8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2016

Jernigan Capital, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland	001-36892	47-1978772
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

6410 Poplar Avenue, Suite 650	38119
(Address of Principal Executive Offices)	(Zip Code)

(901) 567-9510

(Registrant’s telephone number, including area code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

          Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

On July 27, 2016 (the “Effective Date”), Jernigan Capital, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) with accounts managed by NexPoint Advisors, L.P., an affiliate of Highland Capital Management, L.P. (collectively, the “Buyers”) relating to the issuance and sale, from time to time until the second anniversary of the Effective Date (such period, the “Commitment Period”), of up to $100,000,000 in shares of the Company’s newly designated Series A Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), at a price of $1,000 per share (the “Liquidation Value”)(subject to a minimum amount of $50,000,000 of Series A Preferred Stock to be issued and sold by the Company on or prior to the expiration of the Commitment Period), which may be increased at the request of the Company up to $125,000,000. The sale of shares of Series A Preferred Stock pursuant to the Purchase Agreement may occur from time to time, in minimum monthly increments of $5,000,000, maximum monthly increments of $15,000,000 and maximum increments of $35,000,000 over any rolling three month period, all to be completed during the Commitment Period.

The Company expects to contribute the net proceeds from issuances and sales of the Series A Preferred Stock to Jernigan Capital Operating Company, LLC (the “Operating Company”) in exchange for newly designated Series A Preferred membership units in the Operating Company having economic terms and designations, powers, preferences, rights and restrictions that are substantially similar to the Series A Preferred Stock. A copy of the amendment to the limited liability company agreement of the Operating Company (the “OC Amendment”) relating to the Series A Preferred membership units is filed as Exhibit 10.2 hereto and incorporated by reference herein.

The Series A Preferred Stock will rank senior to the shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), with respect to distribution rights and rights upon liquidation, winding up and dissolution of the Company, on parity with any class or series of capital stock of the Company expressly designated as ranking on parity with the Series A Preferred Stock with respect to distribution rights andrights upon liquidation, winding up and dissolution of the Company, junior to any class or series of capital stock of the Company expressly designated as ranking senior to the Series A Preferred Stock with respect to distribution rights andrights upon liquidation, winding up and dissolution of the Company and junior in right of payment to the Company’s existing and future indebtedness.

Holders of Series A Preferred Stock will be entitled to a cumulative cash distribution (“Cash Distribution”) equal to (A) 7.0% per annum on the Liquidation Value for the period beginning on the respective date of issuance until the sixth anniversary of the Effective Date, payable quarterly in arrears, (B) 8.5% per annum on the Liquidation Value for the period beginning the day after the sixth anniversary of the Effective Date and for each year thereafter so long as the Series A Preferred Stock remains issued and outstanding, payable quarterly in arrears, and (C) an amount in addition to the amounts in (A) and (B) equal to 5.0% per annum on the Liquidation Value upon the occurrence of certain triggering events (a “Cash Premium”). In addition, the holders of the Series A Preferred Stock will be entitled to a cumulative dividend payable in-kind in shares of Common Stock or additional shares of Series A Preferred Stock, at the election of the holders (the “Stock Dividend”), equal in the aggregate to the lesser of (Y) 25% of the incremental increase in the Company’s book value (as adjusted for equity capital issuances, share repurchases and certain non-cash expenses) plus, to the extent the Company owns equity interests in income-producing real property, the incremental increase in net asset value (provided, however, that no interest in the same real estate asset will be double counted) and (Z) an amount that would, together with the Cash Distribution, result in a 14.0% internal rate of return for the holders of the Series A Preferred Stock from the date of issuance of the Series A Preferred Stock, as set forth in the Articles Supplementary classifying the Series A Preferred Stock, a copy of which is attached as Exhibit 3.1 hereto and incorporated by reference herein (the “Articles Supplementary”). Triggering events that will trigger the payment of a Cash Premium with respect to a Cash Distribution include: (i) the occurrence of certain change of control events affecting the Company after the third anniversary of the Effective Date, (ii) the Company’s ceasing to be subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iii) the Company’s failure to remain qualified as a real estate investment trust, (iv) an event of default under the Purchase Agreement (as described below), (v) the failure by the Company to register for resale shares of Common Stock pursuant to the Registration Rights Agreement (a “Registration Default”), (vi) the Company’s failure to redeem the Series A Preferred Stock as required by the Purchase Agreement, or (vii) the filing of a complaint, a settlement with, or a judgment entered by the Securities and Exchange Commission against the Company or any of its subsidiaries or a director or executive officer of the Company relating to the violation of the securities laws, rules or regulations with respect to the business of the Company. Accrued but unpaid Cash Distributions and Stock Dividends on the Series A Preferred Stock will accumulate and will earn additional Cash Distributions and Stock Dividends as calculated above, compounded quarterly.

The holders of Series A Preferred Stock have the right to purchase their pro rata share of any qualified offering of Common Stock, which consists of any offering by the Company of Common Stock except any shares of Common Stock issued (i) in connection with a merger, consolidation, acquisition or similar business combination, (ii) in connection with a joint venture, strategic alliance or similar corporate partnering arrangement, (iii) in connection with any acquisition of assets by the Company, (iv) at market prices pursuant to a registered at-the-market program and/or (v) as part of a compensatory or employment arrangement.

So long as shares of Series A Preferred Stock remain outstanding, the Company is required to maintain a ratio of debt to total tangible assets determined under U.S. generally accepted accounting principles of no more than 0.4:1, measured as of the last day of each fiscal quarter.

The Series A Preferred Stock may be redeemed at the Company’s option (i) after five years from the Effective Date at a price equal to 105% of the Liquidation Value per share plus the value of all accumulated and unpaid Cash Distributions and Stock Dividends, and (ii) after six years from the Effective Date at a price equal 100% of the Liquidation Value per share plus the value of all accumulated and unpaid Cash Distributions and Stock Dividends. In the event of certain change of control events affecting the Company prior to the third anniversary of the Effective Date, the Company must redeem all shares of Series A Preferred Stock for a price equal to (a) the Liquidation Value, plus (b) accumulated and unpaid Cash Distributions and Stock Dividends, plus (c) a make-whole premium designed to provide the holders of the Series A Preferred Stock with a return on the redeemed shares equal to a 14.0% internal rate of return through the third anniversary of the Effective Date.

Holders of Series A Preferred Stock will be entitled to a separate class vote with respect to (i) any amendments to the Company’s Amended and Restated Articles of Incorporation (the “Charter”), as supplemented by the Articles Supplementary, or bylaws that would alter or change the rights, preferences, privileges or restrictions of the Series A Preferred Stock so as to materially and adversely affect such Series A Preferred Stock and (ii) by reclassification or otherwise, any issuances by the Company of securities that are senior to, or equal in priority with, the Series A Preferred Stock.

In the event of any liquidation, dissolution or winding up of the Company, the holders of the Series A Preferred Stock shall be entitled to receive an amount equal to the greater of (i) the Liquidation Value, plus all accumulated but unpaid Cash Distributions and Stock Dividends thereon to, but not including, the date of any liquidation, but excluding any Cash Premium and (ii) the amount that would be paid on such date in the event of a redemption following a change of control.

Pursuant to the Purchase Agreement and the Articles Supplementary, the Company agreed to increase the size of its board of directors (the “Board”) by one director and elect either James Dondero or Matt McGraner, as selected by NexPoint Advisors, L.P., as preferred representative of the Buyers, to the Board for a term expiring at the Company’s 2017 annual meeting of stockholders. Thereafter, so long as any shares of the Series A Preferred Stock are outstanding, the Company will nominate one person to be designated by the holders of the Series A Preferred Stock as a designee for election by the Company’s stockholders to the Board. If the Company has not paid the full amount of the Cash Distribution or the Stock Dividend on the shares of the Series A Preferred Stock for six or more quarterly dividend periods (whether or not consecutive), the Company will increase the size of the Board by two directors and will nominate two additional persons to be designated by the holders of the Series A Preferred Stock as designees for election to the Board by the Company’s stockholders at the next annual or special meeting of stockholders to serve until the Company pays in full all accumulated and unpaid Cash Distributions and Stock Dividends.

Further, at any time that the Series A Preferred Stock remains outstanding, if Dean Jernigan, the Company’s current Chief Executive Officer and Chairman of the Board, voluntarily leaves the position of Chief Executive Officer, and is not serving as the Executive Chairman of the Board (a “Key Man Event”), the holders of the Series A Preferred Stock shall have the right to accept or reject the service of any person as Chief Executive Officer (or such person serving as the principal executive officer) of the Company.

The Purchase Agreement requires that the Company and its subsidiaries conduct their business in the ordinary course of business consistent with past practice and use reasonable best efforts to (i) preserve substantially intact the business organization and (ii) avoid becoming subject to the requirements of the Investment Company Act of 1940, as amended. Additionally, the Company and its subsidiaries may not change or alter materially its method of accounting or the manner in which it keeps its accounting books and records unless required by the Securities and Exchange Commission to reflect changes in U.S. generally accepted accounting principles or, in the business judgment of the Board, such change would be in the best interests of the Company or stockholders.

Future issuances of shares of Series A Preferred Stock at any one or more closings after the Effective Date are contingent upon the satisfaction of certain conditions at the time of such proposed purchase, including that (i) the representations and warranties of the Purchase Agreement remain true and correct in all material respects and the Company has complied with all covenants and conditions under the Purchase Agreement, the Articles Supplementary, the Registration Rights Agreement and the documents related thereto, (ii) no material adverse effect (as such term is defined in the Purchase Agreement) has occurred, (iii) there is no suspension of trading of the Common Stock on the New York Stock Exchange or such other market or exchange on which the Common Stock is then listed or traded (the “Principal Market”), (iv) a Key Man Event shall not have occurred, as described above, and (v) the Company has delivered certain customary closing deliverables.

An event of default under the Purchase Agreement terminates the obligation of the Buyers to acquire shares of Series A Preferred Stock from the Company and also triggers the Cash Premium described above. Such events of default under the Purchase Agreement include (i) a Registration Default, (ii) the suspension of trading or delisting of the Common Stock on the Principal Market, (iii) the failure by the transfer agent of the Company to issue shares of the Series A Preferred Stock to the Buyers (subject to an applicable cure period), (iv) the Company’s breach of a representation or warranty, covenant or other term or condition under the Purchase Agreement, Articles Supplementary, the Registration Rights Agreement or the documents related thereto that has a material adverse effect (subject to an applicable cure period), (v) the failure of the Company to sell $50,000,000 of shares of Series A Preferred Stock on or prior to the tenth business day after the expiration of the Commitment Period, (vi) an event of default under any secured indebtedness of the Company, or (vii) certain bankruptcy proceedings.

The holders of the Series A Preferred Stock will have certain customary registration rights with respect to the Common Stock issued as Stock Dividends pursuant to the terms of a Registration Rights Agreement, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.

The foregoing descriptions of the terms of the Series A Preferred Stock, the Purchase Agreement and the transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Purchase Agreement, the Articles Supplementary, the Registration Rights Agreement, the OC Amendment and the schedules and annexes thereto, copies of which are attached hereto as Exhibits 10.1, 3.1, 10.3 and 10.2, respectively, and are incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The information contained in Item 1.01 is incorporated herein by reference.

As described in Item 1.01, under the terms of the Purchase Agreement, the Company has agreed to issue shares of Series A Preferred Stock to the Buyers. This issuance and sale of the Series A Preferred Stock, and the issuance of shares of Common Stock and/or additional shares of Series A Preferred Stock issuable as Stock Dividends, will be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D thereunder. The Buyers represented to the Company that they are “accredited investors” as defined in Rule 501 of the Securities Act and that the Series A Preferred Stock is being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends will be affixed to any certificates evidencing the shares of Series A Preferred Stock or Common Stock issuable pursuant to the Stock Purchase Agreement.

Item 3.03 Material Modification to Rights of Security Holders.

The information contained in Item 1.01 with respect to the Articles Supplementary and the terms of the Series A Preferred Stock is incorporated herein by reference. Reference is also made to the Articles Supplementary filed as Exhibit 3.1 to this current report, which is incorporated herein by reference.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information contained in Item 1.01 with respect to the Articles Supplementary is incorporated herein by reference. On July 27, 2016, the Company filed the Articles Supplementary setting forth the rights and preferences of the Series A Preferred Stock with the Maryland State Department of Assessments and Taxation. The description of the Articles Supplementary and the Series A Preferred Stock contained in Items 1.01 and 3.02 above are incorporated herein by reference, subject to, and qualified in their entirety by, the Articles Supplementary attached hereto as Exhibit 3.1.

Item 7.01. Regulation FD Disclosure.

On July 27, 2016, the Company issued a press release announcing entry into the Purchase Agreement and the transactions contemplated thereunder and released frequently asked questions and answers regarding the transactions (the “Investor FAQs”).  Copies of the press release and the Investor FAQs are furnished as Exhibits 99.1 and 99.2 hereto, respectively.

In accordance with general instruction B.2 to Form 8-K, the information contained in Item 7.01 of this Current Report on Form 8-K is being “furnished” and not “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under such section. Furthermore, such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, unless specifically identified as being incorporated therein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
3.1	Articles Supplementary, dated July 27, 2016.
10.1	Stock Purchase Agreement, dated as of July 27, 2016, by and between Jernigan Capital, Inc. and certain funds managed or advised by Highland Capital Management, L.P. or its controlled affiliates and identified on the signature page(s) thereto
10.2	Amendment  No. 1 to the Limited Liability Company Agreement of Jernigan Capital Operating Company, LLC, dated July 27, 2016
10.3	Registration Rights Agreement, dated as of July 27, 2016, by and between Jernigan Capital, Inc. and certain funds managed or advised by Highland Capital Management, L.P. or its controlled affiliates and identified on the signature page(s) thereto
99.1	Press Release, dated July 27, 2016
99.2	Investor FAQs

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: July 27, 2016
	Jernigan Capital, Inc.
	By:	/s/ John A. Good
		Name: John A. Good
		Title: President and Chief Operating Officer

EXHIBIT INDEX

Exhibit No.	Description
3.1	Articles Supplementary, dated July 27, 2016.
10.1	Stock Purchase Agreement, dated as of July 27, 2016, by and between Jernigan Capital, Inc. and certain funds managed or advised by Highland Capital Management, L.P. or its controlled affiliates and identified on the signature page(s) thereto
10.2	Amendment  No. 1 to the Limited Liability Company Agreement of Jernigan Capital Operating Company, LLC, dated July 27, 2016
10.3	Registration Rights Agreement, dated as of July 27, 2016, by and between Jernigan Capital, Inc. and certain funds managed or advised by Highland Capital Management, L.P. or its controlled affiliates and identified on the signature page(s) thereto
99.1	Press Release, dated July 27, 2016
99.2	Investor FAQs

EX-3.1

Exhibit 3.1

ARTICLES SUPPLEMENTARY

OF

JERNIGAN CAPITAL, INC.

DESIGNATING THE RIGHTS AND PREFERENCES

OF THE

SERIES A PREFERRED STOCK

Pursuant to Section 2-208 of the Maryland General Corporation Law (as amended, supplemented or restated from time to time, the “MGCL”), Jernigan Capital, Inc., a corporation organized and existing under the laws of the state of Maryland (the "Corporation"), does hereby certify to the State Department of Assessments and Taxation of Maryland (the “SDAT”) that:

FIRST: Article VI of the Articles of Amendment and Restatement of the Corporation (the “Charter”), as filed with the SDAT, authorizes the issuance of 600,000,000 shares of stock of the Corporation, consisting of 500,000,000 shares of common stock, $0.01 par value per share (the “Common Stock”), and 100,000,000 shares of preferred stock, $0.01 par value per share (the “Preferred Stock”). No shares of Preferred Stock are currently outstanding. The Charter expressly authorizes the Board to classify any unissued shares of Preferred Stock from time to time into one or more classes or series of stock and to set the number of shares constituting such series and the designation, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications or terms or conditions of redemption of the shares of Preferred Stock constituting such series.

SECOND: Pursuant to the authority expressed in Article VI of the Charter, the Board of Directors of the Corporation (the “Board”), by duly adopted resolutions, classified and designated 300,000 authorized but unissued shares of Preferred Stock as shares of Series A Preferred Stock, $0.01 par value per share, with the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption, which, upon any restatement of the Charter, shall be incorporated into Article VI thereof by reference or added to the text thereof with any necessary or appropriate renumbering or relettering of the sections or subsections hereof. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Charter.

(a)          Designation and Amount. There shall be a series of Preferred Stock designated as “Series A Preferred Stock” (the “Series A Preferred Stock”). The number of shares authorized to be Series A Preferred Stock is 300,000. The Corporation shall not have the authority to issue fractional shares of Series A Preferred Stock.

(b)          Rank. The Series A Preferred Stock shall, with respect to distribution rights and rights upon liquidation, winding up and dissolution of the Corporation, rank (i) senior to the Corporation’s Common Stock and to any class or series of capital stock of the Corporation expressly designated as ranking junior to the Series A Preferred Stock as to distribution rights and rights upon liquidation, winding up and dissolution of the Corporation (collectively, the “Junior Securities”); (ii) on parity with any class or series of capital stock of the Corporation expressly designated as ranking on parity with the Series A Preferred Stock as to distribution rights and rights upon liquidation, dissolution and winding up of the Corporation (“Parity Securities”); (iii) junior to any class or series of capital stock of the Corporation expressly designated as ranking senior to the Series A Preferred Stock as to distribution rights and rights upon liquidation, winding up and dissolution of the Corporation; and (iv) junior in right of payment to the Corporation’s existing and future indebtedness. All shares of Series A Preferred Stock shall rank on parity with each other.

(c)          Distribution Rights. Subject to the preferential rights of holders of any class or series of capital stock of the Corporation expressly designated as ranking senior to the Series A Preferred Stock as to distribution rights and subject to the rights of any Parity Securities, to the extent not prohibited by law each holder of Series A Preferred Stock shall be entitled to receive, if, as and when authorized by the Board and declared by the Corporation, on each outstanding share of Series A Preferred Stock, out of funds legally available for the payment of distributions or dividends:

(1)         a cumulative cash distribution (the “Cash Distribution”), equal to (a) 7.0% per annum on the Liquidation Value (as defined below) for the period beginning on the date of issuance until the sixth anniversary of the date that these Articles Supplementary were filed with and accepted for record by the SDAT (the “Filing Date”), payable quarterly in arrears; (b) 8.5% per annum on the Liquidation Value for the period beginning the day after the sixth anniversary of the Filing Date and for each year thereafter so long as the Series A Preferred Stock remains issued and outstanding, payable quarterly in arrears; and (c) an amount in addition to the amounts in (a) and (b) equal to 5.0% per annum on the Liquidation Value for the period beginning the day after a Triggering Event (the “Cash Premium”); and

(2)         a cumulative dividend payable in-kind in shares of Common Stock or additional shares of Series A Preferred Stock (the “Aggregate Stock Dividend”) (determined at the election of each holder of Series A Preferred Stock (such election to be irrevocable as to the dividend for any fiscal quarter, and made by written notice to the Corporation at least 15 days prior to the record date for each such dividend)) whereby the total value of the Aggregate Stock Dividend to be paid each quarter equals the product obtained by multiplying 0.25 by the sum of (i) Incremental Equity Book Value (as defined herein) as of the end of the most recently completed fiscal quarter and (ii) to the extent the Company owns equity interests in income-producing real property, Incremental Net Asset Value (as defined herein); provided that for purposes of computing the sum of (i) and (ii) above, no interest in the same real estate asset will be double counted. The first Aggregate Stock Dividend shall be calculated using Incremental Equity Book Value and Incremental Net Asset Value from the fiscal quarter ended June 30, 2016 to the end of the most recently completed fiscal quarter. Notwithstanding the foregoing, the election by the holders of the Series A Preferred Stock to receive an Aggregate Stock Dividend in shares of Common Stock or Preferred Stock of the Corporation at all times pursuant to the foregoing shall be limited to the maximum number of shares of Common Stock or Series A Preferred Stock that may be issued (i) in accordance with and not in violation of the ownership limitations set forth in Article VII of the Charter (subject to any Excepted Holder Limits (the “Ownership Limitations”)) and (ii) without approval of the Corporation’s stockholders pursuant to Rule 312.03(b) or (c), as applicable, of the New York Stock Exchange Listed Company Manual (or any replacement provision for such rule) or any similar rule on any other national securities exchange on which the Common Stock is then listed.  The value of any Aggregate Stock Dividend that cannot be paid because of the application of the foregoing limitation shall be paid by the Corporation in cash.

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The number of shares of Common Stock or Series A Preferred Stock to be distributed per each outstanding share of Series A Preferred Stock as Aggregate Stock Dividends (the “Per Share Stock Dividend”) shall be calculated as follows:

(A/B)

C

Where:

(A) equals the Aggregate Stock Dividend as calculated above;

(B) is either (1) the 30-day volume weighted average price per share of the Common Stock or (2) the Liquidation Value, as applicable; and

(C) equals the number of shares of Series A Preferred Stock outstanding at the close of business on the record date for any such Aggregate Stock Dividend.

Notwithstanding anything herein to the contrary, the aggregate Cash Distributions and Per Share Stock Dividend as of any Distribution and Dividend Payment Date (as defined below) shall not exceed the Cumulative Cap.

The Corporation will pay, if, as and when authorized by the Board and declared by the Corporation, to the extent not prohibited by law, the Cash Distribution and the Per Share Stock Dividend quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, or if such day is not on a Business Day, then the next succeeding day that is a Business Day, and no interest or other sums shall accrue on the amount so payable from the original Distribution and Dividend Payment Date to such next succeeding Business Day (each a “Distribution and Dividend Payment Date”), commencing on October 15, 2016. Cash Distributions will be computed on the basis of a 360-day year comprised of twelve 30-day months. The Corporation will make each Cash Distribution and Per Share Stock Dividend, as applicable, due on a Distribution and Dividend Payment Date to the holders of record of Series A Preferred Stock on the close of business on January 1, April 1, July 1 and October 1 immediately preceding the applicable Dividend and Distribution Payment Date, beginning on the close of business on October 1, 2016. Distributions and dividends on the Series A Preferred Stock will accumulate from the most recent date to which distributions and dividends have been paid or, if no distributions or dividends have been paid, from and including the respective date of issuance of such shares of Series A Preferred Stock.

Notwithstanding the foregoing, Cash Distributions and Aggregate Stock Dividends on the Series A Preferred Stock will accumulate whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such Cash Distributions and Aggregate Stock Dividends, whether or not such Cash Distributions and Aggregate Stock Dividends are declared and whether or not such Cash Distributions and Aggregate Stock Dividends are prohibited by agreement. Accrued but unpaid Cash Distributions and Aggregate Stock Dividends on the Series A Preferred Stock will accumulate and will earn additional Cash Distributions and Aggregate Stock Dividends as calculated above (in the case of Stock Dividends, as if such Stock Dividends had been paid or issued on the applicable Distribution and Dividend Payment Date), compounded quarterly (subject to increase as provided in Section (c)(1)(c), as applicable).

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As long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not declare or pay on or set apart for payment to the holders of the Common Stock or any Junior Securities any dividend or other distribution (other than (i) to the extent necessary to ensure that the Corporation remains qualified as a REIT for U.S. federal income tax purposes and (ii) the redemption or other acquisition of capital stock of the Corporation in any calendar year under incentive, benefit or share purchase plans for officers, directors or employees or others performing or providing similar services or in connection with net settlements and withholding in connection with the vesting or exercise of equity incentive awards) unless all accumulated dividends on the then-outstanding shares of Series A Preferred Stock shall have been paid or shall have been declared and set apart for payment to the holders of the Series A Preferred Stock.

When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) on the Series A Preferred Stock and any Parity Securities, all dividends declared and paid on the Series A Preferred Stock shall be declared pro rata so that the amount of dividends declared and paid per share of Series A Preferred Stock and any Parity Securities shall in all cases bear to each other the same ratio that accrued dividends per share of Series A Preferred and Parity Securities bear to each other.

Holders of Series A Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or shares of capital stock of the Corporation, in excess of full cumulative dividends on the Series A Preferred Stock as described herein. Any dividend payment made on the Series A Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable. Except as provided herein, the Series A Preferred Stock shall not be entitled to participate in the earnings or assets of the Corporation.

(d)          Liquidation, Dissolution or Winding Up. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (a “Liquidation”), each holder of Series A Preferred Stock shall be entitled to receive out of the assets that may be legally distributed to the Corporation’s stockholders after payment or provision for payment of all indebtedness of the Corporation, but prior and in preference to any payment or distribution (or any setting apart of any payment or distribution) of any assets on any shares of Common Stock or other Junior Securities, an amount equal to the greater of (1) $1,000 per outstanding share of Series A Preferred Stock (the “Liquidation Value”), plus all accumulated but unpaid Cash Distributions and Aggregate Stock Dividends thereon to, but not including, the date of any liquidation, but excluding any Cash Premium and (2) the amount that would be paid on such date in the event of a redemption following a Change of Control Event pursuant to Section (j). For purposes of determining accumulated but unpaid Cash Distributions and Aggregate Stock Dividends with respect to the Series A Preferred Stock in the event of a Liquidation, the Aggregate Stock Dividends shall be determined by computing Incremental Equity Book Value and Incremental Net Asset Value on a pro forma basis to, but not including, the date of final distribution of all remaining assets of the Corporation without giving effect to any liquidating distributions by the Corporation. After the payment of the Liquidation Value and all accumulated but unpaid Cash Distributions and Aggregate Stock Dividends and any payment on Parity Securities, the remaining assets of the Corporation, if any, shall be distributed to the holders of shares of Common Stock and Junior Securities. If upon Liquidation the assets legally available for distribution to the holders of the Series A Preferred Stock and any Parity Securities are insufficient to permit the payment to such holders of the full amounts specified in this Section (d) or pursuant to the terms of any Parity Security, then the entire assets of the Corporation legally available for distribution will be distributed among the holders of the Series A Preferred Stock and any Parity Securities with equal priority and pro rata in proportion to the amounts they would otherwise be entitled to receive pursuant to this Section (d) and the terms of any such Parity Securities and the Corporation will not make or agree to make any payments to the holders of Common Stock or Junior Securities. Whenever the distribution provided for in this Section (d) shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by the Board. For the purposes hereof, a Change of Control Event shall not be deemed a Liquidation. The Corporation will promptly provide to the holders of Series A Preferred Stock written notice of any Liquidation. In determining whether a distribution (other than upon voluntary or involuntary liquidation), by dividend, redemption or other acquisition of shares of stock of the Corporation or otherwise, is permitted under the MGCL, amounts that would be needed, if the Corporation were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of holders of shares of Series A Preferred Stock shall not be added to the Corporation’s total liabilities. Holders of the Series A Preferred Stock shall not be entitled to any further payments in the event of a Liquidation other than what is expressly provided for in this Section (d) and will have no right or claim to any of the Corporation’s remaining assets.

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(e)          Voting. Except as otherwise required under the MGCL and other applicable law and in these Articles Supplementary, the holders of the Series A Preferred Stock shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation. To the extent the holders of the Series A Preferred Stock are so entitled or permitted to vote, the holders of Series A Preferred Stock may take such action or consent to any action by delivering a consent in writing or by electronic transmission of the holders of Series A Preferred Stock entitled to cast not less than the minimum number of votes that would be necessary to authorize or take such action were such action to be taken at a stockholders meeting, provided that the Corporation gives notice of each the action to each holder of Series A Preferred Stock not later than 10 days after the effective time of the action.

(f)          Appraisal Rights. Other than as set forth herein, holders of the Series A Preferred Stock shall not be entitled to exercise any rights of an objecting stockholder provided for under the MGCL or any successor statute.

(g)          Preferred Stock Directors.

(1)         On the Filing Date, and each year so long as any shares of Series A Preferred Stock are outstanding, the holders of Series A Preferred Stock, voting as a single class, shall have the right to nominate and elect one director to the Board (the “Preferred Stock Director”) at each annual meeting of stockholders of the Corporation, and at any special meeting of the stockholders of the Corporation called for the purpose of electing the Preferred Stock Director or by written or electronic consent of the holders of a majority of the shares of Series A Preferred Stock then outstanding. On the Filing Date, the Board shall increase the number of directors then constituting the Board by one (in accordance with Section 5.1 of the Charter and Article III, Section 2 of the Bylaws of the Corporation (the “Bylaws”)) and shall elect either James Dondero or Matt McGraner, as selected by the Preferred Representative, to fill the vacancy so created, to serve until the next annual meeting of the Corporation or until his successor is duly elected and qualified in accordance with this Subsection (g)(1), the Charter, the Bylaws and the MGCL. Except with the written consent of the Preferred Stock Director, the Board will remain at the same size as long as the Series A Preferred Stock is outstanding.

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(2)         The Preferred Stock Director and the Additional Preferred Stock Directors (as defined below), if any, shall be entitled to serve in the same manner as other directors of the Board, vote on any matter properly voted on by the Board, and receive the same information at the same times provided to other directors of the Board; provided, however, that the Preferred Stock Director shall not be entitled to compensation for service as a director but shall be entitled to the same indemnification, expense advancement and expense reimbursement as all independent directors.

(3)         If the Corporation has not paid the full amount of the Cash Distribution or the Aggregate Stock Dividend (a “Preferred Dividend Default”) on the shares of Series A Preferred Stock for six or more quarterly dividend periods, whether or not consecutive dividend periods, the holders of Series A Preferred Stock then outstanding, voting together as a single class, shall be entitled at the Corporation’s next annual or special meeting of stockholders, whichever occurs first, to elect two additional directors to the Board (the “Additional Preferred Stock Directors”). Prior to the election of the Additional Preferred Stock Directors, the Board shall be required to take action to increase the number of directors then constituting the Board by two and to elect such individuals as shall be designated in writing by the holders of the Series A Preferred Stock to fill such vacancies. If and when the Corporation pays in full all accumulated and unpaid Cash Distributions and Stock Dividends on the Series A Preferred Stock (a “Preferred Dividend Default Cure”), the term of office of each Additional Preferred Stock Director shall immediately terminate and the Board shall promptly take action to decrease the number of directors on the Board by two, unless, with the written consent of the Preferred Stock Director, the Board elects to maintain the then-current number of directors, and appoint additional directors to the vacant Board seats.

(4)         The Board shall not withdraw any nomination or, subject to the Board’s duties under Maryland law, recommendation required under this Section (g), unless the holders of the Series A Preferred Stock deliver to the Board a written request for such withdrawal or, as applicable (A) the Board determines reasonably and in good faith, after consultation with outside legal counsel, that such Preferred Stock Director or Additional Preferred Stock Director is prohibited or disqualified from serving as a director of the Corporation under any rule or regulation of the Securities and Exchange Commission (the “SEC”), a national listing exchange on which the Common Stock is listed or by applicable law or is a “bad actor” as such term is defined in Rule 506(d) under the Securities Act, (B) such Preferred Stock Director or Additional Preferred Stock Director has admitted or been judicially determined, pursuant to a final, non-appealable decision, to have engaged in (x) acts or omissions constituting a breach of the Preferred Stock Director’s or Additional Preferred Stock Director’s, as applicable, duties to the Corporation, (y) acts or omissions that involve intentional misconduct or an intentional violation of law and that are felonies, violations of law involving moral turpitude or are materially adverse to the Corporation or (z) any transaction involving the Corporation from which the Preferred Stock Director or Additional Preferred Stock Director, as applicable, derived an improper personal benefit that was not disclosed to the Board prior to the authorization of such transaction where such disclosure is required pursuant to the Charter or Bylaws; provided, however, that, in each case, the holders of the Series A Preferred Stock shall have the right to replace such Preferred Stock Director or Additional Preferred Stock Director, as applicable, with a new Preferred Stock Director or Additional Preferred Stock Director, as applicable.

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(5)         The holders of the Series A Preferred Stock may only designate a person to be a Preferred Stock Director or an Additional Preferred Stock Director, as applicable, (A) who the holders of the Series A Preferred Stock believe in good faith has the requisite skill and experience to serve as a director of a publicly-traded company, (B) who is not prohibited from or disqualified from serving as a director of the Corporation pursuant to any rule or regulation of the SEC, a national securities exchange on which the Common Stock is then listed or applicable Law, (C) in the case of an Additional Preferred Stock Director only, who meets the applicable independence standards by the listing rules of the national securities exchange on which the Common Stock is then listed and (D) is not a “bad actor” as such term is defined in Rule 506(d) under the Securities Act, and (E) with respect to which no event required to be disclosed pursuant to Item 401(f) of Regulation S-K of the Exchange Act (as defined below) has occurred. The members of the Board shall retain the right to object to the nomination, election or appointment of any Preferred Stock Director or an Additional Preferred Stock Director for service on the Board if the members of the Board reasonably determine in good faith, after consultation with outside legal counsel, that such Preferred Stock Director or an Additional Preferred Stock Director fails to meet the criteria set forth above. In the event that the members of the Board reasonably object to the nomination, election or appointment of any Preferred Stock Director or an Additional Preferred Stock Director to the Board pursuant to the terms of this Section (g), the Board shall nominate or appoint, as applicable, another individual designated by the holders of the Series A Preferred Stock as the Preferred Stock Director or an Additional Preferred Stock Director, as applicable, that meets the criteria set forth in this Section (g).

(6)         The Preferred Stock Director and the Additional Preferred Stock Directors, if any, will be elected to serve until the next annual meeting of stockholders of the Corporation and until his or her successor is duly elected and qualified or, in the case of any Additional Preferred Stock Director, until such Additional Preferred Stock Director’s right to hold the office terminates upon the Preferred Dividend Default Cure, whichever occurs earlier, subject to such Preferred Stock Director’s or Additional Preferred Stock Director’s earlier death, disqualification, resignation or removal. The election of the Additional Preferred Stock Directors, if any, will take place at each subsequent annual meeting of stockholders or special meeting held in place thereof, until the Preferred Dividend Default Cure.

(7)         At any annual or special meeting to elect a Preferred Stock Director or Additional Preferred Stock Directors, all of the holders of the Series A Preferred Stock, voting together as a single class will be entitled to elect the Preferred Stock Director and any Additional Preferred Stock Directors on the basis of one vote per share of Series A Preferred Stock (excluding amounts in respect of accumulated and unpaid Stock Dividends). The Preferred Stock Director and any Additional Preferred Stock Directors shall be elected by the holder or holders of a majority of the outstanding Series A Preferred Stock entitled to vote thereon. The holder or holders of a majority of the Series A Preferred Stock then outstanding, present in person or by proxy, will constitute a quorum for the election of the Preferred Stock Directors and Additional Preferred Stock Directors except as otherwise provided by law. Notice of all meetings at which holders of the Series A Preferred Stock shall be entitled to vote will be given in accordance with applicable law and the Bylaws to such holders at their addresses as they appear in the transfer records. If a Preferred Dividend Default Cure occurs after the notice of a special meeting has been given but before such special meeting has been held, the Corporation shall, as soon as practicable after such termination, mail or cause to be mailed notice of such termination to holders of the Series A Preferred Stock that would have been entitled to vote at such meeting.

(8)         Any Preferred Stock Director or Additional Preferred Stock Director may be removed at any time with or without cause by the vote of, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding Series A Preferred Stock entitled to vote thereon. So long as any Series A Preferred Stock remains outstanding, any vacancy in the office of a Preferred Stock Director may be filled by a vote of the holders of a majority of the outstanding Series A Preferred Stock entitled to vote thereon. So long as a Preferred Dividend Default shall continue, any vacancy in the office of an Additional Preferred Stock Director, may be filled by written consent of the Additional Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding Series A Preferred Stock when they have the voting rights described above. Each of the Preferred Stock Director and Additional Preferred Stock Director, if any, shall be entitled to one vote on any matter.

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(h)          Information Rights. During any period in which the Corporation is not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any shares of Series A Preferred Stock are outstanding, the Corporation shall provide to all holders of Series A Preferred Stock, as their names and addresses appear in the Corporation’s books and records and without cost to such holders, copies of the annual reports and quarterly reports that the Corporation would have been required to file with the SEC pursuant to the reporting requirements of Section 13 or 15(d) of the Exchange Act if the Corporation was subject to such Sections (other than any exhibits that would have been required); provided, however, that (1) such annual and quarterly reports shall not be required to comply with Regulation G under the Exchange Act or Item 10(e) of Regulation S-K with respect to any “non-GAAP” financial information contained therein or Rule 3-10 or Rule 3-16 of Regulation S-X and (2) the Corporation will not be required to comply with Sections 302, 906 and 404 of the Sarbanes-Oxley Act of 2002 or otherwise furnish any information, certificates or reports required by Items 307 or 308 of Regulation S-K, as applicable to the Corporation. For the avoidance of doubt, the Corporation will be required to include in the annual report required pursuant to this Section (h) the information regarding director and management compensation required under the Exchange Act to be included or incorporated by reference in a public company’s Annual Report on Form 10-K, including the compensation discussion and analysis, summary compensation table and other information required by Part III of Form 10-K if and to the extent required. The holders of the Series A Preferred Stock acknowledge that, as of the date of these Articles Supplementary, the Corporation is an “Emerging Growth Company” as defined under the rules of the Exchange Act and is not required to make such disclosures. The Corporation will promptly upon written request periodically supply copies of such reports to any prospective holder of Series A Preferred Stock and will mail the reports to the holders of Series A Preferred Stock within 10 Business Days after the respective dates by which the Corporation would have been required to file such periodic reports with the SEC if the Corporation was then subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

(i)          Conversion. The Series A Preferred Stock shall not be convertible into, or exchangeable for, any other shares of the Corporation’s capital stock.

(j)          Mandatory Redemption. The Corporation shall redeem all of the outstanding shares of Series A Preferred Stock at the election of a majority of the holders of the Preferred A Stock, acting as a single class, upon the occurrence of any of the following events that occurs before the third anniversary of the Filing Date (each, a “Change of Control Event”):

(1)         the acquisition by any “person” or “group” (as such terms are used in Sections 13(d) and 15(d) of the Exchange Act) of more than a majority of the voting rights in the Corporation other than as a result of a transaction in which (i) the holders of securities that represented 100% of the voting rights in the Corporation immediately prior to such transaction are substantially the same as the holders of securities that represent a majority of the voting rights or equity interests of the surviving Person immediately after such transaction and (ii) the holders of the securities that represent 100% of the voting rights of the Corporation immediately prior to such transaction own directly or indirectly the voting rights or equity interests of the surviving Person in substantially the same proportion to each other as immediately prior to such transaction;

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(2)         a merger or consolidation of the Corporation or a sale of all or substantially all of the assets of the Corporation in one or a series of related transactions other than a transaction following which (i) in the case of a merger or consolidation, holders of the securities that represented 100% of the voting rights and equity interests in the Corporation immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the voting rights or equity interests of the surviving Person in such merger or consolidation immediately after such a transaction and (ii) in the case of a sale of all or substantially all of the assets of the Corporation, other than to a Subsidiary or a Person that becomes a Subsidiary of the Corporation;

(3)         a recapitalization, reorganization or other transaction involving the Corporation that constitutes or could result in a transfer of more than a majority of the voting rights in the Corporation; or

(4)         the execution by the Corporation of an agreement providing for or that will, upon consummation of the transactions contemplated thereby, result in any of the foregoing events in (1) through (3), provided that the execution of such an agreement shall not constitute a Change of Control Event if such agreement has been approved by the affirmative vote of a majority of the Board, which majority includes the Preferred Stock Director.

Not more than 30 days after the effective date of a Change of Control Event, the Corporation shall redeem at the Change of Control Redemption Price (as defined below) all of the shares of Series A Preferred Stock then outstanding (the date of such redemption, the “Change of Control Redemption Date”). The Change of Control Redemption Price shall be paid in cash out of funds legally available therefor, in an amount equal to the sum of (1) the Liquidation Value, plus (2) the value of all accumulated but unpaid Cash Distributions and Aggregate Stock Dividends thereon, plus (3) if the Change of Control Redemption Date is prior to the third anniversary of the Filing Date, a Make-Whole Premium (collectively, the “Change of Control Redemption Price”); provided, however, that the Corporation shall only be required to pay the Change of Control Redemption Price after (i) the satisfaction of any indebtedness obligations existing on the Change of Control Redemption Date, if any, and (ii) to the extent such redemption can be made out of funds legally available therefor. From and after the Change of Control Redemption Date and payment of the Change of Control Redemption Price, (i) dividends shall cease to accumulate on the redeemed shares of Series A Preferred Stock, (ii) the redeemed shares of Series A Preferred Stock shall no longer be deemed outstanding, and (iii) all rights with respect to the redeemed shares of the Series A Preferred Stock shall cease and terminate. Notwithstanding the foregoing, in the event of the Corporation’s failure to deliver the Change of Control Redemption Price at the time and place specified in the Change of Control Redemption Notice, additional distributions shall accumulate and accrue with respect to such Change of Control Redemption Price at a rate of 14.0% per annum, compounded quarterly.

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The Corporation shall provide each holder of Series A Preferred Stock with a written notice of redemption (the “Change of Control Redemption Notice”) (addressed to the holder at its address as it appears on the books and records of the Corporation or, at such other place in the United States as such holder shall have designated by written notice to the Corporation), not earlier than 45 days nor later than 10 days before the Change of Control Redemption Date. The Change of Control Redemption Notice shall specify (1) the Change of Control Redemption Date; (2) the Change of Control Redemption Price; and (3) the place the holders of Series A Preferred Stock may obtain payment of the Change of Control Redemption Price upon surrender of their certificates (to the extent physical certificates have been issued and outstanding). A failure to give such notice or any defect in the notice or in its mailing shall not affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as to the holder to whom notice was defective or not given. On or before the Change of Control Redemption Date, each holder of shares of Series A Preferred Stock to be redeemed on the Change of Control Redemption Date shall surrender the certificate or certificates representing such shares to the Corporation, in the manner and at the place designated in the Change of Control Redemption Notice, and thereupon the Change of Control Redemption Price for such shares will be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof.

(k)          Optional Redemption.

(1)         On and after the fifth anniversary of the Filing Date, the Corporation, at its option, upon not fewer than 10 nor more than 60 days’ written notice, may redeem (the “Optional Redemption Right”) the Series A Preferred Stock (including any Series A Preferred Stock issued as an Aggregate Stock Dividend), in whole or from time to time in part, for cash, in an amount equal to the Optional Redemption Price (as defined herein), plus the value of all accumulated and unpaid Cash Distributions and Aggregate Stock Dividends in respect of the Series A Preferred Stock to, but not including, the redemption date set forth in such notice (the “Optional Redemption Date”).  If fewer than all of the outstanding shares of Series A Preferred Stock are to be redeemed pursuant to the Optional Redemption Right, the shares to be redeemed may be selected pro rata (as nearly as practicable without creating fractional shares) or by lot.  If such redemption is to be by lot and, as a result of such redemption, any holder of shares of Series A Preferred Stock would become a holder of a number of shares of Series A Preferred Stock in excess of the Ownership Limitations because such holder’s shares of Series A Preferred Stock were not redeemed, or were only redeemed in part then, except as otherwise provided in the Charter, the Corporation will redeem the requisite number of shares of Series A Preferred Stock of such holder such that no holder will hold a number of shares in excess of the Ownership Limitations subsequent to such redemption.

(2)         To ensure that the Corporation remains qualified as a REIT for federal income tax purposes, the Series A Preferred Stock shall be subject to the Ownership Limitations, pursuant to which shares of Series A Preferred Stock owned by a stockholder in excess of the Ownership Limitations shall automatically be transferred to a Charitable Trust and the Corporation shall have the right to purchase such shares, as provided in Article VII of the Charter.  If the Corporation calls for redemption any shares of Series A Preferred Stock pursuant to and in accordance with Article VII of the Charter and this Section (k)(2), then the redemption price will be an amount equal to the Liquidation Value, plus the value of all accumulated and unpaid Cash Distributions and Aggregate Stock Dividends on the Series A Preferred Stock to, but not including, the Optional Redemption Date, subject to any restrictions or limitations contained in Article VII of the Charter.

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(3)         Unless full cumulative distributions and dividends on all shares of Series A Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past distribution and dividend periods, (i) no shares of Series A Preferred Stock shall be redeemed pursuant to the Optional Purchase Right unless all outstanding shares of Series A Preferred Stock are simultaneously redeemed and (ii) the Corporation shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or be made available for a sinking fund for the redemption of, any shares of Series A Preferred Stock (except by conversion into or exchange for shares of, or options, warrants or rights to purchase or subscribe for shares of, Junior Securities); provided, however, that the foregoing shall not prevent the redemption or purchase by the Corporation of shares of Series A Preferred Stock pursuant to Article VII of the Charter or otherwise in order to ensure that the Corporation remains qualified as a REIT for federal income tax purposes or the purchase or acquisition of shares of Series A Preferred Stock pursuant to a purchase or exchange offer made on the same terms to all holders of Series A Preferred Stock.

(4)         Immediately prior to any redemption of shares of Series A Preferred Stock pursuant to the Optional Redemption Right, the Corporation shall pay any accumulated and unpaid Cash Distributions or Aggregate Stock Dividends, as applicable, on the Series A Preferred Stock to, but not including, the Optional Redemption Date, unless a redemption date falls after a record date for the payment of Cash Distributions or Aggregate Stock Dividends and prior to the corresponding Distribution Payment Date, in which case each holder of record of Series A Preferred Stock at the close of business on such record date shall be entitled to the distribution or dividend payable on such shares on the corresponding Distribution Payment Date (including any accumulated and unpaid distributions or dividends for prior distribution periods) notwithstanding the redemption of such shares pursuant to the Optional Redemption Right prior to such Distribution Payment Date.  Except as provided above and in this Section (k)(4), the Corporation will make no payment or allowance for unpaid distributions or dividends, whether or not in arrears, on shares of Series A Preferred Stock for which a notice of the Corporation’s exercise of the Optional Redemption Rights has been given.

(5)         The Corporation shall provide each holder of Series A Preferred Stock with a written notice of redemption (the “Optional Redemption Notice”) (addressed to the holder at its address as it appears on the books and records of the Corporation or, at such other place in the United States as such holder shall have designated by written notice to the Corporation), not not fewer than 10 nor more than 60 days before the Optional Redemption Date. The Optional Redemption Notice shall specify (1) the Optional Redemption Date; (2) the Optional Redemption Price; and (3) the place the holders of Series A Preferred Stock may obtain payment of the Optional Redemption Price upon surrender of their certificates (to the extent physical certificates have been issued and outstanding). A failure to give such notice or any defect in the notice or in its mailing shall not affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as to the holder to whom notice was defective or not given. On or before the Optional Redemption Date, each holder of shares of Series A Preferred Stock to be redeemed on the Optional Redemption Date shall surrender the certificate or certificates representing such shares to the Corporation, in the manner and at the place designated in the Optional Redemption Notice, and thereupon the Optional Redemption Price for such shares will be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof.

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(l)          Series Protective Provisions.

(1)         So long as shares of Series A Preferred Stock remain outstanding, the Corporation shall not, without the approval, by vote or written consent, of the holders of a majority of the shares of Series A Preferred Stock then outstanding, voting as a separate class:

(A)         amend the Charter or Bylaws (including, without limitation, to modify the authorized amounts of capital stock of the Company other than Common Stock and to increase the amount of authorized Series A Preferred Stock in accordance with the requirements of paragraph (q) hereof) or amend any material terms of the Series A Preferred Stock, in each case, in any manner that would alter or change the rights, preferences, privileges or restrictions of the Series A Preferred Stock so as to materially and adversely affect such Series A Preferred Stock; or

(B)         by reclassification or otherwise (i) create or authorize any class or series of capital stock of the Corporation expressly designated as ranking senior to or on a parity with the Series A Preferred Stock as to distribution rights and rights upon liquidation, winding up and dissolution of the Corporation, (ii) create or authorize any obligation or security convertible into shares of Series A Preferred Stock or into shares of any other class or series of stock senior to or on parity with the Series A Preferred Stock as to distribution rights and rights upon liquidation, winding up and dissolution of the Corporation or (iii) authorize or issue any shares of Series A Preferred Stock other than shares of Series A Preferred Stock for issuance pursuant to the Stock Purchase Agreement or as dividends on shares of Series A Preferred Stock permitted by this clause (iii).

(2)         So long as shares of Series A Preferred Stock remain outstanding, the Corporation shall deliver to the Preferred Stock Director and such other persons designated by him (subject to appropriate covenants by the recipients with respect to the confidentiality thereof) within ten (10) Business Days after preparation final copies of all investment memoranda and investment financial summaries prepared in accordance with the Corporation’s internal policies and procedures in existence as of the Filing Date with respect to each investment by the Corporation in excess of $2,000,000.

(3)         So long as shares of Series A Preferred Stock remain outstanding, the Corporation will maintain a Leverage Ratio of no more than 0.4:1.0, measured as of the last day of each fiscal quarter and evidence thereof shall be provided to the holders of the Series A Preferred Stock no later than the deadline to file the Corporation’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q with the SEC (inclusive of any extended filing due date provided for under Rule 12b-25 under the Exchange Act) or delivered under Section (h), as applicable.

(4)         At any time that Series A Preferred Stock remains outstanding, if Dean Jernigan voluntarily leaves the position of Chief Executive Officer (and is not serving as Executive Chairman) or Executive Chairman of the Corporation, the holders of a majority of the shares of Series A Preferred Stock then outstanding, voting as a separate class, by vote or written consent, shall have the right to accept or reject the service of any person as Chief Executive Officer (or such person serving as the principal executive officer) of the Corporation.

(m)          Preemptive Rights.

(1)         Except as otherwise set forth herein, the shares of Series A Preferred Stock shall not entitle any holder to acquire, or have any rights, preemptive or otherwise, with respect to any issuance, sale, transfer, disposition or acquisition of any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities or such warrants, rights or options may be designated, issued or granted.

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(2)         Each of the holders of Series A Preferred Stock will have the right to purchase its pro rata share of a Qualified Offering. The pro rata share of a Qualified Offering for each holder of Series A Preferred Stock shall be the number of shares of Common stock equal to the product of (i) the number of shares of Common Stock proposed to be issued, sold or placed in the Qualified Offering and (ii) a fraction, the numerator of which is the number of shares of Common Stock that is owned of record by such holder, or owned beneficially by such holder through a custodian or nominee holding on behalf of such holder, immediately prior to the Qualified Offering and the denominator of which is the total number of shares of Common Stock outstanding immediately prior to such Qualified Offering.

(3)         If the Corporation proposes to issue any Common Stock in a Qualified Offering, it shall give the holders of Series A Preferred Stock written notice (a “Rights Notice”) together with a description of the anticipated material terms of the Qualified Offering (which, with respect to expected pricing, may be expressed as a range), including the information required to calculate the pro rata share of the Qualified Offering. The Rights Notice shall be given no later than the later of (A) 10 Business Days prior to the expected date of pricing of the Qualified Offering or (B) the date on which the Corporation selects an underwriter or placement agent and authorizes the preparation of material documents in respect of such Qualified Offering. The Rights Notice shall state a definitive launch time for the Qualified Offering (the “Launch Cutoff”). A failure to give such Rights Notice or any defect in the notice or in its mailing shall not affect the validity of the proceedings for the redemption of any shares of Series A Preferred Stock except as to the holder to whom notice was defective or not given. Acceptance by holders of Series A Preferred Stock of certificates representing shares of Series A Preferred Stock and acceptance of any Rights Notice shall be deemed acknowledgement by such recipient that the issuance of a Rights Notice may be deemed material non-public information with respect to the Corporation, and the recipient of any Rights Notice shall keep confidential and shall not disclose the existence of such Rights Notice to any person other than on a “need to know” basis for purposes of making the decision to exercise the preemptive rights hereunder, and shall take reasonable steps to ensure that no transactions in the Corporation’s Common Stock are effected by any holder of Series A Preferred Stock after receipt of such Rights Notice (it being the express purpose of this provision to permit the Corporation to meet its obligations under Regulation FD under the Exchange Act and under applicable laws in respect of the trading of stock while in possession of material nonpublic information). Each of the holders of Series A Preferred Stock will have 10 Business Days from the delivery of such Rights Notice to agree to purchase its pro rata share of the Qualified Offering for the price and upon the terms and conditions specified in the Rights Notice by giving written notice to the Corporation and stating therein the quantity of the Common Stock to be purchased. Notwithstanding the foregoing, the Corporation shall not be required to offer or sell such Common Stock to any Investor who would cause the Corporation to be in violation of applicable laws or any restriction or qualification in the Charter or Bylaws.

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(4)         Notwithstanding anything herein to the contrary, the purchase of Common Stock by any holder of Series A Preferred Stock pursuant to this Section (m) together with any rights to receive shares of Common Stock in any Per Share Stock Dividend shall be subject to the Ownership Limitations and the maximum number of shares of Common Stock that may be issued without approval of the Corporation’s stockholders pursuant to Rule 312.03(b) or (c), as applicable, of the New York Stock Exchange Listed Company Manual (or any replacement provision for such rule or any similar rule of any other national securities exchange on which the Common Stock is then listed). The Corporation shall have the right, in its sole discretion, at all times prior to consummation of any proposed Qualified Offering giving rise to the rights granted by this Section (m) to abandon, withdraw or otherwise terminate such proposed Qualified Offering. Notwithstanding anything to the contrary herein, in the event that any holder of Series A Preferred Stock is required to file any notifications or report forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) in order to exercise the such holder’s rights pursuant to this Section (m), then such holder shall not have the right purchase right set forth in this Section (m) for such Qualified Offering.

(n)          Transfer Restrictions. The holders of the Series A Preferred Stock are at all times subject to the transfer restrictions set forth in the Stock Purchase Agreement. Not less than five Business Days prior to any proposed transfer of any shares of Series A Preferred Stock, the holder thereof shall give written notice to the Corporation of such holder’s intention to effect such transfer. Each such notice shall describe the manner of the proposed transfer and, if required as described below, shall be accompanied by an opinion of counsel reasonably satisfactory to the Corporation, dated as of the proposed transfer date, to the effect that the proposed transfer may be effected without registration under the Securities Act and any applicable state securities or “blue sky” laws, whereupon such holder shall be entitled to transfer the shares of the Series A Preferred Stock in accordance with the terms of the notice.

No transfer shall be effective until such transfer is reflected on the books and records of the Corporation and unless such transfer will not result in a violation of the Ownership Limitations set forth in the Corporation’s Charter. Each certificate transferred as provided above shall bear the legend set forth below in this Section (n). Certificates representing shares of Series A Preferred Stock shall not be required to contain the legend set forth in this Section (n) or any other legend (other than the Ownership Limit Legend (defined below)) (1) while a registration statement covering the resale of such shares is effective under the Securities Act, (2) following any sale of such shares pursuant to Rule 144 (assuming the transferor is not an affiliate (as defined in Rule 144) of the Corporation), (3) if such shares are eligible to be sold, assigned or transferred under Rule 144 (provided that the holder provides the Corporation with reasonable assurances that such shares are eligible for sale, assignment or transfer under Rule 144, which shall not require an opinion of counsel), (4) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the holder provides the Corporation with an opinion of counsel to the holder, in a generally acceptable form, to the effect that such sale, assignment or transfer of the shares may be made without registration under the applicable requirements of the Securities Act or (5) if such legend is not required under applicable requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the SEC).

Each certificate representing shares of the Series A Preferred Stock shall bear a legend indicating that the Series A Preferred Stock are subject to the Ownership Limitations set forth in the Corporation’s Charter (the “Ownership Limit Legend”), any legend required by the MGCL, any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form until such time as they are not required:

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THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The Corporation may refuse to record any attempted transfer of shares of Series A Preferred Stock not in compliance with this Section (n).

(o)          Restrictions on Ownership and Transfer of Series A Preferred Stock; Preservation of REIT Status.

(1)         The ownership and transfer of shares of Series A Preferred Stock shall be subject to the provisions of Article VII of the Corporation’s Charter.

(2)         If, based upon the advice of legal counsel, the Board reasonably determines that the issuance of Common Stock or Preferred Stock as a Per Share Stock Dividend to a holder of Series A Preferred Stock (based on the Beneficial Ownership and Constructive Ownership of Common Stock and Series A Preferred Stock of such holder) would create a substantial risk that the Corporation would no longer qualify as a REIT under Section 856(a)(6) of the Code (an “Adverse REIT Status Determination”), then only such number of shares of Common Stock and/or Series A Preferred Stock shall be issued such that there is no substantial risk that the Corporation would no longer qualify as a REIT under Section 856(a)(6) of the Code. At least three Business Days prior to the Board making any Adverse REIT Status Determination, the Corporation shall give written notice to each such holder of Series A Preferred Stock, notifying such holder that the issuance of Common Stock and/or Series A Preferred Stock as a Per Share Stock Dividend may be subject to an Adverse REIT Status Determination, and shall thereafter consult in good faith with each such holder as to such determination, including as to the actual Beneficial Ownership and Constructive Ownership of such holder, before the Board makes any Adverse REIT Status Determination.

(3)         In connection with any Adverse REIT Status Determination each holder of any Series A Preferred Stock subject to an Adverse REIT Status Determination shall be issued cash in an amount equal to the value of the remaining amount of any Aggregate Stock Dividend owed by the Corporation to the holder and not able to be paid in Common Stock or Series A Preferred Stock due to the Adverse REIT Status Determination.

(4)         “Beneficial Ownership,” “Constructive Ownership,” “REIT” and “Code” shall have the meanings set forth in the Corporation’s Charter.

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(p)          No Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock or Series A Preferred Stock shall be issued as Aggregate Stock Dividends but, in lieu thereof, the Corporation shall pay to any such holder, at the Corporation’s option (i) an amount in cash equal to (A) in the case of the Series A Preferred Stock, the applicable fraction of a share of Series A Preferred Stock multiplied by the Liquidation Value or (B) in the case of the shares of Common Stock, the applicable fraction of a share of Common Stock multiplied by the closing stock price of one share of Common Stock on the Stock Payment Dividend Date or (ii) one additional whole share (on a holder by holder basis).

(q)          Authorization of Shares.. The Corporation shall, from time to time, in accordance with the laws of the State of Maryland, use its best efforts to increase the authorized number of shares of Common Stock and/or Series A Preferred Stock if, at any time, the number thereof shall not be sufficient to permit the issuance of Aggregate Stock Dividends. If any shares of Common Stock or Series A Preferred Stock required to be issued need to be registered with, or approved by, any governmental authority under any federal or state law before such shares may be issued, the Corporation shall, in good faith and as expeditiously as possible, endeavor to cause such shares to be duly registered or approved, as the case may be. If the Common Stock is listed on a national securities exchange, the Corporation shall, in good faith and as expeditiously as possible, if permitted by the rules of such exchange, endeavor to list and keep listed on such exchange, upon official notice of issuance, all shares of Common Stock issuable as Aggregate Stock Dividends.

(r)          Corporate Opportunities. The Corporation hereby renounces any interest or expectancy of the Corporation or any Affiliate of the Corporation in, or in being offered an opportunity to participate in, any and all business opportunities that are presented to the holders of Series A Preferred Stock or their Affiliates (including, without limitation, any representative or Affiliate of such holders of Series A Preferred Stock serving on the Board or the board of directors or other governing body of any Affiliate of the Corporation) (collectively, the “Investor Parties”), except as otherwise provided in this Section (r). Without limiting the foregoing renunciation, the Corporation on behalf of itself and its Affiliates (1) acknowledges that the Investor Parties are in the business of making investments in, and have or may have investments in, other businesses similar to and that may compete with the businesses of the Corporation and its Affiliates (“Competing Businesses”) and (2) agrees that the Investor Parties shall have the right to make investments in or have relationships with other Competing Businesses independent of their investments in the Corporation. By virtue of an Investor Party holding capital stock of the Corporation or by having persons designated by or Affiliated with such Investor Party serving on or observing at meetings of any of the Board, committee or otherwise, no Investor Party shall have any obligation to the Corporation, any of its Affiliates or any other holder of capital stock or securities of the Corporation to refrain from competing with the Corporation and any of its Affiliates, making investments in or having relationships with Competing Businesses, or otherwise engaging in any commercial activity and none of the Corporation, any of its Affiliates or any other holder of capital stock or securities of the Corporation shall have any right with respect to any investment or activities undertaken by such Investor Party. Without limitation of the foregoing, so long as any such investment or relation with other Competing Businesses does not arise out of the Investor Parties’ relationship with the Corporation, as a stockholder, director, or otherwise, each Investor Party may engage in or possess any interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Corporation or any of its Affiliates, and none of the Corporation, any of its Affiliates or any other holder of capital stock or securities of the Corporation shall have any rights or expectancy by virtue of such Investor Parties’ relationships with the Corporation, or otherwise in and to such independent ventures or the income or profits derived therefrom; and the pursuit of any such ventures, even if such investment is in a Competing Business, shall not for any purpose be deemed wrongful or improper. No Investor Party shall be obligated to present any particular investment opportunity to the Corporation or its Affiliates even if such opportunity is of a character that, if presented to the Corporation or such Affiliates, could be taken by the Corporation or such an Affiliate, provided such Investor Party shall have acted in good faith and such opportunity shall not have been offered to such person in his or her capacity as a director of the Corporation. Each Investor Party shall continue to have the right for its own respective account or to recommend to others any such particular investment opportunity. The Corporation shall not be obligated to present any particular investment opportunity to the Investment Parties or their Affiliates even if such opportunity is of a character that, if presented to the Investor Parties or such Affiliates, could be taken by such Investor Parties or such an Affiliate.

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(s)          Definitions:

“Affiliate” means, in respect of any Person, any other Person that is directly or indirectly controlling, controlled by, or under common control with such Person, and the term “control” (including the terms “controlled by” and “under common control with”) shall mean having, directly or indirectly, the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or by contract or otherwise.

“Business Day” means any day on which the New York Stock Exchange is open for trading during normal trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern Time), including any day on which the New York Stock Exchange is open for trading for a period of time less than the customary time.

“Change of Control Event” has the meaning given in Section (i).

“Cumulative Cap” means as of any Distribution and Dividend Payment Date or Change of Control Redemption Date, as applicable, an amount that is equal to the Target Return.

“Funded Debt” means, with respect to any Person (or consolidated group of Persons) at any date of determination (without duplication):

(a) all indebtedness of such Person for borrowed money;

(b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(c) all direct obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep-well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations;

(d) all unconditional obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, except Trade Payables;

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(e) all capitalized lease obligations, determined in accordance with GAAP;

(f) all Funded Debt of other Persons secured by a Lien on any asset of such Person, whether or not such Funded Debt is assumed by such Person; provided, however, that the amount of such Funded Debt shall be the lesser of (A) the fair market value of such asset at that date of determination and (B) the amount of such Funded Debt; and

(g) all Funded Debt of other Persons guaranteed by such Person to the extent such Funded Debt is guaranteed by such Person.

The amount of Funded Debt of any Person at any date shall be the outstanding balance at such date of all unconditional obligations of the type described above and, with respect to obligations under any guarantee, the maximum liability upon the occurrence of the contingency giving rise to the obligation; provided, however, that: (a) the amount outstanding at any time of any Funded Debt issued with original issue discount shall be deemed to be the face amount with respect to such Funded Debt less the remaining unamortized portion of the original issue discount of such Funded Debt at the date of determination in conformity with GAAP; (b) Funded Debt shall not include trade payables and accrued expenses or any liability for foreign, federal, state, local or other taxes; (c) Funded Debt shall not include any indemnification, earnouts, adjustment or holdback of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a subsidiary, other than guarantees of Funded Debt incurred by any Person acquiring all or any portion of such business, assets or subsidiary for the purpose of financing such acquisition; and (d) Funded Debt shall not include contingent obligations under performance bonds, performance guarantees, surety bonds, appeal bonds or similar obligations incurred in the ordinary course of business and consistent with past practices.

“GAAP” means generally accepted accounting principles in the United States, consistently applied.

“Incremental Equity Book Value” is the amount equal to (i) the difference (if positive) between (A) total assets minus total liabilities determined according to GAAP and reported on the Corporation’s consolidated balance sheet at the end of a particular fiscal quarter, minus (B) total assets minus total liabilities determined and reported in the same manner for the immediately preceding fiscal quarter, with such difference being further adjusted to (W) subtract the net proceeds (or value of assets received upon issuance, such as upon the acquisition of assets in exchange for units of membership interest in Jernigan Capital Operating Company, LLC, or any successor thereto) of any new equity issued from time to time following the Filing Date, (X) add the amortized amount of any stock-based compensation incurred during such period, (Y) add the amount of any depreciation or amortization recognized during such period and (Z) add an amount equal to the consideration paid for any redemption or repurchase of capital stock of the Corporation during such period.

“Incremental Net Asset Value” means the amount equal to the difference (if positive) between (i) Net Asset Value calculated at the end of a particular fiscal quarter, minus (ii) Net Asset Value calculated in the same manner for the immediately preceding fiscal quarter.

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“Indebtedness” means “Indebtedness” means, as to any Person, as at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities on the Corporation’s balance sheet in accordance with GAAP.

(a) all Funded Debt;

(b) all contingent obligations under letters of credit (including standby and commercial), bankers’ acceptances and similar instruments (including bank guaranties, surety bonds, comfort letters, keep-well agreements and capital maintenance agreements) to the extent such instruments or agreements support financial, rather than performance, obligations;

(c) net obligations under any Swap Contract;

(d) Support Obligations in respect of Indebtedness of another Person; and

(e) Indebtedness of any partnership or joint venture or other similar entity in which such Person is a general partner or joint venturer, and, as such, has personal liability for such obligations, but only to the extent there is recourse to such Person for payment thereof.

For purposes hereof, the amount of Indebtedness shall be determined based on Swap Termination Value in the case of net obligations under Swap Contracts under clause (c) and based on the outstanding principal amount of the Indebtedness that is the subject of the Support Obligations in the case of Support Obligations under clause (d).

“IRR” shall mean the annual discount rate that results in a net present value equal to zero when such discount rate is applied to the payment for each share of Series A Preferred Stock in cash by any purchaser of Series A Preferred Stock on the date of issuance, as an outflow, and all Cash Distributions, Aggregate Stock Dividends and Make-Whole Premiums made (or deemed to have been made) by the Corporation to any holder of Series A Preferred Stock, as an inflow. The IRR shall be calculated based on actual dates of outflows and inflows using the XIRR function in Microsoft Excel.

“Leverage Ratio” means, with respect to any fiscal quarter, determined on a consolidated basis in accordance with GAAP, the ratio of (a) total Indebtedness to (b) total Tangible Assets.

“Make-Whole Premium” shall mean an amount in cash necessary to make the Total Return equal the Target Return as of a particular date of determination.

“Net Asset Value” means the aggregate value of the Company’s interests in income-producing real properties (if any) (excluding any interests (including, without limitation, profits interests in self-storage properties associated with loans made by the Company that remain outstanding) included in the accounting for financial instruments that continue to be accounted for at fair value under GAAP) at the end of a particular fiscal quarter, minus the aggregate value of the Company’s liabilities related to its interests in such income-producing real properties (if any) at the end of such fiscal quarter, in each case, as determined by a nationally recognized, independent third-party valuation firm mutually acceptable to the Company and the Preferred Representative.

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“Optional Redemption Price” means an amount per share equal to (a) $1,050 for any Optional Redemption Date on or after the fifth anniversary of the Filing Date and before the sixth anniversary of the Filing Date and (b) $1,000 for any Optional Redemption Date after the sixth anniversary of the Filing Date.

“Person” means any individual, partnership, limited partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or other entity.

“Preferred Representative” means NexPoint Advisors, L.P.

“Qualified Offering” means any offering of Common Stock, for the account of the Corporation, other than any of the following:

(a) any shares of Common Stock issued for consideration in connection with a merger, consolidation, acquisition or similar business combination;

(b) any shares of Common Stock issued for consideration in connection with a joint venture, strategic alliance or similar corporate partnering arrangement;

(c) any shares of Common Stock issued for consideration in connection with any acquisition of assets by the Corporation;

(d) any shares of Common Stock issued at market prices through the facilities of a national securities exchange pursuant to a registered at-the-market program duly adopted by the Corporation; and

(e) any shares of Common Stock issued as part of a compensatory or employment arrangement.

“Support Obligations” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person. The amount of any Support Obligations shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Support Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.

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“Swap Contract” means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement with respect to interest rates, or any foreign exchange contract, currency swap agreement or other similar agreement or arrangement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination values determined in accordance therewith, such termination values and (b) for any date prior to the date referenced in clause (a), the amounts determined as the mark-to-market values for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts.

“Tangible Assets” means the total assets of the Corporation on a consolidated basis, minus any intangible assets, in each case determined in accordance with GAAP.

“Target Return” shall mean a 14.0% IRR.

“Total Return” shall mean (without double-counting), as of a particular date of determination, the actual return equal to the sum of: (a) an amount equal to the sum of the aggregate Cash Distributions and value of Aggregate Stock Dividends (determined as of the date of payment, and excluding any appreciation or depreciation in value following such date) declared and paid to the holders of Series A Preferred Stock and (b) any Make-Whole Premium payable in connection with any mandatory redemption upon the occurrence of a Change of Control Event.

“Triggering Event” means, without duplication, each of: (1) the occurrence of a Change of Control Event after the third anniversary of the Filing Date; (2) the Corporation ceasing to be subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act; (3) the Corporation’s failure to satisfy the requirements for qualification and taxation as a REIT under the Code, or the Corporation’s revocation of its election to be taxed as a REIT under the Code, including pursuant to a determination by the Board that it is no longer in the best interests of the Corporation for the Corporation to continue to so qualify as a REIT; (4) an Event of Default as defined in the Stock Purchase Agreement, dated as of July 27, 2016, between the Corporation, NexPoint Advisors, L.P. (as the Preferred Representative) and the Buyers set forth therein, and the failure to cure any such failure within the timeframe provided for therein with respect to any such Event of Default; (5) a Registration Default, as defined in the Registration Rights Agreement, dated as of July 27, 2016, between the Corporation and the Buyers set forth therein, (6) the failure by the Corporation to redeem the Series A Preferred Stock on any required Redemption Date; or (7) (A) the SEC shall have filed a complaint against any of the Corporation or any of its subsidiaries or a director or executive officer of the Corporation or any of its subsidiaries with respect to the business of the Corporation or any of such subsidiaries, (B) the Corporation or any such subsidiaries shall have entered into a settlement with the SEC to an enforcement action by the SEC against any person covered by clause (A) with respect to the business of the Corporation or any of such subsidiaries or (C) a judgment shall have been entered by a court that includes a finding that any person covered in clause (A) shall have violated securities laws, rules or regulations with respect to the business of the Corporation or any such subsidiaries.

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(t)          Maturity. The Series A Preferred Stock has no stated maturity and will not be subject to any sinking fund and except as described in Section (j) above will not be subject to any mandatory redemption or forced conversion.

(u)          Notice. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted and confirmed by any standard form of telecommunication. Notices to the holders of shares of the Series A Preferred Stock shall be given to the holders at the addresses provided by the holders to the Corporation. Notices to the Corporation shall be given to the Corporation at Jernigan Capital, Inc., 6410 Poplar Avenue, Suite 650, Memphis, TN 38119, Attn: John A. Good; with a copy to: William H. Mathieu, and an additional copy to: Morrison & Foerster LLP, 2000 Pennsylvania Avenue, NW, Suite 6000, Washington, DC 20006, Attn: David P. Slotkin.

(v)         Exclusive Voting Rights. The holders of the Series A Preferred Stock shall have exclusive voting rights on any amendment to the Charter (including these Articles Supplementary) that would alter only the contract rights, as expressly set forth in the Charter, of the Series A Preferred Stock.

THIRD: The Series A Preferred Stock has been classified and designated by the Board under the authority contained in the Charter.

FOURTH: These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

FIFTH: These Articles Supplementary shall be effective at the time the SDAT accepts these Articles Supplementary for record.

SIXTH: The undersigned acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties of perjury.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its Chairman of the Board of Directors and Chief Executive Officer and attested to by its Senior Vice President, Chief Financial Officer and Treasurer on this 27th day of July, 2016.

ATTEST:	JERNIGAN CAPITAL, INC.
/s/ William C. Drummond	/s/ Dean Jernigan
Name: William C. Drummond	Name: Dean Jernigan
Title: Senior Vice President, Chief Financial Officer and Treasurer	Title: Chairman of the Board of Directors and Chief Executive Officer

[Signature Page to Articles Supplementary]

EX-10.1

Exhibit 10.1

STOCK PURCHASE AGREEMENT

STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of July 27, 2016, by and between JERNIGAN CAPITAL, INC., a Maryland corporation (the “Company”), and certain funds managed or advised by Highland Capital Management, L.P. or its controlled affiliates (“Highland”) and identified on the signature page(s) hereto (each, a “Buyer” and collectively, together with their permitted transferees and assigns, the “Buyers”).

RECITALS:

A.           The Company is offering for sale (the “Offering”) shares of its Series A Preferred Stock, par value $0.01 per share (the “Preferred Stock”). When purchased, the Preferred Stock will have the terms set forth in the articles supplementary in the form attached as Annex A hereto (the “Articles Supplementary”) and made a part of the Company’s Articles of Amendment and Restatement (the “Charter”) by the filing of the Articles Supplementary with the Maryland Department of Assessments and Taxation (the “SDAT”). The Preferred Stock will pay dividends in both cash and, at the election of the Buyers, in additional shares of Preferred Stock or in shares of the common stock, par value $0.01 per share, of the Company (the “Common Stock”), subject to and in accordance with the terms and conditions and limitations set forth in the Articles Supplementary.

B.           Pursuant to this Agreement, the Buyers wish to purchase, and the Company wishes to sell, upon the terms and conditions set forth herein, up to $100,000,000 of Preferred Stock (subject to a minimum amount of $50,000,000 of Preferred Stock to be issued and sold by the Company by the second anniversary of the date of the Agreement), which may be increased at the request of the Company by $25,000,000. The sale of shares of Preferred Stock in the Offering may occur from time to time in one or more closings.

C.           The Company and the Buyers are executing and delivering this Agreement in reliance upon the registration exemption afforded by Section 4(a)(2) of the Securities Act, and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “Commission”) under the Securities Act.

D.           Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, substantially in the form attached hereto as Annex B (the “Registration Rights Agreement”), pursuant to which, among other things, the Company will agree to provide certain registration rights with respect to the Dividend Common Stock under the Securities Act and the rules and regulations promulgated thereunder and applicable state securities laws.

E.           Contemporaneously with the execution and delivery of this Agreement, the parties hereto are executing and delivering the Disclosure Schedules (as defined below), annexes and exhibits attached hereto, the Articles Supplementary, the Registration Rights Agreement and any other documents or agreements explicitly contemplated hereunder (together with this Agreement, collectively, the “Transaction Documents”) with respect to the issuance of the Securities to the Buyers, including as dividends on the Preferred Stock.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Buyers hereby agree as follows:

1. PURCHASE OF PREFERRED STOCK.

Subject to the terms and conditions set forth in this Agreement, the Company has the right to sell to the Buyers, and each of the Buyers has the obligation, severally and not jointly, to purchase from the Company, shares of Preferred Stock as follows:

(a)          The Company’s Right to Require Regular Purchases. Subject to the terms and conditions of this Agreement, on any given Business Day after the satisfaction of the conditions set forth in Sections 5 and 6 of this Agreement, through and including, the tenth Business Day (the “Final Purchase Notice Date”) preceding the second anniversary of this Agreement (such second anniversary date, the “Final Draw Date”), the Company shall have the right, but not the obligation (other than as set forth in Section 1(b) below), to direct the Buyers by its delivery to the Buyers of a Purchase Notice from time to time, and each of the Buyers thereupon shall have the obligation, severally and not jointly, to purchase the Purchase Amount specified in the Purchase Notice (each such purchase, a “Regular Purchase”) at the Purchase Price on the Purchase Date, as specified in the Purchase Notice; however, in no event shall (i) the Purchase Amount of a Regular Purchase be (A) less than $5,000,000 or, if greater than $5,000,000, other than in integral multiples of $1,000,000, (B) more than $15,000,000 in any given calendar month, and (C) more than $35,000,000 in any three-month period, and (ii) the Purchase Date be subsequent to the Final Draw Date. The Company may deliver additional Purchase Notices for additional Regular Purchases to the Buyers from time to time so long as the most recent Regular Purchase has been completed, and, in any event, at most one-time per month.

(b)          Company’s Obligation to Issue Preferred Stock. If, on or before the Final Purchase Notice Date, the Company has not issued and the Buyers have not purchased an aggregate of $50,000,000 of Preferred Stock, then on the Final Draw Date of this Agreement, provided that the conditions set forth in Sections 5 and 6 below are satisfied, the Buyers shall purchase and the Company shall issue the amount of Preferred Stock that, together with all previous issuances and purchases, would equal $50,000,000.

(c)          Payment for Purchase of Shares. For each Regular Purchase, the Buyers shall pay to the Company an amount equal to the Purchase Amount as full payment for such shares of Preferred Stock by wire transfer of immediately available funds prior to the issuance by the Company of such shares of Preferred Stock. All payments made under this Agreement shall be made in lawful currency of the United States of America by wire transfer of immediately available funds to such account as the Company may from time to time designate by written notice in accordance with the provisions of this Agreement at least two Business Days prior to the Purchase Date. Whenever any amount expressed to be due by the terms of this Agreement is due on any day that is not a Business Day, the same shall instead be due on the next succeeding Business Day.

(d)          Increase in Available Amount. The Company shall have the right to increase the Available Amount by up to $25,000,000 by the delivery to Buyer Representative of a notice to increase the Available Amount by the amount set forth in such notice. The Company may only give such notice one time and such notice will be effective on such Business Day (as long as such notice is delivered on or before 5:00 p.m. Eastern Time on such Business Day).

(e)          Records of Purchases. Buyer Representative and the Company shall each maintain records showing the remaining Available Amount at any given time and the Purchase Dates and Purchase Amounts for each purchase, or shall use such other method reasonably satisfactory to Buyer Representative and the Company to reconcile the remaining Available Amount.

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(f)          Taxes. The Company shall pay any and all transfer, stamp or similar taxes that may be payable with respect to the issuance and delivery of Securities to the Buyers made in accordance with this Agreement.

(g)          Allocation of Purchases. Subject to adjustment as provided in this Section 1(g), there shall initially be the Buyers as set forth on the signature pages hereto and such Buyers shall be obligated, severally and not jointly, to purchase in proportion to the allocation set forth on Schedule 1(g) (as nearly as possible, subject to any necessary rounding) of the total Preferred Stock to be purchased by Buyers in connection with any Regular Purchase. Notwithstanding the foregoing, at any time and from time to time, Buyer Representative may notify the Company of a change to the identity of the Buyers, the number of Buyers and the allocation of Preferred Stock to be purchased by such Buyers under this Agreement by delivering notice to the Company (an “Allocation Notice”), no later than three Business Days prior to the Purchase Date to which the changes in such Allocation Notice shall apply, which Allocation Notice shall provide: the identity of the Buyers designated to purchase Preferred Stock on such Purchase Date and the allocation (by percentages totaling 100%) between such Buyers; provided, however, that no changes included in an Allocation Notice shall be permitted if such changes would (1) violate the Ownership Limitations set forth in the Charter as to any holder of Common Stock or (2) reasonably be expected to cause the Company to fail to qualify as a REIT. If any Person(s) identified as a Buyer in an Allocation Notice is not a party to this Agreement, such Person shall, prior to the applicable Purchase Date, execute and deliver a joinder agreement substantially in the form attached hereto as Exhibit F.

2. BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer, severally and not jointly, represents and warrants to the Company that as of the date hereof and as of any Purchase Date:

(a)          Authority. The Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to consummate the transactions contemplated by this Agreement and the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement by the Buyer and performance by the Buyer of the transactions contemplated by this Agreement and the other Transaction Documents have been duly authorized by all necessary action on the part of the Buyer. This Agreement and the other Transaction Documents to which the Buyer is a party have been duly executed by the Buyer, and when delivered by the Buyer in accordance with the terms hereof and thereof, will constitute the valid and legally binding obligation of the Buyer, enforceable against it in accordance with its terms, except (1) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (2) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (3) insofar as indemnification and contribution provisions may be limited by applicable law.

(b)          No Conflicts. The execution, delivery and performance by the Buyer of this Agreement and the other Transaction Documents to which it is a party, and the consummation by the Buyer of the transactions contemplated hereby and thereby, do not, and will not (1) result in a violation of any provision of its articles of incorporation, bylaws, limited partnership agreement, limited liability company agreement or similar governing documents of the Buyer, (2) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Buyer is a party or (3) conflict with or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Buyer, except in the case of clauses (2) and (3) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, have, or reasonably be expected to result in, a material adverse effect on the ability of such Buyer to perform its obligations hereunder or under any of the other Transaction Documents to which the Buyer is a party.

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(c)          Investment Intent. The Buyer understands that the shares of Preferred Stock are “restricted securities” and have not been, and will not be, registered for issuance and sale under the Securities Act or any applicable state securities law, and the Buyer is acquiring the shares of Preferred Stock as principal for its own account and not with a view to, or for distributing or reselling such shares of Preferred Stock or any part thereof in violation of the Securities Act or any applicable state securities laws; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the shares of Preferred Stock for any minimum period of time and reserves the right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such shares of Preferred Stock pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. The Buyer is acquiring the shares of Preferred Stock hereunder in the ordinary course of its business. The Buyer does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the shares of Preferred Stock (or any securities which are derivatives thereof) to or through any person or entity. The Buyer is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business that would require it to be so registered as a broker-dealer.

(d)          Buyer Status. The Buyer is an “accredited investor” as defined in Rule 501(a) under the Securities Act. The Buyer acknowledges that, in connection with any Regular Purchase, the Company shall have the right to request evidence reasonably satisfactory to the Company with respect to the Buyer’s status as an “accredited investor” as of the applicable Purchase Date.

(e)          Rule 144. The Buyer acknowledges that it is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and that such Buyer has been advised that Rule 144 permits resales only under certain circumstances. The Buyer understands that to the extent that Rule 144 is not available, but subject to the terms and conditions of the Registration Rights Agreement, the Buyer may only sell Securities pursuant to an effective registration statement under the Securities Act, pursuant to an exemption from such registration requirement or in a transaction not otherwise subject to the registration requirements of the Securities Act.

(f)          General Solicitation. The Buyer acknowledges that the shares of Preferred Stock were not offered to the Buyer as a result of any advertisement, article, notice or other communication regarding the shares of Preferred Stock published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general advertisement.

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(g)          Experience. The Buyer, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the shares of Preferred Stock, and has so evaluated the merits and risks of such investment. The Buyer is able to bear the economic risk of an investment in the shares of Preferred Stock and, at the present time, is able to afford a complete loss of such investment. The Buyer acknowledges that an investment in the shares of Preferred Stock is speculative and involves a high degree of risk.

(h)          Access to Information. The Buyer acknowledges that it has had the opportunity to review the Disclosure Materials (as defined below) and has been afforded (1) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the Offering and the merits and risks of investing in the shares of Preferred Stock, (2) access to information about the Company and its Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment and (3) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of the Buyer or its representatives shall modify, amend or affect the Buyer’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in this Agreement.

(i)          Certain Trading Activities. Other than consummating the transactions contemplated hereunder, the Buyer has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Buyer, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales involving the Company’s securities) since the time that the Buyer was first contacted by the Company or any other Person regarding the specific investment contemplated hereby. The Buyer has maintained the confidentiality of all disclosures made to it in connection with this transaction, including the existence and terms of this transaction.

(j)          Limitations on Issuance of the Securities.

(i)          The Buyer acknowledges that the issuance of the Securities to the Buyer shall be subject to the Ownership Limitations set forth in Article VII of the Company’s Charter (subject to any Excepted Holder Limit (as defined in the Charter) in any waiver of Ownership Limitations applied to the Buyer), and no Dividend Common Stock shall be issued to the Buyer if such issuance would cause the number of Dividend Common Stock issued to exceed the Share Cap (as defined below).

(ii)         The Buyer acknowledges that the number of Dividend Common Stock that the Buyer shall be entitled to receive, together with such number of Dividend Common Stock issued to all other Buyers, shall be limited to the maximum number of shares of Common Stock that may be issued without approval of the Company’s stockholders pursuant to the listing rules of the Principal Market (the “Share Cap”).

(k)          Brokers and Finders. No Person will have, as a result of this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby, any valid right, interest or claim against or upon the Company or any Buyer for any commissions, fees or expenses or other compensation, provided that the Company will reimburse Buyer Representative for reasonable financial advisor fees that are invoiced by Jefferies LLC within 10 days of any Purchase Date in an amount of 0.75% of the amount purchased on such Purchase Date up to a maximum aggregate amount of $750,000.

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(l)          Independent Investment Decision. The Buyer has independently evaluated the merits of its decision to purchase shares of Preferred Stock pursuant to this Agreement and the other Transaction Documents. The Buyer understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Buyer in connection with the purchase of the shares of Preferred Stock and the future receipt of Securities as dividends constitutes legal, tax or investment advice. The Buyer has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the shares of Preferred Stock and the future receipt of Securities as dividends.

(m)          Reliance on Exemptions. The Buyer understands that the shares of Preferred Stock are being offered and sold to it in reliance on specific exemptions from the registration requirements of federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the shares of Preferred Stock.

(n)          Existing Ownership of Common Stock. Buyers are not the “beneficial owner” or “constructive owner” of more than 9.8% of the Company’s Common Stock, as determined in accordance with the Company’s Charter.

(o)          No Governmental Review. The Buyer understands that no federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the shares of Preferred Stock or the fairness or suitability of the investment in the shares of Preferred Stock, nor have such authorities passed upon or endorsed the merits of the Offering.

(p)          Regulation M. The Buyer is aware that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of Securities and other activities with respect to the Securities by the Buyer.

(q)          Residency. The Buyer’s office in which its investment decision with respect to the Securities was made is located in Texas.

(r)          No Other Representations. Except for the representations and warranties set forth in this Section 2, neither the Buyers nor any other Person makes any express or implied representation or warranty with respect to the Buyers or with respect to any other information provided to the Company in connection with this Agreement.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth in the schedules delivered herewith (the “Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation made herein, as well the SEC Reports (as defined below), the Company hereby represents and warrants as of the date hereof, as of the date the Company gives notice to increase the Available Amount pursuant to Section 1(d) and as of any Purchase Date, to the Buyers:

(a)          Subsidiaries. The Company has no direct or indirect Subsidiaries other than those listed in Schedule 3(a) hereto. Except as disclosed in Schedule 3(a) hereto, the Company owns, directly or indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any and all Liens, and all of the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary, if any, are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

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(b)          Organization and Qualification. The Company and each of its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own or lease and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective articles of incorporation, bylaws or other organizational or charter documents. The Company and each of its Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have a Material Adverse Effect, and no Proceeding has been instituted, is pending, or, to the Company’s knowledge, has been threatened in writing in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c)          Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The Company’s execution and delivery of this Agreement and each of the other Transaction Documents to which it is a party and the consummation by it of the transactions contemplated hereby and thereby (including, but not limited to, the sale and delivery of the shares of Preferred Stock in accordance with the terms hereof and the issuance of the Securities as dividends in accordance with the Articles Supplementary) have been duly authorized by all necessary corporate action on the part of the Company, and, other than a waiver of Ownership Limitations to be granted by the Company’s Board of Directors in accordance with Section 5(j)(i)(G) hereof, no further corporate action is required by the Company, its Board of Directors or its stockholders in connection herewith or therewith other than in connection with the Required Approvals (as defined below). This Agreement and each of the other Transaction Documents to which it is a party have been (or upon delivery will have been) duly executed by the Company and are, or when delivered in accordance with the terms hereof and thereof will constitute, the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (1) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application, (2) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (3) insofar as indemnification and contribution provisions may be limited by applicable law or public policy.

(d)          No Conflicts. The execution, delivery and performance by the Company of this Agreement and each of the other Transaction Documents to which it is a party and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the shares of Preferred Stock and the Securities as dividends) do not and will not (1) conflict with or violate any provisions of the Company’s Charter (as amended or supplemented by the Articles Supplementary) or bylaws or otherwise result in a violation of the organizational documents of the Company, (2) conflict with, or constitute a default (or an event that with notice or lapse of time or both would result in a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any Material Contract or (3) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws, assuming the correctness of the representations and warranties made by the Buyer herein), or by which any property or asset of the Company is bound or affected, except in the case of clauses (2) and (3) such as would not, individually or in the aggregate, have, or would reasonably be expected to result in, a Material Adverse Effect.

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(e)          Filings, Consents and Approvals. Neither the Company nor any of its Subsidiaries is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization (including the Principal Market) or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents (including, without limitation, the issuance of the shares of Preferred Stock and the issuance of the Securities as dividends), other than (1) the filing of the Articles Supplementary with the SDAT, (2) filings required by applicable state securities laws, (3) the filing of a Notice of Exempt Offering of Securities on Form D with the Commission under Regulation D of the Securities Act, (4) the filing of any requisite notices and/or application(s) to the Principal Market for the issuance of the Dividend Common Stock and the listing of the Dividend Common Stock for trading or quotation, as the case may be, thereon in the time and manner required thereby, (5) the filings contemplated in Section 4(a) of this Agreement, (6) those that have been made or obtained prior to the date of this Agreement and (7) those approving the issuance of the Securities as dividends (collectively, the “Required Approvals”).

(f)          Issuance of the Securities. The shares of Preferred Stock have been duly authorized and, when issued and paid for in accordance with the terms of this Agreement and the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer (1) provided for in the Charter, (2) pursuant to Liens granted by or otherwise encumbering any of the Buyers, (3) provided for in this Agreement or (4) imposed by applicable securities laws, and shall not be subject to preemptive or similar rights of stockholders. The issuance of the Securities as dividends, when duly authorized and issued in accordance with the terms of the Articles Supplementary, will be validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer provided for in this Agreement and the other Transaction Documents or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights of stockholders. Assuming the accuracy of the representations and warranties of the Buyers in this Agreement and the timely filing of the Required Approvals, the Securities will be issued in compliance with all applicable federal and state securities laws.

(g)          Capitalization. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement and the other Transaction Documents that have not been effectively waived. The issuance and sale of the shares of Preferred Stock will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Buyers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all applicable federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.

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(h)          SEC Reports; Disclosure Materials. The Company has filed with the Commission all reports, schedules, forms, statements and other documents required to be filed by the Company under the Exchange Act prior to the date this representation is made, including pursuant to Sections 13(a) or 15(d) thereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports,” and the SEC Reports, together with the Disclosure Schedules, being collectively referred to as the “Disclosure Materials”), on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective filing dates, or to the extent corrected or updated by a subsequent amendment or restatement, the SEC Reports complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Each Material Contract has been filed (or incorporated by reference) as an exhibit to the SEC Reports.

(i)          Limitation on Dividends. Neither the Company nor any of its Subsidiaries is a party to or otherwise bound by any instrument or agreement that limits or prohibits it (whether with or without giving notice or the passage of time or both), directly or indirectly, from paying any dividends or making other distributions on its capital stock, and no Subsidiary of the Company is a party to or otherwise bound by any instrument or agreement that limits or prohibits (whether with or without giving notice or the passage of time or both), directly or indirectly, it from paying any dividends or making other distributions on its capital stock, limited or general partnership interests, limited liability company interests, or other equity interest, as the case may be, or from repaying any loans or advance from, or (except for instruments or agreements that by their express terms prohibit the transfer or assignment thereof or of any rights thereunder) transferring any of its properties or assets to, the Company or any Subsidiary.

(j)          Financial Statements. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing (or to the extent corrected or updated by a subsequent amendment or restatement). Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries taken as a whole as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments.

(k)          Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as disclosed in a subsequent SEC Report filed prior to the date this representation is made or deemed to be made, as applicable, (1) there have been no events, occurrences or developments that have or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect, (2) the Company has not incurred any material Liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) Liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (3) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (4) there has not been any entry into, or any material change or amendment to, or any waiver of any material right by the Company or any of its Subsidiaries under, any Material Contract.

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(l)          Certified Public Accountant. Grant Thornton LLP (or any successor certified public accountant thereto) who has audited and issued an audit report with respect to the financial statements of the Company (including the related notes thereto and supporting schedules) included as part of the Company’s most recently filed Annual Report on Form 10-K (or any amendment or supplement thereto), is, at the time this representation is made or deemed to be made, an independent registered public accounting firm as required by the Securities Act.

(m)          Litigation. There is no Action pending or, to the knowledge of the Company, threatened, which (1) adversely affects or challenges the legality, validity or enforceability of this Agreement and any of the other Transaction Documents or the issuance of the Securities or (2) except as disclosed in the SEC Reports, would, if there were an unfavorable decision, individually or in the aggregate, have, or would reasonably be expected to result in, a Material Adverse Effect. There are no Actions pending or, to the Company’s knowledge, threatened or contemplated to which the Company or any of its Subsidiaries or any of their respective directors or officers is or would be a party or of which any of the respective properties or assets of the Company or any of its Subsidiaries is or would be subject at law or in equity, before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency, or before or by any self-regulatory organization or other non-governmental regulatory authority, except any such action, suit, claim, investigation or proceeding which, if resolved adversely to the Company or any of its Subsidiaries, would not, individually or in the aggregate, have, or would reasonably be expected to result in, a Material Adverse Effect.

(n)          Employment Matters. No current executive officer of the Company (as defined in Rule 501(f) of the Securities Act) has notified the Company or any of its Subsidiaries that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary. To the Company’s knowledge, no current executive officer is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement with the Company, or any other contract or agreement or any restrictive covenant in favor of a third party, and to the Company’s knowledge, the continued employment of each such executive officer does not subject the Company or any Subsidiary to any Liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or in the aggregate, have, or would reasonably be expected to result in, a Material Adverse Effect.

(o)          Compliance. Neither the Company nor any of its Subsidiaries (1) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any of its Subsidiaries under), nor has the Company or any of its Subsidiaries received written notice of a claim that it is in default under or that it is in violation of, any Material Contract (whether or not such default or violation has been waived), (2) is in violation of any order of any court, arbitrator or governmental body having jurisdiction over the Company, its Subsidiaries or their respective properties or assets or (3) is in violation of, or in receipt of written notice that it is in violation of, any statute, rule or regulation of any governmental authority or self-regulatory organization (including the Principal Market) applicable to the Company, except in each case as would not, individually or in the aggregate, have, or would reasonably be expected to result in, a Material Adverse Effect.

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(p)          Regulatory Permits. Each of the Company and its Subsidiaries has all necessary authorizations, licenses, permits, authorizations, consents and approvals, and possesses all certificates, authorizations and permits (collectively, “Permits”) issued by the appropriate federal, state, local or federal regulatory authorities (“Governmental Authority”) necessary to conduct their respective businesses, except to the extent that any failure to have any such Permits, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. All applications required to have been filed for the renewal of Permits have been duly filed on a timely basis with the appropriate Governmental Authority except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and all other filings required to have been made with respect to such Permits have been duly made on a timely basis with the appropriate Governmental Authority or third party, except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received any written notice nor has any knowledge indicating that it currently is not in compliance in any material respect with the terms of any Permit.

(q)          Title to Assets. To the extent the Company or its Subsidiaries owns any real property (“Company Property”), the Company and its Subsidiaries have good and valid title in fee simple to any Company Property, if applicable, in each case free and clear of all Liens, except (1) such as are listed as an exception to any owner’s or leasehold title insurance policy with respect to such properties or otherwise set forth in any loan or financing documentation relating to such properties, in each case made available by the Company to the Buyers, (2) for the leasehold interests of the tenants or (3) such as would not, individually or in the aggregate, have a Material Adverse Effect. The Company or its Subsidiaries have obtained an owner’s title insurance policy from a title insurance company licensed to issue such policy, on each property that is owned by the Company or such Subsidiary that insures the Company or such Subsidiary’s fee interest in such property or a lender’s title insurance policy insuring the lien of its mortgage securing such property with coverage equal to the maximum aggregate principal amount of any indebtedness held by the Company or such Subsidiary and secured by such property. The Company and its Subsidiaries have good and marketable title to all tangible personal property owned by them that is material to the business of the Company and its Subsidiaries, taken as whole, in each case free and clear of all Liens that do not, individually or in the aggregate, have a Material Adverse Effect on the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any of its Subsidiaries.

(r)          Patents and Trademarks. The Company and its Subsidiaries own, possess, license or have other rights to use all patents, patent applications, trade and service marks, trade and service mark applications and registrations, trade names, trade secrets, inventions, copyrights, licenses, technology, know-how and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have would not have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). There is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by any Person that the Company’s business as now conducted infringes or otherwise violates any patent, trademark, copyright, trade secret or other proprietary rights of such Person. To the Company’s knowledge, there is no existing infringement by another Person of any of the Intellectual Property Rights that would have a Material Adverse Effect. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights, except where failure to do so would not, individually or in the aggregate, have, or would reasonably be expected to result in, a Material Adverse Effect.

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(s)          Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as the Company believes to be prudent and customary in the businesses and locations in which the Company and the Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has received any notice of cancellation of any such insurance, nor, to the Company’s knowledge, will it or any Subsidiary be unable to renew their respective existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business, which individually or in the aggregate, have, or would reasonably be expected to result in, a Material Adverse Effect.

(t)          Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the executive officers or directors of the Company and, to the Company’s knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), that would be required to be disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act and the Exchange Act.

(u)          Internal Accounting Controls. The Company maintains a system of internal accounting controls that comply with the requirements of the Exchange Act and are sufficient to provide reasonable assurance that (1) transactions are executed in accordance with management’s general or specific authorizations, (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and Liability accountability, (3) access to assets or incurrence of Liabilities is permitted only in accordance with management’s general or specific authorization and (4) the recorded accountability for assets and Liabilities is compared with the existing assets and Liabilities at reasonable intervals and appropriate action is taken with respect to any differences. Since the Evaluation Date (as defined below), there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

(v)         Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it. The Company has established disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) for the Company that comply with the requirements of the Exchange Act and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.

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(w)          Certain Fees. No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company or the Buyers for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company, with respect to the offer and sale of the shares of Preferred Stock except as expressly provided herein. The Company shall indemnify, pay, and hold the Buyers harmless against, any Liability, loss or expense (including, without limitation, attorneys’ fees and out-of-pocket expenses) arising in connection with any such right, interest or claim.

(x)          Private Placement. Assuming the accuracy of the Buyer’s representations and warranties set forth in Section 2 of this Agreement, no registration under the Securities Act is required for the offer and sale of the shares of Preferred Stock by the Company to the Buyer under this Agreement. Neither the issuance and sale of the shares of Preferred Stock hereunder nor the issuance of the Dividend Common Stock or the Dividend Preferred Stock in accordance with the Articles Supplementary will contravene the rules and regulations of the Principal Market.

(y)          Investment Company. The Company is not, and immediately after receipt of payment for the shares of Preferred Stock, will not be an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(z)          Registration Rights. Except for the Buyer in connection with the Offering, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

(aa)         Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and the Company has taken no action designed to terminate the registration of the Common Stock under the Exchange Act, nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received written notice from the Principal Market to the effect that the Company is not in compliance with the listing or maintenance requirements of the Principal Market. The Company is in compliance with all listing and maintenance requirements of the Principal Market on the date hereof, except where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse Effect.

(bb)         Rights Agreements. The Company has not adopted any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

(cc)         Tax Matters. (1) The Company and each of its Subsidiaries have timely filed all Tax Returns required to be filed (taking into account any extensions of time within which to file such Tax Returns) and all such Tax Returns are complete, true and accurate in all material respects, and the Company and each of its Subsidiaries have paid all those taxes owed (whether or not shown as due and payable on any Tax Return), other than those that are being contested in good faith, with respect to which adequate reserves have been set aside on the books of the Company.

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(2)         Neither the Company nor any Subsidiary is the subject of any audits, examinations, assessments or other proceedings in respect of taxes, and the Company and its Subsidiaries have not received written notice of any audits or proceedings;

(3)         The Company and each of its Subsidiaries have withheld and paid all taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party, and all Internal Revenue Service Forms W-2 and Forms 1099 (and foreign, state and local equivalents) required with respect thereto have been properly and timely filed or provided, as applicable;

(4)         There are no liens with respect to taxes upon any of the properties or assets, real or personal, tangible or intangible of the Company or any of its Subsidiaries (other than liens for taxes that are not yet due or delinquent);

(5)         Neither the Company nor any of its Subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2);

(6)         The Company has never paid any “preferential dividends” within the meaning of Section 562 of the Code; and

(7)         The Company has not engaged in any transactions that could give rise to “redetermined rents,” “excess interest,” “redetermined deductions” or “redetermined TRS service income” described in Section 857(b)(7) of the Code.

(dd)         REIT Tax Status. Commencing with its taxable year ended December 31, 2015, the Company has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT under the Code and all applicable regulations under the Code, and its form of organization and method of operation will enable it to meet the requirements for qualification and taxation as a REIT under the Code and all applicable regulations under the Code. The Company presently intends to continue to qualify as a REIT under the Code and all applicable regulations under the Code for all subsequent years, and the Company, after reasonable inquiry and diligence, does not know of any event that would reasonably be expected to cause the Company to fail to qualify as a REIT at any time. Each of the Company’s corporate subsidiaries that has elected, together with the Company, to be a taxable REIT subsidiary is in compliance with all requirements applicable to a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code and all applicable regulations under the Code, and the Company, after reasonable inquiry and diligence, is not aware of any fact that could negatively impact such qualification. Each of the Company’s corporate subsidiaries (or subsidiaries taxable as corporations for U.S. federal income tax purposes) that is not a “taxable REIT subsidiary” is a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code and all applicable regulations under the Code.

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(ee)         Environmental Matters. The Company and its Subsidiaries and any Company Property are in substantial compliance with, and each of the Company and its Subsidiaries hold, all permits, authorizations and approvals required under Environmental Laws (as defined below), except to the extent that failure to so comply or to hold such permits, authorizations or approvals would not, individually or in the aggregate, have a Material Adverse Effect; none of the Company or any of its Subsidiaries (1) is, to the Company’s knowledge, the subject of any investigation, (2) has received any notice or claim, (3) is a party to or affected by any pending or, to the Company’s knowledge, threatened action, suit or proceeding, (4) is bound by any judgment, decree or order or (5) has entered into any agreement, in each case relating to any alleged violation of any Environmental Law or any actual or alleged release or threatened release or cleanup at any location of any Hazardous Materials (as defined below) relating to any Company Property, in each case, except as would not, individually or in the aggregate, have a Material Adverse Effect. None of the Company or any of its Subsidiaries has received from any governmental authority notice of any violation, concerning any Company Property, of any municipal, state or federal law, rule or regulation or of any Environmental Law, except for such violations as have heretofore been cured and except for such violations as would not, individually or in the aggregate, have a Material Adverse Effect (as used herein, “Environmental Law” means any federal, state or local law, statute, ordinance, rule, regulation, order, decree, judgment, injunction, permit, license, authorization or other binding requirement, or common law, relating to health, safety or the protection, cleanup or restoration of the environment or natural resources, including those relating to the distribution, processing, generation, treatment, storage, disposal, transportation, other handling or release or threatened release of Hazardous Materials, and “Hazardous Materials” means any material (including, without limitation, pollutants, contaminants, hazardous or toxic substances or wastes) that is regulated by or may give rise to Liability under any Environmental Law).

(ff)         No General Solicitation. Neither the Company nor, to the Company’s knowledge, any Person acting on behalf of the Company, has offered or sold any of the shares of Preferred Stock by any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of any of the Preferred Stock.

(gg)         Unlawful Payments. To the Company’s knowledge, none of the Company, any of its Subsidiaries, nor any directors, executive officers, employees, agents or other Persons acting at the direction of or on behalf of the Company or any of its Subsidiaries, has, in the course of its actions for or on behalf of the Company: (1) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to foreign or domestic political activity; (2) made any unlawful payments to any foreign or domestic governmental officials or employees or to any foreign or domestic political parties or campaigns from corporate funds; (3) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (4) made any other unlawful bribe, rebate, payoff, influence payment, kickback or other material unlawful payment to any foreign or domestic government official or employee.

(hh)         Money Laundering. The operations of the Company and each of its Subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements and money laundering statutes of all jurisdictions in which the Company and each of its Subsidiaries operate including the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency.

(ii)         Company IT Systems. The Company and each of its Subsidiaries owns or has a valid right to access and use all computer systems, networks, hardware, software, databases, websites, and equipment used to process, store, maintain and operate data, information, and functions used in connection with the business of the Company (the “Company IT Systems”). The Company IT Systems are adequate for, and operate and perform in all material respects as required in connection with, the operation of the business of the Company and each of its Subsidiaries as currently conducted, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and each of its Subsidiaries has implemented commercially reasonable backup, security and disaster recovery technology consistent in all material respects with applicable regulatory standards and customary industry practices.

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(jj)         Off Balance Sheet Arrangements. There is no transaction, arrangement or other relationship between the Company (or any Subsidiary) and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its SEC Reports and is not so disclosed and would have a Material Adverse Effect.

(kk)         Acknowledgment Regarding Buyers’ Purchase of Securities. The Company acknowledges and agrees that the Buyers are acting solely in the capacity of arm’s length purchasers with respect to this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby and any advice given by the Buyers or any of their respective representatives or agents in connection with this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Buyers’ purchase of the shares of Preferred Stock. The Company represents to the Buyers that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby and thereby by the Company and its representatives.

(ll)         Absence of Manipulation. The Company has not, and, to the Company’s knowledge, no Person acting on its behalf has, taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company in violation of applicable law to facilitate the sale or resale of the Securities.

(mm)         PFIC. None of the Company’s Subsidiaries is or intends to become a “passive foreign investment company” within the meaning of Section 1297 of the Code.

(nn)          OFAC. Neither the Company nor any of its Subsidiaries is, and, to the Company’s knowledge, no director, executive officer, agent, employee, Affiliate or other Person acting for or on behalf of the Company or any of its Subsidiaries is, currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”). The Company will not knowingly use the proceeds of the sale of the Preferred Stock, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person or entity, towards any sales or operations in any country or region sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

(oo)         No Additional Agreements. The Company does not have any understanding with the Buyers with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.

(pp)         Reservation of Securities. Subject to any limitations set forth in the Company’s Charter, as shall be amended or supplemented pursuant to the Articles Supplementary, and Maryland law, the Company has reserved, and will continue to reserve, free of any preemptive or similar rights of stockholders of the Company, a number of unissued shares of Common Stock and Preferred Stock sufficient to issue and deliver the Dividend Common Stock and the Dividend Preferred Stock, which may be paid as dividends on the Preferred Stock.

(qq)         Representations and Warranties. In connection with any Regular Purchase, on or prior to each applicable Purchase Date, the Company shall be entitled to deliver to the Buyers updated Disclosure Schedules, which shall be in form and substance acceptable to the Buyers.

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(rr)         No Other Representations. Except for the representations and warranties set forth in this Section 3, neither the Company nor any other Person makes any express or implied representation or warranty with respect to the Company or with respect to any other information provided to the Buyers in connection with this Agreement.

4.          COVENANTS.

(a)          Filing of Form 8-K and Registration Statement. The Company agrees that it shall, within the time required under the Exchange Act, file a Current Report on Form 8-K (or disclose under Item 5 of Form 10-Q) disclosing this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby. The Company shall, in accordance with the terms and conditions of the Registration Rights Agreement, file a registration statement covering the resale of the Dividend Common Stock by the Buyer.

(b)          Blue Sky. The Company shall take such action, if any, as is reasonably necessary in order to obtain an exemption for or to qualify (1) the initial sale of the Preferred Stock to the Buyers under this Agreement and (2) any subsequent sale of the Preferred Stock by the Buyers, in each case, under applicable securities or “blue sky” laws of the states of the United States in such states as is necessary in connection with such sales, as required under applicable law of such states, and shall provide evidence of any such action so taken to Buyer Representative.

(c)          Listing. The Company shall, in the time and manner required by the Principal Market, prepare and file with such Principal Market an additional shares listing application covering a number of shares of Common Stock equal to the maximum number of Dividend Common Stock that may be issued under the Share Cap (subject to official notice of issuance) and shall maintain such listing so long as any other shares of Common Stock shall be so listed. The Company shall use commercially reasonable efforts to maintain the Common Stock’s listing on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any action that would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market, unless the Common Stock is immediately thereafter traded on the Nasdaq Stock Market or the OTC Bulletin Board. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 4(c).

(d)          Compliance with Laws. Notwithstanding any other provision of this Section 4, the Buyers covenant that the Securities may be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable state and federal securities laws and in compliance with the Charter. In connection with any transfer of the Securities other than (1) pursuant to an effective registration statement, (2) to the Company, (3) pursuant to Rule 144 (provided that the Buyers provide the Company with reasonable assurances (in the form of seller and, if applicable, broker representation letters) that the securities may be sold pursuant to such rule) or (4) in connection with a bona fide pledge as contemplated in Section 4(e), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. To the extent any such transfer to a Person would cause such Person’s ownership to exceed the Ownership Limitations set forth in the Charter, such transfer shall be subject to the provisions of Article VII of the Charter in the same manner as any other acquisition of Company capital stock. As a condition of such transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and the other Transaction Documents and shall have the rights of the Buyer under this Agreement and the other Transaction Documents with respect to such transferred Securities.

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(e)          Legends. Certificates representing the Securities shall bear a legend indicating that the Securities are subject to the Ownership Limitations set forth in the Company’s Charter (the “Ownership Limit Legend”), any legend required by the Maryland General Corporation Law, any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and, with respect to Securities held in book-entry form, the Transfer Agent will record such a legend on the share register), until such time as they are not required under Section 4(g):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The Company acknowledges and agrees that any Buyer may from time to time pledge and/or grant a security interest in some or all of the legended Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who also agrees to be bound by the transfer and ownership restrictions provided for in this Agreement and the other Transaction Documents upon foreclosure or other transfer upon default in connection with applicable securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin loan with a registered broker-dealer. Such a pledge would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion shall be required in connection with a subsequent transfer or foreclosure by the pledgee following default by such Buyer. No notice shall be required of such pledge, but a Buyer’s pledgee shall promptly notify the Company of any such subsequent transfer or foreclosure. Each Buyer acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Securities or for any agreement, understanding or arrangement between such Buyer and its pledgee or secured party. At the Buyer’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424 of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. The Buyers acknowledge and agree that, except as otherwise provided in Section 4(g), any Securities subject to a pledge or security interest as contemplated by this Section 4(e) shall continue to bear the legend set forth in this Section 4(e) and be subject to the restrictions on transfer set forth in Section 4(d).

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(f)          Transfer Agent Instructions. Upon the effectiveness of any registration statement covering the resale of the Dividend Common Stock, as contemplated by the Registration Rights Agreement, the Company shall issue instructions to the Transfer Agent to issue certificates or credit shares to the applicable balance accounts at DTC, registered in the name of the Buyers and their respective nominee(s), for the Securities in such amounts as specified from time to time by a Buyer to the Company, in the form of Annex C attached hereto (the “Transfer Agent Letter of Instructions”); provided, however, that if the use of such registration statement has been suspended by the Commission or, in the reasonable judgment of the Company, such registration statement must be updated prior to its continued use, the Transfer Agent may be instructed to temporarily credit such shares to the accounts in the books and records of the Transfer Agent, until the conditions in Section 4(g) have been satisfied in the reasonable judgment of the Company, at which time such shares shall be credited in accordance with the Transfer Agent Letter of Instructions. The Company represents and warrants that no instruction other than the Transfer Agent Letter of Instructions and stop transfer instructions to give effect to Section 4(d) will be given by the Company to its Transfer Agent with respect to the Securities. If the Buyers effect a sale, assignment, or transfer of the Securities in accordance with Section 4(d), the Company shall permit the transfer and shall promptly instruct the Transfer Agent to issue one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect such sale, transfer, or assignment.

(g)          Removal of Legends. Certificates or book-entry statements evidencing the Securities shall not be required to contain the Securities Act legend set forth in Section 4(e) above or any other legend (other than the Ownership Limit Legend) (1) while a registration statement (including a registration statement filed pursuant to the Registration Rights Agreement) covering the resale of such Securities is effective under the Securities Act, (2) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an Affiliate of the Company), (3) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer or pledgee, as applicable, provides the Company with reasonable assurances and customary representations that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include an opinion of counsel), (4) in connection with a sale, assignment or other transfer (other than under Rule 144), provided that the Buyers provide the Company with an opinion of counsel to the Buyers, in a form reasonably acceptable to the Company, to the effect that such sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Securities Act or (5) if such legend is not required under applicable requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the Commission). If a legend is not required pursuant to the foregoing, the Company shall no later than three Business Days following the delivery by a Buyer to the Transfer Agent (with notice to the Company) of a legended certificate representing such Securities (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 4(g), as directed by the Buyers, or, in the case of shares held in book-entry accounts, within three Business Days following the date on which a legend is no longer required, without any action required on the part of the Buyers, either: (A) provided that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program, credit the aggregate number of Securities to which the Buyers shall be entitled to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver (via reputable overnight courier) to such Buyers, a certificate representing such Securities that is free from all restrictive and other legends (other than the Ownership Limit Legend), registered in the name of such Buyer or its designee. The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities or the removal of any legends with respect to any Securities in accordance herewith.

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(h)          Breach. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyers. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 4 will be inadequate and agrees, in the event and upon presentation of sufficient proof of a breach or threatened breach by the Company of the provisions of this Section 4, that a Buyer shall be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.

(i)          Due Diligence. A Buyer shall have the right, as the Buyer may reasonably deem appropriate, to perform reasonable due diligence on the Company during normal business hours; provided, however, that such Buyer must give written notice to the Company no later than three Business Days prior to any request to perform such due diligence. The Company and its officers and employees shall provide information and reasonably cooperate with the Buyers in connection with any reasonable request by the Buyers related to the Buyers’ due diligence of the Company, including, but not limited to, any such request made by the Buyers in connection with the entering into of this Agreement; provided, however, that at no time is the Company required or permitted to disclose material non-public information to the Buyers or to breach any obligation of confidentiality or non-disclosure to a third party. Each party hereto agrees not to disclose any Confidential Information of the other party to any third party and shall not use the Confidential Information of such other party for any purpose other than in connection with, or in furtherance of, the transactions contemplated hereby and in the other Transaction Documents. Each party hereto acknowledges that the Confidential Information shall remain the property of the disclosing party and agrees that it shall take all reasonable measures to protect the secrecy of any Confidential Information disclosed by the other party.

(j)          Disposition of Securities. The Buyers shall not sell any Securities except as provided in this Agreement, the Registration Rights Agreement and the “Plan of Distribution” section of the prospectus included in an effective registration statement. The Buyers shall not transfer any Securities except pursuant to sales described in the “Plan of Distribution” section of the prospectus included in an effective registration statement or pursuant to Rule 144 under the Securities Act. In the event of any sales of Securities pursuant to an effective registration statement, the Buyers will (1) effect such sales pursuant to the “Plan of Distribution” section of the prospectus included in the effective registration statement and (2) will comply with all applicable prospectus delivery requirements.

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(k)          Conduct of Business of the Company. The Company shall, and shall cause each of its Subsidiaries to, during the period from the date of this Agreement until the termination of this Agreement, except as expressly contemplated by this Agreement or as required by applicable law or with the prior written consent of the Buyers (1) conduct its business in the ordinary course of business consistent with past practice, and, to the extent consistent therewith, the Company shall, and shall cause each of its Subsidiaries to use its reasonable best efforts to preserve substantially intact its and its Subsidiaries’ business organization, (2) not, unless required by the Commission or necessary to reflect changes in GAAP, or alter materially its method of accounting or the manner in which it keeps its accounting books and records unless, in the business judgment of the Board of Directors of the Company, deviation from these standard practices is determined to be in the best interests of the Company and its stockholders, including the holders of Preferred Stock, and (3) use reasonable best efforts to conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended.

(l)          Qualification as a REIT. The Company shall use reasonable best efforts to operate in a manner in accordance with the requirements for qualification and taxation as a REIT. In the event of the taking or proposed taking of any action that would cause any representation set forth in this Section 4(l) to be incorrect if made as of any date following the date of this Agreement, including the Board in good faith determining by resolution that it is no longer in the best interests of the Company for the Company to continue to so qualify, the Company shall notify the Buyer prior to the taking of such action.

(m)          Board Designee.

(1) Following the date of this Agreement, the Board, in accordance with the bylaws of the Company (the “Bylaws”), shall take action to increase the number of directors constituting the Board by one person and shall promptly following receipt of notice from the Buyer Representative, elect either James Dondero or Matt McGraner to fill the vacancy so created to serve until the next annual meeting of stockholders of the Company or until his successor is duly elected and qualified.

(2) (A) Following the date of this Agreement, any time at which the Company’s stockholders shall have the right to, or shall, vote for or consent in writing to, the election of directors of the Company (whether at an annual meeting of the Company’s stockholders, a special meeting of the Company’s stockholders called for the purpose of electing directors of the Company or at any adjournment or postponement thereof), then, and in each such event, the Board shall (i) nominate one person to be designated by the Buyers holding a majority in interest of the Preferred Stock as a designee for election by the Company’s stockholders to the Board (the “Board Designee”), (ii) subject to the Board’s duties under Maryland law, the Board shall recommend that the Company’s stockholders vote in favor of the election of such Board Designee and (iii) enter into an indemnification agreement with such Board Designee substantially in the form filed as a Material Contract; and (B) if under the Articles Supplementary, the Buyers are entitled to nominate two additional directors for election by the Company’s stockholders to the Board, the Board, by action of the Board pursuant to the Bylaws, shall (i) create two additional vacancies on its Board and, in accordance with the Bylaws, include two persons designated by the Buyers holding a majority in interest of the Preferred Stock and, subject to the Board’s duties under Maryland law, shall recommend that the Company’s stockholders vote in favor of the election of such designees (the “Additional Board Designees”) and (ii) enter into indemnification agreements with such Additional Board Designees substantially in the form filed as a Material Contract.

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(3) The Board shall not withdraw any nomination or, subject to the Board’s duties under Maryland law, recommendation required under this Section 4(m), unless the Buyers holding a majority in interest of the Preferred Stock deliver to the Board a written request for such withdrawal or the Board determines reasonably and in good faith after consultation with outside legal counsel that (i) in the case of the Board Designee, such Board Designee is prohibited or disqualified from serving as a director of the Company or is a “bad actor” as such term is defined in Rule 506(d) under the Securities Act or (ii) in the case of an Additional Board Designee, such Additional Board Designee is prohibited or disqualified from serving as an independent director of the Company or is a “bad actor” as such term is defined in Rule 506(d) under the Securities Act, in each case under any rule or regulation of the SEC, the Principal Market or by applicable Law; provided, however, that the Buyers holding a majority in interest of the Preferred Stock shall have the right to replace such Board Designee or Additional Board Designee, as applicable, with a new Board Designee or Additional Board Designee, as applicable. Further, (A) for any meeting (or consent in lieu of a meeting) of the Company’s stockholders for the election of members of the Board, the Board shall not nominate, in the aggregate, a number of nominees greater than the current number of members of the Board, (B) subject to the Board’s duties under Maryland law, the Board shall not recommend the election of any other person to a position on the Board for which the Board Designee or Additional Board Designee, as applicable has been nominated and (C) the Company shall use commercially reasonable efforts to cause each Board Designee or Additional Board Designee, as applicable, to be elected to the Board. If elected to the Board, the Board Designee or Additional Board Designee, as applicable, will serve as a member of the Board for such term as is provided in the Charter and Bylaws.

(4) The Buyers holding a majority in interest of the Preferred Stock shall cause any Board Designee or Additional Board Designee to resign from the Board and any committees on which such Board Designee or Additional Board Designee serves if, as determined reasonably by the Board in good faith after consultation with outside legal counsel, (i) in the case of the Board Designee, such Board Designee is prohibited or disqualified from serving as a director of the Company or a member of any such committees or is a “bad actor” as such term is defined in Rule 506(d) under the Securities Act or (ii) in the case of an Additional Board Designee is prohibited or disqualified from serving as an independent director of the Company or a member of any such committees or is a “bad actor” as such term is defined in Rule 506(d) under the Securities Act, in each case under any rule or regulation of the SEC, the Principal Market or by applicable Law; provided, however, that, subject to the limitations set forth in this Section 4(m), the Buyers holding a majority in interest of the Preferred Stock shall have the right to replace such resigning Board Designee or Additional Board Designee with a new Board Designee or Additional Board Designee, as applicable, such newly-named Board Designee or Additional Board Designee to be elected promptly to the Board in place of the resigning Board Designee or Additional Board Designee, as applicable, in the manner set forth in the Charter and Bylaws for filling vacancies on the Board. Further, upon the resignation of any Board Designee or Additional Board Designee, any rights granted to such Board Designee or Additional Board Designee pursuant to this Section 4(m) shall terminate forthwith to the maximum extent permitted by applicable law and the Charter and Bylaws; provided, however, that any newly-named Board Designee or Additional Board Designee selected by the Buyers to replace the resigning Board Designee or Additional Board Designee shall be granted the rights set forth in this Section 4(m). Nothing in this paragraph (4) or elsewhere in this Agreement shall confer any third-party beneficiary or other rights upon any person designated hereunder as an Board Designee or Additional Board Designee, whether during or after such person’s service on the Board.

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(5) The Buyers holding a majority in interest of the Preferred Stock shall designate a person to be a Board Designee or Additional Board Designee, as applicable, (A) who Buyer Representative believes in good faith has the requisite skill and experience to serve (w) in the case of a Board Designee, as a director of a publicly-traded company and (x) in the case of an Additional Board Designee, as an independent director of a publicly-traded company, (B) who is not prohibited from or disqualified from serving (x) in the case of a Board Designee, as a director of the Company, and (y) in the case of an Additional Board Designee, as an independent director of the Company, and (z) in each case is not a “bad actor” as such term is defined in Rule 506(d) under the Securities Act, in each case pursuant to any rule or regulation of the SEC, the Principal Market or applicable Law and (C) with respect to which no event required to be disclosed pursuant to Item 401(f) of Regulation S-K of the Exchange Act has occurred. Notwithstanding anything to the contrary in this Section 4(m), the parties hereto agree that members of the Board shall retain the right to object to the nomination, election or appointment of any Board Designee or Additional Board Designee for service on the Board if the members of the Board reasonably determine in good faith, after consultation with outside legal counsel, that such Board Designee or Additional Board Designee fails to meet the criteria set forth above. In the event that the members of the Board reasonably object to the nomination, election or appointment of any Board Designee or Additional Board Designee to the Board pursuant to the terms of this Section 4(m), the Board shall nominate or appoint, as applicable, another individual designated by the Buyers as the Board Designee or Additional Board Designee, as applicable, nominated for election to the Board that meets the criteria set forth in this Section 4(m).

(6) Notwithstanding anything to the contrary in this Section 4(m), nothing shall prevent the members of the Board from acting in accordance with their respective duties under Maryland law or applicable law or Principal Market requirements. The Board shall have no obligation to nominate, elect or appoint any Board Designee or Additional Board Designee, as applicable, if such nomination, election or appointment would violate applicable law or Principal Market requirements or result in a breach by the members of the Board of their duties to the Company and its stockholders; provided, however, that the foregoing shall not affect the right of the Buyers holding a majority in interest of the Preferred Stock to designate an alternative individual as the Board Designee or Additional Board Designee, as applicable, nominated for election to the Board, subject to the other terms, conditions and provisions in this Section 4(m).

(n)          Rule 144(c). The Company will use commercially reasonable efforts to remain in compliance with the reporting requirements of Rule 144(c) of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act.

5. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYERS TO PURCHASE PREFERRED STOCK.

The obligation of the Buyers to acquire shares of Preferred Stock at any Purchase Date is subject to the fulfillment, on or prior to the Purchase Date, of each of the following conditions, any of which may be waived by the Buyers:

(a)          Representations and Warranties. The representations and warranties of the Company contained in Section 3 shall be true and correct in all material respects as of the date when made and as of any Purchase Date, as though made on and as of such date.

(b)          Performance. The Company shall have performed, satisfied and complied in all material respects with any and all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to any Purchase Date.

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(c)          No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

(d)          No Material Adverse Effect. Since the date of execution of this Agreement, no event or series of events shall have occurred that has had a Material Adverse Effect.

(e)          No Suspensions of Trading in Common Stock. The Common Stock (1) shall be designated for listing or quotation on the Principal Market and (2) shall not have been suspended, as of any Purchase Date, by the Commission or the Principal Market from trading on the Principal Market nor shall suspension by the Commission or the Principal Market have been threatened, as of any Purchase Date, either (A) in writing by the Commission or the Principal Market or (B) by falling below any minimum listing maintenance requirements of the Principal Market. The Company shall have filed the Listing of Additional Shares Notification form with the Principal Market.

(f)          Articles Supplementary. The Company shall have filed the Articles Supplementary with the SDAT.

(g)          Amended and Restated Limited Liability Company Agreement. The Company shall have filed an Amended and Restated Limited Liability Company Agreement of Jernigan Capital Operating Company, LLC (the “Operating Company”) to authorize and designate the terms of the preferred units of limited liability company interest that will be issued to the Company upon contribution by the Company to the Operating Company of the net proceeds from the sale of the Preferred Stock hereunder.

(h)          Board Designee. Prior to or as of the date of this Agreement, the Board, in accordance with the Bylaws, shall take action to increase the number of directors constituting the Board by one person and elect the Board Designee to fill the vacancy created by such increase.

(i)          Dean Jernigan. Dean Jernigan shall not have voluntarily resigned, or otherwise consented to his removal without cause, as the Chairman of the Board of Directors or the Executive Chairman of the Board of Directors of the Company.

(j)          Closing Deliveries.

(i)          Except as provided otherwise herein, at or prior to the first Purchase Date and on or after the effectiveness of this Agreement, the Company shall issue, deliver or cause to be delivered to the Buyers, the following:

(A) this Agreement, duly executed by the Company, which shall be delivered on the date of execution hereof;

(B) the Registration Rights Agreement, duly executed by the Company, which shall be delivered on the date of execution thereof;

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(C) one or more stock certificates (if physical certificates are required by the Buyers to be held immediately prior to the closing; if not, then facsimile or “.pdf” copies of such certificates shall suffice for purposes of the closing with original stock certificates to be delivered within two Business Days of such first Purchase Date), representing the number of shares of Preferred Stock the Buyers are purchasing from the Company, registered in the name of the Buyers (or, if the Buyers request, the Company shall cause to be made a book-entry record in the books and records of the Transfer Agent evidencing the shares of Preferred Stock registered in the name of the Buyers);

(D) a legal opinion from counsel of the Company, substantially in the form attached hereto as Exhibit A, executed by such counsel and addressed to the Buyers, which shall be delivered to the Buyers upon the effectiveness of this Agreement with respect to all purchases that may occur during the current fiscal quarter;

(E) a certificate of the Chief Executive Officer or President and the Chief Financial Officer of the Company, dated as of such first Purchase Date, certifying to the matters in Section 5(a) and Section 5(d) hereof substantially in form attached hereto as Exhibit B;

(F) a certificate of the Secretary of the Company, dated as of such first Purchase Date, substantially in the form attached hereto as Exhibit C, (a) certifying the then current versions of the Charter, including the Articles Supplementary, and the Bylaws, and (b) certifying the resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities; and

(G) subject to the satisfaction of the condition described in Section 6(d)(i)(D), the Board of Directors shall have granted to the Buyers a waiver of the Ownership Limitations.

(ii)         Except as provided otherwise herein, at or prior to any Purchase Date other than the first Purchase Date, the Company shall issue, deliver or cause to be delivered to the Buyers, the following:

(A) one or more stock certificates (if physical certificates are required by the Buyers to be held immediately prior to the closing; if not, then facsimile or “.pdf” copies of such certificates shall suffice for purposes of the closing with original stock certificates to be delivered within two Business Days of such Purchase Date), representing the number of shares of Preferred Stock the Buyers are purchasing from the Company, registered in the name of the Buyers (or, if the Buyers request, the Company shall cause to be made a book-entry record in the books and records of the Transfer Agent evidencing the shares of Preferred Stock registered in the name of the Buyers);

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(B) a legal opinion from counsel of the Company, substantially in the form attached hereto as Exhibit A, dated as of such Purchase Date, executed by such counsel and addressed to the Buyers, which shall be delivered to the Buyers on the first business day following the filing with the Commission of a quarterly or annual report, as applicable, following the end of each fiscal quarter, in each case, with respect to all transactions that may occur until the delivery of the legal opinion with respect to the immediately following fiscal quarter

(C) a certificate of the Chief Executive Officer or President and the Chief Financial Officer of the Company, dated as of such Purchase Date, certifying to the matters in Section 5(a) and Section 5(d) hereof substantially in form attached hereto as Exhibit B; and

(D) a certificate of the Secretary of the Company, dated as of such Purchase Date substantially in the form attached hereto as Exhibit C, (a) certifying the then current versions of the Charter, including the Articles Supplementary, and the Bylaws and (b) certifying the resolutions adopted by the Board of Directors of the Company or a duly authorized committee thereof approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities.

6. CONDITIONS PRECEDENT to the OBLIGATIONS OF THE COMPANY TO SELL PREFERRED STOCK.

The Company’s obligation to sell and issue the shares of Preferred Stock at any Purchase Date to the Buyers is subject to the fulfillment on or prior to any Purchase Date of the following conditions, any of which may be waived by the Company:

(a)          Representations and Warranties. The representations and warranties made by the Buyers in Section 2 shall be true and correct in all material respects as of the date when made and as of any Purchase Date, as though made on and as of such date.

(b)          Performance. Each Buyer shall have performed, satisfied and complied in all material respects with any and all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Buyer at or prior to any Purchase Date.

(c)          No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

(d)          Buyer Deliverables.

(i)          At or prior to the first Purchase Date after the effectiveness of this Agreement, each Buyer shall deliver or cause to be delivered to the Company the following:

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(A) this Agreement, duly executed by each Buyer;

(B) the Registration Rights Agreement, duly executed by each Buyer;

(C) the Purchase Amount by wire transfer to the account specified in writing by the Company;

(D) the Waiver Representation Letter (as defined herein) duly executed and delivered to the Board of Directors of the Company; and

(E) a properly completed and executed accredited investor questionnaire in the form attached hereto as Exhibit D.

(ii)         At or prior to any Purchase Date other than the first Purchase Date, each Buyer shall deliver or cause to be delivered to the Company the Purchase Amount by wire transfer to the account specified in writing by the Company; provided, however, that upon the request of the Company, each Buyer shall provide a representation letter certifying that the Buyer is an accredited investor as of the applicable Purchase Date and/or that the Buyer’s ownership of the capital stock of the Company will not result in a violation of the Ownership Limitations after giving effect to such Purchase.

7. INDEMNIFICATION.

(a)          Indemnification of Buyer. In consideration of the Buyers’ execution and delivery of the Transaction Documents and the acquisition of the Securities hereunder and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each Buyer and all of its affiliates, members, officers, directors, and employees, and any of the foregoing person’s agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Buyer Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Buyer Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees of the Buyer Indemnitee’s choice and disbursements (the “Buyer Indemnified Liabilities”), incurred by any Buyer Indemnitee as a result of, or arising out of, or relating to (1) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (2) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated therein or (3) any cause of action, suit or claim brought or made against such Buyer Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, other than with respect to Buyer Indemnified Liabilities which directly and primarily result from (A) a breach of any of such Buyer’s representations and warranties, covenants or agreements made in the Transaction Documents or any certificate, instrument or document contemplated therein or (B) the gross negligence, bad faith, willful misconduct or malfeasance of such Buyer or any other Buyer Indemnitee. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Buyer Indemnified Liabilities which is permissible under applicable law; provided, however, that no Buyer Indemnitee shall be entitled to indemnification for special, consequential (including lost profits or diminution in value) or punitive damages. Notwithstanding anything to the contrary, consequential damages shall be deemed not to include diminution in value of the Securities, which is specifically excluded from damages covered by the Buyer Indemnified Liabilities.

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(b)          Indemnification Procedures. If any action shall be brought against any Buyer Indemnitee in respect of which indemnity may be sought pursuant to this Agreement, such Buyer Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Buyer Indemnitee. Any Buyer Indemnitee shall have the right to employ separate counsel (or, if more than one Buyer is the subject of any action in respect of which indemnity is sought, one counsel for all such Buyers) in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Buyer Indemnitee except to the extent that (1) the employment thereof has been specifically authorized by the Company in writing, (2) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (3) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Buyer Indemnitee, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel for all Buyers seeking indemnity. The Company will not be liable to any Buyer Indemnitee under this Agreement (y) for any settlement by a Buyer Indemnitee effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent, that a loss, claim, damage or liability is attributable to any Buyer Indemnitee’s breach of its representations, warranties or covenants under the Transaction Documents or any conduct by such Buyer Indemnitee which constitutes fraud, gross negligence, willful misconduct or malfeasance. The indemnification required by this Section 7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Buyer Indemnitee against the Company or others and any Liabilities the Company may be subject to pursuant to applicable law.

8. EVENTS OF DEFAULT.

An “Event of Default” shall be deemed to have occurred at any time as any of the following events occurs:

(a)          A “Registration Default” (as defined in the Registration Rights Agreement) has occurred under the terms of the Registration Rights Agreement (subject to any applicable time periods set forth in the Registration Rights Agreement);

(b)          the suspension from trading or failure of the Common Stock to be listed on a Principal Market for a period of five consecutive Business Days;

(c)          the delisting of the Common Stock from the Principal Market; provided, however, that the Common Stock is not immediately thereafter trading on the Nasdaq Stock Market or the OTC Bulletin Board;

(d)          the failure by the Transfer Agent to issue shares of Preferred Stock to the Buyers which the Buyers are entitled to receive within (i) five Business Days after the applicable Purchase Date solely due to the fault of the Company or (ii) otherwise, within 20 Business Days after the applicable Purchase Date;

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(e)          the Company’s breach of any representation, warranty, covenant or other term or condition under any Transaction Document if such breach would reasonably be expected to have a Material Adverse Effect and except in the case of a breach of a covenant which is reasonably curable, only if such breach continues for a period of at least 20 Business Days after written notice to the Company of such breach;

(f)          the Company fails to sell shares of Preferred Stock to the Buyers in an amount that equals or exceeds $50,000,000 on or prior to the Final Draw Date in accordance with Section 1(b) hereof;

(g)          an event of default (subject to any applicable cure periods) under the terms of any Preferred Stock of the Company pursuant to the Articles Supplementary or any mortgage, indenture or other instrument or agreement under which there may be issued or by which there may be secured or evidenced indebtedness of the Company, whether such preferred stock or indebtedness now exists or is incurred after the date of this Agreement;

(h)          if any Person commences an involuntary bankruptcy case against the Company pursuant to or within the meaning of any Bankruptcy Law and such case is not dismissed within 45 days after the commencement thereof;

(i)          if the Company pursuant to or within the meaning of any Bankruptcy Law; (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) becomes insolvent; or

(j)          a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company or for all or substantially all of its property, or (iii) orders the liquidation of the Company or any Subsidiary.

In addition to any other rights and remedies under applicable law and this Agreement, including the Buyer termination rights under Section 10(l) hereof, so long as an Event of Default has occurred and is continuing, or if any event which, after notice and/or lapse of time (without regard for any available cure periods), would become an Event of Default, has occurred and is continuing, the Company may not require a Buyer to purchase any shares of Preferred Stock under this Agreement and may not deliver a Purchase Notice under this Agreement, and the Buyers shall not be obligated or permitted to purchase any shares of Preferred Stock under this Agreement. If pursuant to or within the meaning of any Bankruptcy Law, the Company commences a voluntary case or any Person commences an involuntary bankruptcy case against the Company and such case is not dismissed within 30 days after commencement thereof, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors, (any of which would be an Event of Default as described in Sections 8(h), 8(i) and 8(j) hereof) this Agreement shall automatically terminate without any liability or payment to the Company without further action or notice by any Person. No such termination of this Agreement under Section 10(l)(i) shall affect the Company’s or the Buyers’ obligations under this Agreement with respect to pending purchases and the Company and the Buyers shall complete their respective obligations with respect to any pending purchases under this Agreement.

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9. CERTAIN DEFINED TERMS.

For purposes of this Agreement, the following terms shall have the following meanings:

(a)          “Action” means any action, suit, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or, to the Company’s knowledge, overtly threatened in writing against the Company, any Subsidiary or any of their respective properties or any officer, director or employee of the Company or any Subsidiary acting in his or her capacity as an officer, director or employee, before or by any federal, state, county, local or foreign court, arbitrator, governmental or administrative agency, regulatory authority, stock market, stock exchange or trading facility.

(b)          “Additional Board Designee” has the meaning given in Section 4(m).

(c)          “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is controlled by or is under common control with such Person.

(d)          “Agreement” has the meaning given in the preamble.

(e)          “Articles Supplementary” has the meaning given in the recitals.

(f)           “Available Amount” means initially $100,000,000 in shares of Preferred Stock, in the aggregate, which amount shall be reduced by the Purchase Amount each time the Buyers purchase shares of Preferred Stock pursuant to Section 1 hereof and increased if the Company delivers a notice to increase the Available Amount pursuant to Section 1(d) hereof.

(g)          “Bankruptcy Law” means Title 11 of the U.S. Code, as amended, or any similar federal or state law for the relief of debtors.

(h)          “Board Designee” has the meaning given in Section 4(m).

(i)           “Board of Directors” means the board of directors of the Company.

(j)           “Business Day” means any day on which the Principal Market is open for trading during normal trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern Time), including any day on which the Principal Market is open for trading for a period of time less than the customary time.

(k)          “Buyer(s)” has the meaning given in the preamble.

(l)           “Buyer Indemnified Liabilities” has the meaning given in Section 7(a).

(m)         “Buyer Indemnitee(s)” has the meaning given in Section 7(a).

(n)          “Buyer Representative” means NexPoint Advisors, L.P.

(o)          “Bylaws” has the meaning given in Section 4(m).

(p)          “Charter” has the meaning given in the recitals.

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(q)          “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

(r)           “Commission” has the meaning given in the recitals.

(s)          “Common Stock” has the meaning given in the recitals.

(t)           “Company” has the meaning given in the preamble.

(u)          “Company IT Systems” has the meaning given in Section 3(ii).

(v)          “Company Property” has the meaning given in Section 3(q).

(w)          “Confidential Information” means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including, without limitation, documents, prototypes, samples, plant and equipment), which is designated as “Confidential,” “Proprietary” or some similar designation and obtained or ascertained by either party, or furnished or made available to either party, by the other party, whether prepared by such party before or after the date of the Agreement and regardless of the manner in which furnished. Confidential Information shall not, however, include any information which (1) is or becomes generally available to the public other than as a result of a disclosure by either party in violation of this Agreement, (2) was available to the receiving party on a non-confidential basis prior to its disclosure to the receiving party, (3) becomes available to the receiving party on a non-confidential basis from a person other than the disclosing party who is not otherwise known to receiving the party receiving such information upon due inquiry to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation or (4) is independently developed by the receiving party without the use of or reliance on the “Confidential” or “Proprietary Information,” in whole or in material part.

(x)           “Control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

(y)          “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

(z)          “DTC” means The Depository Trust Company.

(aa)        “Disclosure Materials” has the meaning given in Section 3(h).

(bb)       “Disclosure Schedule” has the meaning given in Section 3.

(cc)        “Dividend Common Stock” means shares of Common Stock issued as dividends on the Preferred Stock.

(dd)        “Dividend Preferred Stock” means shares of Preferred Stock issued as dividends on the Preferred Stock.

(ee)        “Environmental Law” has the meaning given in Section 3(ee).

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(ff)         “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

(gg)       “Final Draw Date” has the meaning given in Section 1(a).

(hh)       “Final Purchase Notice Date” has the meaning given in Section 1(a).

(ii)          “GAAP” means U.S. generally accepted accounting principles, as applied by the Company.

(jj)          “Governmental Authority” has the meaning given in Section 3(p).

(kk)        “Governmental Body” means any government or governmental entity or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

(ll)          “Hazardous Materials” has the meaning given in Section 3(ee).

(mm)      “Highland” has the meaning given in the preamble.

(nn)       “Intellectual Property Rights” has the meaning given in Section 3(r).

(oo)       “Law” means any code, directive, law (including common law), ordinance, regulation, reporting or licensing requirement, rule, or statute, including those promulgated, interpreted, or enforced by any Governmental Body.

(pp)       “Liability” means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person (other than endorsements of notes, bills, checks, and drafts presented for collection or deposit in the ordinary course of business) of any type, secured or unsecured whether accrued, absolute or contingent, direct or indirect, liquidated or unliquidated, matured or unmatured, known or unknown or otherwise.

(qq)       “License” means any license, franchise, notice, permit, easement, right, certificate, authorization, or approval to which any Person is a party or that is or may be binding on any Person or its securities, property or business.

(rr)         “Lien” or “Liens” means any lien, charge, claim, encumbrance, security interest, right of first refusal, preemptive right or other restriction of any kind.

(ss)         “Manager” means JCAP Advisors, LLC, a limited liability company organized and existing under the laws of Delaware.

(tt)         “Material Adverse Effect” means any condition, occurrence, state of facts or event having any effect on the business, operations, properties, assets or condition (financial or otherwise) of the Company, the Manager and the Operating Company that is material and adverse to the Company and its Subsidiaries, taken as a whole, or any condition, occurrence, state of facts or event that prohibits or otherwise materially interferes with or materially delays the ability of the Company to perform any of its material obligations under this Agreement or the Transaction Documents. A Material Adverse Effect shall not include any of the following: (i) changes in general political, economic or financial market conditions that do not disproportionately affect the Company and its Subsidiaries; (ii) changes in industry conditions that do not disproportionately affect the Company and its Subsidiaries; (iii) changes resulting from the parties’ compliance with the terms of this Agreement and the Transaction Documents; (iv) changes in GAAP that do not disproportionately affect the Company and its Subsidiaries; (v) changes in Law that do not disproportionately affect the Company and its Subsidiaries; or (vi) acts of terrorism or war.

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(uu)       “Material Contract” means any contract of the Company that has been filed or was required to have been filed as an exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

(vv)        “OFAC” has the meaning given in Section 3(nn).

(ww)      “Offering” has the meaning given in the recitals.

(xx)        “Operating Company” has the meaning given in Section 5(g).

(yy)       “Ownership Limitations” means the limitations on ownership of capital stock of the Company set forth in Article VII of the Company’s Charter.

(zz)        “Ownership Limit Legend” has the meaning given in Section 4(e).

(aaa)      “Permits” has the meaning given in Section 3(p).

(bbb)     “Person” means an individual or entity including any limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

(ccc)      “Preferred Stock” has the meaning given in the recitals.

(ddd)     “Principal Market” means the New York Stock Exchange; provided, however, that in the event the Company’s Common Stock is ever traded on the Nasdaq Stock Market or the OTC Bulletin Board, then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock is then listed or traded.

(eee)      “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or overtly threatened in writing.

(fff)        “Purchase Amount” means, with respect to any particular purchase made hereunder, the portion of the Available Amount to be purchased by the Buyers pursuant to Section 1 hereof as set forth in a valid Purchase Notice which the Company delivers to Buyer Representative.

(ggg)     “Purchase Date” means with respect to any Regular Purchase made hereunder, the tenth Business Day after the date of receipt by Buyer Representative of a valid Purchase Notice that the Buyers are to buy shares of Preferred Stock pursuant to Section 1(a) hereof.

(hhh)     “Purchase Notice” shall mean an irrevocable written notice from the Company to Buyer Representative directing the Buyer to buy shares of Preferred Stock pursuant to Section 1(a) hereof as specified by the Company therein at the applicable Purchase Price on the Purchase Date.

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(iii)         “Purchase Price” means $1,000 per share of Preferred Stock.

(jjj)         “Regular Purchase” has the meaning given in Section 1(a).

(kkk)      “Regulation D” has the meaning given in the recitals.

(lll)         “Registration Rights Agreement” has the meaning given in the recitals.

(mmm)   “REIT” means a real estate investment trust as defined in Section 856 of the Code.

(nnn)     “Required Approvals” has the meaning given in Section 3(e).

(ooo)     “SDAT” has the meaning given in the recitals.

(ppp)     “SEC Reports” has the meaning given in Section 3(h).

(qqq)     “Securities” means Preferred Stock (including Preferred Stock purchased on any Purchase Date and Dividend Preferred Stock) and Dividend Common Stock.

(rrr)        “Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

(sss)      “Share Cap” has the meaning given in Section 2(j).

(ttt)        “Short Sale” means stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements (including on a total return basis), and (ii) sales and other transactions through non-U.S. broker dealers or foreign regulated brokers (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

(uuu)     “Subsidiary” or “Subsidiaries” means of a specified person an affiliate controlled by such person directly or indirectly through one or more intermediaries.

(vvv)     “Tax” means any federal, state, county, local, or foreign tax, charge, fee, levy, impost, duty, or other assessment, including income, gross receipts, excise, employment, sales, use, transfer, recording, License, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental, federal highway use, commercial rent, customs duty, capital stock, paid-up capital, profits, withholding, social security, single business and unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by any Governmental Body, including any interest, penalties, and additions imposed thereon or with respect thereto, and including Liability for the taxes of any other Person under Treasury Regulation 1.1502-6 (or any similar provision of state, local, or foreign Law) as a transferee or successor, by contract, or otherwise.

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(www)   “Tax Return” means any return (including any informational return) report, statement, schedule, notice, form or other document or information filed with or submitted to, or required to be filed with or submitted to any Taxing Authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of compliance with any legal requirement relating to any Tax.

(xxx)       “Taxing Authority” means the Internal Revenue Service and any other federal, state, local or foreign Governmental Body responsible for the administration of any Tax.

(yyy)     “Transaction Documents” has the meaning given in the recitals.

(zzz)       “Transfer Agent” means the transfer agent of the Company as set forth in Section 10(g) hereof or such other person who is then serving as the transfer agent for the Company in respect of the Common Stock.

(aaaa)    “Transfer Agent Letter of Instructions” has the meaning given in Section 4(f).

(bbbb)   “Waiver Representation Letter” means the letter from Buyers to the Board of Directors substantially in the form of Exhibit E, the delivery of which to the Board of Directors is a precondition to the issuance of a waiver of the Ownership Limitations.

10. MISCELLANEOUS.

(a) Fees and Expenses.

(i)          The Company shall reimburse the Buyers for all reasonable out-of-pocket expenses (including fees and disbursements of their counsel and accountants) incurred by or on behalf of the Buyer in connection with the preparation, negotiation, execution, delivery, and performance of this Agreement and the other Transaction Documents through and including the date of this Agreement, including legal and financial diligence relating thereto, up to a maximum amount of $1,000,000, which amount shall include the fee in an amount up to $750,000 that the Buyers will pay to Jefferies LLC pursuant to Section 2(k).

(ii)         After the date of this Agreement, the Company and the Buyers shall each pay their respective fees and expenses incurred in connection with this Agreement and the other Transaction Documents.

(iii)        The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the shares of Preferred Stock to the Buyers.

(b)          Specific Performance. Each of the Buyers and the Company acknowledges and agrees that irreparable damage would occur to the other parties hereunder in the event that any of the provisions of this Agreement or the Transaction Documents were not performed by such party in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each party shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and the Transaction Documents by any other party and to enforce specifically the terms and provisions hereof and thereof this being in addition to any other remedy to which the parties may be entitled by law or equity.

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(c)          Governing Law; Jurisdiction; Jury Trial. THE CORPORATE LAWS OF THE STATE OF MARYLAND SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND BUYERS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY BUYER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(d)          Counterparts. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile or pdf (or other electronic reproduction) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or pdf (or other electronic reproduction) signature.

(e)          Headings. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

(f)          Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

(g)          Entire Agreement. This Agreement and the Registration Rights Agreement supersede all other prior oral or written agreements between the Buyers, the Company, their respective affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement, the other Transaction Documents and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyers make any representation, warranty, covenant or undertaking with respect to such matters. The Company acknowledges and agrees that it has not relied on, in any manner whatsoever, any representations or statements, written or oral, other than as expressly set forth in this Agreement.

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(h)          Notices. Any notices, consents or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (1) upon receipt when delivered personally; (2) upon receipt when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (3) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:
	Jernigan Capital, Inc.
	6410 Poplar Avenue, Suite 650
	Memphis, TN 38119
	Telephone:	901-567-9510
	Facsimile:	901-567-9557
	Attention:	John A. Good
	Attention:	William H. Mathieu
With a copy to:
	Morrison & Foerster LLP
	2000 Pennsylvania Avenue, Suite 6000
	Washington, DC 20006
	Telephone:	202-887-1554
	Facsimile:	202-785-7522
	Attention:	David P. Slotkin
If to the Buyers:
	NexPoint Advisors, L.P.
	300 Crescent Court, Suite 700
	Dallas, TX 75201
	Telephone:	972-628-4100
	Facsimile:	972-628-4147
	Attention:	Matt McGraner
With a copy to:
	Highland Capital Management, L.P.
	300 Crescent Court, Suite 700
	Dallas, TX 75201
	Telephone:	972-628-4100
	Facsimile:	972-628-4147
	Attention:	Thomas Surgent
and
	Jones Day
	2727 North Harwood Street
	Dallas, TX 75201
	Telephone:	214-220-3939
	Facsimile:	214-969-5100
	Attention:	Charles Haag

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If to the Transfer Agent:
	American Stock Transfer & Trust Company
	10150 Mallard Creek Road, Suite 307
	Charlotte, NC 28262
	Telephone:	718-921-8380
	Facsimile:	718-765-8742
	Attention:	Felix Orihuela

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party one Business Day prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such notice, consent or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, and recipient facsimile number or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of receipt in accordance with clause (1), (2) or (3) above, respectively.

(i)          Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Buyers, including by merger or consolidation. The Buyers may not assign their rights or obligations under this Agreement.

(j)          No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

(k)          Publicity. Buyer Representative shall have the right to approve (which approval shall not be unduly withheld, conditioned or delayed) on behalf of the Buyers any press release prior to its issuance, filing with the Commission or any other public disclosure made by or on behalf of the Company whatsoever with respect to, in any manner, the Buyers, their purchases hereunder or any aspect of this Agreement or the transactions contemplated hereby; provided, however, that the Company shall be entitled, without such prior approval of Buyer Representative, to make any press release or other public disclosure (including any filings with the Commission) with respect to such transactions as is required by applicable law and regulations so long as the Company and its counsel consult with Buyer Representative in connection with any such press release or other public disclosure at least one Business Day prior to its release or use by the Company.

(l)          Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

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(m)          Termination. This Agreement may be terminated only as follows:

(i)          By the Buyers any time an Event of Default exists without any liability or payment to the Company. However, if pursuant to, or within the meaning of, any Bankruptcy Law, the Company commences a voluntary case or any Person commences an involuntary case (which is not dismissed within 30 days after commencement thereof) against the Company, a Custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors, (any of which would be an Event of Default as described in Sections 8(h), 8(i) and 8(j) hereof) this Agreement shall automatically terminate without any liability or payment to the Company without further action or notice by any Person. No such termination of this Agreement under this Section 10(i)(i) shall affect the Company’s or the Buyers’ respective obligations under this Agreement with respect to pending purchases of the Preferred Stock and the Company and the Buyers shall complete their respective obligations with respect to any pending purchases of the Preferred Stock under this Agreement.

(ii)         This Agreement will automatically terminate on the earlier of the (a) date that the Company sells and the Buyers purchase the full Available Amount as provided herein or (b) the close of business on the Final Draw Down Date, without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under this Agreement except as set forth in Section 10(l)(iv) hereof; provided, however, that if, notwithstanding the timely delivery of the requisite Purchase Notice(s), the sale and purchase of the full Available Amount has not occurred due solely to a failure of a Buyer to perform its obligations hereunder, this Agreement shall remain in full force and effect until (y) the Company sells and the Buyers purchase the full Available Amount or (z) the Agreement is terminated by notice of the Company to Buyer Representative.

(iii)        Except as set forth in Sections 10(l)(i) (in respect of an Event of Default under Sections 8(h), 8(i) and 8(j)) and Section 10(l)(ii)), any termination of this Agreement pursuant to this Section 10(l) shall be effected by written notice from the Company to the Buyer, or the Buyer to the Company, as the case may be, setting forth the basis for the termination hereof.

(iv)        The representations and warranties of the Company and the Buyers contained in Sections 2 and 3, the indemnification provisions set forth in Section 7 and the agreements and covenants set forth in Sections 4(e), 4(f) and 10, shall survive any termination of this Agreement. No termination of this Agreement shall affect the Company’s or the Buyers’ respective rights or obligations (a) under the Registration Rights Agreement which shall survive any such termination, (b) under this Agreement with respect to pending purchases of the Preferred Stock, and the Company and the Buyers shall complete their respective obligations with respect to any pending purchases of the Preferred Stock under this Agreement, and (c) under the Preferred Stock or other Securities issued hereunder.

(n)          Financial Advisor, Placement Agent, Broker or Finder. The Company represents and warrants to the Buyers that it has engaged Raymond James as its financial advisor in connection with the transactions contemplated hereby. The Company shall be responsible for the (i) payment of any fees or commissions, if any, of any financial advisor, placement agent, broker or finder engaged by the Company relating to or arising out of the transactions contemplated hereby, and (ii) reimbursement to the Buyers for the amount paid by the Buyers to Jefferies LLC as provided in Section 10(a) of this Agreement.

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(o)          Amendments; Waivers. Neither this Agreement nor any provision hereof may be amended, modified or supplemented unless in writing, executed by all the parties hereto. Except as otherwise expressly provided herein, no waiver with respect to this Agreement shall be enforceable unless in writing and signed by the party against whom enforcement is sought. Except as otherwise expressly provided herein, no failure to exercise, delay in exercising, or single or partial exercise of any right, power, or remedy by any party, and no course of dealing between or among any of the parties, shall constitute a waiver of, or shall preclude any other or further exercise of, any right, power or remedy.

(p)          Replacement of Securities. If any certificate or instrument evidencing any Securities, if applicable, is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, as applicable, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of replacement Securities.

(q)          No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

(r)          Failure or Indulgence Not Waiver. No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

(s)          Buyer Representative. Each Buyer hereby acknowledges and agrees that it has irrevocably approved and appointed the designation of, and hereby irrevocably designates, NexPoint Advisors, L.P. as the Buyer Representative and NexPoint Advisors, L.P. is hereby appointed as of the date hereof as the true and lawful agent and attorney in fact of the Buyers as the Buyer Representative for and on behalf of the Buyers to give and receive notices and communications in connection with this Agreement and all related matters, to take all actions, and to take all other actions that the Buyer Representative deems necessary hereunder. In fulfilling its duties hereunder, the Buyer Representative shall act in good faith and in a manner that the Buyer Representative reasonably believes to be in the best interests of the Buyers, taken as a whole. Notices or communications to or from the Buyer Representative shall constitute notice to or from the Buyers. Each Buyer hereby agrees to receive correspondence from the Buyer Representative, including in electronic form. It is understood by all parties that NexPoint Advisors, L.P. is executing this Agreement solely in its capacity as the Buyer Representative. The Buyer Representative shall be entitled to act in its sole and absolute discretion and shall incur no liability whatsoever to the Buyers for any act done or omitted hereunder as the Buyer Representative, including errors in judgment, while acting in good faith or in reliance on the advice of counsel, accountants, or other advisors, consultants, or experts.

* * * * *

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IN WITNESS WHEREOF, the Company and the Buyers have caused this Stock Purchase Agreement to be duly executed as of the date first written above.

THE COMPANY:
JERNIGAN CAPITAL, INC.
By:	/s/ John A. Good
Name: John A. Good
Title: President and Chief Operating Officer

Buyer Representative:
NexPoint Advisors, L.P.
By: NexPoint Advisors GP, LLC, its general partner
By:	/s/ Brian Mitts
Name: Brian Mitts
Title: Executive Vice President

BUYERS:
NexPoint Real Estate Strategies Fund
By:	/s/ Brian Mitts
Name:  Brian Mitts
Title:  Vice President, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer
NexPoint Real Estate Capital, LLC
By:	/s/ Brian Mitts
Name: Brian Mitts
Title:  Chief Financial Officer and Executive Vice President
NexPoint Real Estate Opportunities, LLC
By: NexPoint Advisors, L.P., its Manager
By: NexPoint Advisors GP, LLC, its general partner
By:	/s/ Brian Mitts
Name: Brian Mitts
Title:  Executive Vice President

SCHEDULES

Schedule 1(g)	Allocation of Purchases
Schedule 3(a)	Subsidiaries
Schedule 3(k)	Material Change

ANNEXES

Annex A	Articles Supplementary
Annex B	Registration Rights Agreement
Annex C	Transfer Agent Letter of Instructions

EXHIBITS

Exhibit A	Form of Legal Opinion
Exhibit B	Form of Officer’s Certificate
Exhibit C	Form of Secretary’s Certificate
Exhibit D	Form of Accredited Investor Questionnaire
Exhibit E	Form of Waiver Representation Letter
Exhibit F	Form of Joinder

DISCLOSURE SCHEDULES

Schedule 1(g) – Allocation of Purchases

Available Amount

Buyers	Proportion of Preferred Stock to be purchased (%)
NexPoint Real Estate Capital, LLC	40.0%
NexPoint Real Estate Opportunities, LLC	60.0%

Schedule 3(a) – Subsidiaries

Name of Subsidiary	Jurisdiction
JCAP FI Holdings, LLC	Delaware
Jernigan Capital OP LLC	Delaware
Jernigan Capital Operating Company, LLC	Delaware

Schedule 3(k) – Material Changes

· Share Repurchase Program, effective as of May 20, 2016 for a share repurchase of up to $10 million of the outstanding shares of common stock of the Company. As of the date hereof, the Company has repurchased and retired a total of 213,078 shares of its common stock at an aggregate cost of $3,152,593.73.

· Cash dividend of $0.35 per share of common stock for the quarter ended June 30, 2016, paid on July 15, 2016 to the stockholders of record on July 1, 2016.

ANNEX A

Articles Supplementary

ANNEX B

Registration Rights Agreement

ANNEX C

Form of Transfer Agent letter of Instructions

EXHIBIT A

FORM OF LEGAL OPINION

EXHIBIT B

FORM OF OFFICER’S CERTIFICATE

EXHIBIT C

FORM OF secretary’s certificate

EXHIBIT D

form of accredited investor questionnaire

EXHIBIT E

FORM OF WAIVER REPRESENTATION LETTER

EXHIBIT F

form of Joinder

EX-10.2

Exhibit 10.2

AMENDMENT NO. 1 TO

LIMITED LIABILITY COMPANY AGREEMENT OF
JERNIGAN CAPITAL OPERATING COMPANY, LLC

DESIGNATION OF SERIES A PREFERRED STOCK

July 27, 2016

WHEREAS, pursuant to Article XIV of the Limited Liability Company Agreement (the “Operating Agreement”) of Jernigan Capital Operating Company, LLC (the “Company”), the Managing Member hereby amends the Operating Agreement as follows in connection with (i) the issuance and sale of preferred stock, $0.01 par value per share (the “Series A Preferred Stock”), of the Managing Member and the issuance to the Managing Member of Series A Preferred Units (as defined below) in exchange for the contribution by the Managing Member of the net proceeds from the issuance and sale of the Series A Preferred Stock or (ii) the issuance of additional shares of Series A Preferred Stock or common stock of the Managing Member, $0.01 par value per share (the “Common Stock”), in connection with dividend payments on the Series A Preferred Stock and the issuance to the Managing Member of Series A Preferred Units or Common Units, as applicable.

1.          Designation and Number. A series of Preferred Units (as defined below), designated the “Series A Preferred Units” (the “Series A Preferred Units”), is hereby established. The number of authorized Series A Preferred Units shall be 300,000.

2.          Defined Terms. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Operating Agreement. The following defined terms used in this Amendment No. 1 to the Operating Agreement shall have the meanings specified below:

“Aggregate Unit Distribution” shall have the meaning provided in Section 5(a)(ii).

“Amendment Date” shall have the meaning provided in Section 5(a)(i).

“Articles Supplementary” means the Articles Supplementary of Jernigan Capital, Inc., filed with the SDAT on July 27, 2016, designating the terms, rights and preferences of the Series A Preferred Stock.

“Cash Distribution” shall have the meaning provided in Section 5(a)(i).

“Cash Premium” shall have the meaning provided in Section 5(a)(i).

“Change of Control Event” shall have the meaning provided in the Articles Supplementary.

“Change of Control Redemption Date” shall have the meaning provided in Section 7(b).

“Change of Control Redemption Notice” shall have the meaning provided in the Articles Supplementary.

“Change of Control Redemption Price” shall have the meaning provided in the Articles Supplementary.

“Common Stock” shall have the meaning provided in the recitals.

“Distribution Payment Date” shall have the meaning provided in Section 5(e).

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

“Incremental Equity Book Value” shall have the meaning provided in the Articles Supplementary.

“Incremental Net Asset Value” shall have the meaning provided in the Articles Supplementary.

“Junior Preferred Units” shall have the meaning provided in Section 4.

“Liquidation” shall have the meaning provided in Section 6(a).

“Liquidation Value” shall have the meaning provided in Section 6(a).

“Managing Member” means Jernigan Capital, Inc., a Maryland corporation.

“Optional Redemption Date” shall have the meaning provided in Section 8(a).

“Optional Redemption Price” shall have the meaning provided in the Articles Supplementary.

“Optional Redemption Right” shall have the meaning provided in Section 8(a).

“Per Unit Distribution” shall have the meaning provided in Section 5(c).

“Person” means an individual or entity including any limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

“SDAT” means the State Department of and Taxation of the State of Maryland.

2

“Senior Preferred Units” shall have the meaning provided in Section 4.

“Series A Preferred Stock” shall have the meaning provided in the recital above.

“Series A Preferred Unit Distribution Payment Date” shall have the meaning provided in Section 5(a).

“Series A Preferred Units” shall have the meaning provided in Section 1.

“Triggering Event” shall have the meaning provided in the Articles Supplementary.

3.          Maturity. The Series A Preferred Units shall have no stated maturity and except as described in Section 7, shall not be subject to any mandatory redemption or forced conversion.

4.          Rank. The Series A Preferred Units shall, with respect to distribution rights and rights upon liquidation, winding up and dissolution of the Company, rank (i) senior to the Common Units and LTIP Units of the Company and to all classes and series of common units of the Company now existing or hereafter authorized, issued or outstanding and any class or series of limited liability company interests of the Company expressly designated as ranking junior to the Series A Preferred Units as to distribution rights and rights upon liquidation, winding up and dissolution of the Company (collectively, the “Junior Preferred Units”) unless otherwise agreed by vote or written consent of the holders of a majority of the units of Series A Preferred Units then outstanding, voting as a separate class; (ii) on parity with any class or series of limited liability company interests of the Company expressly designated as ranking on parity with the Series A Preferred Units as to distribution rights and rights upon liquidation, dissolution and winding up of the Company (“Parity Units”); (iii) junior to any class or series of limited liability company interests of the Company expressly designated as ranking senior to the Series A Preferred Units as to distribution rights and rights upon liquidation, winding up and dissolution of the Company; and (iv) junior in right of payment to the Company’s existing and future indebtedness. All Series A Preferred Units shall rank on parity with each other.

5. Distributions.

a.           Subject to the preferential rights of holders of any class or series of limited liability company interests of the Company expressly designated as ranking senior to the Series A Preferred Units as to distribution rights, and subject to the rights of any Parity Units, to the extent not prohibited by law, each holder of Series A Preferred Units shall be entitled to receive, if, as and when authorized by the Managing Member and declared by the Company, on each outstanding Series A Preferred Unit, out of funds legally available for the payment of distributions:

i.            a cumulative cash distribution (the “Cash Distribution”), equal to (1) 7.0% per annum on the Liquidation Value for the period beginning on the date of issuance until the sixth anniversary of the date of this Amendment (the “Amendment Date”), payable quarterly in arrears; (2) 8.5% per annum on the Liquidation Value for the period beginning the day after the sixth anniversary of the Amendment Date and for each year thereafter so long as the Series A Preferred Units remain issued and outstanding, payable quarterly in arrears; and (3) an amount in addition to the amounts in (1) and (2) equal to 5.0% per annum on the Liquidation Value for the period beginning the day after a Triggering Event (the “Cash Premium”); and

3

ii.         a cumulative distribution payable in-kind in Common Units or additional Series A Preferred Units (the “Aggregate Unit Distribution”) (determined at the election of each holder of Series A Preferred Stock (such election to be irrevocable as to the dividend for any fiscal quarter, and made by written notice to the Managing Member at least 15 days prior to the record date for each such dividend) by NexPoint Advisors, L.P. for all holders of Series A Preferred Stock) whereby the total value of the Aggregate Unit Distribution to be paid each quarter equals the product obtained by multiplying 0.25 by the sum of (i) Incremental Equity Book Value as of the end of the most recently completed fiscal quarter and (ii) to the extent the Managing Member owns equity interests in income-producing real property, Incremental Net Asset Value; provided that for purposes of computing the sum of (i) and (ii) above, no interest in the same real estate asset will be double counted.

b.           The number of Common Units or Series A Preferred Units to be distributed per each outstanding Series A Preferred Unit as Aggregate Unit Distributions (the “Per Unit Distribution”) shall be calculated in accordance with paragraph (c) of the Articles Supplementary.

c.           The Company will pay, if, as and when authorized by the Managing Member and declared by the Company, to the extent not prohibited by law, the Cash Distribution and the Per Unit Distribution quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, or if such day is not on a Business Day, then the next succeeding day that is a Business Day (each a “Distribution Payment Date”), commencing on October 15, 2016. Cash Distributions will be computed on the basis of a 360-day year comprised of twelve 30 day months. The Company will make each Cash Distribution and Per Unit Distribution, as applicable, due on a Distribution Payment Date to the holders of record of Series A Preferred Units on the close of business on January 1, April 1, July 1 and October 1 immediately preceding the applicable Distribution Payment Date, beginning on the close of business on October 1, 2016. Distributions on the Series A Preferred Units will accumulate from the most recent date to which distributions have been paid or, if no distributions have been paid, from and including the respective date of issuance of such shares of Series A Preferred Units.

d.           Notwithstanding the foregoing, Cash Distributions and Aggregate Unit Distributions on the Series A Preferred Units will accumulate whether or not the Company has earnings, whether or not there are funds legally available for the payment of such Cash Distributions and Aggregate Unit Distributions, whether or not such Cash Distributions and Aggregate Unit Distributions are declared and whether or not such Cash Distributions and Aggregate Unit Distributions are prohibited by agreement. Accrued but unpaid Cash Distributions and Aggregate Unit Distributions on the Series A Preferred Units will accumulate and will earn additional Cash Distributions and Aggregate Unit Distributions as calculated above (in the case of Unit Distributions, as if such Unit Distributions had been paid or issued on the applicable Distribution Payment Date), compounded quarterly (subject to increase as provided in Section 5(a)(i), as applicable).

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e.           As long as any Series A Preferred Units remain outstanding, the Company shall not declare or pay on or set apart for the Common Units or any Junior Preferred Units any distribution (other than (i) to the extent necessary to ensure that the Managing Member remains qualified as a REIT for U.S. federal income tax purposes and (ii) the redemption or other acquisition of limited liability company interests of the Company in any calendar year in an amount equal to the number of shares of capital stock of the Managing Member redeemed or acquired under incentive, benefit or share purchase plans for officers, directors or employees of the Managing Member or others performing or providing similar services or in connection with net settlements and withholding in connection with the vesting or exercise of equity incentive awards) unless all accumulated distributions on the then-outstanding Series A Preferred Units shall have been paid or shall have been declared and set apart for payment to the holders of the Series A Preferred Units.

f.            When distributions are not paid in full (or a sum sufficient for such full payment is not so set apart) on the Series A Preferred Units and any Parity Units, all distributions declared and paid on the Series A Preferred Units shall be declared pro rata so that the amount of distributions declared and paid for each Series A Preferred Unit and any Parity Units shall in all cases bear to each other the same ratio that accrued distributions for each Series A Preferred Unit and Parity Units bear to each other.

g.           Holders of Series A Preferred Units shall not be entitled to any distribution whether payable in cash, property or units of the Company, in excess of full cumulative distributions on the Series A Preferred Units as described herein. Any distribution payment made on the Series A Preferred Units shall first be credited against the earliest accrued but unpaid distribution due with respect to such shares which remains payable. Except as provided herein, the Series A Preferred Units shall not be entitled to participate in the earnings or assets of the Company.

6. Liquidation, Dissolution or Winding Up.

a.           In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (a “Liquidation”), each holder of Series A Preferred Units shall be entitled to receive out of the assets that may be legally distributed to the Company’s members after payment or provision for payment of all indebtedness of the Company, but prior and in preference to any payment or distribution (or any setting apart of any payment or distribution) of any assets on any Common Units or Junior Preferred Units, an amount equal to the greater of (1) $1,000 per outstanding Series A Preferred Unit (the “Liquidation Value”), plus all accumulated but unpaid Cash Distributions and Aggregate Unit Distributions thereon to, but not including, the date of any liquidation, but excluding any Cash Premium and (2) the amount that would be paid on such date in the event of a redemption following a Change of Control Event pursuant to Section 7.

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b.           For purposes of determining accumulated but unpaid Cash Distributions and Aggregate Units Distributions with respect to the Series A Preferred Units in the event of a Liquidation, the Aggregate Unit Distributions shall be determined by computing Incremental Equity Book Value on a pro forma basis to, but not including, the date of final distribution of all remaining assets of the Company without giving effect to any liquidating distributions by the Company.

c.           After the payment of the Liquidation Value and all accumulated but unpaid Cash Distributions and Aggregate Unit Distributions and any payment on Parity Units, the remaining assets of the Company, if any, shall be distributed to the holders of Common Units and Junior Preferred Units.

d.           If upon Liquidation the assets legally available for distribution to the holders of the Series A Preferred Units and any Parity Units are insufficient to permit the payment to such holders of the full amounts specified in this Section 6 or pursuant to the terms of any Parity Units, then the entire assets of the Company legally available for distribution will be distributed among the holders of the Series A Preferred Units and any Parity Units with equal priority and pro rata in proportion to the amounts they would otherwise be entitled to receive pursuant to this Section 6 and the terms of any such Parity Units, and the Company will not make or agree to make any payments to the holders of Common Units or Junior Preferred Units. Whenever the distribution provided for in this Section 6 shall be payable in property other than cash, the value of such distribution shall be the fair market value of such property as determined in good faith by Board of Directors of the Managing Member.

7. Mandatory Redemption.

a.           Upon the occurrence of a Change of Control Event, the Company shall redeem all of the outstanding Series A Preferred Units if and when the Managing Member redeems all of the outstanding shares of Series A Preferred Stock of the Managing Member as provided in paragraph (j) of the Articles Supplementary.

b.           Not more than 30 days after the effective date of a Change of Control Event, the Company shall redeem at the Change of Control Redemption Price all of the Series A Preferred Units then outstanding (the date of such redemption, the “Change of Control Redemption Date”); provided, however, that the Company shall only be required to pay the Change of Control Redemption Price after (i) the satisfaction of any indebtedness obligations existing on the Change of Control Redemption Date, if any, and (ii) to the extent such redemption can be made out of funds legally available therefor. From and after the Change of Control Redemption Date and payment of the Change of Control Redemption Price, (i) distributions shall cease to accumulate on the redeemed Series A Preferred Units, (ii) the redeemed Series A Preferred Units shall no longer be deemed outstanding, and (iii) all rights with respect to the redeemed Series A Preferred Units shall cease and terminate. Notwithstanding the foregoing, in the event of the Company’s failure to deliver the Change of Control Redemption Price at the time and place specified in the Change of Control Redemption Notice, additional distributions shall accumulate and accrue with respect to such Change of Control Redemption Price at a rate of 14.0% per annum, compounded quarterly.

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c.           Notice of a Change of Control Redemption of the Series A Preferred Units shall be consistent with the notice procedures set forth in paragraph (j) of the Articles Supplementary.

8. Optional Redemption.

a.           If and when the Managing Member exercises its option to redeem some or all of the Series A Preferred Stock as provided in paragraph (k)(1) of the Articles Supplementary, the Company shall redeem an equal number of the Series A Preferred Units (the “Optional Redemption Right”), for cash, at the Optional Redemption Price.

b.           Unless full cumulative distributions on all units of Series A Preferred Units shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past distribution periods, (i) no Series A Preferred Units shall be redeemed pursuant to the Optional Redemption Right unless all outstanding Series A Preferred Units are simultaneously redeemed and (ii) the Company shall not purchase or otherwise acquire directly or indirectly for any consideration, nor shall any monies be paid to or be made available for a sinking fund for the redemption of, Series A Preferred Units (except by conversion into or exchange for shares of, or options, warrants or rights to purchase or subscribe for shares of, Junior Preferred Units); provided, however, that the foregoing shall not prevent the redemption or purchase by the Company of Series A Preferred Units in order to ensure that the Managing Member remains qualified as a REIT for federal income tax purposes or the purchase or acquisition of Series A Preferred Units pursuant to a purchase or exchange offer made on the same terms to all holders of Series A Preferred Units.

c.           Immediately prior to any redemption of Series A Preferred Units pursuant to the Optional Redemption Right, the Company shall pay any accumulated and unpaid Cash Distributions or Aggregate Unit Distributions, as applicable, on the Series A Preferred Units to, but not including, the Optional Redemption Date, unless a redemption date falls after a record date for the payment of Cash Distributions or Aggregate Unit Distributions and prior to the corresponding Distribution Payment Date, in which case each holder of record of Series A Preferred Units at the close of business on such record date shall be entitled to the distribution payable on such units on the corresponding Distribution Payment Date (including any accumulated and unpaid distributions for prior distribution periods) notwithstanding the redemption of such units pursuant to the Optional Redemption Right prior to such Distribution Payment Date. Except as provided above and in this Section (8)(c), the Company will make no payment or allowance for unpaid distributions, whether or not in arrears, on Series A Preferred Units for which a notice of redemption has been given.

d.           Notice of redemption of the Series A Preferred Units shall be consistent with the notice procedures set forth in paragraph (k)(5) of the Articles Supplementary.

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9.          Voting. The holders of the Series A Preferred Units shall not have any voting rights.

10.         Conversion. The Series A Preferred Units shall not be convertible into, or exchangeable for, any other property or securities.

11.         Allocation of Profit and Loss.

a.           Allocations of the Company’s items of income, gain, loss and deduction shall be allocated among holders of the Series A Preferred Units in accordance with Article VI of the Operating Agreement, as amended by this Amendment No. 1.

b.           Article VI, Section 6.1.B(5) of the Operating Agreement is hereby deleted in its entirety and the following new Section 6.1.B(5) is inserted in its place: “fifth, to the holders of any Interests that are entitled to any preference in non-liquidating distributions in accordance with the rights of any such class of Interests until each such Interest has been allocated, on a cumulative basis pursuant to this clause (5), Net Income equal to the amount of non-liquidating distributions payable that are attributable to the preference of such class of Interests (not including amounts payable in redemption of such Interest, other amounts representing accumulated but unpaid distributions) whether or not paid (and, within such class, pro rata in proportion to the respective Percentage Interests as of the last day of the period for which such allocation is being made); and”.

12.         Except as modified herein, all terms and conditions of the Operating Agreement shall remain in full force and effect, which terms and conditions the Managing Member hereby ratifies and confirms.

[Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned has executed and agrees to be bound by this Amendment as of the date first written above.

MANAGING MEMBER:
JERNIGAN CAPITAL, INC., a Maryland corporation
By:	/s/ John A. Good
Name:	John A. Good
Title:	President and Chief Operating Officer

EX-10.3

Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of July 27, 2016, by and between JERNIGAN CAPITAL, INC., a Delaware corporation (the “Company”), and certain funds managed or advised by Highland Capital Management, L.P. or its controlled affiliates (“Highland”) and identified on the signature page(s) hereto (each, a “Buyer” and collectively, together with their permitted transferees and assigns, the “Buyers”). Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Stock Purchase Agreement dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Stock Purchase Agreement”).

RECITALS:

A.           Upon the terms and subject to the conditions of the Stock Purchase Agreement, the Company has agreed to issue to the Buyers and the Buyers have agreed to purchase shares of the Company’s Series A Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), pursuant to Section 1 of the Stock Purchase Agreement;

B.           In connection with the sale and purchase of the Series A Preferred Stock, the Company may issue to the Buyers shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), as dividends in respect of the Company’s Series A Preferred Stock; and

C.           To induce the Buyers to enter into the Stock Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations there under, or any similar successor statute (collectively, the “Securities Act”), and applicable state securities laws.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Buyer hereby agree as follows:

ARTICLE I
DEFINITIONS

The following terms, as used herein, have the following meanings:

“Agreement” has the meaning set forth in the preamble.

“Board of Directors” means the Board of Directors of the Company.

“Business Day” means any day on which the Principal Market is open for trading during normal trading hours (i.e., 9:30 a.m. to 4:00 p.m. Eastern Time), including any day on which the Principal Market is open for trading for a period of time less than the customary time.

“Buyers” has the meaning set forth in the preamble.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Stock” has the meaning set forth in the recitals.

“Company” has the meaning set forth in the preamble.

“Effectiveness Date” has the meaning set forth in Section 2.1(a).

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder.

“FINRA” has the meaning set forth in Section 3.1(k).

“Holder” means any Initial Holder and any direct or indirect transferee of any Registrable Securities.

“Holders’ Counsel” means one counsel for the Holders that is selected by the Holders holding a majority of the Registrable Securities included in the Shelf Registration Statement, with such selection being effective by written consent of Holders holding a majority of the Registrable Securities, whether record or beneficial Holders.

“Indemnified Party” has the meaning set forth in Section 4.2.

“Indemnifying Party” has the meaning set forth in Section 4.2.

“Initial Holder” means the Buyers in any purchase pursuant to the Stock Purchase Agreement.

“Initial Holder Representative” means NexPoint Advisors, L.P.

“Initiating Holder” has the meaning set forth in Section 2.2(a).

“Inspectors” has the meaning set forth in Section 3.1(i).

“Marketed Underwritten Offering” has the meaning set forth in Section 2.2(b).

“Marketed Underwritten Offering Notice” has the meaning set forth in Section 2.2(b).

“Person” means any individual or entity including any limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.

“Principal Market” means the New York Stock Exchange; provided, however, that in the event the Company’s Common Stock is ever primarily traded on the Nasdaq Stock Market, the OTC Bulletin Board, or another nationally recognized market or exchange, then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock is then primarily listed or traded.

“Records” has the meaning set forth in Section 3.1(i).

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“Registrable Securities” means (1) all shares of Common Stock owned by the Initial Holders, whether owned at the time of the execution of this Agreement or acquired after the date of this Agreement, (2) any shares of Common Stock that Holders receive as dividends on the Company’s Common Stock or Series A Preferred Stock, and (3) any shares of Common Stock owned by a Holder that was issued or is issuable with respect to the Series A Preferred Stock or the Common Stock by way of exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular Registrable Securities, such Registrable Securities shall only cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities has been declared effective by the Commission and such particular Registrable Securities have been disposed of under such registration statement, (b) such time as such particular Registrable Securities have been otherwise transferred to holders who may trade such shares without restriction under the Securities Act, and the Company has delivered a new certificate or other evidence of ownership for such securities not bearing a restrictive legend, or (c) such particular Registrable Securities are eligible to be sold at one time under the exemption of Rule 144 free of all limitations of such rule.

“Registration Default” has the meaning set forth in Section 2.1(e).

“Registration Expenses” has the meaning set forth in Section 3.2.

“Rule 144” means Rule 144 (or any successor rule of similar effect) promulgated under the Securities Act.

“Rule 415” means Rule 415 (or any successor rule of similar effect) promulgated under the Securities Act.

“Securities Act” has the meaning set forth in the recitals.

“Selling Expenses” means all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities.

“Selling Holder” means any Holder whose Registrable Securities are entitled to be registered for resale pursuant to the terms hereof.

“Series A Preferred Stock” has the meaning set forth in the recitals.

“Shelf Filing Date” has the meaning set forth in Section 2.1(a).

“Shelf Registration Period” has the meaning set forth in Section 2.1(b).

“Shelf Registration Statement” has the meaning set forth in Section 2.1(a).

“Stock Purchase Agreement” has the meaning set forth in the recitals.

“Successor” has the meaning set forth in Section 5.9.

“Underwritten Offering Notice” has the meaning assigned to it in Section 2.2(a).

“Underwriter” means a securities dealer who purchases any Registrable Securities or other securities of the Company as principal for the resale of such securities and not as part of such dealer’s market making activities.

“Underwriters’ Counsel” means one counsel for the Underwriter(s), selected in accordance with the terms of this Agreement, of an Underwritten Offering.

“Underwritten Offering” means any sale of Common Stock to an Underwriter(s) on a firm commitment basis.

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ARTICLE II
REGISTRATION RIGHTS

Section 2.1           Shelf Registration.

(a)          Subject to Sections 2.1(c), (d) and (e) hereof, the Company shall (i) use commercially reasonable efforts to prepare and file with the Commission, as soon as reasonably possible following the date of this Agreement but in no event later than 60 days following the date of this Agreement unless the Initial Holder Representative shall on behalf of the Initial Holders in writing designate a later date (the “Shelf Filing Date”), a registration statement (such registration statement, including any replacement registration statement, the “Shelf Registration Statement”) with respect to the resale of the Registrable Securities under the Securities Act on Form S-3 (or any similar or successor form or other form to the extent that Form S-3 is not available), which Shelf Registration Statement (A) shall provide for the registration and the sale by the Holders of the Registrable Securities on a continuous or delayed basis pursuant to Rule 415, (B) shall comply as to form in all material respects with the requirements of the applicable form and include, or incorporate by reference, all financial statements required by the Commission to be filed therewith or be incorporated therein and (C) shall be reasonably acceptable to the Holders’ Counsel, and (ii) use its commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission as soon as practicable thereafter but in no event later than 180 days after filing (the “Effectiveness Date”). The Shelf Registration Statement shall provide for the resale of the Registrable Securities pursuant to any method or combination of methods legally available by the Holders, and the Shelf Registration Statement and any form of prospectus included or incorporated by reference therein (or any prospectus supplement relating thereto) shall reflect such plan of distribution or methods of sale.

(b)          Subject to Sections 2.1(c), (d) and (e), the Company shall use commercially reasonable efforts to keep the Shelf Registration Statement continuously effective for the period beginning on the Effectiveness Date and ending on the date that all of the Registrable Securities registered under the Shelf Registration Statement cease to be Registrable Securities (the “Shelf Registration Period”). During the Shelf Registration Period, the Company shall (i) subject to Section 2.1(c) hereof, prepare and file with the Commission such supplements, amendments and/or post-effective amendments to the Shelf Registration Statement as may be (A) necessary to keep the Shelf Registration Statement continuously effective for the Shelf Registration Period or (B) reasonably requested by the Holders (whether or not required by the form on which the securities are being registered), including, without limitation, to identify additional Holders in such Shelf Registration Statement or to register additional Registrable Securities under such Self Registration Statement, and shall use commercially reasonable efforts to cause each such supplement, amendment and/or post-effective amendment to be declared effective by the Commission, if required, as soon as practicable after the filing thereof, (ii) subject to Section 2.1(c) hereof, use commercially reasonable efforts to cause any related prospectus to be supplemented by any required supplement, and as so supplemented to be filed with the Commission pursuant to Rule 424 under the Securities Act (or any similar provisions then in force under the Securities Act), to the extent required, and (iii) comply in all material respects with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Shelf Registration Statement during the Shelf Registration Period in accordance with the intended methods of disposition in market transactions as may be reasonably requested from time to time by the Holders and set forth in such Shelf Registration Statement as so amended or supplemented or such prospectus as so supplemented.

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(c)          If a majority of the Board of Directors determines in its good faith judgment that the availability of the Shelf Registration Statement or the use of any related prospectus or prospectus supplement would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential or the disclosure of which would impede the Company’s ability to consummate a material transaction (which may include an offering of the Company’s securities by the Company), and that the Company is not otherwise required by applicable securities laws or regulations to disclose, upon written notice from the Company of such determination by the Board of Directors, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to the Shelf Registration Statement or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to the Shelf Registration Statement, including with respect to an Underwritten Offering, shall be suspended until the earlier of (i) the date upon which the Company notifies the Holders in writing that suspension of such rights for the grounds set forth in this Section 2.1(c) is no longer necessary and the Holders have received copies of any required amendment or supplement to the relevant prospectus, and (ii) 45 days following receipt of such written notice from the Company. The Company agrees to give such notice as promptly as reasonably practicable following the date that such suspension of rights is no longer necessary.

(d)          The Company may not utilize the suspension rights under Section 2.1(c) more than one time in any three-month period nor more than two times in any 12-month period. Each Holder agrees by acquisition of the Registrable Securities that upon receipt of any suspension notice provided for under Section 2.1(c), such Holder will discontinue its disposition of Registrable Securities pursuant to the Shelf Registration Statement relating to such Registrable Securities until the expiration of the applicable suspension period as provided in Section 2.1(c).

(e)          If (i) the Shelf Registration Statement has not been filed with the Commission by the Shelf Filing Date, (ii) the Shelf Registration Statement has not been declared effective by the Commission by Effectiveness Date, or (iii) to the extent that Registrable Securities remain outstanding, the Shelf Registration Statement is filed and declared effective but shall thereafter cease to be effective (without being succeeded by a replacement shelf registration statement which is filed and declared effective) or usable (including as a result of any suspension period under Section 2.1(c) hereof) for the offer and sale of such Registrable Securities for any period of time (including any suspension period under Section 2.1(c) hereof) which shall exceed 30 consecutive Business Days or for more than an aggregate of 90 Business Days in any 365-day period, which is not in connection with a post-effective amendment to such Shelf Registration Statement required in the business judgment of the majority of the Board of Directors arrived at in good faith, provided that, in connection with any post-effective amendment to such Shelf Registration Statement that is required to be declared effective by the Commission, such lapse or unavailability may continue for a period of no more than 30 consecutive Business Days, which such period shall be extended for an additional 30 Business Days if the Company receives a comment letter from the Commission in connection therewith (each such event referred to in the immediately preceding clauses (i), (ii) and (iii), a “Registration Default”). THE PARTIES ACKNOWLEDGE THAT THE REMEDIES PROVIDED FOR IN THE ARTICLES SUPPLEMENTARY TO THE COMPANY’S ARTICLES OF AMENDMENT AND RESTATEMENT FOR A FAILURE TO FILE THE REGISTRATION STATEMENT OR A FAILURE TO HAVE THE SHELF REGISTRATION STATEMENT DECLARED OR REMAIN EFFECTIVE ARE DIFFICULT TO MEASURE AND THAT SUCH REMEDIES PROVIDED FOR THEREIN ARE REASONABLE LIQUIDATED DAMAGES AND NOT A PENALTY. Promptly (but in no event more than five Business Days) after the occurrence of a Registration Default, the Company shall give the Holders at such time written notice of such occurrence.

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Section 2.2           Underwritten Shelf Take-Downs.

(a)          At any time during which the Company has an effective Shelf Registration Statement with respect to the Registrable Securities, by written notice to the Company specifying the intended method or methods of disposition thereof (an “Underwritten Offering Notice”), one or more Selling Holder(s) beneficially owning at least an aggregate of 5% of the Registrable Securities (each an “Initiating Holder”) may request an Underwritten Offering of Registrable Securities pursuant to such Shelf Registration Statement, and the Company shall use its commercially reasonable efforts to amend or supplement the applicable Shelf Registration Statement, if necessary, for such purpose as soon as practicable; provided, however, that (i) any Underwritten Offering Notice shall be required to be in respect of at least $15 million in anticipated net proceeds in the aggregate and (ii) in no event shall the Company be required to effect (a) more than one Underwritten Offering during any consecutive 90-calendar day period,(b) more than two Underwritten Offerings during any rolling twelve-month period and (c) more than six Marketed Underwritten Offerings under this Section 2.2.  Subject to Section 2.2(b)(ii) below, such Initiating Holders shall have the right to select the managing Underwriter(s) to administer such offering, which managing Underwriter(s) shall be reasonably acceptable to the Company.

(b)          If any Underwritten Offering Notice requests a customary “road show” (including an “electronic road show”) or other marketing effort by the Company and the Underwriters over a period expected to exceed 48 hours (a “Marketed Underwritten Offering”), promptly upon delivery of such Underwritten Offering Notice (but in no event more than three (3) Business Days thereafter), the Company shall promptly deliver a written notice (a “Marketed Underwritten Offering Notice”) of such Marketed Underwritten Offering to all Selling Holders (other than the Initiating Holders), and the Company shall include in such Marketed Underwritten Offering all such Registrable Securities of such Selling Holders that are registered on the Shelf Registration Statement for which the Company has received written requests, which requests must specify the aggregate amount of such Registrable Securities of such Selling Holders requested to be offered and sold pursuant to such Marketed Underwritten Offering, for inclusion therein within 5 Business Days after the date that such Marketed Underwritten Offering Notice has been delivered; provided, that if the managing Underwriter(s) of any proposed Marketed Underwritten Offering informs the Selling Holders that have requested to participate in such Marketed Underwritten Offering in writing that, in its or their good-faith opinion, the number of Registrable Securities which such Selling Holders intend to include in such Marketed Underwritten Offering exceeds the number of Registrable Securities which can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, then the Registrable Securities to be included in such Marketed Underwritten Offering shall be the number of Registrable Securities that, in the opinion of such managing Underwriter(s), can be sold without having such adverse effect in such Marketed Underwritten Offering, which number shall be allocated (i) first, to the Registrable Securities requested to be included in such Marketed Underwritten Offering by the Initiating Holders and (ii) second, to the Registrable Securities requested to be included in such Marketed Underwritten Offering by any Selling Holder who is not one of the Initiating Holders on a pro rata basis.  The Holders of a majority of the Registrable Securities to be included in any Marketed Underwritten Offering shall have the right to select the managing Underwriter(s) to administer such offering, which managing Underwriter(s) shall be reasonably acceptable to the Company. No holder of securities of the Company shall be permitted to include such holder’s securities in any Marketed Underwritten Offering except for Holders who wish to include Registrable Securities pursuant to this Section 2.2(b)(ii). Notwithstanding anything herein to the contrary, if an Underwritten Offering Notice does not expressly specify that the Underwritten Offering shall include a customary road show or other substantial marketing efforts over a period expected to exceed 48 hours, the Company shall have no obligation to deliver a Marketed Underwritten Offering Notice to Holders.

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(c)          Notwithstanding anything to the contrary herein, the Company shall not be obligated to effect, or take any action to effect, an Underwritten Offering during any customary lock-up period required by the underwriters in connection with any prior primary underwritten public offering of securities of the Company for its own account (a “Company Underwritten Offering”) or (ii) during the period commencing on the date that is thirty (30) days prior to the Company’s good faith estimate of the date of filing of a registration statement, prospectus or prospectus supplement relating to a Company Underwritten Offering and ending on the date that is sixty (60) days after the filing of a final prospectus with respect to a Company Underwritten Offering (the “Black-Out Period”). Promptly upon the commencement of any Black-Out Period, the Company shall deliver a notice of the institution thereof (a “Black-Out Notice”), which Black-Out Notice shall provide the reason(s) for which a Black-Out Period has been instituted. Following the delivery of a Black-Out Notice in accordance with this Section 2.2(c), the Company shall not be obligated to effect the Underwritten Offering requested by such Underwritten Offering Notice until the expiration of the Black-Out Period; provided, however, that the Company shall notify the Initiating Holder promptly if it elects not to pursue a Company Underwritten Offering, in which case the Holders shall no longer be subject to the Black-Out Period and may immediately submit to the Company a new Underwritten Offering Notice.

(d)          In the event of any Company Underwritten Offering, each Holder hereby agrees that it shall not, to the extent requested by the Company or an underwriter of securities of the Company, directly or indirectly sell, offer to sell (including without limitation any short sale), grant any option or otherwise transfer or dispose of any Registrable Securities (other than to donees or affiliates of such Holder who agree to be similarly bound) for a period of up to sixty (60) days following the date of any underwriting agreement with respect to a Company Underwritten Offering; provided, however, that no Holder shall be subject to the restrictions in this Section 2.2(d) unless (i) all executive officers and directors of the Company enter into similar agreements and (ii) any concession or proportionate release allowed to any executive officer or director of the Company that entered into similar agreements shall be afforded to the Holders.

ARTICLE III
REGISTRATION PROCEDURES

Section 3.1           Filings; Information. In connection with the registration of Registrable Securities pursuant to Sections 2.1 and 2.2:

(a)          The Company will prepare and file with the Commission a Shelf Registration Statement on Form S-3 or such other form that the Company is eligible to use and which counsel for the Company shall deem appropriate and available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended methods of distribution thereof, as may be reasonably necessary to effect the sale of the Registrable Securities, including in an Underwritten Offering. Before filing a Shelf Registration Statement, prospectus or any free writing prospectus, or any amendments or supplements thereto, the Company shall (x) furnish to the managing Underwriter(s), if any, and the Holders participating in the Shelf Registration Statement or an Underwritten Offering, as applicable, copies of all documents prepared to be filed, and provide such managing Underwriter(s), if any, and such Holders and their respective counsel with a reasonable opportunity to review and comment on such documents prior to their filing and (y) not file any Shelf Registration Statement or prospectus to which any such Underwriters or Holders, as applicable, shall reasonably object. The Company may require Holders to furnish in writing to the Company such information regarding such Holders and other information as the Company may be legally required to disclose in connection with such registration.

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(b)          The Company shall, if requested, prior to filing a Shelf Registration Statement or any amendment or supplement thereto, furnish to the Selling Holders, and each applicable managing Underwriter, if any, copies thereof, and thereafter furnish to the Selling Holders and each such Underwriter, if any, such number of copies of such Shelf Registration Statement, amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein, unless such exhibits and documents are available on the Commission’s Electronic Data Gathering and Retrieval System) and the prospectus included in such Shelf Registration Statement (including each prospectus, preliminary prospectus and prospectus supplement, as applicable) as the Selling Holders or each such managing Underwriter, if any, may reasonably request in order to facilitate the sale of the Registrable Securities by the Selling Holders.

(c)          After the filing of the Shelf Registration Statement, the Company will promptly notify the Selling Holders and the managing Underwriter(s), if any, of any stop order issued or, to the Company’s knowledge, threatened to be issued by the Commission and use its commercially reasonable efforts to prevent the entry of such stop order or to remove it if entered.

(d)          In addition to the requirements imposed on the Company elsewhere herein, the Company will qualify the Registrable Securities for offer and sale under such other securities or “blue sky” laws of such jurisdictions in the United States as any Selling Holder or managing Underwriter(s), if any, or their respective counsel reasonably request in writing for the registration or qualification of the Registrable Securities for sale; keep any such registration or qualification (or exemption therefrom) effective during the period in which such Shelf Registration Statement is required to be kept effective; and do any and all other acts and things which may be necessary or advisable to enable each Selling Holder to consummate the disposition of the Registrable Securities owned by such Selling Holder in such jurisdictions; provided, however, that the Company will not be required to (i) qualify to generally do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3.1(d), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction where it is not then subject.

(e)          The Company will as promptly as is reasonably practicable notify the Selling Holders and the managing Underwriter(s), if any, at any time when a prospectus relating to the sale of the Registrable Securities is required by law to be delivered in connection with sales by an Underwriter or dealer, of the occurrence of any event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and promptly make available to the Selling Holders and to the managing Underwriter(s), if any, any such supplement or amendment. Upon receipt of any notice of the occurrence of any event of the kind described in the preceding sentence, the Selling Holders will forthwith discontinue the offer and sale of Registrable Securities pursuant to the Shelf Registration Statement covering such Registrable Securities until receipt by the Selling Holders and the managing Underwriter(s) of the copies of such supplemented or amended prospectus and, if so directed by the Company, the Selling Holders shall deliver to the Company all copies, other than permanent file copies then in the possession of the Selling Holders, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. Furthermore, in the event the Company shall give such notice, the Company shall, as promptly as is reasonably practicable, subject to the suspension rights under Sections 2.1(c), (d) and (e), if applicable, prepare a supplement or post-effective amendment to the Shelf Registration Statement or a supplement to the related prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

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(f)          [Reserved]

(g)          [Reserved]

(h)          If requested by the managing Underwriter(s) or any Selling Holder, the Company shall promptly incorporate in a prospectus supplement or post-effective amendment such information as the managing Underwriter(s) or any Selling Holder reasonably requests to be included therein, including without limitation, with respect to the Registrable Securities being sold by such Selling Holder, the purchase price being paid therefor by the Underwriters and with respect to any other terms of the Underwritten Offering of the Registrable Securities to be sold in such offering, and promptly make all required filings of such prospectus supplement or post-effective amendment.

(i)          The Company shall promptly make available for inspection by Initial Holder Representative, any other representative designated to act as a representative of the Holders (other than the Initial Holders) (the “Additional Representative”), or any representative of the Underwriter(s) participating in any disposition of Registrable Securities pursuant to a Shelf Registration Statement, Holders’ Counsel and Underwriters’ Counsel, and any accountant or other agent or representative retained by or on behalf of the Initial Holders (as representative of any such Initial Holder), the Additional Representative, or the representative of such Underwriter(s) (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall reasonably be necessary to enable them to exercise their due diligence responsibility (including the conduct of a reasonable investigation within the meaning of Section 11 of the Securities Act), and cause the Company’s officers, directors and employees to supply all information requested by any such Inspector in connection with such registration statement; provided, however, that unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Company shall not be required to provide any information under this subparagraph (i) if (A) the Company believes, after consultation with counsel for the Company, that to do so would cause the Company to forfeit an attorney-client privilege that was applicable to such information or (B) if the Company has requested and been granted from the Commission confidential treatment of such information contained in any filing with the Commission or documents provided supplementally or otherwise.

(j)          The Company shall cause the Common Stock included in any Shelf Registration Statement to be listed on each securities exchange, including, without limitation, the Principal Market, on which securities issued by the Company are then listed, if the Registrable Securities so qualify.

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(k)          The Company shall cooperate with each Selling Holder, each Underwriter, if any, participating in the disposition of such Registrable Securities, and their respective counsel in connection with any filings required to be made with the Financial Industry Regulatory Authority (“FINRA”).

(l)          The Company shall, as may be reasonably requested in an Underwritten Offering Notice, participate in any customary roadshow organized for purposes of publicizing the sale or other disposition of the Registrable Securities. Such participation shall include, but not be limited to, dispatch by the Company of personnel, on a reasonable basis and subject to the operational needs of the Company, to assist in each presentation during made such roadshow, and provision of the Company data needed for purposes of the roadshow.

(m)          The Company shall, during the period when the prospectus is required to be delivered under the Securities Act, use commercially reasonable efforts to promptly file all documents required to be filed with the Commission pursuant to Section 13(a) of the Exchange Act.

Section 3.2           Registration Expenses. In connection with any registration effected hereunder, the Company shall pay all expenses incurred in connection with such registration (the “Registration Expenses”), including without limitation: (i) registration and filing fees with the Commission and FINRA, (ii) all fees and expenses, if any, of compliance with securities or blue sky laws (including fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, messenger and delivery expenses, (iv) fees and expenses incurred in connection with the listing or quotation of the Registrable Securities, (v) fees and expenses of counsel to the Company and the fees and expenses of independent certified public accountants for the Company (including fees and expenses associated with any special audits or the delivery of comfort letters), (vi) fees and expenses of Holders’ counsel, (vii) the fees and expenses of any additional experts retained by the Company in connection with such registration and (viii) the fees and expenses of other persons retained by the Company, whether or not any Shelf Registration Statement becomes effective; provided that in no event shall Registration Expenses include any Selling Expenses or the fees or expenses of counsel to the Underwriters.

Section 3.3           Underwriters; Due Diligence. In the case of an Underwritten Offering, the Company will:

(a)          make such customary representations and warranties to the applicable Selling Holders and the Underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in secondary Underwritten Offerings, (b) enter into such customary agreements (including underwriting agreements in customary form, which shall include, without limitation, customary indemnification provisions) and take all such other actions as any Selling Holder or the managing Underwriter(s), if any, reasonably request in order to expedite or facilitate the Registration and disposition of such Registrable Securities, (c) obtain for delivery to Holders’ Counsel and Underwriters’ Counsel and to the Underwriter(s), if any, an opinion or opinions from counsel for the Company dated the date of the closing under the underwriting agreement, in customary form, scope and substance (including any customary REIT tax opinions), which opinions shall be reasonably satisfactory to Holders’ Counsel and Underwriters’ Counsel, and (d) obtain for delivery to the Company and the managing Underwriter(s), with copies to Holders’ Counsel and Underwriters’ Counsel, a comfort letter from the Company’s independent certified public accountants in customary form and covering such matters of the type customarily covered by comfort letters as the managing Underwriter(s) reasonably request, dated the date of execution of the underwriting agreement and brought down to the date of the closing of the Underwritten Offering, as specified in the underwriting agreement.

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(b)          use commercially reasonable efforts to cause appropriate officers and employees to be reasonably available, on a customary basis and upon commercially reasonable notice, to meet with prospective investors in presentations, meetings and road shows and otherwise to facilitate, cooperate with, and participate in each such proposed Underwritten Offering to the extent reasonably requested by the managing Underwriter(s).

Section 3.4           Duties of Selling Holders in Underwritten Offerings.

(a)          In the case of an Underwritten Offering, the Selling Holders agree to timely furnish to the Company any information regarding the Holder and the distribution of such Holder’s Registrable Securities as the Company reasonably determines is required to be included in any Registration Statement or any prospectus or prospectus supplement relating to an Underwritten Offering.

(b)          With respect to Underwritten Offerings, (i) the right of any Holder to include such Holder’s Registrable Securities in an Underwritten Offering shall be conditioned upon such Holder’s participation in the process and required delivery of information for such Underwritten Offering and the inclusion of such Holder’s Registrable Securities in the Underwritten Offering to the extent provided herein, (ii) each Holder participating in such Underwritten Offering agrees to enter into an underwriting agreement in customary form and sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by those entitled to select the managing Underwriter(s) hereunder and (iii) each Holder participating in such Underwritten Offering agrees to complete and execute all questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up agreements and other documents reasonably required under the terms of such underwriting arrangements. The Company hereby agrees with each Holder that, in connection with any Underwritten Offering in accordance with the terms hereof, it will negotiate in good faith and execute all indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, including using all commercially reasonable efforts to procure customary legal opinions and auditor “comfort” letters provided for herein.

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ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION

Section 4.1           Indemnification By the Company. The Company agrees to indemnify, and hold harmless each Selling Holder and their respective officers, directors, partners, shareholders, members, employees, agents and representatives and each Person (if any) which controls a Selling Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities, costs and expenses (including reasonable attorneys’ fees) caused by, arising out of, resulting from or related to any untrue statement or alleged untrue statement of a material fact contained or incorporated by reference in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, including all documents attached thereto or incorporated by reference therein, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by or based upon any information furnished in writing to the Company by or on behalf of such Selling Holder or by such Selling 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 Selling Holder with copies of the same; provided, however, that the Company shall have no obligation to indemnify under this sentence to the extent any such losses, claims, damages or liabilities have been finally and non-appealability determined by a court of competent jurisdiction to have resulted from such Selling Holder’s willful misconduct or gross negligence or an intentional act or omission in violation of applicable laws. The Company also agrees to indemnify any Underwriter of the Registrable Securities, their officers and directors and each person who controls such Underwriter on substantially the same basis as that of the indemnification of the Selling Holders provided in this Section 4.1, except insofar as such losses, claims, damages or liabilities are caused by or based upon any information furnished in writing to the Company by or on behalf of such Underwriter or by such Underwriter’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished the Underwriter with copies of the same; provided, however, that the Company shall have no obligation to indemnify under this sentence to the extent any such losses, claims, damages or liabilities have been finally and non-appealably determined by a court to have resulted from any such Underwriter’s willful misconduct or gross negligence. The obligations of the Company under this Section 4.1 shall be in addition to any liability that the Company may otherwise have to any Indemnified Person and the obligations of any Indemnified Person under this Section 4.1 shall be in addition to any liability that such Indemnified Person may otherwise have to the Company. The remedies provided in this Section 4.1 are not exclusive and shall not limit any rights or remedies which may otherwise be available to an indemnified party at law or in equity.

Section 4.1           Indemnification By Selling Holders. Each Selling Holder agrees to indemnify, and hold harmless the Company, its officers and directors, and each Person, if any, that controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities, costs and expenses (including reasonable attorneys’ fees) caused by, arising out of, resulting from or related to any untrue statement or alleged untrue statement of a material fact contained or incorporated by reference in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, including all documents attached thereto or incorporated by reference therein, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only with respect to information furnished in writing by or on behalf of such Selling Holder specifically for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto or any preliminary prospectus. Each Selling Holder also agrees to indemnify and hold harmless any Underwriters of the Registrable Securities, their officers and directors and each person who controls such Underwriters on substantially the same basis as that of the indemnification of the Company provided in this Section 4.2, but only with reference to information furnished in writing by or on behalf of such Selling Holder specifically for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto or any preliminary prospectus. Each such Selling Holder’s liability under this Section 4.2 shall be limited to an amount equal to the net proceeds (after deducting the applicable underwriting discount and expenses associated with such Selling Holder’s Registrable Securities sold thereunder) received by such Selling Holder from the sale of such Registrable Securities by such Selling Holder in the applicable offering. Notwithstanding anything herein to the contrary, the obligations of each Selling Holder under this Article IV shall be several and not joint.

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Section 4.2           Conduct Of Indemnification Proceedings. In case any proceeding (including any investigation by any court, governmental, regulatory or administrative agency or commission or other governmental authority or instrumentality, domestic (federal, state or municipal) or foreign governmental entity) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to Section 4.1 or Section 4.2, such Person (the “Indemnified Party”) shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party, and the Indemnifying Party shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Indemnified Party. Any Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party except to the extent that (1) the employment thereof has been specifically authorized by the Indemnifying Party in writing, (2) the Indemnifying Party has failed after a reasonable period of time to assume such defense and to employ counsel or (3) in such action there is, in the reasonable opinion of counsel, a material conflict on (or a potential material conflict with respect to) any material issue between the position of the Indemnifying Party and the position of such Indemnified Party, in which case the Indemnifying Party shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Indemnifying Party will not be liable to any Indemnified Party under this Agreement (y) for any settlement by a Indemnified Party effected without the Indemnifying Party’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent, that a loss, claim, damage or liability is determined in a final, non-appealable judgment, to directly result from any Indemnified Party’s breach of its representations, warranties or covenants under this Agreement or any conduct by such Indemnified Party which constitutes fraud, gross negligence or willful misconduct. The indemnification required by this Article IV shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Indemnified Party against the Indemnifying Party or others and any liabilities the Indemnifying Parties may be subject to pursuant to applicable law.

Section 4.3           Contribution.

(a)          If the indemnification provided for in this Article IV is, by operation of law unavailable to an Indemnified Party in respect of any losses, claims, damages or liabilities in respect of which indemnity is to be provided hereunder, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the fullest extent permitted by law, contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of such party in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company, a Selling Holder and the Underwriter shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

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(b)          The Company and each Selling Holder agrees that it would not be just and equitable if contribution pursuant to this Section 4.3 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Each Selling Holder shall not be required pursuant to Article IV to contribute any amount in excess of the amount by which the proceeds of any sale (before deducting the applicable underwriting discount and expenses associated with such Selling Holder’s Registrable Securities in the applicable offering) received by such Selling Holder exceeds the amount of any damages that such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 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 was not guilty of such fraudulent misrepresentation.

ARTICLE V
MISCELLANEOUS

Section 5.1           Participation In Underwritten Offerings. No Selling Holder may participate in any Underwritten Offering contemplated hereunder, unless such Selling Holder (a) agrees to sell its Registrable Securities on the basis provided in any underwriting arrangements approved by those entitled hereunder to approve such arrangements, (b) completes and executes all (to the extent reasonable and customary) questionnaires, powers of attorney, custody arrangements, of such underwriting arrangements and this Agreement and (c) furnishes in writing to the Company such information regarding such Selling Holder and other information as the Company may reasonably request or as may legally be required in connection with such Underwritten Offering; provided, however, that no such Selling Holder shall be required to make any representations or warranties in connection with any such Underwritten Offering other than representations and warranties as to (i) such Selling Holder’s ownership of its Registrable Securities to be sold or transferred in a manner that is free and clear of all liens, claims and encumbrances, (ii) such Selling Holder’s power and authority to effect such transfer and (iii) such matters pertaining to compliance with applicable securities laws as may reasonably be requested; provided further, however, that the obligation of such Selling Holder to indemnify pursuant to any such underwriting agreements shall be several, and not joint, among such Selling Holder selling Registrable Securities, and the liability of each such Selling Holder will be in proportion to, and, provided further that such liability will be limited to, the net amount received by such Selling Holder from the sale of such Selling Holder’s Registrable Securities pursuant to such Underwritten Offering.

Section 5.2           Rule 144. The Company shall use commercially reasonable efforts to file any and all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as the Holders may reasonably request to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such reporting requirements.

Section 5.3           Amendments, Waivers, Etc. This Agreement may not be amended, waived or otherwise modified or terminated except by an instrument in writing signed by the Company and the Holders of at least two-thirds of the Registrable Securities then held by all the Holders.

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Section 5.4           Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

Section 5.5           Entire Agreement. This Agreement, together with the Stock Purchase Agreement and the other agreements, instruments and documents referred to herein and therein, constitutes the entire agreement of the parties hereto and supersedes all prior agreements, letters of intent and understandings, both written and oral, among the parties with respect to the subject matter hereof.

Section 5.6           Articles, Sections. Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement.

Section 5.7           Governing Law; Jurisdiction; Jury Trial. THE CORPORATE LAWS OF THE STATE OF MARYLAND SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND HOLDERS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY HOLDER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

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Section 5.8           Assignment of Registration Rights. No Holder of Registrable Securities may assign all or any part of its rights under this Agreement to any person without the prior written consent of the Company, which consent shall not be unreasonably withheld; provided, however, that the rights under this Agreement may be assigned to any Affiliate of the Holders to whom Registrable Securities have been transferred without requiring the Company’s consent, provided that the transferring Holder promptly provides notice of such assignment and the transferee agrees in writing to be bound by the terms and conditions of this Agreement.

Section 5.9           Parties in Interest. This Agreement shall be binding upon and inure to the benefit of the Company and any successor organization that shall succeed to substantially all of the business and property of the Company, whether by merger, consolidation, acquisition of all or substantially all of the assets of the Company or otherwise, including by operation of law (each, a “Successor”). The Company hereby covenants and agrees that it shall cause any Successor to adopt and assume this Agreement. If a parent entity of the Company or its Successor becomes the issuer of the Registrable Securities, then the Company or such Successor shall cause such parent entity to adopt and assume this Agreement to the same extent as if the parent entity were the Company or such Successor.

Section 5.10         Notices. Any notices, consents or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt when delivered personally; (b) upon receipt when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (c) one Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:
Jernigan Capital, Inc.
6410 Poplar Avenue, Suite 650
Memphis, TN 38119
Telephone:	901-567-9510
Facsimile:	901-567-9557
Attention:	John A. Good
Attention:	William H. Mathieu
With a copy to:
Morrison & Foerster LLP
2000 Pennsylvania Avenue, Suite 6000
Washington, DC 20006
Telephone:	202-887-1554
Facsimile:	202-785-7522
Attention:	David P. Slotkin
If to the Initial Holders:
NexPoint Advisors, L.P.
300 Crescent Court, Suite 700
Dallas, TX  75201
Telephone:	972-628-4100
Facsimile:	972-628-4147
Attention:	Matt McGraner

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With a copy to:
Highland Capital Management, L.P.
300 Crescent Court, Suite 700
Dallas, TX  75201
Telephone:	972-628-4100
Facsimile:	972-628-4147
Attention:	Thomas Surgent
and
Jones Day
2727 North Harwood Street
Dallas, TX  75201
Telephone:	214-220-3939
Facsimile:	214-969-5100
Attention:	Charles Haag

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party one Business Day prior to the effectiveness of such change. Written confirmation of receipt (x) given by the recipient of such notice, consent or other communication, (y) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, and recipient facsimile number or (z) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of receipt in accordance with clause (a), (b) or (c) above, respectively.

Section 5.11         Headings. The headings contained in this Agreement are for convenience of reference only and are not part of the substance of this Agreement.

Section 5.12         Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of not less than two-thirds of the then outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any equity securities of the Company that would allow such holder or prospective holder (a) to include such equity securities in any registration statement filed for the Registrable Securities pursuant to the terms of this Agreement, unless under the terms of such agreement, such holder or prospective holder may include such equity securities in any such registration only to the extent that the inclusion of its equity securities will not reduce the amount of Registrable Securities of the Holders or (b) to have its equity securities registered on a registration statement that is declared effective prior to the Effectiveness Date (exclusive of a registration statement filed on Form S-8).

Section 5.13         Initial Holder Representative. Each Initial Holder hereby acknowledges and agrees that it has irrevocably approved and appointed the designation of, and hereby irrevocably designates, NexPoint Advisors, L.P. as the Initial Holder Representative and NexPoint Advisors, L.P. is hereby appointed as of the date hereof as the true and lawful agent and attorney in fact of the Initial Holders as the Initial Holder Representative for and on behalf of the Initial Holders to give and receive notices and communications in connection with this Agreement and all related matters, to take all actions, and to take all other actions that the Initial Holder Representative deems necessary hereunder. In fulfilling its duties hereunder, the Initial Holder Representative shall act in good faith and in a manner that the Initial Holder Representative reasonably believes to be in the best interests of the Initial Holders, taken as a whole. Notices or communications to or from the Initial Holder Representative shall constitute notice to or from the Initial Holders. Each Initial Holder hereby agrees to receive correspondence from the Initial Holder Representative, including in electronic form. It is understood by all parties that NexPoint Advisors, L.P. is executing this Agreement solely in its capacity as the Initial Holder Representative. The Initial Holder Representative shall be entitled to act in its sole and absolute discretion and shall incur no liability whatsoever to the Initial Holders for any act done or omitted hereunder as the Initial Holder Representative, including errors in judgment, while acting in good faith or in reliance on the advice of counsel, accountants, or other advisors, consultants, or experts.

17

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

THE COMPANY:
JERNIGAN CAPITAL, INC.
By:	/s/ John A. Good
Name: John A. Good
Title: President and Chief Operating Officer

[Signature Page to Registration Rights Agreement]

INITIAL HOLDER Representative:
NexPoint Advisors, L.P.
By:	NexPoint Advisors GP, LLC, its general partner
By:	/s/ Brian Mitts
Name:	Brian Mitts
Title:	Executive Vice President

[Signature Page to Registration Rights Agreement]

BUYERS:
NexPoint Real Estate Strategies Fund
By:	/s/ Brian Mitts
Name:  Brian Mitts
Title:  Vice President, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer
NexPoint Real Estate Capital, LLC
By:	/s/ Brian Mitts
Name: Brian Mitts
Title:  Chief Financial Officer and Executive Vice President
NexPoint Real Estate Opportunities, LLC
By: NexPoint Advisors, L.P., its Manager
By: NexPoint Advisors GP, LLC, its general partner
By:	/s/ Brian Mitts
Name: Brian Mitts
Title:  Executive Vice President

[Signature Page to Registration Rights Agreement]

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

JERNIGAN CAPITAL PROCURES EQUITY FINANCING COMMITMENT

· $125 million commitment of “match funded” preferred stock from current common shareholder

· Creates potential $8 to $10 per common share of additional book value by YE 2019

· Flexibility of commitment allows for additional A note sales and other capital solutions

· Supports up to $200 million funding of additional high quality self-storage developments

· 7% cash dividend plus Payment-In-Kind (“PIK”) dividend payable in common or preferred stock subject to 14% total return cap to investor provides avenue for substantial value accretion to current shareholders

Memphis, Tennessee – July 27, 2016

Jernigan Capital, Inc. (NYSE – JCAP) (the “Company”) today announced that it has signed a stock purchase agreement (the “Stock Purchase Agreement”) with accounts managed by NexPoint Advisors, L.P. (“NexPoint”), an affiliate of Highland Capital Management, L.P. (collectively with its affiliates, “Highland”) providing for the purchase and sale over a two-year period of up to $125 million of newly-designated Series A Preferred Stock (“Series A Preferred Stock”) of the Company.

“We have continued to lead the market in providing “smart” funding for high return, state-of-the-art self-storage facilities in underserved submarkets of leading United States cities,” said Dean Jernigan, Chairman and Chief Executive Officer of the Company. “Highland’s commitment, together with the developing A Note market evidenced by our recent A Note sales, provides us with flexible, reasonably priced funding sources for our robust investment pipeline and will allow us to maintain our status as the leading provider of capital to entrepreneurial self-storage developers during this development cycle.”

John Good, the Company’s President and Chief Operating Officer added: “After an initial ramp-up period, we have continued to deliver outstanding investments in new, high quality and well-located self-storage facilities built by top-notch professional storage developers. Our growth and ability to create value has been limited only by uncertainty regarding our access to reasonably priced capital. The Highland commitment removes that uncertainty and clears a path to maximize our opportunity to deliver market-leading returns during this development cycle. In addition, we have now established our access to A Note leverage at costs that are less than those forecast at the time of our IPO, providing us with additional funding momentum. We intend to take full advantage of our $600 million pipeline for the duration of this unprecedented development cycle.”

James Dondero, co-founder and President of Highland, stated: “We are excited to be partnering with Jernigan Capital to focus on the compelling opportunities in the self-storage sector. We believe that self-storage development is currently a top idea in commercial real estate and that Jernigan Capital is the best partner for this exceptional development opportunity. We are a significant holder of JCAP’s common stock and look forward to substantially increasing our investment in JCAP’s highly-regarded management team and robust pipeline.”

FOR IMMEDIATE RELEASE

Under the Stock Purchase Agreement, Highland has committed for a period of two years from the initial closing date (the “Commitment Period”) to purchase from the Company $100 million at a price (the “Liquidation Preference Amount”) of $1,000 per share of Series A Preferred Stock, which amount may be increased to $125 million at the Company’s election made at any time during the Commitment Period. The Company must sell and issue a minimum of $50 million of Series A Preferred Stock by the end of the Commitment Period (the “Minimum Issuance Amount”). The Series A Preferred Stock may be issued in minimum increments of $5 million once per month until the end of the Commitment Period, subject to the Company’s satisfaction of certain conditions such as continued listing of its common stock, continued qualification as a REIT, continued compliance with the terms and conditions of the Stock Purchase Agreement and absence of any event that has, or could reasonably be expected to have, a material adverse effect on the Company, as defined in the Stock Purchase Agreement. The Company’s ability to issue the Series A Preferred Stock in small increments allows the Company to “match fund” its development investments, to the benefit of all stockholders. The Company believes that the Highland commitment, together with proceeds from A note sales, will finance up to $200 million of additional self-storage development investments by the Company over the next several quarters, adding an estimated $8 to $10 to the Company’s book value per share.

Shares of Series A Preferred Stock are entitled to a cumulative cash distribution equal to 7% per annum on the Liquidation Preference Amount (the “Cash Distribution”), payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. In addition, the shares of Series A Preferred Stock will be entitled to a participating dividend, payable in kind in shares of the Company’s common stock or additional shares of Series A Preferred Stock on the same distribution dates mentioned above, at the holder’s election (the “PIK Dividend”), equal in the aggregate to the lesser of 25% of the incremental increase in the Company’s book value (as adjusted for equity capital issuances, share repurchases and certain non-cash expenses) or an amount that would, together with Cash Distributions, result in a 14.0% IRR from the date of issuance of the Series A Preferred Stock (the “Total Return Cap”). The Company’s board of directors has established an ownership limit of the Company’s common stock for the buyers of 17.5% of the Company’s outstanding common stock.

The Series A Preferred Stock may be redeemed at the Company’s option after 5 years from the initial closing date at a price of 105% of the Liquidation Preference Amount per share, and at a price of 100% of the Liquidation Preference Amount per share after 6 years from the initial closing date

In connection with this investment in the Series A Preferred Stock, Highland is entitled to designate one member of the Company’s board of directors. The Company’s board of directors will appoint either Jim Dondero, Co-Founder and President of Highland or Matt McGraner, Managing Director at Highland, as its seventh board member. In addition, Highland will have certain preemptive rights in connection with future issuances of common stock, allowing Highland to retain its common ownership position.

Raymond James acted as the Company’s financial advisor and Jefferies LLC acted as Highland’s financial advisor in connection with the transaction. In addition, Morrison & Foerster LLP acted as the Company’s legal advisor and Jones Day acted as Highland’s legal advisor.

FOR IMMEDIATE RELEASE

The Company has posted on its website at www.jernigancapital.com a slide presentation entitled Frequently Asked Questions About JCAP’s Latest Capital Initiative, which has also been furnished to the Securities Exchange Commission on Form 8-K and is available at www.sec.gov.

About Jernigan Capital

Jernigan Capital, Inc. is a New York Stock Exchange-listed real estate investment trust (NYSE: JCAP) that provides debt and equity capital to private developers, owners, and operators of self-storage facilities. Our mission is to be the preeminent capital partner for self-storage entrepreneurs nationwide by offering creative solutions through and experienced team demonstrating the highest levels of integrity, dedication, excellence and community, while maximizing shareholder value. The Jernigan Capital team has extensive experience in over 100 U.S. markets—from acquiring and managing self-storage properties to new self-storage development—providing JCAP with knowledge unmatched by any lender, broker or advisor to the sector. Jernigan Capital is the only source of construction and development capital focused solely on the self-storage sector.

About Highland

Highland Capital Management, L.P. is an SEC-registered investment adviser based in Dallas, Texas and was founded in 1993. Highland is one of the largest and most experienced global alternative credit managers with approximately $17 billion of assets under management. Highland specializes in credit strategies, such as credit hedge funds, long-only funds and separate accounts, distressed and special situations private equity, real estate, and collateralized loan obligations (CLOs). Highland also offers alternative investments, emerging markets, long/short equities, and natural resources. Highland’s diversified client base includes public pension plans, foundations, endowments, corporations, financial institutions, fund of funds, governments, and high net-worth individuals. Highland is headquartered in Dallas, Texas and maintains offices in New York, Sao Paulo, Singapore, and Seoul.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding the amount of future self storage investments and potential increases in book value. The words “should,” “expects” and “intends” and similar terms and phrases are used in this press release to identify forward-looking statements. The ultimate occurrence of events and results referenced in these forward-looking statements is subject to known and unknown risks and uncertainties, many of which are beyond our control. These forward-looking statements are based upon the Company's present intentions and expectations, but the events and results referenced in these statements are not guaranteed to occur. Investors should not place undue reliance upon forward-looking statements. For a discussion of risks facing our business, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), which is accessible on the SEC’s website at www.sec.gov.

FOR IMMEDIATE RELEASE

Contact:

Jernigan Capital, Inc.

John A. Good – President and COO

(901) 567-5917 (Direct)

john@jernigancapital.com

Highland Capital Management, L.P.

Lucy Bannon

(972) 419-6272

lbannon@highlandcapital.com

EX-99.2

1 Frequently Asked Questions about JCAP’s Latest Capital Initiative Exhibit 99.2

2 Safe Harbor Disclosure Regarding Forward - Looking Statements This presentation includes forward - looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 including statements regarding the amount of future self - storage investments and potential increases in book value. Words such as “should,” “could,” “would,” “predicts,” “believes,” “estimates,” “plans,” “expects,” and “intends” and similar terms and phrases or their negatives are used in this press release to identify forward - looking statements. The ultimate occurrence of events and results referenced in these forward - looking statements is subject to known and unknown risks and uncertainties, many of which are beyond our control. These forward - looking statements are based upon the Company's present intentions and expectations, but the events and results referenced in these statements are not guaranteed to occur or be achieved. Investors should not place undue reliance upon forward - looking statements. For a discussion of risks facing our business, see the information under the heading “Risk Factors” in our Annual Report on Form 10 - K and other reports or information that we file with the Securities and Exchange Commission (“SEC”), which are accessible on the SEC’s website at www.sec.gov .

3 We have just announced a major capital commitment from NexPoint Advisors, L.P. , an affiliate of Highland Capital Management, L.P. (together with its affiliates, “Highland”), a Dallas - based investment company, that we believe will dramatically fuel our growth and substantially enhance shareholder value. We believe this capital will support up to $200 million of additional high - quality self - storage development investments, potentially could create incremental book value of $8 to $10 per share of common stock and drive our book value to between $26 and $29 by the end of 2019. This presentation will inform you about the key components of this capital raising initiative: We have issued a press release regarding the transaction and will file a Current Report on Form 8 - K under SEC rules describing the materials term of the transaction. You should read the press release and the 8 - K for a more complete understanding of the transaction. Both the press release and the Form 8 - K are available on the Investor Relations page of our website at www.jernigancapital.com , and on the website of the SEC at www.sec.gov . What is the purpose of these FAQs? Investor Funds managed by NexPoint Advisors, L.P. Structure of the Investment Series A Preferred Stock Investment Size Up to $125 million of equity capital over a two year period Funding Schedule Drawn in $5 million minimum increments to match fund JCAP investments; flexible structure allows JCAP to layer in up to $75 million of A notes/senior participations and other types of capital to optimally finance investments Cost of Capital 7% cash dividend and Payment in Kind (“PIK”) dividend (common or Additional Series A P referred Stock, at investor’s election) up to 25% of incremental increase in book value; total return limited to 14% IRR Comparison to Other Capital ~$3.00 to ~$8.00 more accretive to common shareholder book value than other available alternatives such as additional JV or public preferred or common equity offering Substantial Advantages of this Structure Match funding, limited dilution, alignment of interests

4 First and foremost, funds managed by Highland are current JCAP common shareholders, having acquired over 4% of our outstanding common stock in the open market. Highland Capital Management, L.P. is an SEC - registered investment adviser based in Dallas, Texas. Founded in 1993, Highland has approximately $17.0 billion of assets under management. Highland invests in both equity and debt securities. Highland’s diversified client base includes public pension plans, foundations, endowments, corporations, financial institutions, fund of funds, governments and high net - worth individuals. Highland maintains offices in Dallas, New York, Sao Paulo, Singapore and Seoul. Highland’s real estate arm, including NexPoint Advisors, L.P. and NexPoint Real Estate Advisors, L.P., shares personnel and other resources with Highland and manages approximately $2.5 billion of real estate assets across every property type and capital position. The Highland personnel have extensive experience investing across all types of real estate assets and throughout the capital stack, including common equity, preferred equity, mezzanine debt and first mortgage debt. Highland and its affiliates have a high level of knowledge about JCAP and our business model and wish to support JCAP’s long - term growth prospects as a substantial institutional investor. Who is Highland Capital Management?

5 • Up to $125 million of Series A Preferred Stock, liquidation preference $1,000 per share (“Series A Preferred Stock”) • Senior to JCAP’s common stock, junior to JCAP indebtedness, including senior participations/A notes sold on JCAP’s loans, and pari passu with or senior to any other future series of JCAP preferred stock • Perpetual preferred stock, meaning that Series A Preferred Stock does not have a definitive mandatory redemption date; therefore, it is permanent equity capital • Optional redemption by JCAP after five years from closing at 5% premium; optional redemption at par after six years from closing, allowing us to manage our capital in a manner that maximizes shareholder value • Issuable in $5 million minimum increments over two year period; minimum issuance of $50 million by August 1, 2018, allowing JCAP to match fund its pipeline of high quality self - storage development investments – JCAP permitted to issue A notes/senior participations on investments at lower rates (currently ~4%) – JCAP may issue other types of equity securities (e.g. common stock) subject to $50 million Series A minimum issuance amount – Structure allows JCAP to optimally capitalize investment portfolio to drive common share value • Mandatory redemption upon a change of control at liquidation preference per share, plus accumulated and unpaid cash and PIK dividends and a make - whole premium (subject to 14% total return cap) What is the structure of Highland’s investment?

6 • 7% per annum cumulative cash dividend, payable quarterly in arrears – dividend rate is equal to the dividend rate per share on $20.00 common stock IPO price and roughly equivalent to the effective interest rate (including origination fees amortization) on JCAP self - storage development investments; subject to limited exceptions, quarterly dividends accumulate and must be paid before any other dividend is paid by JCAP on either our common stock or other series of preferred stock • Cash dividend rate increases to 8.5% per annum if Series A Preferred Stock remains outstanding on August 1, 2022 (with JCAP having right to redeem the Series A Preferred Stock after August 1, 2021) • Participating dividend (the “PIK Dividend”) equal to the lesser of 25% of any incremental increase in JCAP book value resulting from earnings and fair value accretion or the amount that would result in the cumulative total return on the Series A Preferred Stock to equal a 14% internal rate of return; PIK Dividend payable in JCAP common stock or additional Series A Preferred Stock • PIK Dividend payable in common stock subject to 17.5% ownership limitation on all common stock owned by Highland and its affiliates, including current ownership of approximately 4% • Participating Dividend is highly accretive to existing common stockholders – Not payable in cash, allowing cash to be used for additional high yielding investments – Limited to lesser of 25% of incremental increase in JCAP book value resulting from earnings and fair value accretion or 14% cumulative IRR – compared to issuance of 6,000,000 new shares of common stock at IPO price, portion of incremental book value to existing common shareholders is doubled What is the dividend on the Series A Preferred Stock?

7 • Up to $125 million of new commitments with Series A Preferred Stock • Additional $75 million of new commitments with A notes/senior participations on investments financed with Series A Preferred Stock – Since early May, we have successfully sold A notes/senior participations equal to ~58% of JCAP investment amount on all of our development investments that have reached the certificate of occupancy stage – A note rates have been approximately 350 bps over 30 day LIBOR (< 4.0%) with no fees, low costs and rapid closings – Interest from community and small regional banks has been robust, providing reliable indicator of market depth • Potentially $200 million of new commitments supported by Series A Preferred Stock and corresponding A notes is roughly 1/3 of ~$600 million pipeline How much of the JCAP investment pipeline will the Highland commitment support?

8 • Since November 2014, JCAP management has analyzed 490 self - storage sites and approximately $3.6 billion of potential investments • Current term sheets ~$70 million expected to close Q3 2016 • Approximately $91 million in underwriting with closings possible Q4 2016 and likely Q1 2017 • Additional $447 million under various stages of review – JCAP has site addresses and demographic information but awaiting cost and financial information • Closed $216 million of investments in the first 13 months since IPO in April 2015 and additional $49 million scheduled to close into Heitman JV between now and August 15, 2016 • Track record supports expected full commitment of $125 million of Series A Preferred Stock and $75 million of A note proceeds within the next 3 quarters with expected full deployment of all capital over the next 7 quarters Does JCAP have sufficient pipeline to provide $200 million of new investment opportunities?

9 How much shareholder value is expected to be created from $200 million of new on - balance sheet investments? We believe these economics will result in material appreciation of our common stock price, significantly reduce our cost of capital and allow for future common equity issuance to support additional growth Total Cost: $222,000 Aggregate Exit Value: $350,000 - $375,000 Assuming 9.00 - 9.50% development yield and 5.25 - 5.75% exit cap rate JCAP Profit Allocation: $50,000 - $55,000 After Participating Dividend to Highland Capital Projected Incremental Book Value per Share: $8.00 - $10.00 Annual Interest Income: $14,300 Including amortization of origination fees Cash Funding Cost: $11,800 Dividends on Series A Preferred Stock and A notes/senior participations Annual Cash Net Investment Income: $2,500 No dilution due to match funding provision in Highland Capital commitment Heitman JV Projected Book Value per Share Increase ( net of Highland PIK ): $1.50 - $ 2.00 Total Incremental Book Value Per Share Increase: $9.50 - $ 12.00 Estimated Book Value per Share at Year - End 2019: $ 26.50 - $29.00 Note: $ in 000s except per share values

10 • Provides up to $125 million of capital, supporting $200 million of additional investments in $600+ million pipeline of brand new, high quality, well - located self - storage developments • Possibility to create $8.00 to $10.00 of incremental book value per common share, which is $ 3.00 to $8.00 more accretive to book value than other available capital alternatives • Draw feature allows JCAP to match fund development investments to avoid dividend dilution, operating in much the same way as a credit facility • 7% cash dividend per share matches JCAP interest income on development investments and current common dividend if share price were $20.00 (IPO price), and capital from lower cost A note/senior participations invested in $75 million of additional investments earns attractive spread after fully invested • Participating Dividend with 14% IRR Total Return Cap provides JCAP common stockholders with substantially higher share of fair value accretion than alternative capital sources • Optional redemption after 5 years from issuance allows JCAP to manage future cost of capital • Leverage level will remain lower than other mortgage REITs and closer to equity REIT capital stacks • $50 million investment minimum and 2 year commitment period affords JCAP capital flexibility to optimize enterprise value • Removes risk of public equity window not being open to JCAP What are the advantages of the Highland investment? The Highland Structured Preferred Investment is Dramatically Better for JCAP Common Stockholders Than Any Alternative