent’s or the Lenders’ voluntary act or otherwise;

(s)            Any action, occurrence, event or matter consented to by the under any provision hereof, or otherwise;

(t)            The dissolution or termination of existence of any Credit Party; or

(u)            Either with or without notice to the Credit Parties, any renewal, extension, modification, amendment or another changes in the Obligations, including but not limited to any material alteration of the terms of payment or performance of the Obligations.

§36.3Waiver. Each of the Credit Parties waives, to the fullest extent that each may lawfully so do, the benefit of all appraisement, valuation, extension, homestead, exemption and redemption laws which such Person may claim or seek to take advantage of in order to prevent or hinder the enforcement of any of the Loan Documents or the exercise by Lenders or Agent of any of their respective remedies under the Loan Documents and, to the fullest extent that the Credit Parties may lawfully so do, such Person waives any and all right to have the assets comprised in the security intended to be created by the Security Documents (including, without limitation, those assets owned by the other of the Credit Parties) marshaled upon any foreclosure of the lien created by such Security Documents. Each of the Credit Parties further agree that the Lenders and Agent shall be entitled to exercise their respective rights and remedies under the Loan Documents or at law or in equity in such order as they may elect. Without limiting the foregoing, each of the Credit Parties further agree that upon the occurrence and during the continuance of an Event of Default, the Lenders and Agent may exercise any of such rights and remedies without notice to any of the Credit Parties except as required by law or the Loan Documents and agrees that neither the Lenders nor Agent shall be required to proceed against the other of the Credit Parties or any other Person or to proceed against or to exhaust any other security held by the Lenders or Agent at any time or to pursue any other remedy in Lender’s or Agent’s power or under any of the Loan Documents before proceeding against a Credit Party or its assets under the Loan Documents.

§36.4Subordination. So long as the Loans are outstanding, each of the Credit Parties hereby expressly waive any right of contribution from or indemnity against the other, whether at law or in equity, arising from any payments made by such Person pursuant to the terms of this Agreement or the Loan Documents, and each of the Credit Parties acknowledges that it has no right whatsoever to proceed against the other for reimbursement of any such payments. In connection with the foregoing, each of the Credit Parties expressly waives any and all rights of subrogation to the Lenders or Agent against the other of the Credit Parties, and each of the Credit Parties hereby waives any rights to enforce any remedy which the Lenders or Agent may have against the other of the Credit Parties and any rights to participate in any Collateral or any other assets of the other Credit Parties. In addition to and without in any way limiting the foregoing, each of the Credit Parties hereby subordinates any and all indebtedness it may now or hereafter owe to such other Credit Parties to all indebtedness of the Credit Parties to the Lenders and Agent, and agrees with the Lenders and Agent that no Credit Party shall claim any offset or other reduction of such Credit Party’s obligations hereunder because of any such indebtedness and shall not take any action to obtain any of the Collateral or any other assets of the other Credit Parties.

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§36.5      Waiver of Rights Under Anti-Deficiency Rules. Without limiting any other provision of this §36, each Credit Party understands and acknowledges that, if the Agent forecloses judicially or nonjudicially against any real property Collateral for the Obligations, such foreclosure could impair or destroy any right or ability that such Credit Party may have to seek reimbursement, contribution, or indemnification for any amounts paid by such Credit Party under this Agreement. Each Credit Party further understands and acknowledges that in the absence of this waiver such potential impairment or destruction of such Credit Party’s rights, if any, may entitle such Credit Party to assert a defense to this Agreement based on California Code of Civil Procedure §580d as interpreted in Union Bank v. Gradsky, (1968) 265 CA 2d 40, 71 CR 64, on the grounds, among others, that the Agent or the Lenders should be estopped from pursuing such Credit Party because their election to foreclose may have impaired or destroyed such subrogation, reimbursement, contribution, or indemnification rights of such Credit Party. By execution of this Agreement, each Credit Party intentionally, freely, irrevocably, and unconditionally: (i) waives and relinquishes that defense and agrees that such Credit Party will be liable under this Agreement even though the Agent has foreclosed judicially or nonjudicially against any real or personal property Collateral for the Obligations; (ii) agrees that such Credit Party will not assert that defense in any action or proceeding which the Agent or the Lenders may bring to enforce this Agreement; and (iii) acknowledges and agrees that until the Obligations have been indefeasibly paid in full, the rights and defenses waived by such Credit Party in this Agreement include any right or defense that such Credit Party may have or be entitled to assert based on or arising out of California Civil Code §2848.

§36.6Further Waivers. Each Credit Party intentionally, freely, irrevocably and unconditionally waives and relinquishes all rights which may be available to it under any provision of California law or under any California judicial decision, including, without limitation, Section 580a and 726(b) of the California Code of Civil Procedure, to limit the amount of any deficiency judgment or other judgment which may be obtained against such Credit Party under this Agreement to not more than the amount by which the unpaid Obligations exceeds the fair market value or fair value of any real or personal property securing the Obligations, including, without limitation, all rights to an appraisement of, judicial or other hearing on, or other determination of the value of said property. Each Credit Party acknowledges and agrees that, as a result of the foregoing waiver, the Agent or the Lenders may be entitled to recover from such Credit Party an amount which, when combined with the value of any real or personal property foreclosed upon by the Agent (or the proceeds of the sale of which have been received by the Agent and the Lenders) and any sums collected by the Agent and the Lenders from any other Credit Party or other Persons, might exceed the amount of the Obligations.

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§37.      ACKNOWLEDGMENT OF BENEFITS; EFFECT OF AVOIDANCE PROVISIONS.

(a)            Without limiting any other provision of §36, each Subsidiary Guarantor acknowledges that it has received, or will receive, significant financial and other benefits, either directly or indirectly, from the proceeds of the Loans made by the Lenders to Borrower pursuant to this Agreement; that the benefits received by such Subsidiary Guarantor are reasonably equivalent consideration for such Subsidiary Guarantor’s execution of this Agreement and the other Loan Documents to which it is a party; and that such benefits include, without limitation, the access to capital afforded to Borrower pursuant to this Agreement from which the activities of such Subsidiary Guarantor will be supported, the refinancing of certain existing indebtedness of such Subsidiary Guarantor secured by such Subsidiary Guarantor’s Borrowing Base Property from the proceeds of the Loans, and the ability to refinance that indebtedness at a lower interest rate and otherwise on more favorable terms than would be available to it if the Borrowing Base Property owned by such Subsidiary Guarantor were being financed on a stand-alone basis and not as part of a pool of assets comprising the security for the Obligations. Each Subsidiary Guarantor is executing this Agreement and the other Loan Documents in consideration of those benefits received by it and each Subsidiary Guarantor desires to enter into an allocation and contribution agreement with each other Subsidiary Guarantor as set forth in this §37 and agrees to subordinate and subrogate any rights or claims it may have against other Subsidiary Guarantors as and to the extent set forth in §36.

(b)            In the event any one or more Subsidiary Guarantors (any such Subsidiary Guarantor, a “Funding Party”) is deemed to have paid an amount in excess of the principal amount attributable to it (such principal amount, the “Allocable Principal Balance”) (any deemed payment in excess of the applicable Allocable Principal Balance, a “Contribution”) as a result of (a) such Funding Party’s payment of and/or performance on the Obligations and/or (b) Agent’s and/or any Lender’s realization on the Collateral owned by such Funding Party (whether by foreclosure, deed in lieu of foreclosure, private sale or other means), then after payment in full of the Loans and the satisfaction of all of Subsidiary Guarantors’ other obligations under the Loan Documents, such Funding Party shall be entitled to contribution from each benefited Subsidiary Guarantor for the amount of the Contribution so benefited (any such contribution, a “Reimbursement Contribution”), up to such benefited Subsidiary Guarantor’s then current Allocable Principal Balance. Any Reimbursement Contributions required to be made hereunder shall, subject to §36, be made within ten (10) days after demand therefor.

(c)            If a Subsidiary Guarantor (a “Defaulting Party”) shall have failed to make a Reimbursement Contribution as hereinabove provided, after the later to occur of (a) payment of the Loan in full and the satisfaction of all of all Subsidiary Guarantors’ other obligations to Lenders or (b) the date which is 366 days after the payment in full of the Loans, the Funding Party to whom such Reimbursement Contribution is owed shall be subrogated to the rights of Lenders against such Defaulting Party, including the right to receive a portion of such Defaulting Party’s Collateral in an amount equal to the Reimbursement Contribution payment required hereunder that such Defaulting Party failed to make; provided, however, if Agent returns any payments in connection with a bankruptcy of a Subsidiary Guarantor, all other Subsidiary Guarantors shall jointly and severally pay to Agent and Lenders all such amounts returned, together with interest at the Default Rate accruing from and after the date on which such amounts were returned.

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(d)            In the event that at any time there exists more than one Funding Party with respect to any Contribution (in any such case, the “Applicable Contribution”), then Reimbursement Contributions from Defaulting Party pursuant hereto shall be equitably allocated among such Funding Party. In the event that at any time any Subsidiary Guarantor pays an amount hereunder in excess of the amount calculated pursuant to this paragraph, that Subsidiary Guarantor shall be deemed to be a Funding Party to the extent of such excess and shall be entitled to a Reimbursement Contribution from the other Borrower in accordance with the provisions of this §37.

(e)            It is the intent of each Subsidiary Guarantor, the Agent and the Lenders that in any proceeding under the Bankruptcy Code or any similar debtor relief laws, such Subsidiary Guarantor’s maximum obligation hereunder shall equal, but not exceed, the maximum amount which would not otherwise cause the obligations of such Subsidiary Guarantor hereunder (or any other obligations of such Subsidiary Guarantor to the Agent and the Lenders under the Loan Documents) to be avoidable or unenforceable against such Subsidiary Guarantor in such proceeding as a result of Applicable Law, including, without limitation, (i) Section 548 of the Bankruptcy Code and (ii) any state fraudulent transfer or fraudulent conveyance act or statute applied in such proceeding, whether by virtue of Section 544 of the Bankruptcy Code or otherwise. The Laws under which the possible avoidance or unenforceability of the obligations of such Subsidiary Guarantor hereunder (or any other obligations of such Subsidiary Guarantor to the Agent and the Lenders under the Loan Documents) shall be determined in any such proceeding are referred to herein as “Avoidance Provisions”. Accordingly, to the extent that the obligations of a Subsidiary Guarantor hereunder would otherwise be subject to avoidance under the Avoidance Provisions, the maximum Obligations for which such Subsidiary Guarantor shall be liable hereunder shall be reduced to the greater of (A) the amount which, as of the time any of the Obligations are deemed to have been incurred by such Subsidiary Guarantor under the Avoidance Provisions, would not cause the obligations of such Subsidiary Guarantor hereunder (or any other obligations of such Subsidiary Guarantor to the Agent and the Lenders under the Loan Documents), to be subject to avoidance under the Avoidance Provisions or (B) the amount which, as of the time demand is made hereunder upon such Subsidiary Guarantor for payment on account of the Obligations, would not cause the obligations of such Subsidiary Guarantor hereunder (or any other obligations of such Subsidiary Guarantor to the Agent and the Lenders under the Loan Documents), to be subject to avoidance under the Avoidance Provisions. The provisions of this §37(e) are intended solely to preserve the rights of the Agent and the Lenders hereunder to the maximum extent that would not cause the obligations of any Subsidiary Guarantor hereunder to be subject to avoidance under the Avoidance Provisions, and no Subsidiary Guarantor or any other Person shall have any right or claim under this Section as against the Agent and the Lenders that would not otherwise be available to such Person under the Avoidance Provisions.

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§38.ACKNOWLEDGEMENT AND CONSENT TO BAIL-IN OF EEA FINANCIAL INSTITUTIONS. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(i)            the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(ii)            the effects of any Bail-In Action on any such liability, including, if applicable:

(1)            a reduction in full or in part or cancellation of any such liability;

(2)            a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

§39.Not Co-Borrower. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, the Subsidiary Guarantors are not co-borrowers hereunder (or included in the definition of the term “Borrower”).

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IN WITNESS WHEREOF, each of the undersigned have caused this Agreement to be executed by its duly authorized representatives as of the date first set forth above.

BORROWER:
FOUR SPRINGS CAPITAL TRUST OPERATING PARTNERSHIP, L.P., a Delaware limited partnership
By:	Four Springs Capital Trust, a Maryland real estate investment trust, its general partner
	By:	/s/ John E. Warch
	Name:	John E. Warch
	Title:	Chief Financial Officer

[SIGNATURES CONTINUE ON FOLLOWING PAGES]

[Signature Page to Credit Agreement]

REIT GUARANTOR:
FOUR SPRINGS CAPITAL TRUST, a Maryland real estate investment trust
By:	/s/ John E. Warch
Name:	John E. Warch
Title:	Chief Financial Officer

[Signature Page to Credit Agreement]

SUBSIDIARY GUARANTORS: 

FSC AARONS SNYDER TX, LLC, 

FSC AAP GARNER NC, LLC, 

FSC AZ AURORA IL, LLC, 

FSC BPS LONGMONT CO, LLC, 

FSC BPS AMERICAN FORK UT, LLC, 

FSC BR LISLE IL, LLC, 

FSC DA WAUKESHA WI, LLC, 

FSC DG CHARLOTTE NC, LLC, 

FSC DG EDEN NC, LLC, 

FSC DG ELIZABETH CITY NC, LLC, 

FSC DG FORT BRADEN FL, LLC, 

FSC DG GA, LLC, 

FSC DG PENSACOLA FL, LLC, 

FSC DG SAVANNAH GA, LLC, 

FSC DG WINTER HAVEN FL, LLC, 

FSC FMC-FD MEMPHIS TN, LLC, 

FSC FD MEMPHIS TN, LLC, 

FSC FD GA, LLC, 

FSC FD TYLER TX, LLC, 

FSC FD WICHITA LINCOLN KS, LLC, 

FSC FD WICHITA OLIVER KS, LLC, 

FSC FX ALAMOSA CO, LLC, 

FSC FX JACKSON MI, LLC, 

FSC ORLY AL, LLC, 

FSC SB NORTH SYRACUSE NY, LLC, 

FSC TSC BROOKSVILLE FL, LLC, 

FSC CON STERLING HEIGHTS MI, LLC, 

FSC CON VAN BUREN MI, LLC, 

FSC DMG SEABROOK NH, LLC, 

FSC MCO ST. LOUIS MO, LLC, 

FSC SK CHANDLER AZ, LLC, 

FSC AB LYNDALE MN, LLC, 

FSC AB SOUTH SEVENTH MN, LLC, 

FSC GRM LUFKIN FRANK TX, LLC, 

FSC GRM 2601 NORTH TX, LLC, 

FSC GRM 4101 NORTH TX, LLC, 

FSC GRM LUFKIN MEDFORD TX, LLC, 

FSC GRM 5105 TROUP TYLER TX, LLC, 

FSC GRM JASPER GIBSON TX, LLC, 

FSC ZCW LYNCHBURG VA, LLC, 

FSC ZCW ROANOKE VA, LLC, 

FSC TRA ESCANABA MI, LLC,

[Signature Page to Credit Agreement]

FSC TRA WHITMORE LAKE MI, LLC,  

FSC ZCW ST. CHARLES MO, LLC, 

FSC ZCW ST. PETERS MO, LLC, 

FSC ZCW CHARLOTTE TYVOLA NC, LLC, 

FSC ZCW CHARLOTTE WILKINSON NC, LLC, 

FSC ZCW EDWARDSVILLE IL, LLC, 

FSC BPS Tucson AZ, LLC, 

FSC AAP BLOOMINGTON IL, LLC, and 

FSC CC MENTOR OH, LLC, 

each a Delaware limited liability company

By:  Four Springs Capital Trust Operating Partnership, L.P., a Delaware limited partnership, their manager

By:  Four Springs Capital Trust, a Maryland real estate investment trust, its general partner

By:	/s/ John E. Warch
Name:	John E. Warch
Title:	Chief Financial Officer

FSC BRI BIRMINGHAM AL, LLC, a Delaware limited liability company

By: Four Springs Acquisitions, LLC, a Delaware limited liability company, its manager

By:	/s/ John E. Warch
Name:	John E. Warch
Title:	Chief Financial Officer

Four Springs Acquisitions, LLC, a Delaware limited liability company

By:	/s/ John E. Warch
Name:	John E. Warch
Title:	Chief Financial Officer

[SIGNATURES CONTINUE ON FOLLOWING PAGES]

[Signature Page to Credit Agreement]

AGENT AND LENDERS:
M&T BANK, as Agent and as a Lender
By:	/s/ Colleen Foy
Name:	Colleen Foy
Title:	Vice President

[Signature Page to Credit Agreement]

PROVIDENT BANK
By:	/s/ Paul W. Barrood
Name:	Paul W. Barrood
Title:	Vice President

[Signature Page to Credit Agreement]

OCEANFIRST BANK N.A.
By:	/s/ Brian Dobbins
Name:  Brian Dobbins
Title:   Vice President

[Signature Page to Credit Agreement]

EX-10.18

Exhibit 10.18

THIS AMENDED AND RESTATED GUARANTY AMENDS AND RESTATES IN ITS ENTIRETY THAT CERTAIN GUARANTY DATED AS OF OCTOBER 23, 2018 (THE “EXISTING GUARANTY”), EXECUTED BY FOUR SPRINGS CAPITAL TRUST, A MARYLAND REAL ESTATE INVESTMENT TRUST, AS REIT GUARANTOR, AND THE SUBSIDIARY GUARANTORS NAMED THEREIN FOR THE BENEFIT OF CITIZENS BANK, NATIONAL ASSOCIATION (“EXISTING AGENT”), AND THE LENDERS (AS DEFINED THEREIN). AS FURTHER SET FORTH IN THAT CERTAIN RESIGNATION, ASSIGNMENT OF RIGHTS, AND AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT OF EVEN DATE HEREWITH, EXISTING AGENT HAS RESIGNED IN ITS CAPACITY AS AGENT AND AS A LENDER UNDER THE EXISTING CREDIT AGREEMENT (AS DEFINED THEREIN), AND M&T BANK HAS BEEN APPOINTED AS THE AGENT FOR THE AMENDED AND RESTATED REVOLVING CREDIT FACILITY.

AMENDED AND RESTATED GUARANTY

THIS AMENDED AND RESTATED GUARANTY dated as of October 30, 2020 (this “Guaranty”), executed and delivered by FOUR SPRINGS CAPITAL TRUST, a Maryland real estate investment trust (“REIT Guarantor”), and each of the undersigned Subsidiaries of the Borrower (as hereinafter defined) listed on Schedule I hereof (“Subsidiary Guarantor”; Subsidiary Guarantor, any other Person that may join in this Guaranty from time to time as an “Additional Guarantor” pursuant to Section 22, and REIT Guarantor, each a “Guarantor”, and collectively, the “Guarantors”), in favor of M&T BANK, a New York banking corporation, in its capacity as administrative agent (the “Agent”) for the Lenders under that certain Amended and Restated Credit Agreement dated as of the date hereof (as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms, the “Credit Agreement”), by and among FOUR SPRINGS CAPITAL TRUST OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “Borrower”), the Subsidiary Guarantors and REIT Guarantor, and the financial institutions party thereto and their assignees in accordance therewith (the “Lenders”), and the Agent. Capitalized terms used herein and not otherwise defined herein (including Section 31 hereof) shall have the meanings set forth in the Credit Agreement.

WHEREAS, pursuant to the Credit Agreement, the Lenders have made available to the Borrower certain financial accommodations on the terms and conditions set forth in the Credit Agreement;

WHEREAS, the Borrower and Guarantors, though separate legal entities, are members of an affiliated group of companies that includes the Borrower and Guarantors, are mutually dependent on each other in the conduct of their respective businesses as an integrated operation and have determined it to be in their mutual best interests to obtain financing from the Agent and the Lenders through their collective efforts;

WHEREAS, each Guarantor acknowledges that it will receive direct and indirect benefits from the Agent and the Lenders making such financial accommodations available to the Borrower under the Credit Agreement and, accordingly, each Guarantor is willing to guarantee the Borrower’s obligations to the Agent and the Lenders on the terms and conditions contained herein;

WHEREAS, each Subsidiary Guarantor’s guarantee of the Borrower’s obligations to Agent and the Lenders under this Guaranty shall be secured by a certain Mortgage respecting the Borrowing Base Property of such Subsidiary Guarantor, and each of the Assignments of Leases and Rents from such Subsidiary Guarantor to the Agent, as such Mortgages and Assignment of Leases and Rents may be modified or amended; and

WHEREAS, each Guarantor’s execution and delivery of this Guaranty is one of the conditions precedent to the Agent and the Lenders making, or continuing to make, such financial accommodations to the Borrower;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor agrees as follows:

Section 1. Guaranty. Each Guarantor hereby absolutely and unconditionally guarantees, jointly with the other Guarantors and severally, as a primary obligor and not merely as a surety, the due and punctual payment when due (whether at the stated maturity, by required prepayment, by acceleration or otherwise) and performance of (a) all Obligations and Hedge Obligations of each Borrower under the Credit Agreement and the other Loan Documents, including all such Obligations which shall become due but for the operation of any Debtor Relief Law (for the purposes of this Guaranty, Obligations shall exclude all Excluded Swap Obligations). Each Guarantor further agrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon this Guaranty notwithstanding any extension or renewal of any Obligation.

Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a guaranty of payment, and not of collection, and a debt of each Guarantor for its own account. Accordingly, the Agent and the other Lenders shall not be obligated or required before enforcing this Guaranty against any Guarantor: (a) to pursue any right or remedy the Lenders or the Agent may have against the Borrower, any other Guarantor, any other Credit Party, or any other Person or commence any suit or other proceeding against the Borrower, any other Guarantor or any other Person in any court or other tribunal; (b) to make any claim in a liquidation or bankruptcy of any Borrower, any other Guarantor, any other Credit Party, or any other Person; or (c) to make demand of any Borrower, any other Guarantor or any other Person or to enforce or seek to enforce or realize upon any collateral security held by the Lenders or the Agent which may secure any of the Obligations, and each Guarantor hereby waives the right of such Guarantor to require any holder of the Obligations to take action against any Borrower or any other Guarantor as provided by any legal requirement of any Governmental Authority.

The obligations of each Guarantor under this Guaranty shall be secured by the Mortgages and Assignments of Leases and Rents.

Section 3. Guaranty Absolute. Each Guarantor guarantees, jointly and severally, that the Obligations will be paid strictly in accordance with the terms of the documents evidencing the same, regardless of any legal requirement now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Agent or the Lenders with respect thereto. Upon the failure by the Borrower to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor hereby promises to and will forthwith pay, or cause to be paid, to the Agent, for the benefit of the Lenders, or such other Person as designated thereby in cash the amount of such unpaid Obligations. The liability of each Guarantor under this Guaranty shall be absolute and unconditional in accordance with its terms and shall remain in full force and effect without regard to, and shall not be released, suspended, discharged, terminated or otherwise affected by, any circumstance or occurrence whatsoever (other than the full and final payment and performance in full of the Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement)), including, without limitation, the following (whether or not any Guarantor consents thereto or has notice thereof):

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(1)            (i) any change in the amount, interest rate or due date or other term of any of the Obligations; (ii) any change in the time, place or manner of payment of all or any portion of the Obligations; (iii) any amendment or waiver of, or consent to the departure from or other indulgence with respect to, the Credit Agreement, any other Loan Document, or any other document or instrument evidencing or relating to any Obligations; or (iv) any waiver, renewal, extension, addition, or supplement to, or deletion from, or any other action or inaction under or in respect of, the Credit Agreement, any of the other Loan Documents, or any other documents, instruments or agreements relating to the Obligations or any other instrument or agreement referred to therein or evidencing any Obligations or any assignment or transfer of the foregoing;

(2)            any lack of validity or enforceability of the Credit Agreement, any of the other Loan Documents, or any other document, instrument or agreement referred to therein or evidencing any Obligations or any assignment or transfer of any of the foregoing;

(3)            any furnishing to the Agent or the Lenders of any security for the Obligations, or any sale, exchange, release or surrender of, or realization on, any collateral security for the Obligations other than the irrevocable payment in full of the Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement);

(4)            any settlement or compromise of any of the Obligations, any security therefor, or any liability of any other party with respect to the Obligations, or any subordination of the payment of the Obligations to the payment of any other liability of any Borrower;

(5)            any bankruptcy, insolvency, reorganization, composition, adjustment, dissolution, liquidation or other like proceeding relating to any other Guarantor, any Borrower, or any other Person, or any action taken with respect to this Guaranty by any trustee or receiver, or by any court, in any such proceeding;

(6)            any nonperfection of any security interest or other Lien on any of the collateral securing any of the Obligations;

(7)            any failure of the Agent or any Lender to assert any claim or demand or to enforce or exercise any right or remedy against any Credit Party (whether in an Insolvency Proceeding or otherwise) under the provisions of the Credit Agreement, any other Loan Document or otherwise or against any other party with respect to any of the Obligations;

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(8)            any act or failure to act by any Borrower or any other Person which may adversely affect such Guarantor’s subrogation rights, if any, against any Borrower or another Guarantor to recover payments made under this Guaranty;

(9)            any application of sums paid by any Borrower or any other Person with respect to the liabilities of any Borrower to the Agent or the Lenders, regardless of what liabilities of any Borrower remain unpaid;

(10)          any defect, limitation or insufficiency in the borrowing powers of any Borrower or in the exercise thereof;

(11)          any change in the corporate existence, structure or ownership of the Borrower or any other Credit Party;

(12)          any statement, representation or warranty made or deemed made by or on behalf of any Borrower, any Guarantor or any other Credit Party under any Loan Document or any amendment hereto or thereto, proves to have been incorrect or misleading in any respect; or

(13)          any other circumstance which might otherwise constitute a defense available to, or a discharge of, any Guarantor hereunder (other than the irrevocable payment in full of the Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement)).

The value of the consideration received and to be received by each Guarantor is reasonably worth at least as much as the liability and obligation of each Guarantor incurred or arising under the Loan Documents. Each Guarantor has determined that such liability and obligation may reasonably be expected to substantially benefit each Guarantor directly or indirectly. Each Guarantor has had full and complete access to the underlying papers relating to the Loan and all of the Loan Documents, has reviewed them and is fully aware of the meaning and effect of their contents. Each Guarantor is fully informed of all circumstances which bear upon the risks of executing this Guaranty and which a diligent inquiry would reveal. Each Guarantor has adequate means to obtain from each other Credit Party on a continuing basis information concerning such other Credit Party’s financial condition, and is not depending on the Agent or the Lenders to provide such information, now or in the future. Each Guarantor agrees that neither the Agent nor any of the Lenders shall have any obligation to advise or notify each Guarantor or to provide each Guarantor with any data or information regarding any other Credit Party.

Section 4. Action with Respect to Obligations. The Lenders and the Agent may in accordance with the Credit Agreement, at any time and from time to time, without the consent of, or notice to, any Guarantor, and without discharging any Guarantor from its obligations hereunder take any and all actions described in Section 3 and may otherwise: (a) amend, modify, alter or supplement the terms of any of the Obligations, including, but not limited to, extending or shortening the time of payment of any of the Obligations or the interest rate that may accrue on any of the Obligations; (b) amend, modify, alter or supplement the Credit Agreement or any other Loan Document; (c) sell, exchange, release or otherwise deal with all, or any part, of any collateral securing any of the Obligations; (d) release any Person liable in any manner for the payment or collection of the Obligations; (e) exercise, or refrain from exercising, any remedy, power or privilege against any Credit Party or any other Person (including, without limitation, any other Guarantor), whether under the Loan Documents or at law, equity or otherwise; and (f) apply any sum, by whomsoever paid or however realized, to the Obligations in such order as the Lenders or the Agent shall elect in accordance with the Credit Agreement.

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Section 5. Representations and Warranties. Each Guarantor hereby makes to the Agent and the Lenders all of the representations and warranties made by the Borrower with respect to or in any way relating to such Guarantor in the Credit Agreement and the other Loan Documents, as if the same were set forth herein in full.

Section 6. Covenants. Subject to the terms of the Credit Agreement, each Guarantor will comply with all covenants which the Borrower are to cause such Guarantor to comply with under the terms of the Credit Agreement or any other Loan Documents.

Section 7. Waiver. Each Guarantor, to the fullest extent permitted by applicable law, hereby waives notice of acceptance hereof or any presentment, demand, protest or notice of any kind, and any other act or thing, or omission or delay to do any other act or thing, which in any manner or to any extent might vary the risk of such Guarantor or which otherwise might operate to discharge such Guarantor from its obligations hereunder.

Section 8. Inability to Accelerate Loan. If the Agent and/or the Lenders are prevented from demanding or accelerating payment thereof by reason of any automatic stay or otherwise, the Agent and/or the Lenders shall be entitled to receive from the Guarantors, upon demand therefor, the sums which otherwise would have been due had such demand or acceleration occurred.

Section 9. Reinstatement of Obligations. Each Guarantor agrees that this Guaranty and each Guarantor’s obligations hereunder shall continue to be effective or be reinstated, as the case may be, with respect to any Obligations if at any time any payment of the principal of or interest under the Loans, the Note or any other amount payable by any Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of such Borrower or otherwise, and in any such case, each Guarantor’s obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

Section 10. Subrogation. Until all of the Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement) shall have been indefeasibly paid in full, any right of subrogation that any Guarantor may have shall be subordinate to the rights of Agent and the other Lenders and each Guarantor hereby waives any right to enforce any remedy which the Agent and/or the Lenders now have or may hereafter have against any Borrower or any other Credit Party, and each Guarantor hereby waives any benefit of, and any right to participate in, any security or collateral given to the Agent and the Lenders to secure payment or performance of any of the Obligations.

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Section 11. Payments Free and Clear. All sums payable by any Guarantor hereunder shall be made free and clear of and without deduction for any tax or other charge; provided that if any Guarantor shall be required by applicable law to deduct any taxes or other charge from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), the Agent or any Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made; (ii) such Guarantor shall make such deductions; and (iii) such Guarantor shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. Each applicable Guarantor shall promptly provide the Agent with an original receipt or certified copy issued by the relevant authority evidencing the payment of any such amount required to be deducted or withheld.

Section 12. Set-off. Each Guarantor hereby grants to Agent, on behalf of the Lenders, a security interest in and lien on all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by Agent to or for the credit or the account of any Guarantor. The Agent and each Lender is hereby authorized at any time and from time to time during the continuance of an Event of Default, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final but excluding any funds held by any Borrower on behalf of tenants or other third parties at any time held and other obligations at any time owing by such Person to or for the credit or the account of any Guarantor) against any of and all the obligations of such Guarantor now or hereafter existing under this Guaranty held by such Agent or Lender then due and payable. Each Guarantor agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation in a Loan or Note, whether or not acquired pursuant to the applicable provisions of the Credit Agreement, may exercise the aforesaid rights of setoff or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of such Guarantor in the amount of such participation.

Section 13. Subordination. Each Guarantor hereby expressly covenants and agrees for the benefit of the Agent and the Lenders that all obligations and liabilities of any Borrower or any other Guarantor to such Guarantor of whatever description, including without limitation, all intercompany receivables of such Guarantor from any Borrower or any other Guarantor (collectively, the “Junior Claims”) shall be subordinate and junior in right of payment to all Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement); provided, however, that payment thereof may be made so long as no Event of Default shall have occurred and be continuing. If an Event of Default shall have occurred and be continuing, then no Guarantor shall accept any direct or indirect payment (in cash, property, securities by setoff or otherwise) from any Borrower, any other Guarantor, or any other Person on account of or in any manner in respect of any Junior Claim until all of the Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement) have been indefeasibly paid in full. If any Guarantor shall receive any direct or indirect payment (in cash, property, securities by setoff or otherwise) with respect to a Junior Claim at any time when an Event of Default shall have occurred and be continuing, such amount shall be held in trust for the benefit of the Agent and the Lenders and shall forthwith be paid to the Agent to be credited against the payment of the Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement.

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Section 14. Acknowledgement of Benefits; Contribution; Avoidance Provisions.

(a)            Acknowledgement of Benefits. Each Guarantor acknowledges that it has received, or will receive, significant financial and other benefits, either directly or indirectly, from the proceeds of the Loans made by the Lenders to the Borrower pursuant to the Credit Agreement; that the benefits received by each Guarantor are reasonably equivalent consideration for such Guarantor's execution of this Guaranty; and that such benefits include, without limitation, the access to capital afforded to the Borrower pursuant to the Credit Agreement from which the activities of such Guarantor will be supported, as applicable. Each Guarantor is executing this Guaranty and the other Loan Documents in consideration of those benefits received by it. This Guaranty is independent of (and shall not be limited by) any other guaranty now existing or hereafter given. Further, each Guarantor's liability under this Guaranty is in addition to any and all other liability such Guarantor may have in any other capacity, including without limitation, any other credit facilities or guaranties between and among Agent, Lenders and such Guarantor in connection with the Borrower.

(b)            Contribution. Each Guarantor hereby agrees that, in connection with payments made hereunder, such Guarantor shall have a right of contribution from each other guarantor of the Obligations in accordance with applicable law. Such contribution rights shall be subordinate and subject in right of payment to the Obligations until such time as the Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement) have been indefeasibly and irrevocably paid in full, and none of the Guarantors shall exercise any such contribution rights until the Obligations (other than contingent indemnification obligations for which no claim shall have been made under the applicable provisions of the Credit Agreement) have been indefeasibly and irrevocably paid in full.

(c)            Avoidance Provisions. It is the intent of each Guarantor, the Agent and the Lenders that in any Insolvency Proceeding with respect to any Credit Party, such Guarantor’s maximum obligation hereunder shall equal, but not exceed, the maximum amount which would not otherwise cause the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the Lenders) to be avoidable or unenforceable against such Guarantor in such Insolvency Proceeding as a result of applicable law, including without limitation, (a) Section 548 of the Bankruptcy Code of 1978, as amended (the “Bankruptcy Code”) and (b) any state fraudulent transfer or fraudulent conveyance act or statute applied in such Insolvency Proceeding, whether by virtue of Section 544 of the Bankruptcy Code or otherwise. The applicable laws under which the possible avoidance or unenforceability of the obligations of such Guarantor hereunder (or any other obligations of such Guarantor to the Agent and the Lenders) shall be determined in any such Insolvency Proceeding are referred to as the “Avoidance Provisions.” Accordingly, to the extent that the obligations of any Guarantor hereunder would otherwise be subject to avoidance under the Avoidance Provisions, the maximum Obligations for which such Guarantor shall be liable hereunder shall be reduced to that amount which, as of the time any of the Obligations are deemed to have been incurred under the Avoidance Provisions, would not cause the obligations of any Guarantor  hereunder (or any other obligations of such Guarantor to the Agent and the Lenders), to be subject to avoidance under the Avoidance Provisions. This Section is intended solely to preserve the rights of the Agent and the Lenders hereunder to the maximum extent that would not cause the obligations of any Guarantor hereunder to be subject to avoidance under the Avoidance Provisions, and no Guarantor nor any other Person shall have any right or claim under this Section as against the Agent and the Lenders that would not otherwise be available to such Person under the Avoidance Provisions.

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Section 15. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of the financial condition of the Borrower, the other Guarantors, the other Credit Parties, and of all other circumstances bearing upon the risk of nonpayment of any of the Obligations and the nature, scope and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of the Agent or any Lender shall have any duty whatsoever to advise any Guarantor of information regarding such circumstances or risks.

Section 16. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401.

Section 17. Jurisdiction; Venue; JURY WAIVER.

(a)            EACH PARTY HERETO HEREBY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK (INCLUDING ANY FEDERAL COURT SITTING THEREIN). EACH PARTY HERETO FURTHER ACCEPTS, GENERALLY AND UNCONDITIONALLY, THE NON EXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT AND IRREVOCABLY (i) AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY WITH RESPECT TO THIS GUARANTY AND (ii) WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION ANY OF THEM MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH A COURT IS AN INCONVENIENT FORUM. IN ADDITION TO THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN, THE AGENT OR ANY LENDER MAY BRING ACTION(S) FOR ENFORCEMENT ON A NONEXCLUSIVE BASIS WHERE ANY COLLATERAL OR ASSETS OF ANY GUARANTOR EXIST AND EACH OF THE GUARANTORS CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS. EACH GUARANTOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE FOREGOING CHOICE OF NEW YORK LAW WAS A MATERIAL INDUCEMENT TO THE AGENT AND THE LENDERS IN ENTERING INTO THE CREDIT AGREEMENT AND IN MAKING THE LOANS THEREUNDER. NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT

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AGAINST ANY GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. EACH GUARANTOR FURTHER AGREES THAT SERVICE OF PROCESS IN ANY SUCH SUIT MAY BE MADE UPON IT BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 26 HEREOF.

(b)            WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY, THE CREDIT AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. EACH PARTY HERETO ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS SECTION WITH LEGAL COUNSEL AND THAT EACH PARTY AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.

Section 18. Loan Accounts. The Agent may maintain books and accounts setting forth the amounts of principal, interest and other sums paid and payable with respect to the Obligations, and in the case of any dispute relating to any of the outstanding amount, payment or receipt of Obligation or otherwise, the entries in such account shall be binding upon each Guarantor as to the outstanding amount of such Obligations and the amounts paid and payable with respect thereto absent manifest error. The failure of the Agent to maintain such books and accounts shall not in any way relieve or discharge any Guarantor of any of its obligations hereunder.

Section 19. Waiver of Remedies; No Marshaling. No delay or failure on the part of the Agent or the Lenders in the exercise of any right or remedy it may have against any Guarantor hereunder or otherwise shall operate as a waiver thereof, and no single or partial exercise by the Agent or the Lenders of any such right or remedy shall preclude other or further exercise thereof or the exercise of any other such right or remedy. The Agent has no obligation to marshal any assets in favor of any Guarantor, or against or in payment of (a) any of the Obligations, or (b) any other obligation owed to the Agent or Lenders by any Guarantor, any Borrower or any other Person.

Section 20. Successors and Assigns. Each reference herein to the Agent or the Lenders shall be deemed to include such Person’s respective successors and assigns (including, but not limited to, any holder of the Obligations) in whose favor the provisions of this Guaranty also shall inure, and each reference herein to any Guarantor shall be deemed to include such Guarantor’s successors and assigns, upon whom this Guaranty also shall be binding. The Lenders and the Agent may, in accordance with the applicable provisions of the Credit Agreement, assign, transfer or sell any portion of the Obligations, or grant or sell participation in the Loan, to any Person or entity without the consent of, or notice to, any Guarantor and without releasing, discharging or modifying such Guarantor’s obligations hereunder. Each Guarantor hereby consents to the delivery by the Agent or any Lender to any assignee, transferee or participant of any financial or other information regarding any Borrower or any Guarantor or their Subsidiaries. No Guarantor may assign or transfer its obligations hereunder to any Person.

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Section 21. Amendments. No amendment, modification, termination, or waiver of any provision of this Guaranty, and no consent to any departure by any Guarantor from the terms and conditions hereof, shall in any event be effective unless the same shall be in writing and signed by Agent and each Guarantor. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. This Guaranty shall be construed as a separate agreement with respect to each Guarantor and may be amended, modified, supplemented, waived or released with respect to any Guarantor without the approval of any other Guarantor and without affecting the obligations of any other Guarantor hereunder.

Section 22. Additional Guarantors. The initial Guarantors hereunder shall be each of the Subsidiaries of Borrower that are signatories hereto, which are listed on Schedule I attached hereto. From time to time after the date hereof, additional Subsidiaries of the Borrower may become parties hereto as additional Guarantors (each an “Additional Guarantor”) by executing a Guaranty Joinder Agreement in the form of Exhibit A attached hereto. Upon delivery of any such Guaranty Joinder Agreement to Agent, notice of which is hereby waived by the Guarantors, each such Additional Guarantor shall be a Guarantor hereunder and shall be a party hereto as if such Additional Guarantor were an original signatory hereof. Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder, or by any election by Agent not to cause any Subsidiary of Borrower to become an Additional Guarantor hereunder.

Section 23. Release of Guarantors. Each applicable Guarantor shall be released from its obligations under this Guaranty as and when provided in Section 5.6 of the Credit Agreement. Upon Borrower’s request, Agent shall confirm the release of any applicable Guarantor by the execution of a Release of Guarantor in the form of Exhibit B attached hereto (the “Release of Guarantor”). Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the release of any other Guarantor hereunder.

Section 24. Payments. All payments made by any Guarantor pursuant to this Guaranty shall be made in Dollars, in immediately available funds to the Agent at the place and time provided for in the Credit Agreement on the date that is one (1) Business Day after written demand therefor to such Guarantor by the Agent.

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Section 25. Indemnification and Expenses.

(a)            Without limiting or duplicating any of their indemnification obligations under the Credit Agreement or the other Loan Documents, each of the Guarantors, jointly and severally, shall indemnify the Agent (and any sub-agent thereof), each Lender, their Affiliates, and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of each of the foregoing (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, causes of action, damages, liabilities, settlement payments, costs, and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Guarantor or any other Credit Party to the extent arising out of, in connection with, or as a result of, (i) the execution or delivery of this Guaranty, the Credit Agreement, any other Loan Document or any other agreement or instrument contemplated hereby or thereby, the performance by the parties hereto or thereto of their respective obligations hereunder or thereunder, or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Agent (and any sub-agent thereof) and their affiliate Indemnitees only, the administration of this Guaranty, the Credit Agreement and the other Loan Documents, or (ii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Guarantor or any other Credit Party or any of the Credit Parties’ directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, and regardless of whether any Indemnitee is a party thereto, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. In litigation, or the preparation therefor, the Lenders and the Agent shall be entitled to select a single law firm as their own counsel and, in addition to the foregoing indemnity, Borrower and the Guarantors agree to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of Borrower or any Guarantor under this Section 25 are unenforceable for any reason, Borrower and each Guarantor hereby agree to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The provisions of this Section 25 shall survive the repayment of the Loans and the termination of the obligations of the Lenders hereunder for a period of one year.

(b)            Subject to, and as limited by, Section 15 of Credit Agreement, the Guarantors, jointly and severally, agree to pay to the Agent upon demand the amount of any and all reasonable, out-of-pocket costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that the Agent may incur in connection with the administration of this Guaranty, including, without limitation, any such costs and expenses incurred in the preservation, protection, or enforcement of any rights of the Agent or any Lender in any case commenced by or against any Guarantor under the Bankruptcy Code (Title 11, United States Code) or any similar or successor statute.

(c)            To the fullest extent permitted by applicable Law, each party hereby waives any right it may have to claim or recover in any such litigation any special, indirect or consequential damages and to the extent permitted by applicable law, punitive or any damages other than, or in addition to, actual damages (other than as actually claimed against the Agent or any Lender by third parties as a result of any action or omission by a Credit Party as to which the Agent or such Lender is entitled to indemnification hereunder (i.e., direct and actual damages of agent or any such Lender)). No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Guaranty, the Credit Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

-11-

(d)            The agreements in this Section 25 shall survive the resignation of the Agent, the assignment of any Commitment or Loan by any Lender, the replacement of any Lender, the termination of the aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

Section 26. Notices. All notices, requests and other communications hereunder shall be in writing and shall be given as provided in the Credit Agreement and, with respect to each Guarantor, at the following address:

c/o Four Springs Capital Trust

1901 Main Street 

Lake Como, New Jersey 07719

Attn: John Warch 

Email: [***]

with a copy to: 

Duane Morris 1540 Broadway 

New York, New York 10036

Attn: Larry Hughes, Esq. 

Email: [***]

Section 27. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE GUARANTORS HEREUNDER SHALL BE JOINT AND SEVERAL, AND ACCORDINGLY, EACH GUARANTOR CONFIRMS THAT IT IS LIABLE FOR THE FULL AMOUNT OF THE “OBLIGATIONS” AND ALL OF THE OTHER OBLIGATIONS AND LIABILITIES OF EACH OF THE OTHER GUARANTORS HEREUNDER.

Section 28. Severability. In case any provision of this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

-12-

Section 29. Headings. Section headings used in this Guaranty are for convenience only and shall not affect the construction of this Guaranty.

Section 30. Keepwell. Each Qualified ECP Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each Specified Credit Party to honor all of such Specified Credit Party’s obligations under this Guaranty and the other Loan Documents in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under this Section 30 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 30 or otherwise under this Guaranty voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Guarantor under this Section 30 shall remain in full force and effect until the Obligations have been indefeasibly paid and performed in full. Each Qualified ECP Guarantor intends that this Section 30 constitute, and this Section 30 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each Specified Credit Party for all purposes of Section la(18)(A)(v)(II) of the Commodity Exchange Act.

Section 31. Definitions.

(a) For the purposes of this Guaranty:

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Excluded Swap Obligation” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

“Insolvency Proceeding” means, with respect to any Person, any of the following: (i) a voluntary or involuntary case concerning such Person shall be commenced under the Bankruptcy Code or any other applicable bankruptcy laws; (ii) a custodian (as defined in the Bankruptcy Code or any other applicable bankruptcy laws) is appointed for, or takes charge of, all or any substantial part of the property of such Person; (iii) any other proceeding under any applicable law, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding-up or composition for adjustment of debts, whether now or hereafter in effect, is commenced relating to such Person; (iv) such Person is adjudicated insolvent or bankrupt; (v) any order of relief or other order approving any such case or proceeding is entered by a court of competent jurisdiction; (vi) such Person makes a general assignment for the benefit of creditors; (vii) such Person shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; (viii) such Person shall call a meeting of its creditors with a view to arranging a composition or adjustment of its debts; (ix) such Person shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or (x) any corporate action shall be taken by such Person for the purpose of effecting any of the foregoing.

-13-

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Credit Party that has total assets exceeding $10,000,000 or such other Credit Party as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another Person to qualify as an “eligible contract participant” by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

“Specified Credit Party” means each Credit Party that is a corporation, partnership, proprietorship, organization, trust or other entity that would not be an “eligible contract participant” under the Commodity Exchange Act at such time but for the effect of Section 30.

“Swap Obligation” means, with respect to any Credit Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

(b)            Terms not otherwise defined herein are used herein with the respective meanings given them in the Credit Agreement.

Section 32. Amending and Restating. This Guaranty amends and restates the Existing Guaranty in its entirety. The obligations of the Guarantors under the Existing Guaranty shall continue in full force and effect as obligations under this Guaranty, and are not paid, satisfied, released, discharged or novated.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this Guaranty as of the date and year first written above.

REIT GUARANTOR:
FOUR SPRINGS CAPITAL TRUST, a Maryland real estate investment trust
By:	/s/ John E. Warch
Name: John E. Warch
Title: Chief Financial Officer

[Signature Page to Amended and Restated Guaranty]

-15-

SUBSIDIARY GUARANTORS:

FSC AARONS SNYDER TX, LLC,
FSC AAP GARNER NC, LLC,
FSC AZ AURORA IL, LLC,

FSC BPS LONGMONT CO, LLC,

FSC BPS AMERICAN FORK UT, LLC,
FSC BR LISLE IL, LLC,

FSC DAW AUKESHA WI, LLC,
FSC DG CHARLOTTE NC, LLC,
FSC DG EDEN NC, LLC,

FSC DG ELIZABETH CITY NC, LLC,
FSC DG FORT BRADEN FL, LLC,
FSC DG GA, LLC,

FSC DG PENSACOLA FL, LLC,
FSC DG SAVANNAH GA, LLC,
FSC DG WINTER HAVEN FL, LLC,
FSC FMC-FD MEMPHIS TN, LLC,
FSC FD MEMPHIS TN, LLC,

FSC FD GA, LLC,

FSC FD TYLER TX, LLC,

FSC FD WICHITA LINCOLN KS, LLC,
FSC FD WICHITA OLIVER KS, LLC,
FSC FX ALAMOSA CO, LLC,

FSC FX JACKSON MI, LLC,
FSC ORLY AL, LLC,

FSC SB NORTH SYRACUSE NY, LLC,
FSC TSC BROOKSVILLE FL, LLC,

FSC CON STERLING HEIGHTS MI, LLC,
FSC CON VAN BUREN MI, LLC,

FSC DMG SEABROOK NH, LLC,
FSC MCO ST. LOUIS MO, LLC,
FSC SK CHANDLER AZ, LLC,
FSC AB LYNDALE MN, LLC,

FSC AB SOUTH SEVENTH MN, LLC,
FSC GRM LUFKIN FRANK TX, LLC,
FSC GRM 2601 NORTH TX, LLC,
FSC GRM 4101 NORTH TX, LLC,

FSC GRM LUFKIN MEDFORD TX, LLC,
FSC GRM 5105 TROUP TYLER TX, LLC,
FSC GRM JASPER GIBSON TX, LLC,
FSC ZCW LYNCHBURG VA, LLC,

FSC ZCW ROANOKE VA, LLC,
FSC TRA ESCANABA MI, LLC,

FSC TRA WHITMORE LAKE MI, LLC,
FSC ZCW ST. CHARLES MO, LLC,

[Signature Page to Amended and Restated Guaranty]

FSC ZCW ST. PETERS MO, LLC,

FSC ZCW CHARLOTTE TYVOLA NC, LLC,
FSC ZCW CHARLOTTE WILKINSON NC, LLC,
FSC ZCW EDWARDS VILLE IL, LLC,

FSC BPS TUCSON AZ, LLC,

FSC AAP BLOOMINGTON IL, LLC, and
FSC CC MENTOR OH, LLC,

each a Delaware limited liability company

By: Four Springs Capital Trust Operating Partnership, LP., a Delaware limited partnership, their manager

By: Four Springs Capital Trust, a Maryland real estate investment trust, its general partner

By:	/s/ John E. Warch
Name: John E. Warch
Title: Chief Financial Officer

FSC BRI BIRMINGHAM AL, LLC,

a Delaware limited liability company

By: Four Springs Acquisitions, LLC, a Delaware limited liability company, its manager

By:	/s/ John E. Warch
Name: John E. Warch
Title: Chief Financial Officer

FOUR SPRINGS ACQUISITIONS, LLC, a Delaware limited liability company
By:	/s/ John E. Warch
Name: John E. Warch
Title: Chief Financial Officer

[Signature Page to Amended and Restated Guaranty]

SCHEDULE I

INITIAL SUBSIDIARY GUARANTORS

1.	FSC Aarons Snyder TX, LLC
2.	FSC AAP Garner NC, LLC
3.	FSC AZ Aurora IL, LLC
4.	FSC BPS Longmont CO, LLC
5.	FSC BPS American Fork UT, LLC
6.	FSC BR Lisle IL, LLC
7.	FSC DA Waukesha WI, LLC
8.	FSC DG Charlotte NC, LLC
9.	FSC DG Eden NC, LLC
10.	FSC DG Elizabeth City NC, LLC
11.	FSC DG Fort Braden FL, LLC
12.	FSC DG GA, LLC
13.	FSC DG Pensacola FL, LLC
14.	FSC DG Savannah GA, LLC
15.	FSC DG Winter Haven FL, LLC
16.	FSC FMC-FD Memphis TN, LLC
17.	FSC FD Memphis TN, LLC
18.	FSC FD GA, LLC
19.	FSC FD Tyler TX, LLC
20.	FSC FD Wichita Lincoln KS, LLC
21.	FSC FD Wichita Oliver KS, LLC
22.	FSC FX Alamosa CO, LLC
23.	FSC FX Jackson MI, LLC
24.	FSC ORLY AL, LLC
25.	FSC SB North Syracuse NY, LLC

Schedule I

26.	FSC TSC Brooksville FL, LLC
27.	FSC CON Sterling Heights MI, LLC
28.	FSC CON Van Buren MI, LLC
29.	FSC DMG Seabrook NH, LLC
30.	FSC MCO St. Louis MO, LLC
31.	FSC SK Chandler AZ, LLC
32.	FSC AB Lyndale MN, LLC
33.	FSC AB South Seventh MN, LLC
34.	FSC GRM Lufkin Frank TX, LLC
35.	FSC GRM 2601 North TX, LLC
36.	FSC GRM 4101 North TX, LLC
37.	FSC GRM Lufkin Medford TX, LLC
38.	FSC GRM 5105 Troup Tyler TX, LLC
39.	FSC GRM Jasper Gibson TX, LLC
40.	FSC ZCW Lynchburg VA, LLC
41.	FSC ZCW Roanoke VA, LLC
42.	FSC TRA Escanaba MI, LLC
43.	FSC TRA Whitmore Lake MI, LLC
44.	FSC ZCW St. Charles MO, LLC
45.	FSC ZCW St. Peters MO, LLC
46.	FSC ZCW Charlotte Tyvola NC, LLC
47.	FSC ZCW Charlotte Wilkinson NC, LLC
48.	FSC ZCW Edwardsville IL, LLC
49.	FSC BRI Birmingham AL, LLC
50.	FSC BPS Tucson AZ, LLC,
51.	FSC AAP Bloomington IL, LLC
52.	FSC CC Mentor OH, LLC
53.	Four Springs Acquisitions, LLC

Schedule I

EXHIBIT A

FORM OF GUARANTY JOINDER AGREEMENT

Date:_____________, _____

To: M&T Bank, as Agent Ladies and Gentlemen:

This Guaranty Joinder Agreement is made and delivered pursuant to Section 22 of that certain Amended and Restated Guaranty, dated as of October 30, 2020 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Guaranty”), by FOUR SPRINGS CAPITAL TRUST, a Maryland real estate investment trust (“REIT Guarantor”), and certain subsidiaries of Borrower (each a “Subsidiary Guarantor” and, together with REIT Guarantor, individually and collectively, the “Guarantors”) party thereto, in favor of M&T Bank, a New York banking corporation, as Agent. All capitalized terms used in this Guaranty Joinder Agreement and not otherwise defined herein shall have the meanings assigned to them in the Guaranty.

Each of ______________([the][each, an] “Additional Guarantor”) hereby confirms, represents and warrants to the Agent and the Lenders that the Additional Guarantor is a Subsidiary of Borrower.

By executing and delivering this Guaranty Joinder Agreement, [the][each] Additional Guarantor, as provided in Section 22 of the Guaranty, hereby becomes a party to the Guaranty as a Guarantor thereunder with the same force and effect as if originally named therein as a Guarantor and, without limiting the generality of the foregoing, hereby expressly assumes all obligations and liabilities of a Guarantor thereunder.

Effective as of the date of this Guaranty Joinder Agreement, [the][each] Additional Guarantor confirms its acceptance of, and consents to, all representations and warranties, covenants, and other terms and provisions of the Guaranty. [The][Each] Additional Guarantor hereby represents and warrants that each of the representations and warranties contained in Section 5 of the Guaranty is true and correct on and as the date hereof as if made on and as of such date, except to the extent any such representation or warranty (including any such representation or warranty contained in the Credit Agreement) was expressly made as of an earlier date, in which case such representation or warranty was true and correct as of such earlier date.

This Guaranty Joinder Agreement shall constitute a Loan Document under the Credit Agreement.

THIS GUARANTY JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401.

Exhibit A - Guaranty Joinder Agreement

IN WITNESS WHEREOF, the parties hereto have caused this Guaranty Joinder Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

[ADDITIONAL GUARANTOR]

By:

Name:

Title:

Signature Page to Guaranty Joinder Agreement

EXHIBIT B

FORM OF RELEASE OF GUARANTOR

In witness whereof, the undersigned Agent, for itself and on behalf of each of the Lenders (as defined in the Guaranty), hereby releases and discharges ___________________from any and all obligations and liabilities of ____________________to the Agent and the Lenders under that certain Amended and Restated Guaranty dated as of October 30, 2020, executed by FOUR SPRINGS CAPITAL TRUST, a Maryland real estate investment trust, and certain subsidiaries of FOUR SPRINGS CAPITAL TRUST OPERATING PARTNERSHIP, L.P., a Delaware limited partnership, described therein in favor of the Agent and the Lenders defined therein (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Guaranty”)

M&T BANK, a New York banking corporation, as Agent

By:

Name:

Title:

Exhibit B – Release of Guarantor

EX-10.19

Exhibit 10.19

CREDIT AGREEMENT

DATED AS OF OCTOBER 30, 2020

BY AND AMONG

FOUR SPRINGS CAPITAL TRUST,

AS BORROWER,

MAGNETAR CONSTELLATION MASTER FUND, LTD, MAGNETAR CONSTELLATION MASTER FUND II, LTD, MAGNETAR XING HE MASTER FUND LTD, MAGNETAR CONSTELLATION MASTER FUND V LTD, MAGNETAR LONGHORN FUND LP, PURPOSE ALTERNATIVE CREDIT FUND - T LLC, PURPOSE ALTERNATIVE CREDIT FUND LTD AND MAGNETAR LAKE CREDIT FUND LLC,

AS LENDERS,

THE OTHER LENDERS THAT MAY BECOME

PARTIES TO THIS AGREEMENT FROM TIME TO TIME,

MAGNETAR FINANCIAL LLC,

AS ADMINISTRATIVE AGENT, AND

U.S. BANK NATIONAL ASSOCIATION,

AS PAYING AGENT

TABLE OF CONTENTS

			Page
1.	DEFINITIONS AND RULES OF INTERPRETATION		1
	1.1	Definitions	1
	1.2	Rules of Interpretation	25
2.	THE CREDIT FACILITY		26
	2.1	Term Loans	26
	2.2	Record	27
	2.3	Notes	27
	2.4	Paying Agent Fees	27
	2.5	Reserved	27
	2.6	Incremental Increases	27
	2.7	Interest on Loans	28
	2.8	Requests for Loans	28
	2.9	Funds for Loans	28
	2.10	Use of Proceeds	29
3.	REPAYMENT OF THE LOANS		29
	3.1	Repayments	29
	3.2	Reserved	29
	3.3	Optional Prepayments	29
	3.4	Partial Prepayments	30
	3.5	AHYDO Payments	30
	3.6	Proration of Prepayments	31
	3.7	Effect of Prepayments	31
4.	CERTAIN GENERAL PROVISIONS		31
	4.1	Reserved	31
	4.2	Reserved	31
	4.3	Funds for Payment	31
	4.4	Taxes	31
	4.5	Computations	34
	4.6	Reserved	35
	4.7	Reserved	35
	4.8	Reserved	35
	4.9	Additional Costs, Etc.	35
	4.10	Capital Adequacy	36
	4.11	Reserved	36
	4.12	Default Interest	36
	4.13	Certificate	36
	4.14	Limitation on Interest	36

i

	4.15	Certain Provisions Relating to Taxes and Other Lenders	37
	4.16	Tax Treatment	37
5.	COLLATERAL SECURITY; APPRAISALS		37
	5.1	Collateral	37
	5.2	Appraisals	37
	5.3	Authorization to File Financing Statements	37
	5.4	Release of Collateral	38
6.	REPRESENTATIONS AND WARRANTIES		38
	6.1	Corporate Authority, Etc.	38
	6.2	Governmental Approvals	39
	6.3	Title to Borrowing Base Properties	39
	6.4	Financial Statements	40
	6.5	No Material Changes	40
	6.6	Franchises, Patents, Copyrights, Etc.	40
	6.7	Litigation	40
	6.8	No Material Adverse Contracts, Etc.	40
	6.9	Compliance with Other Instruments, Laws, Etc.	41
	6.10	Tax Status	41
	6.11	No Event of Default	41
	6.12	Investment Company Act	41
	6.13	Absence of UCC Financing Statements, Etc.	41
	6.14	Setoff, Etc.	41
	6.15	Certain Transactions	42
	6.16	Employee Benefit Plans	42
	6.17	Disclosure	42
	6.18	Trade Name; Place of Business	43
	6.19	Regulations T, U and X	43
	6.20	Environmental Compliance	43
	6.21	Subsidiaries; Organizational Structure	45
	6.22	Leases	45
	6.23	Property	46
	6.24	Brokers	46
	6.25	Other Debt	47
	6.26	Solvency	47
	6.27	No Bankruptcy Filing	47
	6.28	No Fraudulent Intent	47
	6.29	Reserved	47
	6.30	OFAC	47
	6.31	Regarding Representations and Warranties	48
7.	AFFIRMATIVE COVENANTS		48
	7.1	Punctual Payment	48

ii 

	7.2	Maintenance of Office	48
	7.3	Records and Accounts	48
	7.4	Financial Statements, Certificates and Information	49
	7.5	Notices	52
	7.6	Existence; Maintenance of Properties	53
	7.7	Insurance; Condemnation	54
	7.8	Taxes; Liens	59
	7.9	Inspection of Borrowing Base Properties and Books	60
	7.10	Compliance with Laws, Contracts, Licenses, and Permits	60
	7.11	Further Assurances	60
	7.12	Management	61
	7.13	Leases of the Property	61
	7.14	Business Operations of the Borrower	62
	7.15	Business Operations of the Senior Facility Credit Parties	62
	7.16	Registered Service Mark	62
	7.17	Ownership of Real Estate	62
	7.18	Reserved	62
	7.19	Cash Management.	62
	7.20	Plan Assets	63
	7.21	Certain Other Covenants	63
	7.22	Borrowing Base Properties	63
	7.23	Borrower IPO Event	64
	7.24	Sanctions Laws and Regulations	64
	7.25	New York Mortgage Limitation	64
	7.26	Portfolio Metrics	65
8.	NEGATIVE COVENANTS		65
	8.1	Restrictions on Indebtedness	65
	8.2	Restrictions on Liens, Etc.	67
	8.3	Restrictions on Investments	68
	8.4	Merger, Consolidation	70
	8.5	Restrictions on Prepayment of Indebtedness	70
	8.6	Compliance with Environmental Laws	70
	8.7	Distributions	72
	8.8	Asset Sales	72
	8.9	Borrowing Base Properties	72
	8.10	Derivatives Contracts	73
	8.11	Transactions with Affiliates	73
	8.12	Management Fees	74
	8.13	Changes to Organizational Documents and other Loan Documents	74
	8.14	Restrictions on Preferred Equity Issuances	74
9.	FINANCIAL COVENANTS		75
	9.1	Maximum Leverage Ratios	75
	9.2	Minimum Consolidated Fixed Charge Ratio	75

iii 

	9.3	Minimum Tangible Net Worth	75
	9.4	Minimum Debt Yield	75
	9.5	Reserved	75
	9.6	Reserved	75
	9.7	Liquidity	75
10.	CLOSING CONDITIONS		76
	10.1	Loan Documents	76
	10.2	Certified Copies of Organizational Documents	76
	10.3	Resolutions	76
	10.4	Incumbency Certificate; Authorized Signers	76
	10.5	Opinion of Counsel	76
	10.6	Lien Searches	76
	10.7	Insurance	76
	10.8	Performance; No Default	76
	10.9	Representations and Warranties	77
	10.10	Proceedings and Documents	77
	10.11	Senior Facility Loan Documents	77
	10.12	Compliance Certificate	77
	10.13	Appraisals	77
	10.14	Consents	77
	10.15	Patriot Act; Anti-Money Laundering Laws	77
	10.16	Unpaid Taxes; Tax Liens	77
	10.17	Loan Request	77
	10.18	Other	77
11.	CONDITIONS TO ALL BORROWINGS		78
	11.1	Representations True; No Default	78
	11.2	Borrowing Documents	78
12.	EVENTS OF DEFAULT; ACCELERATION; ETC		78
	12.1	Events of Default and Acceleration	78
	12.2	Certain Cure Periods	81
	12.3	Termination of Commitments	81
	12.4	Remedies	82
	12.5	Distribution of Collateral Proceeds	82
13.	SETOFF		83
14.	THE AGENT		83
	14.1	Authorization	83
	14.2	Employees and Agents	84
	14.3	No Liability	84
	14.4	No Representations	84

iv 

	14.5	Payments	85
	14.6	Holders of Notes	85
	14.7	Indemnity	85
	14.8	Agent as Lender	85
	14.9	Resignation	86
	14.10	Duties in the Case of Enforcement	86
	14.11	Bankruptcy	87
	14.12	RESERVED	87
	14.13	Reliance by Agent	87
	14.14	Approvals	87
	14.15	Borrower Not Beneficiary	88
	14.16	Defaulting Lenders	88
15.	EXPENSES		89
16.	INDEMNIFICATION		90
17.	SURVIVAL OF COVENANTS, ETC.		91
18.	ASSIGNMENT AND PARTICIPATION		91
	18.1	Conditions to Assignment by Lenders	91
	18.2	Register	92
	18.3	New Notes	92
	18.4	Participations	93
	18.5	Pledge by Lender	93
	18.6	No Assignment by Borrower	93
	18.7	Disclosure	94
	18.8	RESERVED	94
	18.9	Amendments to Loan Documents	94
19.	NOTICES		95
20.	RELATIONSHIP		96
21.	GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE		96
22.	HEADINGS		96
23.	COUNTERPARTS		97
24.	ENTIRE AGREEMENT, ETC.		97
25.	WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS		97
26.	DEALINGS WITH BORROWER		98
27.	CONSENTS, AMENDMENTS, WAIVERS, ETC.		99

v 

28.	SEVERABILITY		99
29.	TIME OF THE ESSENCE		99
30.	NO UNWRITTEN AGREEMENTS		100
31.	REPLACEMENT NOTES		100
32.	NO THIRD PARTIES BENEFITED		100
33.	PATRIOT ACT		100
34.	EMPLOYEES AND AGENTS		101
35.	PAYING AGENT		101
	35.1	Appointment	101
	35.2	Nature of Duties	101
	35.3	Exculpatory Provisions	102
	35.4	Lack of Reliance on Paying Agent and Resignation	102
	35.5	Certain Rights of Paying Agent	103
	35.6	Reserved	103
	35.7	Delegation of Duties	103
	35.8	Notice of Default	103
	35.9	Indemnification	103
	35.10	No Reliance on Paying Agent’s Customer Identification Program	103
36.	ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF BORROWER		103
	36.1	Reserved	103
	36.2	Waiver of Defenses	103
	36.3	Waiver	105
37.	ACKNOWLEDGEMENT AND CONSENT TO BAIL-IN OF EEA FINANCIAL INSTITUTIONS		106

vi 

EXHIBITS AND SCHEDULES

Exhibit A	FORM OF TERM NOTE
Exhibit B	FORM OF REQUEST FOR TERM LOAN
Exhibit C	FORM OF COMPLIANCE CERTIFICATE
Exhibit D	FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
Exhibit E	TAX COMPLIANCE CERTIFICATES
Schedule 1.1	LENDERS AND COMMITMENTS
Schedule 4.3	PAYING AGENT OFFICE
Schedule 6.3	LIST OF ALL ENCUMBRANCES ON ASSETS
Schedule 6.5	NO MATERIAL CHANGES
Schedule 6.7	PENDING LITIGATION
Schedule 6.15	CERTAIN TRANSACTIONS
Schedule 6.20(d)	REQUIRED ENVIRONMENTAL ACTIONS
Schedule 6.21	SUBSIDIARIES
Schedule 6.22	EXCEPTIONS TO RENT ROLL
Schedule 6.23	PROPERTY
Schedule 6.25	MATERIAL LOAN AGREEMENTS
Schedule 8.14	GOLDMAN EQUITY INVESTMENT TERM SHEET
Schedule 19	NOTICE ADDRESSES
Schedule IBP	INITIAL BORROWING BASE PROPERTIES

vii 

CREDIT AGREEMENT

THIS CREDIT AGREEMENT is made as of the 30^th day of October, 2020, by and among FOUR SPRINGS CAPITAL TRUST, a Maryland real estate investment trust (“Borrower”), MAGNETAR FINANCIAL LLC, a Delaware limited liability company, as Administrative Agent (the “Agent”), U.S. BANK NATIONAL ASSOCIATION, as Paying Agent (the “Paying Agent”), Magnetar Constellation Master Fund, Ltd, Magnetar Constellation Master Fund II, Ltd, Magnetar Xing He Master Fund Ltd, Magnetar Constellation Master Fund V Ltd, Magnetar Longhorn Fund LP, Purpose Alternative Credit Fund - T LLC, Purpose Alternative Credit Fund Ltd and Magnetar Lake Credit Fund LLC, as Lenders, and the other lending institutions that may become parties hereto from time to time pursuant to the applicable provisions hereof (the “Lenders”).

R E C I T A L S

WHEREAS, Borrower has requested that the Lenders provide a term loan facility to Borrower; and

WHEREAS, the Lenders are willing to provide such term loan facility to Borrower on and subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the recitals herein and mutual covenants and agreements contained herein, the parties hereto hereby covenant and agree as follows:

1. DEFINITIONS AND RULES OF INTERPRETATION.

1.1         Definitions. The following terms shall have the meanings set forth in this Section 1 or elsewhere in the provisions of this Agreement referred to below:

Adjusted Net Operating Income. Net Operating Income from the Borrowing Base Properties for the immediately preceding fiscal quarter, annualized, net of (a) the Capital Reserve, and (b) the Property Management Fees. For the purposes of calculating Adjusted Net Operating Income for the Borrowing Base Properties not owned and operated by the Operating Partnership or a Senior Facility Subsidiary Guarantor for the full prior fiscal quarter most recently ended, the Adjusted Net Operating Income attributable to such Borrowing Base Properties shall be calculated by using the actual historical results for such Borrowing Base Properties for the full fiscal quarter most recently ended as if the Borrowing Base Properties had been owned by the Operating Partnership or a Senior Facility Subsidiary Guarantor during such period. Additionally, for Borrowing Base Properties that have been disposed of during the period of the prior fiscal quarter most recently ended, the Adjusted Net Operating Income attributable to such Borrowing Base Properties shall be excluded from the calculation of Adjusted Net Operating Income. Notwithstanding anything contained herein to the contrary, for purposes of calculating Debt Yield, (a) following the term Borrowing Base Properties as used in this definition (each time such term is used), the following provision shall be added: “or any other Real Estate owned, directly or indirectly, by any of the Consolidated Entities”; and (b) the phrase “the Operating Partnership or any Senior Facility Subsidiary Guarantor” shall be replaced with “any Consolidated Entity.”

Affiliate. An Affiliate, as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means (a) the possession, directly or indirectly, of the power to vote more than ten percent (10%) of the stock, shares, voting trust certificates, beneficial interest, partnership interests, member interests or other interests having voting power for the election of directors of such Person or otherwise to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise, or (b) the ownership of (i) a general partnership interest, (ii) a managing member’s or manager’s interest in a limited liability company or (iii) a limited partnership interest or Preferred Securities (or other ownership interest) representing more than twenty percent (20%) of the outstanding limited partnership interests, Preferred Securities or other ownership interests of such Person; provided that as to Borrower, the term Affiliates, for all purposes herein other than Section 8.11 hereof, shall only include Persons which otherwise meet the definition of an Affiliate and in which Borrower owns a direct or indirect Equity Interest.

Agent. The Person defined as such in the introductory clause of this Agreement, and its permitted successors and assigns.

Aggregate Borrowing Base Value. The sum of the Borrowing Base Property Values for all Borrowing Base Properties as of any date of determination.

Agreement. This Credit Agreement, as the same may be amended, modified, supplemented and/or extended from time to time, including the Schedules and Exhibits hereto.

AHYDO Payment Date. See Section 3.5.

Annualized Base Rent or ABR. The monthly base rent pursuant to Leases that are in effect as of a given point in time multiplied by 12. ABR (i) excludes tenant reimbursements, (ii) excludes any amounts due per percentage rent Lease terms, (iii) is calculated on a cash basis and differs from how we calculate rent in accordance with GAAP, (iv) excludes any ancillary income at a property, and (v) includes all rent escalators.

Anti-Corruption Laws. All laws, rules, and regulations of any jurisdiction applicable to Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

Anti-Money Laundering Laws. All Applicable Law related to the financing of terrorism or money laundering, including without limitation, any applicable provision of the Patriot Act and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. Section 5311-5330 and 12 U.S.C. Section 1818(s), 1820(b) and 1951-1959).

Applicable Law. All applicable provisions of constitutions, statutes, rules, regulations, guidelines and orders of all Governmental Authorities and all orders and decrees of all courts, tribunals and arbitrators.

Appraisal. An MAI appraisal of the value of a parcel of Real Estate, performed by an independent appraiser with experience appraising commercial properties, with any such Appraisal for a Borrowing Base Property or other Real Estate being performed by an independent appraiser selected by the Senior Facility Agent who is not an employee of the Borrower or any of its Subsidiaries, the Senior Facility Agent or a Senior Facility Lender, the form and substance of such appraisal and the identity of the appraiser to be in compliance with the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended, the rules and regulations adopted pursuant thereto and all other regulatory laws and policies (both regulatory and internal) applicable to the Lenders and approved by the Senior Facility Agent in its good faith business judgment.

2

Appraised Value. The “as-is” value of Real Estate determined by the most recent applicable Appraisal of such Real Estate obtained pursuant to this Agreement; as the same may have been reasonably adjusted by the Agent contemporaneously with the date obtained based upon its reasonable internal review of such Appraisal which is based on criteria and factors then generally used and reasonably considered by the Senior Facility Agent in determining the value of similar real estate properties in similar credit facilities, which review shall be conducted prior to acceptance of such Appraisal by the Senior Facility Agent. The Appraised Value of a Borrowing Base Property will be the “go dark” value of such Real Estate as determined by the most recent Appraisal applicable to such Real Estate in the following instances (but only until any such condition (set forth below) no longer exists): (a) in the event that the tenant vacates such Borrowing Base Property and is no longer paying rent, or (b) in the event the tenant vacates a Borrowing Base Property, continues to pay 100% of such tenant’s rent obligations, and it has been more than six months since such tenant has vacated its space.

Approved Fund. Any Fund that is administered or managed by (a) a Lender, or (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

Approved Leases. (a) Each of the Leases in effect on the Closing Date with respect to a Borrowing Base Property, and (b) any Lease approved in connection with the addition of a Borrowing Base Property.

Assignment and Acceptance Agreement. See Section 18.1.

Authorized Officer. The president, chief executive officer or other principal executive officer, the chief operating officer, the general counsel or secretary, the chief financial officer, or other principal financial officer, the treasurer or a vice president of Borrower, and such other Persons as Borrower shall designate in a written notice to the Agent.

Bail-In Action. The exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

Bail-In Legislation. With respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

Balance Sheet Date. As of any date, the date of the most recent financial statements delivered pursuant to 7.4, as applicable.

3 

Bankruptcy Code. Title 11, U.S.C.A., as amended from time to time or any successor statute thereto.

Borrower. Four Springs Capital Trust, a Maryland real estate investment trust.

Borrowing Base. As defined in the Senior Facility Agreement.

Borrowing Base Availability. As defined in the Senior Facility Agreement.

Borrowing Base Property or Borrowing Base Properties. As defined in the Senior Facility Agreement.

Borrowing Base Property Value. (1) For each Newly Acquired Borrowing Base Properties, the lesser of (a) Appraised Value for such Newly Acquired Borrowing Base Property as contained within an Appraisal, or (b) the acquisition cost of such Newly Acquired Borrowing Base Property; and (2) for all Initial Borrowing Base Properties, Borrowing Base Property Value shall mean the Appraised Value of the same as set forth in the applicable Appraisals.

Building. With respect to each Borrowing Base Property or parcel of Real Estate, all of the buildings, structures and improvements now or hereafter located thereon.

Business Day. Any day on which banking institutions located in the State of New York are open for the transaction of banking business.

Capital Lease Obligations. With respect to the Consolidated Entities for any period, the obligations of the Operating Partnership or any Subsidiary to pay rent or other amounts under any Capitalized Lease of real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as liabilities on a balance sheet of the Consolidated Entities under GAAP and the amount of which obligations shall be the capitalized amount thereof determined in accordance with GAAP, all as determined based on the Operating Partnership’s Percentage of each Subsidiary or Affiliate.

Capital Reserve. For any period and with respect to any of the Borrowing Base Properties, an amount equal to $0.10 per annum multiplied by the weighted average total square footage of the Buildings in Real Estate that was a Borrowing Base Property during such period.

Capitalized Lease. A lease (other than an operating lease) under which the discounted future rental payment obligations of the lessee or the obligor are required to be capitalized on the balance sheet of such Person in accordance with GAAP.

Cash Equivalents. As of any date, (a) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof having maturities of not more than one year from such date, (b) time deposits and certificates of deposits having maturities of not more than one year from such date and issued by any domestic commercial bank having, (i) senior long term unsecured debt rated at least A or the equivalent thereof by S&P or A2 or the equivalent thereof by Moody’s and (ii) capital and surplus in excess of $100,000,000; (c) commercial paper rated at least A-1 or the equivalent thereof by S&P or P-1 or the equivalent thereof by Moody’s and in either case maturing within one hundred eighty (180) days from such date, (d) shares of any money market mutual fund rated at least AAA or the equivalent thereof by S&P or at least AAA or the equivalent thereof by Moody’s, and (e) demand deposits, certificates of deposit, bankers acceptances and time deposits of United States banks having total assets in excess of $100,000,000; provided, however, that the aggregate amount at any time so invested with any single bank having total assets of less than $1,000,000,000 will not exceed $200,000.

4 

CERCLA. The Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq.

Change in Law. The occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided, that, notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

Change of Control. A Change of Control shall exist upon the occurrence of any of the following:

(a)               During any twelve month period on or after the date of this Agreement, individuals who at the beginning of such period constituted the Board of Directors or Trustees of Borrower (the “Board”) (together with any new directors whose election by the Board or whose nomination for election by the shareholders of Borrower was approved by a vote of at least a majority of the members of the Board then in office who either were members of the Board at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the members of Borrower then in office;

(b)              Any Person (including a Person’s Affiliates and associates) or group (as that term is understood under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations thereunder), shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of a percentage (based on voting power, in the event different classes of stock or voting interests shall have different voting powers) of the voting stock or voting interests of Borrower equal to at least forty percent (40%) who did not hold such beneficial ownership as of the date of this Agreement;

(c)               Borrower shall fail to own at least seventy-five percent (75%) of the limited partner Equity Interests of the Operating Partnership and own and control the general partner of the Operating Partnership, in each instance free of any Lien, or shall fail to control management and policies of the Operating Partnership;

5 

(d)               Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor consolidates with, is acquired by, or merges into or with any Person (other than a merger permitted by Section 8.4);

(e)               The Operating Partnership fails to own directly or indirectly, free of any Lien, one hundred percent (100%) of the economic, voting and beneficial interest of each Senior Facility Subsidiary Guarantor; or

(f)                The failure of two (2) out of three (3) of William Dioguardi, Coby Johnson and/or John E. Warch to hold the titles of Chairman and CEO, President and/or CFO of Borrower, unless replacement officers reasonably acceptable to the Agent and Required Lenders have been appointed within ninety (90) days of such occurrence.

Closing Date. The date agreed to by the parties hereto on which all of the conditions set forth in Section 10 and Section 11 have been satisfied.

Code. The Internal Revenue Code of 1986, as amended from time to time, any successor statute and the rules, regulations and published interpretations thereof.

Collateral. All of the Equity Interests (and any certificates or other instruments or documents evidencing or representing the same) in the Operating Partnership held by Borrower, whether now existing or hereafter acquired.

Commitment. As to each Lender, the amount set forth on Schedule 1.1 hereto as such Lender’s commitment to fund the Loans from time to time to Borrower in accordance with the terms of this Agreement, as the same may be changed from time to time in accordance with the terms of this Agreement.

Commitment Percentage. With respect to each Lender, the percentage set forth on Schedule 1.1 hereto as such Lender’s percentage of the aggregate Commitments of all of the Lenders, as the same may be changed from time to time in accordance with the terms of this Agreement; provided that if the Commitments of the Lenders have been terminated as provided in this Agreement, then the Commitment of each Lender shall be determined based on the Commitment Percentage of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to the terms hereof.

Commodity Exchange Act. The Commodity Exchange Act (7 U.S.C. Section 1 et seq.), as amended from time to time, and any successor statute.

Compliance Certificate. See Section 7.4(c).

Condemnation Proceeds. All compensation, awards, damages, judgments and proceeds awarded to any Senior Facility Credit Party by reason of any Taking, net of all reasonable and customary amounts actually expended to collect the same and/or to maximize the total amount of the same.

Connection Income Taxes. Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

6 

Consolidated. With reference to any term defined herein, that term as applied to the accounts of a Person and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

Consolidated Depreciation and Amortization Expense. For any period, all depreciation and amortization expenses of the Consolidated Entities, all as determined for the Consolidated Entities on a consolidated basis in accordance with GAAP.

Consolidated EBITDA. For each fiscal quarter annualized, the Consolidated Entities’ Net Income for such period, plus (i) the sum of the amounts for such period included in determining such Net Income of (A) Consolidated Interest Expense, PIK Interest payments, and amortization expense for financing costs, (B) Consolidated Income Tax Expense, (C) Consolidated Depreciation and Amortization Expense, (D) losses and expenses that are properly classified under GAAP as extraordinary and other non-recurring non-cash losses and expenses, including with respect to the sale or other disposition of assets or debt restructurings, (E) the portion of payments received pursuant to leases classified as financing leases that is characterized as a principal payment by GAAP, and (F) other Non-Recurring and Non-Cash Expenses, less gains on sales of assets and gains that are properly classified under GAAP as extraordinary and other nonrecurring non-cash gains, all as determined based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate. Consolidated EBITDA shall include 1031 acquisition revenues on a pro rata basis as recognized by Borrower, and gain on sales, so long as each shall not exceed 10% of total EBITDA for any period.

Consolidated Entities. Borrower and its Subsidiaries.

Consolidated Fixed Charges. For each fiscal quarter, annualized, as determined on a consolidated basis and in accordance with GAAP, based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate, without duplication, means, the aggregate of (i) Consolidated Interest Expense but excluding PIK Interest payments hereunder and (ii) scheduled principal payments on all Indebtedness due during the three months preceding the measurement date (other than (a) balloon payments of principal due upon the stated maturity of any Indebtedness of the Consolidated Entities, and (b) prepayments of the Loans).

Consolidated Income Tax Expense. For any period, the aggregate amount of taxes based on income or profits for such period with respect to the operations of the Borrower and its Subsidiaries and Affiliates (including, without limitation, all corporate franchise, capital stock, net worth and value added taxes assessed by state and local governments, but excluding sales taxes, determined in accordance with GAAP on a consolidated basis (to the extent such income and profits were included in computing Net Income), all as determined based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate.

Consolidated Interest Expense. For any period, total interest expense (including, without limitation, that which is capitalized and that which is attributable to Capitalized Leases) for the Consolidated Entities (as determined based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate) with respect to all outstanding Indebtedness of the Consolidated Entities (whether direct, indirect or contingent, and including, without limitation, interest on all convertible debt but excluding amortization of financing costs), but excluding PIK Interest payments hereunder.

7 

Consolidated Tangible Net Worth. As of any date of determination, for Consolidated Entities, an amount equal to (a) the Total Asset Value less (b) the Consolidated Total Debt.

Consolidated Total Debt. The sum (without duplication) of all Indebtedness of the Consolidated Entities, less Subordinated Debt of Borrower, all as determined based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate.

Construction in Progress. Real Estate as to which construction of the associated or contemplated improvements has commenced (either new construction or substantial renovation) but has not yet been completed such that a certificate of occupancy (or the local equivalent) for a substantial portion of the intended improvements has not yet been issued or, for any completed project, until one hundred eighty (180) days after completion.

Control. The possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

Cure Exercise. See Section 12.6(a).

Debtor Relief Laws. The Bankruptcy Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

Debt Yield. As of any determination date, the (a) Adjusted Net Operating Income for the Consolidated Entities (all as determined based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate) calculated for the prior fiscal quarter, then annualized, divided by (b) all Consolidated Total Debt.

Declaration of Trust. The Restated Declaration of Trust of the Borrower dated as of February 13, 2019, as in effect as of the Closing Date.

Default. See Section 12.1.

Default Rate. See Section 4.12.

8 

Defaulting Lender. Any Lender that: (a) has failed to: (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Agent and Borrower in writing that such failure is the result of such Lender’s good faith determination that one or more conditions precedent to funding (each of which conditions precedent shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent any other amount required to be paid by it hereunder within two (2) Business Days of the date when due; (b) has notified Borrower or the Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s good faith determination that a condition precedent to funding (which condition precedent shall be specifically identified in such writing or public statement) cannot be satisfied); (c) has failed, within three (3) Business Days after written request by Agent or Borrower, to confirm in writing to Agent and Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and Borrower); or (d) has, or has a direct or indirect parent company that has, other than via an Undisclosed Administration, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-in Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 14.16) as of the date established therefor by Agent in a written notice of such determination, which shall be delivered by the Agent to Borrower and each other Lender promptly following such determination.

Derivatives Contract. Any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement. Not in limitation of the foregoing, the term “Derivatives Contract” includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement.

Designated Jurisdiction. At any time, a country, territory or region which is, or whose government is, the subject or target of country-wide or territory-wide Sanctions (currently, Cuba, Iran, Syria, North Korea, and the Crimea region of Ukraine).

9 

Distribution. Any: (a) dividend or other distribution, direct or indirect, on account of any Equity Interest of Borrower or any Senior Facility Credit Party (including any Preferred Securities), now or hereafter outstanding, except a dividend or other distribution payable solely in Equity Interests to the holders of that class; (b) redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interest of Borrower or a Senior Facility Credit Party now or hereafter outstanding; and (c) payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity Interests of Borrower or a Senior Facility Credit Party now or hereafter outstanding.

Dollars or $. Dollars in lawful currency of the United States of America.

Domestic Lending Office. Initially, the office of each Lender designated as such on Schedule 1.1 hereto; thereafter, such other office of such Lender, if any, located within the United States.

Drawdown Date. The date on which any Loan is made.

DST Entities. Each Delaware statutory trust in which the Borrower owns, directly or indirectly, an Equity Interest for the purpose of accommodating 1031 transactions.

EEA Financial Institution. (a) Any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

EEA Member Country. Any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority. Any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Eligible Assignee. (a) A Lender; (b) an Affiliate of a Lender; (c) an Approved Fund, and (d) any other Person (other than a natural person) approved by (i) the Agent, and (ii) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include (i) Borrower or any of Borrower’s Affiliates or Subsidiaries, or (ii) unless an Event of Default shall be in existence, any Person reasonably deemed by Borrower to be a competitor of Borrower or any Senior Facility Credit Party (a “Competitor”) by providing written notice thereof to the Agent.

Eligible Real Estate. As defined in the Senior Facility Agreement.

Employee Benefit Plan. Any employee benefit plan within the meaning of Section 3(3) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate, other than a Multiemployer Plan.

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Environmental Engineer. Such firm or firms of independent professional engineers or other scientists generally recognized as expert in the detection, analysis and remediation of Hazardous Substances and related environmental matters and acceptable to the Agent in its reasonable discretion.

Environmental Laws. As defined in the Indemnity Agreements under the Senior Facility Agreement.

Equity Interests. With respect to any Person, any share of capital stock of (or other ownership or profit interests in) such Person, any warrant, option or other right for the purchase or other acquisition from such Person of any share of capital stock of (or other ownership or profit interests in) such Person, any security convertible into or exchangeable for any share of capital stock of (or other ownership or profit interests in) such Person or warrant, right or option for the purchase or other acquisition from such Person of such shares (or such other interests), and any other ownership or profit interest in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such share, warrant, option, right or other interest is authorized or otherwise existing on any date of determination.

Equity Percentage. The aggregate direct or indirect ownership percentage of the Operating Partnership in its Subsidiaries and Affiliates, without duplication.

Equity Subscription Period. See §12.1(c).

ERISA. The Employee Retirement Income Security Act of 1974, as amended and in effect from time to time.

ERISA Affiliate. Any Person that is subject to ERISA and is treated as a single employer with Borrower or its Subsidiaries under Section 414 of the Code.

ERISA Reportable Event. A reportable event with respect to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived.

EU Bail-In Legislation Schedule. The EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Events of Default. See Section 12.1.

Exchange Act. The Securities Exchange Act of 1934.

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Excluded Taxes. Any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or its Commitment pursuant to Applicable Law in effect on the date on which (i) such Lender acquires such interest in the Loan or its Commitment (other than pursuant to an assignment request by Borrower under Section 4.15 as a result of amounts sought to be reimbursed pursuant to Section 4.4 or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 4.4), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 4.4(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

Existing Credit Agreement. That certain Credit Agreement dated as of October 23, 2018, by and among the Operating Partnership and Citizens Bank, National Association, as agent, and certain other lenders, as amended by that certain Joinder and First Amendment to Credit Agreement dated as of February 19, 2019, and that certain Second Amendment to Credit Agreement dated as of June 24, 2019.

FATCA. Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any Legal Requirement or official practice adopted pursuant to any such intergovernmental agreement.

Event of Default. See Section 12.1.

Federal Funds Effective Rate. For any day, the rate per annum (rounded upward to the nearest one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of Cleveland on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate.” Notwithstanding the foregoing, if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed zero for the purposes of this Agreement.

Fixed Charge Ratio. For the applicable fiscal quarter, the ratio of (a) Consolidated EBITDA, divided by (b) Consolidated Fixed Charges.

Foreign Lender. If Borrower is a U.S. Person, a Lender that is not a U.S. Person, and if Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which Borrower is resident for Tax purposes.

Fund. Any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

GAAP. Principles that are (a) consistent with the accounting principles generally accepted in the United States of America as promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time and (b) consistently applied with past financial statements of the Person adopting the same principles.

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Goldman Closing Period. See §12.1(c).

Goldman Preferred Equity Investment. See §8.14.

Governmental Authority. The government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

Guaranteed Pension Plan. Any employee pension benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan.

Hazardous Substances. As defined in the Indemnity Agreement(s) under the Senior Facility.

Indebtedness. Without duplication, means, as of any date of determination, indebtedness for Borrower and its Subsidiaries, all indebtedness outstanding on such date, in each case whether Recourse Indebtedness or Non-Recourse Indebtedness, secured or unsecured, (including, without limitation, the TEN31 Bridge Financing); provided, however, that undrawn availability under this Agreement or under the Senior Facility on such date shall not be included in calculating Indebtedness, and provided, further, that (without double-counting), each of the following shall be included in Indebtedness: (a) all amounts of guarantees, indemnities for borrowed money, stop-loss agreements and the like provided by Borrower and its Subsidiaries, in each case in connection with and guarantying repayment of amounts outstanding under any other Indebtedness (excluding traditional carve-outs relating to non-recourse debt obligations); (b) all amounts available to be drawn under a letter of credit has been issued for the account of Borrower or any of its Subsidiaries; (c) all available or unutilized amounts of bonds posted by Borrower or any of its Subsidiaries guaranteeing performance or payment obligations (excluding traditional carve-outs relating to non-recourse debt obligations); (d) all Capital Lease Obligations and (e) all liabilities of Borrower or any of its respective Subsidiaries as partners, members or the like for liabilities (other than liabilities that are non-recourse obligations of the applicable partnership or other Person) of partnerships or other Persons in which any of them have an equity interest, which liabilities are for borrowed money or any of the matters listed in clauses (a), (b), (c) or (d) above. Without limitation of the foregoing (without double counting), with respect to any non-Wholly-Owned Subsidiary, (x) to the extent that a Subsidiary or such non-Wholly-Owned Subsidiary is providing a completion guaranty in connection with a construction loan entered into by a non-Wholly-Owned Subsidiary, total Indebtedness shall include such Subsidiary’s pro rata liability under the Indebtedness relating to such completion guaranty (or, if greater, Borrower’s or such Subsidiary’s potential liability under such completion guaranty) and (y) in connection with the liabilities described in clauses (a) and (d) above (other than completion guarantees, which are referred to in clause (x)), the total Indebtedness shall include the portion of the liabilities of such non-Wholly-Owned Subsidiary which are attributable to Borrower’s or such Subsidiary’s percentage equity interest in such non-Wholly-Owned Subsidiary or such greater amount of such liabilities for which Borrower or its respective Subsidiaries are, or have agreed to be, liable by way of guaranty, indemnity for borrowed money, stop-loss agreement or the like, it being agreed that, in any case, Indebtedness of a non-Wholly-Owned Subsidiary shall not be excluded from Total Indebtedness by virtue of the liability of such non-Wholly-Owned Subsidiary being non-recourse. For purposes hereof, the amount of borrowed money shall equal the sum of (1) the amount of borrowed money as determined in accordance with GAAP plus (2) the amount of those contingent liabilities for borrowed money set forth in subsections (a) through (e) above, but shall exclude any adjustment for so called “straight line” interest accounting.

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Any operating lease asset or liability required by FASB AC, GAAP or otherwise to be recognized as an obligation or indebtedness on any Person’s balance sheet shall not be deemed to constitute “Indebtedness” for any purpose under this Agreement.

Indemnified Taxes. (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document and (b) to the extent not otherwise described in the immediately preceding clause (a), Other Taxes.

Insurance Proceeds. All insurance proceeds, damages and claims and the right thereto under any insurance policies relating to any portion of any Collateral, net of all reasonable and customary amounts actually expended to collect the same and/or to maximize the total amount of the same.

Interest Payment Date. The first day of each calendar month, and the Maturity Date.

Investments. With respect to any Person, all shares of capital stock, evidences of Indebtedness and other securities issued by any other Person and owned by such Person, all loans, advances, or extensions of credit to, or contributions to the capital of, any other Person, all purchases of the securities or business or integral part of the business of any other Person and commitments and options to make such purchases, all interests in real property, and all other investments; provided, however, that the term “Investment” shall not include (i) equipment, inventory and other tangible personal property acquired in the ordinary course of business, or (ii) current trade and customer accounts receivable for services rendered in the ordinary course of business and payable in accordance with customary trade terms. In determining the aggregate amount of Investments outstanding at any particular time: (a) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (b) there shall be deducted in respect of each Investment any amount received as a return of capital; (c) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (a) may be deducted when paid; and (d) there shall not be deducted in respect of any Investment any decrease in the value thereof.

IPO Event. The registration, listing and issuance by Borrower of publicly-traded common equity with gross proceeds in an amount not less than $75,000,000.

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Land Assets. Real Estate constituting raw or undeveloped land as to which construction of contemplated improvements has not commenced.

Leases. Leases, licenses and agreements, whether written or oral, relating to the use or occupation of space in any Building or of any Real Estate owned, directly or indirectly, by Borrower or its Subsidiaries.

Legal Requirements. All applicable federal, state, county and local laws, rules, regulations, codes and ordinances, and the requirements in each case of any governmental agency or authority having or claiming jurisdiction with respect thereto, including, but not limited to, those applicable to zoning, subdivision, building, health, fire, safety, sanitation, the protection of the handicapped, and environmental matters and shall also include all orders and directives of any court, governmental agency or authority having or claiming jurisdiction with respect thereto.

Lenders. Magnetar Constellation Master Fund, Ltd, Magnetar Constellation Master Fund II, Ltd, Magnetar Xing He Master Fund Ltd, Magnetar Constellation Master Fund V Ltd, Magnetar Longhorn Fund LP, Purpose Alternative Credit Fund - T LLC, Purpose Alternative Credit Fund Ltd, Magnetar Lake Credit Fund LLC and any other Person which becomes an assignee of any rights and obligations of a Purchaser pursuant to Section 18 (but not including any participant as described in Section 18).

Lien. See Section 8.2.

Liquidation Event. (i) A liquidation, dissolution or winding up of the Borrower, whether voluntary or involuntary; (ii) a merger or consolidation of the Borrower with or into another entity or entities (except for a merger in which the Borrower is the surviving entity, and the members of the board of trustees of the Borrower immediately before such merger or consolidation remain as a majority of the members of the board of trustees after such merger or consolidation); or (iii) any sale or transfer by the Borrower of assets whose value constitutes a majority of the aggregate value of the Borrower’s assets (determined either for the Borrower alone or together with its Subsidiaries on a consolidated basis), in the case of each of clauses (i), (ii) and (iii), irrespective of how any such transaction is structured.

Liquidity. At any time of determination, the aggregate of (a) any unfunded Borrowing Base Availability plus (b) any Unrestricted Cash and Cash Equivalents of the Borrower or any of its Subsidiaries.

Loan Documents. This Agreement, the Note(s), the Security Document(s), the Mezzanine Intercreditor Agreement and all other documents, instruments or agreements now or hereafter executed or delivered by or on behalf of Borrower in connection with the Loans and intended to constitute a Loan Document.

Loan Request. See Section 2.8.

Loan and Loans. An individual loan or the aggregate loans, as the case may be, to be made by the Lenders hereunder. All Loans shall be made in Dollars.

Major Lease. Each Lease in a Borrowing Base Property.

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Management Agreements. Written property management agreements providing for the management of the Borrowing Base Properties or any of them.

Material Acquisition. The acquisition of Real Estate pursuant to one transaction or a series of related transactions occurring substantially contemporaneously that is greater than or equal to 10% of Total Asset Value.

Material Adverse Effect. A material adverse effect on (a) the business, properties, assets, condition (financial or otherwise) or results of operations of Borrower and its Subsidiaries considered as a whole; (b) the ability of Borrower to perform any of its material obligations under the Loan Documents; (c) compliance of the Borrowing Base Property with any Requirements, which causes a material adverse effect on the business, properties, assets, condition (financial or otherwise) or results of operations of Borrower and its Subsidiaries considered as a whole; (d) the value or condition of the Borrowing Base Property which causes a material adverse effect on the business, properties, assets, condition (financial or otherwise), prospects or results of operations of Borrower and its Subsidiaries considered as a whole; (e) the validity or enforceability of any of the Loan Documents or (f) the rights or remedies of Agent or the Lenders thereunder.

Material Debt. See Section 6.25.

Maturity Date. October 30, 2025.

Mezzanine Intercreditor Agreement. The Subordination and Intercreditor Agreement dated as of the date hereof by and between the Agent and the Senior Facility Agent, as such agreement may be amended, restated, supplemented, or otherwise modified from time to time.

Minimum Liquidity Requirement. See Section 9.7.

Moody’s. Moody’s Investor Service, Inc.

Mortgages. As defined in the Senior Facility Agreement.

Multiemployer Plan. Any multiemployer plan within the meaning of Section 3(37) of ERISA maintained or contributed to by Borrower or any ERISA Affiliate.

Net Income. For any period, the net income (or loss) of the Consolidated Entities attributable to all Leases, on a consolidated basis, for such period taken as a single accounting period determined in conformity with GAAP (before minority interest and excluding the adjustment of rent to straight-line rent), calculated without regard to gains or losses on early retirement of debt or debt restructuring, debt modification charges, and prepayment premiums.

Net Operating Income. With respect to any Real Estate owned by any Consolidated Entity for any period, “property rental and other income” (after adjusting for straight-lining of rents and excluding the rents from any tenant under a lease with respect to which a monetary default exists for any period exceeding four consecutive months) attributable to such real estate asset accruing for such period minus the amount of all expenses incurred and unreimbursed by any other Person in connection with and directly attributable to the ownership and operation of such real estate asset for such period, including, without limitation, Property Management Fees and amounts accrued for the payment of real estate taxes and insurance premiums, but excluding interest expense or other debt service charges and any non-cash charges such as depreciation or amortization of financing costs plus acquisition costs for consummated acquisitions. As used herein, “other income” as described above includes any portion of payments received pursuant to a lease that would be characterized by GAAP as interest income or principal payments under the terms of a lease classified as a financing lease.

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Net Rentable Area. With respect to any Real Estate, the net rentable square footage as determined in accordance with the Appraisal.

Newly Acquired Borrowing Base Property. As defined in the Senior Facility Agreement.

Non-Defaulting Lender. Any Lender other than a Defaulting Lender.

Non-Recurring and Non-Cash Expenses. With respect to any Person, such Person’s: (i) non-cash equity compensation expenses; (ii) reasonable fees and expenses related to this Agreement; (iii) reasonable costs, fees and expenses related to acquisitions, including opening balance sheet audit and valuations; (iv) reasonable one-time fees, charges and expenses related to an initial public offering of the Borrower; (v) reasonable back audit expenses; (vi) costs associated with recruiting new officers or senior managers; (vii) non-cash impairment charges related to goodwill, intangible assets and long-lived assets required to be recognized under GAAP, (viii) costs and expenses reimbursed by a tenant, and (ix) other cash items and expenses approved in the reasonable discretion of the Agent.

Non-Recourse Exclusions. With respect to any Non-Recourse Indebtedness of any Person, any industry standard exclusions from the non-recourse limitations governing such Indebtedness, including, without limitation, exclusions for claims that (i) are based on fraud, intentional misrepresentation, misapplication or misappropriation of funds, gross negligence or willful misconduct, (ii) result from intentional mismanagement of or physical waste at the Real Estate securing such Non-Recourse Indebtedness, (iii) arise from the presence of Hazardous Substances on the Real Estate securing such Non-Recourse Indebtedness (whether contained in a loan agreement, promissory note, indemnity agreement or other document), or (iv) are the result of any unpaid real estate taxes and assessments if sufficient cash flow from the Real Estate exists (whether contained in a loan agreement, promissory note, indemnity agreement or other document).

Non-Recourse Indebtedness. Indebtedness of Borrower, the Operating Partnership, their respective Subsidiaries, or an Unconsolidated Affiliate of any such Person, which is secured by one or more parcels of Real Estate (other than a Borrowing Base Property) or interests therein or equipment and which is not a general obligation of Borrower, the Operating Partnership or such Subsidiary or Unconsolidated Affiliate, the holder of such Indebtedness having recourse solely to the parcels of Real Estate, or interests therein, or equipment securing such Indebtedness or to the direct owner of such real estate, the leases thereon and the rents, profits and equity thereof or equipment, as applicable (except for recourse against the general credit of the Person obligated thereon for any Non-Recourse Exclusions), provided that in calculating the amount of Non-Recourse Indebtedness at any time, Borrower’s reasonable estimate of the amount of any Non-Recourse Exclusions which are the subject of a claim and action shall not be included in the Non-Recourse Indebtedness but shall constitute Recourse Indebtedness. Non-Recourse Indebtedness shall also include Indebtedness of a Subsidiary of Borrower that is not a Senior Facility Subsidiary Guarantor or of an Unconsolidated Affiliate which is a special purpose entity that is recourse solely to such Subsidiary or Unconsolidated Affiliate, which is not cross-defaulted to other Indebtedness of the Operating Partnership and which does not constitute Indebtedness of any other Person (other than such Subsidiary or Unconsolidated Affiliate which is the Operating Partnership thereunder).

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Notes. Collectively, the Term Notes.

Notice. See Section 19.

Obligations. The term “Obligations” shall mean and include:

A.               The payment of the principal sum, interest at variable rates, charges and indebtedness evidenced by the Notes including any extensions, renewals, replacements, increases, modifications and amendments thereof, given by Borrower to the order of the respective Lenders;

B.                The payment, performance, discharge and satisfaction of each covenant, warranty, representation, undertaking and condition to be paid, performed, satisfied and complied with by Borrower under and pursuant to this Agreement or the other Loan Documents;

C.                Subject to Article 16, the payment of all costs, expenses, legal fees and liabilities incurred by Agent, the Paying Agent and the Lenders in connection with the enforcement of any of Agent’s, the Paying Agent’s or any Lender’s rights or remedies under this Agreement or the other Loan Documents, or any other instrument, agreement or document which evidences or secures any other obligations or collateral therefor, whether now in effect or hereafter executed; and

D.                The payment, performance, discharge and satisfaction of all other liabilities and obligations of Borrower to Agent, the Paying Agent or any Lender, whether now existing or hereafter arising, direct or indirect, absolute or contingent, under any one or more of the Loan Documents and any amendment, extension, modification, replacement or recasting of any one or more of the instruments, agreements and documents referred to in this Agreement or any other Loan Document or executed in connection with the transactions contemplated by this Agreement or any other Loan Document; provided however that notwithstanding anything to the contrary set forth in the definition of Obligations, with respect to any indemnification, contingent or other similar obligations, such matters shall be considered “Obligations” only to the extent a reasonable good faith claim has been made on such indemnification, contingent or similar obligation on or before the date that all other Obligations are satisfied in full.

OFAC. Office of Foreign Asset Control of the Department of the Treasury of the United States of America.

Operating Partnership. Four Springs Capital Trust Operating Partnership, L.P.

Other Charges. All ground rents, common area maintenance charges, impositions (other than Taxes) and similar charges (including, without limitation, vault charges and license fees for the use of vaults, chutes and similar areas adjoining the Borrowing Base Property), now or hereafter assessed or imposed against the Borrowing Base Property, or any part thereof, together with any penalties thereon.

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Other Connection Taxes. With respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

Other Lenders. See Section 4.15.

Other Taxes. All present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 4.15 as a result of amounts sought to be reimbursed pursuant to Section 4.4).

Outstanding. With respect to the Loans, the aggregate unpaid principal thereof as of any date of determination.

Participant Register. See Section 18.4.

Partnership Agreement. The Amended and Restated Agreement of Limited Partnership of the Operating Partnership dated February 13, 2019, as amended.

Patriot Act. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.

Paying Agent. U.S. Bank National Association.

Paying Agent Fee. See Section 2.4(b).

PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of ERISA and any successor entity or entities having similar responsibilities.

Permitted Liens. Liens, security interests and other encumbrances permitted by Section 8.2.

Person. Any individual, corporation, limited liability company, partnership, trust, unincorporated association, or other legal entity, and any government or any governmental agency or political subdivision thereof.

PIK Interest. The interest due hereunder in respect of the PIK Interest Portion (as defined in Section 2.7 (a)) on an Interest Payment Date, which is paid by increasing the principal amount of outstanding Indebtedness for borrowed money hereunder.

Plan Assets. Assets of any employee benefit plan subject to Part 4, Subtitle B, Title I of ERISA.

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Pledge Agreement. That certain Pledge Agreement dated as of the Closing Date made by Borrower, in favor of Agent.

Preferred Securities. With respect to any Person, Equity Interests in such Person which are entitled to preference or priority over any other Equity Interest in such Person in respect of the payment of dividends or distribution of assets upon liquidation, or both.

Property Management Fees. With respect to each Borrowing Base Property asset for any period, an assumed amount equal to the greater of (i) two percent (2%) per annum of the aggregate base rent and percentage rent due and payable under leases with tenants at such Real Estate, and (ii) actual management fees, excluding amounts that can be reclassified as Regional, Executive Management, or General & Administrative expenses.

Real Estate. All real property at any time owned or leased (as lessor or sublessor) by Borrower or any of its Subsidiaries and Affiliates, including, without limitation, the Borrowing Base Properties and any real property owned by DST Entities.

Recipient. The Agent and any Lender.

Recourse Indebtedness. As of any date of determination, any Indebtedness (whether secured or unsecured) of a Person other than Non-Recourse Indebtedness.

Register. See Section 18.2.

Release. See Section 6.20(c)(iii).

Rent Roll. A report prepared by the Operating Partnership showing for each Borrowing Base Property owned or leased by the Operating Partnership or a Senior Facility Subsidiary Guarantor, its occupancy, tenants, lease expiration dates, lease rent and other information in substantially the form presented to Agent on or prior to the date hereof.

Required Lenders. As of any date, the Lender or Lenders whose aggregate Commitment Percentage is equal to or greater than fifty one percent (51%) of the Total Commitment; provided that in determining said percentage at any given time, all then-existing Defaulting Lenders will be disregarded and excluded and the Commitment Percentages of the Lenders shall be redetermined for voting purposes only to exclude the Commitment Percentages of such Defaulting Lenders and provided further that at all times when two or more Lenders are party to this Agreement, then Required Lenders shall mean at least two (2) unaffiliated Lenders that are Non-Defaulting Lenders (or if there shall not be two (2) Non-Defaulting Lenders, then such fewer number of Lenders as are Non-Defaulting Lenders.

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Replacement Equity Investment. An investment in the Borrower which meets the Replacement Equity Investment Criteria and has been approved by the Lenders in their sole but reasonable discretion.

Replacement Equity Investment Criteria. A Preferred Securities investment in Borrower which (1) has the same or substantially the same terms as set forth on the Goldman Equity Investment Term Sheet attached as Schedule 8.14, (2) is provided by a qualified equity investor approved by the Lenders in their sole but reasonable discretion, which (x) demonstrates the financial strength and institutional ability to provide a term sheet within the Equity Subscription Period and (y) evidences the ability to complete the Replacement Equity Investment within the timeframe set forth in §12.1(c), (3) will provide an initial equity investment of at least $50,000,000.00 and (4) will not require any amendment to the terms of the Loan Documents or the Senior Facility Loan Documents.

Sanctioned Person. Any Person that is (a) any Person listed in any Sanctions-related list of designated Persons maintained by any Governmental Authority of the United States of America, including without limitation, OFAC or the U.S. Department of State, or by the United Nations Security Council, Her Majesty’s Treasury, or the European Union, (b) any Person located, operating, organized or resident in a Designated Jurisdiction, (c) an agency of the government of a Designated Jurisdiction, or (d) any Person owned or controlled by any Person or agency described in any of the preceding clauses (a) through (c).

Sanction(s). Any economic or trade sanction administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union, or Her Majesty’s Treasury, in each case, solely to the extent applicable to Borrower or any of its Subsidiaries.

SEC. The federal Securities and Exchange Commission.

Security Documents. Collectively, the Pledge Agreement and the UCC-1 financing statements.

Senior Facility. The Senior Facility Loans and related Indebtedness as evidenced by the Senior Facility Agreement as in effect as of the Closing Date.

Senior Facility Agent. M&T Bank.

Senior Facility Agreement. That certain Credit Agreement dated as of the date hereof, by and among the Operating Partnership, as borrower, the Borrower, as guarantor, the Senior Facility Subsidiary Guarantors, and the other guarantors from time to time party thereto, the Senior Facility Agent and the other lenders party thereto (as amended, restated, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms of the Mezzanine Intercreditor Agreement).

Senior Facility Collateral. The “Collateral” under the Senior Facility Agreement.

Senior Facility Credit Party(ies). As defined as “Credit Party” under the Senior Facility Agreement.

Senior Facility Lenders. As defined as “Lenders” in the Senior Facility Agreement.

Senior Facility Loans. The Loans under the Senior Facility Agreement.

Senior Facility Loan Documents. The Loan Documents under the Senior Facility Agreement.

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Senior Facility Obligations. The Obligations under the Senior Facility Agreement.

Senior Facility Required Lenders. As defined as “Required Lenders” in the Senior Facility Agreement.

Senior Facility Subsidiary Guarantor(s). As defined as “Subsidiary Guarantor(s)” in the Senior Facility Agreement.

S&P. Standard & Poor’s Ratings Group.

Specified Assets. Real Estate assets purchased with cash and owned for less than one hundred eighty (180) days.

State. A state of the United States of America and the District of Columbia.

Subordinated Debt. See Section 8.1 (xi).

Subsidiary. For any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person, and shall include all Persons the accounts of which are consolidated with those of such Person pursuant to GAAP. For purposes of this Agreement, any DST Entity shall be considered a “Subsidiary” (based upon Borrower’s indirect Equity Percentage of the subject DST Entity).

Survey. An ALTA instrument survey of each parcel of Borrowing Base Property prepared by a registered land surveyor which shall show the location of all buildings, structures, easements and utility lines on such property, shall be sufficient to remove (or endorse over) the standard survey exception from the applicable Title Policy, shall show that all buildings and structures are within the lot lines of the Borrowing Base Property and shall not show any encroachments by others (or to the extent any encroachments are shown, such encroachments shall be acceptable to the Senior Facility Agent in its reasonable discretion), shall show rights of way, adjoining sites, establish building lines and street lines, the distance to and names of the nearest intersecting streets and such other details as the Senior Facility Agent may reasonably require; and shall show whether or not the Borrowing Base Property is located in a flood hazard district as established by the Federal Emergency Management Agency or any successor agency or is located in any flood plain, flood hazard or wetland protection district established under federal, state or local law and shall otherwise be in form and substance reasonably satisfactory to the Senior Facility Agent.

Surveyor Certification. With respect to each parcel of Borrowing Base Property, a certificate executed by the surveyor who prepared the Survey with respect thereto, containing such information relating to such parcel as the Senior Facility Agent may reasonably require, such certificate to be reasonably satisfactory to the Senior Facility Agent in form and substance.

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Taking. The taking or appropriation (including by deed in lieu of condemnation) of any Borrowing Base Property, or any part thereof or interest therein, whether permanently or temporarily, for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation proceeding, or in any other manner or any customarily recognized and compensated damage or injury or diminution in value through condemnation, inverse condemnation or other exercise of the power of eminent domain.

Taxes. All present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges (other than the Other Charges) imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

TEN31 Bridge Financing. The proposed bridge financing to a Subsidiary of the Operating Partnership owning various Equity Interests or other Investments in Real Estate held by DST Entities which are not interests in Borrowing Base Properties, which bridge financing: (1) shall not be repaid from Loans, (2) shall be Non-Recourse to the Borrower, Operating Partnership or any Senior Facility Credit Party, and (3) the terms of which shall be reviewed and approved by all Senior Facility Lenders and the Lenders in their sole and absolute discretion prior to any financing being approved and permitted hereunder.

Term Lender. Collectively, the Lenders which have a Commitment, the initial Lenders being identified on Schedule 1.1 hereto.

Term Loan or Loans. An individual Term Loan or the aggregate Term Loans, as the case may be, in the maximum principal amount (without giving effect to any PIK Interest) of One Hundred Million and No/100 Dollars ($100,000,000.00), to be made by the Lenders hereunder as more particularly described in Section 2.

Term Notes. See Section 2.3.

Test Period. See Section 12.6(a).

Total Asset Value. As of any date of determination, the sum of the (a) the Aggregate Borrowing Base Value of all Borrowing Base Properties, (b) the undepreciated value of all other Real Estate of the Borrower or any of its Subsidiaries or its Affiliates (based on the Operating Partnership’s Equity Percentage of the subject Subsidiary or Affiliate) including portions of the purchase price allocated to intangible assets for GAAP, and (c) all cash and Cash Equivalents (based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate). The Senior Facility Agent has the right to appraise (at the Operating Partnership’s expense) all non-Borrowing Base Properties once prior to the Initial Maturity Date (as defined in the Senior Facility Agreement) if an Event of Default (as defined in the Senior Facility Agreement) shall be in existence. In such an event, the Appraised Values are lower (higher) than purchase price, the lower (or higher) valuation shall be used.

Total Commitment. One Hundred Million and No/100 Dollars ($100,000,000.00) (without giving effect to any PIK Interest). The Total Commitment may increase pursuant to Section 2.6.

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Total Leverage. The Consolidated Total Debt of the Borrower and its Subsidiaries (without duplication) divided by the Total Asset Value of the Borrower and its Subsidiaries (without duplication).

Total Senior Leverage. The sum (without duplication) of all Indebtedness, less Subordinated Debt, of the Operating Partnership and its Subsidiaries (all as determined based on the Operating Partnership’s Equity Percentage of each Subsidiary or Affiliate, for the sake of clarity, Indebtedness of Borrower shall be excluded for all purposes of the term “Total Senior Leverage”), divided by the Total Asset Value of Borrower and its Subsidiaries (without duplication).

Undisclosed Administration. In relation to a Lender or its parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be disclosed.

U.S. Person. Any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.

U.S. Tax Compliance Certificate. See Section 4.4(f)(ii)(B)(III).

Unconsolidated Affiliate. In respect of any Person, any other Person in whom such Person holds an Investment, (a) whose financial results would not be consolidated under GAAP with the financial results of such first Person on the consolidated financial statements of such first Person, and (b) which is not a Subsidiary of such first Person.

Unconsolidated Subsidiary. In respect of any Person, any other Person in whom such Person holds an Investment, whose financial results would not be consolidated under GAAP with the financial results of such first Person on the consolidated financial statements of such first Person.

Unrestricted. As used in conjunction with cash and Cash Equivalents, ‘Unrestricted” shall mean the specified asset is not subject to any escrow, reserves or Liens or similar restrictions or claims of any kind in favor of any Person (other than any statutory right of set off).

Unrestricted Cash and Cash Equivalents. As of any date of determination, the sum of (a) the aggregate amount of Unrestricted Cash and (b) the aggregate amount of Unrestricted Cash Equivalents.

Wholly Owned Subsidiary. As to Borrower, any Subsidiary of Borrower that is directly or indirectly owned 100% by Borrower.

Withholding Agent. Borrower and/or the Paying Agent.

Write-Down and Conversion Powers. With respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

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1.2            Rules of Interpretation.

(a)            A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and the terms of this Agreement.

(b)            The singular includes the plural and the plural includes the singular.

(c)            A reference to any law includes any amendment or modification of such law.

(d)            A reference to any Person includes its permitted successors and permitted assigns.

(e)            Accounting terms not otherwise defined herein have the meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Borrower or any of its Subsidiaries at “fair value”, as defined therein, and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof. Without limiting the foregoing, leases shall continue to be classified and accounted for on a basis consistent with that reflected in the audited financial statements provided under Section 6.4 for all purposes of this Agreement, notwithstanding any change in GAAP related thereto, unless the parties hereto shall enter into a mutually acceptable amendment addressing such changes, as provided for above.

(f)             The words “include”, “includes” and “including” are not limiting.

(g)            The words “approval” and “approved”, as the context requires, means an approval in writing given to the party seeking approval.

(h)            All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the State of New York, have the meanings assigned to them therein.

(i)             Reference to a particular “Section”, refers to that section of this Agreement unless otherwise indicated.

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(j)             The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement.

(k)            The words “the date hereof” or words of like import shall mean the date that this Agreement is fully executed by all parties.

(l)             In the event of any change in GAAP after the date hereof or any other change in accounting procedures pursuant to Section 7.3 which would affect the computation of any financial covenant, ratio or other requirement set forth in any Loan Document, then upon the request of Borrower or Agent, Borrower and the Agent shall negotiate promptly, diligently and in good faith in order to amend the provisions of the Loan Documents such that such financial covenant, ratio or other requirement shall continue to provide substantially the same financial tests or restrictions of Borrower as in effect prior to such accounting change, as determined by the Agent in its good faith judgment. Until such time as such amendment shall have been executed and delivered by Borrower and the Lenders, such financial covenants, ratio and other requirements, and all financial statements and other documents required to be delivered under the Loan Documents, shall be calculated and reported as if such change had not occurred.

(m)           Any reference to “execute”, “executed”, “sign”, “signed”, “signature” or any other like term hereunder shall include execution by electronic signature (including, without limitation, any .pdf file, .jpeg file, or any other electronic or image file, or any “electronic signature” as defined under the U.S. Electronic Signatures in Global and National Commerce Act (“E-SIGN”) or the New York Electronic Signatures and Records Act (“ESRA”), which includes any electronic signature provided using Orbit, Adobe Sign, DocuSign, or any other similar platform identified by the Borrower and reasonably available at no undue burden or expense to the Paying Agent), except to the extent the Paying Agent requests otherwise. Any such electronic signatures shall be valid, effective and legally binding as if such electronic signatures were handwritten signatures and shall be deemed to have been duly and validly delivered for all purposes hereunder.

2. THE CREDIT FACILITY.

2.1            Term Loans. Subject to the terms and conditions set forth in this Agreement, each of the Lenders severally agrees to lend to Borrower, and Borrower shall borrow, from time to time on and after the Closing Date to and including October 30, 2021 (subject to a six-month extension from and after such date, exercised by Borrower at any time prior to such date in Borrower’s sole discretion) up to $100 million in Loans, provided that Borrower has satisfied the following conditions on the date of any such request: (i) all of the conditions required of Borrower set forth in (x) Section 10 with respect to the initial Loan advanced on the Closing Date and (y) Section 11 have been satisfied with respect to any Loan advanced after the Closing Date; (ii) Borrower has provided the Loan Request (as defined below) to the Paying Agent given in accordance with Section 2.8 and such sums as are requested by Borrower, for the purposes set forth in Section 2.10, in the principal amount (without giving effect to any PIK Interest) equal to such Lender’s Commitment Percentage of (a) up to $85 million on the Closing Date and (b) up to the balance of the Total Commitment thereafter; (iii) no Default or Event of Default shall have occurred and be continuing at the time of any such borrowing; (iv) each request for a Loan hereunder shall constitute a representation and warranty by Borrower that all of the conditions required of Borrower set forth in Section 10 and Section 11 have been satisfied on the date of such request (or if such condition is required to have been satisfied or waived only as of the Closing Date, that such condition was satisfied as of the Closing Date) and (v) Borrower shall have certified that the terms and conditions of the Loan Request have been satisfied and Borrower is in pro forma compliance with the terms and conditions set forth in Section 9. The Loans shall be made pro rata in accordance with each Lender’s Commitment Percentage. No Lender shall have any obligation to make Loans to Borrower in the maximum aggregate principal outstanding balance of more than the amount of its Commitment.

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2.2            Record. Borrower irrevocably authorizes the Paying Agent to make or cause to be made, at or about the time of the Drawdown Date of any Loan or the time of receipt of any payment of principal thereof, an appropriate notation on the Lenders’ books and records reflecting the making of such Loan or (as the case may be) the receipt of such payment. The outstanding amount of the Loans set forth on the Paying Agent’s books and records shall be prima facie evidence (absent manifest error) of the principal amount thereof owing and unpaid to each Lender, but the failure to record, or any error in so recording, any such amount on the Paying Agent’s books and records shall not limit or otherwise affect the obligations of Borrower hereunder or under any Note to make payments of principal of or interest on any Loan when due.

2.3            Notes. The Loans shall, if requested by each Lender, be evidenced by separate promissory notes of Borrower in substantially the form of Exhibit A hereto (collectively, the “Term Notes”), dated of even date with this Agreement (except as otherwise provided in Section 18.3) and completed with appropriate insertions. One Note shall be payable to the order of each Lender which so requests the issuance of a Note in the principal amount equal to such Lender’s Commitment or, if less, the outstanding amount of all Loans made by such Lender, plus interest accrued thereon, as set forth below.

2.4            Paying Agent Fees.

(a)            Borrower shall pay Paying Agent an acceptance fee equal to $2,500 on or before the Closing Date.

(b)            Borrower shall pay Paying Agent an annual administrative fee equal to $10,000 (the “Paying Agent Fee”).  The Paying Agent Fee will be payable annually, in advance, commencing on the Closing Date and thereafter on each anniversary thereof, until such time as this Agreement is terminated in accordance with the terms hereunder.  Each Paying Agent Fee shall be deemed earned in full on the date when the same is due and payable hereunder and shall not be subject to rebate or proration upon termination of this Agreement for any reason.

2.5            Reserved.

2.6            Incremental Increases. The parties hereto may from time to time elect to increase the Total Commitment by an aggregate amount not to exceed $50 million, on terms and conditions agreed to by such parties.

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2.7            Interest on Loans.

(a)            Each Loan shall bear interest for the period commencing with the Drawdown Date thereof and ending on the date on which such Loan is repaid (i) at a fixed rate of 7.00% per annum in cash (such interest payable, “Cash Interest”) plus (ii) a fixed rate of 4.50% per annum to be accrued and compounded quarterly in arrears, in the form of PIK Interest (such interest payable, the “PIK Interest Portion”).

(b)           Borrower promises to pay the Cash Interest on the principal on each Loan in arrears on each Interest Payment Date. Notwithstanding the foregoing, Borrower promises to pay the balance of the unpaid principal amount, including the PIK Interest Portion, and any applicable Cash Interest pursuant to Section 3 of this Agreement.

2.8            Requests for Loans. Except with respect to the initial Loan on the Closing Date, Borrower shall give to the Paying Agent written notice executed by an Authorized Officer in the form of Exhibit B hereto (or telephonic notice confirmed in writing in the form of Exhibit B hereto) of each Loan requested hereunder (a “Loan Request”) by 5:00 p.m. (Eastern time) fourteen (14) calendar days prior to the proposed Drawdown Date with respect thereto. Each such notice shall specify with respect to the requested Loan the proposed principal amount of such Loan and the Drawdown Date. Each such Loan Request shall be irrevocable and binding on Borrower and shall obligate Borrower to accept the Loan requested from the Lenders on the proposed Drawdown Date. Nothing herein shall prevent Borrower from seeking recourse against any Lender that fails to advance its proportionate share of a requested Loan as required by this Agreement. Each Loan Request shall be in a minimum aggregate amount of $10,000,000 (except for the last Loan/borrowing hereunder, which may be in a lesser amount equal to the balance of the aggregate Commitments); provided, however, that all Loans shall be made/borrowed in accordance with Section 2.1 and Borrower shall not request each Lender make more than one Loan per calendar week.

2.9            Funds for Loans.

(a)            Not later than noon (Eastern time) on the proposed Drawdown Date of any Loans, each of the Lenders will make available to the Paying Agent, at the Paying Agent’s office, in immediately available funds, the amount of such Lender’s Commitment Percentage of the amount of the requested Loans which may be disbursed pursuant to Section 2.1. Upon receipt from each such Lender of such amount, and upon receipt of the documents required by Section 10 and Section 11 and the satisfaction of the other conditions set forth therein to the extent applicable, the Paying Agent will make available to Borrower the aggregate amount of such Loans made available to the Paying Agent by the Lenders by crediting such amount to the account of Borrower maintained at the Paying Agent’s office or wiring such funds in accordance with Borrower’s written instructions. The failure or refusal of any Lender to make available to the Paying Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Loans shall not relieve any other Lender from its several obligation hereunder to make available to the Paying Agent the amount of such other Lender’s Commitment Percentage of any requested Loans, including any additional Loans that may be requested subject to the terms and conditions hereof to provide funds to replace those not advanced by the Lender so failing or refusing.

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(b)           Unless the Paying Agent shall have been notified by any Lender prior to the applicable Drawdown Date that such Lender will not make available to Paying Agent such Lender’s Commitment Percentage of a proposed Loan, Agent may in its discretion assume that such Lender has made such Loan available to Paying Agent in accordance with the provisions of this Agreement and the Agent may, if it chooses, in reliance upon such assumption make such Loan available to Borrower, and such Lender shall be liable to the Paying Agent for the amount of such advance. If such Lender does not pay such corresponding amount upon the Paying Agent’s demand therefor, the Paying Agent will promptly notify Borrower, and Borrower shall promptly pay such corresponding amount to the Paying Agent. The Paying Agent shall also be entitled to recover from the Lender or Borrower (without duplication), as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Paying Agent to Borrower to the date such corresponding amount is recovered by the Paying Agent at a per annum rate equal to (i) from Borrower at the applicable rate for such Loan or (ii) from a Lender at the Federal Funds Effective Rate.

2.10         Use of Proceeds. Borrower and its Subsidiaries will use the proceeds of the Loans solely: (a) to pay closing costs in connection with this Agreement and the transactions contemplated hereby; (b) to redeem in full the Series E Preferred Shares in the Borrower (as defined in the Declaration of Trust); (c) to fund, directly or indirectly, acquisitions of Eligible Real Estate by Borrower or any of its Subsidiaries or Affiliates, (d)  to fund, directly or indirectly, capital and construction expenditures, tenant improvements, leasing commissions and property and equipment acquisitions for Borrowing Base Properties by Borrower or any of its Subsidiaries or Affiliates; (e) to indirectly refinance the Operating Partnership’s Existing Credit Facility as long as after giving effect thereto, Borrower is in pro forma compliance with the financial covenants in Section 9 and (f), directly or indirectly, for general working capital purposes (including without limitation to finance direct and indirect acquisitions and other investments in real estate, interest shortfalls, general operating expenses) of Borrower or any of its Subsidiaries or Affiliates.

3. REPAYMENT OF THE LOANS.

3.1            Repayments. The Loans shall be due and payable in full on the Maturity Date, together with any and all accrued and unpaid Cash Interest and PIK Interest Portion thereon. Notwithstanding the foregoing, the Loans shall be subject to earlier repayment upon (i) acceleration upon the occurrence of an Event of Default pursuant to Section 12.4, (ii) the occurrence of a Liquidation Event, (iii) or the termination of this Agreement as provided herein.

3.2            Reserved.

3.3            Optional Prepayments.

(a)            Borrower shall have the right, at its election, to prepay the outstanding amount of the Loans, as a whole or in part, at any time and from time to time. Any prepayments of the Loans shall be subject to the provisions of Section 3.3(c) below.

(b)            Borrower shall give the Paying Agent, no later than 1:00 p.m. (Eastern time) at least five (5) Business Days prior written notice of any prepayment pursuant to this Section 3.3, in each case specifying the proposed date of prepayment of the Loans and the principal amount to be prepaid (provided that any such notice or repayment may be conditioned upon the consummation of a transaction).

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(c)            If, on the date that the Loans and other Obligations have been voluntarily paid in full (for the sake of clarity, as distinguished from paid after the occurrence and during the continuance of an Event of Default), the aggregate amount of interest (i.e., the aggregate of Cash Interest (which Cash Interest shall be inclusive of any interest payable under Section 4.12) and the PIK Interest Portion) paid to the Lenders on or prior to such date (the “Previously Paid Interest”) is less than an aggregate of Twenty-Three Million Dollars ($23,000,000), Borrower shall, on such date, pay to the Lenders an additional amount equal to the difference between (A) Twenty-Three Million Dollars ($23,000,000) and (B) the actual amount of such Previously Paid Interest (such difference shall be referred to herein as the “Yield Maintenance Amount”) on or prior to such date; provided that, if (1) one or more Lenders become a Defaulting Lender under this Agreement and the Borrower thus elects to refinance the Loans and make a voluntary repayment in full under this Section 3.3, or (2) if an Event of Default shall have occurred and to the extent that, at such time, Borrower shall have borrowed less than One Hundred Million Dollars ($100,000,000), then the Yield Maintenance Amount owing to the Lenders shall be reduced, in the case of clause (1) alone, by the aggregate amount of Cash Interest and PIK Interest Portion that would have been payable on such Defaulting Lender’s pro rata portion of the Loans that were not funded by such Defaulting Lender, or in the case of clause (2) alone, on a pro-rata basis (relative to the ratio of the loans actually funded to One Hundred Million Dollars ($100,000,000); and further provided, however, that notwithstanding the foregoing to the contrary, from and after the date that Borrower shall have consummated its initial public offering of securities, the additional amount payable under this subsection (c) shall be equal to the lesser of (x) the Yield Maintenance Amount and (y) if prior to the second anniversary of the date hereof, two percent (2%) of the amount so prepaid, and if at any time thereafter, one percent (1%) of the amount so prepaid.

3.4            Partial Prepayments. Each partial prepayment of the Loans under Section 3.3 shall be in a minimum amount of Ten Million Dollars ($10,000,000) and shall be accompanied by the payment of accrued interest on the principal prepaid to the date of payment. Each partial payment under Section 3.3 shall be applied first to the principal of Loans.

3.5            AHYDO Payments. If and as necessary to ensure that the Loans will not be treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code, on or before the end of the first “accrual period” ending after the fifth anniversary of the “date of issue” (each within the meaning of Section 163(i)(2) of the Code) and on or prior to the end of each subsequent accrual period (the date of each such payment, an “AHYDO Payment Date”), the Borrower shall prepay a pro rata portion of each applicable Loan in an amount equal to the AHYDO Amount, plus accrued and unpaid interest, if any, through the date of prepayment, in accordance with the terms of this Agreement. For purposes of the foregoing, “AHYDO Amount” means, as of each AHYDO Payment Date, the portion of the Loans required to be prepaid to ensure that the Loans will not be treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code. The AHYDO Amount shall be calculated by the Borrower, and the Lenders may conclusively rely on such calculation. Each payment of the AHYDO Amount with respect to a portion of the Loan shall be treated for U.S. federal income tax purposes as a payment of original issue discount on the entire Loans (including the portion not being prepaid). It is the intention of this paragraph that the Loans will not be “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Code, and this paragraph shall be interpreted consistently therewith.

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3.6            Proration of Prepayments. If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of offset or otherwise, on account of principal of or interest on any Loan, but excluding any payment pursuant to Section 8.7 (Defaulting Lender) or 15.6 (Assignments)) in excess of its applicable Commitment Percentage of payments and other recoveries obtained by all Lenders on account of principal of and interest on the Loans (or such participation) then held by them, then such Lender shall purchase from the other Lenders such participations in the Loans held by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and the purchase price restored to the extent of such recovery.

3.7            Effect of Prepayments. Amounts of the Loans prepaid under Section 3.3 prior to the Maturity Date may not be reborrowed.

4. CERTAIN GENERAL PROVISIONS.

4.1            Reserved.

4.2            Reserved.

4.3            Funds for Payment.

All payments of principal, interest, facility fees, closing fees and any other amounts due hereunder or under any of the other Loan Documents shall be made to the Paying Agent at the office set forth on Schedule 4.3 attached hereto, not later than 1:00 p.m. (Eastern time) on the day when due, in each case in lawful money of the United States in immediately available funds.

4.4            Taxes.

(a)            For purposes of this Section 4.4, the term “Applicable Law” includes FATCA.

(b)            All payments by Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim, and free and clear of and without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 4.4) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

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(c)            Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Agent timely reimburse it for the payment of, any Other Taxes.

(d)            Borrower shall indemnify (but without duplication) each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 4.4) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e)            As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this Section 4.4, Borrower shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Agent.

(f)             (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments (or any payment) made under any Loan Document shall deliver to Borrower, the Agent and the Paying Agent, at the time or times reasonably requested by Borrower, the Agent or the Paying Agent, such properly completed and executed documentation reasonably requested by Borrower, the Agent or the Paying Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, if reasonably requested by Borrower, the Agent or the Paying Agent, each Lender shall timely deliver to Borrower, the Agent and the Paying Agent such other documentation prescribed by Applicable Law or reasonably requested by Borrower, the Agent or the Paying Agent as will enable Borrower, the Agent or the Paying Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in the immediately following clauses (ii)(A), (ii)(B) and (ii)(D)) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii)            Without limiting the generality of the foregoing, in the event that Borrower is a U.S. Person:

(A)           any Lender that is a U.S. Person shall deliver to Borrower, the Agent and the Paying Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower or the Agent), executed copies of IRS Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax;

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(B)           any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower, the Agent and the Paying Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower, the Agent or the Paying Agent), whichever of the following is applicable:

(I)               in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN, or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W 8BEN, or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(II)             executed copies of IRS Form W-8ECI;

(III)           in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is the sole record and beneficial owner of the Loan(s) and is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable; or

(IV)          to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-2 or Exhibit E-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-4 on behalf of each such direct and indirect partner;

(C)           any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to Borrower, the Agent and the Paying Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of Borrower, the Agent or the Paying Agent), executed copies of any other form prescribed by Applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by Applicable Law to permit Borrower, the Agent or the Paying Agent to determine the withholding or deduction required to be made; and

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(D)          if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower, the Agent and the Paying Agent at the time or times prescribed by Applicable Law and at such time or times reasonably requested by Borrower, the Agent or the Paying Agent such documentation prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower, the Agent or the Paying Agent as may be necessary for Borrower, the Agent and the Paying Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify Borrower, the Agent and the Paying Agent in writing of its legal inability to do so.

(g)            If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 4.4 (including by the payment of additional amounts pursuant to this Section 4.4), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made or additional amounts paid under this Section 4.4 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party actually incurred and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this subsection (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this subsection the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it reasonably deems confidential) to the indemnifying party or any other Person.

(h)            Each party’s obligations under this Section 4.4 shall survive the resignation or replacement of the Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

4.5            Computations. All computations of interest on the Loans and of other fees to the extent applicable shall be based on a 360-day year and paid for the actual number of days elapsed. Whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The Outstanding Loans as reflected on the records of the Agent from time to time shall be considered prima facie evidence of such amount.

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4.6            Reserved.

4.7            Reserved.

4.8            Reserved.

4.9            Additional Costs, Etc. Notwithstanding anything herein to the contrary, if any Change in Law, shall: (a) subject any Lender or the Agent to any Taxes with respect to this Agreement, the other Loan Documents, such Lender’s Commitment, or the Loans (other than for Indemnified Taxes and Taxes described in clauses (b) through (d) of the definition of Excluded Taxes, and Connection Income Taxes), or (b) materially change the basis of taxation (except for changes in taxes on gross receipts, income or profits or its franchise tax) of payments to any Lender of the principal of or the interest on any Loans or any other amounts payable to any Lender under this Agreement or the other Loan Documents, or (c) impose or increase or render applicable any special deposit, compulsory loan, insurance charge, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law and which are not already reflected in any amounts payable by Borrower hereunder) against assets held by, or deposits in or for the account of, or loans by, or commitments of an office of any Lender, or (d) impose on any Lender or the Agent any other conditions or requirements with respect to this Agreement, the other Loan Documents, the Loans, such Lender’s Commitment, or any class of loans or commitments of which any of the Loans or such Lender’s Commitment forms a part; and the result of any of the foregoing is: (i) to increase the cost (other than Taxes) to any Lender of making, continuing, converting to, funding, issuing, renewing, extending or maintaining any of the Loans or such Lender’s Commitment, or (ii) to reduce the amount of principal, interest or other amount payable (other than in respect of Taxes) to any Lender or the Agent hereunder on account of such Lender’s Commitment or any of the Loans, or (iii) require any Lender or the Agent to make any payment or to forego any interest or other sum payable hereunder (other than in respect of Taxes), the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Lender or the Agent from the Borrower hereunder, then, and in each such case, Borrower will, within fifteen (15) days of demand made by such Lender or the Agent at any time and from time to time and as often as the occasion therefor may arise, pay to such Lender such additional amounts as such Lender shall determine in good faith to be sufficient to compensate such Lender for such additional cost, reduction, payment or foregone interest or other sum. Each Lender and the Agent in determining such amounts may use any reasonable averaging and attribution methods generally applied by such Lender, in such case (a) through (d), so long as such amounts have accrued on or before the day that is one hundred and eighty (180) days prior to the date on which the Agent first made demand therefor (except that, if the event giving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) day period referred to above shall be extended to include the period of retroactive effect thereof).

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4.10          Capital Adequacy. If after the date hereof any Lender in good faith determines that (a) as a result of a Change in Law, or (b) compliance by such Lender or its parent bank holding company with any directive of any such entity regarding liquidity or capital adequacy has the effect of reducing the return on such Lender’s or such holding company’s capital as a consequence of such Lender’s commitment to make Loans hereunder to a level below that which such Lender or holding company could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such holding company’s then existing policies with respect to capital adequacy and assuming the full utilization of such entity’s capital) by any amount deemed by such Lender to be material, then such Lender may notify Borrower thereof. Borrower agrees to pay to such Lender the amount of such reduction in the return on capital as and when such reduction is reasonably determined, upon presentation by such Lender of a statement of the amount setting forth the Lender’s calculation thereof. In determining such amount, such Lender may use any reasonable averaging and attribution methods generally applied by such Lender.

4.11          Reserved.

4.12          Default Interest. (a) Automatically upon the occurrence and during the continuance of an Event of Default, and regardless of whether or not the Agent or the Lenders shall have accelerated the maturity of the Loans, all Loans shall bear interest (which shall be Cash Interest) payable on demand at a rate per annum equal to three percent (3.0%) above the interest rate that would otherwise be in effect hereunder (the “Default Rate”), until such amount shall be paid in full (after as well as before judgment) until such amount shall be paid in full (after as well as before judgment), or if any of such amounts shall exceed the maximum rate permitted by law, then at the maximum rate permitted by law.

4.13          Certificate. A certificate setting forth any amounts payable pursuant to Section 4.9, Section 4.10 and Section 4.12 submitted by any Lender or the Agent to Borrower shall be prima facie evidence of the amount due. A Lender shall be entitled to reimbursement under Section 4.9, or Section 4.10 from and after notice to Borrower that such amounts are due given in accordance with Section 4.9 or Section 4.10 and for a period of one hundred eighty (180) days prior to receipt of such notice if such Change in Law was effective during such one hundred eighty (180) day period.

4.14          Limitation on Interest. Notwithstanding anything in this Agreement or the other Loan Documents to the contrary, all agreements between or among Borrower, the Lenders and the Agent, whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of acceleration of the maturity of any of the Obligations or otherwise, shall the interest contracted for, charged or received by the Lenders exceed the maximum amount permissible under applicable law. If, from any circumstance whatsoever, interest would otherwise be payable to the Lenders in excess of the maximum lawful amount, the interest payable to the Lenders shall be reduced to the maximum amount permitted under applicable law; and if from any circumstance the Lenders shall ever receive anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal balance of the Obligations and to the payment of interest or, if such excessive interest exceeds the unpaid balance of principal of the Obligations, such excess shall be refunded to Borrower. All interest paid or agreed to be paid to the Lenders shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full period until payment in full of the principal of the Obligations (including the period of any renewal or extension thereof) so that the interest thereon for such full period shall not exceed the maximum amount permitted by applicable law. This section shall control all agreements between or among Borrower, the Lenders and the Agent.

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4.15         Certain Provisions Relating to Taxes and Other Lenders. If a Lender requests compensation for any losses or reasonable and documented costs to be reimbursed pursuant to any one or more of the provisions of Section 4.4(a)-(d) (as a result of the imposition of U.S. withholding taxes on amounts paid to such Lender under this Agreement), then, upon the request of Borrower, such Lender, as applicable, shall use reasonable efforts in a manner consistent with such institution’s practice in connection with loans like the Loan of such Lender to eliminate, mitigate or reduce amounts that would otherwise be payable by Borrower under the foregoing provisions, provided that such action would not be otherwise prejudicial to such Lender, including, without limitation, by designating another of such Lender’s offices, branches or affiliates; Borrower agreeing to pay all reasonable and necessary costs and expenses incurred by such Lender in connection with any such action.

4.16         Tax Treatment. Each party to this Agreement acknowledges that it is its intent to treat the Loans as indebtedness for U.S. federal, state and local income tax purposes. All parties to this Agreement agree to such treatment and agree to take no action inconsistent with such treatment unless otherwise required by applicable law in a proceeding of final determination.

5. COLLATERAL SECURITY; APPRAISALS 

5.1            Collateral. The Obligations shall be secured by a perfected first priority lien and security interest to be held by the Agent for the benefit of the Lenders on the Collateral, pursuant to the terms of the Security Documents.

5.2            Appraisals.

The Agent may, if and only if the Senior Facility Agent or Senior Facility Lenders shall have failed to obtain the same, require Borrower to provide new Appraisals or an update to existing Appraisals with respect to the Borrowing Base Properties and the non-Borrowing Base Properties, or any of them, as the Agent shall reasonably determine, once during each consecutive twelve-month period (for the sake of clarity, not rolling 12-month periods commencing with each month) commencing on Closing Date (provided that no such new Appraisal or update shall be obtained or required by the Lenders at any time prior to the twelve-month anniversary of the immediately preceding Appraisal relating to the subject Borrowing Base Property or non-Borrowing Base Property); provided that if and to the extent that the Senior Facility Agent or Senior Facility Lenders do not obtain or require any such Appraisals during any such periods, the Lenders shall be entitled to require Borrower to provide the same. The reasonable and actual expense of such Appraisals and/or updates performed pursuant to this Section 5.2 shall be borne by Borrower.

5.3            Authorization to File Financing Statements. Borrower acknowledges that the Agent is authorized to file or record financing statements or continuation statements and amendments thereto, and other filing or recording documents or instruments with respect to the Collateral granted by it in such form and in such offices as the Agent reasonably determines appropriate to perfect or maintain the perfection of the security interests of the Agent under this Agreement. Borrower agrees to furnish to the Agent promptly any information required for the filing of financing statements or any amendments thereto.

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5.4            Release of Collateral. Upon the refinancing or repayment of the Obligations in full (other than contingent indemnification claims for which no claim has been made), then the Agent and the Lenders shall release the Collateral from the lien and security interest of the Security Documents and the other Loan Documents and release Borrower from its obligations under the Loan Documents.

6. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to the Agent and the Lenders as follows, each as of the Closing Date hereof, and as of the date of funding any Loan hereunder (subject to Section 11.1 hereof).

6.1            Corporate Authority, Etc.

(a)           Incorporation; Good Standing. Borrower is a Maryland real estate investment trust duly organized pursuant to its certificate of limited partnership filed with the Maryland Department of Assessments and Taxation, and is validly existing and in good standing under the laws of Maryland. Borrower (i) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated, and (ii) is in good standing and is duly authorized to do business in each other jurisdiction where a failure to be so qualified in such other jurisdiction would reasonably be expected to have a Material Adverse Effect.

(b)           Senior Facility Credit Parties. Each of the Senior Facility Credit Parties (i) is a corporation, limited partnership, general partnership, limited liability company or trust duly organized under the laws of its State of organization and is validly existing and in good standing under the laws thereof, (ii) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated and (iii) is in good standing and is duly authorized to do business in each jurisdiction where a Borrowing Base Property owned or leased by it is located to the extent required to do so under applicable law and in each other jurisdiction where a failure to be so qualified would reasonably be expected to have a Material Adverse Effect.

(c)           Other Subsidiaries. Except where a failure to satisfy such representation would not have a Material Adverse Effect, each of the Subsidiaries of Borrower (other than the Senior Facility Subsidiary Guarantors) (i) is a corporation, limited partnership, general partnership, limited liability company or trust duly organized under the laws of its State of organization and is validly existing and in good standing under the laws thereof, (ii) has all requisite power to own its property and conduct its business as now conducted and as presently contemplated and (iii) is in good standing and is duly authorized to do business in each jurisdiction where Real Estate owned or leased by it is located.

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(d)           Authorization. The execution, delivery and performance of this Agreement and the other Loan Documents to which any of Borrower is a party and the transactions contemplated hereby and thereby (i) are within the authority of the Senior Facility Credit Parties, (ii) have been duly authorized by all necessary actions on the part of the Senior Facility Credit Parties, (iii) do not and will not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which any Senior Facility Credit Party is subject or any judgment, order, writ, injunction, license or permit applicable to any Senior Facility Credit Party, except as would not reasonably be expected to result in a Material Adverse Effect, (iv) do not and will not conflict with or constitute a default (whether with the passage of time or the giving of notice, or both) under any provision of the partnership agreement, articles of incorporation or other charter documents or bylaws of, or any agreement or other instrument binding upon, any Senior Facility Credit Party or any of its properties where, in the case of any agreement or other instrument binding upon any Senior Facility Credit Party or any of its properties, any conflict or default would not reasonably be expected to have a Material Adverse Effect, (v) do not and will not result in or require the imposition of any lien or other encumbrance on any of the properties, assets or rights of any Senior Facility Credit Party other than the liens and encumbrances in favor of the Agent contemplated by this Agreement and the other Loan Documents (or any other lien or encumbrance permitted by this Agreement and/or the Loan Documents), and (vi) do not require the approval or consent of any Person other than those already obtained and delivered to the Agent or except as would not reasonably be expected to result in a Material Adverse Effect.

(e)            Enforceability. The execution and delivery of this Agreement and the other Loan Documents to which the Borrower or any of the Senior Facility Credit Parties is a party are valid and legally binding obligations of the Borrower and the Senior Facility Credit Parties enforceable in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors’ rights and general principles of equity.

6.2            Governmental Approvals. The execution, delivery and performance of this Agreement and the other Loan Documents to which the Borrower or any Senior Facility Credit Party is a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing or registration with, or the giving of any notice to, any court, department, board, governmental agency or authority other than those already obtained or waived in writing and the filing of the Security Documents in the appropriate records office with respect thereto, in each case, except as would not reasonably be expected to result in a Material Adverse Effect.

6.3            Title to Borrowing Base Properties. Except as indicated on Schedule 6.3 hereto, the Operating Partnership and its Subsidiaries own all of the assets reflected in the consolidated balance sheet of the Operating Partnership as of the Balance Sheet Date or acquired since that date (except property and assets sold or otherwise disposed of in the ordinary course since that date), Senior Facility Subsidiary Guarantors own each subject Borrowing Base Property subject to no rights of others, including any mortgages, leases pursuant to which Senior Facility Subsidiary Guarantors or any of their Affiliates is the lessee, conditional sales agreements, title retention agreements, liens or other monetary encumbrances except Permitted Liens (as defined in the Senior Facility Agreement).

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6.4            Financial Statements. Borrower has furnished to the Agent: (a) the consolidated balance sheet of Borrower and its Subsidiaries as of the Balance Sheet Date and the related consolidated statement of income and cash flow for the most recent period then ended (and available) certified by an Authorized Officer or the chief financial or accounting officer of Borrower, (b) as of the Closing Date, an unaudited statement of Net Operating Income for each of the Borrowing Base Properties (if any) for the most recent period then ended (and available) certified by the chief financial or accounting officer of Borrower, to the best of such officer’s knowledge, as fairly presenting in all material respects the Net Operating Income for such parcels for such periods, and (c) certain other financial information relating to Borrower and the Real Estate (including, without limitation, the Borrowing Base Properties). Such balance sheet and statements have been prepared in accordance with GAAP and fairly present in all material respects the consolidated financial condition of the Borrower and its Subsidiaries as of such dates and the consolidated results of the operations of the Borrower and its Subsidiaries for such periods. Notwithstanding the foregoing of this Section 6.4, projections represent Borrower’s best estimate of Borrower’s future financial performance and such assumptions are believed by Borrower to be fair and reasonably in light of current business conditions, and Borrower can give no assurances that such projections will be attained.

6.5            No Material Changes. Since the later of Balance Sheet Date or the date of the most recent financial statements delivered pursuant to Section 7.4, as applicable, except as otherwise disclosed to the Agent, there has occurred no materially adverse change in the financial condition, or business of Borrower and its Subsidiaries taken as a whole as shown on or reflected in the consolidated balance sheet of the Borrower as of the Balance Sheet Date, or its consolidated statement of income or cash flows for the calendar year then ended, other than changes that have not and would not reasonably be expected to have a Material Adverse Effect. As of the date hereof, except as set forth on Schedule 6.5 hereto, there has occurred no materially adverse change in the financial condition, operations or business activities of any of the Borrowing Base Properties from the condition shown on the statements of income delivered to the Agent pursuant to Section 6.4 other than changes in the ordinary course of business that have not had a Material Adverse Effect.

6.6            Franchises, Patents, Copyrights, Etc. Borrower, the Operating Partnership and the Senior Facility Subsidiary Guarantors possess all franchises, patents, copyrights, trademarks, trade names, service marks, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of their business substantially as now conducted without known conflict with any rights of others. None of the Borrowing Base Properties are owned or operated under or by reference to any registered or protected trademark, trade name, service mark or logo, except where such failure or conflict would not reasonably be expected to have a Material Adverse Effect.

6.7            Litigation. As of the date hereof, except as stated on Schedule 6.7, there are no actions, suits, proceedings or investigations of any kind pending or to the knowledge of Borrower threatened against Borrower, the Operating Partnership or a Senior Facility Subsidiary Guarantor before any court, tribunal, arbitrator, mediator or administrative agency or board which question the validity of this Agreement or any of the other Loan Documents, any action taken or to be taken pursuant hereto or thereto or any lien, security title or security interest created or intended to be created pursuant hereto or thereto. As of the date hereof, except as set forth on Schedule 6.7, there are no judgments, final orders or awards outstanding against or affecting Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors or any Borrowing Base Property.

6.8            No Material Adverse Contracts, Etc. None of Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors are subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation that has or is expected in the future to have a Material Adverse Effect. None of Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors are a party to any contract or agreement that has or could reasonably be expected to have a Material Adverse Effect.

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6.9            Compliance with Other Instruments, Laws, Etc. None of Borrower, the Operating Partnership or any of their respective Subsidiaries are in violation of any provision of its charter or other organizational documents, bylaws, or any agreement or instrument to which it is subject or by which it or any of its properties is bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that has had or could reasonably be expected to have a Material Adverse Effect.

6.10          Tax Status. Except as would not reasonably be expected to result in a Material Adverse Effect, each of Borrower, the Operating Partnership and the Senior Facility Subsidiary Guarantors (a) have made or filed all federal and state income and all other Tax returns, reports and declarations required by any jurisdiction to which it is subject or has obtained an extension for filing, (b) have paid prior to delinquency all Taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings or for which any of Borrower, the Operating Partnership or their respective Subsidiaries, as applicable, has set aside on its books provisions reasonably adequate for the payment of such Taxes, and (c) have made provisions reasonably adequate for the payment of all accrued Taxes not yet due and payable. Except as would not reasonably be expected to result in a Material Adverse Effect, there are no unpaid Taxes claimed by the taxing authority of any jurisdiction to be due by Borrower, the Operating Partnership or their respective Subsidiaries, the officers or partners of such Person know of no basis for any such claim, and as of the Closing Date, there are no audits pending or to the knowledge of Borrower threatened with respect to any Tax returns filed by Borrower, the Operating Partnership or their respective Subsidiaries.

6.11          No Event of Default. No Default or Event of Default has occurred and is continuing.

6.12          Investment Company Act. None of Borrower, the Operating Partnership or any of their respective Subsidiaries is an “investment company”, or an “affiliated company” or a “principal underwriter” of an “investment company”, as such terms are defined in the Investment Company Act of 1940.

6.13          Absence of UCC Financing Statements, Etc. Except with respect to Permitted Liens or as disclosed on the lien search reports delivered to and approved by the Agent, there is no financing statement (but excluding any financing statements that may be filed against Borrower without the consent or agreement of such Persons), security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any applicable filing records, registry, or other public office, that purports to cover, affect or give notice of any present or possible future lien on, or security interest or security title in, any Collateral.

6.14          Setoff, Etc. The Collateral and the rights of the Agent and the Lenders with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses by Borrower or any of its Subsidiaries or Affiliates or, to the best knowledge of Borrower, any other Person other than Permitted Liens described in Section 8.2(vi) or Section 8.2(x).

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6.15          Certain Transactions. Except as disclosed on Schedule 6.15 hereto, none of the partners, officers, trustees, managers, members, directors, or employees of Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor is, nor shall any such Person become, a party to any transaction with Borrower, the Operating Partnership or Senior Facility Subsidiary Guarantor (other than for services as partners, managers, members, employees, officers and directors), including any agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any partner, officer, trustee, director or such employee or, to the knowledge of Borrower any corporation, partnership, trust or other entity in which any partner, officer, trustee, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, which are on terms less favorable to Borrower, the Operating Partnership, or the Senior Facility Subsidiary Guarantors than those that would be obtained in a comparable arms-length transaction.

6.16          Employee Benefit Plans. Except as would not reasonably be expected to have a Material Adverse Effect, Borrower and each ERISA Affiliate that is subject to ERISA has fulfilled its obligation, if any, under the minimum funding standards of ERISA and the Code with respect to each Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code with respect to each Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan. Except as would not reasonably be expected to result in a Material Adverse Effect, neither Borrower nor any ERISA Affiliate has (a) sought a waiver of the minimum funding standard under Section 412 of the Code in respect of any Multiemployer Plan or Guaranteed Pension Plan or (b) incurred any liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Neither Borrower nor any ERISA Affiliate has failed to make any contribution or payment to any Multiemployer Plan or Guaranteed Pension Plan, or made any amendment to any Multiemployer Plan or Guaranteed Pension Plan, which has resulted or would reasonably be expected to result in the imposition of a Lien. None of the Borrowing Base Properties constitutes a “plan asset” of any Employee Benefit Plan, Multiemployer Plan or Guaranteed Pension Plan in each case that is subject to ERISA.

6.17          Disclosure. All of the representations and warranties made by Borrower in this Agreement and the other Loan Documents or any document or instrument delivered to the Agent or the Lenders pursuant to or in connection with any of such Loan Documents are true and correct in all material respects, and Borrower has not failed to disclose such information as is necessary to make such representations and warranties not misleading. To the best of Borrower’s knowledge, all information contained in this Agreement, the other Loan Documents or otherwise furnished to or made available to the Agent or the Lenders by Borrower is and will be true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading. To the best of Borrower’s knowledge, the written information, reports and other papers and data with respect to Borrower, its Subsidiaries or the Borrowing Base Properties (other than projections and estimates) furnished to the Agent or the Lenders in connection with this Agreement or the obtaining of the Commitments of the Lenders hereunder was, at the time so furnished, complete and correct in all material respects, or has been subsequently supplemented by other written information, reports or other papers or data, to the extent necessary to give in all material respects a true and accurate knowledge of the subject matter in all material respects; provided that such representation shall not apply to (a) the accuracy of any appraisal, property condition assessment, zoning or code compliance report, title commitment, survey, or engineering and environmental reports prepared by third parties or legal conclusions or analysis provided by Borrower’s counsel (although Borrower has no reason to believe that the Agent and the Lenders may not rely on the accuracy thereof) or (b) budgets, projections and other forward-looking speculative information prepared in good faith by Borrower (except to the extent the related assumptions were when made manifestly unreasonable).

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6.18        Trade Name; Place of Business. None of the Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor uses any trade name and conducts business under any name other than its actual name set forth in the Loan Documents. The principal place of business of Borrower and the Senior Facility Credit Parties is 1901 Main Street, Lake Como, New Jersey, 07719.

6.19        Regulations T, U and X. No portion of any Loan is to be used for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 220, 221 and 224. Neither Borrower nor any Senior Facility Credit Party is engaged, nor will it engage, principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any “margin security” or “margin stock” as such terms are used in Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 220, 221 and 224.

6.20        Environmental Compliance. Except as set forth on Schedule 6.20 or as specifically set forth in the written environmental site assessment reports of the Environmental Engineer provided to the Agent on or before the date hereof, or in the case of any Borrowing Base Property acquired after the date hereof, the environmental site assessment reports with respect thereto provided to the Agent:

(a)             To Borrower’s actual knowledge, none of the Borrowing Base Properties, nor to, any tenant or operations thereon, is in violation, or alleged violation, of any Environmental Law, which violation would reasonably be expected to have a Material Adverse Effect.

(b)            None of Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor has received written notice from any third party including, without limitation, any federal, state or local governmental authority, (i) that it has been identified by the United States Environmental Protection Agency (“EPA”) as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (ii) that any Hazardous Substance(s) which it has generated, transported or disposed of have been found at any site at which a federal, state or local agency or other third party has conducted, or has demanded that Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; or (iii) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding (in each case, contingent or otherwise) arising out of any third party’s incurrence of costs, expenses, losses or damages in connection with the release of Hazardous Substances in violation of applicable Environmental Law, which in the case of clauses (i) through (iii) above which involves a Borrowing Base Property and which would reasonably be expected to have a Material Adverse Effect.

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(c)              (i) No portion of the Borrowing Base Properties is used by Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors, or to the actual knowledge of Borrower, by any tenant or operator thereon, for the handling, processing, storage or disposal of Hazardous Substances except in compliance with applicable Environmental Laws, and, to the actual knowledge of Borrower, no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Borrowing Base Properties except those which are being operated and maintained, and, if required, remediated, in compliance with Environmental Laws; (ii) in the course of any business activities conducted by Borrower, the Operating Partnership or their respective Subsidiaries or, to Borrower’s actual knowledge, the tenants and operators of their properties, no Hazardous Substances have been generated or are being used on the Borrowing Base Properties except in the ordinary course of Borrower’s, the Operating Partnership’s or Senior Facility Subsidiary Guarantors’, or their tenants and operators’, respective businesses and in compliance with applicable Environmental Laws; (iii) to Borrower’s actual knowledge, there has been no past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping (other than in reasonable quantities to the extent necessary in the ordinary course of operation of Borrower’s, the Operating Partnership’s or Senior Facility Subsidiary Guarantors’, or their tenants’ or operators’, respective businesses and, in any event, in compliance with all Environmental Laws) (a “Release”) or threatened Release of Hazardous Substances on, upon, into or from the Borrowing Base Properties, which Release would reasonably be expected to have a Material Adverse Effect; (iv) to Borrower’s actual knowledge, there have been no Releases on, upon, from or into any real property in the vicinity of any of the Borrowing Base Properties which, through soil or groundwater contamination, have come to be located on the Borrowing Base Properties, and which would be reasonably anticipated to have a Material Adverse Effect; and (v) to Borrower’s actual knowledge, any Hazardous Substances that have been generated on any of the Borrowing Base Properties have been transported off-site in accordance with all applicable Environmental Laws and in a manner that would not reasonably be expected to have a Material Adverse Effect.

(d)              Except for such matters that shall be complied with as of the Closing Date, by virtue of the transactions set forth herein and contemplated hereby, or as a condition to the effectiveness of any other transactions contemplated hereby, none of Borrower, the Operating Partnership, the Senior Facility Subsidiary Guarantors or the Borrowing Base Properties will become subject to any applicable Environmental Law requiring the performance of environmental site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any governmental agency or the recording or delivery to other Persons of an environmental disclosure document or statement pursuant to applicable Environmental Laws, which would reasonably be expected to have a Material Adverse Effect.

(e)              To Borrower’s actual knowledge, there are no existing or closed sanitary waste landfills, or hazardous waste treatment, storage or disposal facilities on the Borrowing Base Properties except where such existence would not reasonably be expected to have a Material Adverse Effect.

(f)               Neither Borrower nor the Operating Partnership or the Senior Facility Subsidiary Guarantors have received any written notice from any party that any use, operation, or condition of any Borrowing Base Properties has caused any adverse condition on any other property that would reasonably be expected to result in a claim under applicable Environmental Law that would have a Material Adverse Effect, nor does Borrower, the Operating Partnership or Senior Facility Subsidiary Guarantor have actual knowledge of any existing facts or circumstances that could reasonably be expected to form the basis for such a claim.

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6.21        Subsidiaries; Organizational Structure. Schedule 6.21 sets forth, as of the Closing Date, all of the Subsidiaries and Unconsolidated Subsidiaries of Borrower, the form and jurisdiction of organization of each of the Subsidiaries and Unconsolidated Subsidiaries, and the owners of the direct and indirect ownership interests therein. No Person owns any legal, equitable or beneficial interest in any of the Persons set forth on Schedule 6.21 except as set forth on such Schedule.

6.22        Leases. Borrower have delivered to the Agent true and complete copies of the Leases and any amendments thereto relating to each Borrowing Base Property required to be delivered as a part of the Eligible Real Estate Qualification Documents (as defined in the Senior Facility Agreement) as of the date hereof. An accurate and complete Rent Roll in all material respects as of the date of inclusion of each Borrowing Base Property in the Collateral with respect to all Leases of any portion of the Borrowing Base Property has been provided to the Agent. The Leases previously delivered to the Agent as described in the first sentence of this Section 6.22 constitute as of the date thereof the sole material agreements relating to leasing or licensing of space at such Borrowing Base Property and in the Building relating thereto. No tenant under any Lease is entitled to any free rent, partial rent, rebate of rent payments, credit, offset or deduction in rent, including, without limitation, lease support payments or lease buy-outs, except as reflected in such Leases or such Rent Roll. Except as set forth in Schedule 6.22, to Borrower’s, actual knowledge, the Leases reflected therein are, as of the date of inclusion of the applicable Borrowing Base Property in the Senior Facility Collateral, in full force and effect in accordance with their respective terms, without any payment default or any other material default thereunder, nor are there any material defenses, counterclaims, offsets, concessions or rebates available to any tenant thereunder, and except as reflected in Schedule 6.22, none of Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor has given or made, any notice of any payment or other material default, or any claim, which remains uncured or unsatisfied, with respect to any of the Leases, and to the actual knowledge of Borrower, there is no basis for any such claim or notice of default by any tenant. Borrower knows of no condition which with the giving of notice or the passage of time or both would constitute a default on the part of any tenant with respect to the material terms under a Lease or of the respective Senior Facility Subsidiary Guarantor as landlord under the Lease. No security deposit or advance rental or fee payment (more than 2 months in advance) has been made by any lessee or licensee under the Leases except as may be specifically designated in the copies of the Leases furnished to the Agent or as otherwise disclosed to the Agent in writing. No property other than the Borrowing Base Property which is the subject of the applicable Lease is necessary to comply with the requirements (including, without limitation, parking requirements) contained in such Lease.

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6.23         Property. Except as set forth in Schedule 6.23 or as set forth in the written engineer reports provided to the Agent on or before the date hereof, to Borrower’s actual knowledge, all of the Borrowing Base Properties, and all major building systems located thereon, are structurally sound, in good condition and working order and free from material defects, subject to ordinary wear and tear, except for such portion of such Real Estate which is not occupied by any tenant and which may not be in final working order pending final build-out of such space except where such defects have not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Borrowing Base Properties, and the use and operation thereof, to Borrower’s actual knowledge, is in material compliance with all applicable federal and state law and governmental regulations and any local ordinances, orders or regulations, including without limitation, laws, regulations and ordinances relating to zoning, building codes, subdivision, fire protection, health, safety, handicapped access, historic preservation and protection, wetlands, tidelands, and Environmental Laws except in cases that would not reasonably be expected to cause a Material Adverse Effect. To Borrower’s actual knowledge, all water, sewer, electric, gas, telephone and other utilities necessary for the use and operation of the Borrowing Base Property are installed to the property lines of the Borrowing Base Property through dedicated public rights of way or through perpetual private easements with respect to which the applicable Mortgage created (on the Closing Date under the Senior Facility Agreement) a valid and enforceable first lien subject to Permitted Liens (as such term is defined in the Senior Facility Agreement) and, except in the case of drainage facilities, are connected to the Building located thereon with valid permits and are adequate to service the Building in compliance with applicable law, and except where the failure of any of the foregoing would not reasonably be expected to have a Material Adverse Effect. There are no material unpaid or outstanding real estate or other taxes or assessments on or against any of the Borrowing Base Properties which are payable by Borrower or any tenant (except only real estate or other taxes or assessments, that are not yet delinquent or are being protested as permitted by this Agreement). Except as otherwise disclosed to the Agent in writing, there are no pending, or to the actual knowledge of Borrower threatened or contemplated, eminent domain proceedings against any of the Borrowing Base Properties. Except as otherwise disclosed to the Agent in writing, none of the Borrowing Base Properties is now damaged as a result of any fire, explosion, accident, flood or other casualty. Except as otherwise disclosed to the Agent in writing, none of Borrower, the Operating Partnership or Senior Facility Subsidiary Guarantors has received any outstanding written notice from any insurer or its agent requiring performance of any work with respect to any of the Borrowing Base Properties or canceling or threatening to cancel any policy of insurance, and each of the Borrowing Base Properties complies with the material requirements of all of Borrower’s, the Operating Partnership’s and Senior Facility Subsidiary Guarantors’ insurance carriers, except where any of the foregoing would not reasonably be expected to have a Material Adverse Effect. Except as otherwise disclosed to the Agent, Borrower, the Operating Partnership and the Senior Facility Subsidiary Guarantors have no Management Agreements for any of the Borrowing Base Properties. To the actual knowledge of Borrower, there are no material claims or any bases for material claims in respect of any Borrowing Base Property or its operation by any party to any service agreement or Management Agreement, that would have a Material Adverse Effect. No person or entity has any right or option to acquire any Borrowing Base Property or any Building thereon or any portion thereof or interest therein, except for certain tenants pursuant to the terms of their Leases with Senior Facility Subsidiary Guarantors.

6.24         Brokers. Except for Nomura Securities International, Inc., none of the Borrower or the Senior Facility Credit Parties has engaged or otherwise dealt with any broker, finder or similar entity in connection with this Agreement or the Loans contemplated hereunder.

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6.25         Other Debt. As of the date of this Agreement, (a) none of the Borrower, the Senior Facility Credit Parties nor any of their respective Subsidiaries is in default of (i) the payment of any Indebtedness that individually or in the aggregate has an outstanding principal balance in excess of $500,000.00 (“Material Debt”), or (ii) the performance of any material obligation under any agreement, mortgage, deed of trust, security agreement, financing agreement or indenture to which any of them is a party that is related to a Material Debt, and (b) as of the Closing Date all Indebtedness of Borrower and the Senior Facility Credit Parties is current and not subject to acceleration. Neither the Borrower nor any Senior Facility Credit Party is a party to or bound by any agreement, instrument or indenture that may require the subordination in right or time or payment of any of the Obligations to any other indebtedness or obligation of the Borrower or any Senior Facility Credit Party. Schedule 6.25 attached hereto sets forth all agreements, mortgages, deeds of trust, financing agreements or other material agreements binding upon the Borrower, any Senior Facility Credit Party or their respective properties and entered into by the Borrower or any Senior Facility Credit Party as of the date of this Agreement with respect to any Indebtedness of the Borrower or any Senior Facility Credit Party in an amount greater than $500,000.00, and Borrower has provided the Agent with such true, correct and complete copies thereof as the Agent has requested.

6.26         Solvency. As of the Closing Date and after giving effect to the transactions contemplated by this Agreement and the other Loan Documents, including all Loans made or to be made hereunder, the Borrower, individually and the Senior Facility Credit Parties, taken as a whole, in each case are not insolvent on a balance sheet basis such that the sum of their liabilities exceeds the sum of such assets, the Borrower, individually, and the Senior Facility Credit Parties, taken as a whole, are able to pay their debts as they become due, and the Senior Facility Credit Parties, taken as a whole, have sufficient capital to carry on their businesses.

6.27         No Bankruptcy Filing. As of the Closing Date, none of the Borrower or the Senior Facility Credit Parties are contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of its assets or property, and neither the Borrower or the Senior Facility Credit Parties have knowledge of any Person contemplating the filing of any such petition against it.

6.28         No Fraudulent Intent. Neither the execution and delivery of this Agreement or any of the other Loan Documents nor the performance of any actions required hereunder or thereunder is being undertaken by the Borrower and the Senior Facility Credit Parties with or as a result of any actual intent by any of such Persons to hinder, delay or defraud any entity to which any of such Persons is now or will hereafter become indebted.

6.29         Reserved.

6.30         OFAC. Neither Borrower, nor the Operating Partnership or any Senior Facility Subsidiary Guarantor is (or will be) (i) a Sanctioned Person, (ii) located, organized or resident in a Designated Jurisdiction or (iii) is or has been (within the previous five (5) years) engaged in any transaction with any Sanctioned Person or any Person who is located, organized or resident in any Designated Jurisdiction to the extent that such transactions would violate Sanctions. No Loan, nor the proceeds from any Loan, has been used, directly or indirectly, or has otherwise been made available to fund any activity or business in any Designated Jurisdiction or to fund any activity or business with any Sanctioned Person, or in any other manner that will result in a violation by the Borrower or any Senior Facility Credit Party or Subsidiary thereof, or any Lender or the Agent, of Sanctions. Neither the making of the Loans hereunder nor the use of proceeds thereof will violate the Act, the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or successor statute thereto. Borrower and its Subsidiaries are in compliance in all material respects with the Patriot Act. The Borrower and the Senior Facility Credit Parties have implemented and maintain in effect policies and procedures reasonably designed to promote and achieve compliance with the Anti-Corruption Laws and applicable Sanctions. In addition, Borrower hereby agrees to provide to the Lenders any additional information that a Lender reasonably deems necessary from time to time in order to ensure compliance with all applicable laws concerning money laundering and similar activities.

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6.31         Regarding Representations and Warranties. Each request by any Borrower for an advance of Loan proceeds: (i) shall constitute an affirmation by Borrower that the foregoing representations and warranties remain true and correct as of the date of such request (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date); and (ii) shall constitute the representation and warranty of Borrower to the Agent and each of the Lenders that the information set forth in each such request is true and correct in all material respects and omits no material fact necessary to make the same not misleading. All representations, warranties, covenants and agreements made in this Agreement or in the other Loan Documents by Borrower shall be deemed to have been relied upon by Agent and each of the Lenders notwithstanding any investigation heretofore or hereafter made by Agent and/or any of the Lenders or on its behalf.

7. AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, so long as any Loan or Note is outstanding (other than contingent indemnification claims for which no claim has been made) or any Lender has any obligation to make any Loans:

7.1            Punctual Payment. Borrower will duly and punctually pay or cause to be paid the principal and interest on the Loans and all interest and fees provided for in this Agreement, all in accordance with the terms of this Agreement and the Notes, as well as all other sums owing pursuant to the Loan Documents in accordance with the terms hereof.

7.2            Maintenance of Office. Borrower will maintain its chief executive office at 1901 Main Street, Lake Como, New Jersey 07719, or at such other as Borrower shall designate upon prompt written notice to the Agent and the Lenders, where notices, presentations and demands to or upon Borrower in respect of the Loan Documents may be given or made.

7.3            Records and Accounts. The Borrower, the Operating Partnership and the Senior Facility Subsidiary Guarantors will (a) keep, and cause each of their respective Subsidiaries to keep, true and accurate records and books of account in which full, true and correct entries will be made in accordance with GAAP (in each case, in all material respects) and (b) make adequate provision for the payment of all Taxes (including income taxes). Neither Borrower, nor the Operating Partnership or any of their respective Subsidiaries shall, without the prior written consent of the Lenders (which consent shall not be unreasonably withheld or delayed) (x) make any material change to the accounting policies/principles used by such Person in preparing the financial statements and other information described in Section 6.4 or Section 7.4 (unless required by GAAP or other applicable accounting standards), or (y) change its fiscal year.

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7.4            Financial Statements, Certificates and Information. Borrower will deliver or cause to be delivered to the Agent and the Lenders:

(a)              not later than ninety (90) days after the end of each calendar year, the audited consolidated balance sheet of Borrower and its Subsidiaries at the end of such year, and the related audited consolidated statements of income, changes in capital and cash flows for such year, setting forth in comparative form the figures for the previous fiscal year and all such statements to be in reasonable detail, prepared in accordance with GAAP, together with a certification (as per clause (c) below) by an Authorized Officer or the chief financial officer or accounting officer of Borrower that the information contained in such financial statements fairly presents in all material respects the financial position of Borrower and its Subsidiaries, and accompanied by an auditor’s report prepared without qualification as to the scope of the audit by BDO USA, LLP or another nationally recognized accounting firm reasonably acceptable to the Agent in its reasonable discretion, and any other information the Agent may reasonably request to complete a financial analysis of Borrower and its Subsidiaries;

(b)              not later than sixty (60) days after the end of each calendar quarter of each year, copies of the unaudited consolidated balance sheet of Borrower and its Subsidiaries as at the end of such quarter, and the related unaudited consolidated statements of income and cash flows for the portion of Borrower’s fiscal year then elapsed, all in reasonable detail and prepared in accordance with GAAP, together with a certification (as per clause (c) below) by an Authorized Officer or the chief financial officer or accounting officer of Borrower that the information contained in such financial statements fairly presents in all material respects the financial position of the Borrower and its Subsidiaries on the date thereof (subject to year-end adjustments);

(c)              simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, an executed Borrowing Base Availability Certificate (as defined in the Senior Facility Agreement) and a statement (a “Compliance Certificate”) certified by an Authorized Officer or the chief financial officer or chief accounting officer of Borrower in the form of Exhibit C hereto (or in such other form as the Agent may reasonably approve from time to time) setting forth in reasonable detail computations evidencing compliance or non-compliance (as the case may be) with the covenants contained in Section 9. All income, expense, debt and value associated with Real Estate or other Investments disposed of during any quarter will be eliminated from any calculations, where applicable. The Compliance Certificate shall be accompanied by (i) copies of the statements of Net Operating Income for such calendar quarter for each of the Borrowing Base Properties, prepared on a basis consistent with the statements furnished to the Agent prior to the date hereof and otherwise in form and substance reasonably satisfactory to the Agent, together with a certification by an Authorized Officer or the chief financial officer or chief accounting officer of Borrower that the information contained in such statement fairly presents in all material respects Net Operating Income of the Borrowing Base Properties for such periods (subject to year-end adjustments), (ii) a schedule of the outstanding Taxes that are due and not yet paid by any Senior Facility Credit Party to the extent the Senior Facility Credit Party and not the tenant is responsible for paying the applicable taxes, with respect to the Borrowing Base Properties and (iii) the acquisition pipeline reports.

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(d)             simultaneously with the delivery of the financial statements referred to in clause (a) above, the statement of all contingent liabilities involving amounts of $1,000,000 or more of the Borrower and the Senior Facility Credit Parties which are not reflected in such financial statements or referred to in the notes thereto (including, without limitation, all guaranties, endorsements and other contingent obligations in respect of the indebtedness of others, and obligations to reimburse the issuer in respect of any letters of credit);

(e)             simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, (i) a Rent Roll including each of the Borrowing Base Properties in a form reasonably satisfactory to Senior Facility Agent as of the end of each calendar quarter (including the fourth calendar quarter in each year), (ii) an operating statement for each of the Borrowing Base Properties for each such calendar quarter and year to date and a consolidated operating statement for the Borrowing Base Properties for each such calendar quarter and year to date (such statements and reports to be in form reasonably satisfactory to Senior Facility Agent), including (if requested by Senior Facility Agent) a receivables aging, and (iii) a copy of each Lease or amendment to any Lease entered into with respect to a Borrowing Base Property during such calendar quarter (including the fourth calendar quarter in each year);

(f)              promptly deliver any notices or material correspondence, including without limitation any notices with respect to the payments made under Section 7.7 of this Agreement, sent by Borrower or any Senior Facility Credit Party to the Senior Facility Agent or any such notices or material correspondence received by Borrower or any Senior Facility Credit Party from the Senior Facility Agent;

(g)             if reasonably requested by the Agent, promptly after they are filed with the Internal Revenue Service, copies of all annual federal income tax returns and amendments thereto of Borrower;

(h)             copies of all material reports and notices reported to shareholders of the Borrower must be provided to the Agent within 15 days from the date shareholders are presented materials, provided that any item that is filed via Form 8-K or otherwise publicly available through the SEC shall be treated as being delivered to the Agent;

(i)              promptly upon the filing hereof, copies of any registration statements (other than the exhibits thereto and any registration statements on Form S-8 or its equivalent) and any annual, quarterly or monthly reports and other statements and reports which Borrower or any Guarantor shall file with the SEC;

(j)               not later than December 15 of each year, a budget for the Operating Partnership and the Senior Facility Subsidiary Guarantors, and each Borrowing Base Property, for the next calendar year;

(k)             to the extent requested by the Agent, evidence reasonably satisfactory to the Agent of the timely payment of all real estate taxes for the Borrowing Base Properties;

(l)               from time to time such other financial data and information in the possession of Borrower or its Subsidiaries (including without limitation auditors’ management letters, status of litigation or investigations against the Borrower and the Senior Facility Credit Parties and any settlement discussions relating thereto (unless Borrower in good faith believe that such disclosure could result in a waiver or loss of attorney work product, attorney-client or any other applicable privilege), property inspection and environmental reports and information as to zoning and other legal and regulatory changes affecting the Borrower and the Senior Facility Credit Parties) as the Agent may reasonably request; and

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(m)            deliver the current property portfolio spreadsheet and an equity raise roll-forward reconciliation within twenty (20) days after the end of each calendar month.

Borrower shall reasonably cooperate with the Agent in connection with the publication of certain materials and/or information provided by or on behalf of Borrower. Documents required to be delivered pursuant to the Loan Documents shall be delivered by or on behalf of Borrower to the Agent (collectively, “Information Materials”) pursuant to this Section and Borrower shall designate Information Materials (a) that are either available to the public or not material with respect to Borrower and its Subsidiaries or any of their respective securities for purposes of United States federal and state securities laws, as “Public Information” and (b) that are not Public Information as “Private Information.” Unless and until the Agent and the Lenders receive written notification to the contrary, Borrower hereby designates all Information Materials as “Private Information” for purposes of this Section and this Agreement. Any material to be delivered pursuant to this Section 7.4 may be delivered electronically directly to the Agent. Borrower authorizes the Agent to disseminate any such materials, including without limitation the Information Materials through the use of Intralinks, SyndTrak or any other electronic information dissemination system (an “Electronic System”). Any such Electronic System is provided “as is” and “as available.” The Agent does not warrant the adequacy of any Electronic System and expressly disclaim liability for errors or omissions in any notice, demand, communication, information or other material provided by or on behalf of Borrower that is distributed over or by any such Electronic System (“Communications”). No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by the Agent in connection with the Communications or the Electronic System. In no event shall the Agent or any of its directors, officers, employees, agents or attorneys have any liability to Borrower or any other Person for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of Borrower’s or the Agent’s transmission of Communications through the Electronic System, and Borrower releases the Agent and the Lenders from any liability in connection therewith. Certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to Borrower, its Subsidiaries or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market related activities with respect to such Persons’ securities.

Borrower hereby agrees that it will identify that portion of the Information Materials that may be distributed to the Public Lenders and that (i) all such Information Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Information Materials “PUBLIC,” Borrower shall be deemed to have authorized the Agent and the Lenders to treat such Information Materials as not containing any material non-public information with respect to Borrower, its Subsidiaries, its Affiliates or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Information Materials constitute confidential information, they shall be treated as provided in Section 18.7); (iii) all Information Materials marked “PUBLIC” are permitted to be made available through a portion of any electronic dissemination system designated “Public Investor” or a similar designation; and (iv) the Lenders shall be entitled to treat any Information Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of any electronic dissemination system not designated “Public Investor” or a similar designation.

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7.5           Notices.

(a)              Defaults. Borrower will, promptly upon becoming aware of same, notify the Agent in writing of the occurrence of any Default or Event of Default, which notice shall describe such occurrence with reasonable specificity and shall state that such notice is a “notice of default.” If any Person shall give any written notice to Borrower or take any other action of which Borrower becomes aware in respect of a claimed default (whether or not constituting an Event of Default) under this Agreement or under any note, evidence of indebtedness, indenture or other obligation to which or with respect to which the Borrower or any Senior Facility Credit Party is a party or obligor, whether as principal or surety, and such default would permit the holder of such note or obligation or other evidence of indebtedness to accelerate the maturity thereof, which acceleration would either cause a Default or have a Material Adverse Effect, Borrower shall promptly thereafter give written notice thereof to the Agent, describing the notice or action and the nature of the claimed default.

(b)              Environmental Events. Borrower will give notice to the Agent within five (5) Business Days of becoming aware of, in respect of any Senior Facility Credit Party, (i) any known Release, or threat of Release, of any Hazardous Substances in violation of any applicable Environmental Law; (ii) any violation of any Environmental Law that the Borrower or any Senior Facility Credit Party reports in writing or is reportable by Borrower or the Senior Facility Credit Party in writing (or for which any written report supplemental to any oral report is made) to any federal, state or local environmental agency or (iii) any written inquiry, proceeding, or investigation, including a written notice from any agency of potential environmental liability, of any federal, state or local environmental agency or board, that in the case of either clauses (i) – (iii) above involves any Borrowing Base Property and would reasonably be expected to have a Material Adverse Effect, or materially adversely affect the Agent’s liens or security title on the Collateral pursuant to the Security Documents or the Senior Facility Agent’s Lien or security title on the Senior Facility Collateral pursuant to the Security Documents (as defined in the Senior Facility Agreement).

(c)              Notification of Claims Against Collateral. Borrower will give notice to the Agent in writing within five (5) Business Days of becoming aware of any material setoff, claims (including, with respect to the Borrowing Base Property, environmental claims), withholdings or other defenses to which any of the Collateral or Senior Facility Collateral, or the rights of the Agent or Lenders with respect to the Collateral or of the Senior Facility Agent or the Senior Facility Lenders with respect to the Senior Facility Collateral, are subject, which would reasonably be expected to have a Material Adverse Effect.

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(d)              Notice of Litigation and Judgments. Borrower will give notice to the Agent in writing within five (5) Business Days of becoming aware of any pending litigation and proceedings affecting the Borrower or any Borrower or any Senior Facility Credit Party is a party involving an uninsured claim against the Borrower or any Senior Facility Credit Party that would reasonably be expected to either cause a Default or have a Material Adverse Effect and stating the nature and status of such litigation or proceedings. Borrower will give notice to the Agent, in writing, within ten (10) days of any judgment not covered by insurance, whether final or otherwise, against the Borrower or any Senior Facility Credit Party in an amount in excess of $5,000,000.

(e)              ERISA. Borrower will give notice to the Agent within ten (10) Business Days after the Borrower or any ERISA Affiliate: (i) gives notice to the PBGC of any “reportable event” (as defined in Section 4043 of ERISA) with respect to any Guaranteed Pension Plan, Multiemployer Plan or Employee Benefit Plan, or knows that the plan administrator of any such plan has given or is required to give notice of any such reportable event; (ii) gives a copy of any notice (including any received from the trustee of a Multiemployer Plan) of complete or partial withdrawal liability under Title IV of ERISA; or (iii) receives any notice from the PBGC under Title IV or ERISA of an intent to terminate or appoint a trustee to administer any such plan, in each case if such event or occurrence would reasonably be expected to have a Material Adverse Effect.

7.6            Existence; Maintenance of Properties.

(a)             The Borrower and each Senior Facility Credit Party will preserve and keep in full force and effect their legal existence in the jurisdiction of its incorporation or formation. The Borrower and each Senior Facility Credit Party will preserve and keep in full force all of their rights and franchises, the preservation of which is necessary to the conduct of their business, to the extent that the failure to do so could reasonably be expected to result in a Material Adverse Effect.

(b)             The Borrower, the Operating Partnership and the Senior Facility Subsidiary Guarantors (i) will cause all of the Borrowing Base Properties to be maintained and kept in good condition, repair and working order (ordinary wear and tear excepted) in accordance with the terms of the Leases, and (ii) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof in accordance with the terms of the Leases in each case under (i) or (ii) above in which the failure to do so would cause a Material Adverse Effect. The Operating Partnership and the Senior Facility Subsidiary Guarantors shall promptly and diligently comply (or cause the tenants under the Leases to comply) with the reasonable and necessary recommendations of the Environmental Engineer contained in the environmental reports delivered to the Agent or otherwise obtained by the Operating Partnership or the Senior Facility Subsidiary Guarantors with respect to the Borrowing Base Property, that are required by Environmental Laws, except where the failure to comply would not reasonably be expected to result in a Material Adverse Effect.

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7.7            Insurance; Condemnation.

(a)           The Operating Partnership will maintain or cause to be maintained, insurance policies issued by financially sound and reputable insurance companies which are not Affiliates of the Operating Partnership (other than captive insurance companies), in such amounts, with such coverages, endorsements, deductibles (including self-insurance and captive insurance companies, to the extent applicable) and expiration dates, and covering such risks, as are reasonably acceptable to the Senior Facility Agent generally consistent with the insurance required for the Initial Borrowing Base Properties (as defined in the Senior Facility Agreement) and as are customarily carried or required by companies engaged in similar businesses and owning similar properties in localities where any Borrowing Base Property is located, providing the following types of insurance covering each Borrowing Base Property:

(i)               “All Risk” or “Special Form” property insurance, including coverage from loss or damage arising from flood, earthquake, and acts of terrorism, and comprehensive boiler and machinery or “breakdown” coverage on each Building in an amount not less than the full insurable replacement cost of each Building. If approved by the Senior Facility Agent (such approval not to be unreasonably withheld, delayed or conditioned), flood, earthquake and boiler and machinery/breakdown coverages may be subject to sublimits less than the Building’s insurable replacement cost. Losses shall be valued on a replacement cost basis, and coinsurance (if any) shall be waived. The deductibles shall not exceed $25,000.00 for physical damage, a 24-hour waiting period for business interruption and five percent (5%) of the insured value per location for earthquake or named windstorm. Full insurable replacement cost as used herein means the cost of replacing the Building (exclusive of the cost of excavations, foundations and footings below the lowest basement floor) without deduction for physical depreciation thereof;

(ii)             During the course of construction or repair of any Building, the insurance required by clause (i) above shall be written on a builders risk, completed value, non-reporting form, meeting all of the terms required by clause (i) above, covering the total value of work performed, materials, equipment, machinery and supplies furnished, existing structures, and temporary structures being erected on the Borrowing Base Property, including coverage against collapse and damage during transit or while being stored off-site, and containing a soft costs (including loss of rents) coverage endorsement and a permission to occupy endorsement;

(iii)            Flood insurance if at any time any Building is located in any federally designated “special hazard area” (including any area having special flood, mudslide and/or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map published by the Federal Emergency Management Agency as Zone A, AO, Al-30, AE, A99, AH, VO, V1-30, VE, V, M or E) and the broad form flood coverage required by clause (i) above is not available, in an amount of $50,000,000 in the aggregate annually with a minimum deductible of $100,000 per occurrence and per location, or the maximum amount if available under the National Flood Insurance Program;

(iv)            Rent loss insurance in an amount sufficient to recover at least the total estimated gross receipts from all sources of income, including rental income, for the Borrowing Base Property for a twelve (12) month period;

(v)           Commercial general liability insurance against claims for personal injury (to include bodily injury and personal and advertising injury) and property damage liability, all on an occurrence basis, if commercially available (including contractual liability coverage, completed operations coverage for a period of two (2) years following completion of construction of any improvements on the Borrowing Base Property, and coverages equivalent to an ISO broad form endorsement), with a general aggregate limit of not less than $2,000,000, a completed operations aggregate limit of not less than $2,000,000, and a combined single “per occurrence” limit of not less than $1,000,000 for bodily injury and property damage;

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(vi)           During the course of construction or repair of any improvements on the Borrowing Base Property, the general contractor selected to oversee such improvements shall provide commercial general liability insurance naming the Operating Partnership and the applicable Senior Facility Subsidiary Guarantor as additional insureds, or in lieu thereof, may provide for such coverage by way of owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the insurance required by clause (v) above;

(vii)          Employer’s liability insurance with respect to the Borrower’s or any Senior Facility Credit Party’s employees (or if neither the Borrower nor the Senior Facility Credit Parties have any employees, with respect to the employees of the managers under the Management Agreements);

(viii)        Umbrella liability insurance with limits of not less than the amount equal to thirty percent (30%) of the Borrowing Base Availability for such Borrowing Base Property, to be in excess of the limits of the insurance required by clauses (v), (vi) and (vii) above, with coverage at least as broad as the primary coverages of the insurance required by clauses (v), (vi) and (vii) above, with any excess liability insurance to be at least as broad as the coverages of the lead umbrella policy. All such policies shall be endorsed to provide defense coverage obligations; and

(ix)           Workers’ compensation insurance for all employees of the Borrower or the Senior Facility Credit Parties or their Subsidiaries engaged on or with respect to the Borrowing Base Property with limits as required by Applicable Law.

The Operating Partnership shall pay or cause to be paid all premiums on insurance policies. The insurance policies with respect to all Borrowing Base Property provided for in clauses (v), (vi) and (viii) shall name Senior Facility Agent and each Senior Facility Lender as an additional insured and shall contain a cross liability/severability endorsement; provided that such obligation shall be limited to the Operating Partnership’s using commercially reasonable efforts to cause the tenants under the Leases to comply with such obligation in instances where (y) the Lease for a specific Borrowing Base Property requires the tenant to carry the insurance coverage; and (z) such Lease prohibits or does not require the tenant to name the Senior Facility Agent as mortgagee and/or loss payee, to include a mortgage clause, and/or for the lender’s loss payable endorsements to be issued. The insurance policies provided for in clauses (i), (ii), (iii) and (iv) above as to each Borrowing Base Property shall name Senior Facility Agent as mortgagee and loss payee, shall be first payable in case of loss to Senior Facility Agent, and shall contain mortgage clauses and lender’s loss payable endorsements in form and substance reasonably acceptable to Senior Facility Agent. The insurance policy provided for in clause (v) above shall name the Agent as additional insured. Upon written request of the Senior Facility Agent, the Operating Partnership shall deliver (or shall request of all such tenants under the Leases to deliver) certified binders of such policies to the Senior Facility Agent, and the Operating Partnership shall promptly furnish to the Senior Facility Agent all renewal notices and evidence that all premiums or portions thereof then due and payable have been paid. Prior to the expiration date of the policies, the Operating Partnership shall deliver evidence of continued coverage, including a certificate of insurance; provided, however, if the Operating Partnership is continuing insurance renewal negotiations at such date, then the Operating Partnership shall inform the Senior Facility Agent in writing of the status of such insurance renewal negotiations and any anticipated or potential material changes in coverages, deductibles or limits at least thirty (30) days prior to the expiration date of such policies, and shall in any event provide evidence of extension, renewal or replacement prior to the expiration date of the current policies. Borrower shall deliver evidence of continued coverage of the insurance policies on the Borrowing Base Properties, including certificates of insurance, as requested by the Agent or the Lenders from time to time.

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(b)             All policies of insurance required by this Agreement shall contain clauses or endorsements to the effect that (i) no act or omission of the Borrower or the applicable Senior Facility Credit Parties or anyone acting for the Borrower or the applicable Senior Facility Credit Parties (including, any representations made in the procurement of such insurance), which might otherwise result in a forfeiture of such insurance or any part thereof, no occupancy or use of the Borrowing Base Property for purposes more hazardous than permitted by the terms of the policy, and no foreclosure or any other change in title to the Borrowing Base Property or any part thereof, shall affect the validity or enforceability of such insurance insofar as Senior Facility Agent is concerned, (ii) the insurer waives any right of set off, counterclaim, subrogation, or any deduction in respect of any liability of the Borrower or the applicable Senior Facility Credit Parties and Senior Facility Agent, (iii) such insurance is primary and without right of contribution from any other insurance which may be available (except and unless the tenant under a Lease is obligated to carry the primary insurance coverage), (iv) such policies shall not be modified, canceled or terminated prior to the scheduled expiration date thereof without the insurer thereunder giving at least thirty (30) days prior written notice except in cases of non-payment of premium, ten (10) days prior written notice, to the Agent shall be required, and (v) that the Agent and the Lenders shall not be liable for any premiums thereon or subject to any assessments thereunder, and shall in all events be in amounts sufficient to avoid any coinsurance liability.

(c)             The insurance required by this Agreement may be effected through a blanket policy or policies covering additional locations and property of the Borrower or the applicable Senior Facility Credit Parties and other Persons that are not Borrowing Base Properties, provided that such blanket policy or policies comply with all of the terms and provisions of this Section 7.7 and contain endorsements or clauses assuring that any claim recovery will not be less than that which a separate policy would provide, including a loss payable endorsement with respect to the commercial general liability insurance in favor of the Agent. The policy will be endorsed with a per location aggregate that applies to the commercial general liability insurance.

(d)             All policies of insurance required by this Agreement shall be issued by companies licensed to do business in the State where the policy is issued and also in the States where each of the Borrowing Base Property is located and having a rating in Best’s Key Rating Guide of at least “A” and a financial size category of at least “X.”

(e)             The Operating Partnership shall not carry separate insurance, concurrent in kind or form or contributing in the event of loss, with any insurance required under this Agreement unless such insurance complies with the terms and provisions of this Section 7.7.

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(f)              In the event of any loss or damage to a Borrowing Base Property in excess of $1,000,000, the Operating Partnership or the Senior Facility Subsidiary Guarantors shall give prompt written notice to the insurance carrier, the Senior Facility Agent and the Agent. Subject to the provisions of (g) below, the Operating Partnership and each Senior Facility Subsidiary Guarantor hereby irrevocably authorizes and empowers the Senior Facility Agent, at the Senior Facility Agent’s option and in the Senior Facility Agent’s sole discretion or at the request of the Senior Facility Required Lenders in their sole discretion, as its attorney in fact, to make proof of such loss, to appear in and prosecute any action arising from such insurance policies, to collect and receive Insurance Proceeds and Condemnation Proceeds, and to deduct therefrom the Senior Facility Agent’s reasonable expenses incurred in the collection of such Insurance Proceeds; provided, however, that so long as no Event of Default has occurred and is continuing and so long as the Operating Partnership or the applicable Senior Facility Subsidiary Guarantor shall in good faith diligently pursue such claim, the Operating Partnership or the applicable Senior Facility Subsidiary Guarantor may make proof of loss and appear in and prosecute any proceedings or negotiations with respect to the adjustment of such claim and collect and receive Insurance Proceeds and Condemnation Proceeds of $1,000,000 or less, except that the Operating Partnership or the applicable Senior Facility Subsidiary Guarantor may not settle, adjust or compromise any such claim without the prior written consent of the Senior Facility Agent, which consent shall not be unreasonably withheld or delayed; provided, further, that the Operating Partnership or the applicable Senior Facility Subsidiary Guarantor may make proof of loss and settle, adjust and compromise any claim under casualty insurance policies which is in an amount less than $1,000,000 so long as no Event of Default has occurred and is continuing and so long as the applicable Operating Partnership shall in good faith diligently pursue such claim. Subject to the provisions of (g) below, the Operating Partnership and the Senior Facility Subsidiary Guarantors further authorize the Senior Facility Agent, at the Senior Facility Agent’s option, to (i) apply the balance of such Insurance Proceeds and Condemnation Proceeds to the payment of the Senior Facility Obligations whether or not then due, or (ii) if the Senior Facility Agent shall require the reconstruction or repair of the Borrowing Base Property, to hold the balance of such proceeds as trustee to be used to pay taxes, charges, sewer use fees, water rates and assessments which may be imposed on the Borrowing Base Property which are then due and payable and the Obligations as they become due during the course of reconstruction or repair of the Borrowing Base Property and to pay, in accordance with such terms and conditions as the Senior Facility Agent or other lenders of construction projects may prescribe, for the costs of reconstruction or repair of the Borrowing Base Property, and upon completion of such reconstruction or repair to pay the excess to the Operating Partnership.

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(g)             Notwithstanding the foregoing or anything to the contrary contained in the Mortgages, the Senior Facility Agent shall make Insurance Proceeds and Condemnation Proceeds available to the Operating Partnership or the applicable Senior Facility Subsidiary Guarantor to reconstruct and repair the Borrowing Base Property, in accordance with such customary terms and conditions as the Senior Facility Agent may reasonably prescribe in the Senior Facility Agent’s discretion for the disbursement of the proceeds, provided that (i) the cost of such reconstruction or repair is not reasonably estimated by the Senior Facility Agent to exceed twenty percent (20%) of the replacement cost of the damaged Building, (ii) no Event of Default shall have occurred and be continuing (other than any Event of Default occurring solely as a result of such casualty or Taking), (iii) the Operating Partnership or the Senior Facility Subsidiary Guarantors shall have provided to the Senior Facility Agent additional cash security in an amount equal to the amount reasonably estimated by the Senior Facility Agent to be the amount in excess of the Insurance Proceeds or Condemnation Proceeds received which will be required to complete such repair or restoration, (iv) the Senior Facility Agent shall have approved the plans and specifications, construction budget, construction contracts, and construction schedule for such repair or restoration, such approval not to be unreasonably withheld, delayed or conditioned, and reasonably determined that the repaired or restored Borrowing Base Property will provide the Senior Facility Agent with adequate security for the Senior Facility Obligations (which security should be deemed adequate if such security is substantially comparable to the security in place prior to such casualty or Taking) (provided that the Senior Facility Agent shall not disapprove such plans and specifications if the Building is to be restored to substantially its condition immediately prior to such damage), (v) the Operating Partnership or the Senior Facility Subsidiary Guarantors shall have delivered to the Senior Facility Agent written agreements binding upon not less than seventy five percent (75%) of the tenants or other parties having present or future rights to possession of any portion of the affected Borrowing Base Property or having any right to require repair, restoration or completion of the Borrowing Base Property or any portion thereof (determined by reference to those tenants in the aggregate occupying or having rights to occupy not less than seventy five percent (75%) of the Net Rentable Area of the Building so damaged), agreeing upon a date for delivery of possession of the Borrowing Base Property or their respective portions thereof, to permit time which is sufficient in the judgment of the Senior Facility Agent for such repair or restoration and approving the plans and specifications for such repair or restoration, or other evidence satisfactory to the Senior Facility Agent that none of such tenants or other parties may terminate their Leases as a result of such casualty or as a result of having a right to approve the plans and specifications for such repair or restoration, (vi) the Senior Facility Agent shall reasonably determine that such repair or reconstruction can be completed prior to the Revolving Credit Maturity Date (as defined in the Senior Facility Agreement), (vii) the Senior Facility Agent shall receive evidence reasonably satisfactory to it that any such restoration, repair or rebuilding complies in all respects with any and all applicable state, federal and local laws, ordinances and regulations, including without limitation, zoning laws, ordinances and regulations, and that all required permits, licenses and approvals relative thereto have been or will be issued in a manner so as not to materially impede the progress of restoration, (viii) the Senior Facility Agent shall receive customary evidence reasonably satisfactory to it that the insurer under such policies of fire or other casualty insurance does not assert any defense to payment under such policies against the Operating Partnership, the applicable Senior Facility Subsidiary Guarantor or the Senior Facility Agent (or the Operating Partnership and the Senior Facility Subsidiary Guarantor shall have provided security for any amounts with respect to which the insurance carrier is asserting any defense to payment), and (ix) with respect to any Taking, Senior Facility Agent shall determine that following such repair or restoration there shall be no more than the lesser of (i) a ten percent (10%) reduction in occupancy or rental income from the Borrowing Base Property so affected by such specific condemnation or taking (excluding any proceeds from rental loss insurance or proceeds from such award allocable to rent) or (ii) a five percent (5%) reduction in occupancy or in rental income from all of the Borrowing Base Properties (excluding any proceeds from rental loss insurance or proceeds of such award allocable to rent), after giving effect to the Taking and any previous Takings which may have occurred. Any excess Insurance Proceeds shall be paid to the Operating Partnership or the Senior Facility Subsidiary Guarantors, or if an Event of Default has occurred and is continuing (other than any Event of Default occurring solely as a result of such casualty or Taking), such proceeds shall be applied to the payment of the Senior Facility Obligations, unless in either case by the terms of the applicable insurance policy the excess proceeds are required to be returned to such insurer. Any excess Condemnation Proceeds shall be applied to the payment of the Senior Facility Obligations. In no event shall the provisions of this Section be construed to extend the Revolving Credit Maturity Date (as defined in the Senior Facility Agreement) or to limit in any way any right or remedy of the Senior Facility Agent upon the occurrence of an Event of Default hereunder. If the Borrowing Base Property is acquired by the Senior Facility Agent, all right, title and interest of the Operating Partnership and the Senior Facility Subsidiary Guarantors in and to any insurance policies and unearned premiums thereon (other than in connection with any blanket policy or a policy maintained by a tenant under any of the Leases) and in and to the proceeds thereof resulting from loss or damage to the Borrowing Base Property prior to the sale or acquisition shall pass to the Senior Facility Agent or any other successor in interest to the Operating Partnership or the Senior Facility Subsidiary Guarantors or purchaser of the Borrowing Base Property. Borrower shall give prompt written notice to the Agent of any distribution of proceeds to the Senior Facility Agent made pursuant to this Section 7.7.

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(h)             Notwithstanding the provisions of Section 7.7, as long as the tenant under an Approved Lease complies with the insurance requirements of its Approved Lease (including, without limitation, with respect to self-insurance) the provisions of Section 7.7 as to types and amounts of coverage and as to the insurers providing same shall be deemed to be satisfied as to the Borrowing Base Property being leased under such Approved Lease.

(i)               Borrower will maintain or cause to be maintained insurance policies issued by financially-sound and reputable insurance companies which are not Affiliates of Borrower (other than captive insurance companies), in such amounts, with such coverages, endorsements, deductibles (including self-insurance and captive insurance companies, to the extent applicable) and expiration dates, and covering such risks, as are reasonably acceptable to the Agent and as are customarily carried or required by companies engaged in similar businesses or owning similar properties in the relevant locations.

7.8          Taxes; Liens. Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors will, and will cause their respective Subsidiaries or tenants to, duly pay and discharge, or cause to be paid and discharged, before the same shall become delinquent, all taxes, assessments and other governmental charges imposed upon them or upon the Borrowing Base Properties or the other Real Estate, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials or supplies, that if unpaid might by law become a lien or charge upon any of its property or other Liens affecting any of the Collateral or Senior Facility Collateral or other property of Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors, or, with respect to their respective Subsidiaries or tenants that, in case of any of the foregoing, would reasonably be expected to have a Material Adverse Effect, provided that any such tax, assessment, charge or levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings which shall suspend the collection thereof with respect to such property, neither such property nor any portion thereof or interest therein would be in any danger of sale, forfeiture or loss by reason of such proceeding and Borrower or any such Subsidiary shall have set aside on its books adequate reserves in accordance with GAAP; and provided, further, that forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor, Borrower or any such Subsidiary either (i) will provide a bond issued by a surety reasonably acceptable to the Agent and sufficient to stay all such proceedings or (ii) if no such bond is provided, will pay each such tax, assessment, charge or levy.

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7.9           Inspection of Borrowing Base Properties and Books. The Borrower and the Senior Facility Credit Parties will, and will cause their respective Subsidiaries to, permit the Agent and the Lenders, at Borrower’s expense (subject to the limitation set forth below) and upon reasonable prior notice and subject to the terms of the respective Lease(s), to visit and inspect any of the Borrowing Base Properties during normal business hours, to examine the books of account of the Borrower and the Senior Facility Credit Parties (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of the Borrower and the Senior Facility Credit Parties with, and to be advised as to the same by, their respective officers, partners or members, all at such reasonable times and intervals as the Agent or any Lender may reasonably request, provided that so long as no Event of Default shall have occurred and be continuing, the Borrower and the Senior Facility Credit Parties shall not be required to pay for such visits and inspections more than once in any twelve (12) month period. The Agent and the Lenders shall use good faith efforts to coordinate such visits and inspections so as to minimize the interference with and disruption to the normal business operations of the tenants, the Borrower, the Senior Facility Credit Parties and their respective Subsidiaries.

7.10         Compliance with Laws, Contracts, Licenses, and Permits. The Borrower and the Senior Facility Credit Parties will comply (or cause to be complied with) in all respects with (i) all applicable laws and regulations now or hereafter in effect wherever its business is conducted, (ii) the provisions of its corporate charter, partnership agreement, limited liability company agreement or declaration of trust, as the case may be, and other charter documents and bylaws, (iii) all agreements and instruments to which it is a party or by which it or any of its properties may be bound, (iv) all applicable decrees, orders, and judgments to which it is subject, and (v) all licenses and permits required by applicable laws and regulations for the conduct of its business or the ownership, use or operation of its properties, except where a failure to so comply with any of clauses (i) through (v) would not reasonably be expected to have a Material Adverse Effect. If any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that the Borrower and the Senior Facility Credit Parties or their respective Subsidiaries may fulfill any of its obligations hereunder, the Borrower, the Senior Facility Credit Parties or such Subsidiary will immediately take or cause to be taken all steps necessary to obtain such authorization, consent, approval, permit or license and furnish the Agent with evidence thereof, except where the failure to obtain the foregoing would not reasonably be expected to have a Material Adverse Effect. The Borrower and the Senior Facility Credit Parties shall develop and implement such programs, policies and procedures as are necessary to comply with the Patriot Act and shall promptly advise the Agent in writing in the event that the Credit Parties shall determine that any investors in Borrower or the Operating Partnership are in violation of such act.

7.11         Further Assurances. The Borrower and the Senior Facility Credit Parties will cooperate with the Agent and the Lenders and execute such further instruments and documents as the Lenders or the Agent shall reasonably request and reasonably deem necessary to carry out to their satisfaction the transactions contemplated by this Agreement and the other Loan Documents provided that such instrument and documents are consistent with the terms of the Loan Documents and do not impose any additional material obligations or expenses on the Borrower and the Senior Facility Credit Parties.

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7.12         Management. The Operating Partnership and the Senior Facility Subsidiary Guarantors shall not enter into any Management Agreement with a third-party manager for the Borrowing Base Property without the prior written consent of the Senior Facility Agent and the Agent (which shall not be unreasonably withheld, delayed or conditioned), except where permitted under the terms of any Lease and existing at the time of purchase, and after such approval, no such Management Agreement shall be modified in any material respect or terminated without the Senior Facility Agent’s or the Agent’s prior written approval, such approval not to be unreasonably withheld, delayed or conditioned. The Management Agreements described on Schedule 6.23 hereto relating to the Initial Borrowing Base Properties as listed on Schedule IBP attached hereto) have been approved by the Senior Facility Agent and the Agent.

7.13         Leases of the Property.

(a)             The Operating Partnership will, and will cause the Senior Facility Subsidiary Guarantors to, take, or cause to be taken, all reasonable steps within the power of the Operating Partnership and Senior Facility Subsidiary Guarantors to market and lease the leasable area of the Borrowing Base Properties in accordance with sound and customary leasing and management practices for similar properties, as and when needed. Any such leasing activity shall be conducted in accordance with the terms of Section 7.13(b), below, and the Mortgages. During the existence of an Event of Default, the Senior Facility Agent shall have the right, and the Operating Partnership and Senior Facility Subsidiary Guarantors hereby authorize the Senior Facility Agent, to communicate directly with any tenant under a Lease to verify any information delivered to the Senior Facility Agent by the Operating Partnership or Senior Facility Subsidiary Guarantors concerning such tenant or such tenant’s Lease.

(b)             The Borrower will not permit the Operating Partnership or the Senior Facility Subsidiary Guarantors to enter into, amend, modify, waive or supplement any Major Lease without the prior written consent of the Agent (which consent shall not be unreasonably withheld, conditioned or delayed) at any time after the Operating Partnership and Senior Facility Guarantors have entered into, modified, waived or supplemented Major Leases that constitute twenty percent (20%) or more of all Major Leases and (ii) twenty percent (20%) or more in appraised value of the underlying Borrower Base Property relative to the total Borrowing Base Property value.

(c)             The Operating Partnership shall not, and will not permit the Senior Facility Subsidiary Guarantors to, collect any rents, issues, profits, revenues, income or other benefits payable under any of the Leases for the Borrowing Base Properties more than one (1) month in advance (provided that the foregoing shall not prohibit the collection of security deposits and real estate taxes and insurance premiums billed to tenants annually, semiannually or quarterly). The Operating Partnership shall not, and shall not permit the Senior Facility Subsidiary Guarantors to, directly or indirectly, cause, any condition which would result in the termination or cancellation of, or which would relieve the performance of any material obligations of any tenant under, any Lease for all or any portion of the Borrowing Base Properties. In the event that any existing or future security deposit is in the form of a letter of credit, the Operating Partnership shall deliver the original of such Letter of Credit to the Senior Facility Agent, and during the continuance of an Event of Default, the Operating Partnership or the applicable Senior Facility Subsidiary Guarantor shall cause Senior Facility Agent to be a named beneficiary thereof and shall otherwise cause such letter of credit to be in form and substance reasonably satisfactory to Senior Facility Agent, and shall assign to Senior Facility Agent its interest in such letter of credit pursuant to documents reasonably satisfactory to Senior Facility Agent. Without limiting any term of the Loan Documents prohibiting the Operating Partnership or the Senior Facility Subsidiary Guarantors from terminating Leases, any payments received by the Operating Partnership or the Senior Facility Subsidiary Guarantors with respect to early lease termination options or otherwise paid by tenants in consideration of an early termination of any Lease shall be promptly paid to Senior Facility Agent as a prepayment of the Loans.

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7.14         Business Operations of the Borrower. The Borrower will not engage in any business other than its current businesses or businesses reasonably-related thereto. For furtherance of doubt, reasonably-related businesses shall include all aspects of originating, underwriting, investing in, purchasing, selling and syndicating net lease real estate and providing related services to real estate lenders, investors, sponsors and advisors and the operations/business described in Section 7.15.

7.15         Business Operations of the Senior Facility Credit Parties. The Senior Facility Credit Parties will not and will not permit any of their respective Subsidiaries to engage in any business other than to acquire, own, use, operate, manage, finance, sell, lease, sublease, exchange or otherwise dispose of double or triple net commercial properties, directly or indirectly, and engage in any other activities related or incidental thereto or permitted pursuant to the terms hereof.

7.16         Registered Service Mark. Without prior written notice to the Senior Facility Agent, none of the Borrowing Base Properties shall be owned or operated by the Operating Partnership or the Senior Facility Subsidiary Guarantors under any registered or protected trademark, tradename, service mark or logo.

7.17         Ownership of Real Estate. Without the prior written consent of Senior Facility Agent (which consent shall not be unreasonably withheld, conditioned or delayed), all Real Estate and all interests (whether direct or indirect) of the Operating Partnership or Borrower in any real estate assets now owned or leased or acquired or leased after the date hereof shall be owned or leased directly by the Operating Partnership or a Wholly Owned Subsidiary of the Operating Partnership; provided, however that the Operating Partnership shall be permitted to directly or indirectly own or lease interests in Real Estate through non-Wholly Owned Subsidiaries and Unconsolidated Affiliates as permitted by Section 8.3.

7.18         Reserved.

7.19         Cash Management. (a)The Operating Partnership has or will establish and maintain with Senior Facility Agent a deposit account (the “Collateral Account”) for the purposes of receiving all payments from the tenants of the Senior Facility Subsidiary Guarantors, which account shall be subject to the Account Pledge Agreement (as defined in the Senior Facility Agreement).

(b)             Amounts on deposit in the Collateral Account shall be invested and reinvested by Senior Facility Agent in such Cash Equivalents as directed by the Operating Partnership unless an Event of Default shall have occurred and be continuing, in which instance such amounts shall be invested and reinvested as Senior Facility Agent shall determine in its sole discretion. Without limiting any other rights and remedies of the Senior Facility Agent and the Senior Facility Lenders hereunder, all amounts deposited in the Collateral Account shall be applied by the Senior Facility Agent against the Senior Facility Obligations while any Event of Default shall be in existence.

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7.20          Plan Assets. The Borrower and the Senior Facility Credit Parties will do, or cause to be done, all things necessary to ensure that none of the Borrowing Base Properties will be deemed to be Plan Assets at any time.

7.21          Certain Other Covenants. Borrower shall comply with the following covenants:

(a)                  Borrower will not make or permit to be made, by voluntary or involuntary means, any transfer or encumbrance of its interest in the Operating Partnership, or any dilution of its interest in the Operating Partnership, that would result in a Change of Control; and

(b)                 the Borrower shall not dissolve, liquidate or otherwise wind-up its business, affairs or assets.

7.22         Borrowing Base Properties. Without limiting the further covenants contained in the Security Documents, at all times the Operating Partnership and the Senior Facility Subsidiary Guarantors shall use commercially reasonable efforts to cause each other or the applicable tenant, to:

(a)                 pay (or cause to be paid in accordance with the terms of the Leases) all real estate and personal property taxes, assessments, water rates or sewer rents, ground rents, common area maintenance charges, impositions, and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Borrowing Base Property, now or hereafter levied or assessed or imposed against any Borrowing Base Property or any part thereof (except those which are being contested in good faith by appropriate proceedings diligently conducted where the failure to pay any of the foregoing could reasonably be expected to have a Material Adverse Effect).

(b)                 pay (or cause to be paid in accordance with the terms of the Leases), all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with any Borrowing Base Property (except those which are being contested in good faith by appropriate proceedings diligently conducted where the failure to pay any of the foregoing could reasonably be expected to have a Material Adverse Effect), and in any event never permit to be created or exist in respect of any Borrowing Base Property or any part thereof any other or additional Lien or security interest other than Permitted Liens (as defined in the Senior Facility Agreement).

(c)                 maintain, operate and keep the Borrowing Base Properties in good condition, repair and working order (ordinary wear and tear excepted) in accordance with the terms of the Leases, and in all material respects in accordance with all Legal Requirements in accordance with the Operating Partnership’s or such Subsidiary’s prudent business judgment, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

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7.23           Borrower IPO Event. Upon completion of the IPO Event, the Equity Interests of Borrower shall at all times thereafter be publicly-traded on the New York Stock Exchange, or some other comparable stock exchange. The Borrower shall at all times comply with all requirements of applicable laws to the extent necessary to maintain its status as a real estate investment trust under the Code, shall elect to be treated as a real estate investment trust and shall, subject to the provisions hereof, operate its business in compliance with the terms and conditions of this Agreement applicable to Borrower and the other Loan Documents to which it is a party.

7.24           Sanctions Laws and Regulations. Borrower shall not, directly or to its knowledge (other than in respect of any Subsidiary of Borrower) indirectly, use the proceeds of the Loans or lend, contribute or otherwise make available such proceeds to any Subsidiary, Unconsolidated Affiliate or other Person (i) to fund any activities or business of or with any Designated Person, or in any country or territory, that at the time of such funding is itself the subject of territorial sanctions under applicable Sanctions, (ii) in any manner that would result in a violation of applicable Sanctions by any party to this Agreement, or (iii) in any manner that would cause Borrower, or any of its Subsidiaries to violate the United States Foreign Corrupt Practices Act. None of the funds or assets of Borrower, the Operating Partnership, or the Senior Facility Subsidiary Guarantors that are used to pay any amount due pursuant to this Agreement shall constitute funds obtained from transactions with or relating to Designated Persons or countries which are themselves the subject of territorial sanctions under applicable Sanctions. Borrower shall maintain policies and procedures designed to achieve compliance with Sanctions.

7.25           New York Mortgage Limitation. At any time that the outstanding amount of all Revolving Credit Loans (as defined in the Senior Facility Agreement) is less than $2,019,600.00 (the “New York Real Estate Allocated Amount”), within five (5) Business Days after the request of Senior Facility Agent, the Operating Partnership and the Senior Facility Subsidiary Guarantor that owns the Real Estate located in the State of New York will execute such documents as Senior Facility Agent may reasonably request so as to amend the Mortgage (as defined in the Senior Facility Agreement) covering the Real Estate located in the State of New York (the “New York Mortgage”) in order that such the New York Mortgage continues to secure the New York Real Estate Allocated Amount.

To the extent that the outstanding amount of all Revolving Credit Loans (as defined in the Senior Facility Agreement) is less than the New York Real Estate Allocated Amount and to the extent required by virtue of compliance with this Section 7.25, or to the extent otherwise required by Applicable Law, the Operating Partnership and the Senior Facility Subsidiary Guarantor that owns the Real Estate located in the State of New York shall take all further actions including the payment of any additional mortgage recording taxes, fees, charges, costs and expenses required so to grant, preserve, protect or perfect the Liens created by such New York Mortgage to the maximum amount of Senior Facility Obligations secured by the New York Mortgage (i.e. the New York Real Estate Allocated Amount) and the validity, enforceability or priority of any such Lien.

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7.26          Portfolio Metrics. Borrower and its Subsidiaries shall maintain the following minimum portfolio metrics:

(a)                  At least thirty percent (30%) of the Annualized Base Rents payable to Borrower or any of its Subsidiaries shall be from tenants or any of their respective Affiliates having an S&P rating of BBB- or higher and a Moody’s rating of Baa3 or higher;

(b)                 The Real Estate leased to third-party tenants by any of the Subsidiaries of Borrower, taken as an entirety, shall at all times be subject to leases with a minimum weighted average remaining lease term in excess of eight (8) years;

(c)                  No single third-party tenant of any of the Subsidiaries or Borrower shall represent/generate Annualized Base Rents greater than ten percent (10%) of aggregate Annualized Base Rents (i.e., the aggregate of such amounts payable under all Leases of the Borrower or any of its Subsidiaries);

(d)                 Real Estate located in a single state shall not represent/generate Annualized Base Rents greater than twenty percent (20%) of aggregate Annualized Base Rents (i.e., the aggregate of such amounts payable under all Leases of the Borrower or any of its Subsidiaries);

(e)                 The purchase price in respect of any parcel of Real Estate/lease of Real Estate shall not exceed Twenty-Five Million Dollars ($25,000,000);

(f)                  Real Estate utilized in the restaurant business will not represent/generate Annualized Base Rents greater than ten percent (10%) of aggregate Annualized Base Rents (i.e., the aggregate of such amounts payable under all Leases of the Borrower or any of its Subsidiaries); and

(g)                 Real Estate relating to the conduct of business in new industries (determined by SIC Code) will not represent/generate Annualized Base Rents greater than ten percent (10%) of aggregate Annualized Base Rents (i.e., the aggregate of such amounts payable under all Leases of the Borrower or any of its Subsidiaries).

Whenever the provisions in this Article 7 (purportedly) require a Person that is an Affiliate of the Borrower (other than Borrower) to act or to refrain from acting, such requirement shall be deemed to mean that Borrower shall cause such Person to so act or refrain from acting.

8. NEGATIVE COVENANTS.

Borrower covenants and agrees that, so long as any Loan or Note is outstanding (other than contingent indemnification claims for which no claim has been made) or any of the Lenders has any obligation to make any Loans:

8.1            Restrictions on Indebtedness. The Borrower and the Senior Facility Credit Parties will not create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other than:

(i)                  Indebtedness to the Lenders arising under any of the Loan Documents;

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(ii)                 Indebtedness to the “Lender Hedge Providers” in respect of any “Hedge Obligations” (as defined in the Senior Facility Agreement) under the Senior Facility Agreement;

(iii)                current liabilities of any of the Borrower and the Senior Facility Credit Parties or any of their Subsidiaries incurred in the ordinary course of business (including under surety bonds, performance bonds, etc. to secure worker’s compensation claims, bank overdrafts), but not incurred through (i) the borrowing of money, or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services;

(iv)                Indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 7.8;

(v)                 Indebtedness in respect of judgments only to the extent, for the period and for an amount not resulting in an Event of Default;

(vi)                endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business;

(vii)               Indebtedness under leases and Capital Lease Obligations;

(viii)              Indebtedness incurred to any other landowners, government or quasi-government or entity or similar entity in the ordinary course of business in connection with the construction or development of any Real Estate, including, without limitation, subdivision improvement agreements, development agreements, reimbursement agreements, infrastructure development agreements, agreements to construct or pay for on-site or off-site improvements and similar agreements incurred in the ordinary course of business in connection with the development of Real Estate or construction of infrastructure in connection therewith as well as any Indebtedness for any bonds or letters of credit posted to secure the obligations under any of the foregoing;

(ix)                Indebtedness of Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor constituting customary non-recourse carve out guarantees and environmental indemnifications of Indebtedness permitted to be incurred by Subsidiaries of Borrower;

(x)                 Indebtedness to the Senior Facility Lenders under any of the Senior Facility Loan Documents as in effect as of the Closing Date;

(xi)                Indebtedness which is subordinated to the Indebtedness owing to the Lenders hereunder on terms and conditions reasonably satisfactory to the Agent (“Subordinated Debt”); or

(xii)               All obligations under the TEN31 Bridge Financing agreements and documents (if and only to the extent the terms of the same are approved by all the Lenders and the Senior Facility Lenders in their sole and absolute discretion and such financing will be permitted then only to the extent of such approved terms) in an amount not to exceed $25,000,000.00.

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8.2             Restrictions on Liens, Etc. The Borrower and the Senior Facility Credit Parties will not (a) create or incur or suffer to be created or incurred or to exist any lien, security title, encumbrance, mortgage, pledge, negative pledge, charge, or other security interest of any kind upon any of Borrower’s assets, the Borrowing Base Properties, the Equity Interests in the Operating Partnership, any Senior Facility Subsidiary Guarantor, or their material respective property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) except as otherwise permitted under this Agreement, transfer any of Borrower’s, the Operating Partnership’s or any Senior Facility Subsidiary Guarantor’s material property or assets or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement, except for lease arrangements classified as financing leases for GAAP; (d) suffer to exist for a period of more than thirty (30) days after the same shall have been incurred any Indebtedness or claim or demand against any of them that if unpaid would by law or upon bankruptcy or insolvency, or otherwise, be given Lien priority as to the Borrowing Base Properties over any of their general creditors; (e) sell, assign, pledge or otherwise transfer any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse; or (f) incur or maintain any obligation to any holder of Indebtedness of any of such Persons which prohibits the creation or maintenance of any lien securing the Obligations (collectively, “Liens”); provided that notwithstanding anything to the contrary contained herein, Borrower or any Senior Facility Credit Party may create or incur or suffer to be created or incurred or to exist:

(i)                  Liens not yet due or payable on properties to secure taxes, assessments and other governmental charges (excluding any Lien imposed pursuant to any of the provisions of ERISA) or claims for labor, material or supplies incurred in the ordinary course of business in respect of obligations not overdue by more than 60 days or are being contested in good faith and by appropriate proceedings diligently conducted with adequate reserves being maintained by Borrower or the Operating Partnership in accordance with GAAP or not otherwise required to be paid or discharged under the terms of this Agreement or any of the other Loan Documents;

(ii)                 deposits or pledges made in connection with, or to secure payment of, workers’ compensation, unemployment insurance, old age pensions or other social security obligations;

(iii)                deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(iv)                judgment liens and judgments that do not constitute an Event of Default;

(v)                encumbrances on Real Estate consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property and defects and irregularities in the title thereto, landlord’s or lessor’s liens under leases to which Borrower, the Operating Partnership, any Senior Facility Subsidiary Guarantor or any other Subsidiary is a party, purchase money security interests and other liens or encumbrances, which do not individually or in the aggregate have a Material Adverse Effect;

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(vi)               Liens in favor of (a) the Agent and the Lenders under the Loan Documents to secure the Obligations or (b) the Senior Facility Agent and the Senior Facility Lenders in the Senior Facility Collateral to secure the Senior Facility Obligations and/or the Hedge Obligations under the Senior Facility Agreement or other Senior Facility Loan Documents as in effect as of the Closing Date;

(vii)              Liens granted by DST Entities or Subsidiaries of the Borrower that are not Credit Parties to secure Indebtedness permitted under Section 8.1(vi) or (viii) above;

(viii)              Liens and encumbrances on a Borrowing Base Property expressly permitted under the terms of the Mortgage relating thereto;

(ix)               direct liens on Real Estate (other than the Borrowing Base Properties or other Senior Facility Collateral) to secure Indebtedness of Subsidiaries of Borrower that are not Senior Facility Subsidiary Guarantors;

(x)                 rights of setoff or bankers’ liens upon deposits of cash in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such deposit accounts in the ordinary course of business;

(xi)                Liens of Capitalized Leases on the property leased thereby;

(xii)               Leases permitted by this Agreement or under the Senior Facility Agreement; and

(xiii)              Any transfer of any Borrowing Base Property in connection with a Taking.

8.3            Restrictions on Investments.

(a)                  No Credit Party will make or permit to exist or to remain outstanding any Investment except Cash Equivalents or Investments in:

(i)                  marketable direct or guaranteed obligations of the United States of America that mature within one (1) year from the date of purchase by Borrower, the Operating Partnership or Senior Facility Subsidiary Guarantor;

(ii)                 marketable direct obligations of any of the following: Federal Home Loan Mortgage Corporation, Student Loan Marketing Association, Federal Home Loan Banks, Federal National Mortgage Association, Government National Mortgage Association, Bank for Cooperatives, Federal Intermediate Credit Banks, Federal Financing Banks, Export-Import Bank of the United States, Federal Land Banks, or any other agency or instrumentality of the United States of America;

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(iii)                demand deposits, certificates of deposit, bankers acceptances and time deposits of United States banks;

(iv)                securities commonly known as “commercial paper” issued by a corporation organized and existing under the laws of the United States of America or any State which at the time of purchase are rated by Moody’s or by S&P at not less than “P 1” if then rated by Moody’s, and not less than “A 1”, if then rated by S&P;

(v)                 repurchase agreements having a term not greater than ninety (90) days and fully secured by securities described in the foregoing subsection (i), (iv) and (vi) with banks described in the foregoing subsection (iii) or with financial institutions or other corporations having total assets in excess of $500,000,000;

(vi)                shares of so-called “money market funds” registered with the SEC under the Investment Company Act of 1940 which maintain a level per-share value, invest principally in investments described in the foregoing subsections (i) through (iv) and have total assets in excess of $50,000,000;

(vii)              the acquisition of fee interests and properties subject to ground leases by a Senior Facility Subsidiary Guarantor (directly or indirectly) in real estate and investments (including loans) incidental thereto and any and all construction and development related thereto;

(viii)              Investments in DST Entities, tenants in common or joint ventures that do not violate real estate investment trust status, test or compliance restrictions;

(ix)                Investments which constitute Indebtedness to the extent such Indebtedness is permitted pursuant to Section 8.1; or

(x)                 Investments by Borrower in Subsidiaries that are directly or indirectly one hundred percent (100%) owned by Borrower, which in turn own Investments permitted by this Section 8.3.

Notwithstanding the foregoing, the aggregate Investments of the Consolidated Entities in:

(1)             Land Assets shall not exceed ten percent (10%) of Total Asset Value;

(2)             Construction in Progress shall not exceed five percent (5%) of Total Asset Value; and;

(3)             mortgages, mezzanine loans and other debt instruments, as lender in respect thereof, shall not exceed ten percent (10%) of Total Asset Value.

Provided the aggregate amount of Investments described in clauses (1) through (3) above shall not exceed ten percent (10%) of Total Asset Value; with any violation of the foregoing limits not resulting in an Event of Default but shall result in the amount of such excess being excluded when calculating Total Asset Value.

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For the purposes of this Section 8.3, the Investment of Borrower, the Operating Partnership or Senior Facility Subsidiary Guarantors in any non-Wholly Owned Subsidiaries and Unconsolidated Affiliates will equal (without duplication) the sum of: (i) such Person’s pro rata share of their non-Wholly Owned Subsidiary and Unconsolidated Affiliate’s Investment in Real Estate recognized at the lower of such Person’s purchase price or the Appraised Value; plus (ii) such Person’s pro rata share of any other Investments recognized at the GAAP net book value.

8.4             Merger, Consolidation. None of the Borrower or any Senior Facility Credit Party will become a party to any dissolution, liquidation, disposition of all or substantially all of its assets or business, merger, reorganization, consolidation or other business combination (or agree to effect any asset acquisition, stock acquisition or other acquisition individually or in a series of transactions if it has a substantially similar effect as any of the foregoing), in each case without the prior written consent of the Required Lenders except for (i) the merger or consolidation of one or more of the Subsidiaries of the Operating Partnership with and into the Operating Partnership (it being understood and agreed that in any such event Borrower will be the surviving Person), (ii) the merger or consolidation of two or more Subsidiaries of the Operating Partnership or (iii) in connection with the release of all Collateral owned by such Senior Facility Subsidiary Guarantor.

8.5             Restrictions on Prepayment of Indebtedness. The Borrower and the Senior Facility Credit Parties will not and will not permit their Subsidiaries to voluntarily prepay, redeem, defease, purchase or otherwise retire the principal amount, in whole or in part, of any material Indebtedness other than the Senior Facility Obligations and the Hedge Obligations (as defined in the Senior Facility Agreement) in accordance with the Mezzanine Intercreditor Agreement after the occurrence and continuation of any Event of Default; provided, that the foregoing shall not prohibit (x) the prepayment of Indebtedness which is financed primarily from the proceeds of a new loan which would otherwise be permitted by the terms of Section 8.1 (excluding, except to the extent permitted under the Mezzanine Intercreditor Agreement (if at all), any prepayment of the Senior Facility Obligations); and (y) the prepayment, redemption, defeasance or other retirement of the principal of Indebtedness secured by Real Estate which is satisfied primarily from the proceeds of a sale of the Real Estate securing such Indebtedness.

8.6            Compliance with Environmental Laws. None of the Borrower or the Senior Facility Credit Parties will do any of the following: (a) use any of the Borrowing Base Properties or any portion thereof as a facility for the handling, processing, storage or disposal of Hazardous Substances, except for quantities of Hazardous Substances used in the ordinary course of a Senior Facility Subsidiary Guarantor’s or its tenants’ business and in material compliance with all applicable Environmental Laws, (b) cause or permit to be located on any of the Borrowing Base Properties any underground tank or other underground storage receptacle for Hazardous Substances except in material compliance with Environmental Laws, (c) generate any Hazardous Substances on any of the Borrowing Base Properties except in material compliance with Environmental Laws, (d) conduct any activity at any Borrowing Base Properties or use any Borrowing Base Properties in any manner that would reasonably be expected to cause a Release of Hazardous Substances on, upon or into the Borrowing Base Properties or any surrounding properties which would reasonably be expected to give rise to liability under CERCLA or any other Environmental Law, or (e) directly or indirectly transport or arrange for the transport of any Hazardous Substances (except in compliance with all Environmental Laws), except, any such use, generation, conduct or other activity described in clauses (a) to (e) of this Section 8.6 would not reasonably be expected to have a Material Adverse Effect.

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The Borrower and the Senior Facility Credit Parties shall, except for any failure to comply that would not reasonably be expected to have a Material Adverse Effect:

(i)                 in the event of any change in Environmental Laws governing the assessment, release or removal of Hazardous Substances, take all reasonable action as required by Environmental Laws, and

(ii)                if any Release or disposal of Hazardous Substances which the Operating Partnership or the Senior Facility Subsidiary Guarantors are legally obligated to contain, correct or otherwise remediate shall occur or shall have occurred on any Borrowing Base Property (including without limitation any such Release or disposal occurring prior to the acquisition or leasing of such Borrowing Base Property by Borrower or the Senior Facility Subsidiary Guarantors), the Operating Partnership or Senior Facility Subsidiary Guarantor shall, after obtaining knowledge thereof, cause the performance of actions required by applicable Environmental Laws at the Borrowing Base Property in material compliance with all applicable Environmental Laws; provided, that each of Borrower, the Operating Partnership and the Senior Facility Subsidiary Guarantors shall be deemed to be in compliance with Environmental Laws for the purpose of this clause (ii) so long as it or a responsible third party with sufficient financial resources is taking reasonable action to remediate or manage such event to the reasonable satisfaction of the Senior Facility Agent or has taken and is diligently pursuing a challenge to any such alleged legal obligation through appropriate administrative or judicial proceedings. The Senior Facility Agent may engage its own Environmental Engineer to review the environmental assessments and the compliance with the covenants contained herein.

At any time that an Event of Default shall have occurred and is continuing hereunder, the Senior Facility Agent may at its election (and will at the request of the Senior Facility Required Lenders) obtain such environmental assessments of any or all of the Borrowing Base Properties prepared by an Environmental Engineer as may be reasonably necessary or advisable for the purpose of evaluating or confirming (i) whether any Hazardous Substances are present in the soil or water at any such Borrowing Base Property in a quantity or condition that is required to be contained, corrected or otherwise remediated by the owner or operator of the Borrowing Base Property pursuant to applicable Environmental Laws and (ii) whether the use and operation of any such Borrowing Base Property complies with all Environmental Laws to the extent required by the Senior Facility Loan Documents. Additionally, at any time that the Senior Facility Agent or the Senior Facility Required Lenders shall have reasonable and objective grounds to believe that a Release or threatened Release of Hazardous Substances may have occurred at or from any Borrowing Base Property which the owner or operator of such property would be obligated to contain, correct or otherwise remediate pursuant to Environmental Laws, or that any of the Borrowing Base Property is not in compliance with Environmental Laws to the extent required by the Loan Documents, the Operating Partnership or the Senior Facility Subsidiary Guarantors shall promptly upon the request of Senior Facility Agent obtain and deliver to Senior Facility Agent such environmental assessments of such Borrowing Base Property prepared by an Environmental Engineer as may be reasonably necessary or advisable for the purpose of evaluating or confirming (i) whether any Hazardous Substances are present in the soil or water at such Borrowing Base Property and (ii) whether the use and operation of such Borrowing Base Property complies with all Environmental Laws to the extent required by the Senior Facility Loan Documents. Environmental assessments may include detailed visual inspections of such Borrowing Base Property including, without limitation, any and all storage areas, storage tanks, drains, dry wells and leaching areas, and the taking of soil samples, as well as such other investigations or analyses as are reasonably necessary or appropriate for a complete determination of the compliance of such Borrowing Base Property and the use and operation thereof with all Environmental Laws. All reasonable expenses of environmental assessments contemplated by this Section 8.6 shall be at the sole cost and expense of the Operating Partnership and the Senior Facility Subsidiary Guarantors.

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8.7             Distributions.

(a)                  Borrower shall not make any dividends or distributions (whether in cash, Cash Equivalents, or property) on any class or series of Junior Shares (as defined in the Declaration of Trust) that in the aggregate exceed ten percent (10%) of the per-share undiscounted issuance price of such class or series of Junior Shares in any twelve (12) month period, without the Agent’s prior written consent. Borrower shall not pay any dividends or distributions on any class or series of Junior Shares (whether in cash, Cash Equivalents, or property) to the extent that any such payment is not permitted under, or would constitute a default or violation under, the Senior Facility Agreement (except to the extent such payment is approved by the Senior Facility Agent, or such default or violation is waived by, the Senior Facility Agent).

(b)                 The Borrower shall not, nor shall Borrower permit any Senior Facility Credit Party (including the Operating Partnership) to make any dividends or distributions (i) on account of any Preferred Securities or common shares of the Borrower or any Senior Facility Credit Party (including the Operating Partnership) if an Event of Default under Section 12.1(p) has occurred is continuing and (ii) to make any cash payments of paid-in-kind interest that has accrued on Preferred Securities.

(c)                  The Borrower shall not, nor shall Borrower permit any Senior Facility Credit Party (including the Operating Partnership), make any other Distributions not otherwise permitted by the terms of the Senior Facility Agreement.

8.8             Asset Sales. Other than as permitted by Article 5 or in connection with a Taking, Borrower, the Operating Partnership and the Senior Facility Subsidiary Guarantors will not sell, transfer or otherwise dispose of any material asset other than pursuant to a bona fide arm’s length transaction or if replaced with an asset(s) of reasonably equivalent or greater value, and subject in all instances to Section .

8.9             Borrowing Base Properties. The Operating Partnership shall not, nor shall it permit any Senior Facility Subsidiary Guarantor, directly or indirectly, to:

(a)                  use or occupy or conduct any activity on, or knowingly permit the use or occupancy of or the conduct of any activity on any Borrowing Base Properties by any tenant, in any manner (i) which violates any Legal Requirement or which constitutes a public or private nuisance and has a Material Adverse Effect, or (ii) which makes void, voidable, or cancelable any insurance then in force with respect thereto or makes the maintenance of insurance in accordance with Section 7.7(a) commercially unreasonable (including by way of increased premium) and has a Material Adverse Effect;

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(b)                  without the prior written consent of the Senior Facility Agent (which consent shall not be unreasonably withheld, conditioned or delayed), except in connection with any construction, development or redevelopment of any Borrowing Base Property pursuant to a Lease entered into in accordance with the Senior Facility Agreement, initiate or permit any zoning reclassification of any Borrowing Base Property, seek any variance under existing zoning ordinances applicable to any Borrowing Base Property, or in any event use or knowingly permit the use of any Borrowing Base Property in such a manner which would result in such use becoming a nonconforming use under applicable zoning ordinances or other Legal Requirements if such nonconforming use would reasonably be expected to have a Material Adverse Effect;

(c)                  without the prior written consent of the Senior Facility Agent and Agent which consent shall not be unreasonably withheld, conditioned or delayed), except in connection with any construction, development or redevelopment of any Borrowing Base Property, (i) impose any material easement, restrictive covenant, or encumbrance upon any Borrowing Base Property, other than the easements entered into the ordinary course of business and that would customarily be agreed to by a reasonably prudent land owner, (ii) execute or file any subdivision plat or condominium declaration affecting any Borrowing Base Property, or (iii) consent to the annexation of any Borrowing Base Property to any municipality;

(d)                 do any act, by the Operating Partnership or Senior Facility Subsidiary Guarantor which would reasonably be expected to materially decrease the value of any Borrowing Base Property as reflected in the most-recent Appraisal (including by way of negligent act); or

(e)                  without the prior written consent of the Agent (which consent shall not be unreasonably withheld, conditioned or delayed), take any affirmative action to permit any drilling or exploration for or extraction, removal or production of any mineral, hydrocarbon, gas, natural element, compound or substance (including sand and gravel) from the surface or subsurface of any Borrowing Base Property regardless of the depth thereof or the method of mining or extraction thereof.

8.10           Derivatives Contracts. None of Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor shall contract, create, incur, assume or suffer to exist any Derivatives Contracts except for Derivative Contracts made in the ordinary course of business and not prohibited pursuant to Section 8.1 and which are not secured by any portion of the Collateral granted to the Agent under any of the Loan Documents or to the Senior Facility Agent under any of the Senior Facility Loan Documents (other than “Hedge Obligations” as defined in the Senior Facility Agreement).

8.11           Transactions with Affiliates. None of Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor shall permit to exist or enter into any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate (but not including Borrower or any Subsidiary of Borrower), except (i) transactions in connection with the Management Agreements (and any amendments, waivers, renewals or extension of any of the same), (ii) transactions set forth on Schedule 6.15 attached hereto (and any amendments, waivers, renewals or extension of any of the same), (iii) transactions pursuant to the reasonable requirements of the business of such Person and upon fair and reasonable terms which are no less favorable to such Person than would be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate and (iv) distributions permitted under Section 8.7.

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8.12          Management Fees. The Borrower and the Senior Facility Credit Parties shall not pay, and shall not permit to be paid, any property management, advisory or acquisition fees or other payments under any Management Agreement for any Borrowing Base Property to any Person that is an Affiliate of the Borrower or the Senior Facility Credit Parties in the event that an Event of Default shall have occurred and be continuing.

8.13          Changes to Organizational Documents and other Loan Documents. Borrower shall not amend or modify, or permit the amendment or modification of, the trust agreement, limited partnership agreement, limited liability company agreements or other formation or organizational documents of Borrower, the Operating Partnership or any Senior Facility Subsidiary Guarantor (x) without the prior approval of the Agent and the Lenders as and to the extent required by Section 8.14 or (y) in any material respect without the prior written consent of the Agent (which consent shall not be unreasonably withheld, conditioned or delayed). Without limiting the foregoing, none of the Borrower or the Senior Facility Credit Parties will issue any Preferred Securities (except as set forth in Section 8.14) without the prior written consent of the Agent and the Lenders (which consent shall not be unreasonably withheld, conditioned or delayed). Borrower shall not amend or modify, or permit the amendment or modification of the Senior Facility Agreement or Senior Facility Loan Documents, except as permitted under the Mezzanine Intercreditor Agreement.

8.14           Restrictions on Preferred Equity Issuances. Without limiting the foregoing, none of the Borrower or any Senior Facility Credit Party will (i) make any cash payments of paid-in-kind interest accrued on Preferred Securities or (ii) issue any Preferred Securities without the prior written consent of the Agent and the Lenders other than the contemplated preferred equity investment of no more than $50,000,000.00 (plus the sum of (a) the “OID,” (b) the “Lead Investor Fee,” and (c) the amount of any “PIK” (each such term as defined in the Goldman Preferred Equity Investment term sheet attached as Schedule 8.14) paid from time to time) from (1) the Goldman Sachs Asset Management’s Alternative Investments & Manager Selection Group or any of its Affiliates or designees (which shall be upon the same or substantially the same terms as those set forth in the term sheet attached as Schedule 8.14) (the “Goldman Preferred Equity Investment”) or (2) the Replacement Equity Investment investor(s). Notwithstanding the foregoing, and for the avoidance of doubt, any and all documentation related to the Goldman Preferred Equity Investment or the Replacement Equity Investment shall be subject to the prior review and approval of the Lenders in their sole but reasonable discretion. Notwithstanding anything to the contrary contained in this Agreement, the Goldman Preferred Equity Investment or the Replacement Equity Investment shall be treated as equity for the purposes of all calculations involving, or covenants relating to, debt or interest expense (including Indebtedness and Consolidated Interest Expense) regardless of GAAP accounting classifications. The issuance of any additional preferred equity interests (i.e., in excess of the $50,000,000, plus the sum of (a) the “OID,” (b) the “Lead Investor Fee,” and (c) the amount of any “PIK” paid from time to time), whether in connection with the Goldman Preferred Equity Investment or otherwise, shall be subject to the sole and absolute approval of the Lenders. None of the Borrower, Operating Partnership or any Senior Facility Credit Party will modify or amend the Senior Facility Loan Documents or TEN31 Bridge Financing documents without the prior written consent of Agent (if approved by Agent).

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Whenever the provisions in this Article 8 (purportedly) require a Person that is an Affiliate of the Borrower (other than the Borrower) to act or to refrain from acting, such requirement shall be deemed to mean that the Borrower shall cause such Person to so act or refrain from acting.

9. FINANCIAL COVENANTS.

Borrower covenants and agrees that, so long as any Loan or Note is outstanding (other than contingent indemnification claims for which no claim has been made) or any Lender has any obligation to make any Loans, the Operating Partnership and Borrower, as applicable, shall at all times comply with the below covenants. The Operating Partnership’s and Borrower’s compliance with the following covenants shall be tested quarterly (other than Section 9.7), as of/at the last day of each fiscal quarter, commencing with the fiscal quarter ending on December 31, 2020.

9.1             Maximum Leverage Ratios.

(a)                  The Total Senior Leverage shall not exceed sixty percent (60.0%).

(b)                  The Total Leverage shall not exceed eighty percent (80.0%).

9.2             Minimum Consolidated Fixed Charge Ratio. The Fixed Charge Ratio shall not be less than 1.30 to 1.0.

9.3             Minimum Tangible Net Worth. The Consolidated Tangible Net Worth shall not be less than the sum of (i) during the sixty (60) days following the Closing Date, $85,000,000.00, and thereafter, $90,000,000.00, plus (ii) an amount equal to eighty-five percent (85%) of the net proceeds from any issuance of common Equity Interests or Preferred Securities in Borrower or Operating Partnership following the Closing Date, plus (iii) an amount equal to 85% of the equity in any Real Estate contributed to Borrower or Operating Partnership following the Closing Date.

9.4             Minimum Debt Yield. The Debt Yield shall not be less than nine percent (9%).

9.5             Reserved.

9.6             Reserved.

9.7             Liquidity. At all times, and without duplication, the Borrower and the Senior Facility Credit Parties shall maintain Liquidity of Two Million Dollars ($2,000,000.00) (the “Minimum Liquidity Requirement”); provided that (a) not more frequently than annually or in connection with a Material Acquisition, and (b) no Event of Default or Default shall have then occurred and be continuing, Borrower may seek a reduction to the Minimum Liquidity Requirement, subject to approval by the Agent in its sole discretion. At any time that Liquidity is below the Minimum Liquidity Requirement, Borrower will have forty-five (45) days to cure such deficit (e.g., by causing to be made additional cash contributions to the capital of Borrower) prior to triggering an Event of Default.

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10. CLOSING CONDITIONS.

The obligation of the Lenders to, or on the date hereof, make the initial Loans shall be subject to the satisfaction (unless waived by the Agent in writing) of the following conditions precedent:

10.1           Loan Documents. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto and shall be in full force and effect. The Agent shall have received a fully executed counterpart of each such document.

10.2          Certified Copies of Organizational Documents. The Agent shall have received from Borrower a copy, certified as of a recent date by the appropriate officer of each State in which such Person is organized (if applicable) and a duly authorized officer of such Person to be true and complete, of the organizational agreements of such Person and its qualification to do business as in effect on such date of certification.

10.3          Resolutions. All action on the part of Borrower necessary for the valid execution, delivery and performance by such Person of this Agreement and the other Loan Documents to which such Person is or is to become a party shall have been duly and effectively taken, and evidence thereof reasonably satisfactory to the Agent shall have been provided to the Agent.

10.4          Incumbency Certificate; Authorized Signers. The Agent shall have received from Borrower an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of such Person and giving the name and bearing a specimen signature of each individual who shall be authorized to sign, in the name and on behalf of such Person, each of the Loan Documents to which such Person is or is to become a party. The Agent shall have also received from Borrower a certificate, dated as of the Closing Date, signed by a duly authorized representative of such Person and giving the name and specimen signature of each Authorized Officer who shall be authorized to make Loan Requests and to give notices and to take other action on behalf of such Person under the Loan Documents.

10.5          Opinion of Counsel. The Agent and the Lenders shall have received an opinion, including a tax opinion to the effect that the Term Loan should be treated as debt for U.S. federal income tax purposes, addressed to the Agent and the Lenders and dated as of the Closing Date from counsel to Borrower in form and substance reasonably satisfactory to the Agent and the Lenders.

10.6           Lien Searches. The Agent shall have received the results from the lien searches on the Borrower conducted in Borrower’s state of formation.

10.7          Insurance. The Agent shall have received the certificates of insurance evidencing the Agent is named as additional insured on the commercial general liability insurance policy as further described in Section 7.7 and the certificates of insurance for the “All Risk” or “Special Form” property insurance.

10.8          Performance; No Default. Borrower shall have performed and complied with all terms and conditions herein required to be performed or complied with by it on or prior to the Closing Date, and on the Closing Date there shall exist no Default or Event of Default.

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10.9           Representations and Warranties. The Agent shall have received a Closing Certificate certifying that the representations and warranties made by Borrower in the Loan Documents shall have been true and correct in all respects when made and shall also be true and correct in all respects on the Closing Date (unless such representations and warranties are limited by their terms to a specific date).

10.10         Proceedings and Documents. All proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be reasonably satisfactory to the Agent in form and substance, and the Agent shall have received all information and such counterpart originals or certified copies of such documents and such other certificates, opinions, assurances, consents, approvals or documents as the Agent may reasonably require and are customarily required in connection with similar transactions.

10.11         Senior Facility Loan Documents. The Agent shall have received executed copies of the Senior Facility Agreement, the Senior Facility Loan Documents and any certificates, consents or other transaction documents contemplated by the consummation of the Senior Facility Loans.

10.12       Compliance Certificate. The Agent shall have received a Compliance Certificate dated as of the date of the Closing Date demonstrating compliance with each of the covenants in Section 9 of this Agreement calculated therein on a pro forma basis after giving effect to the incurrence of the Loans under this Agreement and the Senior Facility Loan Documents.

10.13         Appraisals. The Agent shall have received Appraisals of each of the Borrowing Base Properties reflecting the Appraised Value for such Borrowing Base Properties as of the date of such Appraisals.

10.14         Consents. The Agent shall have received evidence reasonably satisfactory to the Agent that all necessary stockholder, partner, member or other consents required in connection with the consummation of the transactions contemplated by this Agreement and the other Loan Documents have been obtained.

10.15         Patriot Act; Anti-Money Laundering Laws. Borrower shall have provided to the Agent the documentation and other information requested by the Agent at least five (5) Business Days prior to the Closing Date in order to comply with the requirements of any Anti-Money Laundering Laws, including, without limitation, the Patriot Act and any applicable “know your customer” rules and regulations.

10.16         Unpaid Taxes; Tax Liens. The Agent shall have received a Closing Certificate certifying that, to the knowledge of Borrower, there are no unpaid Taxes on any Borrowing Base Property nor has any Tax Lien been filed or any claim asserted with respect to such Taxes on any Borrowing Base Property.

10.17         Loan Request. The Agent shall have reviewed a fully completed Loan Request dated as of the date hereof for the Initial Loan substantially in the form of Exhibit B hereto.

10.18         Other. The Agent shall have reviewed such other documents, instruments, certificates, opinions, assurances, consents and approvals as the Agent may reasonably have requested and are customarily required in connection with similar transactions.

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11. CONDITIONS TO ALL BORROWINGS.

The obligations of the Lenders to make any Loan advanced after the Closing Date shall also be subject to the satisfaction of the following conditions precedent:

11.1          Representations True; No Default. Each of the representations and warranties made by Borrower contained in this Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Agreement shall be true in all material respects both as of the date as of which they were made and shall also be true in all material respects as of the time of the making of such Loan, with the same effect as if made at and as of that time, except to the extent of changes resulting from transactions permitted by the Loan Documents (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct only as of such specified date), and no Default or Event of Default shall have occurred and be continuing.

11.2         Borrowing Documents. The Agent shall have received a fully completed Loan Request for such Loan and the other documents and information (including, without limitation, a Compliance Certificate) as required by Section 2.8.

12. EVENTS OF DEFAULT; ACCELERATION; ETC.

12.1          Events of Default and Acceleration. If any of the following events (“Events of Default” or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, “Defaults”) shall occur:

(a)                  Borrower shall fail to pay any principal of the Loans when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment;

(b)                  Borrower shall fail to pay any interest on the Loans within five (5) days of the date that the same shall become due and payable, or any fees or other sums due hereunder (other than any voluntary prepayment) or under any of the other Loan Documents within five (5) days after notice from the Agent, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment;

(c)                  Borrower shall fail to complete the Goldman Preferred Equity Investment and be in receipt of all of the funds due thereunder within sixty (60) days from the Closing Date (the “Goldman Closing Period”); provided, however, that notwithstanding the foregoing, Borrower shall be provided an additional one hundred twenty (120) days from the expiration of the Goldman Closing Period (the “Equity Subscription Period”) to complete a Replacement Equity Investment in lieu of such Goldman Preferred Equity Investment, in accordance with the Replacement Equity Investment Criteria; notwithstanding the foregoing, from the end of Goldman Closing Period through the completion of the Replacement Equity Investment, no Loans shall be advanced hereunder;

(d)                  Borrower shall fail to perform or cause to be performed any term, covenant or agreement contained in Section 8 or Section 9;

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(e)                  Borrower shall fail to perform or cause to be performed any other term, covenant or agreement contained herein or in any of the other Loan Documents which Borrower is required to perform or cause to be performed (other than those specified in the other subclauses of this Section 12 (including, without limitation, Section 12.2 below) or in the other Loan Documents), and such failure shall continue for thirty (30) days after Borrower receives from the Agent written notice thereof, and in the case of a default that cannot be cured within such thirty (30)-day period despite Borrower’s diligent efforts but is susceptible of being cured within ninety (90) days of Borrower’s receipt of the Agent’s original notice, then Borrower shall have such additional time as is reasonably necessary to effect such cure, but in no event in excess of ninety (90) days from Borrower’s receipt of the Agent’s original notice, or any material representation or warranty made by Borrower in this Agreement or any other Loan Document, or any report, certificate, financial statement, request for a Loan, or in any other document or instrument delivered pursuant to or in connection with this Agreement, any advance of a Loan, or any of the other Loan Documents shall prove to have been false in any material respect upon the date when made or deemed to have been made or repeated, except to the extent it is not reasonably expected to have a Material Adverse Effect;

(f)                   Any (a) Borrower or any Senior Facility Credit Party defaults under any recourse Indebtedness or suffers a claim under non-recourse carve-out guaranty, other than in respect of the Senior Facility Loan Documents or suffers a claim under non-recourse carve-out guaranty with respect to all uncured defaults at any time, or (b) Borrower or Senior Facility Credit Party defaults under any Non-Recourse Indebtedness, in an aggregate amount (in the case of (a) or (b) above) equal to or greater than $25,000,000 with respect to uncured defaults at any time, or (c) an “Event of Default” (as defined in the Senior Facility Agreement), occurs under any Senior Facility Loan Document which is not cured or waived within the applicable grace and cure periods set forth in the Senior Facility Loan Documents;

(g)                  any of Borrower or any Senior Facility Credit Party (i) shall make an assignment for the benefit of creditors, or admit in writing its general inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver for it or any substantial part of its assets, (ii) shall commence any case or other proceeding relating to it under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or (iii) shall take any action to authorize any of the foregoing;

(h)                 a petition or application shall be filed for the appointment of a trustee or other custodian, liquidator or receiver of any of Borrower or any Senior Facility Credit Party or any substantial part of the assets of any thereof, or a case or other proceeding shall be commenced against any such Person under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, and any such Person shall indicate its approval thereof, consent thereto or acquiescence therein or such petition, application, case or proceeding shall not have been dismissed within ninety (90) days following the filing or commencement thereof;

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(i)                   a decree or order is entered appointing a trustee, custodian, liquidator or receiver for any of Borrower or any Senior Facility Credit Party or adjudicating any such Person bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of any such Person in an involuntary case under federal bankruptcy laws as now or hereafter constituted;

(j)                  there shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty (30) days, one or more uninsured or unbonded final judgments against Borrower or any Subsidiary of Borrower that, either individually or in the aggregate, exceed in excess of $2,500,000.00 in any calendar year;

(k)                  any of the material Loan Documents shall be canceled, terminated, revoked or rescinded otherwise than in accordance with the terms thereof or the express prior written agreement, consent or approval of the Lenders, or any action at law, suit in equity or other legal proceeding to cancel, revoke or rescind any of the material Loan Documents shall be commenced by or on behalf of any of the Senior Facility Credit Parties, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination, or issue a judgment, order, decree or ruling, to the effect that any one or more of the material Loan Documents is illegal, invalid or unenforceable in accordance with the terms thereof;

(l)                   (i) Borrower ceases to be treated as a real estate investment trust under the Code in any taxable year or, (ii) after the occurrence of the IPO Event, the common Equity Interests of the Borrower shall fail to be listed and traded on the New York Stock Exchange or another publicly recognized exchange;

(m)               with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and such event reasonably would be expected to result in liability of any of the Borrower and the Senior Facility Credit Parties to pay money to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and one of the following shall apply with respect to such event: (x) such event in the circumstances occurring reasonably would be expected to result in the termination of such Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan; or (y) a trustee shall have been appointed by the United States District Court to administer such Plan; or (z) the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan;

(n)                 any dissolution, termination, partial or complete liquidation, merger or consolidation of any of Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors shall occur or any sale, transfer or other disposition of any material portion of the assets of any of Borrower, the Operating Partnership or the Senior Facility Subsidiary Guarantors shall occur other than as permitted under the terms of this Agreement or the other Loan Documents;

(o)                  Borrower or any of its Subsidiaries, or any officer, director, partner or member of any of them, shall be indicted for a federal crime, a punishment for which would reasonably likely result in the forfeiture of (i) any assets of such Person which in the good faith judgment of the Required Lenders would reasonably be expected to have a Material Adverse Effect, or (ii) the Collateral;

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(p)                  Borrower shall default on or fail to perform any affirmative, negative or financial covenant or other obligation contained in any documentation relating to the Goldman Preferred Equity Investment or Replacement Equity Investment which default or failure to perform is not cured within any applicable cure period set forth in such documentation if (i) the effect of such default or failure is to cause, or to permit the holder or holders of the Goldman Preferred Equity Investment or Replacement Equity Investment (with or without the giving of notice, the lapse of time or both) to cause, the mandatory redemption of the Goldman Preferred Equity Investment or Replacement Equity Investment in whole or in part or (ii) such default or failure gives the holder or holders of the Goldman Preferred Equity Investment or Replacement Equity Investment any payments, rights or remedies that could reasonably be expected to be adverse to the Lenders (as determined in their sole discretion); or

(q)                  any Change of Control shall occur;

then, and upon the occurrence and during the continuance of any such Event of Default, the Agent may, and upon the request of the Required Lenders shall, by notice in writing to Borrower declare all amounts owing with respect to this Agreement, the Notes, and the other Loan Documents to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower; provided that in the event of any Event of Default specified in Section 12.1(g), Section 12.1(h) or Section 12.1(i), all such amounts shall become immediately due and payable automatically and without any requirement of presentment, demand, protest or other notice of any kind from any of the Lenders or the Agent.

12.2          Certain Cure Periods. Notwithstanding anything contained herein to the contrary (including Section 12.1), in the event that there shall occur any Default or Event of Default that affects only certain Borrowing Base Property or the owner(s) thereof (if such owner is a Senior Facility Subsidiary Guarantor) or the removal of certain Borrowing Base Property would cure such Default or Event of Default, then Borrower may elect to cure such Default or Event of Default (so long as no other Default or Event of Default would arise as a result) by causing the Operating Partnership to elect to have Senior Facility Agent remove such Borrowing Base Property from the calculation of the Borrowing Base Availability (and the Operating Partnership’s compliance with Section 3.2 of the Senior Facility Agreement as a result thereof), in which event such removal and reduction shall be completed within thirty (30) days after receipt of notice of such Default or Event of Default from the Agent, as long after giving effect to such removal, Borrower shall be in compliance with the portfolio metrics as described in Section 7.25 and the financial covenants in Section 9.

12.3           Termination of Commitments. If any one or more Events of Default specified in Section 12.1(g), Section 12.1(h) or Section 12.1(i) shall occur, then immediately and without any action on the part of the Agent or any Lender any unused portion of the credit hereunder shall terminate and the Lenders shall be relieved of all obligations to make Loans to Borrower. If any other Event of Default shall have occurred, the Agent may, and upon the election of the Required Lenders shall, by notice to Borrower, terminate the obligation to make Loans to Borrower. No termination under this Section 12.3 shall relieve Borrower of its obligations to the Lenders arising under this Agreement or the other Loan Documents.

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12.4           Remedies. In case any one or more Events of Default shall have occurred and be continuing, and whether or not the Agent on behalf of the Lenders shall have accelerated the maturity of the Loans pursuant to Section 12.1, the Agent on behalf of the Lenders may, and upon the direction of the Required Lenders shall, proceed to protect and enforce their rights and remedies under this Agreement, the Notes and/or any of the other Loan Documents by suit in equity, action at law or other appropriate proceeding, including to the full extent permitted by applicable law the obtaining of the ex parte appointment of a receiver, and, if any amount shall have become due, by declaration or otherwise, the enforcement of the payment thereof. No remedy herein conferred upon the Agent or the holder of any Note is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law. Notwithstanding the provisions of this Agreement providing that the Loans may be evidenced by multiple Notes in favor of the Lenders, the Lenders acknowledge and agree that only the Agent may exercise any remedies arising by reason of a Default or Event of Default. If the Borrower or any Senior Facility Credit Party fails to perform any agreement or covenant contained in this Agreement or any of the other Loan Documents beyond any applicable period for notice and cure, the Agent may itself perform, or cause to be performed, any agreement or covenant of such Person contained in this Agreement or any of the other Loan Documents which such Person shall fail to perform, and the out-of-pocket costs of such performance, together with any reasonable expenses, including reasonable and documented attorneys’ fees actually incurred (including attorneys’ fees incurred in any appeal) by the Agent in connection therewith, shall be payable by Borrower upon demand and shall constitute a part of the Obligations and shall if not paid within five (5) days after demand bear interest at the rate for overdue amounts as set forth in this Agreement. In the event that all or any portion of the Obligations is collected by or through an attorney-at-law, Borrower shall pay all costs of collection including, but not limited to, reasonable attorney’s fees.

12.5           Distribution of Collateral Proceeds. In the event that, following the occurrence and during the continuance of any Event of Default, any monies are received in connection with the enforcement of remedies under any of the Loan Documents, such monies shall be distributed for application as follows:

(a)                 First, to pay to or reimburse: (x) the Agent for or in respect of, all Obligations constituting reasonable and documented out-of-pocket costs, expenses, disbursements and losses which shall have been paid, incurred or sustained by the Agent to protect or preserve the Collateral or in connection with the collection of such monies by the Agent, for the exercise, protection or enforcement by the Agent of all or any of the rights, remedies, powers and privileges of the Agent under this Agreement or any of the other Loan Documents or in respect of the Collateral or in support of any provision of adequate indemnity to the Agent against any taxes or liens which by law shall have, or may have, priority over the rights of the Agent to such monies and (y) the Paying Agent for or in respect of all Obligations constituting fees and reasonable and documented out-of-pocket costs, expenses, disbursements and losses which shall have been paid, incurred or sustained by the Paying Agent;

(b)                 Second, to the payment of all other Obligations (including any interest, expenses or other obligations incurred after the commencement of a bankruptcy) in such order or preference as the Required Lenders shall determine; provided, that (i) in the event that any Lender shall have wrongfully failed or refused to make an advance under Section 2.9(a) and such failure or refusal shall be continuing, advances made by other Lenders during the pendency of such failure or refusal shall be entitled to be repaid as to principal and accrued interest in priority to the other Obligations; and (ii) Obligations owing to the Lenders with respect to each type of Obligation such as interest, principal, fees and expenses shall be made among the Lenders, pro rata; and provided, further that the Required Lenders may in their discretion make proper allowance to take into account any Obligations not then due and payable; and

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(c)          Third, the excess, if any, shall be returned to Borrower or to such other Persons as are entitled thereto.

13. SETOFF.

Regardless of the adequacy of any Collateral, during the continuance of any Event of Default, any deposits (general or specific, time or demand, provisional or final, regardless of currency, maturity, or the branch where such deposits are held) or other sums credited by or due from any Lender or any Affiliate thereof to Borrower and any securities or other property of such parties in the possession of such Lender or any Affiliate may, without notice to Borrower (any such notice being expressly waived) but with the prior written approval of the Agent, be applied to or set off against the payment of Obligations. Each of the Lenders agrees with each other Lender that if such Lender shall receive from Borrower, whether by voluntary payment, exercise of the right of setoff, or otherwise, and shall retain and apply to the payment of the Note or Notes held by such Lender any amount in excess of its ratable portion of the payments received by all of the Lenders with respect to the Notes held by all of the Lenders, such Lender will make such disposition and arrangements with the other Lenders with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Lender receiving in respect of the Notes held by it its proportionate payment as contemplated by this Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Lender, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. In the event that any Defaulting Lender shall exercise any such right of setoff, (a) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of this Agreement and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agent and the Lenders, and (b) the Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.

14. THE AGENT(a).

14.1          Authorization. The Agent is authorized to take such action on behalf of each of the Lenders and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Agent and all other powers not specifically reserved to the Lenders, together with such powers as are reasonably incident thereto, provided that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Agent. The obligations of the Agent hereunder are primarily administrative in nature, and nothing contained in this Agreement or any of the other Loan Documents shall be construed to constitute the Agent as a trustee for any Lender or to create an agency or fiduciary relationship. Agent shall act as the contractual representative of the Lenders hereunder, and notwithstanding the use of the term “Agent”, it is understood and agreed that Agent shall not have any fiduciary duties or responsibilities to any Lender by reason of this Agreement or any other Loan Document and is acting as an independent contractor, the duties and responsibilities of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Borrower and any other Person shall be entitled to conclusively rely on a statement from the Agent that it has the authority to act for and bind the Lenders pursuant to this Agreement and the other Loan Documents.

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14.2          Employees and Agents. The Agent may exercise its powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Agreement and the other Loan Documents. The Agent may utilize the services of such Persons as the Agent may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by Borrower.

14.3          No Liability. Neither the Agent nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent, or employee thereof, shall be liable to the Lenders for (a) any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Agent or such other Person, as the case may be, shall be liable for losses due to its willful misconduct or gross negligence as finally determined by a court of competent jurisdiction after the expiration of all applicable appeal periods or (b) any action taken or not taken by Agent with the consent or at the request of the Required Lenders. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Lenders, unless the Agent has received notice from a Lender or Borrower referring to the Loan Documents and describing with reasonable specificity such Default or Event of Default and stating that such notice is a “notice of default”.

14.4          No Representations. The Agent shall not be responsible for the execution or validity or enforceability of this Agreement, the Notes, any of the other Loan Documents or any instrument at any time constituting, or intended to constitute, collateral security for the Notes, or for the value of any such collateral security or for the validity, enforceability or collectability of any such amounts owing with respect to the Notes, or for any recitals or statements, warranties or representations made herein, or any agreement, instrument or certificate delivered in connection therewith or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of Borrower or any of their respective Subsidiaries, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or in any of the other Loan Documents. The Agent shall not be bound to ascertain whether any notice, consent, waiver or request delivered to it by Borrower or any holder of any of the Notes shall have been duly authorized or is true, accurate and complete. The Agent has not made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to the Lenders, with respect to the creditworthiness or financial condition of Borrower or any of their respective Subsidiaries, or the value of the Collateral or any other assets of Borrower or any of their respective Subsidiaries. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender, based upon such information and documents as it deems appropriate at the time, continue to make its own credit analysis and decisions in taking or not taking action under this Agreement and the other Loan Documents.

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14.5         Payments.

(a)            A payment by Borrower to the Agent hereunder or under any of the other Loan Documents for the account of any Lender shall constitute a payment to such Lender. The Agent agrees to distribute to each Lender not later than one Business Day after the Agent’s receipt of good funds, determined in accordance with the Agent’s customary practices, such Lender’s pro rata share of payments received by the Agent for the account of the Lenders except as otherwise expressly provided herein or in any of the other Loan Documents. In the event that the Agent fails to distribute such amounts within one Business Day as provided above, the Agent shall pay interest on such amount at a rate per annum equal to the Federal Funds Effective Rate from time to time in effect.

(b)            If in the reasonable opinion of the Agent the distribution of any amount received by it in such capacity hereunder, under the Notes or under any of the other Loan Documents might involve it in liability, it may refrain from making such distribution until its right to make such distribution shall have been adjudicated by a court of competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court.

14.6         Holders of Notes. Subject to the terms of Section 18, the Agent may deem and treat the payee of any Note as the absolute owner or purchaser thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder, assignee or transferee.

14.7         Indemnity. The Lenders ratably agree hereby to indemnify and hold harmless the Agent from and against any and all claims, actions and suits (whether groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Agent has not been reimbursed by Borrower as required by Section 15), and liabilities of every nature and character arising out of or related to this Agreement, the Notes, or any of the other Loan Documents or the transactions contemplated or evidenced hereby or thereby, or the Agent’s actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by the Agent’s willful misconduct or gross negligence as finally determined by a court of competent jurisdiction after the expiration of all applicable appeal periods. The agreements in this Section 14.7 shall survive the payment of all amounts payable under the Loan Documents.

14.8          Agent as Lender. In its individual capacity, Agent shall have the same obligations and the same rights, powers and privileges in respect to its Commitment and the Loans made by it, and as the holder of any of the Notes as it would have were it not also the Agent.

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14.9          Resignation. The Agent may resign at any time by giving thirty (30) calendar days’ prior written notice thereof to the Lenders and Borrower. The Required Lenders may remove the Agent from its capacity as Agent in the event of the Agent’s gross negligence or willful misconduct or if the Agent is a Defaulting Lender (with the Commitment Percentage of the Lender which is acting as Agent shall not be taken into account in the calculation of Required Lenders for the purposes of removing Agent in the event of the Agent’s willful misconduct or gross negligence). Upon any such resignation, or removal, the Required Lenders, subject to the terms of Section 18.1, shall have the right to appoint as a successor Agent (i) any Lender or (ii) any bank whose senior debt obligations are rated not less than “A” or its equivalent by Moody’s or not less than “A” or its equivalent by S&P and which has a net worth of not less than $500,000,000. Unless a Default or Event of Default shall have occurred and be continuing, such successor Agent Lender shall be reasonably acceptable to Borrower. If no successor Agent shall have been appointed and shall have accepted such appointment within thirty (30) days after the retiring Agent’s giving of notice of resignation or the Required Lender’s removal of the Agent, then the retiring or removed Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be (i) any Lender or (ii) any financial institution whose senior debt obligations are rated not less than “A2” or its equivalent by Moody’s or not less than “A” or its equivalent by S&P and which has a net worth of not less than $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Agent, and the retiring or removed Agent shall be discharged from its duties and obligations hereunder as Agent. After any retiring Agent’s resignation or removal, the provisions of this Agreement and the other Loan Documents shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent under this Agreement, the resigning or removed Agent shall execute such assignments of and amendments to the Loan Documents as may be necessary to substitute the successor Agent for the resigning or removed Agent.

14.10       Duties in the Case of Enforcement. In case one or more Events of Default have occurred and shall be continuing, and whether or not acceleration of the Obligations shall have occurred, the Agent may and, if so requested by the Required Lenders which have provided to the Agent such additional indemnities and assurances in accordance with their respective Commitment Percentages against expenses and liabilities as the Agent may reasonably request, shall proceed to exercise all or any legal and equitable and other rights or remedies as it may have; provided, however, that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem to be in the best interests of the Lenders. Without limiting the generality of the foregoing, if Agent reasonably determines payment is in the best interest of all the Lenders, Agent may without the approval of the Lenders pay taxes and insurance premiums and spend money for maintenance, repairs or other expenses which may be necessary to be incurred, and Agent shall promptly thereafter notify the Lenders of such action. Each Lender shall, within thirty (30) days of request therefor, pay to the Agent its Commitment Percentage of the reasonable costs incurred by the Agent in taking any such actions hereunder to the extent that such costs shall not be promptly reimbursed to the Agent by Borrower or out of the Collateral within such period with respect to the Borrowing Base Properties. The Required Lenders may direct the Agent in writing as to the method and the extent of any such exercise, the Lenders hereby agreeing to indemnify and hold the Agent harmless in accordance with their respective Commitment Percentages from all liabilities incurred in respect of all actions taken or omitted in accordance with such directions, except to the extent that any of the same shall be directly caused by the Agent’s willful misconduct or gross negligence as finally determined by a court of competent jurisdiction after the expiration of all applicable appeal periods, provided that the Agent need not comply with any such direction to the extent that the Agent reasonably believes the Agent’s compliance with such direction to be unlawful in any applicable jurisdiction or commercially unreasonable under the UCC as enacted in any applicable jurisdiction.

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14.11        Bankruptcy. In the event a bankruptcy or other insolvency proceeding is commenced by or against Borrower with respect to the Obligations, the Agent shall have the sole and exclusive right to file and pursue a joint proof claim on behalf of all Lenders. Any votes with respect to such claims or otherwise with respect to such proceedings shall be subject to the vote of the Required Lenders or all of the Lenders (or each of those affected by such proceeding) as required by Section 27 of this Agreement. Each Lender irrevocably waives its right to file or pursue a separate proof of claim in any such proceedings unless Agent fails to file such claim within thirty (30) days after receipt of written notice from the Required Lenders requesting that Agent file such proof of claim.

14.12        RESERVED.

14.13        Reliance by Agent. The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by an Authorized Officer. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Agent may presume that such condition is satisfactory to such Lender unless the Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

14.14        Approvals. If consent is required for some action under this Agreement, or except as otherwise provided herein an approval of the Lenders or the Required Lenders (as applicable) is required or permitted under this Agreement, each Lender agrees to give the Agent, within ten (10) days of receipt of the request for action together with all reasonably requested information related thereto (or such lesser period of time required by the terms of the Loan Documents), notice in writing of approval or disapproval (collectively “Directions”) in respect of any action requested or proposed in writing pursuant to the terms hereof. To the extent that any Lender does not approve any recommendation of Agent, such Lender shall in such notice to Agent describe the actions that would be acceptable to such Lender. If consent is required for the requested action, any Lender’s failure to respond to a request for Directions within the required time period shall be deemed to constitute a Direction to take such requested action. In the event that any recommendation is not approved by the requisite number of Lenders and a subsequent approval on the same subject matter is requested by Agent, then for the purposes of this paragraph each Lender shall be required to respond to a request for Directions within ten (10) Business Days of receipt of such request. Agent and each Lender shall be entitled to assume that any officer of the other Lenders delivering any notice, consent, certificate or other writing is authorized to give such notice, consent, certificate or other writing unless Agent and such other Lenders have otherwise been notified in writing.

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14.15       Borrower Not Beneficiary. Except for the provisions of Section 14.9 relating to the appointment of a successor Agent, the provisions of this Section 14 are solely for the benefit of the Agent and the Lenders, may not be enforced by Borrower, and except for the provisions of Section 14.9, may be modified or waived without the approval or consent of Borrower.

14.16       Defaulting Lenders 

(a)            Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Legal Requirements:

(i)            That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 27.

(ii)           Any payment of principal, interest, fees or other amounts received by Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, or otherwise, and including any amounts made available to the Non-Defaulting Lenders by that Defaulting Lender pursuant to Section 13), shall be applied at such time or times as may be determined by the Non-Defaulting Lenders as follows: first, Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Non-Defaulting Lenders; second, if so determined by the Non-Defaulting Lenders and Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; third, to the payment of any amounts owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Default or Event of Default exists or Non-Defaulting Lenders have been paid in full all amounts then due, to the payment of any amounts owing to Borrower as a result of any judgment of a court of competent jurisdiction obtained by Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans made at a time when the conditions set forth in Section 11 were satisfied or waived, such payment shall be applied solely to pay the Loans to all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

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(b)           Defaulting Lender Cure. If Borrower and the Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that the Agent will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their Commitment Percentages (without giving effect to Section 14.16(a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

15. EXPENSES.

Borrower agrees to pay (a) the reasonable and documented, out-of-pocket costs incurred by the Agent and the Paying Agent of producing and reproducing this Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) any documented Indemnified Taxes (including any interest and penalties in respect thereto) payable by the Agent, the Paying Agent or any of the Lenders (other than taxes based upon any Agent, any Paying Agent or any Lender’s gross or net income, except that the Agent and the Lenders shall be entitled to indemnification for any and all amounts paid by them in respect of taxes based on income or other taxes assessed by any State in which Collateral is located, such indemnification to be limited to taxes due solely on account of the granting of Collateral under the Security Documents and to be net of any credit allowed to the indemnified party from any other State on account of the payment or incurrence of such tax by such indemnified party), (c) all reasonable and documented, out-of-pocket fees, expenses and disbursements of the outside counsel to the Agent or the Paying Agent and any local counsel to the Agent or the Paying Agent incurred in connection with the preparation, administration, or interpretation of the Loan Documents and other instruments mentioned herein, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (d) all other reasonable and documented, out-of-pocket fees (including reasonable attorneys’ fees), expenses and disbursements (other than Taxes unless such payment is otherwise required pursuant to the terms of this Agreement) of the Agent or the Paying Agent incurred by the Agent or the Paying Agent in connection with the preparation or interpretation of the Loan Documents and other instruments mentioned herein, the review of leases, the making of each Loan hereunder, and the third party out-of-pocket costs and expenses incurred in connection with the syndication of the Commitments pursuant to Section 18 hereof, and (e) without duplication, all reasonable and documented out-of-pocket expenses (including reasonable attorneys’ fees and costs, and the fees and costs of appraisers, engineers, investment bankers or other experts retained by any Lender, the Agent or the Paying Agent) incurred by any Lender or the Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Borrower or the Senior Facility Credit Parties or the administration thereof during the existence of a Default or Event of Default and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to any of the Agent’s, the Paying Agent’s or the Lenders’ relationship with Borrower (provided that any attorneys’ fees and costs pursuant to this clause (e) shall be limited to those incurred by the Agent and the Paying Agent, (f) all reasonable and documented fees, expenses and disbursements of the Agent incurred in connection with UCC searches, UCC filings, title rundowns, title searches or mortgage recordings, (g) all reasonable and documented out-of-pocket fees, expenses and disbursements (including reasonable attorneys’ fees and costs) which may be incurred by the Agent and the Paying Agent in connection with the execution and delivery of this Agreement and the other Loan Documents (without duplication of any of the items listed above), and (h) all expenses relating to the use of Intralinks, SyndTrak or any other similar system for the dissemination and sharing of documents and information in connection with the Loans in accordance with the terms of this Agreement. The covenants of this Section 15 shall survive the repayment of the Loans and the termination of the obligations of the Lenders hereunder.

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16. INDEMNIFICATION.

Borrower agrees to indemnify and hold harmless the Agent, the Paying Agent, the Lenders and each director, officer, employee, agent and Affiliate thereof and Person who controls the Agent, the Paying Agent or any Lender against any and all claims, actions and suits, whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character (subject to Section 15) arising out of or relating to any claim, action, suit or litigation arising out of this Agreement or any of the other Loan Documents or the transactions contemplated hereby and thereby including, without limitation, (a) any and all claims for brokerage, leasing, finders or similar fees which may be made relating the Loans by parties claiming by Borrower (b) any actual or proposed use by Borrower of the proceeds of any of the Loans, (c) any actual or alleged infringement of any patent, copyright, trademark, service mark or similar right of Borrower, (d) Borrower entering into or performing this Agreement or any of the other Loan Documents, (e) any actual or alleged violation of any law, ordinance, code, order, rule, regulation, approval, consent, permit or license relating to any Real Estate, (f) with respect to Borrower or any Senior Facility Credit Party and their respective properties and assets, subject to any limitations set forth in the Indemnity Agreements (as defined in the Senior Facility Agreement), the violation of any Environmental Law, the Release or threatened Release of any Hazardous Substances or any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances (including, but not limited to, claims with respect to wrongful death, personal injury, nuisance or damage to property), and (g) to the extent used by Borrower, any use of Intralinks, SyndTrak or any other system for the dissemination and sharing of documents and information, in each case including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding; provided, however, that Borrower shall not be obligated under this Section 16 or otherwise to indemnify any Person for liabilities arising from such Person’s own gross negligence or willful misconduct as determined by a court of competent jurisdiction after the exhaustion of all applicable appeal periods. In litigation, or the preparation therefor, each of the Paying Agent, the Lenders and the Agent shall be entitled to select a single law firm as their own counsel (including any local counsel as needed) and, in addition to the foregoing indemnity, Borrower agrees to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of Borrower under this Section 16 are unenforceable for any reason, Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The provisions of this Section 16 shall survive the repayment of the Loans and the termination of the obligations of the Lenders hereunder for a period of one year.

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17. SURVIVAL OF COVENANTS, ETC.

All covenants, agreements, representations and warranties made herein, in the Notes, in any of the other Loan Documents or in any documents or other papers delivered by Borrower pursuant hereto or thereto shall be deemed to have been relied upon by the Lenders and the Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Lenders of any of the Loans, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Agreement or the Notes or any of the other Loan Documents remains outstanding or any Lender has any obligation to make any Loans. The indemnification obligations of Borrower provided herein and in the other Loan Documents shall survive the full repayment of amounts due and the termination of the obligations of the Lenders hereunder and thereunder to the extent provided herein and therein for a period of one year. All statements contained in any certificate delivered to any Lender or the Agent at any time by Borrower pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by such Person hereunder.

18. ASSIGNMENT AND PARTICIPATION.

18.1          Conditions to Assignment by Lenders. Except as provided herein, each Lender may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment Percentage and Commitment and the same portion of the Loans at the time owing to it and the Notes held by it); provided that (a) the parties to such assignment shall execute and deliver to the Agent, the Paying Agent and the other Lenders and to the Borrower for the purpose of recording in the Register (as hereinafter defined), an Assignment and Acceptance Agreement in the form of Exhibit D annexed hereto, together with any Notes subject to such assignment, (b) in no event shall any assignment be to any Person controlling, controlled by or under common control with, or which is not otherwise free from influence or control by, Borrower, and (c) other than Assignees that constitute Eligible Assignees pursuant to clause (a), such assignee shall acquire an interest in the Loans of not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof (or if less, the remaining Loans of the assignor), unless waived by the Agent, and so long as no Default or Event of Default exists hereunder, Borrower shall have given its prior written consent to such assignment. Upon execution, delivery, acceptance and recording of such Assignment and Acceptance Agreement, (i) the assignee thereunder shall be a party hereto and all other Loan Documents executed by the Lenders and, to the extent provided in such Assignment and Acceptance Agreement, have the rights and obligations of a Lender hereunder and (ii) the assigning Lender shall be released from its obligations under this Agreement arising after the effective date of such assignment with respect to the assigned portion of its interests, rights and obligations under this Agreement. In connection with each assignment, the assignee shall represent and warrant to the Agent and the assignor as to whether such assignee is controlling, controlled by, under common control with or is not otherwise free from influence or control by, Borrower and whether such assignee is a Defaulting Lender or an Affiliate of a Defaulting Lender. In connection with any assignment of rights and obligations of any Defaulting Lender, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Lenders in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or actions, including funding, with the consent of Borrower and the Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Commitment Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under Applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

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18.2          Register. The Paying Agent shall maintain a copy of each assignment delivered to it and a register or similar list (the “Register”) for the recordation of the names and addresses of the Lenders and the Commitment Percentages of and principal amount of and interest on the Loans owing to the Lenders from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and Borrower, the Agent, the Paying Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower and the Lenders at any reasonable time and from time to time upon reasonable prior notice. The Paying Agent agrees to provide promptly a copy of the Register to the Agent and Borrower following any Lender assignment or other changes to the Register. Each of the Agent and the Borrower may conclusively rely on the information contained in the Register most recently received by it until it is notified of any changes to such Register by the Paying Agent.

18.3          New Notes. Upon its receipt of an Assignment and Acceptance Agreement executed by the parties to such assignment, together with each Note subject to such assignment, the Paying Agent shall record the information contained therein in the Register. Within five (5) Business Days after receipt of notice of such assignment from the Agent, Borrower, at its own expense, shall execute and deliver to the Agent, in exchange for each surrendered Note, a new Note (if requested by the subject Lender) to the order of such assignee in an amount equal to the amount assigned to such assignee pursuant to such Assignment and Acceptance Agreement and, if the assigning Lender has retained some portion of its obligations hereunder, a new Note to the order of the assigning Lender in an amount equal to the amount retained by it hereunder. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Acceptance Agreement and shall otherwise be in substantially the form of the assigned Notes. The surrendered Notes shall be canceled and returned to Borrower.

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18.4         Participations. Each Lender may sell participations to one or more Lenders or other entities in all or a portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents; provided that (a) any such sale or participation shall not affect the rights and duties of the selling Lender hereunder, (b) except as explicitly provided herein or therein, such participation shall not entitle such participant to any rights or privileges under this Agreement or any Loan Documents, including without limitation, rights granted to the Lenders under Section 4.8, Section 4.9 and Section 4.10, (c) such participation shall not entitle the participant to the right to approve waivers, amendments or modifications, (d) such participant shall have no direct rights against Borrower, (e) such participant shall be entitled to the benefits of Section 4.4 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 18.1, but shall not be entitled to receive any greater payment under Section 4.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, (f) such sale is effected in accordance with all applicable laws, (g) such participant shall not be a Person controlling, controlled by or under common control with, or which is not otherwise free from influence or control by any of Borrower, and (h) unless an Event of Default is in existence, such participant is not a Competitor; provided, however, such Lender may agree with the participant that it will not, without the consent of the participant, agree to (i) increase, or extend the term or extend the time or waive any requirement for the reduction or termination of, such Lender’s Commitment, (ii) extend the date fixed for the payment of principal of or interest on the Loans or portions thereof owing to such Lender, (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest is payable thereon or (v) release Borrower (except as otherwise permitted under Article 5). Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the foregoing provisions are intended to comply with the registration requirements in U.S. Treasury Regulations Section 5f.103-1(c), or any successor provisions thereof, so that any payments made on any Loan or Note are considered to be paid on a debt instrument issued in “registered form” pursuant to such regulations, and all parties hereto shall construe the provisions of this Agreement to ensure that the Loans, Notes or other obligations will be considered to have been so issued and shall have no responsibility for maintaining a Participant Register.

18.5          Pledge by Lender. Notwithstanding anything herein to the contrary, any Lender may at any time pledge all or any portion of its interest and rights under this Agreement (including all or any portion of its Note) to any of the twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341 or any other central banking authority, or to such other Person as the Lenders elect. No such pledge or the enforcement thereof shall release the pledgor Lender from its obligations hereunder or under any of the other Loan Documents.

18.6          No Assignment by Borrower. Borrower shall not assign or transfer any of their rights or obligations under this Agreement without the prior written consent of each of the Lenders.

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18.7          Disclosure. Borrower agrees to promptly and reasonably cooperate with any Lender in connection with any proposed assignment or participation of all or any portion of its Commitment. Borrower agrees that, in addition to disclosures made in accordance with standard banking practices, any Lender may disclose information obtained by such Lender pursuant to this Agreement to assignees or participants and potential assignees or participants hereunder, but in all events subject to the terms hereof. Each Lender agrees to hold confidential all non-public information obtained from Borrower or any Senior Facility Credit Party or any of their Affiliates, and shall not disclose such information to any other Person, it being understood and agreed that, notwithstanding the foregoing, a Lender may make (a) disclosures to its participants (provided such Persons are advised of the provisions of this Section 18.7, and agree (pursuant to customary click through confidentiality provisions or otherwise) to be bound by the provisions of this Section 18.7 and to destroy or return all confidential information if it does not become an assignee or participant), (b) disclosures to its directors, officers, employees, Affiliates, accountants, appraisers, legal counsel and other professional advisors of such Lender (provided that such Persons who are not employees of such Lender are advised of the provision of this Section 18.7 and agree (through customary click through or other customary requirements) to be bound by the provisions hereof, (c), disclosures customarily provided or reasonably required by any potential or actual bona fide assignee, transferee or participant or their respective directors, officers, employees, Affiliates, accountants, appraisers, legal counsel and other professional advisors in connection with a potential or actual assignment or transfer by such Lender of any Loans or any participations therein (provided such Persons are advised of the provisions of this Section 18.7 and agree (through customary click through or other customary requirements) to be bound by the provisions hereof, (d) disclosures requested by bank regulatory authorities or self-regulatory bodies with jurisdiction over such Lender, or (e) disclosures required by any other governmental authority or representative thereof or pursuant to legal process; provided that, unless specifically prohibited by applicable law or court order, each Lender shall notify Borrower of any request by any governmental authority or representative thereof prior to disclosure (other than any such request in connection with any examination of such Lender by such government authority) for disclosure of any such non-public information prior to disclosure of such information and provide (if permitted under applicable Legal Requirements) Borrower a reasonable opportunity to challenge the disclosure or require that such disclosure be made under seal. In addition, each Lender may make disclosure of such information to any contractual counterparty in swap agreements or such contractual counterparty’s professional advisors (so long as such contractual counterparty or professional advisors agree to be bound by the provisions of this Section 18.7). Non-public information shall not include any information which is or subsequently becomes publicly available other than as a result of a disclosure of such information by a Lender, or prior to the delivery to such Lender is within the possession of such Lender if such information is not known by such Lender to be subject to another confidentiality agreement with or other obligations of secrecy to Borrower, or is disclosed with the prior approval of Borrower. Nothing herein shall prohibit the disclosure of non-public information to the extent necessary to enforce the Loan Documents.

18.8          RESERVED.

18.9          Amendments to Loan Documents. Upon any such assignment or participation, Borrower shall, upon the request of the Agent enter into such documents as may be reasonably required by the Agent to modify the Loan Documents to reflect such assignment or participation.

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19. NOTICES.

(a)            Each notice, demand, election or request provided for or permitted to be given pursuant to this Agreement (hereinafter in this Section 19 referred to as “Notice”) must be in writing and shall be deemed to have been properly given or served by personal delivery or by telegraph, telecopy, telefax, telex or email/electronic transmission or by sending same by overnight courier or by depositing same in the United States Mail, postpaid and registered or certified, return receipt requested, and addressed to the parties at the address set forth on Schedule 19.

(b)            Each Notice shall be effective upon being personally delivered or upon being sent by overnight courier or upon being deposited in the United States Mail as aforesaid, or if transmitted by telegraph, telecopy, telefax or telex is permitted, upon being sent and confirmation of receipt. The time period in which a response to such Notice must be given or any action taken with respect thereto (if any), however, shall commence to run from the date of receipt if personally delivered or the Business Day after the day sent by overnight courier (sent for next day delivery), or if so deposited in the United States Mail, the earlier of three (3) Business Days following such deposit or the date of receipt as disclosed on the return receipt. Rejection or other refusal to accept or the inability to deliver because of changed address for which no notice was given shall be deemed to be receipt of the Notice sent. By giving at least fifteen (15) days prior Notice thereof, Borrower, a Lender or Agent shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses and each shall have the right to specify as its address any other address within the United States of America.

(c)             Loan Documents and notices under the Loan Documents may be transmitted and/or signed by facsimile or by signatures delivered in “PDF” format by electronic mail. The effectiveness of any such documents and signatures shall, subject to Applicable Law, have the same force and effect as an original copy with manual signatures and shall be binding on Borrower, Agent and Lenders. The Agent may also require that any such documents and signature delivered by facsimile or “PDF” format by electronic mail be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver any such manually-signed original shall not affect the effectiveness of any facsimile or “PDF” document or signature.

(d)            Notices and other communications to the Agent and the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Lenders that it is incapable of receiving notices under such section by electronic communication. The Agent or Borrower may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, e-mail or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

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20. RELATIONSHIP.

Neither the Agent nor any Lender has any fiduciary relationship with or fiduciary duty to Borrower or their respective Subsidiaries arising out of or in connection with this Agreement or the other Loan Documents or the transactions contemplated hereunder and thereunder, and the relationship between each Lender and Agent, and Borrower is solely that of a lender and borrower, and nothing contained herein or in any of the other Loan Documents shall in any manner be construed as making the parties hereto partners, joint venturers or any other relationship other than lender and borrower.

21. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.

THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401. BORROWER, THE AGENT AND THE LENDERS AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK (INCLUDING ANY FEDERAL COURT SITTING THEREIN). BORROWER, THE AGENT AND THE LENDERS FURTHER ACCEPT, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS AND ANY RELATED APPELLATE COURT AND IRREVOCABLY (i) AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY WITH RESPECT TO THIS AGREEMENT AND (ii) WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION ANY OF THEM MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH A COURT IS AN INCONVENIENT FORUM. IN ADDITION TO THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN, THE AGENT OR ANY LENDER MAY BRING ACTION(S) FOR ENFORCEMENT ON A NONEXCLUSIVE BASIS WHERE ANY COLLATERAL OR ASSETS OF BORROWER EXISTS AND BORROWER CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS. BORROWER EXPRESSLY ACKNOWLEDGES AND AGREES THAT THE FOREGOING CHOICE OF NEW YORK LAW WAS A MATERIAL INDUCEMENT TO THE AGENT AND THE LENDERS IN ENTERING INTO THIS AGREEMENT AND IN MAKING THE LOANS HEREUNDER.

22. HEADINGS.

The captions in this Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

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23. COUNTERPARTS.

This Agreement and any amendment hereof may be executed and delivered in counterparts (including by facsimile, electronic transmission or other transmission method (including by facsimile, electronic transmission or other transmission method (including, without limitation, any .pdf file, .jpeg file, or any other electronic or image file, or any “electronic signature” as defined under E-SIGN or ESRA, which includes any electronic signature provided using Orbit, Adobe Sign, DocuSign, or any other similar platform identified by the Borrower and reasonably available at no undue burden or expense to the Paying Agent), each of which will be deemed an original and shall be deemed to have been duly and validly delivered for all purposes hereunder, and all of which together shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by e-mail (PDF) or facsimile shall be effective as delivery of a manually executed counterpart of this Agreement. In proving this Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought.

24. ENTIRE AGREEMENT, ETC.

This Agreement and the Loan Documents are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Agreement and the Loan Documents. All prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superseded by this Agreement and the Loan Documents, and no party is relying on any promise, agreement or understanding not set forth in this Agreement and the Loan Documents. Neither this Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in Section 27.

25. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.

EACH OF BORROWER, THE AGENT AND THE LENDERS HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, PUNITIVE OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES (OTHER THAN AS ACTUALLY CLAIMED AGAINST THE AGENT OR ANY LENDER BY THIRD PARTIES AS A RESULT OF ANY ACTION OR OMISSION BY BORROWER OR ANY SENIOR FACILITY CREDIT PARTY AS TO WHICH THE AGENT OR SUCH LENDER IS ENTITLED TO INDEMNIFICATION HEREUNDER (I.E., DIRECT AND ACTUAL DAMAGES OF ANY THE AGENT OR SUCH LENDER)). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 25. EACH PARTY ACKNOWLEDGES THAT IT HAS HAD AN OPPORTUNITY TO REVIEW THIS SECTION 25 WITH LEGAL COUNSEL AND THAT EACH PARTY AGREES TO THE FOREGOING AS ITS FREE, KNOWING AND VOLUNTARY ACT.

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26. DEALINGS WITH BORROWER.

The Agent, the Lenders and their affiliates may accept deposits from, extend credit to, invest in, act as trustee under indentures of, serve as financial advisor of, and generally engage in any kind of banking, trust or other business with Borrower and its Subsidiaries or any of their Affiliates regardless of the capacity of the Agent or the Lender hereunder. Borrower acknowledges, on behalf of itself and its Affiliates, that the Agent and each of the Lenders and their respective Affiliates may be providing debt financing, equity capital or other services (including financial advisory services) in which Borrower and its Affiliates may have conflicting interests regarding the transactions described herein and otherwise. Neither the Agent nor any Lenders will use confidential information described in Section 18.7 obtained from Borrower by virtue of the transactions contemplated hereby or its other relationships with Borrower and its Affiliates in connection with the performance by the Agent or such Lender or their respective Affiliates of services for other companies, and none of the Agent, the Lenders nor their Affiliates will furnish any such information to other companies. Borrower, on behalf of itself and its Affiliates, also acknowledges that none of the Lenders has any obligation to use in connection with the transactions contemplated hereby, or to furnish to Borrower, confidential information obtained from other companies. Borrower, on behalf of itself and its Affiliates, further acknowledges that one or more of the Agent and the Lenders and their respective Affiliates may be a full service securities firm and may from time to time effect transactions, for its own or its Affiliates’ account or the account of customers, and hold positions in loans, securities or options on loans or securities of Borrower and its Affiliates.

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27. CONSENTS, AMENDMENTS, WAIVERS, ETC.

Except as otherwise expressly provided in this Agreement, any consent or approval required or permitted by this Agreement may be given, and any material term of this Agreement or of any other instrument related hereto or mentioned herein may be amended, and the performance or observance by Borrower of any terms of this Agreement or such other instrument or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Required Lenders and, with respect to any amendment of any term of this Agreement or of any other instrument related hereto or mentioned herein, Borrower; provided, that no such amendment or waiver will be effective unless the Borrower provides a tax opinion to the effect that after such amendment or waiver, the Term Loans should be treated as debt for U.S. federal income tax purposes, addressed to the Agent and the Lenders from counsel to Borrower in form and substance reasonably satisfactory to the Agent and the Lenders. Notwithstanding the foregoing, none of the following may occur without the written consent of each Lender adversely affected thereby: (a) a reduction in the rate of interest on the Notes (other than a reduction or waiver of default interest); (b) an increase in the amount of the Commitments of the Lenders; (c) a forgiveness, reduction or waiver of the principal of any unpaid Loan or any interest thereon or fee payable under the Loan Documents; (d) a change in the amount of any fee payable to a Lender hereunder; (e) the postponement of any date fixed for any payment of principal of or interest on the Loan; (f) an extension of the Maturity Date; (g) a change in the manner of distribution of any payments to the Lenders or the Agent; (h) the release of Borrower, or any Collateral except as otherwise provided in Article 5; (i) an amendment of the definition of Required Lenders or of any requirement for consent by all of the Lenders; (j) any modification to require a Lender to fund a pro rata share of a request for an advance of the Loan made by Borrower other than based on its Commitment Percentage; (k) an amendment to this Section 27; or (l) an amendment of any provision of this Agreement or the Loan Documents which requires the approval of all of the Lenders, the Required Lenders or the Required Lenders to require a lesser number of Lenders to approve such action. The provisions of Section 14 may not be amended without the written consent of the Agent. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of the Agent or any Lender in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

Further notwithstanding anything to the contrary in this Section 27, if the Agent and Borrower have jointly identified an ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or the other Loan Documents or an inconsistency between provisions of this Agreement and/or the other Loan Documents, the Agent and Borrower shall be permitted to amend, modify or supplement such provision or provisions to cure such ambiguity, omission, mistake, defect or inconsistency so long as to do so would not adversely affect the interest of the Lenders. Any such amendment, modification or supplement shall become effective without any further action or consent of any of other party to this Agreement.

28. SEVERABILITY.

The provisions of this Agreement are severable, and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.

29. TIME OF THE ESSENCE.

Time is of the essence with respect to each and every covenant, agreement and obligation under this Agreement and the other Loan Documents (subject to the provisions hereof/thereof).

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30. NO UNWRITTEN AGREEMENTS.

THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. ANY ADDITIONAL TERMS OF THE AGREEMENT BETWEEN THE PARTIES ARE SET FORTH BELOW.

31. REPLACEMENT NOTES.

Upon receipt of evidence reasonably satisfactory to Borrower of the loss, theft, destruction or mutilation of any Note, and in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to Borrower or, in the case of any such mutilation, upon surrender and cancellation of the applicable Note, Borrower will execute and deliver, in lieu thereof, a replacement Note, identical in form and substance to the applicable Note and dated as of the date of the applicable Note and upon such execution and delivery all references in the Loan Documents to such Note shall be deemed to refer to such replacement Note.

32. NO THIRD PARTIES BENEFITED.

This Agreement and the other Loan Documents are made and entered into for the sole protection and legal benefit of Borrower, the Lenders, the Agent and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. All conditions to the performance of the obligations of the Agent and the Lenders under this Agreement, including the obligation to make Loans, are imposed solely and exclusively for the benefit of the Agent and the Lenders, and their permitted successors and assigns, and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that the Agent and the Lenders will refuse to make Loans in the absence of strict compliance with any or all thereof and no other Person shall, under any circumstances, be deemed to be a beneficiary of such conditions, any and all of which may be freely waived in whole or in part by the Agent and the Lenders at any time if in their sole discretion they deem it desirable to do so. In particular, the Agent and the Lenders make no representations and assume no obligations as to third parties concerning the quality of the construction by Borrower or any of its Subsidiaries of any development or the absence therefrom of defects.

33. PATRIOT ACT.

Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that, pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies Borrower, which information includes names and addresses and other information that will allow such Lender to identify Borrower in accordance with the Patriot Act.

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34. EMPLOYEES AND AGENTS.

The Lenders and the Agent may exercise their powers and execute their duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Agreement and the other Loan Documents. The Lenders and the Agent may utilize the services of such Persons as the Agent may reasonably determine, and all reasonable fees and expenses of any such Persons shall be paid by Borrower.

35. PAYING AGENT.

35.1          Appointment. Each Lender hereby designates U.S. Bank National Association to act as Paying Agent for such Lender under this Agreement and the Loan Documents. Each Lender hereby irrevocably authorizes Paying Agent to take such action on its behalf under the provisions of this Agreement and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of Paying Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Paying Agent may perform any of its duties hereunder by or through its agents or employees. The Paying Agent shall not have any duty to take any discretionary action or exercise any discretionary powers expressly contemplated hereby or the Loan Documents, except discretionary rights and powers the Paying Agent has been directed in writing by the Agent; provided, however, that Paying Agent shall not be required to take any action which exposes Paying Agent to liability or which is contrary to this Agreement or the Loan Documents or Applicable Law unless Paying Agent is furnished with an indemnification reasonably satisfactory to Paying Agent with respect thereto.

35.2          Nature of Duties. The Paying Agent shall have no duties or responsibilities except those expressly set forth in this Agreement. Neither Paying Agent nor any of its officers, directors or employees shall be (i) liable for any action taken or omitted by them, in good faith, as such hereunder or in connection herewith, unless caused by their gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment), or (ii) responsible in any manner for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement, or in any of the Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by Paying Agent under or in connection with, this Agreement or any of the Loan Documents or for the value, validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this Agreement, or any of the Loan Documents or for any failure of the Borrower to perform its obligations hereunder. The Paying Agent shall not be under any obligation to the Agent or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any of the Loan Documents, or to inspect the properties, books or records of the Borrower. The duties of Paying Agent with respect to the Loans to Borrower shall be mechanical and administrative in nature; Paying Agent shall not have by reason of this Agreement a fiduciary relationship in respect of the Agent or any Lender (regardless of whether a Default has occurred and is continuing); and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Paying Agent any obligations in respect of this Agreement except as expressly set forth herein. The Paying Agent shall not, except as expressly set forth herein and in the Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person servicing as the Paying Agent or any of its Affiliates in any capacity.

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  Without limiting the foregoing, the Paying Agent shall not be required to act hereunder or to advance its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of its rights hereunder and under any other agreements or documents to which it is a party, and shall in all cases be fully justified in failing or refusing to act hereunder unless it shall receive further assurances to its satisfaction from the Agent and/or the Lenders of their indemnification obligations under and in accordance with the provisions of Section 35.4 against any and all liability and expense that may be incurred by it by reason of taking or continuing to take or refraining from taking any such action. The Paying Agent shall be fully justified in requesting direction from the Agent in the event this Agreement or any Loan Document is silent or vague with respect to such Paying Agent’s duties, rights or obligations. The Paying Agent shall not be liable for any action taken or not taken by it, in good faith, (i) with the consent or at the request of the Agent or (ii) in the absence of its own gross negligence or willful misconduct, as determined by a court of competent jurisdiction in a final and non-appealable decision.

35.3           Exculpatory Provisions. The Paying Agent and any of its respective officers, partners, directors, employees or agents shall not be liable for any action taken or omitted, in good faith, by any agent or attorney-in-fact under or in connection with any of the Loan Documents except to the extent caused by the Paying Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, nonappealable order. Without prejudice to the generality of the foregoing, (i) the Paying Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected and free from liability in relying on opinions and judgments of attorneys (who may be attorneys for the Borrower), accountants, experts and other professional advisors selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants, experts or professional advisors; (ii) no Lender shall have any right of action whatsoever against the Paying Agent as a result of the Paying Agent acting or (where so instructed) refraining from acting hereunder or any of the other Loan Documents in accordance with the instructions of the Agent; (iii) the Paying Agent shall not incur liability under or in respect of this Agreement or any other Loan Document by relying on, acting upon (or by refraining from action in reliance on) any notice, consent, certificate, instruction or waiver, report, statement, opinion, direction or other instrument or writing (which may be delivered by telecopier, email, electronic transmission, cable or telex, if acceptable to it) believed by it to be genuine and believe by it to be signed or sent by the proper party or parties; and (iv) the Paying Agent shall not be liable for any action taken in good faith and reasonably believed by it to be within the powers conferred upon it, or taken by it pursuant to any direction or instruction by which it is governed, or omitted to be taken by it by reason of the lack of direction or instruction required hereby for such action (including without limitation for refusing to exercise discretion or for withholding its consent in the absence of its receipt of, or resulting from a failure, delay or refusal on the part of the Agent to provide, written instruction to exercise such discretion). As to any matters not expressly provided for by this Agreement or any matter that would require the Paying Agent to exercise any discretion hereunder or under any Loan Document, the Paying Agent shall not be obligated to advance, expend or risk its own funds, or to take any action which in its reasonable judgment may cause it to incur any expense or financial or other liability unless the Paying Agent is furnished with a satisfactory indemnification from the Agent with respect thereto. The Paying Agent shall not be responsible or liable for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes or other disasters. The Paying Agent shall not be responsible for any special, exemplary, punitive or consequential damages. The Paying Agent shall have no duty to monitor the performance of any obligor under any Loan Document nor shall it have any obligation or liability with respect to the compliance with statutory or regulatory requirements related to any Loan.

35.4          Lack of Reliance on Paying Agent and Resignation. Independently and without reliance upon Paying Agent or any other Lender, each Lender has made and shall continue to make (i) its own independent investigation of the financial condition and affairs of the Borrower and the Senior Facility Credit Parties in connection with the making and the continuance of the Loans hereunder and the taking or not taking of any action in connection herewith, and (ii) its own appraisal of the creditworthiness of the Borrower and the Senior Facility Credit Parties. Paying Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before making of the Loans or at any time or times thereafter except as shall be provided by any the Borrower pursuant to the terms hereof. Paying Agent shall not be responsible to any Lender for the financial condition of the Borrower, or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement, the Loan Documents or the financial condition of any Borrower, or the existence of any Event of Default or any Default.Paying Agent may resign on sixty (60) days’ prior written notice to the Agent and within sixty (60) days after the retiring Paying Agent’s giving of notice of resignation, the Agent will promptly designate a successor Paying Agent reasonably satisfactory to Borrower.

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Any such successor Paying Agent shall succeed to the rights, powers and duties of Paying Agent, and the term “Paying Agent” shall mean such successor Paying Agent effective upon its appointment, and the former Paying Agent’s rights, powers and duties as Paying Agent shall be terminated, without any other or further act or deed on the part of such former Paying Agent. After any Paying Agent’s resignation as Paying Agent, the provisions of this Article 35 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Paying Agent under this Agreement.

35.5          Certain Rights of Paying Agent If Paying Agent shall request instructions from the Agent with respect to any act or action (including failure to act) in connection with this Agreement or any Loan Document, the Paying Agent shall be entitled to refrain from such act or taking such action unless and until the Paying Agent shall have received instructions from the Agent; and the Paying Agent shall not incur liability to any Person by reason of so refraining. Without limiting the foregoing, neither the Agent nor the Lenders shall have any right of action whatsoever against Paying Agent as a result of its acting or refraining from acting hereunder in accordance with the instructions of the Agent.

35.6           Reserved.

35.7           Delegation of Duties. The Paying Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any Loan Document by or through any one or more sub-agents appointed by such Paying Agent. The Paying Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective agents. The exculpatory provisions of this Article shall apply to any such sub-agent and to the agents of the Paying Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Paying Agent. The Paying Agent shall not be responsible for the actions, omissions or misconduct of any agents or attorneys in fact selected by it with reasonable care.

35.8           Notice of Default. The Paying Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder or under the Loan Documents, unless Paying Agent has received notice from the Agent referring to this Agreement or the Loan Documents, describing such Default or Event of Default and stating that such notice is a “notice of default”. The Paying Agent shall not be deemed to have notice or knowledge of any matter unless a responsible officer of the Paying Agent responsible for the administration of this Agreement has actual knowledge thereof or unless written notice thereof is received by the Paying Agent at the address listed on Schedule 4.3 and such notice references the Loans generally, the Borrower or this Agreement.

35.9           Indemnification. To the extent Paying Agent is not reimbursed and indemnified by Borrower, each Lender will reimburse and indemnify Paying Agent in proportion to its respective portion of the Loans, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, fees (including reasonable legal fees, costs and expenses), costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Paying Agent in performing its duties hereunder, or in any way relating to or arising out of this Agreement or any Loan Document and (whether brought by or involving any third party, the Borrower or the Lenders); provided that, Lenders shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Paying Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable judgment).

35.10         No Reliance on Paying Agent’s Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on Paying Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any Borrower, its Affiliates or its paying agents, this Agreement, the Loan Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other laws.

36            ADDITIONAL AGREEMENTS CONCERNING OBLIGATIONS OF BORROWER.

36.1          Reserved.

36.2          Waiver of Defenses. To the extent permitted by Applicable Law, Borrower hereby waives and agrees not to assert or take advantage of any defense based upon:

(a)               Reserved;

(b)               Reserved;

(c)               Any defense that may arise by reason of the incapacity, lack of authority, death or disability of any other Person or Persons or the failure of any Lender to file or enforce a claim against the estate (in administration, bankruptcy or any other proceeding) of any other Person or Persons;

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(d)               Any failure on the part of the Agent or any Lender to ascertain the extent or nature of any Collateral or any insurance or other rights with respect thereto, or the liability of any party liable under the Loan Documents or the obligations evidenced or secured thereby;

(e)               Demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices of any kind (except for such notices as are specifically required to be provided to Borrower pursuant to the Loan Documents), or the lack of any thereof, including, without limiting the generality of the foregoing, notice of the existence, creation or incurring of any new or additional indebtedness or obligation or of any action or non-action on the part of any Borrower, the Agent, any Lender, any endorser or creditor of the Borrower or on the part of any other Person whomsoever under this or any other instrument in connection with any obligation or evidence of indebtedness held by the Agent or any Lender;

(f)                Any defense based upon an election of remedies by the Agent or any Lender, including any election to proceed by judicial or nonjudicial foreclosure of any security, whether real property or personal property security, or by deed in lieu thereof, and whether or not every aspect of any foreclosure sale is commercially reasonable, or any election of remedies, including remedies relating to real property or personal property security, which destroys or otherwise impairs the subrogation rights of Borrower to proceed against the other Persons for reimbursement;

(g)               Any right or claim of right to cause a marshaling of the assets of the Borrower or the Senior Facility Credit Parties;

(h)               Reserved;

(i)                 Any duty on the part of the Agent or any Lender to disclose to Borrower any facts the Agent or any Lender may now or hereafter know about the Borrower or any Senior Facility Credit Party or the Collateral, regardless of whether the Agent or any Lender has reason to believe that any such facts materially increase the risk beyond that which Borrower intends to assume or has reason to believe that such facts are unknown to Borrower or has a reasonable opportunity to communicate such facts to Borrower, it being understood and agreed that Borrower is fully responsible for being and keeping informed of all circumstances bearing on the risk that liability may be incurred by Borrower hereunder and under the other Loan Documents;

(j)                 Any inaccuracy of any representation or other provision contained in any Loan Document;

(k)               Subject to compliance with the provisions of this Agreement, any sale or assignment of the Loan Documents, or any interest therein;

(l)                 Reserved;

(m)               Any invalidity, irregularity or unenforceability, in whole or in part, of any one or more of the Loan Documents;

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(n)               Any lack of commercial reasonableness in dealing with the Collateral;

(o)               Any deficiencies in the Collateral;

(p)               Reserved;

(q)               Any modifications of the Loan Documents or any obligation of Borrower or any Senior Facility Credit Parties relating to the Loan by operation of law or by action of any court, whether pursuant to the Bankruptcy Code, or any other debtor relief law (whether statutory, common law, case law or otherwise) of any jurisdiction whatsoever, now or hereafter in effect, or otherwise;

(r)                Any release of Borrower or of any other Person from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law, Agent’s or the Lenders’ voluntary act or otherwise; or

(s)                Any action, occurrence, event or matter consented to by the under any provision hereof, or otherwise.

36.3          Waiver. Borrower waives, to the fullest extent that each may lawfully so do, the benefit of all appraisement, valuation, extension, homestead, exemption and redemption laws which such Person may claim or seek to take advantage of in order to prevent or hinder the enforcement of any of the Loan Documents or the exercise by Lenders or Agent of any of their respective remedies under the Loan Documents and, to the fullest extent that Borrower may lawfully so do, such Person waives any and all right to have the assets comprised in the security intended to be created by the Security Documents marshaled upon any foreclosure of the lien created by such Security Documents. Borrower further agrees that the Lenders and Agent shall be entitled to exercise their respective rights and remedies under the Loan Documents or at law or in equity in such order as they may elect. Without limiting the foregoing, Borrower further agrees that upon the occurrence and during the continuance of an Event of Default, the Lenders and Agent may exercise any of such rights and remedies without notice to Borrower or any of the Senior Facility Credit Parties except as required by law or the Loan Documents and agrees that neither the Agent nor the Lenders shall be required to proceed against any other Person or to proceed against or to exhaust any other security held by the Lenders at any time or to pursue any other remedy in each Lender’s or Agent’s power or under any of the Loan Documents before proceeding against Borrower or its assets under the Loan Documents.

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37. ACKNOWLEDGEMENT AND CONSENT TO BAIL-IN OF EEA FINANCIAL INSTITUTIONS.

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(i)             the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(ii)            the effects of any Bail-In Action on any such liability, including, if applicable:

(1)       a reduction in full or in part or cancellation of any such liability;

(2)       a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

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IN WITNESS WHEREOF, each of the undersigned have caused this Agreement to be executed by its duly authorized representatives as of the date first set forth above.

BORROWER:
FOUR SPRINGS CAPITAL TRUST,
a Maryland real estate investment trust
By:	/s/ John E. Warch
Name:	John E. Warch
Title:	Chief Financial Officer

SIGNATURES CONTINUE ON FOLLOWING PAGES]

[Signature Page to Credit Agreement]

AGENT:
MAGNETAR FINANCIAL LLC,
a Delaware limited liability company
By:	/s/ Karl Wachter
Name: Karl Wachter
Title: General Counsel

[SIGNATURES CONTINUE ON FOLLOWING PAGES]

[Signature Page to Credit Agreement]

PAYING AGENT:
U.S. BANK NATIONAL ASSOCIATION,
as Paying Agent
By:	/s/ James A. Hanley
Name: James A. Hanley
Title: Vice President

[SIGNATURES CONTINUE ON FOLLOWING PAGES]

[Signature Page to Credit Agreement]

LENDERS:
MAGNETAR CONSTELLATION MASTER FUND, LTD
By:     Magnetar Financial LLC, its investment manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel
MAGNETAR CONSTELLATION FUND II, LTD
By:       Magnetar Financial LLC, its investment manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel
MAGNETAR CONSTELLATION MASTER FUND V LTD
By:       Magnetar Financial LLC, its investment manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel
MAGNETAR XING HE MASTER FUND LTD
By:       Magnetar Financial LLC, its investment manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel

[Signature Page to Credit Agreement]

MAGNETAR LONGHORN FUND LP
By:     Magnetar Financial LLC, its investment manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel
Purpose Alternative Credit Fund - T LLC
By:     Magnetar Financial LLC, its manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel
Purpose Alternative Credit Fund Ltd
By:     Magnetar Financial LLC, its investment manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel
Magnetar Lake Credit Fund LLC
By:     Magnetar Financial LLC, its manager
By:	/s/ Karl Wachter
Name:	Karl Wachter
Title:	General Counsel

[Signature Page to Credit Agreement]

Schedule IBP – Page 1

EX-10.20

Exhibit 10.20

AMENDED AND RESTATED SERIES A-1 PREFERRED SHARE INVESTOR RIGHTS AGREEMENT

THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made as of May 3, 2021 by and among Four Springs Capital Trust, a Maryland real estate investment trust (the “Company” or the “Trust”), Goldman Sachs Asset Management, L.P. (“GSAM”) and the Persons listed on the Schedule of Investors attached hereto as Schedule I (collectively referred to herein as “Investors” and individually as an “Investor”). This Agreement amends and restates in its entirety that certain Investor Rights Agreement, dated as of November 20, 2020, among the Company and the Investors set forth therein (the “Prior Agreement”).

The parties to this Agreement are parties to a Series A-1 Preferred Share Purchase Agreement dated as of November 20, 2020 (the “Purchase Agreement”). Unless otherwise defined in this Agreement, certain capitalized terms contained herein have the meanings set forth in the Purchase Agreement.

The Series A-1 Preferred Shares have been classified pursuant to Articles Supplementary, dated November 20, 2020, as amended and restated pursuant to that certain Amended and Restated Articles Supplementary dated May 3, 2021 (the “Amended and Restated Articles Supplementary”), to the Trust’s Restated Declaration of Trust, dated February 13, 2019 (as amended, restated or supplemented, including as supplemented by the Amended and Restated Articles Supplementary, the “Declaration of Trust”).

The Company is a party to the Series A-2 Preferred Share Purchase Agreement (the “Series A-2 Purchase Agreement”) dated as of the date hereof pursuant to which the Company will sell to the Purchasers on Schedule I attached thereto (the “Series A-2 Purchasers”) Series A-2 Preferred Shares in an aggregate amount of up to $200,000,000 as set forth in Section 1.2 of the Series A-2 Purchase Agreement. In conjunction therewith the Company and the Series A-2 Purchasers entered into the Investor Rights Agreement, dated as of the date hereof (the “Series A-2 Investor Rights Agreement”).

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

Article 1

INFORMATION AND INSPECTION RIGHTS

Section 1.1Financial Information. The Trust shall deliver to each holder of Series A-1 Preferred Shares one copy of each of the following items:

(a)as soon as reasonably available, and in any event within sixty (60) days after the end of each of the first three quarters of each fiscal year, unaudited interim consolidated balance sheets of the Trust and its subsidiaries as at the end of such quarter and the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flow and changes in financial position of the Trust and its subsidiaries as at the end of and for such quarter, setting forth in each case in comparative form the corresponding figures for and as at the end of the corresponding quarter of the preceding fiscal year, all in reasonable detail and certified by a principal financial officer of the Trust, as prepared in accordance with GAAP consistently applied (subject to year-end adjustments and the absence of footnotes), and fairly presenting the consolidated financial position and results of operations of the Trust and its subsidiaries for such periods;

(b)within ninety (90) days after the end of each fiscal year of the Trust, consolidated balance sheets of the Trust and its subsidiaries as at the end of such year and the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows of the Trust and its subsidiaries for such fiscal year, setting forth in each case in comparative form the consolidated figures for the previous fiscal year, all in reasonable detail and accompanied by a report thereon of independent public accountants selected by the Trust, which report shall state that such consolidated financial statements present fairly the financial position of the Trust and its subsidiaries as at the dates indicated and the results of their operations and changes in their financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise specified in such report) and that the audit by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards;

(c)promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available by the Trust to the holders of any class of its securities generally or by any subsidiary of the Trust to the holders of any class of its securities generally;

(d)within ten (10) days of the initial filing or other submission with the relevant federal or state governmental entity, copies of all tax returns of the Trust;

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(e) within ninety (90) days after the end of each fiscal year of the Trust, a copy of a valuation report on the properties held by the Trust prepared by an independent third party valuation firm; and

(f)with reasonable promptness, such other information relating to the Trust and its subsidiaries as the holders of the Series A-1 Preferred Shares may, from time to time, reasonably request, including quarterly calls with management of the Trust, and such information reasonably requested by the holders of the Series A-1 Preferred Shares to enable such holders to comply with their U.S. federal, state, and other tax filing and reporting obligations.

Section 1.2Inspection Rights. The Trust will, and will cause its Subsidiaries to, permit the Investor, at the Trust’s expense (subject to the limitation set forth below) and upon reasonable prior notice and subject to the terms of the respective Lease(s), to visit and inspect any of the Trust’s properties during normal business hours, to examine the books of account of the Trust and its Subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of the Trust and its Subsidiaries with, and to be advised as to the same by, their respective officers, trustees, partners, members accountants, legal counsels and investment bankers, subject to receipt of any documents or agreements as may be reasonably required by such professionals prior to providing any information, all at such reasonable times and intervals as the Investor may reasonably request; provided that the Trust shall not be required to pay for such visits and inspections more than once in any twelve (12) month period. The Investor shall use good faith efforts to coordinate such visits and inspections so as to minimize the interference with and disruption to the normal business operations of the tenants, the Trust and their respective Subsidiaries.

Section 1.3Other Information. No later than sixty (60) days following the end of each fiscal quarter, the Trust shall provide the following information to GSAM; (a) the data tape detailing all of the Trust’s assets and reasonably detailed information regarding the Trust’s acquisitions and potential acquisitions for the next six (6) months thereafter and (b) reasonably detailed information regarding each Subsidiary created by the Trust during such fiscal quarter. Within fifteen (15) days prior to the end of each fiscal year, the Trust shall provide its annual budget to GSAM in reasonable detail. The Trust shall also provide to GSAM, promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available by the Trust to the holders of any class of its securities generally or by any subsidiary of the Trust to the holders of any class of its securities generally.

Section 1.4Fees and Expenses. The Company shall pay and reimburse reasonable fees and expenses in connection with the Investors’ ongoing monitoring of their investments in the Company, including legal, accounting, consulting, travel and other expenses (including with respect to the Series A-1 Preferred Trustee and the Series A-1 Board Observer (each as defined in the Amended and Restated Articles Supplementary)).

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Article 2

REIT PROVISIONS

Section 2.1Covenants. The Trust will maintain the following minimum metrics for its portfolio of Properties unless waived in writing by the consent of the Investors holding a majority of the Series A-1 Preferred Shares:

(a)the annualized base rents (“ABRs”) of all properties held by the Trust, directly or indirectly, from tenants or guarantors of such leases, who have a rating of Baa3 or better by Moody’s Investors Service or BBB or better by Standard & Poor’s Ratings Services represent no less than thirty percent (30%) of the Trust’s aggregate ABRs;

(b)no single tenant shall represent more than ten percent (10%) of the Trust’s aggregate ABRs;

(c)the properties located in a single state shall represent no more than twenty percent (20%) of the Trust’s aggregate ABRs;

(d)the weighted average (by ABRs) remaining lease term of all properties held by the Trust shall not be less than 8 years; and

(e)the total purchase price of any proposed acquisition (including any assumed liabilities and estimated closing costs) may not exceed $35,000,000.

Section 2.2Ownership Limitations; Excepted Holder. At the closing of the acquisition of the Series A-1 Preferred Shares under the Purchase Agreement, the Trust granted each Investor whose ownership of the outstanding Series A-1 Preferred Shares, and any Common Shares into which the Series A-1 Preferred Shares are converted exceeded the Ownership Limit (as defined in the Declaration of Trust), an exemption from the Ownership Limit pursuant to Section 7.2.7 of the Declaration of Trust with an Excepted Holder Limit (as defined in the Declaration of Trust) of 100% of the outstanding Series A-1 Preferred Shares, and any Common Shares into which the Series A-1 Preferred Shares are converted, held by the Investor. The Investor and any affiliated Person of the Investor who is or would be a Beneficial Owner (as defined in the Declaration of Trust) or Constructive Owner (as defined in the Declaration of Trust) of Series A-1 Preferred Shares, Common Shares or warrants or other options to acquire Common Shares shall be treated at all times as an Excepted Holder (as defined in the Declaration of Trust) under Section 7.2.7 of the Declaration of Trust with an Excepted Holder Limit of 100% of the outstanding Series A-1 Preferred Shares, Common Shares and warrants or other options to acquire Common Shares, as the case may be, held by the Investor and/or any affiliated Person of the Investor. In the event that the Investor or any affiliated Person of the Investor intends to transfer any Series A-1 Preferred Shares, Common Shares, warrants or other options to acquire Common Shares to any other Person, as permitted in the Declaration of Trust, the Trust shall reasonably cooperate with such other Person to provide a waiver for such other Person from the Ownership Limitation (as defined in the Declaration of Trust), and to treat such Person as an Excepted Holder of 100% of the outstanding Series A-1 Preferred Shares, Common Shares, warrants or other options to acquire Common Shares, that would be transferred to such other Person; provided, however, that in the event that the Investor’s or such affiliated Person’s transfer of such Series A-1 Preferred Shares, Common Shares, warrants or other options to acquire Common Shares would, or could reasonably be expected to, cause the Company to be “closely held” (within the meaning of Code Section 856(a)(6)), then the Investor or such affiliated Person shall cooperate with the Trust and enter into discussions regarding such transfer in order to alleviate the failure of the Trust to meet such requirement of the Code, including the ability to redeem such shares in accordance with Section 6.19.4(b) of the Declaration of Trust.

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Article 3 

TAX REPORTING AND TREATMENT OF SERIES A-1 PREFERRED SHARES

Section 3.1Treatment of the Series A-1 Preferred Shares. The parties intend that, for U.S. federal and applicable state and local income tax purposes, (a) the Series A-1 Preferred Shares will not be treated as preferred stock within the meaning of Section 305(b)(4) of the Code and Treasury Regulations Section 1.305-5(a); and (b) no Investor will be required to include in income any amounts in respect of the Series A-1 Preferred Shares by operation of Section 305(b) or (c) of the Code.

Section 3.2Reporting. The Company will, and will cause its Subsidiaries and agents, unless otherwise required by a determination within the meaning of Section 1313(a) of the Code, to report consistently with, and take no positions or actions inconsistent with, the foregoing treatment (including by way of withholding). The Company will not, and will not cause or permit any of its Subsidiaries to, issue any securities or otherwise take any action that could reasonably be expected to affect the treatment described in this Article 3.

Section 3.3Domestically Controlled Qualified Investment Entity. The Company shall use commercially reasonable efforts to continue to qualify as a domestically controlled qualified investment entity within the meaning of Section 897(h)(4)(B) of the Code.

Section 3.4Sales or Dispositions of Real Property. The Company shall use commercially reasonable efforts to effect any sales or other dispositions of real property as exchanges pursuant to Section 1031(a) of the Code.

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Article 4

ADDITIONAL ISSUANCES

Section 4.1Right of the Trust to Issue Additional Series A-1 Preferred Shares. At all times after the date of this Agreement, the Trust shall have the right to issue in the aggregate Series A-1 Preferred Shares or Series A-2 Preferred Shares, as set forth in Section 4.2, for an aggregate initial face amount of up to One Hundred Million Dollars ($100,000,000.00) (collectively, the “Additional Issuances”), which does not include the issuance of Series A-2 Preferred Shares on the date hereof, on the same terms (including the same price), and subject to the same conditions as the Series A-1 Preferred Shares issued on November 20, 2020 or the Series A-2 Preferred Shares issued on the date hereof, as applicable; provided that GSAM provides written consent to such Additional Issuances, which consent shall not be unreasonably withheld, and the Trust complies with Section 4.2, if applicable.

Section 4.2GSAM’ Right of First Offer.

(a)Prior to the Trust seeking to offer any Additional Issuances, the Trust must notify GSAM and the Series A-2 Purchasers in writing of the terms and conditions of such Additional Issuance (the “ROFO Notice”), whereupon GSAM and the Series A-2 Purchasers shall have five (5) Business Days from the receipt of the ROFO Notice to notify the Trust in writing of its acceptance of such offer to participate in such Additional Issuance, in which case the Additional Issuance shall be Series A-1 Preferred Shares (for any Additional Issuance to the Investors) or Series A-2 Preferred Shares (for any Additional Issuance to the Series A-2 Purchasers), as applicable; provided that at no time shall the amount of the Additional Issuance required to be offered to GSAM pursuant to this Section 4.2 exceed in the aggregate amount One Hundred Million Dollars ($100,000,000.00); and provided, further, that if the Series A-2 Purchasers accept the offer to participate in such Additional Issuance pursuant to Section 3.2 of the A-2 Investor Rights Agreement, the Investors and the Series A-2 Purchasers will participate in such Additional Issuance of the Series A-1 Preferred Shares and the Series A-2 Preferred Shares, respectively, on a pro rata basis based on the aggregate initial face amount of the Series A-1 Preferred Shares and Series A-2 Preferred Shares held by the Investors and the Series A-2 Purchasers, as applicable. If for any reason GSAM declines to participate in such Additional Issuance, the Trust shall have the right to offer such Additional Issuance to any unaffiliated third party, subject to GSAM’s consent, which consent shall be unreasonably withheld, on terms and conditions which are not more favorable to such third party than those set forth in the ROFO Notice

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(b)Notwithstanding the forgoing, the Trust shall have the right to issue Series A-2 Preferred Shares to the Series A-2 Purchasers, as set forth in the Series A-2 Purchase Agreement, for an aggregate initial face amount of up to One Hundred Million Dollars ($100,000,000.00).

(c)The rights of first offer set forth pursuant to this Section 4.2 are personal to GSAM and shall not inure to the benefit of any assignee, other than affiliates, funds, accounts and investment vehicles controlled, managed or advised by GSAM or its affiliates. Notwithstanding the right set forth in this Section 4.2, in the event that an Investor’s participation in an Additional Issuance shall result in a change in the Trust’s status as a domestically controlled REIT, either at the time of such Additional Issuance or within thirty-six (36) months thereafter (taking into account the Series A-1 Accretion Dividend as defined in the Amended and Restated Articles Supplementary and the Series A-2 Accretion Dividend as defined in the Articles Supplementary with respect to the Series A-2 Preferred Shares), such Investor shall not participate in the Additional Issuance and the Trust may offer such Additional Issuance to any unaffiliated third party as set forth in this Section 4.2, subject to GSAM’s consent, which consent shall not be unreasonably withheld.

Section 4.3 Investor Cure Right. The Investors hereby acknowledge and agree that, upon the occurrence of any payment default or default under any covenant that is subject to any cure rights, in each case under any indebtedness of the Company or any of its subsidiaries in excess of $25,000,000, if the Company (or its affiliates) has not cured such default or breach not less than 15 Business Days prior to the expiration of the applicable cure or grace period, the Series A-2 Purchasers will have the right, in their sole discretion, to cause the Company to issue additional Series A-2 Preferred Shares in an amount substantially equal to the amount required to cure such default to the Series A-2 Purchasers as set forth in Section 4.3 of the A-2 Investor Rights Agreement. In the event that the Series A-2 Purchasers do not elect to cure such default or breach by the issuance of the Series A-2 Preferred Shares, the Investors will have the right, in their sole discretion, to cause the Company to issue additional Series A-1 Preferred Shares in an amount substantially equal to the amount required to cure such default to the Investors (on a pro rata basis, provided, that if any such Investors elect not to participate in such issuance, any electing Investors may elect to purchase the share of the non-electing Investors (on a pro rata basis or as otherwise agreed among such Investors)) on the same terms and for the same price as the Series A-1 Preferred Shares as set forth in the Purchase Agreement, the proceeds of which shall be applied substantially concurrently to cure such default.

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Article 5

REGISTRATION RIGHTS

Section 5.1Demand Registrations.

(a)Requests for Registration. Subject to the terms and conditions of this Section 5.1, at any time after the earlier of (i) 180 days after the closing of an IPO or (ii) the Registration Date, one or more holders of Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-11 or any similar long-form registration (each a “Long-Form Registration”) if the requesting holder or holders propose to sell Registrable Securities at an aggregate price to the public of at least $10,000,000. In addition, at such time as the Company shall have qualified for the use of a Registration Statement on Form S-3 or any successor form thereto, any holder of Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-3 or any similar short-form registration (each, a “Short-Form Registration”). All registrations requested pursuant to this Section 5.1(a) are referred to herein as “Demand Registrations”. Each request for a Demand Registration shall specify the number of Registrable Securities requested to be registered and the intended method of distribution. Within 10 days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to the terms of Section 5.1(d) hereof, shall include in such registration (and in all related registrations and qualifications under state blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice.

(b)Long-Form Registrations. The holders of Registrable Securities shall be entitled to request two (2) Long-Form Registrations and not more than one (1) within any twelve (12) month period. The Company shall pay all Registration Expenses as set forth in Section 5.5 hereof. A registration shall not count as one of the permitted Long-Form Registrations until it has become effective, and no Long-Form Registration shall count as one of the permitted Long-Form Registrations unless the holders of Registrable Securities are able to register and sell at least 80% of the Registrable Securities requested to be included in such registration. The Company shall use its commercially reasonable efforts to keep the Long-form Registration effective (a) for up to one year after its effectiveness (provided that, if the Company becomes eligible for the use of a Registration Statement on Form S-3 or any similar short-form registration statement within the one-year period, the Company shall be entitled to use such short-form registration statement to keep the registration effective for the remainder of the one-year period, and such use of a short-form registration statement shall count as one Demand Registration), or (b) until such earlier date as of which all the Registrable Securities under the Long-form Registration shall have been disposed of in the manner described in the Long-form Registration.

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(c)Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to Section 5.1(b), the holders of Registrable Securities shall be entitled to request two (2) Short-Form Registrations. The Company shall pay all Registration Expenses for the Short-Form Registrations. Demand Registrations shall be Short-Form Registrations when the Company is eligible to use any applicable short form registration statement and the Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective or become automatically effective under the Securities Act and to keep any Short-Form Registrations continuously effective for a period of three (3) years. For the avoidance of doubt, the Company may, but shall have no obligation to, maintain the effectiveness of any Registration Statement in respect of any Common Shares that were Registrable Securities at the time a Registration Statement was declared effective but have ceased to be Registrable Securities under the terms of this Agreement.

(d)Priority on Demand Registrations. The Company shall not include in any Demand Registration that is an underwritten offering any securities which are not Registrable Securities without the prior written consent of the holders of at least a majority of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold without adversely affecting the marketability of the offering, the Company shall include in such registration prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders thereof on the basis of the amount of Registrable Securities owned by each such holder. If such underwriters determine that less than all of the Registrable Securities proposed to be sold can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder. The holders of Registrable Securities shall not be responsible for any expenses incurred, or that otherwise must be paid, by any other Persons who participate in any Demand Registrations.

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(e) Restrictions on Long-Form Registrations. The Company shall not be obligated to effect any Long-Form Registration within 90 days after the effective date of a previous Long-Form Registration under this Agreement. The Company may postpone for up to 90 days the filing or the effectiveness of a Registration Statement for a Demand Registration if the Company’s board of trustees determines in its reasonable good faith judgment that such Demand Registration would reasonably be expected (i) to have a material adverse effect on any material proposal or plan by the Company or any of its Subsidiaries to engage in any acquisition (other than in the ordinary course of business) or any material merger, consolidation, tender offer, reorganization, offering of non-equity securities or other debt financing or transaction similar to any of the foregoing, (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act; provided that in such event, the holders of a majority of the Registrable Securities initially requesting such Demand Registration shall be entitled to withdraw such request (after having been notified by the Company in writing) and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder, and the Company shall pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration hereunder only twice in any twelve-month period, but at least 30 days must elapse between the end of one such delay and the beginning of another delay.

(f)Selection of Underwriters. If the holders of the Registrable Securities initially requesting a Demand Registration elect to distribute the Registrable Securities covered by their request in an underwritten offering, they shall so advise the Company as a part of their request made pursuant to Section 5.1(a), Section 5.1(b), or Section 5.1(d), and the Company shall include such information in any related notice required to given to the other holders of Registrable Securities. The Lead Investor shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering. In connection with any other registrations, the Company shall be entitled to select the underwriter or underwriters for such offering in its sole discretion.

(g)Certain Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any securities of the Company, other than with respect to its Series A-2 Investor Rights Agreement. Except as provided in this Agreement or the Series A-2 Investor Rights Agreement, the Company shall not (i) grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, which rights are more favorable than or inconsistent with the rights granted hereunder, or (ii) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the holders of Registrable Securities in this Agreement, without the prior written consent of the holders of a majority of the Registrable Securities.

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Section 5.2Piggyback Registrations.

(a)Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees, trustees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan, whether or not including a “first share” feature), whether for its own account or for the account of one or more stockholders of the Company) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to the terms of Section 5.2(c) and Section 5.2(d) hereof, shall include in such registration (and in all related registrations or qualifications under blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion. A Piggyback Registration shall not be considered a Demand Registration for purposes of Section 5.2.

(b)Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations.

(c)Priority on Primary Underwritten Registrations. If a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriters advise the Company and the holders of Registrable Securities (if any holders of Registrable Securities have elected to include Registrable Securities in such Piggyback Registration) in writing that in their reasonable and good faith opinion the number of Common Shares proposed to be included in such registration, including all Registrable Securities and all other Common Shares proposed to be included in such underwritten offering, exceeds the number of Common Shares which can be sold in such offering without adversely affecting the price per share of the Common Shares to be sold in such offering, the Company shall include in such registration (i) first, the number of Registrable Securities requested to be included in such registration by the holders equal to up to 50% of the Registrable Securities held by them on the date hereof (the “Minimum Amount”), (ii) second, the Common Shares that the Company proposes to sell; (iii) third, the Common Shares requested to be included therein by holders of Registrable Securities in excess of the Minimum Amount, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iv) fourth, the Common Shares requested to be included therein by holders of Common Shares other than holders of Registrable Securities, allocated among such holders in such manner as they may agree.

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(d)Priority on Secondary Underwritten Registrations. If a Piggyback Registration is initiated as an underwritten offering on behalf of a holder of Common Shares other than Registrable Securities, and the managing underwriters advise the Company in writing that in their reasonable and good faith opinion the number of Common Shares proposed to be included in such registration, including all Registrable Securities and all other Common Shares proposed to be included in such underwritten offering, exceeds the number of Common Shares which can be sold in such offering without adversely affecting the price per share of the Common Shares to be sold in such offering, the Company shall include in such registration (i) first, the Common Shares requested to be included therein by the holder(s) requesting such registration, allocated pro rata among all such holders on the basis of the number of Common Shares owned by all such holders or in such manner as they may otherwise agree; and (ii) second, the Minimum Amount allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree.

(e)Other Registrations. If the Company has previously filed a Registration Statement with respect to Registrable Securities pursuant to Section 5.1 or pursuant to this Section 5.2, and if such previous registration has not been withdrawn or abandoned, the Company shall not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least 90 days has elapsed from the effective date of such previous registration.

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Section 5.3Holdback Agreements.

(a)Each holder of Registrable Securities shall not (i) effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, (ii) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any Common Shares or any securities convertible into, exercisable for or exchangeable for Common Shares or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (ii) or (iii) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise, during the seven (7) days prior to and the 90-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration) or such longer period for up to one hundred and eighty (180) days as may be requested by the managing underwriter, unless the underwriters managing the registered public offering otherwise agree. The foregoing restrictions shall be applicable to the holders of Registrable Securities only if all officers and directors of the Company and, with respect to the IPO, all stockholders owning more than 5% of the Company’s outstanding Common Shares are subject to substantially similar restrictions. Each holder of Registrable Securities agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. Notwithstanding anything to the contrary contained in this Section 5.3, terms of the lock-up agreement shall provide that each holder of Registrable Securities shall be released, pro rata, from any lock-up agreement entered into pursuant to this Section 5.3 in the event and to the extent that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any officer, director or holder of greater than 5% of the outstanding Common Shares.

(b)The Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into, exercisable for or exchangeable for shares of such securities, during the seven (7) days prior to and during the 90-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees, trustees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan, whether or not including a “first share” feature, unless the managing underwriter of any such underwritten registration otherwise agrees.

(c)The Company shall cause each holder of at least 5% (on a fully-diluted basis) of its Common Shares, or any securities convertible into or exchangeable or exercisable for Common Shares, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during the seven (7) days prior to and during the 90-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.

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Section 5.4Registration Procedures. If and whenever the holders of Registrable Securities request that the offer and sale of any Registrable Securities be registered under the Securities Act pursuant to the provisions of this Agreement, the Company shall use its commercially reasonable efforts to effect the registration of the offer and the sale of such Registrable Securities and permit the sale of such Registrable Securities under the Securities Act in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as soon as practicable and as applicable:

(a)prepare and file with the Commission a Registration Statement covering such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to be declared effective;

(b)prepare and file with the Commission such amendments, post-effective amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective as set forth in Section 5.1(b) and Section 5.1(c) and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such Registration Statement;

(c)within a reasonable time before filing such Registration Statement, Prospectus or amendments or supplements thereto with the Commission, furnish to one counsel selected by holders of a majority of such Registrable Securities copies of such documents proposed to be filed, which documents shall be subject to the review, comment and approval of such counsel;

(d)notify each selling holder of Registrable Securities, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed with the Commission;

(e)furnish to each selling holder of Registrable Securities, without charge, such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits and documents incorporated by reference therein) and such other documents as such selling holders of Registrable Securities may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such holders;

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(f)use its commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any selling holder requests and do any and all other acts and things which may be necessary or advisable to enable such holders to consummate the disposition in such jurisdictions of the Registrable Securities owned by such holders; provided, that the Company shall not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 5.4(f);

(g)notify each selling holder of such Registrable Securities, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)use its reasonable commercially reasonable efforts to cause such Registrable Securities to be listed on each securities exchange on which the Common Shares are then listed or, if the Common Shares are not then listed, on a national securities exchange selected by the holders of at least 30% of such Registrable Securities;

(i)provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such Registration Statement;

(j)enter into such customary agreements (including underwriting and lock-up agreements in customary form) as reasonably required and take all such other customary actions as the holders of such Registrable Securities or the managing underwriter of such offering request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in “road show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities));

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(k) execute and deliver all instruments and documents (including an underwriting agreement or placement agent agreement, as applicable, in customary form) and take such other actions and obtain such certificates and opinions as holders of the Registrable Securities being offered and sold reasonably request in order to effect a public offering of such Registrable Securities and in connection with such, whether or not an underwriting agreement is entered into and whether or not the offering is an underwritten offering, (i) make such representations and warranties to the holders of such Registrable Shares with respect to the business of the Company and its subsidiaries, and such Registration Statement and documents incorporated by reference therein, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested;

(l)furnish to each selling holder of Registrable Securities and each underwriter, if any, with (i) a written legal opinion of the Company’s outside counsel, dated the closing date of the offering, in form and substance as is customarily given in opinions of the Company’s counsel to underwriters in underwritten registered offerings; and (ii) on the date of the applicable Prospectus, on the effective date of any post-effective amendment to the applicable Registration Statement and at the closing of the offering, dated the respective dates of delivery thereof, a “comfort” letter signed by the Company’s independent certified public accountants in form and substance as is customarily given in accountants’ letters to underwriters in underwritten registered offerings;

(m)otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and make available to its stockholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period;

(n)without limiting Section 5.4(f), use its reasonable commercially reasonable efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(o)notify the holders of Registrable Securities promptly of any request by the Commission for the amending or supplementing of such Registration Statement or Prospectus or for additional information;

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(p) advise the holders of Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued;

(q)permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company, to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included;

(r)take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, that, to the extent that any prohibition is applicable to the Company, the Company will take all reasonable action to make any such prohibition inapplicable; and

(s)otherwise use its commercially reasonable efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

Section 5.5Registration Expenses.

(a)All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities shall be paid by the Company, including, without limitation, all (i) registration and filing fees (including, without limitation, any fees relating to filings required to be made with, or the listing of any Registrable Securities on, any securities exchange or over-the-counter trading market on which the Registrable Securities are listed or quoted); (ii) the Company’s portion of underwriting expenses for the securities it sells, if any; (iii) expenses of any Company audits incident to or required by any such registration; (iv) fees and expenses of complying with securities and “blue sky” laws (including, without limitation, fees and disbursements of counsel for the Company in connection with “blue sky” qualifications or exemptions of the Registrable Securities); (v) printing expenses; (vi) messenger, telephone and delivery expenses; (vii) fees and expenses of the Company’s counsel and accountants; and (viii) Financial Industry Regulatory Authority, Inc. filing fees (if any) (all such expenses being herein called “Registration Expenses”). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties) and the expense of any annual audits.

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(b)In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees (not to exceed $50,000) and disbursements under the circumstances of one firm of counsel chosen by the holders of a majority of the Registrable Securities included in such registration. Notwithstanding the foregoing, the Company shall not be required to pay for any Registration Expenses for any registration proceeding begun pursuant to Section 5.1 if the registration is subsequently withdrawn at the request of the holders of the Registrable Securities (in which case all the holders of Registrable Securities shall bear such expense on a pro rata basis), unless the holders whose Registrable Securities constitute a majority of the Registrable Securities then outstanding agree that such withdrawn registration shall constitute one of the Demand Registrations under Section 5.1 hereof (in which case the Company shall bear such expense); provided that such holders may so treat such withdrawn registration as one of the Demand Registrations under Section 5.1 hereof twice, and only once in any twelve-month period; provided further, that if the withdrawal is a result of a postponement of such registration by the Company pursuant to Section 5.1(e) or such other action by the Company that would cause the holders of Registrable Securities to withdraw such registration, the Company shall pay for any Registration Expenses and such withdrawn registration shall not constitute a Demand Registration.

(c)All Selling Expenses relating to the offer and sale of Registrable Securities registered under the Securities Act pursuant to this Agreement shall be borne and paid by the holders of such Registrable Securities, in proportion to the number of Registrable Securities included in such registration for each such holder. To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder shall pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered.

Section 5.6Participation in Underwritten Registrations. No Person may participate in any registration hereunder which is underwritten, including for the avoidance of doubt, any underwritten Block Trade, unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Article 7.

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Section 5.7Block Trades.

(a)Notwithstanding the foregoing, at any time and from time to time when an effective short-form registration statement is on file with the Commission and effective, if a holder of Registrable Securities wishes to engage in a Block Trade with a total offering price reasonably expected to exceed, in the aggregate, either (i) $25,000,000 or (ii) all remaining Registrable Securities held by such holder, then notwithstanding the time periods provided for in this Article 5, such holder need only to notify the Company of the Block Trade at least five (5) Business Days prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade; provided that such holders representing a majority of the Registrable Securities wishing to engage in the Block Trade shall use commercially reasonable efforts to work with the Company and any underwriters or placement agents or sales agents prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade.

(b)Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade, a majority-in-interest of the holders of Registrable Securities initiating such Block Trade shall have the right to submit a withdrawal Notice to the Company and the underwriters or placement agents or sales agents (if any) of their intention to withdraw from such Block Trade. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the expenses incurred in connection with a Block Trade prior to its withdrawal under this Section 5.7; provided that if a Block Trade is withdrawn more than two times in a six month period at the request of the holders of Registrable Securities initiating such Block Trade, then such holders of Registrable Securities shall bear (on a pro rata basis) all expense incurred by the Company in connection therewith prior to such withdrawal), unless the holders whose Registrable Securities constitute a majority of the Registrable Securities then outstanding agree that such withdrawn Block Trade shall constitute one of the Demand Registrations under Section 5.1, if available.

(c)Notwithstanding anything to the contrary in this Agreement, Section 5.2 hereof shall not apply to a Block Trade initiated by a holder of Registrable Securities pursuant to this Agreement.

(d)The holders of Registrable Securities in a Block Trade shall have the right to select the underwriters and any sale agents or placement agents (if any) for such Block Trade (which shall consist of one or more reputable nationally recognized investment banks).

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Article 6

REPRESENTATIONS AND WARRANTIES

Section 6.1Representations and Warranties of the Investor. The Investor represents and warrants to the Trust that: (a) the Investor is duly authorized to execute, deliver and perform its obligations under this Agreement; (b) this Agreement has been duly authorized, executed and delivered by the Investor and is a valid and binding agreement of the Investor, enforceable against the Investor in accordance with its terms; and (c) the execution, delivery and performance by the Investor of this Agreement will not conflict with or constitute a breach of, or default (or, with the giving of notice or lapse of time or both would constitute a default) under its organizational documents, any indenture, mortgage, loan or credit agreement, deed of trust, note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument to which the Investor is a party or by which it or any of its properties or assets may be bound,  and will not result in any violation of any statute, law, rule, regulation, judgment, order or decree applicable to the Investor of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Investor or any of its properties or assets.

Section 6.2Representations and Warranties of the Trust. The Trust represents and warrants to the Investor that: (a) it is duly authorized to execute, deliver and perform its obligations under this Agreement; (b) this Agreement has been duly authorized, executed and delivered by the Trust and is a valid and binding agreement of the Trust, enforceable against the Trust in accordance with its terms; and (c) the execution, delivery and performance by the Trust of this Agreement will not conflict with or constitute a breach of, or default (or, with the giving of notice or lapse of time or both would constitute a default) under its organizational documents, any indenture, mortgage, loan or credit agreement, deed of trust, note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument to which the Trust is a party or by which it or any of its properties or assets may be bound,  and will not result in any violation of any statute, law, rule, regulation, judgment, order or decree applicable to the Trust of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Trust or any of its properties or assets.

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Article 7

INDEMNIFICATION

Section 7.1Company Indemnification. The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its officers, directors, partners and employees and each Person who controls such holder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) against all losses, claims, actions, damages, liabilities and expenses caused by (i) any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and to pay to each holder of Registrable Securities, its officers, directors, partners and employees and each Person who controls such holder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), as incurred, any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the Registration Statement or Prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

Section 7.2Investor Information for Registration Statement. In connection with any Registration Statement in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished in writing by such holder; provided that the obligation to indemnify shall be several, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such Registration Statement.

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Section 7.3Indemnification Procedures Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between indemnified parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party (who shall not, without the consent of the indemnified party, be counsel to the indemnifying party). If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicting indemnified parties shall have a right to retain one separate counsel, chosen by the holders of a majority of the Registrable Securities included in the registration, and the indemnifying party shall be obligated to pay the reasonable fees and expenses for such separate counsel. No indemnifying party, in the defense of such claim or litigation, shall, except with the consent of each indemnified party, consent to the entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

Section 7.4Survival. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, partner, employee or Controlling Person of such indemnified party and shall survive the transfer of the Registrable Securities.

Section 7.5Contribution. If the indemnification provided for in this Article 7 is held by a court of competent jurisdiction to be unavailable to an indemnified party or is otherwise unenforceable with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 7.5 were to be determined by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to herein shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject hereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation. The indemnity and contribution agreements contained in this Section 7 are in addition to any liability that the indemnifying parties may have to the indemnified parties.

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Article 8

DEFINITIONS 

As used in this Agreement, the following terms shall have the following meanings:

“Beneficial Owner” of a security is a Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (a) voting power, which includes the power to vote, or to direct the voting of, such security and/or (b) investment power, which includes the power to dispose, or to direct the disposition, of such security. The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

“Block Trade” means an offering and/or sale of Registrable Securities by any Investor on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction.

“Common Shares” means the common shares, par value $0.001 per share, of the Company and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other corporate reorganization or other similar event with respect to the Common Shares).

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“IPO” means (i) an initial offering of the Common Shares or any other common equity securities of the Company pursuant to an effective Registration Statement filed under the Securities Act, (ii) a direct listing of such Common Shares or other common equity securities, or (iii) the merger of the Company with, or the acquisition of all or substantially all of equity interests of the Trust by, any special purpose acquisition company following which, the common stock of the surviving company or acquirer (or any parent thereof) is listed on a national securities exchange.

“Lead Investor” means GSAM.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, unincorporated organization, trust, association or other entity.

“Preferred Shares” means the shares of Series A-1 Preferred Shares of Beneficial Interest, par value $0.001 per share, of the Company, issued or issuable to the Investors pursuant to the Purchase Agreement.

“Prospectus” means the prospectus or prospectuses included in any Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance on Rule 430 under the Securities Act or any successor rule thereto), as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

“Registrable Securities” means (a) any Common Shares issued or issuable upon conversion of the Preferred Shares, and (b) any Common Shares issued or issuable with respect to any shares described in subsection (a) above by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Shares (it being understood that, for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities upon the earlier of when (i) the Commission has declared a Registration Statement covering such securities effective and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such Registrable Securities have been sold pursuant to Rule 144 (or other similar rule), or (iii) such securities have ceased to be outstanding.

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“Registration Date” means the date on which the Company becomes subject to Section 13(a) or Section 15(d) of the Exchange Act other than as a result of an IPO.

“Registration Statement” means any registration statement of the Company, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement.

“Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Selling Expenses” means all underwriting fees, discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any holder of Registrable Securities (except for the fees and disbursements of counsel for the holders of Registrable Securities required to be paid by the Company pursuant to Section 5.5).

Article 9

TERMINATION

This Agreement shall automatically terminate (other than the obligation set forth in Article 7) upon the earlier of (a) the date on which the Investors (including any permitted transferees as set forth in the Amended and Restated Articles Supplementary) Beneficially Own less than fifteen percent (15%) of the Series A-1 Preferred Shares purchased pursuant to the Purchase Agreement on the date thereof or (b) the completion of a Qualifying IPO (as defined in the Amended and Restated Articles Supplementary); provided, however, that 5 shall survive until the Investor (including any permitted transferees as set forth in the Amended and Restated Articles Supplementary) no longer Beneficially Owns any Series A-1 Preferred Shares, warrants or other options to acquire Common Shares or Common Shares. The registration rights granted pursuant to Section 5.1 shall terminate on the date on which the Investors (including any permitted transferees as set forth in the Amended and Restated Articles Supplementary) Beneficially Own less than ten percent (10%) of the Common Shares issued or issuable upon conversion of the Preferred Shares purchased pursuant to the Purchase Agreement. The rights to designate the Series A-1 Preferred Trustee and Series A-1 Board Observer (each as defined in the Amended and Restated Articles Supplementary) pursuant to Section 6.19.10 of the Amended and Restated Articles Supplementary shall terminate on the earlier of the date on which the Investors (including any permitted transferees as set forth in the Amended and Restated Articles Supplementary) Beneficially Own less than (i) ten percent (10%) of the Common Shares issued or issuable upon conversion of the Preferred Shares purchased pursuant to the Purchase Agreement or (ii) ten percent (10%) of the Common Shares issued and outstanding following the Qualifying IPO.

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Article 10

MISCELLANEOUS

Section 10.1No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

Section 10.2Adjustments Affecting Registrable Securities. The Company shall not take any action, or permit any change to occur, with respect to its securities which would adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split or a combination of shares).

Section 10.3Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that, in addition to any other rights and remedies existing in its favor, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

Section 10.4Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and holders of a majority of the Registrable Securities. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

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Section 10.5Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities; provided that if any holder of Registrable Securities which is a limited partnership or limited liability company distributes any Registrable Securities to its partners or members after the Company has effected a registered public offering of the Common Shares under the Securities Act, such transferees of Registrable Securities shall no longer be subject to the provisions of Section 5.3(a) hereof.

Section 10.6Severability Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

Section 10.7Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or by ".pdf" electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement. The words "execution," "signed," "signature," and words of like import shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

Section 10.8Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

Section 10.9Governing Law; Choice of Forum; Jury Trial Waiver. All issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Any dispute arising under or in connection with this Agreement shall be filed and maintained only in a state or federal court sitting in New York County in the State of New York. The parties hereby irrevocable consent to the jurisdiction of such courts. THE COMPANY AND EACH PURCHASER EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG THE PARTIES HERETO ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

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Section 10.10Notices. All notices, demands or other communications given hereunder shall be in writing and shall be sufficiently given if delivered in person, by courier (including overnight delivery service), obtaining written receipt of delivery, sent by U.S. registered or certified mail, return receipt requested, first class, postage prepaid, or sent by facsimile or e-mail (with a copy simultaneously sent by one of the other permitted methods) addressed as follows:

If to the Company:

Four Springs Capital Trust
1901 Main Street
Lake Como, NJ 07719
Attention: Coby R. Johnson, President
E-mail: [***]
Facsimile: [***]

with a copy to:

Duane Morris LLP
1540 Broadway
New York, NY 10036-4086
Attention: Nanette C. Heide
E-mail: [***]
Facsimile: [***]

If to any Purchaser:

Goldman Sachs Asset Management, L.P.

200 West Street, 34th Floor

New York, New York 10282

Attn: Brandon Press and Andres Gonzalez

Tel: [***]

Fax: [***]

e-mail: [***]

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with a copy to:

Fried, Frank, Harris, Shriver & Jacobson LLP

801 17th Street, NW

Washington, DC 20004

Attention: Stuart Barr and Andrew P. Varney

Email: [***]

or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

Section 10.11Amended and Restated Articles Supplementary. The Trust hereby agrees to adopt the Amended and Restated Articles Supplementary in its entirety, in the form attached hereto as Exhibit B.

Section 10.12Prior Agreement. Effective upon and contingent upon the execution of this Agreement by the Company and the Investors, the Prior Agreement shall be amended and restated to read as set forth in this Agreement.

[Remainder of page intentionally blank.]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

THE COMPANY:
FOUR SPRINGS CAPITAL TRUST
By:	/s/ William P. Dioguardi
Name:	William P. Dioguardi
Title:	Chief Executive Officer

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

GSAM:
GOLDMAN SACHS ASSET MANAGEMENT, L.P.
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Authorized Signatory
INVESTORS:
VINTAGE REAL ESTATE PARTNERS II FOREIGN INCOME BLOCKER LLC
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Authorized Signatory
HO FUND B FOREIGN INCOME BLOCKER LLC
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Authorized Signatory
GT FUND B FOREIGN INCOME BLOCKER LLC
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Authorized Signatory

VINTAGE SECONDARY STRATEGIES LLC
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Vice President
DALPP SERIES C FOREIGN INCOME BLOCKER LLC
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Authorized Signatory
VINTAGE REAL ESTATE PARTNERS II (INTERNATIONAL) OFFSHORE HOLDINGS LP
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Authorized Signatory
VREP II INTERNATIONAL AJAX HOLDINGS SCSP
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Authorized Signatory
RA PROGRAM 2019 FOREIGN INCOME BLOCKER LTD
By:	/s/ Andres Gonzalez
Name:	Andres Gonzalez
Title:	Vice President

Schedule I

Schedule of Investors

Name of Investor	Address of Investor	Number of Series A-1 Preferred Shares
Vintage Real Estate Partners II Foreign Income Blocker LLC	c/o Goldman Sachs Asset Management L.P. 200 West Street New York, NY 10282	955,152
HO Fund B Foreign Income Blocker LLC	c/o Goldman Sachs Asset Management L.P.   200 West Street New York, NY 10282	185,290
GT Fund B Foreign Income Blocker LLC	c/o Goldman Sachs Asset Management L.P.   200 West Street New York, NY 10282	185,290
Vintage Secondary Strategies LLC	c/o Goldman Sachs Asset Management L.P.   200 West Street New York, NY 10282	190,018
DALPP Series C Foreign Income Blocker LLC	c/o Goldman Sachs Asset Management L.P.   200 West Street New York, NY 10282	87,090
Vintage Real Estate Partners II (International) Offshore Holdings LP	c/o Goldman Sachs Asset Management L.P.   200 West Street New York, NY 10282	678,115
VREP II International AJAX Holdings SCSp	c/o Goldman Sachs Asset Management L.P.   200 West Street New York, NY 10282	205,850
RA Program 2019 Foreign Income Blocker Ltd	c/o Goldman Sachs Asset Management L.P.   200 West Street New York, NY 10282	13,195
Total	N/A	2,500,000

REGISTRATION AGREEMENT

JOINDER

The undersigned is executing and delivering this Joinder pursuant to the Registration Agreement dated as of November [___], 2020 (as the same may hereafter be amended, the “Registration Agreement”), by and among Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), and the other person named as parties therein.

By executing and delivering this Joinder to the Company, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Registration Agreement as a holder of Registrable Securities in the same manner as if the undersigned were an original signatory to the Registration Agreement, and the undersigned’s __________ shares of [Common Shares] shall be included as Registrable Securities under the Registration Agreement.

Accordingly, the undersigned has executed and delivered this Joinder as of the ___ day of _______________, 20__.

Signature of Stockholder

Print Name of Stockholder

A-1

EX-10.21

Exhibit 10.21

SERIES A-2 PREFERRED SHARE INVESTOR RIGHTS AGREEMENT

THIS INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made as of May 3, 2021 by and among Four Springs Capital Trust, a Maryland real estate investment trust (the “Company” or the “Trust”), and the Persons listed on the Schedule of Investors attached hereto as Schedule I (collectively referred to herein as “Investors” and individually as an “Investor”).

The parties to this Agreement are parties to a Series A-2 Preferred Share Purchase Agreement of even date herewith (the “Purchase Agreement”). In order to induce the Investors to enter into the Purchase Agreement, the Company has agreed that this Agreement shall govern certain matters relating to the relationship among the parties hereto and provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the Closing under the Purchase Agreement. Unless otherwise defined in this Agreement, certain capitalized terms contained herein have the meanings set forth in the Purchase Agreement.

The Series A-2 Preferred Shares have been classified pursuant to Articles Supplementary, dated May 3, 2021 (the “Articles Supplementary”), to the Trust’s Restated Declaration of Trust, dated February 13, 2019 (as amended, restated or supplemented, including as supplemented by the Articles Supplementary, the “Declaration of Trust”).

The Company is a party to a Series A-1 Preferred Share Purchase Agreement dated as of November 20, 2020 (the “Series A-1 Purchase Agreement”) whereby the Trust issued Series A-1 Preferred Shares (the “Series A-1 Preferred Shares”) to the purchasers on Schedule 1 attached thereto (the “Series A-1 Purchasers”) , in an aggregate amount of up to $150,000,000 as set forth in Section 1.2 of the Series A-1 Purchase Agreement. In conjunction therewith the Company and the Series A-1 Purchasers entered into the Investor Rights Agreement, which is being amended and restated as of the date hereof (the “A&R A-1 Investor Rights Agreement”).

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

Article 1

INFORMATION AND INSPECTION RIGHTS

Section 1.1Financial Information. The Trust shall deliver to each holder of Series A-2 Preferred Shares one copy of each of the following items:

(a)as soon as reasonably available, and in any event within sixty (60) days after the end of each of the first three quarters of each fiscal year, unaudited interim consolidated balance sheets of the Trust and its subsidiaries as at the end of such quarter and the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flow and changes in financial position of the Trust and its subsidiaries as at the end of and for such quarter, setting forth in each case in comparative form the corresponding figures for and as at the end of the corresponding quarter of the preceding fiscal year, all in reasonable detail and certified by a principal financial officer of the Trust, as prepared in accordance with GAAP consistently applied (subject to year-end adjustments and the absence of footnotes), and fairly presenting the consolidated financial position and results of operations of the Trust and its subsidiaries for such periods;

(b)within ninety (90) days after the end of each fiscal year of the Trust, consolidated balance sheets of the Trust and its subsidiaries as at the end of such year and the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows of the Trust and its subsidiaries for such fiscal year, setting forth in each case in comparative form the consolidated figures for the previous fiscal year, all in reasonable detail and accompanied by a report thereon of independent public accountants selected by the Trust, which report shall state that such consolidated financial statements present fairly the financial position of the Trust and its subsidiaries as at the dates indicated and the results of their operations and changes in their financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise specified in such report) and that the audit by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards;

(c)promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available by the Trust to the holders of any class of its securities generally or by any subsidiary of the Trust to the holders of any class of its securities generally;

(d)within ten (10) days of the initial filing or other submission with the relevant federal or state governmental entity, copies of all tax returns of the Trust;

(e)within ninety (90) days after the end of each fiscal year of the Trust, a copy of a valuation report on the properties held by the Trust prepared by an independent third party valuation firm; and

(f)with reasonable promptness, such other information relating to the Trust and its subsidiaries as the holders of the Series A-2 Preferred Shares may, from time to time, reasonably request, including quarterly calls with management of the Trust, and such information reasonably requested by the holders of the Series A-2 Preferred Shares to enable such holders to comply with their U.S. federal, state, and other tax filing and reporting obligations.

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Section 1.2Inspection Rights. The Trust will, and will cause its Subsidiaries to, permit the Investor, at the Trust’s expense (subject to the limitation set forth below) and upon reasonable prior notice and subject to the terms of the respective Lease(s), to visit and inspect any of the Trust’s properties during normal business hours, to examine the books of account of the Trust and its Subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of the Trust and its Subsidiaries with, and to be advised as to the same by, their respective officers, trustees, partners, members accountants, legal counsels and investment bankers, subject to receipt of any documents or agreements as may be reasonably required by such professionals prior to providing any information, all at such reasonable times and intervals as the Investor may reasonably request; provided that the Trust shall not be required to pay for such visits and inspections more than once in any twelve (12) month period. The Investor shall use good faith efforts to coordinate such visits and inspections so as to minimize the interference with and disruption to the normal business operations of the tenants, the Trust and their respective Subsidiaries.

Section 1.3Other Information. No later than sixty (60) days following the end of each fiscal quarter, the Trust shall provide the following information to Carlyle Global Credit Investment Management L.L.C. or certain of its affiliates, funds, accounts and investment vehicles, as directed by Carlyle Global Credit Investment Management L.L.C; (a) the data tape detailing all of the Trust’s assets and reasonably detailed information regarding the Trust’s acquisitions and potential acquisitions for the next six (6) months thereafter and (b) reasonably detailed information regarding each Subsidiary created by the Trust during such fiscal quarter. Within fifteen (15) days prior to the end of each fiscal year, the Trust shall provide its annual budget to the Investors in reasonable detail.

Article 2

REIT PROVISIONS

Section 2.1Covenants. The Trust will maintain the following minimum metrics for its portfolio of Properties unless waived in writing by the consent of the Investors holding a majority of the Series A-2 Preferred Shares:

(a)the annualized base rents (“ABRs”) of all properties held by the Trust, directly or indirectly, from tenants or guarantors of such leases, who have a rating of Baa3 or better by Moody’s Investors Service or BBB or better by Standard & Poor’s Ratings Services represent no less than thirty percent (30%) of the Trust’s aggregate ABRs;

(b)no single tenant shall represent more than ten percent (10%) of the Trust’s aggregate ABRs;

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(c) the properties located in a single state shall represent no more than twenty percent (20%) of the Trust’s aggregate ABRs;

(d)the weighted average (by ABRs) remaining lease term of all properties held by the Trust shall not be less than 8 years; and

(e)                    the total purchase price of any proposed acquisition (including any assumed liabilities and estimated closing costs) may not exceed $35,000,000.

Section 2.2Ownership Limitations; Excepted Holder. At the closing of the acquisition of the Series A-2 Preferred Shares under the Purchase Agreement, the Trust granted each Investor whose ownership of the outstanding Series A-2 Preferred Shares, and any Common Shares into which the Series A-2 Preferred Shares are converted exceeded the Ownership Limit (as defined in the Declaration of Trust), an exemption from the Ownership Limit pursuant to Section 7.2.7 of the Declaration of Trust with an Excepted Holder Limit (as defined in the Declaration of Trust) of 100% of the outstanding Series A-2 Preferred Shares, and any Common Shares into which the Series A-2 Preferred Shares are converted, held by the Investor. The Investor and any affiliated Person of the Investor who is or would be a Beneficial Owner (as defined in the Declaration of Trust) or Constructive Owner (as defined in the Declaration of Trust) of Series A-2 Preferred Shares, Common Shares or warrants or other options to acquire Common Shares shall be treated at all times as an Excepted Holder (as defined in the Declaration of Trust) under Section 7.2.7 of the Declaration of Trust with an Excepted Holder Limit of 100% of the outstanding Series A-2 Preferred Shares, Common Shares and warrants or other options to acquire Common Shares, as the case may be, held by the Investor and/or any affiliated Person of the Investor. In the event that the Investor or any affiliated Person of the Investor intends to transfer any Series A-2 Preferred Shares, Common Shares, warrants or other options to acquire Common Shares to any other Person, as permitted in the Declaration of Trust, the Trust shall reasonably cooperate with such other Person to provide a waiver for such other Person from the Ownership Limitation (as defined in the Declaration of Trust), and to treat such Person as an Excepted Holder of 100% of the outstanding Series A-2 Preferred Shares, Common Shares, warrants or other options to acquire Common Shares, that would be transferred to such other Person; provided, however, that in the event that the Investor’s or such affiliated Person’s transfer of such Series A-2 Preferred Shares, Common Shares, warrants or other options to acquire Common Shares would, or could reasonably be expected to, cause the Company to be “closely held” (within the meaning of Code Section 856(a)(6)), then the Investor or such affiliated Person shall cooperate with the Trust and enter into discussions regarding such transfer in order to alleviate the failure of the Trust to meet such requirement of the Code, including the ability to redeem such shares in accordance with Section 6.19.4(b) of the Declaration of Trust.

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Article 3

ADDITIONAL ISSUANCES

Section 3.1Right of the Trust to Issue Additional Series A-1 Preferred Shares. In addition to any issuances available pursuant to Section 3.1 of the Purchase Agreement, at all times after the date of this Agreement, the Trust shall have the right to issue in the aggregate Series A-2 Preferred Shares or Series A-1 Preferred Shares, as set forth in Section 3.2, for an aggregate initial face amount of up to One Hundred Million Dollars ($100,000,000.00) (collectively, the “Additional Issuances”), which does not include the previous issuance of Series A-1 Preferred Shares on November 20, 2020, on the same terms (including the same price), and subject to the same conditions as the issuance of Series A-2 Preferred Shares issued on the date hereof or the Series A-1 Preferred Shares issued on November 20, 2020, as applicable; provided that the Investors provide written consent to such Additional Issuances, which consent shall not be unreasonably withheld, and the Trust complies with Section 3.2, if applicable.

Section 3.2Investors’ Right of First Offer. Prior to the Trust seeking to offer any Additional Issuances, the Trust must notify the Investors and the Series A-1 Purchasers in writing of the terms and conditions of such Additional Issuance (the “ROFO Notice”), whereupon the Investors and the Series A-1 Purchasers shall have five (5) Business Days from the receipt of the ROFO Notice to notify the Trust in writing of their acceptance of such offer to participate in such Additional Issuance, in which case the Additional Issuance shall be Series A-2 Preferred Shares (for any Additional Issuance to the Investors) or Series A-1 Preferred Shares (for any Additional Issuance to the Series A-1 Purchasers), as applicable; provided that at no time shall the amount of the Additional Issuance required to be offered to the Investors or the Series A-1 Purchasers pursuant to this Section 3.2 Error! Reference source not found.exceed in the aggregate amount One Hundred Million Dollars ($100,000,000.00); and provided, further, that if the Series A-1 Purchasers accept the offer to participate in such Additional Issuance, pursuant to Section 4.2 of the A&R A-1 Investor Rights Agreement, the Investors and such Series A-1 Purchasers will participate in such Additional Issuance of the Series A-2 Preferred Shares and the Series A-1 Preferred Shares, respectively, on a pro rata basis based on the aggregate initial face amount of the Series A-2 Preferred Shares and Series A-1 Preferred Shares held by the Investors and the Series A-1 Purchasers, as applicable. If for any reason the Investors decline to participate in such Additional Issuance, then such Additional Issuance shall be Series A-1 Preferred Shares, and the Trust shall have the right to offer such Additional Issuance to any unaffiliated third party, subject to the Investor’s consent, which consent shall be unreasonably withheld, on terms and conditions which are not more favorable to such third party than those set forth in the ROFO Notice. The rights of first offer set forth pursuant to this Section 3.2 are personal to the Investors and shall not inure to the benefit of any assignee, other than affiliates, funds, accounts and investment vehicles controlled, managed or advised by Carlyle Global Credit Investment Management L.L.C. or its affiliates. Notwithstanding the right set forth in this Section 3.2, in the event that an Investor’s participation in an Additional Issuance shall result in a change in the Trust’s status as a domestically controlled REIT, either at the time of such Additional Issuance or within thirty-six (36) months thereafter (taking into account the Series A-2 Accretion Dividend as defined in the Articles Supplementary and the Series A-1 Accretion Dividend as defined in the Amended and Restated Articles Supplementary for the Series A-1 Preferred Shares), such Investor shall not participate in the Additional Issuance and the Trust may offer such Additional Issuance to any unaffiliated third party as set forth in this Section 3.2, subject to the Investor’s consent, which consent shall not be unreasonably withheld.

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Section 3.3Investor Cure Right. The Investors hereby acknowledge and agree that, upon the occurrence of any payment default or default under any covenant that is subject to any cure rights, in each case under any indebtedness of the Company or any of its subsidiaries in excess of $25,000,000, if the Company (or its affiliates) has not cured such default or breach not less than 15 Business Days prior to the expiration of the applicable cure or grace period, the Investors will have the right, in their sole discretion, to cause the Company to issue additional Series A-2 Preferred Shares in an amount substantially equal to the amount required to cure such default to the Investors (on a pro rata basis, provided, that if any such Investors elect not to participate in such issuance, any electing Investors may elect to purchase the share of the non-electing Investors (on a pro rata basis or as otherwise agreed among such Investors)) on the same terms and for the same price as the Series A-2 Preferred Shares purchased on the date hereof, the proceeds of which shall be applied substantially concurrently to cure such default. In the event that the Investors do not elect to cure such default or breach by the issuance of the Series A-2 Preferred Shares, the holders of Series A-1 Preferred Shares will have the right, in their sole discretion, to cause the Company to issue additional Series A-1 Preferred Shares in an amount substantially equal to the amount required to cure such default to the holders of Series A-1 Preferred Shares (on a pro rata basis, provided, that if any such holders elect not to participate in such issuance, any electing holders may elect to purchase the share of the non-electing holders (on a pro rata basis or as otherwise agreed among such Investors)) on the same terms and for the same price as the Series A-1 Preferred Shares as set forth in the Series A-1 Purchase Agreement, the proceeds of which shall be applied substantially concurrently to cure such default.

Article 4 

REGISTRATION RIGHTS

Section 4.1Demand Registrations.

(a)Requests for Registration. Subject to the terms and conditions of this Section 4.1, at any time after the earlier of (i) 180 days after the closing of an IPO or (ii) the Registration Date, one or more holders of Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-11 or any similar long-form registration (each a “Long-Form Registration”) if the requesting holder or holders propose to sell Registrable Securities at an aggregate price to the public of at least $10,000,000. In addition, at such time as the Company shall have qualified for the use of a Registration Statement on Form S-3 or any successor form thereto, any holder of Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-3 or any similar short-form registration (each, a “Short-Form Registration”). All registrations requested pursuant to this Section 4.1(a) are referred to herein as “Demand Registrations”. Each request for a Demand Registration shall specify the number of Registrable Securities requested to be registered and the intended method of distribution. Within 10 days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and, subject to the terms of Section 4.1(d) hereof, shall include in such registration (and in all related registrations and qualifications under state blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice.

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(b)Long-Form Registrations. The holders of Registrable Securities shall be entitled to request two (2) Long-Form Registrations and not more than one (1) within any twelve (12) month period. The Company shall pay all Registration Expenses as set forth in Section 4.5 hereof. A registration shall not count as one of the permitted Long-Form Registrations until it has become effective, and no Long-Form Registration shall count as one of the permitted Long-Form Registrations unless the holders of Registrable Securities are able to register and sell at least 80% of the Registrable Securities requested to be included in such registration. The Company shall use its commercially reasonable efforts to keep the Long-form Registration effective (a) for up to one year after its effectiveness (provided that, if the Company becomes eligible for the use of a Registration Statement on Form S-3 or any similar short-form registration statement within the one-year period, the Company shall be entitled to use such short-form registration statement to keep the registration effective for the remainder of the one-year period, and such use of a short-form registration statement shall count as one Demand Registration), or (b) until such earlier date as of which all the Registrable Securities under the Long-form Registration shall have been disposed of in the manner described in the Long-form Registration.

(c)Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to Section 4.1(b), the holders of Registrable Securities shall be entitled to request two (2) Short-Form Registrations. The Company shall pay all Registration Expenses for the Short-Form Registrations. Demand Registrations shall be Short-Form Registrations when the Company is eligible to use any applicable short form registration statement and the Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective or become automatically effective under the Securities Act and to keep any Short-Form Registrations continuously effective for a period of three (3) years. For the avoidance of doubt, the Company may, but shall have no obligation to, maintain the effectiveness of any Registration Statement in respect of any Common Shares that were Registrable Securities at the time a Registration Statement was declared effective but have ceased to be Registrable Securities under the terms of this Agreement.

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(d)Priority on Demand Registrations. The Company shall not include in any Demand Registration that is an underwritten offering any securities which are not Registrable Securities without the prior written consent of the holders of at least a majority of the Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold without adversely affecting the marketability of the offering, the Company shall include in such registration prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which in the opinion of such underwriters can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders thereof on the basis of the amount of Registrable Securities owned by each such holder. If such underwriters determine that less than all of the Registrable Securities proposed to be sold can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated pro rata among the respective holders thereof on the basis of the number of Registrable Securities owned by each such holder. The holders of Registrable Securities shall not be responsible for any expenses incurred, or that otherwise must be paid, by any other Persons who participate in any Demand Registrations.

(e)Restrictions on Long-Form Registrations. The Company shall not be obligated to effect any Long-Form Registration within 90 days after the effective date of a previous Long-Form Registration under this Agreement. The Company may postpone for up to 90 days the filing or the effectiveness of a Registration Statement for a Demand Registration if the Company’s board of trustees determines in its reasonable good faith judgment that such Demand Registration would reasonably be expected (i) to have a material adverse effect on any material proposal or plan by the Company or any of its Subsidiaries to engage in any acquisition (other than in the ordinary course of business) or any material merger, consolidation, tender offer, reorganization, offering of non-equity securities or other debt financing or transaction similar to any of the foregoing, (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act; provided that in such event, the holders of a majority of the Registrable Securities initially requesting such Demand Registration shall be entitled to withdraw such request (after having been notified by the Company in writing) and, if such request is withdrawn, such Demand Registration shall not count as one of the permitted Demand Registrations hereunder, and the Company shall pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration hereunder only twice in any twelve-month period, but at least 30 days must elapse between the end of one such delay and the beginning of another delay.

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(f)                      Selection of Underwriters. If the holders of the Registrable Securities initially requesting a Demand Registration elect to distribute the Registrable Securities covered by their request in an underwritten offering, they shall so advise the Company as a part of their request made pursuant to Section 4.1(a), Section 4.1(b), or Section 4.1(d), and the Company shall include such information in any related notice required to given to the other holders of Registrable Securities. The Investors shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering. In connection with any other registrations, the Company shall be entitled to select the underwriter or underwriters for such offering in its sole discretion.

(g)Certain Other Registration Rights. The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any other Person with respect to any securities of the Company, other than with respect to its Series A-1 Preferred Shares pursuant to the A&R A-1 Investor Rights Agreement. Except as provided in this Agreement or the A&R A-1 Investor Rights Agreement, the Company shall not (i) grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities convertible or exchangeable into or exercisable for such securities, which rights are more favorable than or inconsistent with the rights granted hereunder, or (ii) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates or subordinates the rights expressly granted to the holders of Registrable Securities in this Agreement, without the prior written consent of the holders of a majority of the Registrable Securities.

Section 4.2Piggyback Registrations.

(a)Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees, trustees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan, whether or not including a “first share” feature), whether for its own account or for the account of one or more stockholders of the Company) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice to all holders of Registrable Securities of its intention to effect such a registration and, subject to the terms of Section 4.2(c) and Section 4.2(d) hereof, shall include in such registration (and in all related registrations or qualifications under blue sky laws or in compliance with other registration requirements and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion. A Piggyback Registration shall not be considered a Demand Registration for purposes of Section 4.2.

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(b)Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations.

(c)Priority on Primary Underwritten Registrations. If a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriters advise the Company and the holders of Registrable Securities (if any holders of Registrable Securities have elected to include Registrable Securities in such Piggyback Registration) in writing that in their reasonable and good faith opinion the number of Common Shares proposed to be included in such registration, including all Registrable Securities and all other Common Shares proposed to be included in such underwritten offering, exceeds the number of Common Shares which can be sold in such offering without adversely affecting the price per share of the Common Shares to be sold in such offering, the Company shall include in such registration (i) first, the number of Registrable Securities requested to be included in such registration by the holders equal to up to 50% of the Registrable Securities held by them on the date hereof (the “Minimum Amount”), (ii) second, the Common Shares that the Company proposes to sell; (iii) third, the Common Shares requested to be included therein by holders of Registrable Securities in excess of the Minimum Amount, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iv) fourth, the Common Shares requested to be included therein by holders of Common Shares other than holders of Registrable Securities, allocated among such holders in such manner as they may agree.

(d)Priority on Secondary Underwritten Registrations. If a Piggyback Registration is initiated as an underwritten offering on behalf of a holder of Common Shares other than Registrable Securities, and the managing underwriters advise the Company in writing that in their reasonable and good faith opinion the number of Common Shares proposed to be included in such registration, including all Registrable Securities and all other Common Shares proposed to be included in such underwritten offering, exceeds the number of Common Shares which can be sold in such offering without adversely affecting the price per share of the Common Shares to be sold in such offering, the Company shall include in such registration (i) first, the Common Shares requested to be included therein by the holder(s) requesting such registration, allocated pro rata among all such holders on the basis of the number of Common Shares owned by all such holders or in such manner as they may otherwise agree; and (ii) second, the Minimum Amount allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree.

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(e)Other Registrations. If the Company has previously filed a Registration Statement with respect to Registrable Securities pursuant to Section 4.1 or pursuant to this Section 4.2, and if such previous registration has not been withdrawn or abandoned, the Company shall not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any successor form), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least 90 days has elapsed from the effective date of such previous registration.

Section 4.3Holdback Agreements.

(a)Each holder of Registrable Securities shall not (i) effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, (ii) offer, pledge, sell, contract to sell, grant any option or contract to purchase, purchase any option or contract to sell, hedge the beneficial ownership of or otherwise dispose of, directly or indirectly, any Common Shares or any securities convertible into, exercisable for or exchangeable for Common Shares or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (ii) or (iii) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise, during the seven (7) days prior to and the 90-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration) or such longer period for up to one hundred and eighty (180) days as may be requested by the managing underwriter, unless the underwriters managing the registered public offering otherwise agree. The foregoing restrictions shall be applicable to the holders of Registrable Securities only if all officers and directors of the Company and, with respect to the IPO, all stockholders owning more than 5% of the Company’s outstanding Common Shares are subject to substantially similar restrictions. Each holder of Registrable Securities agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the managing underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. Notwithstanding anything to the contrary contained in this Section 4.3, terms of the lock-up agreement shall provide that each holder of Registrable Securities shall be released, pro rata, from any lock-up agreement entered into pursuant to this Section 4.3 in the event and to the extent that the managing underwriter or the Company permit any discretionary waiver or termination of the restrictions of any lock-up agreement pertaining to any officer, director or holder of greater than 5% of the outstanding Common Shares.

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(b) The Company shall not effect any public sale or distribution of its equity securities, or any securities convertible into, exercisable for or exchangeable for shares of such securities, during the seven (7) days prior to and during the 90-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (other than a registration (i) pursuant to a Registration Statement on Form S-8 (or other registration solely relating to an offering or sale to employees, trustees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant to a Registration Statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan, whether or not including a “first share” feature, unless the managing underwriter of any such underwritten registration otherwise agrees.

(c)The Company shall cause each holder of at least 5% (on a fully-diluted basis) of its Common Shares, or any securities convertible into or exchangeable or exercisable for Common Shares, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during the seven (7) days prior to and during the 90-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.

Section 4.4Registration Procedures. If and whenever the holders of Registrable Securities request that the offer and sale of any Registrable Securities be registered under the Securities Act pursuant to the provisions of this Agreement, the Company shall use its commercially reasonable efforts to effect the registration of the offer and the sale of such Registrable Securities and permit the sale of such Registrable Securities under the Securities Act in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as soon as practicable and as applicable:

(a)prepare and file with the Commission a Registration Statement covering such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to be declared effective;

(b)prepare and file with the Commission such amendments, post-effective amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective as set forth in Section 4.1(b) and Section 4.1(c) and to comply with the provisions of the Securities Act with respect to the disposition of such Registrable Securities in accordance with the intended methods of disposition set forth in such Registration Statement;

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(c) within a reasonable time before filing such Registration Statement, Prospectus or amendments or supplements thereto with the Commission, furnish to one counsel selected by holders of a majority of such Registrable Securities copies of such documents proposed to be filed, which documents shall be subject to the review, comment and approval of such counsel;

(d)notify each selling holder of Registrable Securities, promptly after the Company receives notice thereof, of the time when such Registration Statement has been declared effective or a supplement to any Prospectus forming a part of such Registration Statement has been filed with the Commission;

(e)furnish to each selling holder of Registrable Securities, without charge, such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus) and any supplement thereto (in each case including all exhibits and documents incorporated by reference therein) and such other documents as such selling holders of Registrable Securities may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such holders;

(f)use its commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any selling holder requests and do any and all other acts and things which may be necessary or advisable to enable such holders to consummate the disposition in such jurisdictions of the Registrable Securities owned by such holders; provided, that the Company shall not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 4.4(f);

(g)notify each selling holder of such Registrable Securities, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event that would cause the Prospectus included in such Registration Statement to contain an untrue statement of a material fact or omit any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, and, at the request of any such holder, the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(h)use its reasonable commercially reasonable efforts to cause such Registrable Securities to be listed on each securities exchange on which the Common Shares are then listed or, if the Common Shares are not then listed, on a national securities exchange selected by the holders of at least 30% of such Registrable Securities;

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(i) provide a transfer agent and registrar (which may be the same entity) for all such Registrable Securities not later than the effective date of such Registration Statement;

(j)enter into such customary agreements (including underwriting and lock-up agreements in customary form) as reasonably required and take all such other customary actions as the holders of such Registrable Securities or the managing underwriter of such offering request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, making appropriate officers of the Company available to participate in “road show” and other customary marketing activities (including one-on-one meetings with prospective purchasers of the Registrable Securities));

(k)execute and deliver all instruments and documents (including an underwriting agreement or placement agent agreement, as applicable, in customary form) and take such other actions and obtain such certificates and opinions as holders of the Registrable Securities being offered and sold reasonably request in order to effect a public offering of such Registrable Securities and in connection with such, whether or not an underwriting agreement is entered into and whether or not the offering is an underwritten offering, make such representations and warranties to the holders of such Registrable Shares with respect to the business of the Company and its subsidiaries, and such Registration Statement and documents incorporated by reference therein, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and, if true, confirm the same if and when requested;

(l)furnish to each selling holder of Registrable Securities and each underwriter, if any, with (i) a written legal opinion of the Company’s outside counsel, dated the closing date of the offering, in form and substance as is customarily given in opinions of the Company’s counsel to underwriters in underwritten registered offerings; and (ii) on the date of the applicable Prospectus, on the effective date of any post-effective amendment to the applicable Registration Statement and at the closing of the offering, dated the respective dates of delivery thereof, a “comfort” letter signed by the Company’s independent certified public accountants in form and substance as is customarily given in accountants’ letters to underwriters in underwritten registered offerings;

(m)otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and make available to its stockholders an earnings statement (in a form that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act or any successor rule thereto) no later than thirty (30) days after the end of the 12-month period beginning with the first day of the Company’s first full fiscal quarter after the effective date of such Registration Statement, which earnings statement shall cover said 12-month period;

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(n) without limiting Section 4.4(f), use its reasonable commercially reasonable efforts to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the holders of such Registrable Securities to consummate the disposition of such Registrable Securities in accordance with their intended method of distribution thereof;

(o)notify the holders of Registrable Securities promptly of any request by the Commission for the amending or supplementing of such Registration Statement or Prospectus or for additional information;

(p)advise the holders of Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued;

(q)permit any holder of Registrable Securities which holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a “controlling person” (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) (a “Controlling Person”) of the Company, to participate in the preparation of such Registration Statement and to require the insertion therein of language, furnished to the Company in writing, which in the reasonable judgment of such holder and its counsel should be included;

(r)take no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, that, to the extent that any prohibition is applicable to the Company, the Company will take all reasonable action to make any such prohibition inapplicable; and

(s)otherwise use its commercially reasonable efforts to take all other steps necessary to effect the registration of such Registrable Securities contemplated hereby.

Section 4.5Registration Expenses.

(a)All expenses (other than Selling Expenses) incurred by the Company in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities shall be paid by the Company, including, without limitation, all (i) registration and filing fees (including, without limitation, any fees relating to filings required to be made with, or the listing of any Registrable Securities on, any securities exchange or over-the-counter trading market on which the Registrable Securities are listed or quoted); (ii) the Company’s portion of underwriting expenses for the securities it sells, if any; (iii) expenses of any Company audits incident to or required by any such registration; (iv) fees and expenses of complying with securities and “blue sky” laws (including, without limitation, fees and disbursements of counsel for the Company in connection with “blue sky” qualifications or exemptions of the Registrable Securities); (v) printing expenses; (vi) messenger, telephone and delivery expenses; (vii) fees and expenses of the Company’s counsel and accountants; and (viii) Financial Industry Regulatory Authority, Inc. filing fees (if any) (all such expenses being herein called “Registration Expenses”). In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties) and the expense of any annual audits.

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(b)In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees (not to exceed $50,000) and disbursements under the circumstances of one firm of counsel chosen by the holders of a majority of the Registrable Securities included in such registration. Notwithstanding the foregoing, the Company shall not be required to pay for any Registration Expenses for any registration proceeding begun pursuant to Section 4.1 if the registration is subsequently withdrawn at the request of the holders of the Registrable Securities (in which case all the holders of Registrable Securities shall bear such expense on a pro rata basis), unless the holders whose Registrable Securities constitute a majority of the Registrable Securities then outstanding agree that such withdrawn registration shall constitute one of the Demand Registrations under Section 4.1 hereof (in which case the Company shall bear such expense), provided that such holders may so treat such withdrawn registration as one of the Demand Registrations under Section 4.1 hereof twice, and only once in any twelve-month period; provided further, that if the withdrawal is a result of a postponement of such registration by the Company pursuant to Section 4.1(e) or such other action by the Company that would cause the holders of Registrable Securities to withdraw such registration, the Company shall pay for any Registration Expenses and such withdrawn registration shall not constitute a Demand Registration.

(c)All Selling Expenses relating to the offer and sale of Registrable Securities registered under the Securities Act pursuant to this Agreement shall be borne and paid by the holders of such Registrable Securities, in proportion to the number of Registrable Securities included in such registration for each such holder. To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder shall pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered.

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Section 4.6                Participation in Underwritten Registrations. No Person may participate in any registration hereunder which is underwritten, including for the avoidance of doubt, any underwritten Block Trade, unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Article 4 6.

Section 4.7Block Trades.

(a)Notwithstanding the foregoing, at any time and from time to time when an effective short-form registration statement is on file with the Commission and effective, if a holder of Registrable Securities wishes to engage in a Block Trade with a total offering price reasonably expected to exceed, in the aggregate, either (i) $25,000,000 or (ii) all remaining Registrable Securities held by such holder, then notwithstanding the time periods provided for in this Article 4, such holder need only to notify the Company of the Block Trade at least five (5) Business Days prior to the day such offering is to commence and the Company shall as expeditiously as possible use its commercially reasonable efforts to facilitate such Block Trade; provided that such holders representing a majority of the Registrable Securities wishing to engage in the Block Trade shall use commercially reasonable efforts to work with the Company and any underwriters or placement agents or sales agents prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade.

(b)Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade, a majority-in-interest of the holders of Registrable Securities initiating such Block Trade shall have the right to submit a withdrawal Notice to the Company and the underwriters or placement agents or sales agents (if any) of their intention to withdraw from such Block Trade. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the expenses incurred in connection with a Block Trade prior to its withdrawal under this Section 4.7; provided that if a Block Trade is withdrawn more than two times in a six month period at the request of the holders of Registrable Securities initiating such Block Trade, then such holders of Registrable Securities shall bear (on a pro rata basis) all expense incurred by the Company in connection therewith prior to such withdrawal), unless the holders whose Registrable Securities constitute a majority of the Registrable Securities then outstanding agree that such withdrawn Block Trade shall constitute one of the Demand Registrations under Section 4.1, if available.

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(c)Notwithstanding anything to the contrary in this Agreement, Section 4.2 hereof shall not apply to a Block Trade initiated by a holder of Registrable Securities pursuant to this Agreement.

(d)The holders of Registrable Securities in a Block Trade shall have the right to select the underwriters and any sale agents or placement agents (if any) for such Block Trade (which shall consist of one or more reputable nationally recognized investment banks).

Article 5

REPRESENTATIONS AND WARRANTIES

Section 5.1Representations and Warranties of the Investor. The Investor represents and warrants to the Trust that: (a) the Investor is duly authorized to execute, deliver and perform its obligations under this Agreement; (b) this Agreement has been duly authorized, executed and delivered by the Investor and is a valid and binding agreement of the Investor, enforceable against the Investor in accordance with its terms; and (c) the execution, delivery and performance by the Investor of this Agreement will not conflict with or constitute a breach of, or default (or, with the giving of notice or lapse of time or both would constitute a default) under its organizational documents, any indenture, mortgage, loan or credit agreement, deed of trust, note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument to which the Investor is a party or by which it or any of its properties or assets may be bound,  and will not result in any violation of any statute, law, rule, regulation, judgment, order or decree applicable to the Investor of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Investor or any of its properties or assets.

Section 5.2Representations and Warranties of the Trust. The Trust represents and warrants to the Investor that: (a) it is duly authorized to execute, deliver and perform its obligations under this Agreement; (b) this Agreement has been duly authorized, executed and delivered by the Trust and is a valid and binding agreement of the Trust, enforceable against the Trust in accordance with its terms; and (c) the execution, delivery and performance by the Trust of this Agreement will not conflict with or constitute a breach of, or default (or, with the giving of notice or lapse of time or both would constitute a default) under its organizational documents, any indenture, mortgage, loan or credit agreement, deed of trust, note, contract, franchise, lease or other agreement, obligation, condition, covenant or instrument to which the Trust is a party or by which it or any of its properties or assets may be bound,  and will not result in any violation of any statute, law, rule, regulation, judgment, order or decree applicable to the Trust of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Trust or any of its properties or assets.

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Article 6

INDEMNIFICATION

Section 6.1Company Indemnification. The Company agrees to indemnify, to the extent permitted by law, each holder of Registrable Securities, its officers, directors, partners and employees and each Person who controls such holder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) against all losses, claims, actions, damages, liabilities and expenses caused by (i) any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and to pay to each holder of Registrable Securities, its officers, directors, partners and employees and each Person who controls such holder (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), as incurred, any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such holder expressly for use therein or by such holder’s failure to deliver a copy of the Registration Statement or Prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

Section 6.2Investor Information for Registration Statement. In connection with any Registration Statement in which a holder of Registrable Securities is participating, each such holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished in writing by such holder; provided that the obligation to indemnify shall be several, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such Registration Statement.

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Section 6.3Indemnification Procedures Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between indemnified parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party (who shall not, without the consent of the indemnified party, be counsel to the indemnifying party). If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicting indemnified parties shall have a right to retain one separate counsel, chosen by the holders of a majority of the Registrable Securities included in the registration, and the indemnifying party shall be obligated to pay the reasonable fees and expenses for such separate counsel. No indemnifying party, in the defense of such claim or litigation, shall, except with the consent of each indemnified party, consent to the entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

Section 6.4Survival. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director, partner, employee or Controlling Person of such indemnified party and shall survive the transfer of the Registrable Securities.

Section 6.5Contribution. If the indemnification provided for in this Article 66 is held by a court of competent jurisdiction to be unavailable to an indemnified party or is otherwise unenforceable with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 6.5 were to be determined by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to herein shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject hereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation. The indemnity and contribution agreements contained in this Section 6 are in addition to any liability that the indemnifying parties may have to the indemnified parties.

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Article 7

DEFINITIONS 

As used in this Agreement, the following terms shall have the following meanings:

“Beneficial Owner” of a security is a Person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares (a) voting power, which includes the power to vote, or to direct the voting of, such security and/or (b) investment power, which includes the power to dispose, or to direct the disposition, of such security. The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

“Block Trade” means an offering and/or sale of Registrable Securities by any Investor on a block trade or underwritten basis (whether firm commitment or otherwise) without substantial marketing efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction.

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“Common Shares” means the common shares, par value $0.001 per share, of the Company and any other shares of stock issued or issuable with respect thereto (whether by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other corporate reorganization or other similar event with respect to the Common Shares).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“IPO” means (i) an initial offering of the Common Shares or any other common equity securities of the Company pursuant to an effective Registration Statement filed under the Securities Act, (ii) a direct listing of such Common Shares or other common equity securities, or (iii) the merger of the Company with, or the acquisition of all or substantially all of equity interests of the Trust by, any special purpose acquisition company following which, the common stock of the surviving company or acquirer (or any parent thereof) is listed on a national securities exchange.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, unincorporated organization, trust, association or other entity.

“Preferred Shares” means the shares of Series A-2 Preferred Shares of Beneficial Interest, par value $0.001 per share, of the Company, issued or issuable to the Investors pursuant to the Purchase Agreement.

“Prospectus” means the prospectus or prospectuses included in any Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance on Rule 430 under the Securities Act or any successor rule thereto), as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus or prospectuses.

“Registrable Securities” means (a) any Common Shares issued or issuable upon conversion of the Preferred Shares, and (b) any Common Shares issued or issuable with respect to any shares described in subsection (a) above by way of a stock dividend or stock split or in exchange for or upon conversion of such shares or otherwise in connection with a combination of shares, distribution, recapitalization, merger, consolidation, other reorganization or other similar event with respect to the Common Shares (it being understood that, for purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to then acquire or obtain from the Company any Registrable Securities, whether or not such acquisition has actually been effected). As to any particular Registrable Securities, such securities shall cease to be Registrable Securities upon the earlier of when (i) the Commission has declared a Registration Statement covering such securities effective and such securities have been disposed of pursuant to such effective Registration Statement, (ii) such Registrable Securities have been sold pursuant to Rule 144 (or other similar rule), or (iii) such securities have ceased to be outstanding.

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“Registration Date” means the date on which the Company becomes subject to Section 13(a) or Section 15(d) of the Exchange Act other than as a result of an IPO.

“Registration Statement” means any registration statement of the Company, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement.

“Rule 144” means Rule 144 under the Securities Act or any successor rule thereto.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Selling Expenses” means all underwriting fees, discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any holder of Registrable Securities (except for the fees and disbursements of counsel for the holders of Registrable Securities required to be paid by the Company pursuant to Section 4.5).

Article 8

TERMINATION

This Agreement shall automatically terminate (other than the obligation set forth in Article 56) upon the earlier of (a) the date on which the Investors (including any permitted transferees as set forth in the Articles Supplementary) Beneficially Own less than fifteen percent (15%) of the Series A-2 Preferred Shares purchased pursuant to the Purchase Agreement on the date thereof or (b) the completion of a Qualifying IPO (as defined in the Articles Supplementary); provided, however, that Article 4 shall survive until the Investor (including any permitted transferees as set forth in the Articles Supplementary) no longer Beneficially Owns any Series A-2 Preferred Shares, warrants or other options to acquire Common Shares or Common Shares. The registration rights granted pursuant to Section 4.1, shall terminate on the date on which the Investors (including any permitted transferees as set forth in the Articles Supplementary) Beneficially Own less than ten percent (10%) of the Common Shares issued or issuable upon conversion of the Preferred Shares purchased pursuant to the Purchase Agreement on the date thereof. The rights to designate the Series A-2 Preferred Trustee and Series A-2 Board Observer (each as defined in the Articles Supplementary) pursuant to Section 6.19.10 of the Articles Supplementary shall terminate on the earlier of the date on which the Investors (including any permitted transferees as set forth in the Articles Supplementary) Beneficially Own less than (i) ten percent (10%) of the Common Shares issued or issuable upon conversion of the Preferred Shares purchased pursuant to the Purchase Agreement on the date thereof or (ii) ten percent (10%) of the Common Shares issued and outstanding following the Qualifying IPO.

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Article 9

MISCELLANEOUS

Section 9.1No Inconsistent Agreements. The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

Section 9.2Adjustments Affecting Registrable Securities. The Company shall not take any action, or permit any change to occur, with respect to its securities which would adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or which would adversely affect the marketability of such Registrable Securities in any such registration (including, without limitation, effecting a stock split or a combination of shares).

Section 9.3Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages would not be an adequate remedy for any breach of the provisions of this Agreement and that, in addition to any other rights and remedies existing in its favor, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

Section 9.4Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may be amended or waived only upon the prior written consent of the Company and holders of a majority of the Registrable Securities. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

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Section 9.5Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities; provided that if any holder of Registrable Securities which is a limited partnership or limited liability company distributes any Registrable Securities to its partners or members after the Company has effected a registered public offering of the Common Shares under the Securities Act, such transferees of Registrable Securities shall no longer be subject to the provisions of Section 4.3(a) hereof.

Section 9.6Severability Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

Section 9.7Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or by ".pdf" electronic transmission shall be effective as delivery of a manually executed counterpart of this Agreement. The words "execution," "signed," "signature," and words of like import shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

Section 9.8Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

Section 9.9Governing Law; Choice of Forum; Jury Trial Waiver. All issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. Any dispute arising under or in connection with this Agreement shall be filed and maintained only in a state or federal court sitting in New York County in the State of New York. The parties hereby irrevocable consent to the jurisdiction of such courts. THE COMPANY AND EACH INVESTOR EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG THE PARTIES HERETO ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

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Section 9.10Notices. All notices, demands or other communications given hereunder shall be in writing and shall be sufficiently given if delivered in person, by courier (including overnight delivery service), obtaining written receipt of delivery, sent by U.S. registered or certified mail, return receipt requested, first class, postage prepaid, or sent by facsimile or e-mail (with a copy simultaneously sent by one of the other permitted methods) addressed as follows:

If to the Company:

Four Springs Capital Trust
1901 Main Street
Lake Como, NJ 07719
Attention: Coby R. Johnson, President
E-mail: [***]
Facsimile: [***]

with a copy to:

Duane Morris LLP
1540 Broadway
New York, NY 10036-4086
Attention: Nanette C. Heide
E-mail: [***]
Facsimile: [***]

If to any Investor:

The Carlyle Group

One Vanderbilt Avenue, Suite 3400

New York, NY 10017

Attention: Fund Manager, Carlyle Global Credit

Email: [***]

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with copies to:

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Attention: Stelios G. Saffos and Peter Sluka

Email: [***]

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attention: Jonathan Adler, Esq.

Email: [***]

or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

[Remainder of page intentionally blank.]

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

THE COMPANY:
FOUR SPRINGS CAPITAL TRUST
By:	/s/ Coby Johnson
Name:	Coby Johnson
Title:	President

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

CARLYLE:
Carlyle Global Credit Investment Management L.L.C.
By:	/s/ Joshua Lefkowitz
Name: Joshua Lefkowitz
Title: Managing Director
INVESTORS:
Carlyle Credit Opportunities Fund (Parallel) AIV, L.P.,
By: CCOF General Partner, L.P., its general partner,
By: CCOF, L.L.C., its general partner
/s/ David Lobe
By: David Lobe
Title: Authorized Person
Carlyle Credit Opportunities Fund (Parallel) AIV 2, L.P
By: CCOF General Partner, L.P., its general partner,
By: CCOF, L.L.C., its general partner
/s/ David Lobe
By: David Lobe
Title: Authorized Person

Carlyle Credit Opportunities Fund, L.P.

By: CCOF General Partner, L.P., its general partner,

By: CCOF, L.L.C., its general partner

/s/ David Lobe

By: David Lobe

Title: Authorized Person

Carlyle Credit Opportunities Fund (Parallel) II AIV Holdings, L.P.

By: CCOF II General Partner, L.P., its general partner

By: CCOF II, L.L.C., its general partner

/s/ David Lobe

By: David Lobe

Title: Authorized Person

Carlyle Credit Opportunities Fund (Parallel) II AIV 2 Holdings, L.P.

By: CCOF II General Partner, L.P., its general partner

By: CCOF II, L.L.C., its general partner

/s/ David Lobe

By: David Lobe

Title: Authorized Person

Carlyle Credit Opportunities Fund II, L.P.

By: CCOF II General Partner, L.P., its general partner

By: CCOF II, L.L.C., its general partner

/s/ David Lobe

By: David Lobe

Title: Authorized Person

CARLYLE SKYLINE CREDIT FUND, L.P., as Lender

/s/ Brian Marcus

By: Brian Marcus

Title: Managing Director

Schedule I

Schedule of Investors

Name of Investor	Address of Investor	Number of Series A-2 Preferred Shares
Carlyle Credit Opportunities Fund, L.P.	c/o Carlyle Global Credit Investment Management L.L.C.   One Vanderbilt Avenue, Suite 3400   New York, NY 10017	1,337,600
Carlyle Credit Opportunities Fund (Parallel) AIV, L.P.	c/o Carlyle Global Credit Investment Management L.L.C.   One Vanderbilt Avenue, Suite 3400   New York, NY 10017	674,880
Carlyle Credit Opportunities Fund (Parallel) AIV 2, L.P.	c/o Carlyle Global Credit Investment Management L.L.C. One Vanderbilt Avenue, Suite 3400   New York, NY 10017	1,027,520
Carlyle Credit Opportunities Fund II, L.P.	c/o Carlyle Global Credit Investment Management L.L.C.   One Vanderbilt Avenue, Suite 3400   New York, NY 10017	3,409,960
Carlyle Credit Opportunities Fund (Parallel) II AIV Holdings, L.P.	c/o Carlyle Global Credit Investment Management L.L.C.   One Vanderbilt Avenue, Suite 3400   New York, NY 10017	1,010,600
Carlyle Credit Opportunities Fund (Parallel) II AIV 2 Holdings, L.P.	c/o Carlyle Global Credit Investment Management L.L.C.   One Vanderbilt Avenue, Suite 3400   New York, NY 10017	2,099,440
Carlyle Skyline Credit Fund, L.P.	c/o Carlyle Global Credit Investment Management L.L.C.   One Vanderbilt Avenue, Suite 3400   New York, NY 10017	430,000
Total	N/A	10,000,000

EXHIBIT A

REGISTRATION AGREEMENT

JOINDER

The undersigned is executing and delivering this Joinder pursuant to the Registration Agreement dated as of [___], 2021 (as the same may hereafter be amended, the “Registration Agreement”), by and among Four Springs Capital Trust, a Maryland real estate investment trust (the “Company”), and the other person named as parties therein.

By executing and delivering this Joinder to the Company, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Registration Agreement as a holder of Registrable Securities in the same manner as if the undersigned were an original signatory to the Registration Agreement, and the undersigned’s __________ shares of [Common Shares] shall be included as Registrable Securities under the Registration Agreement.

Accordingly, the undersigned has executed and delivered this Joinder as of the ___ day of _______________, 20__.

Signature of Stockholder

Print Name of Stockholder

A-1

EX-10.22

Exhibit 10.22

FIRST AMENDED AND RESTATED

TRUST AGREEMENT

OF

[TRUST NAME], DST

DATED AS OF

OCTOBER ___, 2017

BY AND AMONG

[TRUST NAME] DEPOSITOR, LLC,

AS DEPOSITOR,

[TRUST NAME] MANAGER, LLC,

AS TRUST MANAGER, MANAGER AND SIGNATORY TRUSTEE

AND

THE CORPORATION TRUST COMPANY,

AS DELAWARE TRUSTEE

ARTICLE 1 DEFINITIONS AND INTERPRETATION		1
Section 1.1.	Definitions	1
ARTICLE 2 GENERAL MATTERS		5
Section 2.1.	Organizational Matters	5
Section 2.2.	Declaration of Trust and Statement of Intent	6
Section 2.3.	Purposes	6
ARTICLE 3 PROVISIONS RELATING TO THE LOAN AND TAX TREATMENT		6
Section 3.1.	Article 3 Supersedes All Other Provisions of this Trust Agreement	6
Section 3.2.	Provisions Relating to the Loan	6
Section 3.3.	Provisions Relating to Tax Treatment	11
ARTICLE 4 CONCERNING THE Delaware TRUSTEE and the Signatory Trustee		12
Section 4.1.	Power and Authority	12
Section 4.2.	Delaware Trustee May Request Direction	12
Section 4.3.	Delaware Trustee’s Capacity	12
Section 4.4.	Duties	12
Section 4.5.	Indemnification	13
Section 4.6.	Removal; Resignation; Succession	13
Section 4.7.	Fees and Expenses	14
Section 4.8.	Signatory Trustee	14
ARTICLE 5 CONCERNING THE MANAGER		14
Section 5.1.	Power and Authority	14
Section 5.2.	Manager’s Capacity	14
Section 5.3.	Duties	17
Section 5.4.	Indemnification	17
Section 5.5.	Fees and Expenses	17
Section 5.6.	Sale of Trust Estate by Manager Is Binding	17
Section 5.7.	Removal/Resignation; Succession	17
Section 5.8.	Capital Expenditure Reserve	18
ARTICLE 6 BENEFICIAL INTERESTS		18
Section 6.1.	Issuance of Class 1 and Class 2 Beneficial Ownership Certificates	18
Section 6.2.	Ownership Records	19
Section 6.3.	Mutilated, Destroyed, Lost or Stolen Beneficial Ownership Certificates	19
Section 6.4.	Restrictions on Transfer; Right of First Refusal	19
Section 6.5.	Conditions to Admission of Subsequent Class 1 Beneficial Owners	20
Section 6.6.	Limit on Number of Beneficial Owners and Ownership by Benefit Plan Investors	20
Section 6.7.	Representations and Acknowledgements of Beneficial Owners	20
Section 6.8.	Status of Relationship	21
Section 6.9.	No Legal Title to Trust Estate	21

Section 6.10.	In-Kind Distributions; Waivers	21
Section 6.11.	Rights and Powers of the Class 2 Beneficial Owner Prior to Conversion Notice	21
Section 6.12.	Issuance of Conversion Notice	21
Section 6.13.	Right and Powers of Class 1 Beneficial Owners	21
Section 6.14.	Contributions by the Class 1 Beneficial Owners; Issuance of Class 1 Beneficial Ownership Certificates; Reduction in Class 2 Beneficial Interest	22
ARTICLE 7 DISTRIBUTIONS AND REPORTS		22
Section 7.1.	Payments From Trust Estate Only	22
Section 7.2.	Distributions in General	22
Section 7.3.	Distribution Upon Dissolution	22
Section 7.4.	Cash and other Accounts; Reports by the Manager	22
ARTICLE 8 RELIANCE; REPRESENTATIONS; COVENANTS		23
Section 8.1.	Good Faith Reliance	23
Section 8.2.	No Representations or Warranties as to Certain Matters	23
ARTICLE 9 EXCHANGE RIGHT		23
ARTICLE 10 TERMINATION		25
Section 10.1.	Termination in General	25
Section 10.2.	Termination to Protect and Conserve Trust Estate	25
Section 10.3.	Sale of the Trust Estate	26
Section 10.4.	Disposition by Broker	26
Section 10.5.	Distribution Upon Sale or Transfer Distribution	26
Section 10.6.	Certificate of Cancellation	26
ARTICLE 11 MISCELLANEOUS		26
Section 11.1.	Limitations on Rights of Others	26
Section 11.2.	Successors and Assigns	26
Section 11.3.	Usage of Terms	26
Section 11.4.	Headings	27
Section 11.5.	Amendments	27
Section 11.6.	Notices	27
Section 11.7.	Governing Law	27
Section 11.8.	Counterparts	27
Section 11.9.	Severability	27
Section 11.10.	Lender As Third Party Beneficiary	27

2

EXHIBITS

Exhibit A	-	Property
Exhibit B-1	-	Form of Class 1 Beneficial Ownership Certificate
Exhibit B-2	-	Form of Class 2 Beneficial Ownership Certificate
Exhibit C	-	Form of Certificate of Trust
Exhibit D	-	Agreement of Assignee or Transferee Beneficial Owner
Exhibit E	-	Form of Limited Liability Company Agreement
Exhibit F	-	Form of Conversion Notice
Exhibit G-1	-	Form of Notice of Exercise of Initial Exchange Right
Exhibit G-2	-	Form of Notice of Exercise of Secondary Exchange Right
Exhibit H	-	Delaware Trustee’s Fees

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FIRST AMENDED AND RESTATED TRUST AGREEMENT
OF
[TRUST NAME], DST,
A DELAWARE STATUTORY TRUST

This FIRST AMENDED AND RESTATED TRUST AGREEMENT, dated as of October __, 2017 (as the same may be amended or supplemented from time to time, this “Trust Agreement”), is made by and among [TRUST NAME] DEPOSITOR, LLC, a Delaware limited liability company (“Depositor”), [TRUST NAME] MANAGER, LLC, a Delaware limited liability company (in its individual capacity, “Trust Manager”), as Manager and Signatory Trustee, and THE CORPORATION TRUST COMPANY, (in its individual capacity, “CTC”), as Delaware Trustee. All capitalized terms used in this Trust Agreement that are not otherwise defined in the text are defined in Article 1 below.

RECITALS

A.       The Depositor will cause the Trust to acquire that certain real estate known as [Location Name] and located in [Property Location], as more particularly described in Exhibit A attached hereto and made a part hereof, together with all buildings, structures, fixtures and improvements located thereon, except to the extent owned by Lessee (collectively, the “Property”).

B.       The Depositor and CTC have agreed to form a statutory trust in accordance with Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. §3801, et seq. (the “Statutory Trust Act”).

C.       As of the Effective Date, the Depositor is the sole Beneficial Owner as evidenced by its ownership of 100% of the Class 2 Beneficial Interests.

D.       After the issuance of the Conversion Notice, certain Persons will acquire Class 1 Beneficial Interests in the Trust, as evidenced by newly-issued Class 1 Beneficial Ownership Certificates or otherwise, in exchange for payment of money to the Trust and become Class 1 Beneficial Owners in accordance with the provisions of this Trust Agreement, which money will be used in part to establish reserves and in part to repurchase a pro rata portion of the Class 2 Beneficial Interest held by the Depositor.

E.       The Trust will retain Trust Manager as the Manager of the Trust to undertake certain actions and perform certain duties that would otherwise be performed by the Trust.

NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE 1
DEFINITIONS AND INTERPRETATION

Section 1.1.Definitions. Capitalized terms used in this Trust Agreement shall have the following meanings:

“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract, or otherwise; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing.

“Applicable Laws” shall mean all existing and future federal, state and local laws, orders, ordinances, governmental rules and regulations and court orders.

“Beneficial Interest” means a beneficial interest in the Trust, as such term is used in the Statutory Trust Act, all of which interests shall be either Class 1 Beneficial Interests or the Class 2 Beneficial Interest.

“Beneficial Owner” means each Person who, at the time of determination, holds a Beneficial Interest as reflected on the most recent Ownership Records.

“Beneficial Ownership Certificate” means a certificate, stating whether it is a Class 1 Beneficial Ownership Certificate or a Class 2 Beneficial Ownership Certificate, in substantially the form of Exhibit B-1 or Exhibit B-2, respectively, evidencing a Beneficial Interest in the Trust.

“Benefit Plan Investor” shall mean (i) any “employee benefit plan” as defined in Section 3(3) of ERISA, which includes any “employee pension benefit plan” or “employee welfare benefit plan” as defined in ERISA, whether or not such plan is subject to Title I of ERISA, (ii) any plan described in Section 4975(e)(1) of the Code, including individual retirement accounts and Keogh plans, and (iii) any entity whose underlying assets include plan assets by reason of a plan’s investment in such entity.

“Business Day” is any day other than a Saturday, Sunday or legal holiday in the State of Delaware.

“Capital Expenditure Reserve” has the meaning given to such term in Section 5.8.

“Cash Amount” has the meaning given to such term in Section 9.1(b).

“Certificate of Trust” means the certificate of trust of the Trust in substantially the form of Exhibit C.

“Class 1 Beneficial Interests” means the Beneficial Interests held by the Investors. The issued Class 1 Beneficial Interests, along with any outstanding and unredeemed Class 2 Beneficial Interest, if any, collectively equal 100% of the Beneficial Interests.

“Class 2 Beneficial Interest” means the Beneficial Interest held by the Depositor.

“Class 1 Beneficial Owners” means the Investors.

“Class 2 Beneficial Owner” means the Depositor.

“Class 1 Beneficial Ownership Certificates” means any Beneficial Ownership Certificates issued to the Investors.

“Class 2 Beneficial Ownership Certificate” means any Beneficial Ownership Certificate issued to the Depositor.

“Closing Date” means that date of the first sale of Class 1 Beneficial Interests in the Trust to the Investors.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise. “Controlled” and “Controlling” shall have correlative meanings.

“Conversion Notice” means the notice, in substantially the form of Exhibit F, issued by the Depositor to the Delaware Trustee and the Manager stating that the provisions of Section 3.3(c) shall become effective upon receipt of the notice by the Delaware Trustee.

“CTC” has the meaning given to such term in the introductory paragraph hereof.

“Delaware Trustee” means the Person serving, at the time of determination, as the Delaware Trustee under this Trust Agreement. As of the Effective Date, the Delaware Trustee is CTC.

“Depositor” has the meaning given to such term in the introductory paragraph hereof.

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“Dissenting Beneficial Owner” has the meaning given to such term in Section 9.2(b).

“Dissenting Notice” has the meaning given to such term in Section 9.2(b).

“Effective Date” means the date of this Trust Agreement as specified in the introductory paragraph hereof.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Right” has the meaning given to such term in Section 9.1(b).

“Exhibit” means an exhibit attached to this Trust Agreement, unless otherwise specified.

“Financing Documents” means the Loan Agreement, the Note, the Mortgage, the Environmental Indemnity, the Guaranty Agreement and any other documents or agreements evidencing, securing or otherwise relating to the Loan, as the same have been or may have been modified, amended or restated.

“Initial Exchange Right” has the meaning given to such term in Section 9.1(a).

“Investors” means the Persons who purchase Class 1 Beneficial Interests in the Trust.

“Lease” means the lease agreement between [Landlord] and [Tenant], and assigned to the Trust together with all amendments, supplements and modifications thereto.

“Lender” means [Lender Name], together with its successors, assigns and transferees.

“Lessee” means [Tenant], and its successors and assigns.

“LLC” has the meaning given to such term in Section 10.2.

“Loan” means that certain loan from Lender to the Trust in the original principal amount of $_________ secured by, among other things, the Property.

“Loan Agreement” means that certain Loan Agreement dated as of September ___, 2017 between the Trust and the Lender, as amended.

“Manager” means the Person serving, at the time of determination, as the manager under this Trust Agreement. As of the Effective Date, the Manager is Trust Manager.

“Manager Covered Expenses” has the meaning given to such term in Section 5.4.

“Manager Indemnified Persons” has the meaning given to such term in Section 5.4.

“Mortgage” means the Deed of Trust and Security Agreement, dated as of September __, 2017, executed by the Trust in favor of the Lender.

“Note” means the Promissory Note made by the Trust in the original principal amount of $_________ relating to the Loan.

“Notice of Exchange” means a notice in similar form to that provided as Exhibit G-1 or Exhibit G-2 to this Trust Agreement and as required by Section 9.1(a) or (b).

“Offered Interest” means a Class 1 Beneficial Interest, or portion thereof, that is being offered for sale pursuant to a Third-Party Offer.

“Offeree” means, with respect to a Third-Party Offer, (i) the Operating Partnership and (ii) each Class 1 Beneficial Owner other than the Selling Beneficial Owner in the event the Operating Partnership does not exercise its right of first refusal in the Offered Interest.

3

“Operating Partnership” has the meaning given such term in Section 9.1(a).

“Ownership Records” means the records maintained by the Manager, or such third party service provider as the Manager may engage in its sole discretion, indicating from time to time the name, mailing address, and Percentage Share of each Beneficial Owner, which records shall initially indicate the Depositor as the sole Beneficial Owner and shall be revised by the Manager contemporaneously to reflect the issuance of Beneficial Interests (and Beneficial Ownership Certificates, if any) in accordance with this Trust Agreement, changes in mailing addresses, or other changes.

“Percentage Share” means, for each Beneficial Owner, the percentage of the aggregate Beneficial Interests in the Trust held by such Beneficial Owner as reflected on the most recent Ownership Records.

“Permitted Investment” has the meaning given to such term in Section 7.2.

“Permitted Transfer” means the transfer of a Class 1 Beneficial Interest (i) by devise, descent or by operation of law upon the death of a Class 1 Beneficial Owner or the member, partner, or stockholder of a Class 1 Beneficial Owner, (ii) by gift, (iii) by an individual to a trust or other entity created for estate planning purposes primarily for the benefit of such individual or (iv) by an Investor pursuant to Article 9 of this Trust Agreement; provided, however, that the transferee in any such transfer pursuant to items (i) through (iv) must be an accredited investor or acting in a fiduciary capacity for a person meeting such condition.

“Person” means a natural person, corporation, limited liability company, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, bank trust company, land trust, business trust, statutory trust or other organization, whether or not a legal entity, and a government or agency or political subdivision thereof.

“Property” has the meaning given to such term in Recital A hereof and as described in greater detail in Exhibit A.

“Purchase Agreement” means the agreement to be entered into by the Trust (through the Manager) and each Investor with respect to the acquisition of Class 1 Beneficial Interests by the Investors.

“Receipt Date” has the meaning given to such term in Section 9.3.

“Regulations” means U.S. Treasury Regulations promulgated under the Code.

“Reserves” has the meaning given to such term in Section 7.2.

“Retention Notice” has the meaning given to such term in Section 9.2(a).

“ROFR Notice” has the meaning given to such term in Section 6.4(b).

“Secondary Exchange Right” has the meaning given to such term in Section 9.1(b).

“Secondary Trigger Date” has the meaning given to such term in Section 9.1(b).

“Secretary of State” has the meaning given to such term in Section 2.1(b).

“Section” means a section of this Trust Agreement, unless otherwise specified.

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

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“Selling Beneficial Owner” means a Class 1 Beneficial Owner who receives a Third-Party Offer.

“Signatory Trustee” has the meaning given to such term in Section 4.8.

“Single Purpose Entity” has the meaning given to such term in Section 3.2(b).

“Statutory Trust Act” has the meaning given to such term in Recital B hereof.

“Third-Party Offer” means an offer to purchase all or a portion of a Class 1 Beneficial Interest or a controlling ownership interest in the Selling Beneficial Owner that (i) is for a specified price and stated terms, (ii) is made by a Person, identified therein by name and address and (iii) contains all terms and conditions of the proposed purchase and sale thereof. A “Third Party Offer” shall not include transfers to an Affiliate and shall not constitute a valid transfer unless the transferee is an accredited investor or acting in a fiduciary capacity for a person meeting such condition.

“Transaction Documents” means this Trust Agreement, the Lease, the Financing Documents and the Purchase Agreement, together with any other documents to be executed in furtherance of the investment activities of the Trust.

“Transfer Distribution” has the meaning given to such term in Section 10.2.

“Trust” means [TRUST NAME], DST, a Delaware statutory trust formed by and in accordance with, and governed by, this Trust Agreement.

“Trust Agreement” has the meaning given to such term in the introductory paragraph hereof.

“Trust Estate” means all of the Trust’s right, title, and interest in and to the Property, the Lease and any and all other property and assets (whether tangible or intangible) in which the Trust at any time has any right, title or interest.

“Trust Manager” has the meaning given to such term in the introductory paragraph hereof.

“Trustee Covered Expenses” has the meaning given to such term in Section 4.5.

“Trustee Indemnified Persons” has the meaning given to such term in Section 4.5.

“Units” has the meaning given to such term in Section 9.1(a).

ARTICLE 2
GENERAL MATTERS

Section 2.1.Organizational Matters.

(a)CTC has been appointed as the Delaware Trustee, and accepted such appointment, pursuant and subject to this Trust Agreement.

(b)The Delaware Trustee has executed and filed in the office of the Secretary of State of the State of Delaware (the “Secretary of State”) the Certificate of Trust.

(c)The name of the Trust is “[TRUST NAME], DST.” The Manager shall have full power and authority, and is hereby authorized, to conduct the activities of the Trust, execute and deliver all documents (including, without limitation, the Transaction Documents) for or on behalf of the Trust, and cause the Trust to sue or be sued under its name. Any reference to the Trust shall be a reference to the statutory trust formed pursuant to the Certificate of Trust and this Trust Agreement and not to the Delaware Trustee, the Signatory Trustee or the Manager individually or to the officers, agents or employees of the Trust, the Delaware Trustee, the Signatory Trustee or the Manager.

(d)The principal office of the Trust, and such additional offices as the Manager may determine to establish, shall be located at such places inside or outside of the State of Delaware as the Manager shall designate from time to time. As of the Effective Date, the principal office of the Trust is located at 1901 Main Street, Lake Como, New Jersey 07719.

(e)Legal title to the Trust Estate shall be vested in the Trust as a separate legal entity.

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Section 2.2.Declaration of Trust and Statement of Intent.

(a)The Trust hereby declares that it shall hold the Trust Estate in trust for the benefit of the Beneficial Owners upon the terms set forth in this Trust Agreement.

(b)It is the intention of the parties that the Trust constitute a “statutory trust,” the Delaware Trustee is a “trustee,” the Manager is an “agent” of the Trust, the Signatory Trustee is a co-trustee (subject to the limitations provided for in Section 4.8 hereof), the Beneficial Owners are “beneficial owners,” and this Trust Agreement is the “governing instrument” of the Trust, each within the respective meaning of such term as provided in or as used in the Statutory Trust Act.

(c)The Trust shall allow for the designation of officers from time to time, and hereby creates the position of Vice President of the Trust. The Manager, on behalf of the Trust, hereby appoints William Dioguardi, Coby Johnson and John Warch as Vice Presidents of the Trust, and grants each of these persons individually the power to act and sign documents on behalf of the Trust. The Manager may appoint additional Vice Presidents, replace any Vice President and/or eliminate any and all Vice President positions in its/their entirety at the Manager’s sole discretion.

Section 2.3.Purposes. The purposes of the Trust are solely to engage in the following activities: (i) to acquire the Property and enter into the Loan; (ii) to hold for investment, lease, maintain and eventually dispose its interest in the Property; and (iii) to take only such other actions as the Manager deems necessary or appropriate to carry out the foregoing.

ARTICLE 3
PROVISIONS RELATING TO THE LOAN AND TAX TREATMENT

Section 3.1.Article 3 Supersedes All Other Provisions of this Trust Agreement. This Article 3 contains certain provisions required by the Lender in connection with the Loan or intended to achieve the desired treatment of the Trust and Beneficial Interests for United States federal income tax purposes. To the extent of any inconsistency between this Article 3 and any other provision of this Trust Agreement, this Article 3 shall supersede and be controlling; provided, for the avoidance of doubt, that nothing in this Article 3 shall limit or impair the Trust’s power and authority to execute and deliver, and to perform its obligations under, the Transaction Documents, and further provided that the requirements of this Article 3 shall be enforceable to the maximum extent permissible under the Statutory Trust Act.

Section 3.2.Provisions Relating to the Loan.

(a)This Section 3.2 is intended to qualify the Trust as a “single purpose entity” for purposes of the Loan. So long as the Loan remains outstanding, the provisions of this Section 3.2 shall be in full force and effect. The terms of this Trust Agreement are further limited by and subject to the provisions of the Financing Documents while the Loan remains outstanding.

(b)Until the Loan is paid in full, the Trust must remain a Single Purpose Entity. A “Single Purpose Entity” means with respect to the Trust, a Delaware statutory trust or, following a Transfer Distribution, a limited liability company, which shall at all times comply with the following requirements unless it has received either prior consent to do otherwise from Lender or a permitted administrative agent thereof, or, while the Loan is securitized, confirmation from each of the applicable Rating Agencies (as defined in the Loan Agreement) that such noncompliance would not result in the requalification, withdrawal, or downgrade of the ratings of any Securities or any class thereof (hereinafter referred to as the Trust and the Special Purpose Entity):

(1)has not owned, does not own and will not own any asset or property other than (i) in the case of the Trust, (A) the Property and (B) incidental personal property necessary for the ownership, management or operation of the Property, and (ii) in the case of Signatory Trustee, (A) the rights as signatory trustee of the Trust and (B) incidental personal property necessary therefor;

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(2)has not engaged, does not engage, and will not engage in any business other than (i) in the case of the Trust, the ownership, management and operation of the Property, and (ii) in the case of Signatory Trustee, acting as signatory trustee of the Trust, and each Special Purpose Entity will conduct and operate its business as presently conducted and operated;

(3)has not entered into and is not a party to and will not enter into or be a party to any contract or agreement with any Affiliate of such Special Purpose Entity, any constituent party of such Special Purpose Entity or any Affiliate of any constituent party, except in the ordinary course of business and on terms and conditions that are disclosed to Lender in advance and that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arms-length basis with third parties other than any such party;

(4)has not incurred and will not incur any Indebtedness (as defined in the Loan Agreement) other than (i) in the case of the Trust, (A) the Debt (as defined in the Loan Agreement) and (B) unsecured trade payables and operational debt (excluding so-called property-assessed clean energy or similar loans) not evidenced by a note and in an aggregate amount not exceeding three percent (3%) of the original principal amount of the Loan at any one time; provided that any Indebtedness incurred pursuant to subclause (B) shall be (x) not more than sixty (60) days past due and (y) incurred in the ordinary course of business (the Indebtedness (as defined in the Loan Agreement) described in the foregoing clauses (A) and (B) is referred to herein, collectively, as “Permitted Indebtedness”); provided, that no Indebtedness other than the Debt may be secured (subordinate or pari passu) by the Property, and (ii) in the case of Signatory Trustee, unsecured trade payables incurred in the ordinary course of business related to the ownership of an interest in the Trust that (A) do not exceed at any one time $10,000.00, and (B) are paid within thirty (30) days after the date incurred;

(5)has not made and will not make any loans or advances to any Person (including any Affiliate or constituent party), and has not acquired and shall not acquire obligations or securities of its Affiliates;

(6)is and intends to remain solvent and has paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due; provided, that compliance with this Section 3.2(b)(6) shall not require any member or beneficial interest holder of such Special Purpose Entity to make any additional capital contributions to such Special Purpose Entity;

(7)has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and will not (i) terminate or fail to comply with the provisions of its organizational documents, or (ii) unless (A) Lender has consented (such consent not to be unreasonably withheld, conditioned or delayed) and (B) following a Securitization (as defined in the Loan Agreement) of the Loan, the Rating Agencies (as defined in the Loan Agreement) have issued a Rating Agency Confirmation (as defined in the Loan Agreement) in connection therewith, amend, modify or otherwise change its partnership certificate, partnership agreement, articles of incorporation and bylaws, operating agreement, trust or other organizational documents;

(8)has maintained and will maintain all of its accounts, books, records, financial statements and bank accounts separate from those of its Affiliates and any other Person. Special Purpose Entity’s assets have not been and will not be listed as assets on the financial statement of any other Person; provided, however, that such Special Purpose Entity’s assets may be included in a consolidated financial statement of its Affiliates if (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of such Special Purpose Entity and such Affiliates and to indicate that such Special Purpose Entity’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person, and (ii) such assets shall be listed on such Special Purpose Entity’s own separate balance sheet. Special Purpose Entity has and will file its own tax returns (to the extent such Special Purpose Entity is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person. Special Purpose Entity has maintained and shall maintain its books, records, resolutions and agreements as official records;

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(9)has been and will be, and has held and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of such Special Purpose Entity or any constituent party of such Special Purpose Entity), has corrected and shall correct any known misunderstanding regarding its status as a separate entity, has conducted and shall conduct business in its own name, has not identified and shall not identify itself or any of its Affiliates as a division or part of the other, and has maintained and shall maintain and utilize separate stationery, invoices and checks bearing its own name;

(10)has maintained and will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided, that compliance with this Section 3.2(b)(10) shall not require any member or beneficial interest holder of such Special Purpose Entity to make any additional capital contributions to such Special Purpose Entity;

(11)has not, nor has any constituent party, sought nor will seek or effect the liquidation, dissolution, winding up, consolidation or merger, in whole or in part, of such Special Purpose Entity;

(12)has not commingled and will not commingle the funds and other assets of such Special Purpose Entity with those of any Affiliate or constituent party or any other Person, and has held and will hold all of its assets in its own name;

(13)has maintained and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party or any other Person;

(14)has not assumed or guaranteed or become obligated for the debts of any other Person and has not held itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person, and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person;

(15)will comply with or cause the compliance with all the organizational documents of such Special Purpose Entity;

(16)has not permitted and will not permit any Affiliate or constituent party independent access to its bank accounts;

(17)has paid and shall pay the salaries of its own employees (if any) from its own funds and has and shall maintain a sufficient number of employees (if any) in light of its contemplated business operations; provided, that compliance with this Section 3.2(b)(17) shall not require any member or beneficial interest holder of such Special Purpose Entity to make any additional capital contributions to such Special Purpose Entity;

(18)has compensated and shall compensate each of its consultants and agents from its funds for services provided to it and pay from its own assets all obligations of any kind incurred; provided, that compliance with this Section 3.2(b)(18) shall not require any member or beneficial interest holder of such Special Purpose Entity to make any additional capital contributions to such Special Purpose Entity.

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(19)has not, and without the unanimous consent of all of its members, partners, directors or managers (including, in the case of the Trust, the Signatory Trustee) will not, take any action that might reasonably be expected to cause such Special Purpose Entity to become insolvent;

(20)has allocated and will allocate fairly and reasonably any shared expenses, including shared office space;

(21)has not pledged and will not pledge its assets for the benefit of any other Person, except in connection with the Loan;

(22)either (i) has no, and will have no, obligation to indemnify its officers, directors, managers, members, shareholders or partners, as the case may be, or (ii) if it has any such obligation, such obligation is fully subordinated to the Debt and will not constitute a claim against such Special Purpose Entity if cash flow in excess of the amount required to pay the Debt is insufficient to pay such obligation;

(23)will consider the interests of such Special Purpose Entity’s creditors in connection with all trust, limited liability company or limited partnership actions;

(24)has not and will not have any of its obligations guaranteed by any Affiliate, except as provided in the Loan Documents;

(25)in the case of the Trust, has organizational documents that provide that the Trust shall have (and the Trust shall at all times cause there to be) at least one (1) duly appointed Delaware Trustee of the Trust;

(26)has organizational documents that provide that as long as any portion of the Obligations remains outstanding;

a.such Special Purpose Entity will not:

i.dissolve, merge, liquidate or consolidate, except as provided below;

ii.except in connection with a sale or other transfer permitted under the Loan Documents, sell all or substantially all of its assets;

iii.amend its organizational documents with respect to the matters set forth in this Section 3.2(b), without the prior written consent of Lender; or

iv.without the affirmative vote of all directors or managers of such Special Purpose Entity, take any Material Action (as defined in the Loan Agreement) with respect to itself or to any other entity in which it has a direct or indirect legal or beneficial ownership interest.

b.such Special Purpose Entity shall be dissolved, and its affairs shall be wound up, only upon the first to occur of the following: (A) the termination of the legal existence of the last remaining owner or member, as applicable, of such Special Purpose Entity or the occurrence of any other event which terminates the continued ownership or membership, as applicable of the last remaining owner or member of such Special Purpose Entity in such Special Purpose Entity unless the business of such Special Purpose Entity is continued in a manner permitted by its operating agreement or the Delaware Limited Liability Company Act (the “Act”), (B) the entry of a decree of judicial dissolution under Section 18-802 of the Act, or (C) in the case of the Trust, in connection with a Conversion pursuant to the terms and conditions of the Loan Agreement;

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c.the bankruptcy of any member of Signatory Trustee shall not cause such member to cease to be a member of Signatory Trustee and upon the occurrence of such an event, the business of Signatory Trustee shall continue without dissolution;

d.in the event of the dissolution of such Special Purpose Entity, such Special Purpose Entity shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of such Special Purpose Entity in an orderly manner), and the assets of such Special Purpose Entity shall be applied in the manner, and in the order of priority, set forth in Section 18-804 of the Act and 12 Delaware Code Section 3801, et. seq.; and

e.to the fullest extent permitted by law, each member of such Special Purpose Entity shall irrevocably waive any right or power that they might have to cause such Special Purpose Entity or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Trust, to compel any sale of all or any portion of the assets of such Special Purpose Entity pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of such Special Purpose Entity.

(27)in the case of the Trust, has one (1) signatory trustee that is a Special Purpose Entity; and

(28)in the case of the Trust, its organizational documents shall provide that the Trust shall maintain (and the Trust shall at all times cause there to be), at all times during the Term, at least one (1) Delaware Trustee, who shall have the authority to terminate the Trust Agreement of the Trust by converting the Trust into a Delaware limited liability company in form and substance satisfactory to Lender in accordance with the provisions of Section 10.2 hereof.

(c)The bankruptcy of the final Beneficial Owner of the Trust shall not cause the final Beneficial Owner to cease to be a Beneficial Owner of the Trust and upon the occurrence of such an event, the business of the Trust shall continue without dissolution.

(d)In the event of the dissolution of the Trust, the Trust shall conduct only such activities as are necessary to wind up its affairs (including the sale of the assets of the Trust in an orderly manner), and the assets of the Trust shall be applied in the manner, and in the order of priority, set forth in the Act.

(e)To the fullest extent permitted by law, each of the Beneficial Owners of the Trust irrevocably waive any right or power that they might have to cause the Trust or any of its assets to be partitioned, to cause the appointment of a receiver for all or any portion of the assets of the Trust, to compel any sale of all or any portion of the assets of the Trust pursuant to any applicable law or to file a complaint or to institute any proceeding at law or in equity to cause the dissolution, liquidation, winding up or termination of the Trust.

(f)Until the Loan is paid in full, no tenancy-in-common or other partial interests in the Property shall be issued or distributed to any Person.

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Section 3.3.Provisions Relating to Tax Treatment.

(a) Prior to the issuance of the Conversion Notice, the sole Beneficial Owner of the Trust shall be the Depositor. The rights of the Depositor (as the Class 2 Beneficial Owner) with respect to the assets and property held by the Trust, as provided in Section 6.11, are such that the Trust will be characterized prior to the issuance of the Conversion Notice as a “business entity” within the meaning of Regulations Section 301.7701-3. Because the Depositor will be the sole Beneficial Owner, the Trust will be characterized as a disregarded entity, and all assets and property of the Trust shall be treated for federal income tax purposes as assets and property of the Depositor.

(b)Upon the issuance of the Conversion Notice, the special rights of the Depositor (as the Class 2 Beneficial Owner) set forth in Section 6.11 will terminate, as set forth in Section 6.12, and the Depositor will have the same rights as any Class 1 Beneficial Owner.

(c)It is the intention of the parties hereto that upon and at all times after the issuance of the Conversion Notice that the Trust shall constitute an “investment trust” within the meaning of Regulations Section 301.7701-4(c) and each Beneficial Owner shall be treated as a “grantor” within the meaning of Code Section 671. As such, the parties further intend that each Beneficial Owner shall be treated for federal income tax purposes as if it holds a direct ownership interest in the Trust and, through the Trust, the Property. Each Beneficial Owner agrees to report its interest in the Trust in a manner consistent with the foregoing and otherwise not to take any action that would be inconsistent with the foregoing. Upon and after issuance of the Conversion Notice, none of the Delaware Trustee, the Manager, the Beneficial Owners and/or the Trust shall have power and authority, or shall be authorized, and each of them is hereby expressly prohibited from taking, and none of them shall be allowed to take, any of the following actions:

(1)sell, transfer or exchange the Trust Estate, except as required or permitted under Article 9 or Article 10;

(2)invest or reinvest any monies of the Trust, except as permitted hereunder or in accordance with Section 7.2;

(3)renegotiate the terms of the Loan or enter into new financing (except in the case of the Lessee’s bankruptcy or insolvency);

(4)renegotiate the Lease or enter into new leases (except in the case of the Lessee’s bankruptcy or insolvency);

(5)make modifications to the Property (other than minor non-structural modifications) unless required by law;

(6)accept any capital from a Beneficial Owner (other than the initial capital received from an Investor that will be paid to the Depositor and reduce the Depositor’s Percentage Shares); or

(7)take any other action which would in the opinion of tax counsel to the Trust cause the Trust to be treated as a business entity for federal income tax purposes if the effect would be that such action or actions would constitute a power under the Trust Agreement to “vary the investment of the certificate holders” under Regulations Section 301.7701-4(c)(1) and Rev. Rul. 2004-86, 2004-33 I.R.B. 191.

The Trust shall hold the Trust Estate for investment purposes. The activities of the Trust with respect to the Trust Estate shall be limited to the activities which are customary services in connection with the holding of the Trust Estate and none of the Delaware Trustee, the Beneficial Owners, the Manager nor their agents shall provide non-customary services, as such term is defined in Code Sections 512 and 856 and Rev. Rul. 75-374, 1975-2 C.B. 261. Without limiting the generality of the foregoing, upon and after issuance of the Conversion Notice (i) none of the Delaware Trustee, the Manager, the Lessee, the Beneficial Owners or the Trust shall have any power or authority to undertake any actions that are not permitted to be undertaken by an entity that is classified as a “trust” within the meaning of Regulations Section 301.7701-4 and not classified as a “business entity” within the meaning of Regulations Section 301.7701-3, and (ii) this Trust Agreement shall be interpreted and enforced so as to be in compliance with the requirements of Rev. Rul. 2004-86.

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For federal income tax purposes, after issuance of the Conversion Notice, the Trust is intended to be and shall constitute an “investment trust” within the meaning of Regulations Section 301.7701-4(c) and shall not constitute a “business entity.”

ARTICLE 4
CONCERNING THE Delaware TRUSTEE and the Signatory Trustee

Section 4.1.Power and Authority. The Delaware Trustee shall have the power and authority, and is hereby authorized and empowered, to (i) accept legal process served on the Trust in the State of Delaware; and (ii) execute any certificates that are required to be executed under the Statutory Trust Act and file such certificates in the office of the Secretary of State, and take such action or refrain from taking such action under this Trust Agreement as may be directed in a writing delivered to the Delaware Trustee by the Manager; provided, however, that the Delaware Trustee shall not be required to take or to refrain from taking any such action if the Delaware Trustee shall believe, or shall have been advised by counsel, that such performance is likely to involve the Delaware Trustee in personal liability or to result in personal liability to the Delaware Trustee, or is contrary to the terms of this Trust Agreement or of any document contemplated hereby to which the Trust or the Delaware Trustee is or becomes a party or is otherwise contrary to law. The Manager agrees not to instruct the Delaware Trustee to take any action or to refrain from taking any action that is contrary to the terms of this Trust Agreement or of any document contemplated hereby to which the Trust or the Delaware Trustee is or becomes party or that is otherwise contrary to law. Other than as expressly provided for in this Trust Agreement, the Delaware Trustee shall have no duty to take any action for or on behalf of the Trust.

Section 4.2.Delaware Trustee May Request Direction. If at any time the Delaware Trustee determines that it requires or desires guidance regarding the application of any provision of this Trust Agreement or any other document, or regarding action that must or may be taken in connection herewith or therewith, or regarding compliance with any direction it received hereunder, then the Delaware Trustee may deliver a notice to a court of competent jurisdiction requesting written instructions as to the desired course of action, and such instructions from the court shall constitute full and complete authorization and protection for actions taken and other performance by the Delaware Trustee in reliance thereon. Until the Delaware Trustee has received such instructions after delivering such notice, it shall be fully protected in refraining from taking any action with respect to the matters described in such notice.

Section 4.3.Delaware Trustee’s Capacity. In accepting the Trust hereby created, CTC acts solely as Delaware Trustee hereunder and not in its individual capacity, and all Persons having any claim against the Delaware Trustee by reason of the transactions contemplated by this Trust Agreement, the Transaction Documents, or any other document shall look only to the Trust Estate for payment or satisfaction thereof. Notwithstanding any provision of this Trust Agreement or any other document to the contrary, under no circumstances shall CTC, in its individual capacity or in its capacity as Delaware Trustee, (i) have any duty to choose or supervise, nor shall it have any liability for the actions or inactions of, the Manager or any officer, manager, employee, or other Person (other than CTC and its own employees), or (ii) be liable or responsible for, or obligated to perform, any contract, representation, warranty, obligation or liability of the Trust, the Manager, or any officer, manager, employee, or other Person; provided, however, that this limitation shall not protect CTC against any liability to the Beneficial Owners to which it would otherwise be subject by reason of its willful misconduct, bad faith, fraud or gross negligence in the performance of its duties under this Trust Agreement.

Section 4.4.Duties. None of the Delaware Trustee, CTC or any successor Delaware Trustee shall have any duty or obligation under or in connection with this Trust Agreement, the Trust, or any transaction or document contemplated hereby, except as expressly provided by the terms of this Trust Agreement, and no implied duties or obligations shall be read into this Trust Agreement against the Delaware Trustee, CTC or any successor Delaware Trustee. The right of the Delaware Trustee to perform any discretionary act enumerated herein shall not be construed as a duty. To the fullest extent permitted by applicable law, including without limitation Section 3806 of the Statutory Trust Act, the Delaware Trustee’s, CTC’s or any successor Delaware Trustee’s duties (including fiduciary duties) and liabilities relating thereto to the Trust and the Beneficial Owners shall be restricted to those duties (including fiduciary duties) expressly set forth in this Trust Agreement and liabilities relating thereto.

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Section 4.5.Indemnification. The Beneficial Owners and the Trust, jointly and severally, hereby agree to: (i) reimburse the Delaware Trustee, CTC and/or any successor Delaware Trustee for all reasonable expenses (including reasonable fees and expenses of counsel and other professionals), incurred in connection with the negotiation, execution, delivery, or performance of, or exercise of rights or powers under, this Trust Agreement; (ii) to the fullest extent permitted by law, indemnify, defend and hold harmless the Delaware Trustee, CTC and/or any successor Delaware Trustee, and the officers, directors, employees and agents of the Delaware Trustee and/or any successor Delaware Trustee (collectively, including the Delaware Trustee, CTC and/or any successor Delaware Trustee in its individual capacity, the “Trustee Indemnified Persons”) from and against any and all losses, damages, liabilities, claims, actions, suits, costs, expenses, disbursements, taxes and penalties of any kind and nature whatsoever (collectively, “Trustee Covered Expenses”), to the extent that such Trustee Covered Expenses arise out of or are imposed upon or asserted at any time against any such Trustee Indemnified Persons, including without limitation on the basis of ordinary negligence on the part of any such Trustee Indemnified Persons, with respect to or in connection with this Trust Agreement, the Trust, or any transaction or document contemplated hereby; provided, however, that the Beneficial Owners or the Trust shall not be required to indemnify a Trustee Indemnified Person for Trustee Covered Expenses to the extent such Trustee Covered Expenses result from the willful misconduct, bad faith, fraud or gross negligence of such Trustee Indemnified Person; and (iii) to the fullest extent permitted by law, advance to each such Trustee Indemnified Person Trustee Covered Expenses incurred by such Trustee Indemnified Person in defending any claim, demand, action, suit or proceeding, in connection with this Trust Agreement, the Trust, or any transaction or document contemplated hereby, prior to the final disposition of such claim, demand, action, suit or proceeding, only upon receipt by any Beneficial Owner of an undertaking, by or on behalf of such Trustee Indemnified Person, to repay such amount if a court of competent jurisdiction renders a final, nonappealable judgment that includes a specific finding of fact that such Trustee Indemnified Person is not entitled to be indemnified therefor under this Section 4.5. The obligations of the Beneficial Owners and the Trust under this Section 4.5 shall survive the resignation or removal of the Delaware Trustee, shall survive the dissolution and termination of the Trust, and shall survive the termination, amendment, supplement, and/or restatement of this Trust Agreement; provided, however, a Beneficial Owner shall be released from and relieved of any and all obligations under this Section 4.5 that relate to any acts or events occurring in their entirety after the date on which such Beneficial Owner no longer owns any Beneficial Interest in the Trust. Notwithstanding the above, in all cases, the indemnification provided under this Section 4.5 shall be limited to and only paid out of the Trust Estate.

Section 4.6.Removal; Resignation; Succession. The Delaware Trustee may resign at any time by providing prior written notice to the Manager, and such resignation shall become effective upon the acceptance of appointment by a successor Delaware Trustee as hereinafter provided. The Manager may at any time remove the Delaware Trustee for cause by providing written notice to the Delaware Trustee, and such removal shall become effective upon the acceptance of appointment by a successor Delaware Trustee as hereinafter provided. Cause shall only result from (i) the willful misconduct, bad faith, fraud or negligence of the Delaware Trustee, or (ii) the modification of the Delaware Trustee’s fees, as provided for in Section 4.7 hereof, without the express written consent of the Manager. In case of the removal or resignation of the Delaware Trustee, and with the prior written consent of Lender while the Loan remains outstanding, the Manager may appoint a successor by written instrument. If the Manager shall not have notified the Delaware Trustee, within sixty (60) days after the giving of such notice, that a successor Delaware Trustee shall have been appointed, the Delaware Trustee or any of the Beneficial Owners may apply to any court of competent jurisdiction in the United States to appoint a successor Delaware Trustee to act until such time, if any, as a successor shall have been appointed as provided above; provided, the Lender approves such appointment during any period in which the Loan remains outstanding. Any successor so appointed by such court shall immediately and without further act be superseded by any successor appointed as provided above within one (1) year from the date of the appointment by such court. Any successor, however appointed, shall execute and deliver to its predecessor Delaware Trustee an instrument accepting such appointment, and thereupon such successor, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Delaware Trustee in the trusts hereunder with like effect as if originally named the Delaware Trustee herein; but upon the written request of such successor, such predecessor shall execute and deliver an instrument transferring to such successor, upon the trusts herein expressed, all the estates, properties, rights, powers, duties and trusts of such predecessor, and such predecessor shall duly assign, transfer, deliver and pay over to such successor all monies or other property then held by such predecessor upon the trusts herein expressed. Any right of the Beneficial Owners against a predecessor Delaware Trustee in its individual capacity shall survive the resignation or removal of such predecessor, shall survive the dissolution and termination of the Trust, and shall survive the termination, amendment, supplement, and/or restatement of this Trust Agreement.

Any successor Delaware Trustee, however appointed, shall be a bank or trust company satisfying the requirements of Section 3807(a) of the Statutory Trust Act. Any corporation into which the Delaware Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Delaware Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Delaware Trustee may be transferred, shall, subject to the preceding sentence, be the Delaware Trustee under this Trust Agreement without further act.

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Section 4.7.Fees and Expenses. The Delaware Trustee shall receive as compensation for its services hereunder the amounts set forth on Exhibit H. The Delaware Trustee shall not have any obligation by virtue of this Trust Agreement to spend any of its own funds, or to take any action that could result in its incurring any cost or expense.

Section 4.8.Signatory Trustee. The Manager may appoint in its sole discretion, from time to time, a co-trustee to serve with the Delaware Trustee for the limited purpose of executing any documentation that may require the signature of more than one trustee of the Trust (the “Signatory Trustee”). The Trust hereby grants the Signatory Trustee the power to act and sign documents on behalf of the Trust pursuant to the terms of this Section 4.8. The Manager may appoint additional Signatory Trustees and replace any Signatory Trustee subject to the requirements of the Financing Documents. The Signatory Trustee shall not receive any compensation for its services. The initial Signatory Trustee shall be the Manager.

ARTICLE 5
CONCERNING THE MANAGER

Section 5.1.Power and Authority. The investment activities and affairs of the Trust shall be managed exclusively by or under the direction of the Manager. The Manager shall have the power and authority, and is hereby authorized and empowered, to manage the Trust Estate and the investment activities and affairs of the Trust, subject to and in accordance with the terms and provisions of this Trust Agreement, provided that the Manager shall have no power to engage on behalf of the Trust in any activities that the Trust could not engage in directly, and further provided that the Manager shall at all times be subject to the control and authority of the Trust. The Manager shall have the power and authority, and is hereby authorized, empowered, and directed to enter into the Loan and assume the Lease and to enter into, execute and deliver (as applicable), and to cause the Trust to perform its obligations under, each of the Transaction Documents to which the Trust is or becomes a party or signatory.

Section 5.2.Manager’s Capacity. The Manager acts solely as an agent of the Trust and not in its individual capacity, and all Persons having any claim against the Manager by reason of the transactions contemplated by this Trust Agreement, the Transaction Documents, or any other document shall look only to the Trust Estate for payment or satisfaction thereof. Notwithstanding any provision of this Trust Agreement to the contrary, the Manager shall not have any liability to any Person except for its own willful misconduct, bad faith, fraud or gross negligence, subject to the limitations detailed in Section 5.4.

Section 5.3.Duties.

(a)The Manager has primary responsibility for performing the administrative actions set forth in this Section 5.3. In addition, the Manager shall have the obligations with respect to a potential sale or transfer of the Trust Estate as set forth in Article 9 and Article 10. The Manager shall also have the authority to approve and cause the Trust to enter into the Loan and the Lease and to enter into the Financing Documents. The Manager shall not have any duty or obligation under or in connection with this Trust Agreement, the Trust, or any transaction or document contemplated hereby, except as expressly provided by the terms of this Trust Agreement, and no implied duties or obligations shall be read into this Trust Agreement against the Manager. The right of the Manager to perform any discretionary act enumerated herein shall not be construed as a duty. To the fullest extent permitted by applicable law, including without limitation Section 3806 of the Statutory Trust Act, the Manager’s duties (including fiduciary duties) and liabilities relating thereto to the Trust and the Beneficial Owners shall be restricted to those duties (including fiduciary duties) expressly set forth in this Trust Agreement and liabilities relating thereto.

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(b)Without limiting the generality of Section (a) above, the Manager, for and on behalf of the Trust, is hereby authorized and directed to take each of the following actions necessary to conserve and protect the Trust Estate:

(1)to the extent applicable, comply with the terms of the Financing Documents, including but not limited to creating and maintaining any accounts or reserves required by the Financing Documents;

(2)to the extent applicable, comply with the terms of the Lease;

(3)collect rents and make distributions in accordance with Article 7;

(4)enter into any agreement for purposes of completing tax-free exchanges involving Beneficial Interests with a “Qualified Intermediary” as defined in Regulations Section 1.1031(k)-1(g)(4)(iii);

(5)acquire and maintain any insurance required of the Trust under the Transaction Documents;

(6)notify the relevant parties of any default by them under the Transaction Documents;

(7)take any action which in the reasoned opinion of tax counsel to the Trust, should not have an adverse effect on either the treatment of the Trust as an “investment trust” within the meaning of Regulations Section 301.7701-4(c) or each Beneficial Owner as a “grantor” within the meaning of Code Section 671;

(8)make or cause to be made any repairs necessary to maintain the Property subject to the terms of the Lease;

(9)provide asset management services in relation to the Property (and, as it deems appropriate, engage a third party or Affiliate to provide local management services in connection with the Property, subject to the limitations on certain “non-customary services”, as such term is defined in Code Sections 512 and 856 and Rev. Rul. 75-374, 1975-2 C.B. 261); and

(10)solely to the extent necessitated by the bankruptcy or insolvency of the Lessee, if the Trust has not terminated under Section 10.2, enter into a new lease with respect to the Property, amend the existing lease at the Property, or renegotiate or refinance any debt secured by the Property (including, without limitation, the Loan).

The foregoing notwithstanding, from and after the issuance of the Conversion Notice, in accordance with Section 3.3(c), under no circumstances shall the power or authority of the Manager include the ability to take any actions which would cause the Trust to cease to constitute an “investment trust” within the meaning of Regulations Section 301.7701-4(c). After issuance of the Conversion Notice, the power and authority of the Manager shall be strictly and narrowly construed so as to preserve and protect the status of the Trust as an “investment trust” for federal income tax purposes.

(c)The Manager shall keep customary and appropriate books and records relating to the Trust and the Trust Estate and shall certify reports regarding same to the Lender, if required by the Financing Documents. The Manager shall maintain appropriate books and records in order to provide reports of income and expenses to each Beneficial Owner as necessary for such Beneficial Owner to prepare his/her income tax returns regarding the Trust Estate. All receipts and disbursements on behalf of the Trust shall be recorded in such a manner that transactions pertaining to the Trust will be readily accessible. Payables and receivables for the Trust shall be reconciled on the books by the Manager on a periodic basis and payment will thereupon obtained from or made to the Trust as applicable. Any books or records kept pursuant to this Section 5.3(c) shall be the sole property of the Trust. The Manager shall keep separate checking accounts for the Manager and the Trust for funds relating to the Properties. No monies collected by the Manager on the Trust’s behalf will be commingled with the funds of the Manager.

(d)The Manager shall promptly furnish to the Beneficial Owners copies of all reports, notices, requests, demands, certificates, financial statements and any other writings required to be distributed to them pursuant to the Transaction Documents, unless the Manager reasonably believes the same to have been sent directly to the Beneficial Owners, and promptly shall furnish to the Lender those documents as required by the Financing Documents.

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(e)The Manager shall not be required to act or refrain from acting under this Trust Agreement or the Financing Documents if the Manager reasonably determines, or has been advised by counsel, that such actions or inactions may result in personal liability, unless the Manager is indemnified by the Trust and the Beneficial Owners against any liability and costs (including reasonable legal fees and expenses) which may result in a manner and form reasonably satisfactory to the Manager.

(f)The Manager shall not, on its own behalf (in contrast to actions that the Manager is required to perform on behalf of the Trust), have any duty to (i) file, record or deposit any document or to maintain any such filing, recording or deposit or to refile, rerecord or redeposit any such document, (ii) obtain or maintain any insurance on the Property, (iii) maintain the Property, (iv) pay or discharge any tax levied against any part of the Trust Estate, (v) confirm, verify, investigate or inquire into the failure to receive any reports or financial statements from any party obligated under the Financing Documents to provide such, or (vi) inspect the Property at any time or to ascertain or inquire as to the performance or observance of any of the covenants of any Person under the Financing Documents.

(g)The Manager shall manage, control, dispose of or otherwise deal with the Trust Estate consistent with its duties to conserve and protect the Trust Estate, subject to any restrictions required by the Financing Documents, or otherwise provided in this Trust Agreement.

(h)Upon its receipt of a written request to do so, the Manager shall provide to each Person who becomes a Beneficial Owner a copy of this Trust Agreement.

(i)The Manager shall impose such restrictions (including restrictions on transfers) as it shall deem necessary or appropriate for the purpose of ensuring that no Beneficial Interests are acquired or held by any person in breach of this Trust Agreement. In particular, the Manager shall ensure that no Beneficial Interests shall be sold or transferred to a Benefit Plan Investor or any other investor if, following the sale or transfer of such Beneficial Interests, the total investment by Benefit Plan Investors in the Trust shall equal more than 24.9% of the value of the total number of Beneficial Interests outstanding.

(j)In the event the Manager determines that the ownership, or transfer of ownership, of any Beneficial Interests by a Beneficial Owner may result in the 24.9% limit described in Section 5.3(j) being exceeded, or may otherwise result in the assets of the Trust being deemed to be “plan assets” for purposes of ERISA, the Manager may give notice to such Beneficial Owner requiring the Beneficial Owner to transfer such Beneficial Interests to an entity which is not a Benefit Plan Investor. Until such transfer is effected, such Beneficial Owner shall not be entitled to any rights or privileges attaching to such Beneficial Interests. If such Beneficial Owner does not, within thirty (30) days of the receipt of such notice, transfer its Beneficial Interests to an entity which is not a Benefit Plan Investor, the Manager shall have the authority to take any action necessary to cause such Beneficial Owner to sell, transfer or redeem such Beneficial Interests.

(k)The Manager shall provide to the Delaware Trustee a copy of the Ownership Records contemporaneously with each revision thereto.

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Section 5.4.Indemnification. The Class 1 Beneficial Owners and the Trust, jointly and severally, hereby agree to: (i) reimburse the Manager for all reasonable expenses (including reasonable fees and expenses of counsel and other professionals), incurred in connection with the negotiation, execution, delivery, or performance of, or exercise of rights or powers under, this Trust Agreement; (ii) to the fullest extent permitted by law, indemnify, defend and hold harmless the Delaware Trustee, the Depositor, the Trust Manager, the Manager, the Manager’s sole member, the Operating Partnership, Four Springs Capital Trust, and each of their respective members, managers, shareholders, partners, officers, directors, employees, consultants, affiliates and advisors (collectively, including the Manager and Trust Manager in its individual capacity, the “Manager Indemnified Persons”) from and against any and all losses, damages, liabilities, claims, actions, suits, costs, expenses, disbursements (including the reasonable fees and expenses of counsel and other professionals), taxes and penalties of any kind and nature whatsoever (collectively, “Manager Covered Expenses”), to the extent that such Manager Covered Expenses arise out of or are imposed upon or asserted at any time against any such Manager Indemnified Persons, including without limitation on the basis of ordinary negligence on the part of any such Manager Indemnified Persons, with respect to or in connection with this Trust Agreement, the Trust, or any transaction or document contemplated hereby; provided, however, that the Class 1 Beneficial Owners or the Trust shall not be required to indemnify a Manager Indemnified Person for Manager Covered Expenses to the extent such Manager Covered Expenses result from the willful misconduct, bad faith, fraud or gross negligence of such Manager Indemnified Person; and (iii) to the fullest extent permitted by law, advance to each such Manager Indemnified Person Manager Covered Expenses incurred by such Manager Indemnified Person in defending any claim, demand, action, suit or proceeding, in connection with this Trust Agreement, the Trust, or any transaction or document contemplated hereby, prior to the final disposition of such claim, demand, action, suit or proceeding, only upon receipt by any Class 1 Beneficial Owner of an undertaking, by or on behalf of such Manager Indemnified Person, to repay such amount if a court of competent jurisdiction renders a final, nonappealable judgment that includes a specific finding of fact that such Manager Indemnified Person is not entitled to be indemnified therefor under this Section 5.4. The obligations of the Class 1 Beneficial Owners and the Trust under this Section 5.4 shall survive the resignation or removal of the Manager, shall survive the dissolution and termination of the Trust, and shall survive the termination, amendment, supplement, and/or restatement of this Trust Agreement; provided, however, a Class 1 Beneficial Owner shall be released from and relieved of any and all obligations under this Section 5.4 that relate to any acts or events occurring in their entirety after the date on which such Class 1 Beneficial Owner no longer owns any Class 1 Beneficial Interest in the Trust. Notwithstanding the above, in all cases, the indemnification provided under this Section 5.4 shall be limited to and only paid out of the Trust Estate. Notwithstanding anything to the contrary in this Agreement, any indemnification claim against the Trust arising under this Agreement, other than an indemnification claim arising under Section 4.5, the Certificate of Trust, or the laws of the State of Delaware, shall be fully subordinate to any obligations of the Trust arising under the Financing Documents, and shall only constitute a claim against the Trust to the extent of, and shall be paid by the Trust in monthly installments only from, the excess of net operating income for any month over all amounts then due under the Financing Documents. For the avoidance of misunderstanding, the two immediately preceding sentences shall have no application or relevance to any right or entitlement of CTC or the Delaware Trustee.

Section 5.5.Fees and Expenses. The Manager shall receive an annual trust management fee equal to $25,403 (the “Trust Management Fee”), which shall be paid in equal monthly installments. The Manager shall not have any obligation by virtue of this Trust Agreement to spend any of its own funds, or to take any action that could result in its incurring any cost or expense including any fees incurred in engaging a third-party or Affiliate as property manager in accordance with 5.3(b)(9). Notwithstanding anything to the contrary in this Agreement, the Trust Management Fee and any other fees and expenses pursuant to this Section 5.5 shall be fully subordinate to any obligations of the Trust arising under the Financing Documents, and shall be paid by the Trust only from the excess of net operating income over all amounts then due under the Financing Documents.

Section 5.6.Sale of Trust Estate by Manager Is Binding. Any sale or other conveyance of the Trust Estate or any part thereof by the Manager made for and on behalf of the Trust pursuant to the terms of this Trust Agreement shall bind the Trust and the Beneficial Owners and be effective to transfer or convey all rights, title and interest of the Trust and the Beneficial Owners in and to the Trust Estate.

Section 5.7.Removal/Resignation; Succession. The Manager, subject to receipt of the written approval of the Lender, may resign at any time by providing prior written notice to the Delaware Trustee, and such resignation shall become effective upon the acceptance of appointment by a successor Manager as hereinafter provided. The Delaware Trustee may, with the prior written consent of the holders of at least two thirds (2/3rds) of the Beneficial Interests in the Trust and the written approval of the Lender, remove the Manager for cause by providing written notice to the Manager, and such removal shall become effective upon the acceptance of appointment by a successor Manager as hereinafter provided. Cause shall only result from the willful misconduct or gross negligence of the Manager. In case of the removal or resignation of the Manager, and with the prior written consent of Lender while the Loan remains outstanding, the Delaware Trustee may appoint a successor by written instrument. If a successor Manager shall not have been appointed within sixty (60) days after the giving of such notice, the Manager or any of the Beneficial Owners may apply to any court of competent jurisdiction in the United States to appoint a successor Manager to act until such time, if any, as a successor shall have been appointed as provided above, provided that the Lender approves such appointment during any period in which the Loan remains outstanding. Any successor so appointed by such court shall immediately and without further act be superseded by a successor appointed as provided above within one (1) year from the date of the appointment by such court. Any successor, however appointed, shall execute and deliver to its predecessor Manager an instrument accepting such appointment, and thereupon such successor, without further act, shall become vested with all the rights, powers and duties of the predecessor Manager in the trusts hereunder with like effect as if originally named the Manager herein; but upon the written request of such successor, such predecessor shall execute and deliver an instrument transferring to such successor, upon the trusts herein expressed, all the rights, powers and duties of such predecessor. Any right of the Beneficial Owners against a predecessor Manager in its individual capacity shall survive the resignation or removal of such predecessor Manager, shall survive the dissolution and termination of the Trust, and shall survive the termination, amendment, supplement, and/or restatement of this Trust Agreement.

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Section 5.8.Capital Expenditure Reserve. The Manager shall have the power to establish a capital expenditure reserve on behalf of the Trust and for the benefit of the Property (the “Capital Expenditure Reserve”) in an initial amount of $142,500 and deposit monthly into such reserve an appropriate amount (or such amount as may be required by the Lender following notice to the Trust in accordance with the Financing Documents or as may be determined by the Manager in its discretion in accordance with Rev. Rul. 2004-86) from the base rent amounts received under the Lease. Such amount shall be held by or on behalf of the Trust and invested pursuant to the limitations provided under Section 7.2. Interest or other income earned on the Capital Expenditure Reserve shall be distributed to the Beneficial Owners as, and if, permitted in the Financing Documents. The Capital Expenditure Reserve is, and shall remain, the property of the Trust and any unused balance shall be distributed to the Beneficial Owners, in accordance with this Trust Agreement, upon the sale of the Trust Estate.  

ARTICLE 6
BENEFICIAL INTERESTS

Section 6.1.Issuance of Class 1 and Class 2 Beneficial Ownership Certificates.

(a)Simultaneous with the execution of this Trust Agreement, the Trust shall issue a Class 2 Beneficial Ownership Certificate to the Depositor evidencing its Percentage Share. The Class 2 Beneficial Ownership Certificate, in substantially the form set forth in Exhibit B-2, shall be issued in unregistered form and delivered to, and recorded in the Ownership Records in the name of, the Depositor. Each Class 2 Beneficial Ownership Certificate (i) shall be printed and dated the date of its execution, (ii) shall be printed, lithographed, typewritten, mimeographed, photocopied or otherwise produced in any other manner as may, consistent herewith, be determined by the Manager, (iii) may have such insertions, omissions, substitutions and other variations as are required by this Trust Agreement and (iv) may have such letters, numbers or other marks of identification and such legends and endorsements placed thereon as may, consistent herewith, be approved by the Manager

(b)No earlier than three (3) days after the issuance of the Conversion Notice, one or more Investors who have executed Purchase Agreement(s) shall contribute cash to the Trust, and the Trust shall issue a Class 1 Beneficial Ownership Certificate to each contributing Investor. Each Class 1 Beneficial Ownership Certificate, in substantially the form set forth in Exhibit B-1, shall be issued in unregistered form and delivered to, and recorded in the Ownership Records in the name of, the applicable Investor. Each Class 1 Beneficial Ownership Certificate (i) shall be printed and dated the date of its execution, (ii) shall be printed, lithographed, typewritten, mimeographed, photocopied or otherwise produced in any other manner as may, consistent herewith, be determined by the Manager, (iii) may have such insertions, omissions, substitutions and other variations as are required by this Trust Agreement and (iv) may have such letters, numbers or other marks of identification and such legends and endorsements placed thereon as may, consistent herewith, be approved by the Manager. Any portion of any Class 1 Beneficial Ownership Certificate may be set forth on the reverse or subsequent pages thereof.

(c)The Manager is hereby authorized to execute each Beneficial Ownership Certificate for and on behalf of the Trust by the manual signature of any duly authorized officer of the Manager, such execution to constitute the authentication thereof.

(d)Each Beneficial Ownership Certificate bearing the manual signature of any individual who at the time such Beneficial Ownership Certificate was executed was a duly authorized officer of the Manager shall bind the Trust, notwithstanding that any such individual has ceased to hold such office or to be a duly authorized officer of the Manager prior to the delivery of such Beneficial Ownership Certificate or at any time thereafter. No Beneficial Ownership Certificate shall be valid for any purpose unless it is executed on behalf of the Trust by the Manager. The signature of a duly authorized officer of the Manager on any Beneficial Ownership Certificate shall be conclusive evidence that such Beneficial Ownership Certificate has been duly executed and authenticated under this Trust Agreement.

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(e) Notwithstanding anything to the contrary in this Trust Agreement, any provisions of this Trust Agreement relating to Beneficial Ownership Certificates shall be construed as optional, and it shall be within the Manager’s sole discretion as to whether or not the Trust issues Beneficial Ownership Certificates pursuant to the terms and provisions of this Trust Agreement or, in the alternative, determines and evidences the fact of ownership of a Beneficial Interest in the Trust by registration or otherwise as contemplated in Section 3801(a) of the Act.

Section 6.2.Ownership Records. The Manager shall at all times be the Person at whose office a Beneficial Ownership Certificate may be presented or surrendered for registration of transfer or for exchange and where notices and demands to or upon the Trust in respect of a Beneficial Ownership Certificate may be served. The Manager shall keep Ownership Records, which shall include records of the transfer and exchange of Beneficial Interests. Notwithstanding any provision of this Trust Agreement to the contrary, transfer of a Beneficial Interest in the Trust, or of any right, title or interest therein, shall occur only upon and by virtue of the entry of such transfer in the Ownership Records. In the event of any transfer permitted under the terms of this Trust Agreement, the Manager shall issue a new Beneficial Ownership Certificate setting forth the current percentage interest in the Trust held by such new Beneficial Owner, the transferring Beneficial Owner shall surrender its Beneficial Ownership Certificate for cancellation and if applicable the Manager shall issue a new Beneficial Ownership Certificate setting forth the Beneficial Interest retained by any transferring Beneficial Owner. Except as specifically permitted by Sections 6.4, 6.5 and 6.6, the Beneficial Ownership Certificates shall be non-transferable and may not be negotiated, endorsed or otherwise transferred to a holder.

Section 6.3.Mutilated, Destroyed, Lost or Stolen Beneficial Ownership Certificates. If any Beneficial Ownership Certificate shall become mutilated, destroyed, lost or stolen, the Trust shall, upon the written request of the holder of any Beneficial Ownership Certificate thereof and presentation of the Beneficial Ownership Certificate or satisfactory evidence of destruction, loss or theft thereof to the Manager, issue and deliver in exchange therefor or in replacement thereof, a new Beneficial Ownership Certificate in the name of such Beneficial Owner evidencing the same Beneficial Interest and dated the date of its execution. If the Beneficial Ownership Certificate being replaced has become mutilated, such Beneficial Ownership Certificate shall be surrendered to the Manager. If the Beneficial Ownership Certificate being replaced has been destroyed, lost or stolen, the Beneficial Owner thereof shall furnish to the Trust and the Manager (i) a written indemnity by such Beneficial Owner to the Trust and the Manager which provides for such Person to save the Trust and the Manager harmless; and (ii) evidence satisfactory to the Trust and the Manager of the destruction, loss or theft of such Beneficial Ownership Certificate and of the ownership thereof. The applicable Beneficial Owner shall pay any tax imposed in connection therewith.

Section 6.4.Restrictions on Transfer; Right of First Refusal.

(a)          A Class 1 Beneficial Interest, or any portion thereof, may not be assigned, transferred, encumbered, pledged or otherwise conveyed unless the Manager consents in writing to such assignment, transfer, encumbrance, pledge or conveyance, which consent may be withheld for any reason or no reason whatsoever. No Beneficial Owner shall transfer, assign, convey or offer to transfer all or any portion of a Beneficial Interest to a Benefit Plan Investor if, following such transfer or assignment, the total investment in the Trust by Benefit Plan Investors shall equal more than 24.9% of the value of the total number of Beneficial Interests outstanding. If given, consent will be conditioned on (i) evidence of compliance by the Class 1 Beneficial Owner with the terms and conditions contained in Sections 6.4(b) and 6.5, (ii) a determination by the Manager that such assignment, transfer, pledge, encumbrance or conveyance will not violate any applicable securities laws or the terms of Section 6.6, (iii) the payment of a transfer fee by the transferring Class 1 Beneficial Owner to the Manager in an amount equal to Two Thousand Five Hundred Dollars ($2,500), and (iv) such other conditions as the Manager may determine in its sole discretion. All expenses of any such transfer, including those of the Trust, Delaware Trustee and Manager, shall be paid by the transferring Class 1 Beneficial Owner. Notwithstanding anything to the contrary, the Manager shall not withhold its consent to any Permitted Transfer of a Class 1 Beneficial Interest which satisfies all the requirements of this Section 6.4(a). All Class 2 Beneficial Interests, or any portion thereof, may be freely assigned, transferred, encumbered, pledged or otherwise conveyed by the Depositor or its affiliates.

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(b)Upon the receipt of a Third-Party Offer by a Selling Beneficial Owner, such Selling Beneficial Owner shall provide the Manager notice of such Third-Party Offer, together with a true, correct and complete copy of such Third-Party Offer (collectively, the “ROFR Notice”). The Manager will provide a copy of the ROFR Notice to each of the Offerees listed in the Ownership Records within five (5) business days after Manager’s receipt of the ROFR Notice, indicating the date on which the Manager received such ROFR Notice. The giving of a ROFR Notice by a Selling Beneficial Owner to the Manager shall constitute a representation and warranty by the Selling Beneficial Owner to the Offerees that the Third-Party Offer is bona fide in all respects. The Operating Partnership shall have the right, but not the obligation, within ten (10) days after Manager’s receipt of the ROFR Notice, to elect to purchase the Offered Interest for the price and upon the terms and conditions as are contained in the Third-Party Offer by providing a notice of such election to the Selling Beneficial Owner and the Manager. If the Operating Partnership does not elect to exercise such right, the other Offerees shall have the right, but not the obligation, within fifteen (15) days after Manager’s receipt of the ROFR Notice, to elect to purchase the Offered Interest for the price and upon the terms and conditions as are contained in the Third-Party Offer by providing a notice of such election to the Selling Beneficial Owner and the Manager; provided, however, the price that any such other Offeree shall pay for the Offered Interest shall be reduced by any broker’s fees or commissions that would have been payable by any Person under the express written terms of the Third-Party Offer if the Offered Interest had been sold pursuant to the Third-Party Offer (as determined in the sole discretion of the Manager). If at the end of the period during which the Operating Partnership can exercise its right of first refusal all or a portion of the Offered Interest remains and more than one of the other Offerees elect to exercise its right of first refusal in the Offered Interest, then the Offered Interest will be sold to the participating Offerees on a pro rata basis according to their respective Percentage Shares. If none of the Offerees elect to exercise its right of first refusal in the Offered Interest, then the Selling Beneficial Owner shall be free to sell the Offered Interest to the Person who made the Third-Party Offer in accordance with the terms and conditions of the Third-Party Offer; provided, that (i) if the Offered Interest will not be sold for the price or upon the other terms and conditions stated in the Third-Party Offer for any reason, the Offered Interest may not be sold unless and until the Offerees have been given an opportunity to accept the revised Third-Party Offer in accordance with the terms and conditions of the right of first refusal contained herein and (ii) an Offeree’s election not to exercise its right of first refusal hereunder shall not be deemed a waiver of its rights hereunder with respect to any other Third-Party Offers. Any transfer in violation of this Section 6.4(b) shall, to the fullest extent permitted by law, be null, void and of no effect whatsoever and the Trust (through the Manager) may enforce this Section 6.4(b), without limitation, by injunction, specific performance or other equitable relief. Notwithstanding anything herein to the contrary, the right of first refusal described herein shall not be applicable with respect to a Permitted Transfer.

Section 6.5.Conditions to Admission of Subsequent Class 1 Beneficial Owners. Any assignee or transferee of a Class 1 Beneficial Owner shall only become a Class 1 Beneficial Owner upon (a) such assignee’s or transferee’s written acceptance and adoption of this Trust Agreement, as manifested by its execution and delivery to the Manager of an executed agreement substantially in the form of Exhibit D, (b) entry of such transfer in the Ownership Records pursuant to Section 6.2, and (c) the issuance of a new Class 1 Beneficial Ownership Certificate to such assignee or transferee, copies of which will be provided by the Manager to the Delaware Trustee.

Section 6.6.Limit on Number of Beneficial Owners and Ownership by Benefit Plan Investors. Notwithstanding anything to the contrary in this Trust Agreement, at no time shall (a) the number of Beneficial Owners exceed one thousand nine hundred ninety-nine (1,999) Persons or (b) the Benefit Plan Investors, as a group, own more than 24.9% of the value of the total number of Beneficial Interests outstanding. Additionally, for so long as the Loan is outstanding, no Person, group of affiliated Persons or group of family members shall own more than 20.0% of the value of the total number of Beneficial Interests outstanding; however the foregoing limitation shall not apply with respect to Four Springs Capital Trust owning Beneficial Interests directly and/or indirectly through a majority-owned affiliate. Any transfer that results in a violation of the preceding sentence shall, to the fullest extent permitted by law, be null, void and of no effect whatsoever.

Section 6.7.Representations and Acknowledgements of Beneficial Owners. Each Beneficial Owner hereby represents and warrants that it (i) is not acquiring its Beneficial Interest with a view to any distribution thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United States; and (ii) is aware of the restrictions on transfer that are applicable to the Beneficial Interests and will not offer, sell, pledge or otherwise transfer its Beneficial Interest except in compliance with all applicable securities laws and regulations. Each Beneficial Owner hereby acknowledges that (y) no Beneficial Interest may be sold, transferred or otherwise disposed of unless expressly permitted hereunder and it is registered or qualified under the Securities Act and all other applicable laws of any applicable jurisdiction or an exemption therefrom is available in accordance with all other laws of any applicable jurisdiction; and (z) no Beneficial Interest has been or is expected to be registered under the Securities Act, and accordingly, all Beneficial Interests are subject to restrictions on transfer.

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Section 6.8.Status of Relationship. This Trust Agreement shall not be interpreted to impose a partnership or joint venture relationship on the Beneficial Owners either at law or in equity. Accordingly, no Beneficial Owner shall have any liability for the debts or obligations incurred by any other Beneficial Owner, with respect to the Trust Estate, or otherwise, and no Beneficial Owner shall have any authority to act on behalf of any other Beneficial Owner or to impose any obligation on any other Beneficial Owner with respect to the Trust Estate. Neither the power to give direction to the Delaware Trustee, the Manager, or any other Person nor the exercise thereof by any Beneficial Owner shall cause such Beneficial Owner to have duties (including fiduciary duties) or liabilities relating thereto to the Trust or to any Beneficial Owner.

Section 6.9.No Legal Title to Trust Estate. The Beneficial Owners shall not have legal title to the Trust Estate. The death, incapacity, dissolution, termination, or bankruptcy of any Beneficial Owner shall not result in the termination or dissolution of the Trust.

Section 6.10.In-Kind Distributions; Waivers. Except as expressly provided herein, no Beneficial Owner (i) has an interest in specific Trust property or (ii) shall have any right to demand and receive from the Trust an in-kind distribution of the Trust Estate or any portion thereof. To the fullest extent permitted by law, each Beneficial Owner expressly waives any right, if any, under the Statutory Trust Act to seek a judicial dissolution of the Trust, to terminate the Trust (other than any right provided in Article 10 hereof, if any) or to partition the Trust Estate. In addition, each Beneficial Owner expressly waives any right, to the fullest extent permitted by law, to file a petition in bankruptcy on behalf of the Trust or take any action that consents to, aids, supports, solicits or otherwise cooperates in the filing of an involuntary bankruptcy proceeding involving the Trust.

Section 6.11.Rights and Powers of the Class 2 Beneficial Owner Prior to Conversion Notice. Prior to the issuance of the Conversion Notice, the Class 2 Beneficial Owner shall have the right and power, at its sole discretion (but subject to the restrictions in Article 3), to:

(a)Contribute additional assets to the Trust; and

(b)Cause the Trust to sell all or any portion of its assets and re-invest the proceeds of such sale or sales.

It is expressly understood by the Class 2 Beneficial Owner that these powers are inconsistent with the ability to classify the Trust as an “investment trust” under Regulations Section 301.7701-4(c), and the Trust shall not be so classified prior to the issuance of the Conversion Notice. The Percentage Share of the Class 2 Beneficial Owner prior to the issuance of any Class 1 Beneficial Interests (pursuant to Section 6.14 hereof) shall total 100%.

Section 6.12.Issuance of Conversion Notice. The Class 2 Beneficial Owner may, at any time in its sole discretion, issue the Conversion Notice to the Delaware Trustee and the Manager. Upon issuance of the Conversion Notice, the Class 2 Beneficial Owner shall no longer have any of the rights or powers set forth in Section 6.11. Instead, the Class 2 Beneficial Owner shall have the same rights and powers as apply to a Class 1 Beneficial Owner (as set forth in Section 6.13). In no event may any Class 1 Beneficial Interests be issued to Investors until at least three (3) days after the issuance of the Conversion Notice.

Section 6.13.Right and Powers of Class 1 Beneficial Owners. The Class 1 Beneficial Owners shall only have the right to receive distributions from the Trust as a result of the ownership or sale of the Trust Estate. The Class 1 Beneficial Owners shall not have the right or power to direct in any manner the Trust or the Manager in connection with the operation of the Trust or the actions of the Delaware Trustee or the Manager. In addition, the Class 1 Beneficial Owners shall not have the right or power to:

(a)contribute additional assets to the Trust (other than the initial contribution of cash to the Trust by an Investor in exchange for Class 1 Beneficial Interests);

(b)be involved in any manner in the operation or management of the Trust or its assets;

(c)cause the Trust to negotiate or re-negotiate loans or leases; or

(d) cause the Trust to sell its assets and re-invest the proceeds of such sale.

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Section 6.14.Contributions by the Class 1 Beneficial Owners; Issuance of Class 1 Beneficial Ownership Certificates; Reduction in Class 2 Beneficial Interest. The Trust shall issue Class 1 Beneficial Ownership Certificates to the Investors upon the contribution of cash to the Trust by the Investors in exchange for Class 1 Beneficial Interests. The amount of cash contributed by, and the Percentage Share of, each Investor shall be determined by the Manager and shall be set forth in the Purchase Agreement for each Investor. All cash contributed by Investors in exchange for Class 1 Beneficial Interests shall be used by the Trust to repurchase a corresponding portion of the Class 2 Beneficial Interest then held by the Depositor. With respect to each contribution by a Class 1 Beneficial Owner and related repurchase of a portion of the Class 2 Beneficial Interest then held by the Depositor, the reduction of the Percentage Share of the Depositor shall be equal to the Percentage Share granted by the Trust to the contributing Class 1 Beneficial Owner, and the Depositor shall surrender its Class 2 Beneficial Ownership Certificate for cancellation and issuance of a new Class 2 Beneficial Ownership Certificate reflecting the Depositor’s remaining Percentage Share, if any. All funds received by the Trust from the Investors after issuance of the Conversion Notice shall be used to repurchase a corresponding portion of the Class 2 Beneficial Interest then held by the Depositor, so that in no event may such repurchase result in a net increase or decrease in the corpus of the Trust.

ARTICLE 7
DISTRIBUTIONS AND REPORTS

Section 7.1.Payments From Trust Estate Only. All payments to be made by the Manager under this Trust Agreement shall be from the Trust Estate.

Section 7.2.Distributions in General. The Manager shall distribute all available cash generated by the Trust Estate to the Beneficial Owners in accordance with their Percentage Share on a monthly basis, provided, however, that for the purposes of this Section 7.2, such available cash will be determined by the Manager, in its sole discretion, only after (i) paying or reimbursing the Manager and the Delaware Trustee for any fees or expenses incurred or paid by the Manager or the Delaware Trustee on behalf of the Trust, (ii) making any payments required to the Lender in accordance with the Financing Documents and (iii) retaining such additional amounts as are required by the Financing Documents or as the Manager determines are necessary to pay anticipated ordinary current and future Trust expenses (“Reserves”), including but not limited the Capital Expenditure Reserve. For the avoidance of any doubt, the Manager shall not be responsible from its own funds for any cost items enumerated under this Section 7.2. Reserves and any other cash retained pursuant to this paragraph shall be invested by the Manager only in short-term obligations of (or guaranteed by) the United States, or any agency or instrumentality thereof and in certificates of deposit or interest-bearing bank accounts of any bank or trust company having a minimum stated capital and surplus of $100,000,000 (a “Permitted Investment”). All such obligations must mature prior to the next distribution date, and be held to maturity. All amounts distributable to the Beneficial Owners pursuant to this Trust Agreement shall be paid by check or in immediately available funds by transfer to a banking institution with bank wire transfer facilities for the account of such Beneficial Owner, as instructed from time to time by such Beneficial Owner within forty-five (45) days after the last Business Day of each calendar month. Without limiting the generality of the foregoing, all cash received by the Trust upon the sale of the Trust Estate will be distributed to the Beneficial Owners in accordance with their Percentage Shares.

Section 7.3.Distribution Upon Dissolution. In the event of the Trust’s dissolution in accordance with Article 10 hereof, all of the Trust Estate as may then exist after the winding up of its affairs in accordance with the Statutory Trust Act (including without limitation subsections (d) and (e) of Section 3808 of the Statutory Trust Act and providing for all costs and expenses, including any income or transfer taxes which may be assessed against the Trust, whether or not by reason of the dissolution of the Trust), shall, subject to Section 10.2, be distributed to those Persons who are then Beneficial Owners in accordance with their respective Percentage Shares.

Section 7.4.Cash and other Accounts; Reports by the Manager. The Manager shall be responsible for receiving all cash from the Lessee and placing such cash into one or more accounts as required under the distribution and investment obligations of the Trust under Section 7.2. The Manager will furnish to the Beneficial Owners (i) reports of income and expenses as necessary for such Beneficial Owner to prepare its income tax returns, and (ii) within eighteen months of the effective date of the Trust Agreement, and thereafter on no less than an annual basis a report detailing reserve balances, amounts spent on the Property and general property and tenant information.

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ARTICLE 8

RELIANCE; REPRESENTATIONS; COVENANTS

Section 8.1.Good Faith Reliance. Neither the Delaware Trustee nor the Manager shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably and in good faith believed by such Person to be genuine and signed by the proper party or parties thereto. As to any fact or matter, the manner of ascertainment of which is not specifically described herein, the Delaware Trustee and the Manager may for all purposes hereof rely on a certificate, signed by or on behalf of the Person executing such certificate, as to such fact or matter, and such certificate shall constitute full protection of the Delaware Trustee and the Manager for any action taken or omitted to be taken by them in good faith in reliance thereon, and the Delaware Trustee and the Manager may conclusively rely upon any certificate furnished to such Person that on its face conforms to the requirements of this Trust Agreement. Each of the Delaware Trustee and the Manager may (i) exercise its powers and perform its duties by or through such attorneys and agents as it shall appoint with due care, and it shall not be liable for the acts or omissions of such attorneys and agents; and (ii) consult with counsel, accountants and other experts, and shall be entitled to rely upon the advice of counsel, accountants and other experts selected by it in good faith and shall be protected by the advice of such counsel and other experts in anything done or omitted to be done by it in accordance with such advice. In particular, no provision of this Trust Agreement shall be deemed to impose any duty on the Delaware Trustee or the Manager to take any action if such Person shall have been advised by counsel that such action may involve it in personal liability or is contrary to the terms hereof or to applicable law. For all purposes of this Trust Agreement, the Delaware Trustee shall be fully protected in relying upon the most recent Ownership Records delivered to it by the Manager.

Section 8.2.No Representations or Warranties as to Certain Matters. NEITHER THE DELAWARE TRUSTEE NOR THE MANAGER, EITHER WHEN ACTING HEREUNDER IN ITS CAPACITY AS DELAWARE TRUSTEE OR MANAGER OR IN ITS INDIVIDUAL CAPACITY, MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, LOCATION, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE TRUST ESTATE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE TRUST ESTATE OR ANY PART THEREOF.

Neither the DELAWARE Trustee nor the Manager makes any representation or warranty as to (i) the title, value, condition or operation of the Property, and (ii) the validity or enforceability of Transaction Documents or as to the correctness of any statement contained in any thereof, except as expressly made by the DELAWARE Trustee or the Manager in its individual capacity. Each of the DELAWARE Trustee and the Manager represents and warrants to the Beneficial Owners that it has authorized, executed and delivered this Trust Agreement.

ARTICLE 9
EXCHANGE RIGHT

Section 9.1.          Exchange Rights.

(a) Subject to Sections 9.2(a) and 9.3, each of the Beneficial Owners hereby grants to Four Springs Capital Trust Operating Partnership, L.P. (the “Operating Partnership”), its affiliates, successors or assigns the right, but not the obligation, to offer (but not require) that each such Beneficial Owner exchange its interest in the Trust for units in the Operating Partnership (the “Units”) on or before September 30, 2023 in a transaction intended to qualify as a non-recognition transfer under Code section 721, pursuant to the terms of this Article 9 (the “Initial Exchange Right”). In the event that a Beneficial Owner elects to exchange their Interests for Units, such Beneficial Owner will receive an amount of Units with an aggregate value (as determined by the Operating Partnership in its sole discretion) to be equal to the then fair market value of such Beneficial Owner’s Interests as of the date the Initial Exchange Right is exercised. The Initial Exchange Right shall be exercised pursuant to a Notice of Exchange, a form of which is attached as Exhibit G-1 to this Trust Agreement, delivered to the Beneficial Owners by the Operating Partnership. Notwithstanding anything to the contrary, the Operating Partnership may not exercise the Initial Exchange Right until all Beneficial Owners have held their interest in the Trust for at least one (1) year.

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(b) Subject to Sections 9.2(b) and 9.3, in the event that any Beneficial Owners (other than the Operating Partnership) hold any interests in the Trust after the earlier of (i) the date of the exercise of the Initial Exchange Right by the Operating Partnership or (ii) September 30, 2023 (the earlier of the preceding clauses (i) and (ii) being the “Secondary Trigger Date”), each such Beneficial Owner hereby grants to the Operating Partnership, its affiliates, successors or assigns the right, but not the obligation, to require that each such Beneficial Owner either (x) exchange its interests in the Trust for Units in a transaction intended to qualify as a non-recognition transfer under Code section 721, pursuant to the terms of this Article 9, or (y) sell such Beneficial Owner’s interests in the Trust to the Operating Partnership for cash (the “Secondary Exchange Right” and, collectively with the Initial Exchange Right, the “Exchange Right”). In the event that a Beneficial Owner elects to exchange their interests in the Trust for Units, such Beneficial Owner will receive an amount of Units with an aggregate value (as determined by the Operating Partnership in its sole discretion) to be equal to the then fair market value of such Beneficial Owner’s interests in the Trust as of the date the Secondary Exchange Right is exercised. In the event that the Beneficial Owner elects to have the Operating Partnership acquire their Interests for cash, the Beneficial Owner shall be entitled to receive the then fair market value of such Beneficial Owner’s Interests (the “Cash Amount”). The Secondary Exchange Right shall be exercised pursuant to a Notice of Exchange, a form of which is attached as Exhibit G-2 to this Trust Agreement, delivered to the Beneficial Owners by the Operating Partnership. Notwithstanding anything to the contrary, the Operating Partnership may exercise the Secondary Exchange Right at any time following the Secondary Trigger Date.

(c) So long as the Financing Documents remain in place, if (i) the Operating Partnership exercises the Initial Exchange Right and such exercise results in the Operating Partnership owning 100% of the Beneficial Interests of the Trust or (ii) the Operating Partnership exercises the Secondary Exchange Right, the Operating Partnership may cause the Trust to transfer the Property to a wholly-owned and controlled subsidiary of the Operating Partnership (the “OP Sub”), which OP Sub shall hold the Property in accordance with the single purpose entity requirements of the Financing Documents and shall assume the Trust’s obligations under the Financing Documents and the Lease. Any such transfer and assumption pursuant to the preceding sentence must be made in accordance with and subject to the terms and conditions of the Financing Documents.

Section 9.2.          Dissenting Beneficial Owners.

(a) With respect to the Initial Exchange Right, a Beneficial Owner may elect to (i) have the Operating Partnership acquire the Investor’s interest in the Trust for Units or (ii) continue to retain its interest in the Trust following the exercise of the Operating Partnership of its Initial Exchange Right. If a Beneficial Owner elects to retain its interests in the Trust with respect to a Notice of Exchange, it shall so notify the Operating Partnership in writing within ten (10) business days after the date on which the Manager mails the Notice of Exchange to the Beneficial Owner (the “Retention Notice”). If any Beneficial Owner does not provide a Retention Notice to the Manager within ten (10) business days after the mailing date of the Notice of Exchange, such Beneficial Owner will be deemed to have elected to exchange its interests in the Trust for Units.

(b) With respect to the Secondary Exchange Right, notwithstanding the provisions of Section 9.1(b), a Beneficial Owner may elect to have the Operating Partnership acquire the Beneficial Owner’s interests in the Trust for cash rather than exchange such interests for Units following the exercise of the Operating Partnership of its Secondary Exchange Right (a Beneficial Owner who makes an election under this Section 9.2(b), a “Dissenting Beneficial Owner”). For the avoidance of doubt, the Beneficial Owners will not have the right to continue to retain an interest in the Trust following the Operating Partnership’s exercise of its Secondary Exchange Right, but only in the event such right is so exercised by the Operating Partnership. If a Dissenting Beneficial Owner elects to exercise its rights to have the Operating Partnership acquire its interests in the Trust for cash under this Section 9.2(b) with respect to a Notice of Exchange, it shall so notify the Operating Partnership in writing within ten (10) business days after the date on which the Manager mails the Notice of Exchange to the Beneficial Owner (the “Dissenting Notice”). If any Beneficial Owner does not provide a Dissenting Notice to the Manager within ten (10) business days after the mailing date of the Notice of Exchange, such Beneficial Owner will be deemed to have agreed to have the Operating Partnership acquire the Beneficial Owner’s interest in the Trust in exchange for Units.

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Section 9.3.          Documentation and Signatures; Delivery. Each Beneficial Owner agrees to execute such documents and signatures as the Manager or Operating Partnership may reasonably require in connection with the exercise of an Exchange Right under Section 9.1 or the cash purchase under 9.2(b). Upon receipt of any and all documents and signatures required by the Manager or Operating Partnership under this Section 9.3 (such date of final receipt, the “Receipt Date”), the Manager shall distribute (i) to any Beneficial Owner that is not a Dissenting Beneficial Owner the Units within sixty (60) business days of the Receipt Date and (ii) to any Dissenting Beneficial Owner who elected the cash purchase under Section 9.2(b), the Cash Amount within one hundred eighty (180) days of the Receipt Date.

Section 9.4.          Determination of Fair Market Value of Interests in the Trust. For the purposes of this Article 9, the fair market value of a Beneficial Owner’s interests in the Trust to be acquired by the Operating Partnership will be determined by multiplying: (i) the Percentage Share represented by the interests in the Trust to be acquired by the Operating Partnership by (ii) the fair market value of the Property (less the outstanding amount of the Loan), as determined by an independent appraisal firm selected by the Manager in its sole discretion. Such appraisal shall have been completed within one (1) year of the date the Exchange Right is exercised. No discounts for lack of liquidity or minority interests shall be considered in determining the fair market value of such interests in the Trust.

Section 9.5.         Continued Existence of Trust. Notwithstanding anything to the contrary in this Trust Agreement, in the event (i) the Operating Partnership exercises the Initial Exchange Right and such exercise results in the Operating Partnership owning 100% of the Beneficial Interests of the Trust or (ii) the Operating Partnership exercises the Secondary Exchange Right, the Trust shall survive until such time that the Property is transferred to the OP Sub and the Loan is assumed in accordance with Section 9.1(c) hereof and the Financing Documents. Following the acquisition by the Operating Partnership of 100% of the Beneficial Interests of the Trust in accordance with a transaction as described in the preceding sentence, the Trust shall take any and all necessary actions to cease to be treated as a fixed investment trust under Regulations section 301.7701-4(c) and instead be treated as a “disregarded entity” under Regulations section 301.7701-3 for U.S. Federal income tax purposes.

ARTICLE 10
TERMINATION

Section 10.1.Termination in General. The Trust shall not have perpetual existence and instead shall be dissolved and wound up in accordance with Section 3808 of the Statutory Trust Act upon the first to occur of a Transfer Distribution or the sale of the Trust Estate pursuant to Section 10.3, at which time each Beneficial Owner’s Percentage Share of the Trust Estate shall be distributed to such Beneficial Owner in accordance with Section 7.3. Notwithstanding anything in this Section 10.1 or this Trust Agreement to the contrary, the Trust shall dissolve and wind up not later than December 31, 2115.

Section 10.2.Termination to Protect and Conserve Trust Estate. Subject to the terms and conditions of the Financing Documents, following a determination by the Manager, in writing, that the dissolution of the Trust is necessary and appropriate to preserve and protect the Trust Estate for the benefit of the Beneficial Owners either because (i)  the Trust Estate is in jeopardy of being lost due to a default on the Loan or because of any other reason, (ii)  the termination of the Trust Agreement is required by the Financing Documents, or (iii) the Manager needs to take one of the actions enumerated in Section 3.3(c), the Trust shall dissolve and wind up in accordance with Section 3808 of the Statutory Trust Act and each Beneficial Owner’s Percentage Share of the Trust Estate shall be distributed to such Beneficial Owner in accordance with this Section 10.2 in full and complete satisfaction of their Beneficial Ownership Certificates. Subject to the requirements of Section 3808 of the Statutory Trust Act, immediately before any such liquidating distributions, and only in the event that a distribution would otherwise be made to the Beneficial Owners under this Section 10.2, the Manager may in its sole discretion cause the Trust to transfer title to the assets comprising the Trust Estate to, or convert to, a newly formed Delaware limited liability company (the “LLC”) that has a limited liability company agreement substantially similar to that set forth in Exhibit E (the “Transfer Distribution”), which LLC shall assume, by contract, operation of law, or otherwise, the assumption of the Trust’s obligations under the Financing Documents and the Lease. As part of the Transfer Distribution, the Manager shall cause the limited liability company interests in the LLC to be distributed to the Beneficial Owners in complete satisfaction of their Beneficial Interests and their Beneficial Ownership Certificates in order to consummate the dissolution of the Trust. It is the express intent of this Trust Agreement that no distribution be made under this Section 10.2 except in the rare and unexpected situation in which such distribution is necessary to prevent the loss of the Trust Estate. To the fullest extent permitted by applicable law, the Manager shall be fully protected in any such determination made in good faith, and shall have no liability to any Person, including, without limitation, the Beneficial Owners, with respect thereto. If a determination has been made to dissolve the Trust under this Section 10.2, the Manager may, in its discretion and upon advice of counsel, utilize such other form of transaction (including, without limitation, a conversion of the Trust into a limited partnership, limited liability partnership, limited liability company or tenant-in-common arrangement if then permitted by applicable law) to accomplish the intent of the transaction contemplated by the Transfer Distribution, provided that such alternative form of transaction is entered into to preserve and protect the Trust Estate for the benefit of the Beneficial Owners and is not prohibited by the Statutory Trust Act.

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Section 10.3.Sale of the Trust Estate. Except as contemplated and allowed for under Article 9, the Delaware Trustee may sell the Trust Estate, at any time after the second anniversary of the Closing Date, or prior to the second anniversary of the Closing Date if: (i) the Property realizes an annualized return on investment of more than 10%, as determined by the Manager (in its sole discretion); or (ii) there has been a material adverse change at the Property, as determined by the Manager (in its sole discretion), upon the Delaware Trustee’s receipt of a notice from the Manager that the Manager has determined in its sole discretion that a sale of the Trust Estate is appropriate. Any such sale of the Trust Estate shall occur as soon as practicable after the Manager has determined that the sale of the Trust Estate is appropriate. Immediately following such sale, the Trust shall dissolve and wind up in accordance with Section 3808 of the Statutory Trust Act. The Manager shall be responsible for (i) determining the fair market value of the Trust Estate, (ii) providing notice to the Delaware Trustee that the Trust Estate should be sold, (iii) conducting the sale of the Trust Estate, and (iv) subject to Section 3808 of the Statutory Trust Act, after paying all amounts due to the Delaware Trustee and Manager hereunder, and the Lender, if any, distributing the balance of the proceeds (net of any closing costs payable by the Trust, including any fee payable to the Manager pursuant to Section 10.4) to the Beneficial Owners in accordance with their respective Percentage Shares. The Manager and the Delaware Trustee are expressly instructed to take all reasonable action that would enable the sale of the Trust Estate to qualify, with respect to each Beneficial Owner, as a like-kind exchange within the meaning of Section 1031 of the Code. Any sale of the Trust Estate or conversion of the Trust to the LLC must be accomplished subject to the terms and conditions of the Financing Documents.

Section 10.4.Disposition by Broker. The Manager is authorized to engage and compensate third-party brokers in connection with the disposition of the Trust Estate.

Section 10.5.Distribution Upon Sale or Transfer Distribution. It is the express understanding of the parties hereto that upon a Transfer Distribution under Section 10.2 or a sale under Section 10.3, the Trust shall distribute on a pro-rata basis, upon its receipt of the same, the limited liability company interests in the LLC or the net proceeds of the sale, respectively, to the holders of the Class 1 Beneficial Ownership Certificates and Class 2 Beneficial Ownership Certificate.

Section 10.6.Certificate of Cancellation. Upon the completion of the dissolution and winding up of the Trust, the Certificate of Trust shall be cancelled by the Delaware Trustee who shall execute and cause a certificate of cancellation to be filed in the office of the Secretary of State.

ARTICLE 11
MISCELLANEOUS

Section 11.1.Limitations on Rights of Others. Nothing in this Trust Agreement, whether express or implied, shall give to any Person other than the Depositor, CTC, the Delaware Trustee, Trust Manager, the Manager, the Beneficial Owners, and the Trust any legal or equitable right, remedy or claim hereunder.

Section 11.2.Successors and Assigns. All covenants and agreements contained herein shall be binding upon and inure to the benefit of the Depositor, CTC, the Delaware Trustee, Trust Manager, the Manager, the Beneficial Owners, the Trust, and their successors and assigns, all as herein provided. Any request, notice, direction, consent, waiver or other writing or action by any such Person shall bind its successors and assigns.

Section 11.3.Usage of Terms. With respect to all terms in this Trust Agreement, the singular includes the plural and the plural includes the singular; words importing any gender include the other gender; references to “writing” include printing, typing, lithography and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Trust Agreement; references to Persons include their successors and permitted assigns; and the term “including” means including without limitation.

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Section 11.4.Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 11.5.Amendments. To the fullest extent permitted by applicable law, this Trust Agreement may not be supplemented or amended, and no term or provision hereof may be waived, discharged, or terminated orally, but only by a signed writing executed by each of the parties hereto.

Section 11.6.Notices. All notices, consents, directions, approvals, instructions, requests and other communications required or permitted by the terms hereof shall be in writing, and given by (i) overnight courier, or (ii) hand delivery, and shall be deemed to have been duly given when received. Notices shall be provided to the parties at the addresses specified below.

If to the Depositor:	[TRUST NAME] Depositor, LLC
	1901 Main Street
	Lake Como, New Jersey 07719
	Attn: William P. Dioguardi
If to the Manager:	[TRUST NAME] Manager, LLC
	1901 Main Street
	Lake Como, New Jersey 07719
	Attn: William P. Dioguardi
If to the Delaware Trustee:	The Corporation Trust Company
	1209 Orange Street
	Wilmington, DE 19801
	Attn: Ricardo Beausoleil

If to a Beneficial Owner, at such Person’s address as specified in the most recent Ownership Records.

From time to time the Depositor, Delaware Trustee, or Manager may designate a new address for purposes of notice hereunder by notice to the others, and any Beneficial Owner may designate a new address for purposes of notice hereunder by notice to the Manager.

Section 11.7.Governing Law. This Trust Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware (without regard to conflict of law principles). The laws of the State of Delaware pertaining to trusts (other than the Statutory Trust Act) shall not apply to this Trust Agreement.

Section 11.8.Counterparts. This Trust Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

Section 11.9.Severability. Any provision of this Trust Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, each of the parties hereby waives any provision of applicable law that renders any such provision prohibited or unenforceable in any respect.

Section 11.10.Lender As Third Party Beneficiary. The Lender is a third party beneficiary of the Trust Agreement so long as the Loan is outstanding and may seek to enforce Article 3 of this Trust Agreement and any other provision requiring Lender’s consent or compliance with the Financing Documents.

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[SIGNATURE PAGE(S) FOLLOW]

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

DEPOSITOR:
[TRUST NAME] DEPOSITOR, LLC,
a Delaware limited liability company
By:	Four Springs TEN31 Xchange, LLC,
	a Delaware limited liability company,
Its:	Sole Member
By:	Four Springs Capital Trust Operating Partnership, L.P.,
	a Delaware limited partnership
Its:	Sole Member
By:	Four Springs Capital Trust,
	a Maryland real estate investment trust
Its:	General Partner
By:
Name:
Title:
THE TRUST MANAGER, MANAGER AND SIGNATORY TRUSTEE:
[TRUST NAME] MANAGER, LLC,
a Delaware limited liability company
By:	Four Springs TEN31 Xchange, LLC,
	a Delaware limited liability company
Its:	Sole Member
By:	Four Springs Capital Trust Operating Partnership, L.P.,
	a Delaware limited partnership
Its:	Sole Member
By:	Four Springs Capital Trust,
	a Maryland real estate investment trust
Its:	General Partner
By:
Name:
Title:

[Signature Page to First Amended and Restated Trust Agreement]

THE DELAWARE TRUSTEE:
THE CORPORATION TRUST COMPANY
By:
Name:	Jennifer A. Schwartz
Title:	Asst. Vice President
ACKNOWLEDGED AND AGREED WITH RESPECT TO ARTICLES 6 AND 9:
FOUR SPRINGS CAPITAL TRUST Operating Partnership, L.P., a Delaware limited partnership
By:	Four Springs Capital Trust,
	a Maryland real estate investment trust
Its:	General Partner
By:
Name:
Title:

[Signature Page to First Amended and Restated Trust Agreement]

EXHIBIT A

Legal Description of Property

B-1-1

EXHIBIT B-1

FORM OF Class 1 BENEFICIAL OWNERSHIP CERTIFICATE

THIS CLASS 1 BENEFICIAL OWNERSHIP CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY IN ANY JURISDICTION. THIS CLASS 1 BENEFICIAL OWNERSHIP CERTIFICATE MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED, OTHER THAN PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE SECURITIES LAWS. TRANSFER OF A BENEFICIAL INTEREST IN THE TRUST, OR OF ANY RIGHT, TITLE OR INTEREST THEREIN, SHALL OCCUR IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE TRUST AGREEMENT AND ONLY UPON AND BY VIRTUE OF THE ENTRY OF SUCH TRANSFER IN THE OWNERSHIP RECORDS OF THE TRUST PURSUANT TO SECTION 6.2 OF THE TRUST AGREEMENT. THIS CLASS 1 BENEFICIAL OWNERSHIP CERTIFICATE IS NON-TRANSFERABLE AND MAY NOT BE NEGOTIATED, ENDORSED OR OTHERWISE TRANSFERRED TO A HOLDER.

[TRUST NAME], DST

CLASS 1 BENEFICIAL OWNERSHIP CERTIFICATE

No. ________

[TRUST NAME], DST, a statutory trust organized under the laws of the State of Delaware (the “Issuer”), certifies that ______________________ is the owner of ____ Class 1 Beneficial Interests equal to __% of the interest in the Issuer, issued pursuant to the Trust Agreement dated as of September ___, 2017 (as may be amended or supplemented from time to time, the “Trust Agreement”) by and among [TRUST NAME] DEPOSITOR, LLC, as the Depositor, [TRUST NAME] MANAGER, LLC, as Manager and Signatory Trustee, and THE CORPORATION TRUST COMPANY, as Delaware Trustee.

All capitalized terms used in this Class 1 Beneficial Ownership Certificate and not defined herein shall have the meanings assigned to such terms in the Trust Agreement. Reference is made to the Trust Agreement and any agreements supplemental thereto for a statement of the respective rights and obligations thereunder of the Depositor, the Manager, the Delaware Trustee, and the Beneficial Owners. This Class 1 Beneficial Ownership Certificate is subject to all terms of the Trust Agreement.

The Class 1 Beneficial Interest evidenced by this Class 1 Beneficial Ownership Certificate is subject to a right of first refusal in favor of the Manager (or any Affiliate thereof designated by the Manager) and the other Class 1 Beneficial Owners. Additional information concerning the terms of the right of first refusal are set forth in Section 6.4 of the Trust Agreement.

By accepting this Class 1 Beneficial Ownership Certificate, the holder hereof acknowledges that it waives any right, if any, under the Statutory Trust Act to seek a judicial dissolution of the Trust, to terminate the Trust, or, to the fullest extent permitted by law, (i) partition the Trust Estate, (ii) file a petition in bankruptcy on behalf of the Trust or (iii) take any action that consents to, aids, supports, solicits or otherwise cooperates in the filing of an involuntary bankruptcy proceeding involving the Trust.

This Class 1 Beneficial Ownership Certificate shall in all respects be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of law principles). The laws of the State of Delaware pertaining to trusts (other than the Statutory Trust Act) shall not apply to this Class 1 Beneficial Ownership Certificate.

B-1-2

IN WITNESS WHEREOF, the Issuer has caused this Class 1 Beneficial Ownership Certificate to be signed manually by the Manager in accordance with the terms of the Trust Agreement.

Date:

[TRUST NAME] MANAGER, LLC, not in its individual capacity, but solely as Manager of the Issuer
By:	Four Springs TEN31 Xchange, LLC, a Delaware limited liability company
Its:	Sole Member

By: Four Springs Capital Trust Operating Partnership, L.P., a Delaware limited partnership

Its: Sole Member

By:	Four Springs Capital Trust, a Maryland real estate investment trust
Its:	General Partner

By:

Name:

Title:

B-1-3

EXHIBIT B-2

FORM OF BENEFICIAL OWNERSHIP CERTIFICATE

THIS CLASS 2 BENEFICIAL OWNERSHIP CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY IN ANY JURISDICTION. THIS CLASS 2 BENEFICIAL OWNERSHIP CERTIFICATE MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED, OTHER THAN PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE SECURITIES LAWS. TRANSFER OF A BENEFICIAL INTEREST IN THE TRUST, OR OF ANY RIGHT, TITLE OR INTEREST THEREIN, SHALL OCCUR ONLY UPON AND BY VIRTUE OF THE ENTRY OF SUCH TRANSFER IN THE OWNERSHIP RECORDS OF THE TRUST PURSUANT TO SECTION 6.2 OF THE TRUST AGREEMENT. THIS CLASS 2 BENEFICIAL OWNERSHIP CERTIFICATE IS NON-TRANSFERABLE AND MAY NOT BE NEGOTIATED, ENDORSED OR OTHERWISE TRANSFERRED TO A HOLDER.

[TRUST NAME], DST

CLASS 2 BENEFICIAL OWNERSHIP CERTIFICATE

No. ________

[TRUST NAME], DST, a statutory trust organized under the laws of the State of Delaware (the “Issuer”), certifies that ________________________ is the owner of ______ Class 2 Beneficial Interests equal to __% of the interest in the Issuer, issued pursuant to the Trust Agreement dated as of September ___, 2017 (as the same may be amended or supplemented from time to time, the “Trust Agreement”) by and among [TRUST NAME] DEPOSITOR, LLC, as the Depositor, [TRUST NAME] MANAGER, LLC, as Manager and Signatory Trustee and THE CORPORATION TRUST COMPANY, as Delaware Trustee.

All capitalized terms used in this Class 2 Beneficial Ownership Certificate and not defined herein shall have the meanings assigned to such terms in the Trust Agreement. Reference is made to the Trust Agreement and any agreements supplemental thereto for a statement of the respective rights and obligations thereunder of the Manager, the Delaware Trustee, and the Beneficial Owners. This Class 2 Beneficial Ownership Certificate is subject to all terms of the Trust Agreement.

This Class 2 Beneficial Ownership Certificate shall in all respects be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of law principles). The laws of the State of Delaware pertaining to trusts (other than the Statutory Trust Act) shall not apply to this Class 2 Beneficial Ownership Certificate.

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGE FOLLOWS]

B-2-1

IN WITNESS WHEREOF, the Issuer has caused this Class 2 Beneficial Ownership Certificate to be signed manually by the Manager in accordance with the terms of the Trust Agreement.

Date:

[TRUST NAME] MANAGER, LLC, not in its individual capacity, but solely as Manager of the Issuer
By:	Four Springs TEN31 Xchange, LLC, a Delaware limited liability company
Its:	Sole Member

By: Four Springs Capital Trust Operating Partnership, L.P., a Delaware limited partnership

Its: Sole Member

By:	Four Springs Capital Trust, a Maryland real estate investment trust
Its:	General Partner

By:

Name:

Title:

B-2-2

EXHIBIT C

CERTIFICATE OF TRUST
OF
[TRUST NAME], DST

(copy attached)

C-1

EXHIBIT D

AGREEMENT OF ASSIGNEE OR TRANSFEREE BENEFICIAL OWNER OF

[TRUST NAME], DST

The undersigned has received and reviewed, with assistance from such legal, tax, investment, and other advisors and skilled persons as the undersigned has deemed appropriate, the Trust Agreement of [TRUST NAME], DST, dated as of October ___, 2017 (the “Trust Agreement”), by and among [TRUST NAME] DEPOSITOR, LLC, as the Depositor, [TRUST NAME] MANAGER, LLC as Manager and Signatory Trustee, and THE CORPORATION TRUST COMPANY, as Delaware Trustee. All capitalized terms used herein, and not defined herein shall have the meanings given to such terms in the Trust Agreement.

In connection with the purchase of the Class 1 Beneficial Interest, the undersigned hereby:

1.1         Acknowledges (i) that the Class 1 Beneficial Interest being acquired by the undersigned is subject to a right of first refusal in favor of the Operating Partnership and the other Beneficial Owners, all as more particularly set forth in Section 6.4 of the Trust Agreement, (ii) that the failure of the Operating Partnership and other Beneficial Owners of being given the right to exercise said right of first refusal could void the undersigned’s acquisition of the subject Class 1 Beneficial Interest or otherwise have an adverse effect on the undersigned’s right, title and interest in and to the subject Class 1 Beneficial Interest and (iii) that the undersigned’s acquisition of the subject Class 1 Beneficial Interest is subject to the written consent of the Manager (which consent may be withheld for any reason or no reason whatsoever).

1.2         Represents and warrants that the undersigned: (i) understands and is aware that there are substantial uncertainties regarding the treatment of the undersigned’s Class 1 Beneficial Interest as an interest in real estate for federal income tax purposes; (ii) has independently obtained advice from its legal counsel and/or accountant regarding any deferral of gain under Code Section 1031, including, without limitation, whether the acquisition of the undersigned’s Class 1 Beneficial Interest may qualify as part of a tax-deferred exchange, and the undersigned is relying on such advice and not on the opinion of special tax counsel issued to the Trust or upon any statements in the Memorandum (as defined below) regarding the tax treatment of the Class 1 Beneficial Interests; (iii) is aware that while the Internal Revenue Service (“IRS”) has issued Revenue Ruling 2004-86 (the “Revenue Ruling”) specifically addressing Delaware statutory trusts, the Revenue Ruling is merely guidance and is not a “safe-harbor” for taxpayers or sponsors, and, without the issuance of a Private Letter Ruling on a specific offering, there is no assurance that the undersigned’s Class 1 Beneficial Interest will not be treated as a partnership interest for federal income tax purposes; (iv) understands that the Trust has not obtained a ruling from the IRS that the undersigned’s Class 1 Beneficial Interest will be treated as an undivided interest in real estate as opposed to an interest in a partnership; (v) understands that the tax consequences of an investment in the undersigned’s Class 1 Beneficial Interest, especially the treatment of the transaction described herein under Code Section 1031 and the related rules, are complex and vary with the facts and circumstances of each individual purchaser; (vi) understands that, notwithstanding the opinion of special tax counsel issued to the Trust stating that a purchaser’s Class 1 Beneficial Interest “should” be considered a real property interest and not a partnership interest for federal income tax purposes, no assurance can be given that the IRS will agree with this opinion; and (vii) shall, for federal income tax purposes, report the purchase of the Class 1 Beneficial Interest by the undersigned as a purchase by the undersigned of a direct ownership interest in the Property.

1.3         Acknowledges that the undersigned (i) has received from the undersigned’s transferor or assignor a courtesy copy of the private offering memorandum regarding the sale of the Class 1 Beneficial Interests by the Trust (together with any addendums or supplements thereto, the “Memorandum”) and the Trust Agreement and (ii) is familiar with and understands each of the foregoing including the “Risk Factors” set forth in the Memorandum.

1.4         Represents and warrants that the undersigned, in determining to acquire the Class 1 Beneficial Interest, has relied solely upon the advice of the undersigned’s legal counsel and accountants or other financial advisors with respect to the tax and other consequences involved in acquiring the Class 1 Beneficial Interest and that none of the Trust, the Delaware Trustee, the Manager or the Depositor has made any representation to the undersigned regarding the Class 1 Beneficial Interest or the Property.

1.5         Acknowledges that the Class 1 Beneficial Interest being acquired will be governed by the terms and conditions of the Trust Agreement, and under certain circumstances by the applicable form of limited liability company agreement contemplated under Section 10.2 of the Trust Agreement and attached as Exhibit E thereto, all of which the undersigned accepts and by which the undersigned agrees by execution hereof to be legally bound notwithstanding that his signature will not be required thereon.

D-1

1.6         Represents and warrants that the undersigned either (i) is an accredited investor, or (ii) is acquiring the Class 1 Beneficial Interest in a fiduciary capacity for a person meeting such condition.

1.7         Represents and warrants that the Class 1 Beneficial Interest being acquired will be acquired for the undersigned’s own account without a view to public distribution or resale and that the undersigned has no contract, undertaking, agreement or arrangement to sell or otherwise transfer or dispose of the Class 1 Beneficial Interest or any portion thereof to any other Person.

1.8         Represents and warrants that the undersigned (i) can bear the economic risk of the purchase of the Class 1 Beneficial Interest including the total loss of the undersigned’s investment, (ii) has such knowledge and experience in business and financial matters, including the analysis of or participation in offerings of privately issued securities, as to be capable of evaluating the merits and risks of purchasing Class 1 Beneficial Interests, and (iii) if an individual, is at least nineteen (19) years of age.

1.9         Understands that the Class 1 Beneficial Interest has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state and are subject to substantial restrictions on transfer as described in the Memorandum under “Terms of the Offering – Restrictions on Transfer of Interests,” which restrictions are in addition to certain other restrictions set forth in the Trust Agreement.

1.10       Understands that a legend will be placed on any Class 1 Beneficial Ownership Certificate with respect to restrictions on distribution, transfer, resale, assignment or subdivision of the Class 1 Beneficial Interest imposed by applicable federal and state securities laws.

1.11       Agrees that the undersigned will not sell or otherwise transfer or dispose of any Class 1 Beneficial Interest or any portion thereof unless (i) such Class 1 Beneficial Interest is registered under the Securities Act and any applicable state securities laws or, if required by the Trust (through the Manager), the undersigned obtains an opinion of counsel that is satisfactory to the Trust that such Class 1 Beneficial Interest may be sold in reliance on an exemption from such registration requirements, and (ii) the transfer is otherwise made in accordance with the Trust Agreement.

1.12       Agrees that the undersigned will not sell or transfer a Class 1 Beneficial Interest or any portion thereof to a foreign Person, or to a Benefit Plan Investor if such sale or transfer would result in the total investment in the Trust by Benefit Plan Investors to equal more than 24.9% of the value of the total number of Class 1 Beneficial Interests outstanding.

1.13       Understands that (i) the Trust has no obligation or intention to register any Class 1 Beneficial Interest for resale or transfer under the Securities Act or any state securities laws or to take any action (including the filing of reports or the publication of information as required by Rule 144 under the Securities Act) that would make available any exemption from the registration requirements of any such laws, and (ii) the undersigned therefore may be precluded from selling or otherwise transferring or disposing of any Class 1 Beneficial Interest or any portion thereof for an indefinite period of time or at any particular time.

1.14       Understands that no federal or state agency including the Securities and Exchange Commission, and the securities commission or authorities of any state has approved or disapproved the Class 1 Beneficial Interests, passed upon or endorsed the merits of the Trust’s offering of Class 1 Beneficial Interests or the accuracy or adequacy of the Memorandum, or made any finding or determination as to the fairness of the Interest for public investment.

1.15       Represents, warrants and agrees that, if the undersigned is acquiring the Class 1 Beneficial Interest in a fiduciary capacity, (i) the above representations, warranties, agreements, acknowledgments and understandings shall be deemed to have been made on behalf of the Person or Persons for whose benefit such Class 1 Beneficial Interest is being acquired, (ii) the name of such Person or Persons is indicated below the undersigned’s name, and (iii) such further information as the Manager deems appropriate shall be furnished regarding such Person or Persons.

D-2

1.16       Acknowledges and agrees that counsel, including special tax counsel, to the Trust, the Depositor, the Delaware Trustee, the Manager and their Affiliates do not represent, and shall not be deemed under applicable codes of professional responsibility, to have represented or to be representing, any transferee or assignee, including the undersigned, in any way in connection with the transfer or assignment of a Class 1 Beneficial Interest.

1.17.       Acknowledges and understands that the Operating Partnership has the right, but not obligation, to exercise the Exchange Right, and that the Operating Partnership may choose not to exercise such right.

1.18       Agrees to indemnify, defend and hold harmless the Trust, Delaware Trustee, the Depositor, the Trust Manager, the Manager, the Manager’s sole member, the Operating Partnership, Four Springs Capital Trust, and each of their respective members, managers, shareholders, partners, officers, directors, employees, consultants, affiliates and advisors (collectively, the “Indemnified Persons”) of and from any and all damages, losses, liabilities, costs and expenses (including reasonable attorneys’ fees and costs) that they may incur by reason of the untruth or inaccuracy of any of the representations, warranties, covenants or agreements contained herein or in any other document transferee or assignee has furnished to any of the foregoing in connection with this transaction. In addition, if any person shall assert a claim to a finder’s fee or real estate brokerage commission on account of alleged employment as a finder or real estate broker through or under the undersigned in connection with the undersigned’s acquisition of the Class 1 Beneficial Interest, the undersigned shall indemnify and hold the Indemnified Parties harmless from and against any such claim. This indemnification includes, but is not limited to, any damages, losses, liabilities, costs and expenses (including reasonable attorneys’ fees and costs) incurred by the Indemnified Parties defending against any alleged violation of federal or state securities laws, which is based upon or related to any untruth or inaccuracy of any of the representations, warranties or agreements contained herein or in any other documents the undersigned has furnished to any of the foregoing in connection with this transaction, and against any failure of the transaction to satisfy any Code Section 1031 requirements in connection with the undersigned’s exchange under such provisions.

1.19       Represents and warrants that neither the undersigned nor any of its Affiliates (i) is listed in the Annex to, or otherwise subject to the provisions of, the Executive Order Nos. 12947, 130199 and 13224 and all modifications thereto or thereof (collectively, the “Executive Order”); (ii) is owned or controlled by, or acting for or on behalf of, any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) is prohibited from engaging in any transaction by any terrorism or money laundering law, including the Executive Order; (iv) has committed, threatened or conspired to commit or support “terrorism” as defined in the Executive Order; or (v) is subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulations promulgated thereunder which would prohibit he, she or it from acquiring Interests;

1.20       Represents and warrants that neither the undersigned nor any Affiliate of the undersigned (i) is a Sanctioned Person (defined below), (ii) has more than 15% of its assets in Sanctioned Countries (defined below), or (iii) derives more than 15% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Countries. For purposes of the foregoing, a “Sanction Person” shall mean (y) a Person named on the list of “specially designated nationals” or “blocked persons” maintained by the U.S. Office of Foreign Assets Control (“OFAC”) which may be downloaded from http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or as otherwise published from time to time, or (y) (1) an agency of the government of a Sanctioned Country, (2) an organization controlled by a Sanctioned Country, or (3) a person resident in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC. A “Sanctioned Country” shall mean a country subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx, or as otherwise published from time to time.

D-3

1.21       If the undersigned is (i) an “employee benefit plan” as defined in Section 3(3) of ERISA, which includes any “employee pension benefit plan” or “employee welfare benefit plan” as defined in ERISA, whether or not such plan is subject to Title I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code, including individual retirement accounts and Keogh plans, or (iii) any entity whose underlying assets include plan assets by reason of a plan’s investment in such entity (each of (i), (ii) and (iii) are herein referred to as a “Benefit Plan”), the undersigned, by affixing his or her initials herein, acknowledges that it is such a Benefit Plan.

Initials

The representations, warranties, acknowledgments, understandings and indemnities of transferee or assignee set forth herein above shall survive the undersigned’s acquisition of the Class 1 Beneficial Interest.

		Name:
STATE OF	)
	)SS.
COUNTY OF	)

SWORN AND SUBSCRIBED before me the __ day of _______, 20__.

Name of Notary Public:

My Commission Expires:

D-4

EXHIBIT E

FORM OF LIMITED LIABILITY COMPANY AGREEMENT

(Attached)

E-1

EXHIBIT F

FORM OF CONVERSION NOTICE

[TRUST NAME] DEPOSITOR, LLC, a Delaware limited liability company, as the Class 2 Beneficial Owner and holder of 100% of the Class 2 Beneficial Interest in [TRUST NAME], DST, hereby provides a Conversion Notice pursuant to Section 6.12 of the Trust Agreement dated as of October ___, 2017.

Date: ____________

[TRUST NAME] DEPOSITOR, LLC,
a Delaware limited liability company
By:	Four Springs TEN31 Xchange, LLC,
	a Delaware limited liability company,
Its:	Sole Member
By:	Four Springs Capital Trust Operating Partnership, L.P.,
	a Delaware limited partnership
Its:	Sole Member
By:	Four Springs Capital Trust,
	a Maryland real estate investment trust
Its:	General Partner

By:

Name:

Title:

F-1

EXHIBIT G-1

NOTICE OF EXERCISE OF INITIAL EXCHANGE RIGHT

In accordance with Section 9.1(a) of the First Amended and Restated Trust Agreement (the “Agreement”) of [TRUST NAME], DST (the “Trust”), the undersigned hereby exercises its Initial Exchange Right under Section 9.1(a) of the Agreement in relation to ___________________ (the “Beneficial Owner”) and its _____% interest in the Trust (“Interest”). The Beneficial Owner may, within ten (10) business days of the date of this Notice of Exercise, notify the undersigned in writing (“Confirmation”) that, pursuant to the terms of Sections 9.1(a) and 9.2(a) of the Agreement, the Beneficial Owner (i) is exercising its right to accept the Units (as defined in the Agreement) for its Interest or (ii) is exercising its right to retain its Interest instead of receiving the Units. Should the Beneficial Owner not provide the undersigned with a Confirmation within ten (10) business days of the date of this Notice of Exercise, the Beneficial Owner shall be deemed to have surrendered its Interest and all rights, title and interest therein in exchange for the Units. The undersigned shall deliver the Units to the Beneficial Owner in accordance with the terms of Section 9.3 of the Agreement and to the address specified in the Company’s records.

Dated: ______________________, 20____

FOUR SPRINGS CAPITAL TRUST Operating Partnership, L.P.

By:	Four Springs Capital Trust
Its:	General Partner
By:

Name:

Title:

G-1-1

EXHIBIT G-2

NOTICE OF EXERCISE OF SECONDARY EXCHANGE RIGHT

In accordance with Section 9.1(b) of the First Amended and Restated Trust Agreement (the “Agreement”) of [TRUST NAME], DST (the “Trust”), the undersigned hereby exercises its Secondary Exchange Right under Section 9.1(b) of the Agreement in relation to ___________________ (the “Beneficial Owner”) and its _____% interest in the Trust (“Interest”). The Beneficial Owner may, within ten (10) business days of the date of this Notice of Exercise, notify the undersigned in writing (such writing, a “Dissenting Notice”) that, pursuant to the terms of Sections 9.1(b) and 9.2(b) of the Agreement, the Beneficial Owner is exercising its right to accept the Cash Amount (as defined in the Agreement) instead of Units (as defined in the Agreement) for its Interest. Should the Beneficial Owner not provide the undersigned with a Dissenting Notice within ten (10) business days of the date of this Notice of Exercise, the Beneficial Owner shall be deemed to have surrendered its Interest and all rights, title and interest therein in exchange for the Units. The undersigned shall deliver the Units or Cash Amount, whichever is applicable, to the Beneficial Owner in accordance with the terms of Section 9.3 of the Agreement and to the address specified in the Company’s records.

Dated: ______________________, 20____

FOUR SPRINGS CAPITAL TRUST Operating Partnership, L.P.

By:	Four Springs Capital Trust
Its:	General Partner
By:

Name:

Title:

G-2-1

EXHIBIT H

ANNUAL DELAWARE TRUSTEE FEE

A $2,000.00 fee to cover the prescribed duties of the Delaware Trustee in accordance with the terms and conditions of the Trust Agreement. Delaware Trustee reserves the right to review and revise such fee on an annual basis at its sole discretion.

H-1

EX-21.1

Exhibit 21.1

List of Subsidiaries of Four Springs Capital Trust

	Name of Subsidiary	State
1	Four Springs Capital Trust Operating Partnership, L.P.	Delaware
2	FSC AAP Garner NC, LLC	Delaware
3	FSC Aarons Snyder TX, LLC	Delaware
4	FSC AB Blaine MN, LLC	Delaware
5	FSC AB Bordentown NJ, LLC	Delaware
6	FSC AB Brighton CO, LLC	Delaware
7	FSC AB Lyndale MN, LLC	Delaware
8	FSC AB Middleton WI, LLC	Delaware
9	FSC AB South Seventh MN, LLC	Delaware
10	FSC ALS Master, LLC	Delaware
11	FSC ASP Columbus OH, LLC	Delaware
12	FSC At Master, LLC	Delaware
13	FSC AZ Aurora IL, LLC	Delaware
14	FSC BGL Toledo OH, LLC	Delaware
15	FSC BPS American Fork UT, LLC	Delaware
16	FSC BPS Longmont CO, LLC	Delaware
17	FSC BPS Tucson AZ, LLC	Delaware
18	FSC BR Lisle IL, LLC	Delaware
19	FSC Care Mt. Prospect IL, LLC	Delaware
20	FSC CC Mentor OH, LLC	Delaware
21	FSC CFSR Master, LLC	Delaware
22	FSC CG Athens OH, LLC	Delaware

23	FSC CG Bridgeville PA, LLC	Delaware
24	FSC CHKD Newport News, LLC	Delaware
25	FSC Con Sterling Heights MI, LLC	Delaware
26	FSC Con Van Buren MI, LLC	Delaware
27	FSC DA Waukesha WI, LLC	Delaware
28	FSC DG Charlotte NC, LLC	Delaware
29	FSC DG Eden NC, LLC	Delaware
30	FSC DG Elizabeth City NC, LLC	Delaware
31	FSC DG Fort Braden FL, LLC	Delaware
32	FSC DG GA, LLC	Delaware
33	FSC DG Middleburg FL, LLC	Delaware
34	FSC DG Pensacola FL, LLC	Delaware
35	FSC DG Savannah GA, LLC	Delaware
36	FSC DG Winter Haven FL, LLC	Delaware
37	FSC DG Yulee FL, LLC	Delaware
38	FSC DMG Seabrook NH, LLC	Delaware
39	FSC DOM Odenton MD, LLC	Delaware
40	FSC DPM Alexandria VA, LLC	Delaware
41	FSC DPM Atlanta GA, LLC	Delaware
42	FSC DPM Congress CT, LLC	Delaware
43	FSC DPM Danville CA, LLC	Delaware
44	FSC DPM East Quogue NY, LLC	Delaware
45	FSC DPM Fairfax VA, LLC	Delaware
46	FSC DPM Glenview IL, LLC	Delaware

2

47	FSC TSC Brooksville FL, LLC	Delaware
48	FSC AS Mt. Juliet TN, DST	Delaware
49	FSC FMC Carbondale IL, DST	Delaware
50	FSC DPM Granite Bay CA, LLC	Delaware
51	FSC DPM Mine Hill CT, LLC	Delaware
52	FSC DPM Montverde FL, LLC	Delaware
53	FSC DPM Plano TX, LLC	Delaware
54	FSC EPP Colony TX, LLC	Delaware
55	FSC EPP Elkhart IN, LLC	Delaware
56	FSC EPP Eufaula OK, LLC	Delaware
57	FSC EPP Granger IN, LLC	Delaware
58	FSC EPP Irving TX, LLC	Delaware
59	FSC EPP Mishawaka IN, LLC	Delaware
60	FSC EPP Richland Hills TX, LLC	Delaware
61	FSC EPP Utica MI, LLC	Delaware
62	FSC EQS Master, LLC	Delaware
63	FSC FD Memphis TN, LLC	Delaware
64	FSC FD Wichita Lincoln KS, LLC	Delaware
65	FSC FD Wichita Oliver KS, LLC	Delaware
66	FSC FE Cincinnati OH, LLC	Delaware
67	FSC FMC Baltimore MD, LLC	Delaware
68	FSC FX Alamosa CO, LLC	Delaware
69	FSC FX Jackson MI, LLC	Delaware
70	FSC GM Lebanon IN DST, LLC	Delaware

3

71	FSC GPC Troy NY, LLC	Delaware
72	FSC GRM 2601 North TX, LLC	Delaware
73	FSC GRM 4101 North TX, LLC	Delaware
74	FSC GRM 5105 Troup Tyler TX, LLC	Delaware
75	FSC GRM Jasper Gibson TX, LLC	Delaware
76	FSC GRM Lufkin Frank TX, LLC	Delaware
77	FSC GRM Lufkin Medford TX, LLC	Delaware
78	FSC GW Greenwood IN, LLC	Delaware
79	FSC GW Muncie IN, LLC	Delaware
80	FSC HBCBS Mt. Laurel NJ, LLC	Delaware
81	FSC Industrial II DST, LLC	Delaware
82	FSC ITW St. Charles MO, LLC	Delaware
83	FSC LBC Master, LLC	Delaware
84	FSC MCO St. Louis MO, LLC	Delaware
85	FSC MDSA Jackson TN, LLC	Delaware
86	FSC Mentor OH, LLC	Delaware
87	FSC MON Morton IL, LLC	Delaware
88	FSC OCH Burlington NC, LLC	Delaware
89	FSC ORLY AL, LLC	Delaware
90	FSC OSB Richburg SC, LLC	Delaware
91	FSC PFG Romulus MI, LLC	Delaware
92	FSC Plattsburgh NY, LLC	Delaware
93	FSC SB North Syracuse NY, LLC	Delaware

4

94	FSC SK Chandler AZ, LLC	Delaware
95	FSC SP Merrillville IN, LLC	Delaware
96	FSC STU North Canton OH, LLC	Delaware
97	FSC TRA Escanaba MI, LLC	Delaware
98	FSC TRA Whitmore Lake MI, LLC	Delaware
99	FSC TRA Wilkes-Barre PA, LLC	Delaware
100	FSC TSC Brooksville FL, LLC	Delaware
101	FSC WTH Jackson TN, LLC	Delaware
102	FSC ZCW Charlotte Tyvola NC, LLC	Delaware
103	FSC ZCW Charlotte Wilkinson NC, LLC	Delaware
104	FSC ZCW Lynchburg VA, LLC	Delaware
105	FSC ZCW Roanoke VA, LLC	Delaware
106	FSC BCBS Greenville SC, LLC	Delaware
107	FSC BCBS Summerville SC, LLC	Delaware
108	FSC BCBS Knoxville TN, LLC	Delaware
109	FSC BCBS Aiken SC, LLC	Delaware
110	FSC BCBS Simpsonville SC, LLC	Delaware
111	FSC BCBS Charleston SC, LLC	Delaware
112	FSC BCBS Jimmy Love SC, LLC	Delaware
113	FSC BCBS Garners Ferry SC, LLC	Delaware
114	FSC BCBS Orangeburg SC, LLC	Delaware
115	FSC BCBS Hoffmeyer SC, LLC	Delaware
116	FSC BCBS Greer SC, LLC	Delaware
117	FSC BCBS Anderson SC, LLC	Delaware
118	Four Springs Acquisitions, LLC	Delaware
119	Four Springs TEN31 Xchange, LLC	Delaware

5

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

Four Springs Capital Trust

Lake Como, New Jersey

We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of (i) our report dated August 24, 2021, relating to the consolidated financial statements and schedule of Four Springs Capital Trust as of and for the years ended December 31, 2020 and 2019 and (ii) our report dated August 24, 2021, relating to the statement of revenues and certain operating expenses of the Amazon Property, Austin, Texas, for the year ended December 31, 2020, both of which are contained in that Prospectus.

We also consent to the reference to us under the caption “Experts” in the Prospectus.

/s/ BDO USA, LLP

New York, New York

November 15, 2021

EX-23.4

Exhibit 23.4

CONSENT OF PERSON TO BE NAMED TRUSTEE

As required by Rule 438 under the Securities Act of 1933, as amended, the undersigned hereby consents to being named in the Registration Statement on Form S-11 (together with any amendments or supplements thereto, the “Registration Statement”) of Four Springs Capital Trust, a Maryland real estate investment trust (the “Trust”), as a person who has agreed to serve as a trustee of the Trust beginning immediately after the closing of the Company’s initial public offering and to the inclusion of her biographical information in the Registration Statement.

/s/ Elizabeth A. Picklo-Smith

Signature

Elizabeth A. Picklo-Smith

Printed Name

Date: November 12, 2021

EX-23.5

Exhibit 23.5

CONSENT OF ROSEN CONSULTING GROUP

We hereby consent to the use of our name in the Registration Statement on Form S-11 (together with any amendments or supplements thereto, the "Registration Statement"), to be filed by Four Springs Capital Trust and the references to the Rosen Consulting Group wherever appearing in the Registration Statement, including, but not limited to the references to our company under the headings “Prospectus Summary,” “Our Business” and “Experts” in the Registration Statement.

Dated: November 12, 2021

ROSEN CONSULTING GROUP
By:	/s/ Randall Sakamoto
Name: Randall Sakamoto
Title: President