# EDGAR Filing Document

**Accession Number:** 0001836735
**File Stem:** 0001520138-23-000163
**Filing Date:** 2023-3
**Character Count:** 868202
**Document Hash:** 93886586f9bb2f39b892b86e1802d267
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001520138-23-000163.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001520138-23-000163

**CONFORMED SUBMISSION TYPE**: 253G2

**PUBLIC DOCUMENT COUNT**: 16

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** VictoryBase Corp
- **CENTRAL INDEX KEY:** 0001836735
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE [6500]
- **IRS NUMBER:** 853850063
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 253G2
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 024-11748
- **FILM NUMBER:** 23789144

**BUSINESS ADDRESS:**
- **STREET 1:** 550 RESERVE STREET, SUITE 190
- **CITY:** SOUTHLAKE
- **STATE:** TX
- **ZIP:** 76092
- **BUSINESS PHONE:** 469-694-2707

**MAIL ADDRESS:**
- **STREET 1:** PO BOX 617
- **CITY:** ROANOKE
- **STATE:** TX
- **ZIP:** 76262

**Post-Qualification Offering Circular Amendment No. 1**

**File No. 024-11748**

![](image_001.jpg)

**<u>Explanatory Note</u>**

This Post-Qualification Offering Circular Amendment No. 1 to Offering Circular (this "Amendment") replaces and supersedes in its entirety our original Offering Circular, dated January 28, 2022 (filed February 1, 2022), as previously supplemented by the Supplement thereto, dated January 30, 2023 (the "Supplement").

**THIS AMENDMENT IS DATED MARCH 31, 2023**

We are amending our Offering Circular to report our entering into a placement agent agreement with a broker-dealer, Entoro Securities, LLC, a Delaware limited liability company ("Entoro"), who will assist us in the Offering. In connection with our entering into the placement agent agreement with Entoro, we have also updated the terms of our Subscription Agreement, a copy of which is attached as Exhibit 4.1 to this Amendment. A copy of the placement agent agreement with Entoro is attached as Exhibit 1.1 to this Offering Circular.

We are amending our Offering Circular to report the closing of NY1's acquisition of an approximately $7.9 million multi-unit residential real estate property in Sackets Harbor, New York (the "NY1 Acquisition"). In the Supplement, the acquisition was described as being anticipated.

In the Supplement, we disclosed that we expected that (i) VBRE would contribute $100,000 to Holdings in exchange for 10,000 Class C Units of Holdings; (ii) Holdings would contribute $100,000 to NY1; and (iii) NY1 would incur approximately $100,000 in closing costs in connection with the NY1 Acquisition. In fact, NY1 incurred approximately $300,000 in closing costs and/or other working capital requirements, so VBRE contributed $300,000 to Holdings in exchange for 30,000 Class C Units, and Holdings contributed $300,000 to NY1. We have revised the Second Amendment to Limited Liability Company Agreement of Holdings accordingly. A copy of the revised Second Amendment to Limited Liability Company Agreement of Holdings is attached as Exhibit 6.4 to this Amendment. Likewise, the pro forma financial statements showing the impact of the NY1 Acquisition have been revised accordingly as well.

We identified some additional marketing terms that we plan to use on page 32.

Finally, we are amending our Offering Circular to extend the term of our Offering until two years after the qualification of this Amendment.

Capitalized terms used but not defined in this Explanatory Note have the meanings given to such terms in this Amendment below.

**As submitted to the Securities and Exchange Commission on March 31, 2023**

**PART II – OFFERING CIRCULAR**

**Preliminary Offering Circular dated March 31, 2023**

**An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.**

**VictoryBase Corporation**

**a Delaware corporation** 

**Up to $75,000,000 in Class A Common Stock** 

PO Box 617

Roanoke, TX 76262

469-694-2707

www.VictoryBase.com

This Offering Circular relates to a public offering (the "Offering") of securities to be issued by VictoryBase Corporation, a Delaware corporation (the "Company"). We are offering up to 7,500,000 shares of our Class A common stock, par value $0.001 ("Class A Common Stock"), at an offering price of $10.00 per share (the "Shares") on a continuous basis. Except as the context requires otherwise, as used in this Offering Circular, the terms "we," "us," or "our" refer to the Company, and where applicable, our direct and indirect subsidiaries.

This Offering will be available to any investor meeting the qualifications described in this Offering Circular.

These securities are speculative securities. Investment in our stock involves significant risk. You should purchase these securities only if you can afford a complete loss of your investment. See the "Risk Factors" section on page 3 of this Offering Circular.

**The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.**

**Generally, no sale may be made to you in this Offering if the aggregate annual purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.**

i

***This Offering Circular follows the Offering Circular disclosure format.***

**The date of this Offering Circular is March 31, 2023**

See "The Offering" section on page 1 and "Securities Being Offered" on page 53 for further details.

The Company (directly and through our broker-dealer) is the only party selling Shares in this Offering. None of the securities offered are being sold by our present security holders.

This Offering commenced within two calendar days of qualification of this Offering by the Securities and Exchange Commission on March 9, 2022, and it will be a continuous offering pursuant to Rule 251(d)(3)(i)(F).

The Shares in this Offering will be offered through Entoro as our broker-dealer and by us, affiliates of ours, and employees of ours or of our affiliates, in reliance upon the exemption from registration contained in Rule 3a4-1 of the Securities Exchange Act of 1934. Entoro is not required to sell any specific number or dollar amount of Shares but will use its "reasonable best efforts" to sell the Shares offered.

Because these securities are being offered on a "best efforts" basis, the following disclosures are hereby made:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Price to Public <sup>(1)</sup> | Commissions <sup>(2)</sup> | Proceeds to Company <sup>(3)</sup> | Proceeds to Other Persons <sup>(4)</sup> |
| Per Share: | $10.00 | $0.50 | $9.50 | N/A |
| Total Minimum: | N/A | N/A | N/A | N/A |
| Total Maximum: | $75000000.00 | $3750000.00 | $71250000.00 | N/A |

---

<sup>(1)</sup> The price per Share shown was arbitrarily determined by our Board of Directors. The sales price per share bears no relationship to our book value or any other measure of our current value or worth.

<sup>(2)</sup> We will pay Entoro a commission equal to 1% of gross offering proceeds during the term of our placement agent agreement with Entoro, except in cases that Entoro has facilitated the sale of Shares, in which case we will pay Entoro a commission equal to 5% of the gross offering proceeds. See "PLAN OF DISTRIBUTION."

<sup>(3)</sup> Does not reflect payment of expenses of this Offering, which are estimated to not exceed $5,000,000 and which include, among other things, legal fees, accounting costs, reproduction expenses, due diligence, marketing, consulting, administrative services, transfer agent fees, technology expenses, other costs of blue sky compliance, and actual out-of-pocket expenses incurred by the Company selling the Shares. Over the next six months, we anticipate incurring approximately $362,000 in marketing expenses, $250,000 in broker-dealer expenses, $3,600 in transfer agent expenses, and $5,970 in technology expenses, in connection with the Offering. This amount represents the proceeds of this Offering to the Company, which will be used as set out in "USE OF PROCEEDS TO ISSUER."

<sup>(4)</sup> There are no finder's fees or other fees being paid to third parties from the proceeds, other than commissions payable to our broker-dealer. See "PLAN OF DISTRIBUTION."

The Shares are being offered pursuant to Regulation A of Section 3(b) of the Securities Act of 1933, as amended, for Tier 2 offerings. The Shares will only be issued to purchasers who satisfy the requirements set forth in Regulation A. This Offering is expected to expire on the first of: (i) all of the Shares offered are sold; or (ii) two years from the date of qualification of this Amendment by the Securities and Exchange Commission, unless sooner terminated or extended by us.

ii

**THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS CONCERNING THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.**

**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

This Form 1-A, Offering Circular, and any documents incorporated by reference herein or therein contain forward-looking statements and are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this Form 1-A, Offering Circular, and any documents incorporated by reference are forward-looking statements. Forward-looking statements give our current reasonable expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events.

The forward-looking statements contained in this Form 1-A, Offering Circular, and any documents incorporated by reference herein or therein are based on reasonable assumptions we have made in light of our industry experience, perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. As you read and consider this Form 1-A, Offering Circular, and any documents incorporated by reference, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control) and assumptions. You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Offering Circular, including in "Risk Factors" and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

● The speculative nature of the business we intend to develop;

● Our reliance on suppliers, customers and investors;

● Our dependence upon external sources for the financing of our operations;

● Our ability to effectively execute our business plan;

● Our ability to manage our expansion, growth and operating expenses;

● Our ability to finance our businesses;

● Our ability to promote our businesses;

● Our ability to compete and succeed in highly competitive and evolving businesses;

● Our ability to respond and adapt to changes in technology and customer behavior; and

● Our ability to protect our intellectual property and to develop, maintain and enhance strong brands.

Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements. Should one or more of these risks or uncertainties materialize or should any of these assumptions prove incorrect or change, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Any forward-looking statement made by us in this Form 1-A, Offering Circular or any documents incorporated by reference herein speaks only as of the date of this Form 1-A, Offering Circular or any documents incorporated by reference herein. Factors or events that could cause our actual operating and financial performance to differ may emerge from time to time, and it is not possible for the Company to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

iii

 **STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS**

Our Shares are being offered and sold only to "qualified purchasers" (as defined in Regulation A). As a Tier 2 offering pursuant to Regulation A, this Offering will be exempt from state law "blue sky" review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that our Shares offered hereby are offered and sold only to "qualified purchasers" or at a time when our Shares are listed on a national securities exchange. "Qualified purchasers" include: (i) "accredited investors" under Rule 501(a) of Regulation D, and (ii) all other investors so long as their investment in our Shares does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). We reserve the right to reject any investor's subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a "qualified purchaser" for purposes of Regulation A.

To determine whether a potential investor is an "accredited investor" for purposes of satisfying one of the tests in the "qualified purchaser" definition, the investor must be a natural person who has:

&nbsp;&nbsp;&nbsp;&nbsp;1. an
 individual net worth, or joint net worth with the person's spouse, that exceeds $1,000,000 at the time of the purchase, excluding
 the value of the primary residence of such person; or

&nbsp;&nbsp;&nbsp;&nbsp;2. earned
 income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and
 a reasonable expectation of the same income level in the current year.

If the investor is not a natural person, different standards apply. See Rule 501 of Regulation D for more details.

For purposes of determining whether a potential investor is a "qualified purchaser," annual income and net worth should be calculated as provided in the "accredited investor" definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor's home, home furnishings, and automobiles.

iv

**<u>About This Form 1-A and Offering Circular</u>**

In making an investment decision, you should rely only on the information contained in this Form 1-A and Offering Circular. We have not authorized anyone to provide you with information different from that contained in this Form 1-A and Offering Circular. We are offering to sell and seeking offers to buy the Shares only in jurisdictions where offers and sales are permitted. You should assume that the information contained in this Form 1-A and Offering Circular is accurate only as of the date of this Form 1-A and Offering Circular, regardless of the time of delivery of this Form 1-A and Offering Circular. Our business, financial condition, results of operations, and prospects may have changed since that date. Statements contained herein as to the content of any agreements or other documents are summaries and, therefore, are necessarily selective and incomplete and are qualified in their entirety by the actual agreements or other documents. We will provide the opportunity to ask questions of and receive answers from our management concerning terms and conditions of this Offering, the Company, or any other relevant matters and any additional reasonable information to any prospective investor prior to the consummation of the sale of the Shares. This Form 1-A and Offering Circular do not purport to contain all of the information that may be required to evaluate this Offering and any recipient hereof should conduct its own independent analysis. The statements of ours contained in this Offering Circular are based on information we believe to be reliable. No warranty can be made as to the accuracy of any forward-looking estimates we may have made or that circumstances have not changed since the date of this Form 1-A and Offering Circular. We do not expect to update or otherwise revise this Form 1-A, Offering Circular or other materials supplied herewith. The delivery of this Form 1-A and Offering Circular at any time does not imply that the information contained herein is correct as of any time subsequent to the date of this Form 1-A and Offering Circular. This Form 1-A and Offering Circular are submitted in connection with this Offering described herein and may not be reproduced or used for any other purpose.

v

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [OFFERING SUMMARY](#a_001) | [1](#a_001) |
| &nbsp;&nbsp;&nbsp;[The Offering](#a_002) | [1](#a_002) |
| &nbsp;&nbsp;&nbsp;[Certain Definitions](#a_003) | [2](#a_003) |
| [RISK FACTORS](#a_004) | [3](#a_004) |
| &nbsp;&nbsp;&nbsp;[Risks relating to the Company and our Business](#a_005) | [3](#a_005) |
| &nbsp;&nbsp;&nbsp;[Risks relating to this Offering and investment](#a_006) | [12](#a_006) |
| [DILUTION](#a_007) | [19](#a_007) |
| [PLAN OF DISTRIBUTION](#a_008) | [20](#a_008) |
| [USE OF PROCEEDS TO ISSUER](#a_009) | [23](#a_009) |
| [USE OF PROCEEDS](#a_010) | [23](#a_010) |
| [MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION](#a_011) | [24](#a_011) |
| &nbsp;&nbsp;&nbsp;[Our Business](#a_012) | [30](#a_012) |
| [DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES](#a_013) | [45](#a_013) |
| [COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS](#a_014) | [46](#a_014) |
| &nbsp;&nbsp;&nbsp;[Executive Compensation](#a_015) | [46](#a_015) |
| [SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS](#a_016) | [48](#a_016) |
| [INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS](#a_017) | [49](#a_017) |
| [ERISA CONSIDERATIONS](#a_018) | [50](#a_018) |
| [SECURITIES BEING OFFERED](#a_019) | [53](#a_019) |
| [DISQUALIFYING EVENTS DISCLOSURE](#a_020) | [55](#a_020) |
| [INVESTOR ELIGIBILITY STANDARDS](#a_021) | [55](#a_021) |
| [SECTION F/S FINANCIAL STATEMENTS](#a_022) | [56](#a_022) |
| [INDEX TO EXHIBITS](#a_023) | [83](#a_023) |

---

vi

**OFFERING SUMMARY**

*The following summary is qualified in its entirety by the more detailed information appearing elsewhere in this Offering Circular and/or incorporated by reference in this Offering Circular. For full Offering details, please (1) thoroughly review this Form 1-A filed with the Securities and Exchange Commission, (2) thoroughly review this Offering Circular, and (3) thoroughly review any attached documents to or documents referenced in, this Form 1-A and Offering Circular.*

---

| | |
|:---|:---|
| Type of Stock Offering: | Class A Common Stock |
| Price Per Share: | $10.00 |
| Minimum Investment: | Generally $500, but we reserve the right to accept purchases of less than $500 in our sole discretion. |
| Maximum Offering Amount: | $75,000,000.00. We will not accept investments greater than the Maximum Offering Amount. |
| Maximum Shares Offered: | 7,500,000 Shares of our Class A Common Stock |
| Use of Proceeds: | We will use the proceeds of this Offering to (i) purchase Class B Units of VictoryBase Holdings LLC, a Texas limited liability company ("Holdings"), our subsidiary, and (ii) for general working capital. Holdings will use the proceeds of the sale of Class B Units to acquire (directly and indirectly) VictoryBase Properties and for general working capital. See also the description in section entitled "USE OF PROCEEDS TO ISSUER." |
| Voting Rights: | The Shares have full voting rights; however, shares of our Class B Common Stock have super-voting rights as described in "SECURITIES BEING OFFERED." |
| Length of Offering: | Shares will be offered on a continuous basis until either (1) the maximum number of Shares or sold; (2) two years from the date of qualification of this Amendment by the Commission, or (3) we in our sole discretion withdraw this Offering. |

---

**<u>The Offering</u>**

---

| | |
|:---|:---|
| Class A Common Stock Outstanding <sup>(1)(2)</sup> | 25,030 Shares |
| Class A Common Stock in this Offering <sup>(2)</sup> | 7,500,000 Shares |
| Class A Common Stock to be outstanding after this Offering <sup>(3)</sup> | 7,525,000 Shares |

---

<sup>(1)</sup> We have authorized 10,000,000 shares of our Class A Common Stock and 1,000,000 shares of Class B Common Stock. We had issued 1,000,000 shares of our Class A Common Stock to VBRE, but VBRE subsequently surrendered 975,000 shares of Class A Common Stock back to the Company. As of the date of this Offering Circular, the Company has 25,000 shares of Class A Common Stock outstanding and held by VictoryBase RE, LLC ("VBRE") and 30 shares of Class A Common Stock outstanding and held by an individual EquityBase Investor, for a total of 25,030 Class A Common Stock outstanding. We have issued 1,000,000 shares of Class B Common Stock to VBRE. Each share of Class B Common Stock is entitled to 1,000,000 votes, giving VBRE voting control of the Company. As of the date of this Offering Circular, Thomas Paquin is the trustee of The Tom Paquin Irrevocable Trust, the sole owner of VBRE. No Class B Common Stock is being sold in this Offering. Shares of our Class B Common Stock have no economic rights. In addition, VBRE, as the holder of Class A membership interests ("Class A Units") of Holdings, has the right to exchange such Class A Units for shares of the Company's Class A common stock such that immediately after the exchange, the indirect percentage ownership interest in Holdings represented by such newly issued Class A shares will equal the same percentage ownership as the Class A Units of Holdings as the forfeited Class A Units represented in Holdings immediately prior to the exchange. See "SECURITIES BEING OFFERED."

<sup>(2)</sup> Includes 30 Shares of Class A Common Stock previously sold as part of this Offering.

<sup>(3)</sup> The total number of Shares of our Class A Common Stock assumes that the maximum number of Shares are sold in this Offering.

[**Table of Contents**](#toc)

We may not be able to sell the Maximum Offering Amount. We will conduct one or more closings on a rolling basis as funds are received from investors.

The net proceeds of this Offering will be the gross proceeds of the Shares sold minus the expenses of this Offering.

***Restrictions on Resale***

We are not currently listed on any stock exchange nor are we quoted on any quotation service, and our ability to list our stock or have our stock quoted for trading in the future is uncertain. Investors should not assume that the Shares will be listed or quoted. A public trading market for the Shares may never develop. We have no current plans to list or obtain quotation of the Shares. Accordingly, the investor must be willing to hold the Shares for an indefinite period of time. In order to sell the Shares, the investor will need to independently locate a buyer, and any such sales must comply with any applicable state blue sky laws and regulations which often restrict the offer or sale of shares.

***Potential Future Share Repurchase Program***

In the future, we plan to adopt a share repurchase program which may permit you to sell Shares back to the Company. Prior to adopting such any share repurchase program, we plan to seek an exemptive letter from the Division of Trading and Markets of the Securities and Exchange Commission (the "SEC"), seeking to exempt us from restrictions on repurchases of shares during an offering of securities under the provisions of Regulation M promulgated by the SEC. Unless and until we receive such an exemptive letter, we do not plan to adopt any share repurchase program. We may never obtain such an exemptive letter. Thus, we may never adopt a share repurchase program.

**<u>Certain Definitions</u>**

As used in this Offering Circular, we will use the following terms which have the meanings set forth below.

●  ***Base Agreement*** is an agreement between one of our customers and a VB Property Company that allows the customer to reside in a VictoryBase Property.

●  ***Base Payment*** is a monthly payment made by our customers to occupy VictoryBase Properties under the terms of a Base Agreement.

●  ***Control Agreement*** is a master control and contribution agreement among Holdings, a VB Property Company, and the owner of such VB Property Company. Under a Control Agreement, (i) the VB Property Company grants to Holdings (i) the right to elect to control and occupy (and permit third parties to control and occupy) one or more VictoryBase Properties, (ii) the right to require the owner of the VB Property Company to contribute its ownership of such VB Property Company to Holdings in exchange for membership interests of Holdings. A form of Control Agreement is attached as an exhibit to this Offering Circular.

●  ***EquityBase Program*** is a marketing term we give to our program that allows a person to elect both to reside in VictoryBase Properties and to invest in shares of our stock. Regardless of whether a VictoryBase Property resident elects to enter into a subscription agreement or an investor elects to enter into a Base Agreement, in neither case would there be any change to the rights, privileges, or responsibilities of the customer under the Base Agreement or the rights, privileges, or responsibilities of the investor under the subscription agreement. We plan to offer discounted Base Payments to EquityBase Investors that meet the criteria that we might establish from time to time. See "Potential Future Discount Program" under " Plan of Distribution " below.

●  ***Holdings*** is VictoryBase Holdings LLC, a Texas limited liability company, a subsidiary of the Company.

●  ***Holdings Tracking Units*** are membership interests of Holdings that track the value of one or more subsidiaries or other assets or operations of Holdings.

●  ***NY1*** is VictoryBase NY1, LLC, a Texas limited liability company, a subsidiary of Holdings.

●  ***SC1*** is VictoryBase SC1, LLC, a Texas limited liability company, a subsidiary of Holdings.

●  ***Value Add*** is an adjective we use to describe a VictoryBase Property that we believe has net operating income that we can improve over time by implementing efficient management procedures and/or capital improvement programs. Generally, we consider a VictoryBase Property to no longer be "Value Add" when the efficient management procedures and/or capital improvement programs have been implemented and the net operating income has increased and is stabilized.

●  ***VB Property Company*** is a company that owns one or more VictoryBase Properties.

●  ***VictoryBase Property*** is a residential real property, such as single-family homes, townhomes, multi-family units or other residential real property within our network available for potential occupancy by one of our customers.

[**Table of Contents**](#toc)

**RISK FACTORS**

The purchase of Shares of our Class A Common Stock involves substantial risks. You should carefully consider the following risk factors in addition to any other risks associated with this investment. The Shares offered by us constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those risks associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks and uncertainties may also have an adverse effect on our business and your investment in the Shares. An investment in the Company may not be suitable for all recipients of this Offering Circular. You should consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.

The discussions and information in this Offering Circular may contain both historical and forward-looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of our business, please be advised that our actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. We have attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results may differ from our current expectations.

Before investing, you should carefully read and carefully consider the following risk factors:

**<u>Risks relating to the Company and our Business</u>**

***We have limited operating history.***

We have a limited operating history and have suffered losses and our proposed plan of business may not be realized in the manner contemplated, and, if it cannot be, stockholders may lose all or a substantial part of their investment. We may not generate significant operating revenues and our operations may not be profitable.

***We are dependent upon our management, key personnel and consultants to execute our business plan.***

Our success is heavily dependent upon the continued active participation of our current executive officers as well as other key personnel and consultants. Loss of the services of one or more of these individuals could have a material adverse effect upon our business, financial condition, or results of operations. Further, our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the residential real estate industry is intense, and the loss of any of such persons, or an inability to attract, retain and motivate any additional highly skilled employees required for the expansion of our activities, could have a materially adverse effect on it. The inability to attract and retain the necessary personnel, consultants and advisors could have a material adverse effect on our business, financial condition or results of operations.

***Although dependent upon key personnel, we do not have any key man life insurance policies on any such persons.***

We are dependent upon management in order to conduct our operations and execute our business plan; however, we have not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, should any of these key personnel, management or founders die or become disabled, we will not receive any compensation that would assist with such person's absence. The loss of such person could negatively affect us and our operations.

[**Table of Contents**](#toc)

***We are not subject to Sarbanes-Oxley regulations, and we lack financial controls and safeguards required of public companies.***

We do not have the internal infrastructure necessary, and we are not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. We may have significant deficiencies or material weaknesses in the quality of our financial controls. We expect to incur additional expenses and diversion of management's time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

***We have engaged and intend to continue to engage in transactions with related persons.***

We will routinely be engaged in transactions and contractual relationships with related parties. For example, each time VBRE contributes a new asset or a new entity to Holdings and/or one of its subsidiaries, the fair market value of such contribution will be determined by us and not by arms-length negotiation. Likewise, when the Company contributes cash to Holdings, the value of Holding's existing assets, and therefore the number of Class B membership interests ("Class B Units") of Holdings to be issued to the Company in exchange for such contribution will be based upon fair market value determined by us rather than by arms-length negotiation. Please see the section of this Offering Circular entitled "Interest of Management and Others in Certain Related-Party Transactions and Agreements."

***Changes in employment laws or regulation could harm our performance.***

Various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws may include minimum wage requirements, overtime pay, healthcare reform and the implementation of various federal and state healthcare laws, unemployment tax rates, workers' compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.

***Our bank accounts will not be fully insured.***

Our regular bank accounts each have federal insurance that is limited to a certain amount of coverage. It is anticipated that the account balances in one or more of our accounts may exceed those limits at times. In the event that any of our banks should fail, we may not be able to recover all amounts deposited in these bank accounts.

***Our business plan is speculative.***

Our present business and planned business are speculative and subject to numerous risks and uncertainties. We may not generate significant revenues or profits.

***We will likely incur debt.***

We have incurred debt and expect to incur future debt in order to fund operations. Complying with obligations under such indebtedness may have a material adverse effect on us and on your investment.

***Our expenses could increase without a corresponding increase in revenues.***

Our operating and other expenses could increase without a corresponding increase in revenues, which could have a material adverse effect on our consolidated financial results and on your investment. Factors which could increase operating and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations or policies, (4) significant increases in insurance premiums, and (5) increases in borrowing costs.

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***We will be reliant on key suppliers.***

We intend to enter into agreements with key suppliers and will be reliant on positive and continuing relationships with such suppliers. Termination of those agreements, variations in their terms, or the failure of a key supplier to comply with its obligations under these agreements (including if a key supplier were to become insolvent), could have a material adverse effect on our consolidated financial results and on your investment.

***Increased costs could affect us.***

An increase in the cost of raw materials or energy could affect our profitability. Commodity and other price changes may result in unexpected increases in the cost of raw materials used by us. We may also be adversely affected by shortages of raw materials. In addition, energy cost increases could result in higher transportation, freight and other operating costs. We may not be able to increase our prices to offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect on your investment.

***We may not be able to maintain and enhance our product image.***

It is important that we maintain and enhance the image of our existing and new products. The image and reputation of our products may be impacted for various reasons including litigation or complaints from customers, investors or regulatory bodies resulting from quality failure. Such concerns, even when unsubstantiated, could be harmful to our image and the reputation of our products. From time to time, we may receive complaints from customers regarding products or services purchased from us. We may receive correspondence from customers requesting reimbursement. Dissatisfied customers may threaten legal action against us if no reimbursement is made. We may become subject to lawsuits from customers alleging injury because of a purported defect in VictoryBase Properties, claiming substantial damages and demanding payments from us. These claims may not be covered by our insurance policies. Any resulting litigation could be costly for us, divert our management's attention, and could result in increased costs of doing business, or otherwise have a material adverse effect on our business, results of operations, or financial condition. Any negative publicity generated as a result of customer or investor complaints about our products could damage our reputation and diminish the value of our brand, which could have a material adverse effect on our business, results of operations, and financial condition, as well as your investment. Deterioration in our brand equity (brand image, reputation and product quality) may have a material adverse effect on our consolidated financial results as well as your investment.

***If we are unable to protect our intellectual property effectively, we may not be able to operate our business, which would impair our ability to compete.***

Our success will depend on our ability to obtain and maintain meaningful intellectual property protection for any such intellectual property. As we currently do not have any registered intellectual property with the USPTO, the names and/or logos of our brands (whether owned by us or licensed to us) may be challenged by holders of trademarks who file opposition notices, or otherwise contest trademark applications by us for our brands. Similarly, domains owned and used by us may be challenged by others who contest the ability of us to use the domain name or URL. Such challenges could have a material adverse effect on our consolidated financial results as well as your investment.

***Computer, website or information system breakdown could affect our business.***

Our business operations plan to rely heavily on technology and electronic communications. We plan to conduct a substantial portion of our business through our website or mobile app. Computer, website, mobile app, or information system breakdowns as well as cyber security attacks could impair our ability to service customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on our consolidated financial results as well as your investment. Furthermore, we do not currently have insurance protections against cyber attack or system breakdowns or malfunctions.

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***Changes in the economy could have a detrimental impact on us.***

Changes in the general economic climate could have a detrimental impact on consumer expenditure and therefore on our revenue. It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest rates, inflation, higher unemployment and tax increases) may adversely affect customers' confidence and willingness to spend. Any of such events or occurrences could have a material adverse effect on our consolidated financial results and on your investment.

***The amount of capital we are attempting to raise in this Offering is not enough to sustain our current business plan.***

In order to achieve our near and long-term goals, we will need to procure funds in addition to the amount raised in this Offering. We may not be able to raise such funds on acceptable terms or at all. If we are not able to raise sufficient capital in the future, we will not be able to execute our business plan, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining assets, which could cause you to lose all or a portion of your investment.

***Additional financing may be necessary for the implementation of our growth strategy.***

We may require additional debt and/or equity financing to pursue our growth and business strategies. These include, but are not limited to, enhancing our operating infrastructure and otherwise respond to competitive pressures. Given our limited operating history and existing losses, additional financing may not be available, or, if available, may not be available upon terms acceptable to us. Lack of additional funding could force us to curtail substantially our growth plans. Furthermore, the issuance by us of any additional securities pursuant to any future fundraising activities undertaken by us would dilute the ownership of existing stockholders and may reduce the price of our Shares.

***Our employees, executive officers, directors and insider stockholders beneficially own or control a substantial portion of our outstanding shares.***

Thomas Paquin, our founder, sole director, and an officer, serves as the trustee of The Tom Paquin Irrevocable Trust, which owns and controls VBRE, which controls all of our Class B Common Stock, which controls the Company. Control of the Company by one person will limit your ability and the ability of our other stockholders, whether acting alone or together, to propose or direct the management or overall direction of the Company. Additionally, this concentration of ownership could discourage or prevent a potential takeover of the Company that might otherwise result in an investor receiving a premium over the market price for his Shares. Because Mr. Paquin indirectly controls the Company, he will have the power to control the election of our directors and the approval of actions for which the approval of our stockholders is required. If you acquire our Shares, you will have no effective voice in the management of the Company. Such concentrated control of the Company may adversely affect the price of the Shares. Our principal stockholder may be able to control matters requiring approval by our stockholders, including the election of directors, mergers or other business combinations. Such concentrated control may also make it difficult for our stockholders to receive a premium for their Shares in the event that we merge with a third party or enter into different transactions, which require stockholder approval. These provisions could also limit the price that investors might be willing to pay in the future for our Shares.

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***Our operating plan relies in large part upon assumptions and analyses developed by us. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.***

Whether actual operating results and business developments will be consistent with our expectations and assumptions as reflected in our forecast depends on a number of factors, many of which are outside our control, including, but not limited to:

● whether we can obtain sufficient capital to sustain and grow our business;

● our ability to manage our growth;

● whether we can manage relationships with key vendors and advertisers;

● demand for our products and services;

● the timing and costs of new and existing marketing and promotional efforts;

● competition;

● four ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel;

● our ability to adequately insure our assets and protect against liabilities;

● the overall strength and stability of domestic and international economies;

● the impact of inflation; and

● consumer spending habits.

Unfavorable changes in any of these or other factors, most of which are beyond our control, could materially and adversely affect our business, consolidated results of operations and consolidated financial condition.

***To date, we have had operating losses, and we may not be initially profitable for at least the foreseeable future, and we cannot predict when we might become profitable.***

We have been operating at a loss since our inception. We may not be able to generate significant revenues in the future. In addition, we expect to incur substantial operating expenses in order to fund the expansion of our business. As a result, we expect to continue to experience substantial negative cash flow for at least the foreseeable future and cannot predict when, or even if, we might become profitable.

***We may be unable to manage our growth or implement our expansion strategy.***

We may not be able to expand our product and service offerings, our markets, or implement the other features of our business strategy at the rate or to the extent presently planned. Our projected growth will place a significant strain on our administrative, operational and financial resources. If we are unable to successfully manage our future growth, establish and continue to upgrade our operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, our consolidated financial condition and consolidated results of operations could be materially and adversely affected.

***We rely upon trade secret protection to protect our intellectual property. It may be difficult and costly to protect our proprietary rights and we may not be able to ensure their protection.***

We currently rely on trade secrets. While we use reasonable efforts to protect these trade secrets, our employees, consultants, contractors or advisors may, unintentionally or willfully, disclose our trade secrets to competitors or other third parties. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. If we are unable to defend our trade secrets from others use, or if our competitors develop equivalent knowledge, it could have a material adverse effect on our business. Any infringement of our proprietary rights could result in significant litigation costs, and any failure to adequately protect our proprietary rights could result in our competitors offering similar products, potentially resulting in loss of a competitive advantage and decreased revenue. Existing patent, copyright, trademark and trade secret laws afford only limited protection. Therefore, we may not be able to protect our proprietary rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using our trade secrets could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources and could materially adversely affect our future operating results.

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***Our business model is evolving.***

Our business model is unproven and is likely to continue to evolve. Accordingly, our current business model may not be successful and may need to be changed. Our ability to generate significant revenues will depend, in large part, on our ability to successfully market our products to potential users who may not be convinced of the need for our products and services or who may be reluctant to rely upon third parties to develop and provide these products. We intend to continue to develop our business model as our market continues to evolve.

***We need to increase brand awareness.***

Due to a variety of factors, our opportunity to achieve and maintain a significant market share may be limited. Developing and maintaining awareness of our brand name, among other factors, is critical. Further, the importance of brand recognition will increase as competition in our market increases. Successfully promoting and positioning our brand, products and services will depend largely on the effectiveness of our marketing efforts. Therefore, we may need to increase our financial commitment to creating and maintaining brand awareness. If we fail to successfully promote our brand name or if we incur significant expenses promoting and maintaining our brand name, it would have a material adverse effect on our consolidated results of operations.

***We face competition in our markets from a number of large and small companies, some of which have greater financial, research and development, production and other resources than us.***

In many cases, our competitors have longer operating histories, established ties to the market and consumers, greater brand awareness, and greater financial, technical and marketing resources. Our ability to compete depends, in part, upon a number of factors outside our control, including the ability of our competitors to develop alternatives that are superior. If we fail to successfully compete in our markets, or if we incur significant expenses in order to compete, it would have a material adverse effect on our consolidated results of operations.

***A data security breach could expose us to liability and protracted and costly litigation and could adversely affect our reputation and operating revenues.***

To the extent that our activities involve the storage and transmission of confidential information, we and/or third-party processors will receive, transmit and store confidential customer and investor and other information. Encryption software and the other technologies used to provide security for storage, processing and transmission of confidential customer and investor and other information may not be effective to protect against data security breaches by third parties. The risk of unauthorized circumvention of such security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers. Improper access to our or these third parties' systems or databases could result in the theft, publication, deletion or modification of confidential customer and investor and other information. A data security breach of the systems on which sensitive account information is stored could lead to fraudulent activity involving our products and services, reputational damage, and claims or regulatory actions against us. If we are sued in connection with any data security breach, we could be involved in protracted and costly litigation. If unsuccessful in defending that litigation, we might be forced to pay damages and/or change our business practices or pricing structure, any of which could have a material adverse effect on our operating revenues and profitability. We would also likely have to pay fines, penalties and/or other assessments imposed as a result of any data security breach.

***We depend on third-party providers for a reliable internet infrastructure and the failure of these third parties, or the internet in general, for any reason would significantly impair our ability to conduct our business.***

We will outsource some or all of our online presence and data management to third parties who host the actual servers and provide power and security in multiple data centers in each geographic location. These third-party facilities require uninterrupted access to the internet. If the operation of the servers is interrupted for any reason, including natural disaster, financial insolvency of a third-party provider, or malicious electronic intrusion into the data center, our business would be significantly damaged. As has occurred with many businesses that rely upon the internet, we may be subject to "denial-of-service" attacks in which unknown individuals bombard our computer servers with requests for data, thereby degrading the servers' performance. We may not be successful in quickly identifying and neutralizing these attacks. If a third-party facility failed, or our ability to access the internet was interfered with because of the failure of internet equipment in general or if we become subject to malicious attacks of computer intruders, our business and operating results will be materially adversely affected.

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***Our employees may engage in misconduct or improper activities.***

We, like any business, are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with laws or regulations, provide accurate information to regulators, comply with applicable standards, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve improper or illegal activities which could result in regulatory sanctions and serious harm to our reputation.

***Our directors enjoy limitations on their liability.***

We may provide for the indemnification of our directors to the fullest extent permitted by law and, to the extent permitted by such law, eliminate or limit the personal liability our directors and our stockholders for monetary damages for breaches of fiduciary duty. Such indemnification may be available for liabilities arising in connection with this Offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling ours pursuant to the foregoing provisions, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

***The number of active-duty US military personnel may decrease in size or the location of US military bases may change.***

Our business model is highly dependent upon US military servicepersons as a significant portion of our investor and customer base. Significant changes in deployment patterns or the size and scope of the US military personnel or the size or location of US military bases could have material adverse effect on our business and the results of our operations.

***The market may not embrace our business concept.***

Our business concept is somewhat novel, and our potential customers may not be aware of our business concept. Even after becoming aware of our business offerings, our potential customers may not embrace our business concept and may choosing instead to rent or purchase homes rather than do business with us.

***Due to the unpredictability of deployment orders, our client base may terminate their Base Agreements early in certain circumstances, which could negatively affect our revenue.***

A significant portion of our client base will be active duty and Reserve/National Guard service members. Those service members frequently move or receive orders to active duty that require them to deploy outside the United States. If either of these things occurs, the service member may terminate his or her Base Agreement early without penalty under certain circumstances as set forth in the Servicemembers Civil Relief Act and under the terms of the applicable Base Agreement. A significant number of early terminations of Base Agreements could have a material adverse effect on our business and results of our operations.

***COVID-19 may have unpredictable effects on the global economy and our business.***

The global pandemic caused by the spread of COVID-19 may have a substantial impact on the global economy, the residential real estate market, and our business in ways that are difficult to predict or react to. Although we believe our business model is well positioned to weather the storm of the pandemic and the economic devastation that we expect will be left in the pandemic's wake, we may not be able to adapt our business model to effectively compete in these uncertain times.

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***COVID-19 or other global, national, or reginal pandemics may cause a change in business operations.***

A pandemic and any other internal or external condition can cause face-to-face meeting to be cancelled, operations to change in various and unpredictable ways, operations to reduced or even ceased, additional cost could be incurred to sanitize or provide other use other methods to mediate risks, both physical and other, have an negative impact on our ability to hire or retain employees, provide alternate solutions to customers if we are unable to perform any portion of our agreements, or other unknown and unpredictable negative impacts on the business.

***Environmentally hazardous conditions may adversely affect our financial condition, cash flows and operating results.***

Under various federal, state and local laws, as well as local ordinances and regulations, an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous substances at, on, under or in such property, as well as certain other potential costs relating to hazardous or toxic substances. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. A conveyance of the property, therefore, does not relieve the owner or operator from liability. As a current or former owner and operator of real estate, we may be required by law to investigate and clean up hazardous substances released at or from the properties we currently own or operate or have in the past owned or operated. We may also be liable to the government or to third parties for property damage, investigation costs and cleanup costs. In addition, some environmental laws create a lien on the contaminated site in favor of the government for damages and costs the government incurs in connection with the contamination. Contamination may adversely affect our ability to sell or lease real estate, or to make properties available for residents, or to borrow using the real estate as collateral. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos-containing materials and for the release of such materials into the air. These laws may provide for third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials. In connection with the ownership, operation, management, and development of real properties, we may be considered an owner or operator of such properties and, therefore, are potentially liable for removal or remediation costs, and may be liable for governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities. We are not aware of any environmental liabilities relating to our investment properties that would have a material adverse effect on our business, assets, or results of operations. However, environmental liabilities may arise in the future and such liabilities may have a material adverse effect on our business, assets or results of operation.

***Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash flow, including without limitation as a result of hurricanes, earthquakes, hail, tornados, and other natural disasters.***

We generally maintain insurance policies related to our business, including casualty, general liability and other policies covering business operations, employees and assets. However, we may be required to bear all losses that are not adequately covered by insurance. In addition, there are certain losses that are not generally insured because it is not economically feasible to insure against them, including losses due to riots or acts of war. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated profits and cash flow from the properties and, in the case of debt that carries recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Although we believe that our insurance programs are adequate, we may incur losses in excess of its insurance coverage, or we may not be able to obtain insurance in the future at acceptable levels and reasonable cost.

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***The market value of our VictoryBase Properties could decline, thereby reducing the value of the Company and the Shares.***

The value of residential real property in our portfolio of VictoryBase Properties may fluctuate. Market and economic conditions in the markets in which we operate may impact occupancy or rental rates. Occupancy and rental rates, in turn, may impact the amount of Base Payments we are able to obtain from residents, and thus our revenues, and if our communities do not generate cash flow sufficient to meet our operating expenses, including debt service and capital expenditures, current cash flow and ability to pay or refinance our debt obligations could be adversely affected. We are exposed to the risks of downturns in the local economy or other local real estate market conditions that could adversely affect occupancy rates, rental rates, Base Payment rates, and property values in these markets. Other factors that may affect the value of our assets include:

● the national and local economic climate, which may be adversely affected by, among other factors, plant closings, and industry slowdowns;

● local real estate market conditions such as the oversupply of residential real property in an area;

● the number of repossessed homes in a particular market;

● the rental market which may limit the extent to which Base Payment rates may be increased to meet increased expenses without decreasing occupancy rates;

● the safety, convenience and attractiveness of our properties and the neighborhoods where they are located;

● zoning or other regulatory restrictions;

● competition from other available housing communities and alternative forms of housing;

● our ability to provide adequate management, maintenance and insurance;

● increased operating costs, including insurance premiums, real estate taxes and utilities; and

● the enactment of rent control laws or laws taxing the owners of residential homes.

***The quality of our VictoryBase Properties may not be adequate, and there will be only limited guarantees from the builder of our VictoryBase Properties.***

We will seek to acquire or construct VictoryBase Properties that have satisfactory levels of quality to satisfy consumer demands and to provide for reasonable maintenance expenses. We will seek to obtain warranties from our builders, and we will seek to use only reputable builders for our homes. However, we may not be successful in selecting only reputable builders and all builders' warranties are limited to varying degrees. VictoryBase Properties that we acquire or construct may turn out to lack the quality that we expect. Lack of quality in any one property could result in a decline in confidence in our brand which would negatively impact the value or perceived value of our VictoryBase Properties nationwide. Thus, if any of our VictoryBase Properties ends up inferior quality, it could have a negative impact on our business and our results of operations.

***Increased interest rates may have a negative impact on cash flows of the Company and limit our ability to continue operations without seeking addition financing.***

Interest rate increases can have a negative impact on all aspects of the business. An increase in interest rates can increase interest payments on any indebtedness that we incur. The increase can create increased cash flow requirements, which we may not be able to support. Increase interest rates could also decreases the affordability of our home in the event we attempt to resell them or use the homes as collateral. If we elect to use financial hedging instruments, such as interest rate swaps, we may suffer losses on and increase or decrease in interest rates, depending on our short or long position.

***The costs of our Base Agreement discount program may exceed its benefits.***

We plan to implement a Base Agreement discount program as outlined in "Potential Future Discount Program" under "PLAN OF DISTRIBUTION" below. Under our anticipated discount program, EquityBase Investors may obtain discounted Base Payments under their Base Agreements if they also purchase Shares in this Offering. We anticipate that this discount program will lower our operating costs by encouraging our residents to have an ownership mentality, which we also may refer to as an ownership mindset. The discount program may not result in the development of such ownership mentality in our residents. Any such ownership mindset may not result in lowering our operating costs by the amount of the Base Payment discounts or at all. There is no limit to the amount of discount we may elect to offer, but we anticipate that the amount of the discount will be less than half of the amount of the applicable Base Payment.

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**<u>Risks relating to this Offering and investment</u>**

***We may undertake additional equity or debt financing that may dilute the Shares in this Offering.***

We may undertake further equity or debt financing, which may be dilutive to existing stockholders, including you, or result in an issuance of securities whose rights, preferences and privileges are senior to those of existing stockholders, including you, and also reducing the value of Shares subscribed for under this Offering.

***An investment in our Shares could result in a loss of your entire investment.***

An investment in the Shares offered in this Offering involves a high degree of risk, and you should not purchase the Shares if you cannot afford the loss of your entire investment. You may not be able to liquidate your investment for any reason in the near future.

***The Shares are offered on a "best efforts" basis, and we may not raise the maximum amount being offered.***

Since we are offering the Shares on a "best efforts" basis, we may not sell enough Shares to meet our capital needs. If you purchase Shares in this Offering, we may not raise enough money to satisfy the full "Use of Proceeds To Issuer" which we have outlined in this Offering Circular or to meet our working capital needs.

***We have not paid dividends in the past and do not expect to pay dividends in the future, so any return on your investment may be limited to the value of the Shares.***

We have never paid cash dividends on shares of our stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on the Shares will depend on earnings, financial condition and other business and economic factors affecting it at such time that management may consider relevant. If we do not pay dividends, the Shares may be less valuable because a return on your investment will only occur if our stock price appreciates.

***We may not be able to obtain additional financing.***

Even if we are successful in selling the maximum number of Shares in this Offering, we may require additional funds to continue and grow our business. We may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force us to delay our plans for growth and implementation of our strategy which could seriously harm our business, financial condition and results of operations. If we need additional funds, we may seek to obtain them primarily through additional equity or debt financings. Those additional financings could result in dilution to our current stockholders, and to you if you invest in this Offering.

***The offering price has been arbitrary determined, and we may in the future elect to change the price of the Shares for this Offering or the purchase price for shares of our Class A Common Stock in future offerings arbitrarily.***

We have arbitrarily established the offering price of the Shares based upon our present and anticipated financing needs, and the offering price of the Shares bears no relationship to our present financial condition, assets, book value, projected earnings, or any other generally accepted valuation criteria. The offering price of the Shares may not be indicative of the value of the Shares or the Company, now or in the future. From time to time in the future, we may arbitrarily adjust the purchase price for the Shares in this Offering and/or the purchase price for shares of our Class A Common Stock in future offerings. Any such future offering price of the Shares may not bear any relationship to our then present financial condition, assets, book value, projected earnings, or any other generally accepted valuation criteria.

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***Our management has broad discretion in application of proceeds of this Offering.***

Our management has broad discretion to adjust the application and allocation of the net proceeds of this Offering in order to address changed circumstances and opportunities. As a result of the foregoing, our success will be substantially dependent upon the discretion and judgment of our management with respect to the application and allocation of the net proceeds hereof.

***We may not be able to pay distributions to our stockholders, and we may never adopt a share repurchase program.***

While we may choose to pay distributions at some point in the future to our stockholders, cash flow and profits may not allow such distributions to ever be made. In addition, the amount of cash available for distributions may be limited due to repurchases of our shares if we ever adopt a share repurchase program. If we adopt a share repurchase program, our board of directors will have flexibility to determine the allocation of available cash available as between the payment of distributions and repurchase of our shares. We may never adopt a share repurchase program.

***There is no public trading market for our Shares.***

At present, shares of our Class A Common Stock are not listed or quoted any exchange or quotation service. There is no consistent and active trading market for our securities and a consistent trading market may not develop. Although we hope to have the Shares listed for trading in the future or have the Shares quoted for trading on an electronic quotation service, such listing or quotation may never occur.

***You may not be legally permitted to sell the Shares.***

Any resale of the Shares must comply with any applicable federal securities laws and state blue sky laws. You may not be able to resell the Shares in one or more states under their applicable state blue sky laws, unless the resale of the shares is registered or you are able to qualify for an applicable exemption from registration requirements under such state blue sky laws. We have no current plans to register the Shares for resale with any state securities regulator. Moreover, although we plan to adopt a share repurchase program in the future, we may never adopt a share repurchase plan. And if we do adopt a share repurchase plan, we expect that it will include numerous restrictions that may limit your ability to sell your Shares to us, including provisions that (i) our Board of Directors may reject any request for repurchase of Shares at any time in its sole discretion, and (ii) our Board of Directors may suspend (in whole or in part), amend (in whole or in part), or terminate our share repurchase program at any time. Therefore, it may be difficult for you to sell your Shares promptly or at all. If you are able to sell your Shares, you may have to sell them at a discount to the price you paid for the Shares. It is likely that your Shares would not be accepted as the primary collateral for a loan. You should purchase the Shares only as a long-term investment because of the illiquid nature of the Shares.

***We may never adopt a future share repurchase program; if we adopt such a program, the repurchases price may be less than the offering price in this Offering and less than our then-current offering price.***

We do not expect that a secondary market for resale of our Class A Common Stock will develop. We plan to request from the SEC an exemptive letter exempting a potential share repurchase program from Regulation M promulgated by the SEC. If we obtain such an exemptive letter, we plan to adopt a stock repurchase plan for stockholders who wish to sell their shares. We may never obtain an exemptive letter from the SEC, and even if we obtain such a letter, we may never adopt a share repurchase plan. Our ability to repurchase Shares depends upon the levels of our cash reserves, availability under any line of credit that we might have, the pace of new Share sales, and our ability to sell properties and other investments. If we must sell properties or other investments in order to honor repurchase requests, the repurchase of Shares offered for repurchase could be delayed until we have sold sufficient properties or investments to honor such requests. We will have no obligation to sell any properties in order repurchase Shares. We expect that the property sale process, if undertaken to honor repurchase requests, could take several months, and we may never raise sufficient capital from property sales and other sources to honor all such requests. If we adopt a share repurchase program, we expect to honor such repurchase requests in the order they are received. If we adopt a share repurchase program, we may not repurchase Shares if such repurchase would materially impair our capital or operations as determined by our Board of Directors. We may never adopt a share repurchase program, and if we do adopt such as program, our Board of Directors may suspend (in part or in whole), amend (in part or in whole) or terminate our share repurchase program at any time.

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Furthermore, if we adopt a share repurchase program in the future, the repurchase price is likely to be based upon a discount to our then-current net asset value. If we adopt such a share repurchase program, there could be a significant difference in your repurchase price and our current offering price and our offering price at the time of any such repurchase. Likewise, our net asset value for purposes of determining the repurchase price as part of a future share repurchase program may be less than the current offering price and the offering price at the time of repurchase, even prior to applying any discounts under the terms of any such share repurchase plan. We may never adopt a share repurchase plan.

***Sales of a substantial number of shares of our type of stock may cause the price of our type of stock to decline.***

If our stockholders sell substantial amounts of shares of our Class A Common Stock, shares sold may cause the price to decrease below the current offering price. These sales may also make it more difficult for us to sell equity or equity-related securities at a time and price that we deem reasonable or appropriate.

***We have made assumptions in our projections and in "forward-looking statements" that may not be accurate.***

The discussions and information in this Offering Circular may contain both historical and "forward-looking statements" which can be identified by the use of forward-looking terminology including the terms "believes," "anticipates," "continues," "expects," "intends," "may," "will," "would," "should," or, in each case, their negative or other variations or comparable terminology. You should not place undue reliance on forward-looking statements. These forward-looking statements include matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Offering Circular, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. To the extent that this Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of our business, please be advised that our actual financial condition, operating results, and business performance may differ materially from that projected or estimated by us. We have attempted to identify, in context, certain of the factors we currently believe may cause actual future experience and results to differ from our current expectations. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, lack of market acceptance, reduction of consumer demand, unexpected costs and operating deficits, lower sales and revenues than forecast, default on Base Agreements or other indebtedness, loss of suppliers, loss of supply, loss of distribution and service contracts, price increases for capital, supplies and materials, inadequate capital, inability to raise capital or financing, failure to obtain investors or customers, loss of investors or customers, and failure to obtain new investors or customers, the risk of litigation and administrative proceedings involving the Company or our employees, loss of government licenses and permits or failure to obtain them, higher than anticipated labor costs, the possible acquisition of new businesses or products that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility of our operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be referred to in this Offering Circular or in other reports issued by us or by third-party publishers.

***Investment in the Shares offered in this Offering is a long-term investment.***

Because the Shares have not been registered under the securities laws of any state or non-United States jurisdiction, the Shares may have certain transfer restrictions. It is not currently contemplated that registration under state securities laws will be effected. Limitations on the transfer of the Shares may also adversely affect the price that you might be able to obtain for the Shares in a private sale. You should be aware of the long-term nature of your investment in the Company.

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***Neither this Offering nor the Shares have been registered under federal or state securities laws, leading to an absence of regulation applicable to us.***

We have relied on exemptions from securities registration requirements under applicable state and federal securities laws. Investors in us, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering on their own or in conjunction with their personal advisors.

***The Shares in this Offering have no protective provisions.***

The Shares in this Offering have no protective provisions. As such, you will not be afforded protection, by any provision of the Shares or as a stockholder in the event of a transaction that may adversely affect you, including a reorganization, restructuring, merger or other similar transaction involving us. If there is a liquidation event or change of control, the Shares being offered do not provide you with any protection. In addition, there are no provisions attached to the Shares in this Offering that would permit you to require us to repurchase the Shares in the event of a takeover, recapitalization or similar transaction.

***You will not have significant influence on our management.***

Substantially all decisions with respect to the management of the Company will be made exclusively by our officers, directors, managers or employees. You will have a very limited ability, if at all, to vote on issues of our management and will not have the right or power to take part in management of the Company and will not be represented on the board of directors or by managers of the Company. Accordingly, you should not purchase Shares unless you are willing to entrust all aspects of management to us. As noted above, Thomas Paquin, as the trustee of The Tom Paquin Irrevocable Trust, the sole member of VBRE, as the sole owner of our Class B Common Stock, controls the Company.

***We anticipate additional rounds of fund raising in the future.***

After the conclusion of this Offering, we plan to be continuously offering additional shares of our Class A Common Stock in additional future offerings. Any such issuance of additional shares of Class A Common Stock will dilute the ownership of the Company represented by the Shares sold in this Offering.

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***We may choose to modify our corporate structure and tax elections.***

We may elect to amend our corporate structure and the tax consequences of that structure, including without limitation our current status as a C-corporation with a tax receivable agreement with VBRE. For example, we might explore the possibility of converting into a real estate investment trust or other structure other than the structure described in this Offering Circular. We are a startup with limited experience with the business model described in this Offering Circular. We may determine that another corporate structure and/or the tax treatment thereof is more favorable for the Company and its stockholders.

***Our financial statements, our underlying assets, and the value of the Shares can be difficult to understand, which might put downward pressure on the value of the Shares.***

Our organizational structure, including without limitation the exchangeability of Class A Units in Holdings for shares of our Class A Common Stock, which is sometimes referred to as an Up-C structure, and the related tax receivable agreement, can be difficult to understand. The complexity of our organizational structure can put downward pressure on the value of the Company and the Shares.

***Our amended and restated certificate of incorporation, as amended, provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.***

Our amended and restated certificate of incorporation, as amended, provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. This choice of forum provision does not preclude or contract the scope of exclusive federal or concurrent jurisdiction for any actions brought under the Securities Act or the Exchange Act. Accordingly, our exclusive forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.

Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. These exclusive-forum provisions may limit a stockholder's ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation, as amended, to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management and other employees.

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***You may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in a less favorable outcome to you in any such action.***

The subscription agreement provides that you waive the right to a jury trial of any claim they may have against us arising out of or relating to the subscription agreement, including any claim under the U.S. federal securities laws.

If we opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with applicable U.S. state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the U.S. federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of Delaware, which govern the subscription agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the subscription agreement. Accordingly, you are subject to these provisions of the subscription agreement to the extent permitted by applicable law. It is advisable that you consult legal counsel regarding the jury waiver provision before investing in the Shares.

If you bring a claim against us in connection with matters arising under the subscription agreement, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us. If a lawsuit is brought against us under the subscription agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to you in any such action.

Nevertheless, if this jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of the subscription agreement with a jury trial. No condition, stipulation or provision of the subscription agreement serves as a waiver by you or by us of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

***By purchasing Shares in this Offering pursuant to a subscription agreement, you are bound by the provisions contained in the subscription agreement which provide for mandatory arbitration which limits your ability to bring class action lawsuits, seek remedies on a class basis, or have a jury decide the factual merits of your claim.***

By purchasing shares in this Offering pursuant to subscription agreement, you agree to be bound by the arbitration provisions contained in our subscription agreement which provide that arbitration is the exclusive means for resolving disputes relating to or arising out of the subscription agreement. Purchasers of shares in a secondary transaction would not be subject to the same arbitration provisions. Such arbitration provision limits your ability to bring class action lawsuits or similarly seek remedies on a class basis for claims subject to the provision. If invoked, the arbitration is required to be conducted in Fort Worth, Texas in accordance with Delaware law. The subscription agreement allows for either the Company or you to elect to enter into binding arbitration in the event of any covered claim in which the Company and you are adverse parties. While not mandatory, in the event that we were to invoke the arbitration clause, your rights to seek redress in court would be severely limited. These restrictions on the ability to bring a class action lawsuit may result in increased costs and/or reduced remedies, to individual investors who wish to pursue claims against the Company. BY AGREEING TO BE SUBJECT TO THIS PROVISION, INVESTORS WILL NOT BE DEEMED TO WAIVE THE COMPANY'S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

***By purchasing Shares in this Offering you are bound by the fee-shifting provision contained in our subscription agreement, which may discourage you to pursue actions against us.***

In the event you initiate or assert a claims against us, in accordance with the dispute resolution provisions contained in our subscription agreements, and you do not, in a judgment prevail, you will be obligated to reimburse us for all reasonable costs and expenses incurred in connection with such claim, including, but not limited to, reasonable attorney's fees and expenses and costs of appeal, if any. Generally, under Delaware law, to be a "prevailing party," a litigant must achieve predominance in the litigation by prevailing on the case's chief issue as determined by the respective court. We intend to interpret o apply the fee-shifting sections of the subscription agreements as broadly as possible.

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This fee-shifting provision applies to all claims arising from any disputes or controversies arising from the subscription agreements, including claims under the U.S. federal securities laws. For the avoidance of doubt, this fee-shifting provisions only applies to disputes between the executing parties of the subscription agreements, and, hence, is not applicable to any secondary transactions.

This fee-shifting provision applies to all claims arising from any disputes or controversies arising from the subscription agreements, including claims under the U.S. federal securities laws. For the avoidance of doubt, this fee-shifting provisions does only apply to disputes between the executing parties of the subscription agreements, and, hence, is not applicable to any secondary transactions. BY AGREEING TO BE SUBJECT TO THIS PROVISION, INVESTORS WILL NOT BE DEEMED TO WAIVE THE COMPANY'S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

***If you agree to purchase Shares on a monthly basis, you may not terminate monthly purchases until the end of the term set forth on your subscription agreement.***

Under the terms of our subscription agreement, you may elect to purchase Shares upfront at one time, or you may elect to purchase Shares on a monthly installment basis. If you elect to purchase Shares on a monthly installment basis, you are committed to purchase all the subscribed Shares at the price agreed to in the subscription agreement and we are committed to sell all the subscribed Shares at the agreed price, even if your Base Agreement terminates for any reason.

***The cost of the Shares that you purchase in this Offering may exceed that value of any discount that we offer under our potential future discount program.***

We plan to offer a discount off of our Base Payment rates for EquityBase Investors who purchase or commit to purchase Shares as more fully described in the portion of this Offering Circular labeled "Potential Future Discount Program" under "Plan of Distribution" below. The amount of any such discount is subject to change from time to time at our sole discretion. The cost of the Shares that you purchase in this Offering may exceed the amount of any such discount.

***Our estimate of the total value of our discount program is only an estimate and subject to change.***

We have estimated that the total value of our potential future discount program is $115,200. We have based that estimate on a series of assumptions as more fully described in the portion of this Offering Circular labeled "Potential Future Discount Program" under "Plan of Distribution." As with all estimates in this Offering Circular, such estimates may not be accurate. Our assumptions may not be correct, and our plans may change due changing events or changing business plans. The actual total amount of discounts offered may change on the basis of changes in the amount of the discount, the amount of VictoryBase Properties we own or control, the portion of VictoryBase Properties occupied by EquityBase Investors, and other factors.

IN ADDITION TO THE RISKS LISTED ABOVE, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY THE MANAGEMENT. IT IS NOT POSSIBLE TO FORESEE ALL RISKS THAT MAY AFFECT US. MOREOVER, WE CANNOT PREDICT WHETHER WE WILL SUCCESSFULLY EFFECTUATE OUR CURRENT BUSINESS PLAN. EACH PROSPECTIVE INVESTOR IS ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN THE SHARES AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHER FACTORS, THE RISK FACTORS DISCUSSED ABOVE.

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**DILUTION**

As of the date of this Offering Circular, we had issued 1,000,000 shares of our Class A Common Stock, and subsequently our sole stockholder surrendered 975,000 shares of our Class A Common Stock back to the Company. We have previous sold 30 Shares of Class A Common Stock in this Offering. As a result, as of the date of this Amendment to Offering Circular, we had 25,030 shares of Class A Common Stock outstanding. The term "dilution" refers to the reduction (as a percentage of the aggregate shares outstanding) that occurs for any given share of stock when additional shares are issued. If all of the Shares in this Offering are fully subscribed and sold, the Shares offered herein will constitute approximately 99.67% of the total outstanding shares of our Class A Common Stock, our only class of common stock with economic value. If all of the Shares in this Offering are fully subscribed and sold, the Shares offered herein will constitute less than 0.001% of the total voting rights of our Class A Common Stock and Class B Common Stock, which generally vote together as a single class. In addition, holders of Class A Units of Holdings have the right to exchange their Class A Units of Holdings into additional shares of Class A Common Stock of the Company under the terms of Holding's limited liability company agreement and the Company's certificate of incorporation. Any such exchange by holders of Class A Units of Holdings will further dilute the Shares sold in this Offering. We anticipate that subsequent to this Offering we may require additional capital and such capital may take the form of Class A Common Stock, other stock or securities or debt convertible into Class A Common Stock. Such future fund raising will further dilute the percentage ownership of the Shares sold in this Offering in the Company.

If you invest in Shares of our Class A Common Stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Class A Common Stock and the pro forma net tangible book value per share of our Class A Common Stock after this Offering. As of December 31, 2021, our net tangible book value was approximately ($208,232). Based on the 25,030 shares of our Class A Common Stock issued and outstanding as of the date of this Offering Circular, that equates to a negative net tangible book value of approximately ($8.322) per share of our Class A Common Stock on a pro forma basis. Net tangible book value per share consists of total stockholders' equity adjusted for the retained earnings (deficit), divided by the total number of shares of Class A Common Stock outstanding. The pro forma net tangible book value, assuming full subscription in this Offering, would be $9.939 per share of our Class A Common Stock.

Thus, if this Offering is fully subscribed, the net tangible book value per share of our Class A Common Stock owned by our current stockholders will have immediately increased by approximately $18.26 without any additional investment on their part and the net tangible book value per Share for new investors will be immediately diluted to $9.939 per Share. These calculations do not include the costs of this Offering after December 31, 2021, and such expenses will cause further dilution. Furthermore, these calculations do not include the impact of the potential exchange by holders of Class A Units of Holdings of their Class A Units of Holdings for shares of our Class A Common Stock, and such exchange may cause further dilution.

The following table illustrates this per Share dilution:

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| | |
|:---|:---|
| Offering price per Share\* | $10.00 |
| Net Tangible Book Value per Share before Offering (based on Net Tangible Book Value as of December 31, 2021, and 25,030 shares of Class A Common Stock outstanding as of the date of this Offering Circular) | $(8.322) |
| Increase in Net Tangible Book Value per Share Attributable to Shares Offered Hereby (based on 7,500,000 Shares) | $75000000 |
| Net Tangible Book Value per Share after Offering (based on Net Tangible Book Value as of December 31, 2021, and 2,025,000 shares of Class A Common Stock to be outstanding after Offering) | $9.939 |
| Dilution of Net Tangible Book Value per Share to Purchasers in this Offering | $(0.061) |

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\*Before deduction of Offering expenses after December 31, 2021.

There is a disparity between the price of the Shares in this Offering and the effective cash cost to officers, directors, promoters and affiliated persons for shares acquired by them in transactions during the past year, or that they have a right to acquire. Specifically, the Company has issued 25,000 shares of Class A Common Stock to one stockholder for an average per share purchase price of $0.04 prior to the Offering (adjusted to account for the surrender of 975,000 shares previously issued to the stockholder). Furthermore, holders of Class A Units of Holdings have the right to exchange their Class A Units of Holdings into additional shares of Class A Common Stock of the Company under the terms of Holding's limited liability company agreement and the Company's certificate of incorporation.

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**PLAN OF DISTRIBUTION**

We are offering a Maximum Offering Amount of up to $75,000,000 in Shares of our Class A Common Stock. This Offering is being conducted on a best-efforts basis without any minimum number of Shares required to be sold. The Shares are being offered by: (1) persons associated with us through an online platform managed by Issuance, Inc. that may be accessed through our website at <u>www.VictoryBase.com</u> or one or more other websites that we may establish; and (2) our broker-dealer's online listing platform OfferBoard at www.entoro.com. In conducting this Offering, such persons associated with us with intend to rely on the exemption from registration contained in Exchange Act Rule 3a4-1.

We will undertake one or more closings on a rolling basis as funds are received from investors. We anticipate that many closings will occur in connection with our business operations as more fully described below. We anticipate that many investors will elect to commit to purchase a specified amount of Shares upfront and make installment payments on a monthly basis corresponding with the term of their applicable Base Agreement. If you elect to purchase Shares on a monthly installment basis, you are committed to purchase all the subscribed Shares at the price agreed to in the subscription agreement, and we are committed to sell all the subscribed Shares at the agreed price, even if your Base Agreement terminates for any reason. If you have a Base Agreement that ends or changes in any way, including a loss of any discounts associated with your Base Agreement, then you will nonetheless be required to purchase any Shares that you commit to purchase under a subscription agreement.

**Broker-Dealer**

We have engaged a broker-dealer to promote the sales of our Shares. Our broker-dealer is:

Entoro Securities, LLC

333 W. Loop N Freeway, STE 333

Houston, TX 77204

The Shares are being offered and sold by the Company through an online listing platform affiliated with Entoro named "OfferBoard," which is located online at <u>www.entoro.com</u>, an online platform managed by Issuance, Inc. that may be accessed through our website at <u>www.VictoryBase.com</u> or one or more other websites that we may establish. The Shares are being offered on a best efforts basis. OfferBoard is owned by OfferBoard, LLC, a subsidiary of Entoro Securities, LLC's parent company, Entoro LLC.

OfferBoard will also perform certain administrative and compliance related services in connection with all shares of Common Stock sold in this Offering such as:

● Reviewing investor information for investors in this Offering, including performing and/or reviewing KYC ("Know Your

● Customer") data, AML ("Anti Money Laundering") and other compliance background checks, and provide a recommendation to the Company whether or not to accept investor as a customer;

● Reviewing each investor's subscription agreement to confirm such investor's participation in the Offering, and provide a determination to us whether or not to accept the use of the subscription agreement for the investor's participation;

● Contacting and/or notifying us, if needed, to gather additional information or clarification on an investor;

● Keeping investor details and data confidential and not disclose to any third-party except as required by regulators or pursuant to the terms of the agreement (e.g., as needed for AML and background checks); and

● Coordinate with third party providers to ensure adequate review and compliance.

Entoro is a member of the Financial Industry Regulatory Authority (FINRA). FINRA is not a government agency. Rather, FINRA is an independent regulatory body. FINRA has established rules that govern their member brokers and dealers engaged in the sales and promotion of securities. For more information, please see FINRA's website at www.finra.org.

Entoro is also a member of Securities Investor Protection Corporation (SIPC). SIPC is an insurance mechanism that protects investors in the event that a broker-dealer, such as Entoro, fails. In such an event, investors may regain control over cash and securities that were being held by the broker-dealer at the time of failure. This will likely not provide you any protection because Entoro is not authorized to receive cash from investors and has not been authorized to hold our securities. For detailed information on the scope of Entoro Securities, LLC's role in the sale and promotion of our shares, please see our placement agent agreement with Entoro which is attached as Exhibit 1.1 to this Offering Statement.

Your initial subscription amount will be placed into an escrow account until our broker-dealer confirms that your subscription meets the investor qualification requirements set forth in this Offering Circular and is otherwise acceptable to us and our broker-dealer. It is anticipated that such funds will be released from escrow within 24 to 48 hours of receipt from the investor along with an executed subscription agreement. If we do not accept your subscription for any reason, we will refund the full amount of your subscription, but you will not be entitled to any interest earned while the subscription funds are in escrow. If you accept your subscription, you will be notified electronically via email or our mobile app. We may terminate this Offering at any time for any reason at our sole discretion, and we may extend this Offering past the termination date in our absolute discretion and in accordance with the rules and provisions of Regulation A of the JOBS Act.

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Only the Company (directly and through our broker-dealer) is offering Shares for sale as part of this Offering. None of the Shares being sold in this Offering are being sold by existing securities holders.

After this Amendment to the Offering Statement has been qualified by the Securities and Exchange Commission (the "SEC"), we will accept tenders of funds to purchase the Shares. Subscriptions will be made through an escrow agent in coordination with our broker-dealer engaged to assist us with this Offering.

The Shares will be sold only to a person who is not an accredited investor if the aggregate annual purchases paid by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2). Each investor will complete a subscription agreement in order to invest.

The Shares in this Offering will be offered principally by our broker-dealer, who may be assisted by us, affiliates of ours, and employees of ours or of our affiliates, in reliance upon the exemption from registration contained in Rule 3a4-1 of the Securities Exchange Act of 1934.

**Broker-Dealer Compensation**

We will pay Entoro a commission equal to 1% of the gross offering proceeds, except in instances where Entoro has facilitated sale, in which case we will pay Entoro a commission equal to 5% of the gross proceeds of such sales. For example, if the Company directly solicits an investment from an investor, and Entoro played no role in facilitating this investors' investment, Entoro will still earn a 1% commission on such investment. Entoro will also charge a $10,000 advisory/consulting fee, which is deemed to be earned on the later of SEC qualification of this Amendment to the Offering Statement of which this Offering Circular is a part, or the issuing by FINRA of a No Objection Letter regarding Entoro's compensation structure. In addition, we have advanced $10,000 to Entoro towards expenses, such as due diligence expenses, technology platform setup costs, and other support necessary prior to qualification of this offering. This advance is refundable to the extent not used. More broadly and inclusive of the $10,000 advance, we have agreed to reimburse Entoro for all out-of-pocket expenses incurred in connection their performance as our broker-dealer, including reasonable travel and amounts paid to outside professionals or experts retained in connection with Entoro's performance as our broker-dealer, up to a maximum of $40,000, with $15,000 being the maximum allocated for reimbursement for use of outside counsel, which Entoro may engage to assist in connection with its services in this Offering. Also included under expenses, we have reimbursed Entoro its filing fee of approximately $11,750 paid to FINRA for a review of Entoro's compensation for its services in connection with this Offering. The maximum expenses of $40,000 includes maximum reimbursement for outside counsel fees and any expenses incurred in conducting background checks. While our placement agent agreement with Entoro references charges for background checks of management and significant stakeholders, we obtained such background checks through other channels acceptable to Entoro, so there will be no associated charges involving Entoro or its service providers in this Offering. For the avoidance of doubt, Entoro is not entitled to fees based on a right of refusal.

The total minimum compensation Entoro would be entitled to if we issued the maximum number of Shares under a $75,000,000 offering with none of the sales of Shares were facilitated by Entoro would be $770,000, made up of $750,000 in 1% commission, a $10,000 expense advance, and $10,000 in advisory and consulting fees. The total maximum compensation Entoro would be entitled to if we issued the maximum number of Shares under a $75,000,000 raise, if all sales of Shares were facilitated by Entoro's efforts, and if possible expenses were maximized, would be approximately $3,800,000 made up of approximately $3,750,000 in 5% commission, maximum expenses of $40,000, and $10,000 in advisory and consulting fees.

Entoro has been authorized to promote the sales of our Shares through direct solicitation and marketing campaigns and subsequently directing prospective investors to the technology platform, which is operated by OfferBoard. The Offering is now being made through Entoro Securities, LLC, Member FINRA/SIPC, who will act as our broker/dealer of record. Entoro's principal address is 333 W. Loop N., Suite 333, Houston TX, 77024. There is no minimum amount of Shares required to be sold in this Offering.

To the extent permitted by law and our certificate of incorporation, we will indemnify the participating broker-dealer against certain civil liabilities, including certain liabilities arising under the Securities Act and liabilities arising from breaches of our representations and warranties contained in the placement agent agreement with Entoro. Nevertheless, the SEC takes the position that indemnification against liabilities arising under the Securities Act is against public policy and is not enforceable.

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This Offering will commence within two calendar days of the qualification of this Amendment to Offering Circular, as determined by the Securities and Exchange Commission and continue for a period of two years. We may extend this Offering for an additional time period unless this offering is completed or otherwise terminated by us, or unless we are required to terminate by application of Regulation A of the JOBS Act.

Upon our acceptance a subscription, a confirmation of such acceptance will be sent to you. We may accept or reject subscriptions in whole or in part, for any reason or for no reason. We will return all funds from rejected subscriptions to the investor, without interest or deductions.

This is an offering made under "Tier 2" of Regulation A, and the Shares will not be listed on a registered national securities exchange or any other trading platform upon qualification. The Shares will be sold to a person who is not an accredited investor only if the aggregate annual purchases by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended.

To invest in this Offering, you must represent in writing (which may be done electronically via our mobile app) that you meet the applicable requirements set forth above and in the subscription agreement.

We (or our broker-dealer) must make a reasonable inquiry in order to verify an investor's suitability for an investment in the Company. As part of this inquiry, we may ask you to confirm that your income and/or net worth exceeds the minimum thresholds described in this Offering Circular.

The Shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) is named on the list of "specially designated nationals" or "blocked persons" maintained by the U.S. Office of Foreign Assets Control ("OFAC") at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time, (ii) an agency of the government of a Sanctioned Country, (iii) an organization controlled by a Sanctioned Country, or (iv) is a person residing in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC. A "Sanctioned Country" means a country subject to a sanctions program identified on the list maintained by OFAC and available at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time. Furthermore, the shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) has more than fifteen percent (15%) of its assets in Sanctioned Countries, or (ii) derives more than fifteen percent (15%) of its operating income from investments in, or transactions with, sanctioned persons or Sanctioned Countries.

The sale of other securities of the same class as those to be offered for the period of distribution will not necessarily be limited and restricted to those sold through this Offering. Without limiting the foregoing, holders of Class A Units of Holdings may exchange their Class A Units of Holdings for shares of our Class A Common Stock at any time as described in this Offering Circular.

***Discount Program***

Because we expect customers who are also stockholders to be better stewards of VictoryBase Properties and therefore lower our operating costs, we offer lower Base Payment rates for our EquityBase Investors. We refer to this improved stewardship as an "ownership mindset" or "ownership mentality". Upon qualification of this Offering by the SEC, we plan to offer a discount of up to $100 per month off of our Base Payment rates for any EquityBase Investor who purchases or commits to purchase at least five Shares per month during the term of their Base Agreement. The amount of such discount is subject to change or elimination from time to time based upon our evaluation of market conditions and our analysis of actual operating cost savings, if any, that we observe from EquityBase Investors. We plan to make the amount of any such discounts available to EquityBase Investors, as such discount may be increased, decreased, or eliminated from time to time, and then applicable minimum investment amount, available for review on our website. There is no limit to the amount of discount we may elect to offer, but we anticipate that the amount of the discount will be less than half of the amount of the applicable Base Payment.

We established a value of up to $100 per month as the initial amount of our discount program because that is the point at which we believe we will maximize the amount by which our anticipated operating cost savings resulting from our residents' anticipated ownership mindset will exceed the amount of the applicable discount. We plan to experiment with adjustments to the amount of this discount in an effort to optimize our cost savings as it relates to the amount of the discount offered. Any change in the amount of this discount will impact Base Payments entered into on or after the date of the discount is changed, but any such change will have no impact on the amount of Base Payments under Base Agreement then outstanding. Any discount offered may not be sold or transferred by the EquityBase Investor. The discount will not change based upon the value of your Shares. We anticipate that our discount plan will not include any restrictions on how or when an EquityBase Investor may qualify for a discount except that the EquityBase Investor must have (i) become a VictoryBase Property resident by entering into a Base Agreement, and (ii) contemporaneously with entering into the Base Agreement, purchase or commit to purchase at least five Shares for each month of the term of the Base Agreement. We plan to include all VictoryBase Properties in our discount program; however, the start date of the discount program may differ or never occur at any specific VictoryBase Property.

For VictoryBase Property residents who have previously entered into Base Agreements, we plan to offer such residents the opportunity to include the discount program to their existing Base Agreement (or amend their existing base agreement, or terminate their existing Base Agreement and enter into a new Base Agreement) incorporating the terms of the discount program described above if, contemporaneously, such residents enter into Subscription Agreements complying with the discount program terms.

If we assume the amount of the discount stays at $100 per month per home during throughout the 24 months of this Offering, and if we further assume that all of the occupants of the 98 homes that we currently own or are under contract to purchase qualify for the discount program, and if we further assume that we do not acquire any additional homes during the Offering, then the total value of discounts under the discount program will be approximately $235,200. Of course, this is just an estimate and any of those assumptions are subject to change.

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**USE OF PROCEEDS TO ISSUER**

The Use of Proceeds is an estimate based on our current business plan. We may find it necessary or advisable to reallocate portions of the net proceeds reserved for one category to another, or to add additional categories, and we will have broad discretion in doing so.

The maximum gross proceeds from the sale of the Shares in this offering are $75,000,000. The net proceeds from the Offering, assuming it is fully subscribed, are expected to be approximately $74,250,000 after the payment of an anticipated 1% commission to our broker-dealer, but before other costs of the Offering, including legal fees, accounting costs, reproduction expenses, due diligence, marketing, consulting, administrative services, transfer agent fees, technology expenses, other costs of blue sky compliance, and actual out-of-pocket expenses incurred by the Company selling the Shares. The estimate of the budget for offering costs is an estimate only and the actual offering costs may differ from those we expect.

Our management has wide latitude and discretion in the use of proceeds from this Offering. We intend to use a substantial portion of the net proceeds to purchase Class B Units of Holdings. We also plan to use a portion of the proceeds from this Offering for general working capital purposes. Holdings intends to use a substantial portion of the proceeds of its sale of Class B Units to the Company to acquire VictoryBase Properties and for general working capital. At present, our management's best estimate of the use of proceeds is set out in the chart below. However, this chart contains only the best estimates of our management based upon information available to us at the present time, and that the actual use of proceeds is likely to vary from this chart based upon circumstances as they exist in the future, our various needs at different times in the future, and the discretion of our management at all times.

A portion of the proceeds from this Offering may be used to compensate or otherwise make payments to our officers or directors. Our officers and directors may be paid salaries and receive benefits that are commensurate with similar companies, and a portion of the proceeds may be used to pay these ongoing business expenses.

**USE OF PROCEEDS**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **If 25% of the**<br> **Offering is Raised** | **If 50% of the**<br> **Offering is Raised**  | **If 75% of the**<br> **Offering is Raised** | **If 100% of the**<br> **Offering is Raised**  |
| Purchase of Class B Units of Holdings | $14850000 | $29700000 | $44550000 | $59400000 |
| Working Capital | $3712500 | $7425000 | $11137500 | $14850000 |
| **TOTAL** | $**18562500** | $**37125000** | $**55687500** | $**74250000** |

---

Holdings intends to use a substantial portion of its sales of Class B Units to the Company to acquire (directly or indirectly) VictoryBase Properties and for general working capital purposes.

**We reserve the right to change the use of proceeds set out herein based on the needs of our ongoing business and the discretion of our management. We may reallocate the estimated use of proceeds among the various categories or for other uses if management deems such a reallocation to be appropriate.**

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**MANAGEMENT'S DISCUSSION AND ANALYSIS<br> OF FINANCIAL CONDITION AND RESULTS OF OPERATION**

*You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled "Risk Factors" and elsewhere in this Offering Circular.*

**Forward-looking Statements**

This section contains certain statements that may include "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipate," "optimistic," "intend," "will" or other similar expressions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in our periodic reports that are filed with the SEC. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under applicable securities laws, we do not assume a duty to update these forward-looking statements.

**Description of Business**

We were originally incorporated on August 13, 2020 under the laws of the State of Delaware. Our Class A Common Stock is not currently listed on any exchange or quoted on any quotation service.

**General**

We are seeking to build a nationwide network of residential real estate properties located near United States military bases which we will make available for occupancy by military servicemembers and other individuals and families seeking housing in such locations. Once our network of properties has been established, our customers will be able to move from one VictoryBase Property through a relatively simple process.

In addition to providing housing at affordable prices, we plan to offer our customers and other investors the opportunity to invest in our company by offering shares of our stock for sale. We believe the Company will benefit by customers electing to enter into both a Base Agreement and a subscription agreement. Many of those benefits are outlined in this offering circular.

To be clear, the subscription agreement and Base Agreement are unique and separate agreements. Any person otherwise meeting the qualification requirements for such agreements will have the option to enter into one, both, or neither of a Base Agreement and/or a subscription agreement with us. Regardless of whether a VictoryBase Property resident elects to enter into a subscription agreement or an investor elects to enter into a Base Agreement, in neither case would there be any change to the rights, privileges, or responsibilities of the customer under the Base Agreement or the rights, privileges, or responsibilities of the investor under the subscription agreement. We plan to offer discounted Base Payments to EquityBase Investors that meet the criteria that we might establish from time to time. See "Potential Future Discount Program" under "Plan of Distribution" above.

**Corporate Structure**

The Company is the sole holder of Class B Units of Holdings. Holdings has and will have the right to elect to control and occupy (and allow our customers to occupy) all VictoryBase Properties through the Control Agreement and Sub-Control Agreement described below. From time to time, Holdings may form or acquire one or more new VB Property Companies who may acquire additional VictoryBase Properties. Initially, typically, the VB Property Companies will initially be formed and wholly-owned by Holdings, but Holdings will create a new class of Units ("Holdings Tracking Units") that will track 100% of the economic value of the applicable VB Property Company, and Holdings will issue such Holdings Tracking Units to equity investors who will fund (directly or indirectly) all or part of the acquisition of such VictoryBase Properties by VB Property Companies. The Holdings Tracking Units will typically be convertible into Class A Units of Holdings with a value equal to Holdings Tracking Units being converted, such valuation to be mutual agreed to by Holdings and the holder of the applicable Holdings Tracking Units. We anticipate that the Holdings Tracking Units will be converted into Class A Units of Holdings after the applicable VictoryBase Properties have ceased to be Value Add. Please see the section of this Offering Circular labeled "Operational Overview" that begins on page 35 of this Offering Circular for a description of what we mean by "Value Add." For example, Holdings has created Class C Units that as Holdings Tracking Units that will track the value of NY1 until the NY1 VictoryBase Properties are no longer Value Add.

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We plan to acquire additional VictoryBase Properties pursuant to the arrangement described above. The applicable VB Property Company will make those VictoryBase Properties available to be occupied by our customers through a Base Agreement described below. Many of our customers will be members of the United States military because, generally, the VictoryBase Properties will be located near military bases. We offer our customers and investors an opportunity to purchase Shares of our Class A Common Stock. Through ownership of our Class A Common Stock, our investors have an opportunity to participate indirectly in a portion of the potential growth in the value of the VictoryBase Properties. In this manner, our investors can acquire an indirect ownership interest in a portion of the VictoryBase Properties owned by the VB Property Companies through the Company's ownership of Holdings and Holdings' ownership (or right to acquire ownership) of the VB Property Companies. Although we expect that our business model will be particularly attractive to U.S. military service members who would not otherwise invest in home ownership, non-service members may also enter into subscription agreements and thereby have an opportunity to purchase Shares on the same terms as service members. We will offer and sell Shares to investors who reside in VictoryBase Properties and investors that do not reside in VictoryBase Properties.

The Company will issue Shares of our Class A Common Stock to investors in accordance with the terms set forth in the applicable subscription agreement between the Company and the investor. Our Class A Common Stock, as a class, holds 100% of the economic interests of the Company. Our Class B Common Stock, as a class, holds virtually all of the voting interest in the Company. The Company has issued 1,000,000 shares of Class B, non-economic super voting (1,000,000 votes per share) shares to VBRE.

A graphic representation of the relationship among the Company and its subsidiaries and affiliates described above is set forth below for your convenient reference. The following graphic demonstrates the relationship of the Company and its subsidiaries and affiliates as of the date of this Offering Circular.

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![](image_002.jpg)

● FN 1 – Subject to the rights of the Class C Units of Holdings, Class A Units of Holdings share voting and economic rights with the Class B Units on a pari passu basis, except that the Company is the sole manager of Holdings, and the Company has the sole right to appoint any replacement manager of Holdings. Class C Units collectively track the value of the Holding's interests in the common membership interests of NY1. Holdings will separately account for its ownership of common membership interests of NY1, and all distributions related to such interests (and the proceeds of such interests) will be distributed exclusively to the holders of Class C Units of Holdings. Likewise, all profits and losses related to Holdings' ownership of common membership interests of NY1 will be allocated exclusively to holders of Class C Units of Holdings. The Manager of Holdings may convert the Class C Units into Class A Units of Holdings of equivalent value after January 1, 2025, or earlier with the consent of holders of a majority of the Class C Units.

● FN 2 – Shares of Class A Common Stock of the Company hold all economic rights of the Company on a pari passu basis. Each share of Class A Common Stock of the Company entitles the holder of such share to 1 vote. Shares of Class B Common Stock hold no economic rights. Each share of Class B Common Stock of the Company entitles the holder of such share to 1,000,000 votes.

● FN 3 – Subject to the rights of preferred membership interests of NY1, holders of common membership interests of NY1 are entitled to all economic and voting rights of NY1. Preferred membership interests of NY1 are entitled to distributions of available cash from NY1 as follows:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Cash
 from operations of NY1 is to be distributed as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) First,
 to the preferred member until the preferred member has received a 6% return on its investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Second,
 75% to the preferred member and 25% to the common member of NY1, until the Preferred Member has received a 7.5% return on investment;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Thereafter,
 the remainder, if any, to the common member of NY1; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) Cash
 from capital transactions is to be distributed as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) First,
 to the preferred member until the preferred member has been returned the amount of its investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Second,
 75% to the preferred member, and 25% to the common member of NY1, until the preferred member has received the amount of its investment
 plus a 7.5% internal rate of return on its investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Thereafter,
 the remainder, if any, to the common member of NY1.

The Preferred Member of NY1 has no voting rights.

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**Property Acquisition** 

Our founder, Chief Executive Officer, President, Secretary, and sole director, Thomas Paquin, is the trustee of The Tom Paquin Irrevocable Trust, which owns and operates VictoryBase RE, LLC, a Texas limited liability company ("VBRE"). VBRE identifies existing homes, homes under construction, and building sites for new homes near United States military bases and in other markets that VBRE deems suitable for our business model and enters into one or more acquisition agreements with third party landowners, builders, developers and other real estate owners with respect to such properties. VBRE may acquire VictoryBase Properties through forming or acquiring ownership of VB Property Companies that are primarily owned by VBRE. VBRE used this model in its acquisition and development of the VictoryBase Properties owned by SC1.

Alternatively, we anticipate that some of our acquisitions of VictoryBase Properties will be by newly formed subsidiaries of Holdings. In connection with such acquisitions of VictoryBase Properties, Holdings may issue Holdings Tracking Units to VBRE and/or others. Such Holdings Tracking Units will track the value of such VB Property Companies until the applicable VictoryBase Properties are no longer Value Add, at which point the Holdings Tracking Units will convert into Class A Units of Holdings.

We may also receive some or all of our financing of VictoryBase Properties from the seller of such VictoryBase Properties. For example, NY1 acquired the VictoryBase Properties in Sackets Harbor, New York as follows: NY1 funded such acquisition with (i) preferred membership interests of NY1 issued to the seller of such real property, and (ii) cash contributed to NY1 from Holdings. Holdings funded such contribution to NY1 with cash contributed to Holdings by VBRE in exchange for Holdings issuance of Class C Units to VBRE. Such Class C Units are an example of Holdings Tracking Units. As of the closing of such acquisition, NY1 became a landlord under a number of lease agreements with existing tenants. Although the terms of lease agreements are similar to our base agreements, we anticipate transitioning such leases into base agreements as their current lease terms expire.

**Master Control Agreements; Sub-Control Agreements**

Holdings has entered into and plans to continue to enter into master control and contribution agreements ("Control Agreements") among Holdings, the owners of VB Property Companies, and the applicable VB Property Companies. Under a Control Agreement, (i) the VB Property Company will permit Holdings to elect to control and elect to occupy the applicable VictoryBase Properties, (ii) Holdings agrees to pay a monthly fee to the VB Property Company, and (iii) in situations where Holdings is not already the owner of the applicable VB Property Company, Holdings has the right to require the owner of the applicable VB Property Company to contribute its ownership of the VB Property Company to Holdings. We anticipate that the typical term for a Control Agreement will be one year, subject to automatic renewal on a month-to-month basis.

If Holdings exercises its right to require the owner of a VB Property Company to contribute its ownership of the VB Property Company to Holdings, (A) Holdings will issue units of membership interests of Holdings to the owner of the VB Property Company, and (B) the owner of the VB Property Company will be deemed to have made a capital contribution to Holdings in an amount equal to the excess, if any, of the fair market value of the VB Property Company, reduced by (i) any cash paid by Holdings to the owner of the VB Property Company as a return of the owner of the VB Property Company's capital upon such contribution, and (ii) any debt assumed by Holdings in connection with such contribution. The fair market value of the VB Property Companies or the methodology for determining the fair market value of the VB Property Companies will be determined by (or based upon a valuation method established by) and mutually agreed upon by Holdings and the owner of the VB Property Company. We plan to value the illiquid assets held by the VB Property Companies at their cost for approximately the first three months following their acquisition by the applicable VB Property Company if their occupancy and cash flow rates remain substantially similar. After the first three months from acquisition, we plan to value such assets using information believed by us to be accurate and appropriate. There is no industry standard valuation method, making it possible for other analysts to arrive at different valuations. Our valuation methodology will not be audited and may not reflect the fair market value of such assets if they were able to be sold at auction or other public trading platform. Our asset valuations and calculations are subject to good faith assumptions and estimates determined by our management. As a result, our asset valuations may not accurately reflect the price we would achieve by liquidating such assets. In determining the fair market value of the VB Property Company and/or its assets, Holdings and the owner of the VB Property Company may consider the value of the applicable VictoryBase Properties, the VB Property Company's rights and obligations under real estate acquisition agreements, real property, and/or other tangible or intangible assets (e.g., business plan, marketing materials, business data and research) to Holdings in exchange for cash and/or capital account credit in Holdings for these capital contributions equal to their fair market value as mutually agreed by Holdings and VBRE. VBRE may cause the VB Property Company to directly contribute such assets, or the owner of the VB Property Company may contribute its ownership of one or more VB Property Company. If Holdings acquires 100% of a VB Property Company or 100% of a VictoryBase Property held by a VB Property Company, and there is no applicable Holdings Tracking Units then outstanding, then we may choose to terminate the applicable Control Agreement because any payments made thereafter would be effectively being made by Holdings to itself.

For each VictoryBase Property that Holdings is able to elect to control and occupy under a Control Agreement, Holdings will in turn enter into a sub-control agreement with the Company. In exchange for a monthly fee, the sub-control agreement will give the Company the right to elect to control and occupy the applicable VictoryBase Property.

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Under the terms of the Control Agreements the VB Property Companies will grant Holdings the right to elect to cause the VB Property Company to relinquish the operational control of any or all VictoryBase Properties to Holdings. Holdings, in turn, will grant the Company the right to elect to cause Holdings to relinquish operational control of VictoryBase Properties to the Company.

We plan to use proceeds of the Offering to make contributions to Holdings. Holdings plans to use such proceeds to acquire VictoryBase Properties and for general working capital.

**Base Agreements**

VB Property Companies will then enter into Base Agreements with our customers, unless Holdings elects to exercise its right to control the VictoryBase Property under the Control Agreement and the Company elects to exercise its right to control the VictoryBase Property under the Sub-Control Agreement, in which case the Base Agreements would be between the Company and the applicable resident. Each Base Agreement grants our customer the right to occupy an individual VictoryBase Property. The Base Agreement will provide for a monthly Base Payment from the customer to the applicable VB Property Company. The amount of the Base Payment will be an amount agreed to between the VB Property Company and the customer at the time the VB Property Company enters into the Base Agreement or a renewal of the Base Agreement and is expected to adjust with BAH rates. We will establish the Base Payment amount for each VictoryBase Property. To establish such suggested amount, we plan to use data-driven pricing models, supported by analysis from the local staff and BAH rates for each market. We plan to consider the following factors in establishing the amount of the Base Payment: (i) a competitive analysis of market rents, (ii) the size and age of the house, (iii) qualitative factors, such as neighborhood characteristics and access to quality schools, transportation and services, and (iv) whether or not the customer is or will become an EquityBase Investor.

Because we expect customers who are also stockholders to be better stewards of VictoryBase Properties and therefore lower our operating costs, we plan to offer lower Base Payment rates for EquityBase Investors. Upon qualification of this Offering by the SEC, we plan to offer a discount of up to $100 per off of our Base Payment rates for EquityBase Investors who purchase or commit to purchase at least five Shares per month during the term of the Base Agreement. The amount of such discount and the minimum commitment to purchase shares, if any, is subject to change from time to time based upon our evaluation of market conditions and our analysis of actual operating cost savings, if any, that we observe from EquityBase Investors. We plan to make the amount of any such discounts available to EquityBase Investors, as such discount may be increased, decreased, or eliminated from time to time, and then applicable minimum investment amount, available for review on our website. The amounts may differ between and among various VictoryBase Properties.

We anticipate acquiring information from the following sources to aid in our analysis:

● BAH rates with publicly available data that goes back to 1998;

● Market rental rates (which is a market competitor to the Base Payment amount), which may be available from Zillow, Zumper, Rents.com, Apartments.com and other websites

● Schools information from GreatSchools.Org and other websites; and

● Changes to our income or expenses after discounts or other incentives are offered or altered.

**Company's Investment in Holdings**

From time to time the Company plans to contribute a portion of the funds invested in the Company into Holdings (and/or funds invested by other investors in this Offering) in exchange for additional Class B Units of Holdings. The per unit purchase price that the Company will pay Holdings for such Class B Units will be an amount equal to the fair market value as mutually agreed by the Company and Holdings at the time of such contribution. The per unit valuation applicable to the issuance of any Class B Units to the Company will be the same amount as any contemporaneous per unit valuation applicable to any issuance of Class A Units to owners of VB Property Companies in connection with the contribution of VB Property Companies to Holdings pursuant to a Control Agreement (or in connection with a conversion of Holding Tracking Units into Class A Units of Holdings).

Over time, the Company's ownership of Holdings is expected to increase as a function of (i) investors' investment in Shares of our Class A Common Stock and the Company's subsequent contribution of a portion of the proceeds of the sale of Shares into Holdings in exchange for additional Class B Units of Holdings, and (ii) owners of the VB Property Companies' exchange of Class A Units of Holdings for Class A Common Stock of the Company described below (or the conversion of Holding Tracking Units into Class A Units of Holdings).

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**Holdings' acquisition of VB Property Companies and VictoryBase Properties**

In addition to a portion of the net proceeds from the sale of Shares by the Company that are subsequently paid to Holdings via control fees or paid by the Company to Holdings under sub-control agreements, Holdings and/or one or more VB Property Companies may generate funds required to acquire and operate VictoryBase Properties by incurring indebtedness. One or more VB Property Companies may also raise capital by issuing preferred membership interests of such VB Property Company. Any such preferred membership interests of the VB Property Companies may have preferential rights to operating distributions, tax allocations, and liquidating distributions of the applicable VB Property Company.

For example, NY1 has issued preferred membership interest. NY1's limited liability company agreement provides that distribution will be made to its members as follows:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Cash
 from operations of NY1 is to be distributed as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) First,
 to the preferred member until the preferred member has received a 6% return on its investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Second,
 75% to the preferred member and 25% to the common member of NY1, until the preferred member
 has received a 7.5% return on investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Thereafter,
 the remainder, if any, to the common member of NY1; and

&nbsp;&nbsp;&nbsp;&nbsp;(2) Cash
 from capital transactions is to be distributed as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) First,
 to the preferred member until the preferred member has been returned the amount of its investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Second,
 75% to the preferred member, and 25% to the common member of NY1, until the preferred member
 has received the amount of its investment plus a 7.5% internal rate of return on its investment;
 and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Thereafter,
 the remainder, if any, to the common member of NY1.

The preferred member of NY1 has no voting rights.

Holdings will use control fees paid by the Company, capital contributed by the Company, proceeds of loans from lenders, and cash from other sources to purchase VictoryBase Properties. We may have the VB Property Companies issue preferred membership interests to investors as a further source of capital for acquisition of VictoryBase Properties. Debt to fund the acquisition of VictoryBase Properties may be issued at the level of the VB Property Companies, Holdings, or the Company, and any and all such entities may guaranty such indebtedness.

Holdings or its subsidiaries may also acquire VictoryBase Properties by issuing one or more new or existing classes or series of membership interests of Holdings or one of its subsidiaries in exchange for such VictoryBase Properties. For example, in February 2023, Holdings issued 30,000 newly created Class C Units to VBRE in exchange for a $300,000 contribution from VBRE to Holdings. The Class C Units will be Holdings Tracking Units, tracking the value of NY1. Holdings then contributed such $300,000 to NY1. NY1 acquired approximately $7.9 million of residential real estate properties in Sackets Harbor, New York in exchange for (i) approximately $5.9 million in cash, plus (ii) the issuance of $2 million of preferred membership interests of NY1 to the prior owner of such real property. NY1 borrowed $5.9 million from a savings bank to finance the cash portion of the purchase price. NY1 incurred approximately $300,00 in closing costs in connection with this acquisition.

**Exchange Rights; Tax Receivable Agreement**

In accordance with the limited liability company agreement of Holdings, Class A Units of Holdings may be exchanged by holders of such Class A Units periodically for shares of the Company's Class A Common Stock at a conversion rate that results in the holder of such Class A Units receiving in exchange for such forfeited Class A Units an amount of the Company's Class A Common Stock with an indirect economic ownership interest in Holdings that is equal to the direct economic interest in Holdings that the exchanged Class A Units represented in the hands of such holder of Class A Units (each an "Exchange"). Upon any Exchange, (i) the Class A Units of Holdings that are subject to such Exchange will be forfeited to Holdings and no longer be "issued" units, and (ii) the holder of Class A Units will receive newly issued shares of Class A Common Stock of the Company.

*By way of example, if at the time of an Exchange, (i) the Company had 5,000,000 shares of its Class A Common Stock issued and outstanding, and (ii) Holdings had (A) 8,000,000 Class B Units outstanding and held by the Company, and (B) 2,000,000 Class A Units outstanding and held by VBRE; and VBRE wished to exchange 1,000,000 Class A Units of Holdings for shares of Class A Common Stock of the Company, then the Company will issue an additional 555,556 shares of Class A Common Stock to VBRE upon such Exchange. This is calculated so that VBRE's newly issued shares of Class A Common Stock represent the same interest of total shares of Class A Common Stock outstanding after the Exchange as their interest of total units of Holdings forfeited prior to the Exchange. In this example, VBRE is forfeiting 1,000,000 Class A Units of Holdings, which represent 10% of the 10,000,000 total units of Holdings outstanding. Therefore, the newly issued shares of Class A Common Stock must equal 10% of the sum of (1) existing shares of Class A Common Stock outstanding, plus (2) newly issued shares of Class A Common Stock. Algebraically, if we define "X" as the newly issued shares of Class A Common Stock for VBRE, then we would solve for "X" using the following equation: X / (5,000,000 + X) = 10%. When solved, "X" is equal to 555,556 newly issued shares.* 

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In connection with the Exchange, Holdings plans to make the election under Internal Revenue Code of 1986, as amended (the "Code") Section 754 which will result in a special tax basis adjustment when Class A Units of Holdings are exchanged for shares of Class A Common Stock of the Company in a taxable transaction. The Company and VBRE have entered into a tax receivable agreement, which may be joined by other future holders of Class A Units of Holdings. The tax receivable agreement requires the Company to pay 85% of any tax benefits resulting from the Code Section 754 tax basis adjustment when and as realized by us. A copy of the tax receivable agreement is attached as an exhibit to this Offering Circular.

**Taxation**

The Company will be taxed as a corporation for all U.S. federal and state tax laws. We believe that Holdings is properly treated as a partnership for federal income tax purposes. As a partnership, Holdings is not subject to U.S. federal income tax on its income. Instead, each of Holdings' partners, including the Company, will be allocated, and may be required to pay tax with respect to, its share of Holdings' income. As such, no provision for U.S. federal income taxes has been included for Holdings.

**Principal Office; Website**

Our principal executive office is located at 550 Reserve Street, Southlake, TX 76092. Our mailing address is P.O. Box 617, Roanoke, TX 76262. Our main telephone number is 469-694-2707. Our website address is www.victorybase.com. The information contained on our website is not part of or incorporated by reference in this report.

**<u>Our Business</u>**

***General Overview***

Our nation's veterans and United States active duty military members willingly take an oath to defend our country at any cost. This act of selflessness often comes at great personal expense. Time away from home and family, as well as extended deployments to remote and dangerous areas of the world, are largely associated with military family sacrifice. However, often overlooked as a sacrifice, is the constant uprooting of military families to new duty locations based on the needs of the military. These regular moves, referred to as "Permanent Changes of Station" (PCS), may be one of the biggest financial sacrifices for our military members.

Home ownership is often regarded as the single largest investment in which an individual can build wealth. For U.S service members, however, the ability to earn value in home ownership is limited due to PCS orders that generally occur every three years. There is rarely enough time for a service member to realize material principal accumulation or home appreciation. Veterans Affairs loan fees, realtor fees, funding fees and all other fees associated with purchasing a home generally exceed any value appreciation that may have been enjoyed during such a short ownership period. Also, the potential of being forced to sell a home in a down market further increases the risk of home buying for a military member. In many cases, U.S. service members choose to live in substandard base housing or rent a home, completely eliminating the opportunity to gain value through home ownership.

For these reasons, we will seek to market our EquityBase Program as an alternative to home ownership or home rental models. Although, we will initially seek the military member as our primary target, our business model may be attractive to other populations who have difficulty finding affordable housing, have not accumulated enough savings for a down payment to purchase a home, or those required to move more frequently than the average homeowner. We are focused on developing new affordable housing and multi-family communities. Our acquisition plan will focus on new homes. Additionally, we can acquire previously owned homes, as well as multi-family units, and accomplish required renovations. By marketing our EquityBase Program, a customer who resides in a VictoryBase Property will have an opportunity to become a stockholder in the Company by entering into a subscription agreement with us. All investors share in the efficiency of our operations, and over time, may also share in the potential appreciation in value of the VictoryBase Properties.

Neither the Company nor Holdings are expected to directly own the VictoryBase Properties. We expect Holdings to acquire indirect ownership in a portion of the VictoryBase Properties by acquiring VB Property Companies over time (or having Holdings Tracking Units convert into Class A Units of Holdings) as outlined in this Offering Circular. The Company will acquire additional units of Holdings over time as outlined in this Offering Circular. Furthermore, your ability to participate in any appreciation of value of VictoryBase Properties is dependent upon the Company paying dividends, repurchasing your Shares, or providing investors with other liquidity options. We have no immediate plans to pay dividends, and we may never adopt a share repurchase program. The Shares are not currently listed on any stock exchanges or quoted on any quotation services, and we have no immediate plans to obtain such listing or quotation for our common stock.

To the extent Holdings acquires one or more of the VB Property Companies holding VictoryBase Properties under a Control Agreement, your interests in the Company may be diluted because the owner of such VB Property Companies (or the holder of Holdings Tracking Units tied to the value of such VB Property Companies) may be issued additional Class A Units of Holdings when the owner of such VB Property Companies contributes its ownership interests in such VB Property Companies to Holdings (or the holder of Holdings Tracking Units converts such units into Class A Units of Holdings). Such additional Class A Units of Holdings may then be exchanged for shares of our Class A Common Stock as described in this Offering Circular.

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***Marketing Strategy***

We are making the Shares available for our customers for purchase in an effort to instill an "ownership mindset" in our customers, though which we will seek to align the interests of our customers our investors. As part of this effort, we intend to use the following terms and concepts in connection with our operations:

●  ***Base Agreement*** is an agreement between one of our customers and a VB Property Company that allows the customer to reside in a VictoryBase Property.

●  ***Base Payment*** is a monthly payment made by our customers to occupy VictoryBase Properties under the terms of a Base Agreement.

●  ***Equity Agreement*** is a marketing term that we use to describe our subscription agreement.

●  ***Equity Payment*** is a marketing term that we use to describe payments made to purchase shares of our stock under a subscription agreement.

●  ***EquityBase Agreement*** is a marketing term that we use to describe two separate agreements as one defined term. The two separate agreements are the Base Agreement and the subscription agreement. Regardless of whether a VictoryBase Property resident elects to enter into a subscription agreement or an investor elects to enter into a Base Agreement, in neither case would there be any change to the rights, privileges, or responsibilities of the customer under the Base Agreement or the rights, privileges, or responsibilities of the investor under the subscription agreement. We plan to offer discounted Base Payments to EquityBase Investors that meet the criteria that we might establish from time to time. See "Potential Future Discount Program" under " Plan of Distribution " above.

●  ***EquityBase Investor*** is a marketing term that we use to describe a person that purchases shares of our stock and is also a customer of ours currently or previously residing in a VictoryBase Property. Regardless of whether a VictoryBase Property resident elects to enter into a subscription agreement or an investor elects to enter into a Base Agreement, in neither case would there be any change to the rights, privileges, or responsibilities of the customer under the Base Agreement or the rights, privileges, or responsibilities of the investor under the subscription agreement. We plan to offer discounted Base Payments to EquityBase Investors that meet the criteria that we might establish from time to time. See "Potential Future Discount Program" under " Plan of Distribution " above.

●  ***EquityBase Payment*** is a marketing term that we use to describe two separate payments made by an EquityBase Investor as one aggregate amount. The two separate monthly payments are the Base Payment payable under a Base Agreement, plus the Equity Payment payable under a subscription agreement. Regardless of whether a VictoryBase Property resident elects to enter into a subscription agreement or an investor elects to enter into a Base Agreement, in neither case would there be any change to the rights, privileges, or responsibilities of the customer under the Base Agreement or the rights, privileges, or responsibilities of the investor under the subscription agreement. We plan to offer discounted Base Payments to EquityBase Investors that meet the criteria that we might establish from time to time. See "Potential Future Discount Program" under " Plan of Distribution " above.

●  ***EquityBase Program*** is a marketing term we give to our program that allows a person to elect to both reside in VictoryBase Properties and invest in shares of our stock. Regardless of whether a VictoryBase Property resident elects to enter into a subscription agreement or an investor elects to enter into a Base Agreement, in neither case would there be any change to the rights, privileges, or responsibilities of the customer under the Base Agreement or the rights, privileges, or responsibilities of the investor under the subscription agreement. We plan to offer discounted Base Payments to EquityBase Investors that meet the criteria that we might establish from time to time. See "Potential Future Discount Program" under "Plan of Distribution" above. By way of example, as part of our EquityBase Program, our customers would have an opportunity to become an investor and be labeled as an EquityBase Investors by agreeing to do both of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) occupy
 a VictoryBase Property by entering into (or having previously entered into) a Base Agreement and making monthly Base Payments; and

(2) invest
 in shares of the Company by entering into a subscription agreement (which we may call an Equity Agreement) pursuant to which the
 investor would agree upfront to purchase a specified number of Shares each month by making monthly subscription payments.

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●  ***Integrated Smart Home Technology*** or  ***Smart Home Technology*** is a marketing term that we use to describe various levels of technology that will allow for us and/or our residents to monitor HVAC systems, provide security options, door lock options, or other technologies based on location and availability. Some of our homes may or may not have one or all of these types of systems.

●  ***Integrated Operating Platform*** is a marketing term that we use to describe a website or mobile application that includes technology allowing us and/or our residents to attempt to gain more efficiency in home operations or management.

●  ***VictoryBase Property*** is a residential real property, such as single-family homes, townhomes, multi-family units or other residential real property within our network available for potential occupancy by one of our customers.

●  ***Ownership Mindset*** or  ***Ownership Mentality*** are marketing phrases we use to define the attitude or approach of an individual who takes responsibility for their home and feels a sense of ownership over their living situation and community.

●  ***Equity Ownership*** is a marketing term that we use to describe the ownership of shares in VictoryBase Corporation.

●  ***Traditional Home Ownership*** is a marketing term that we use to describe the practice of an individual or family owning a home and the land it is situated on, where they have exclusive rights to use, occupy, and modify the property as they see fit. The homeowner is responsible for maintaining the property and paying for expenses such as property taxes, utilities, and insurance. In most cases, the homeowner has taken out a mortgage to purchase the property and makes regular payments to the mortgage lender until the mortgage is paid off. The homeowner also has the ability to sell or transfer ownership of the property to another individual or entity. This type of home ownership is commonly practiced in many countries around the world and is often seen as a symbol of stability and financial security.

●  ***Pathway to Equity Ownership*** is a marketing phrase that we use to describe the ability for someone to become an equity owner in VictoryBase Corporation by purchasing shares of our Class A Common Stock through this Offering.

*●*  ***Invest in VictoryBase Equity*** is a marketing phrase that we use to define the act of investing money in the equity of VictoryBase Corporation by purchasing shares of our Class A Common Stock through this Offering.

*●*  ***The American Dream*** is a marketing phrase that we use to describe a belief that anyone, regardless of their background or social class, can achieve success and prosperity through hard work, education, and determination and is also closely associated with homeownership.

●  ***Build Equity*** is a marketing phrase that defines the process of a person increasing the amount of equity ownership they have over time by purchasing shares of Class A Common Stock in VictoryBase Corporation.

●  ***Build an Investment or Create an Investment*** are marketing phrases we use to define the act of investing money in shares of VictoryBase Corporation Class A Common Stock, with the goal of generating a return on the investment over time but also understanding that there is no guarantee of performance or return on their investment.

●  ***Own Corporate Equity*** is a marketing phrase we use to define the ownership of stock in VictoryBase Corporation, which represents a proportional ownership stake in VictoryBase Corporation.

●  ***Absentee Landlord*** is a marketing phrase we use to define a property owner who does not live on or near their property and manages the property from another location or hires a property manager or management company to handle the day-to-day operations.

●  ***Accidental Landlord*** is a marketing phrase we use to define a property owner who becomes a landlord by circumstance, often because they move to a different location or are unable to sell their property and choose to rent it out instead.

●  ***Resident Based Property Management*** is a marketing phrase we use to define a property management model where VictoryBase residents are responsible for managing many of the day-to-day operations of the property.

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***Target Resident***

*Service Members are Responsible, Disciplined and Accountable*

We seek to initially focus business efforts in areas with a large military presence, with the U.S. service member as our primary target customer. We believe military members will see the potential appreciation in value in becoming an investor and a resident of VictoryBase Properties versus the traditional home rental or base housing option. Our target demographic within the military community is career-minded officers and senior enlisted non-commissioned officers. Such military members will likely have either a college degree and/or several years of professional military experience, we believe both of which require a high level of discipline and accountability. While all members of the military are required to maintain a standard of conduct while in uniform, career officers and senior enlisted non-commissioned officers are expected to maintain a high level of professionalism in the community while out of uniform as well.

We believe there is a natural and consequential level of accountability within the military. If a member of the armed forces were in financial trouble, threatening the ability to pay housing expenses, the chain of command (or Supervisor/Commander) is typically notified. The Commander has a responsibility to the service member to solicit help through professional financial counseling, and/or establishing a plan to help the service member regain control of their finances. Based upon our management's observations, the military's culture and system of including the chain of command's involvement in a service member's life, including financial matters outside of the military, is prevalent, commonplace, and generally reliable. Our executive team understands the U.S. Department of Defense policies and culture and expects that we can effectively engage military leadership to resolve issues before they become problematic.

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Career service members tend to be good stewards of property and equipment due to their training within the service. We believe, service members' ability to look after and care for a residential unit is far less complex than many of the tasks they have been professionally trained to do, thereby lowering the risk of misuse of the home's structural features and appliances. Military members will be well equipped to share in the efficiency of operations.

*Favorable Economics for Service Members*

Service members receive a tax-free Basic Allowance for Housing ("BAH") in addition to base military pay that is designed to cover housing expenses should a service member choose to live in off-base housing. This housing allowance is dependent on the rank of the service member, number of dependents, and zip code of the base at which they are stationed. BAH rates are updated yearly and based on the economics of off-base rentals in the community surrounding the base. We plan to target our residential units' Base Payment on the applicable markets' BAH. BAH rates also have a protection clause. If the annual change in housing allowance decreases while a service member is stationed at a particular duty station, they will receive the higher amount as long as they remain at that station. Therefore, despite any potential lowered BAH, existing Base Agreements with our customers, will not place downside market pressure on VictoryBase revenue as it relates to Base Agreement renewals. Conversely, if BAH rates increase, we will raise Base Payments in conjunction with the rising rents in the market.

We expect our service member customers will make Base Payments equal to approximately 22% to 32% of their household gross income, which is more favorable than a similar percentage of rent-to-gross income for civilians. This percentage difference likely exists because of lower healthcare costs and less student debt for military members. Because healthcare costs are considered a benefit of military service, most service members experience limited to no out-of-pocket healthcare expenses. Furthermore, most service members are not burdened with student debt due to various military programs designed to pay off existing loans or cover higher education costs. In addition to those benefits, access to base facilities, such as gymnasiums, commissaries, and entertainment facilities exist which further lower out-of-pocket expenses for service members and their families.

***Market Selection for VictoryBase Properties***

Our long-term strategy is to have a presence near many major military installations nationwide, creating a diversified network of residential units that service members can live in over the span of their predictably transient career with the Armed Forces. Furthermore, we will seek markets where the threat of Base Realignment and Closure (BRAC) is reasonably minimal including infrastructure-heavy locations that cannot be easily replaced, bases with large military operating areas and firing range facilities, bases that have already been realigned in the recent past (and therefore less likely to be closed in the near future), and those with strong geo-political connections to their surrounding markets.

A key tenet of our plan of creating an effective network of residential units is to provide VictoryBase Properties in locations along the predictable career paths for our military personnel, so they may continue to invest and live in VictoryBase Properties, regardless of where they are stationed. The major service branches of the Army, Navy, Air Force, Marines, and Coast Guard all have independent and joint military bases. Service members are generally stationed at each duty assignment for three years. Naturally, a career Army Soldier will predictably go from one Army base to another Army base, while an Airman will predictably go from one Air Force base to another Air Force base. Although there are exceptions, the vast majority of Permanent Changes of Station (PCS) follow a series of predictable paths. As such, the network of communities is most effective when it aligns with a specific branch that maps to the career path of the military member. Our foray into creating such a network will revolve around air bases, while our long-term strategy is to have a presence with each of the services and each career type.

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Initially, we plan to invest near air bases for the following reasons:

● There are many air bases that are in high population-growth areas in the country, such as San Antonio, Texas, the Florida panhandle, Denver, Colorado, and Colorado Spring, Colorado, among others that already provide for favorable residential real estate investment fundamentals;

● Air Force, Navy and Marine pilot deployments are generally shorter than ground based Army units at 3-6 months as compared to the Army's 12 month deployment. Because service members are protected by the Servicemembers Civil Relief Act, they have the right to terminate a residential lease if they receive military orders to deploy or move to a new base. We intend to honor the responsibilities of a landlord under the Servicemembers Civil Relief Act as if such agreements were leases. Shorter deployment timeframes naturally lead to fewer lease terminations, thus fewer Base Agreement terminations, as Airmen are more likely to retain the residential unit to return to after deployment. We believe Army soldiers, who deploy for longer periods of time, would have a higher tendency to terminate a Base Agreement;

● Air bases tend to be infrastructure-heavy as they have specific requirements for airfields, hangars, equipment, airspace, etc. For this reason, we believe air bases are less likely to be moved or closed due to the cost of relocation;

● We believe pilots and aircrew personnel are more likely to have a college degree or some college than any of the other branches; and

● Military pilots receive extra financial incentives to fly for the military which increases their overall compensation. For example, under Marine Administrative Message (MARADMIN) 514/20, the US Marines offer up to $210,000 to pilots that commit to remain in the service for an additional 72 months. This provides additional compensation to the pilot of nearly $3,000 per month. Additionally, aircrew receive $1,800-$3,000 annually of Hazardous Duty Pay.

***Operational Overview***

VB Property Companies will enter into Base Agreements with our customers for the customer's use of VictoryBase Properties. Holdings will have the right to elect to take operational control of VictoryBase Properties through Control Agreements. The Company will have the right to elect to take operational control of VictoryBase Properties from Holdings through Sub-Control Agreements. Our VictoryBase Properties will be managed by Holdings through its proprietary technology platform that is connected with external platforms. Holdings may also engage external property management companies, which may be an affiliate of ours or a third-party management company. Our property manager may also elect to subcontract property management duties to one or more other external property management companies.

Marketing our "EquityBase Program" is the means by which our investors may purchase shares of the Company and thereby share indirectly in the potential growth in value of our portfolio of VictoryBase Properties. We plan to have the VB Property Companies collect Base Payments, while the operate VictoryBase Properties and establish a large-scale model for the investor to potentially gain value over time. We plan to have VB Property Companies enter into Base Agreements and have the Company accept subscription agreements.

We call the agreement between VB Property Company and our customers whereby our customers may occupy VictoryBase Properties the Base Agreement. The Base Agreement will include terms for our customers and their family to reside in the VictoryBase Property. The amount of the Base Payment for each home will vary based on the local real estate market for each home or multi-family unit, among other factors.

We believe our business model will establish us as a market leader for EquityBase Programs for the single-family home and multi-family housing industry that will provide investors the opportunity to gain value as corporate stockholders. We intend to create a geographically diversified portfolio of high-quality, single-family homes and multi-family units to establish "VictoryBase" and "EquityBase" into nationally recognized marketing brands. We believe the brands will be known for quality, value, customer satisfaction, investor value and will garner respect in our communities. Our investments may be made directly or through investment vehicles with third-party investors.

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Through our relationship with VBRE, we are creating an integrated operating platform that consists of various off-the-shelf IT solutions for property management. We will use this platform, along with personnel who are dedicated to property management, acquisitions, development, marketing, leasing, financial and administrative functions. We are also developing an on-site management network using some of the customers within the communities we serve. We plan to appoint one or more of our customers as a representative for each of the communities.

During the acquisition process, through Holding's issuance of Holdings Tracking Units and other means, third parties, such as VBRE, are expected to assume the risk of land acquisition, entitlement risk, development risk, construction risk, funding risks, occupancy risk (finding residents to sign Base Agreements), among many other risks associated with "stabilizing" a property until the applicable VictoryBase Properties ceased to be Value Add. We generally consider a group of properties as "stabilized" when such properties have achieved an occupancy rate of at least 80% for a period of not less than 90 days, and at least 80% of the properties in the development in which such properties are located are complete or the residential home is deemed sufficiently complete to the point where it can be used for its intended purpose. We generally consider a property to be Value Add when we believe such property has net operating income that we can improve over time by implementing efficient management procedures and/or capital improvement programs. Generally, we consider a VictoryBase Property to no longer be "Value Add" when the efficient management procedures and/or capital improvement programs have been implemented and the net operating income has increased and is stabilized. VB Property Companies may or may not enter into debt agreements and preferred equity agreements with lenders and investors. The terms of the preferred equity have not been negotiated, except with regard to NY1. The terms of the preferred equity of NY1 are summarized on page 29 of this Offering Circular. Third parties, such as VBRE, will manage the capitalization of the VB Property Companies prior to Holdings determining if Holdings will require VBRE to contribute the VB Property Companies. The Control Agreement allows the Company and Holdings to have a pathway to avoid pre-stabilization risk by requiring VBRE to contribute the stabilized property to Holdings when such properties have ceased to be Value Add. Prior to requiring VBRE to contribute its ownership of VB Property Companies to Holdings, Holdings and the Company, in its capacity as manager of Holdings, shall conduct its due diligence on the property. The Company plans to evaluate the occupancy rate, military vs civilian occupancy ratio, terms of the short or permanent debt and other factors, including the terms of any preferred equity that would exit or remain in the deal.

***Beaufort, South Carolina***

In January 2023, Holdings exercised its right under the Control Agreement among Holdings, VBRE, and SC1 to require VBRE to contribute all of the membership interests in SC1 to Holdings. In connection with such contribution, Holdings issued 715,065 Class A Units of Holdings to VBRE, and Holdings assumed approximately $7,900,000 of debt from SC1. Upon such contribution, the Control Agreement terminated by mutual agreement of the parties. SC1 holds 48 homes in a single community located in Beaufort County, South Carolina, all of which are VictoryBase Properties. We have begun implementing "Integrated Smart Home Technology" in our Beaufort, South Carolina VictoryBase Properties. This permits technology driven "self-guided" showings and one-on-one showings with current customers residing in VictoryBase Properties.

As of March 31, 2023, SC1 is a party to 48 active Base Agreements. The terms of these Base Agreements are generally 12 months. The Base Agreement payments range from approximately $1,975 per month to $2,500 per month. The average amount of the Base Payment in these Base Agreements is approximately $2,250 per month per home.

Because SC1 was owned by VBRE as of December 31, 2021, and VBRE was a controlling shareholder of the Company as of December 31, 2021, the assets, liabilities, revenue and expenses of SC1 are already reflected in our audited financial statements as of December 31, 2021 set forth in this Offering Circular.

***Sackets Harbor, New York***

In October 2022, we formed NY1 as a subsidiary of Holdings. In February 2023, NY1 acquired 50 apartment homes in a single community in Sackets Harbor, New York, each of which is now a VictoryBase Property. The purchase price for such homes was approximately $7.9 million.

To fund NY1's acquisition of such 50 VictoryBase Properties, VBRE purchased 30,000 Class C Units of Holdings in exchange for $300,000. Next, Holdings contributed $300,000 into NY1. In exchange for the conveyance of the VictoryBase Properties in Sackets Harbor, New York to NY1, NY1 (i) paid the seller $5,900,000 in cash, and (ii) issued to the seller $2,000,000 preferred membership interests of NY1. NY1 borrowed approximately $5,900,000 from a local savings bank to fund the cash portion of this acquisition. There are currently 50 leases ranging from $1250 to $1275 per month with the average lease rate between those amounts. Most leases are for 12 months with expiration throughout the year. In the future, we expect residents will enter into Base Agreements at a rate of $1400 to $1600.

Based upon financial information provided to the Company by the seller of the VictoryBase Properties acquired by NY1, historic and pro forma unaudited financial statements of such VictoryBase Properties are set forth beginning on page 76 of this Offering Circular.

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***VictoryBase Model Difference***

Our business model is designed to allow for career military members (and other customers) to have the potential to indirectly share in a portion of the potential growth in the value of our portfolio of residential properties by being responsible stewards and holding every customer accountable.

The following factors distinguish our business model from traditional rental models:

● Once complete, the property management platform being developed by VBRE, will guide our customers to execute the majority of move-in/move-out transactions on their own. This model is similar to short-term rental models, such as Airbnb, VRBO, etc., where a traveler can spend a short period of time in another owner's house without ever having to personally interact with the owner except on a web or mobile platform. We will only be involved to verify the prospective Base Agreement, the Base Payment amount, other key terms, all of which is confirmed remotely and signed electronically on our website or through our mobile application;

● We permit our customers (and other investors) to purchase shares of the Company's Class A Common Stock. Because our customers may also be investors, we believe this will serve as an additional incentive to enhance the likelihood of a smooth transaction; and

● To establish our maintenance model, we will receive comprehensive warranty programs from our builder partners, as well as establish contractual relationships with third party service providers to perform the day-to-day maintenance needs of the homes in our communities. Using our website or mobile application, our customers will communicate maintenance needs at their home via photo upload and/or written description. Pre-arranged third-party contractors will receive that information and schedule servicing directly with the customer.

***Property Management Platform***

*Resident-Based Property Management*

Our customers are guided through the process to perform basic level property management tasks that would normally be done by a property management employee. We call this resident-based property management. Every month they self-report the completion of the scheduled tasks through our mobile app. This strategy benefits from the capable and well-trained members of the armed forces caring for the home in which they live. Our customers will complete tasks around the home and answer questions about their occupancy such as "Have you received orders to change duty stations?"

We plan to ask our customers to be responsible for the following basic management tasks:

● Landscaping tasks such as lawn mowing and trimming shrubs;

● Basic preventative maintenance like changing filters, replacing fire detector batteries, etc.;

● Resident turnover functions (coordinating paint/touch-up/clean); and

● Re-listing functions by uploading current photos of the home, and scheduling showings with prospective customers.

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**On-site Property Management led by Military Spouses that Live in the Community** 

In conjunction with the development of our on-site management network using some of our customers, in select markets, we may also hire and train a military spouse that lives in the community to become the on-site property manager. The benefits of hiring a military spouse are abundant, including the following<sup>[1]</sup>:

● Military spouses are more likely to be unemployed due to frequent relocation;

● Military spouses are about 35% more likely to have a college degree than a civilian counterpart;

● Military spouses are more likely to have some college than a civilian counterpart;

● We believe our customers that are also our investors will have an owner's mindset because they are part owners of the company that indirectly has ownership interests in the community in which they live;

● The community benefits from near 24/7 on-site management; and

● Military spouses can continue to work with us as their active-duty spouses are reassigned to other bases in our network

We plan for these military spouses to be our "boots on the ground" who oversee the day-to-day property management tasks required of customers at the community in which they live. We plan to ask our property managers to report basic metrics up to our headquarters as well as coordinate and manage more complex property management tasks as required.

***Move-in and Move-out Procedures***

Service members normally receive orders to report to a new duty station 4-6 months prior to moving. Once the service member receives the orders, the service member should have access to our mobile application to conduct a search for a home at the new duty station. Provided this app is available, this search will allow our customers to find and review VictoryBase Properties, take a virtual tour, view pictures, study the floor models, view the local schools, determine the commute to the base, and much more. Our customers will be able to contact the current residents living in the homes of interest to ask questions about the home, neighborhood, military base, etc. If the service member elects to travel to the new duty station, they can make appointments with the existing residents currently living in the VictoryBase Property. If the home is new and not yet occupied, the VictoryBase mobile app should allow our customers to access the home on their own. Once the service member finds a home they like, they will coordinate the move-in date based on the existing resident's move-out date. We plan to create an incentive for our customers to have fewer unoccupied days (non-revenue days). Our customer moving in and the customer moving out will sign the move in/out agreement with digital signatures on the VictoryBase mobile app. The new customer will sign a Base Agreement also using our mobile app. The outgoing customer will execute a check-out procedure on the VictoryBase app, including pictures (if required). We plan to ask the incoming customer to accept the home and complete a check-in procedure. If there are any problems, we expect the customers to resolve the issue with a resolution procedure that will be created over time based on common issues and the appropriate resolution. If the customers cannot resolve the issue, our property manager will step in and seek to resolve the issue. When it is time to move again, the service member will re-list the home as available on the VictoryBase mobile app and the process will start over.

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| | |
|:---|:---|
| <sup>[1]</sup> | The statistical information in the following bullet points is based upon information and statistics regarding military spouses compiled by the Syracuse University Institute for Veterans and Military Families, the White House, and/or the Unites States Chamber of Commerce Foundation. |

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***Non-Correlated to the Regular Market Forces***

Our niche model of providing homes primarily for military service members grants investors exposure to residential investment property indirectly supported by the United States federal government, which is required to maintain military forces. For instance, during a recession, a service member is less likely than a civilian counterpart to lose employment because the Department of Defense does not generally draw down the number of people in the Armed Forces during such times. As such, this stable level of employment for military members, which the civilian population may not enjoy, reduces our risk of non-payment. Military members will likely have greater job security regardless of economic conditions. Additionally, during poor economic times, the BAH rate generally increases and therefore increases the revenue we collect through the Base Agreements.

***Flexibility of Asset Sales and Recapitalization***

We are planning to develop most of our communities in separate but contiguous parcels to provide maximum flexibility within our assets during the tenure of ownership. By structuring our communities this way, we can continue to hold them and recapitalize them in conjunction with market dynamics, sell the homes individually to homebuyers, or sell the communities we build to investors in part or in whole. We can also acquire homes in a noncontiguous area based on current economics of a particular market.

**Our Business and Growth Strategies**

We are seeking to market our EquityBase Program as an alternative to home ownership or home rental models. The marketing for the EquityBase Program focuses on encouraging our customers to become investors and thus be stockholders in the Company by entering into subscription agreements. The investor then shares in the efficiency of operations and, over time, the potential appreciation in value of the VictoryBase Properties. We anticipate encouraging our customers to invest at least $100 per month in the Offering.

We believe we can achieve this objective with the following strategies:

●  ***Secure early-mover advantage and position us as a dominant EquityBase Program provider of VictoryBase Properties.*** 

Historically, the majority of the single-family home rental market has been fragmented, comprised primarily of private and individual property investors in local markets. While some of the owners offered rent to own options, the ability to own an entire portfolio has not been common. Prior to the 2008 housing crisis, there were few large-scale, national market owners/operators primarily due to the challenge of efficiently scaling the acquisition and management of many individual homes and none of these, to our knowledge, have an extensive ownership pathway. With an opportunity to acquire homes at attractive prices, we intend to leverage and market the EquityBase Program model to rapidly build an institutional quality, professionally managed business. We believe that being one of the first in our industry to offer the VictoryBase Properties on a large scale will provide us the "early-mover" advantage to continue aggregating a large, geographically diversified portfolio of high-quality VictoryBase Properties at prices that provide attractive potential yields and capital appreciation.

●  ***Employ a disciplined property acquisition process*** .

We are focused on acquiring VictoryBase Properties with a number of key property characteristics, including: (i) locations close to major military instillations; (ii) locations that provide quality school and educational opportunities for the our customers' entire family; (iii) quality that exceeds current on-base housing options; (iv) affordable housing options that align with the government's Basic Allowance for Housing ("BAH") that is provided to U.S. service members; and (v) homes in "secondary" markets that meet the criteria outlined in (ii) and (iii) above and are located in growing communities with a perceived demand for our customers to also be investors in the Company. We plan to target areas with large military populations, well-regarded school districts (or school choice) and access to desirable lifestyle activities and amenities. We believe that homes in these areas will attract customers that desire ownership pathways while retaining the ability to have low down payments and the ability to easily transfer to new locations. We plan to target areas where the military members move frequently and provide them with the option to move from one VictoryBase Property to another VictoryBase Property. We may alter the criteria above if we believe the acquisitions or alteration will benefit us. We will continue to refine our process to build and acquire high quality single-family homes and multi-family units.

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●  ***Assemble a geographically diversified portfolio.*** 

We plan to monitor and manage the diversification of our VictoryBase Properties in order to minimize risks associated with adverse developments affecting a particular market. We currently are focusing on acquiring single-family homes in selected sub-markets of metropolitan statistical areas within the United States, with an emphasis on achieving critical mass within each target markets near military instillations. We plan to continually evaluate potential new markets where we may invest and establish operations as opportunities emerge. We plan to select our markets based on a large military population, anticipated population growth and strong demand, providing for attractive potential yields and capital appreciation. In addition, if we are unable to gain desired critical mass within a market to operate efficiently, then we may pursue ways to exit those markets in a manner designed to maximize stockholder value.

●  ***Efficiently manage and operate properties.*** 

We plan to encourage our customers to become investors because investors will be aligned with our goals to efficiently operate VictoryBase Properties. The lower our operating costs are, the more long-term value the investors will realize. We intend to (i) minimize home maintenance costs by requiring the home builder to provide warranties on the homes, where possible, and requiring our customers to perform routine preventive maintenance tasks, (ii) reduce labor costs associated with property management by electing our customers as on-site property management, and (iii) reduce realtor fees and other fees associated with turnover by requiring our customers to list, show, and ensure the transition from one of our customers to another is seamless. In addition to increased efficiency at the VictoryBase Properties, our corporate level management can centralize many functions, including management, accounting, legal, marketing and other services. These centralized services allow us to provide all markets with the benefits of these functions without the burden of those costs separately in every market. We also plan, in conjunction with our property management company, to seek to negotiate favorable terms on services and products with many of our contractors and vendors, including national contractors and vendors. Additionally, we may be able to negotiate reduced property taxes for homes occupied by active service members and service-disabled veterans. We believe our investments in technology to manage the properties will lead to efficiently managing a large number of relatively low-cost properties. Having our customers participate in managing the VictoryBase Properties will provide efficiency at each home and we will realize additional efficiency with significant economies of scale and standardize brand consistency.

●  ***Establish a nationally recognized brand.*** 

Our goal is to be the first company that comes to mind when a person wants the flexibly of a rental home with the ability to participate in a portion of the value of home ownership. To our knowledge, there is no other option that is nationally marketed that offers the value and flexibility we plan to establish by marketing the EquityBase Program. We strive to establish "VictoryBase" and "EquityBase" as nationally recognized brands. We believe that establishing a brand well-known for quality, value and our customer satisfaction will help attract and retain customers with superior interest in creating more value for the entire EquityBase Program. We believe that creating brand awareness will facilitate the growth and success of our company.

●  ***Optimize capital structure.*** 

We may use leverage to increase potential returns to our stockholders. Additionally, we may have the opportunity to issue and sell fair yield producing preferred membership interests of our VB Property Companies which might provide an attractive source of equity capital. We may also obtain capital through the use of unsecured credit facilities, the issuance of unsecured senior notes, and through asset-backed transactions. We may also participate in investment vehicles with third-party investors as an alternative source of equity to grow our business.

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**Our Business Activities** 

***● Property Acquisition.*** We are refining our acquisition processes to deploy capital across acquisition channels and in multiple markets. Our acquisition process begins with an analysis of housing markets. We intend to select target markets based on a large military population, anticipated population growth, and strong demand, providing for attractive potential yields and capital appreciation. If we are unable to gain desired critical mass within a market to operate efficiently, then we may pursue ways to exit those markets in a manner designed to maximize stockholder value. We anticipate that most of our acquisitions will be made in a manner similar to our acquisition of the VictoryBase Properties held by NY1. Specifically, for each acquisition, Holdings is expected to form new VB Property Company that is expected to purchase properties or contract to acquire future VictoryBase Properties. Holdings is expected to issue Holdings Tracking Units to one or more investors who will contribute funds to Holdings. Holdings is then expected to contribute such funds to the newly created VB Property Company to finance part or all of the acquisition. The applicable Holdings Tracking Units are later expected to be convert into Class A Units of Holdings after the applicable VictoryBase Property have ceased to be Value Add. We plan to target a variety of acquisition channels, including broker sales and portfolio (bulk) sales, acquire "built for rent" properties through third party developers and develop properties through its internal construction teaming program.

● ***Property Management.*** In collaboration, we plan to develop an extensive property management infrastructure, with modern systems, dedicated personnel, and local customers performing management functions.

● ***Marketing and Base Agreements*.** We will establish Base Payment rates, marketing and signing of the Base Agreements (including screening prospective customers) and collecting and processing Base Payments. We will establish Base Payment rates centrally, using data-driven pricing models, supported by analysis from the local staff and BAH rates for each market. We plan to consider the following factors in establishing the Base Payment rates: (i) a competitive analysis of market rents, (ii) the size and age of the house, (iii) qualitative factors, such as neighborhood characteristics and access to quality schools, transportation and services, and (iv) whether or not the customer is or will become an EquityBase Investor. Because we expect customers who are also stockholder to be better stewards of VictoryBase Properties and therefore lower our operating costs, we plan to offer lower Base Payment rates for EquityBase Investors that meet the criteria that we might establish from time to time. See "Potential Future Discount Program" under "Plan of Distribution" above. We expect to advertise the available properties through multiple channels, including our website, online marketplaces, government housing offices, direct advertising to military members and other methods. We intend to show the VictoryBase Properties using technology driven "self-guided" showings and one-on-one showings with the current customer that is residing in the VictoryBase Property. We plan to permit prospective customers to submit an application through our website or mobile app. We plan to evaluate prospective customers in a standardized manner. Our application and evaluation process may include obtaining appropriate identification, their military record and rank (if applicable), an evaluation of credit and household income, a review of the applicant's rental history, a review of the applicants Base Payment history, and a background check for criminal activity, among other possible screening criteria. We intend to create a ranking system based on the customer's performance while residing in current and previous VictoryBase Properties. Although we plan to generally require a minimum household credit score and income to Base Payment ratio, we may take other factors into consideration during the evaluation process, including an emphasis on Base Payment history and previous ratings in other VictoryBase Properties. We plan to collect all of the Base Payments electronically via military allotments, Automated Clearing House transfer or direct debit to the customers' checking account via a secure portal on our website or our mobile app. An auto-pay feature will be offered to facilitate Base Payments. Customers who do not pay the Base Payments by the late payment date (typically within five calendar days of the due date) will receive notification and are assessed a late fee. If the customer is a U.S. service member, our staff may coordinate with the U.S. service members Commanding Officer to arrange payment. Eviction will generally be a last resort, and the eviction process will be managed in compliance with local and state regulations. The eviction process will be documented through a property management system with all correspondence and documentation stored electronically.

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● ***Property Maintenance and Property Warranty.*** We will seek to negotiate extended warranty terms on newly constructed VictoryBase Properties. We expect such warranties will cover 100% of the home warranty and maintenance items for a minimum of the first year. Negotiations among us, VBRE and the home builder may establish warranty items beyond one year. Preventative maintenance is to be performed by our customers occupying the property and assisted/supervised by our onsite military spouse performing management duties. Examples of preventative maintenance include changing air filters and replacing smoke detector batteries. Reactive maintenance problems will be submitted to the corporate maintenance reporting platform, telephone or email. Our onsite military spouse performing management duties will also be informed. We will offer a 24/7 emergency line to handle after hours issues.

● ***Information Technology Systems.*** We believe that effective information technology systems are essential components of our process. VBRE is making significant investments in our information technology systems. The systems will be designed to be scalable to accommodate continued growth. Our website will be fully integrated into our customer accounting and VictoryBase Property residence system. From the website, which will be accessible from mobile devices, and our mobile app, our prospective customers can browse properties, request additional information, and schedule a showing. We will engage a search engine optimization firm to seek to ensure we place high in search engine lists and will continue to monitor our placement on search engines. In addition, sponsored key words can be purchased in selected markets as needed.

● ***Risk Management.*** We face various forms of risk in our business ranging from broad economic, housing market and interest rate risks, to more specific factors, such as credit risk related to our customers, base closures, acts of God and war, including without limitation those risk factors identified beginning on page 3 of this Offering Circular. We believe that the systems and processes developed by our executive team allow us to monitor, manage and ultimately navigate these risks.

● ***Insurance.*** We plan to maintain property, liability and corporate level insurance coverage related to our business, including crime and fidelity, property management errors and omissions, trustees' and officers' errors and omissions, cyber liability, employment practice liability and workers' compensation. We believe the policy specifications and insured limits under our insurance program will be appropriate and adequate for our business and properties given the relative risk of loss, the cost of the coverage and industry practice.

● ***Competition*.** We face competition from different sources in each of our two primary activities: acquiring properties and securing customers that will live in our homes. Our primary competitors in acquiring portfolios include large and small private equity investors, public and private REITs, and other sizeable private institutional investors. These same competitors may also compete with us for customers. Competition may increase the prices for properties that we would like to purchase, reduce the amount of the Base Payment we may charge at our properties, reduce the occupancy of our portfolio and adversely impact our ability to achieve attractive yields. However, we believe that our acquisition platform, our property management infrastructure, and market knowledge in military markets that meet our selection criteria provide us with competitive advantages.

● ***Regulation***. VictoryBase Properties are subject to various covenants, laws and ordinances, and certain of our properties are also subject to the rules of the various homeowners' associations where such properties are located. We believe that we will be in material compliance with such covenants, laws, ordinances and rules, and we also require that our customers agree to comply with such covenants, laws, ordinances and rules in their Base Agreement with us.

● ***Fair Housing Act*.** The Fair Housing Act ("FHA") and its state law counterparts, and the regulations promulgated by the U.S. Department of Housing and Urban Development ("HUD") and various state agencies, prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under the age of 18), handicap or, in some states, financial capability. We believe that our properties are in substantial compliance with the FHA and other regulations.

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●  ***Environmental Matters*.** As a current or prior owner of real estate, we are subject to various federal, state and local environmental laws, regulations and ordinances, and we could be liable to third parties as a result of environmental contamination or noncompliance at our properties, even if we no longer own such properties. See "Risk Factors—Risks Related to Our Business" Environmentally hazardous conditions may adversely affect our financial condition, cash flows and operating results.

**Rights to Exchange Class A Units of Holdings for our Class A Common Stock**

Each holder of Class A Units of Holdings, from time to time, may exchange all or a portion of its Class A Units in Holdings for newly issued shares of Class A Common Stock of the Company on a basis such that the indirect ownership of Holdings represented by such newly issued Class A common stock is equal to the reduction in direct percentage ownership of Holdings represented by the exchanged Class A Units. In addition, the holder of Class C Units of Holdings has the right to convert such Class C Units into Class A Units under certain circumstances. Such Class A Units will likewise be exchangeable for Class A Common Stock of the Company.

**Tax Receivable Agreement**

Holdings will make the election under Internal Revenue Code Section 754 which will result in a special tax basis adjustment when Class A Units of Holdings are exchanged for shares of Class A Common Stock of the Company in a taxable transaction. The Company and VBRE have entered into a tax receivable agreement which will require us to pay to VBRE 85% of any tax benefits resulting from the Code Section 754 tax basis adjustment when and as realized by us. Future holders of Class A Units of Holdings may join the tax receivables agreement.

**Results of Operations; Liquidity and Capital Resources**

The bulk of our activities from our inception on August 13, 2020, until June 1, 2021, related to the acquisition of VictoryBase Properties and the development, management, and promotion of the EquityBase Program. On June 1, 2021, we entered into a Control Agreement among Holdings, SC1 and VBRE, pursuant to which VBRE granted Holdings control of certain properties owned by SC1 in South Carolina. On January 1, 2023, we exercised our right under the Control Agreement to cause VBRE to contribute all of its membership interests in SC1 into Holdings, thereby giving us indirect equity interests in 48 VictoryBase Properties in Beaufort, South Carolina. In February 2023, NY1 acquired 50 VictoryBase Properties in Sackets Harbor, New York. We have limited liquidity and capital resources, and we will require additional funding, including funding from this Offering, in order to implement our business plan.

**Plan of Operations**

The Company only recently begun receiving revenue from operations. To date, VBRE and/or its affiliates have advanced funds to assist the Company with our startup expenses. We anticipate that VBRE and/or its affiliates will continue to advance funds to the Company to meet our cash requirements in the short term. We anticipate using proceeds of the Offering to repay such advances and meet our operational cash requirements over the next twelve months. We expect the Company's cash needs to be relatively modest because our corporate structure described above allows much of the risk associated with acquiring and developing properties to be borne by VBRE and other third parties expected to purchase Holdings Tracking Units. The Company's cash needs relate primarily to legal and accounting expenses and making monthly payments to Holdings under the Sub-Control Agreement described below. The Company will not incur monthly expenses under the Sub-Control Agreement unless and until it is ready to accept residents in the applicable VictoryBase Properties.

Most of the operational expenses of our enterprise as a whole, such as general and administrative expenses and expenses of operating the VictoryBase Properties, will be borne by Holdings and the VB Property Companies. As with the Company, we anticipate that over the short term VBRE and/or one of its affiliates will advance funds necessary to meet Holdings' short term cash requirements. We anticipate that the Company will contribute a portion of the proceeds of the Offering to repay such advances and meet Holdings' operational cash requirements over the next twelve months. Holdings will not incur monthly expenses under the Control Agreement unless and until the Company is ready to accept residents in the applicable VictoryBase Properties. VBRE plans to acquire and develop the VictoryBase Properties. And we may acquire VictoryBase Properties from sources other than VBRE.

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We consider a group of VictoryBase Properties to be "stabilized" when such properties have achieved an occupancy rate of at least 80% for a period of not less than 90 days, and at least 80% of the properties in the development in which such properties are located are complete or the residential home is deemed sufficiently complete to the point where it can be used for its intended purpose. Holdings has exercised its option to cause VBRE to contribute its membership interests in SC1 into Holdings.

We consider a VictoryBase Property to be "Value Add" when we believe that such VictoryBase Property has net operating income that we can improve over time by implementing efficient management procedures and/or capital improvement programs. Generally, we consider a VictoryBase Property to no longer be "Value Add" when the efficient management procedures and/or capital improvement programs have been implemented and the net operating income has increased and is stabilized. After property stabilization and contribution, the operating expenses such as the costs of running and maintaining the VictoryBase Properties, including insurance premiums, management fees, legal fees, community utilities, property taxes, repair costs, and trash fees will be funded by the monthly Base Payments of our customers. A substantial portion of such Base Payments will be used by VB Property Companies to pay operating expenses of the applicable VictoryBase Properties. Such Base Payments may be supplemented by monthly control fees paid by Holdings. Holdings will fund such control fees by monthly sub-control fees paid by the Company under the Sub-Control Agreements.

**Off-Balance Sheet Arrangements**

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

**Additional Company Matters**

We have not filed for bankruptcy protection nor have we ever been involved in receivership or similar proceedings.

**Legal Proceedings**

We are not presently involved in any other legal proceedings material to our business or financial condition. We do not anticipate any material reclassification, merger, consolidation in the next 12 months. We expect to purchase or otherwise acquire a significant amount of assets outside of the ordinary course of business, specifically, additional VictoryBase Properties and/or VB Property Companies that will own VictoryBase Properties, in the next 12 months.

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**DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES**

As of March 31, 2023, we had no full-time employees who was not an executive officer of the Company.

Our directors and executive officers as of March 31, 2023 are as follows:

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Position** | **Age** | **Term of Office** | **Approximate hours per week for part-time employees** |
| Thomas Paquin | Chief Executive Officer, President, Secretary and Director | 51 | Since formation on August 13, 2020 | N/A |
| John Sharkey | Chief Operating Officer | 41 | March 1, 2021 | N/A |

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**Name and Title(s) of each Director and Executive Officer**

**Thomas Paquin** is our founder, Chief Executive Officer, President, Secretary and director. During the past five (5) years, Mr. Paquin has been the CEO of VictoryBase Corporation; President of VictoryBase RE, LLC; President and Managing Member of Victory Diesel, LLC, and its subsidiaries; and the Managing Member of Victory Aviation, LLC. Prior to his business career, Tom served as a US Marine Corps F/A-18 pilot and participated in combat operations around the world.

**John Sharkey** has been our Chief Operating Officer since March, 2021. From November 2019 through March, 2021, he was our Vice President of Operations and Vice President of VictoryBase RE, LLC. From 2016 through January 2020, Mr. Sharkey served as the Vice President of Operations for Devonwood Investors LLC, a private equity real estate developer focused on large-scale, mixed use projects in urban markets. Mr. Sharkey's responsibilities at Devonwood Investors included financial analysis, due diligence, capital raising, and coordination of pre-development activities. Prior to joining Devonwood Investors, Mr. Sharkey represented institutional investors, family offices, and private capital real estate owners at CBRE. John Sharkey spent seven years as a US Army Aviation Office and Blackhawk helicopter pilot. He is a West Point graduate with an MBA from Cornell University.

**Involvement in Certain Legal Proceedings**

No executive officer, director, or significant employee or control person of our Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.

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**COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS**

**<u>Executive Compensation</u>**

The following table sets forth a summary of the annual compensation paid to the Company's executive officers during 2022:

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| | | |
|:---|:---|:---|
| **Name and Title** | **Other<br> Compensation** | **Total<br> Compensation** |
| Thomas Paquin$0 <sup>(1)</sup> | $0 | $0 |
| John Sharkey$0 <sup>(1)</sup> | $0 | $0 |

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<sup>(1)</sup> Although neither Mr. Paquin nor Mr. Sharkey has received any compensation from us as of the date of this Offering Circular, it is anticipated that Mr. Paquin and Mr. Sharkey will each be paid an annual salary of $500,000 per year once we determine that our financial position permits the payment of such compensation. Such salary does not accrue.

**Employment Agreements**

We do not have any employment agreements at this time.

**Stock Incentive Plan**

We currently have no stock incentive plan. In the future, we may establish a management stock incentive plan pursuant to which stock options and awards may be authorized and granted to our directors, executive officers, employees and key employees or consultants. Details of such a plan, should one be established, have not been decided yet. Stock options or a significant equity ownership position in us may be utilized by us in the future to attract one or more new key senior executives to manage and facilitate our growth.

**Board of Directors**

Our board of directors currently consists of one director. None of our directors is "independent" as defined in Rule 4200 of FINRA's listing standards. We may appoint additional independent directors to our board of directors in the future, particularly to serve on committees should they be established.

**Committees of the Board of Directors**

We may establish an audit committee, compensation committee, a nominating and governance committee and other committees to our Board of Directors in the future but have not done so as of the date of this Offering Circular. Until such committees are established, matters that would otherwise be addressed by such committees will be acted upon by the Board of Directors.

**Director Compensation**

We currently do not pay our directors any compensation for their services as board members, with the exception of reimbursing and board related expenses. In the future, we may compensate directors, particularly those who are not also employees and who act as independent board members, on either a per meeting or fixed compensation basis.

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**Limitation of Liability and Indemnification of Officers and Directors**

Our bylaws limit the liability of our directors and officers to the maximum extent permitted by Delaware law. Our bylaws state that we shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to, or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or an officer of the Company or such director or officer is or was serving at our request as a director, officer, partner, member, manager, trustee, employee or agent of another company or of a partnership, limited liability company, joint venture, trust or other enterprise.

We believe that indemnification under our bylaws covers at least negligence and gross negligence on the part of indemnified parties. We also may secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our bylaws permit such indemnification.

We have also entered into separate indemnification agreements with our directors and officers, in addition to the indemnification provided for in our bylaws. These agreements, among other things, provide that we will indemnify our directors and officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person's services as one of our directors or officers, or rendering services at our request, to any of its subsidiaries or any other company or enterprise. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.

There is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

For additional information on indemnification and limitations on liability of our directors and officers, please review our bylaws and our form of indemnification agreement, each of which are attached to this Offering Circular.

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**SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS**

The following table sets forth information regarding beneficial ownership of our common stock as of March 31, 2023. None of our officers or directors are selling stock in this Offering.

Beneficial ownership and percentage ownership are determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to Shares of our stock. This information does not necessarily indicate beneficial ownership for any other purpose.

Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over their shares of our common stock. Percentage of beneficial ownership before the offering is based on (i) 25,030 Shares of our Class A common stock outstanding, and (ii) 1,000,000 shares of Class B Common Stock outstanding, in each case as of March 31, 2023.

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| | | |
|:---|:---|:---|
| **Name and Position** | **Shares Beneficially Owned<br> Prior to and After Offering** | **Percent of Class<br> Prior to Offering** |
| VictoryBase RE, LLC <sup>(1)</sup> | 25,000 shares of Class A Common Stock; and | 99.88% |
|  | 1,000,000 shares of Class B Common Stock | 100% |
| TOTAL | 25,000 shares of Class A Common Stock; and | 99.88% |
|  | 1,000,000 shares of Class B Common Stock | 100% |

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<sup>(1)</sup> Thomas Paquin, our founder, Chief Executive Officer, President, Secretary and director is the trustee of the sole owner of VBRE and the sole manager of VBRE. Mr. Paquin may be deemed to be the beneficial owner of the shares held by VBRE by virtue of his position as the trustee of The Tom Paquin Irrevocable Trust, the sole owner of VBRE and the manager of VBRE.

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**INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS**

As noted elsewhere in this Offering Circular, our management has direct or indirect interests in a number of our subsidiaries, affiliates, and parties with whom we currently have contractual relationships and/or expect to have contractual relationships in the future, including without limitation the following:

● Thomas Paquin, our founder, Chief Executive Officer, President, Secretary and director is the trustee of The Tom Paquin Irrevocable Trust, currently the sole owner of VBRE, and is the manager of VBRE. VBRE has a number of contractual relationships with us as described elsewhere in this Offering Circular and as set forth below in this section.

● VBRE owns 25,000 shares of our Class A Common Stock and 1,000,000 shares of our Class B Common Stock.

● VBRE is the sole holder of Class A Units of Holdings.

● The Company or the applicable VB Property Companies may enter into a property management agreement with an affiliate of ours to pay for property management services at arms-length terms.

● The VB Property Companies may relinquish operational control of the VictoryBase Properties to Holdings. Likewise, Holdings may relinquish operational control of the VictoryBase Properties to the Company.

● It is anticipated that from time to time VBRE and/or one or more of its subsidiaries or affiliates will contribute to Holdings residential real property, contractual rights to acquire real property, and/or entities holding such properties or contractual rights. Such contributions will be valued at their fair market value as determined by (or based upon a valuation method established by) us and VBRE at the time of such contribution. Such valuation may be greater than VBRE's out-of-pocket costs to acquire such properties, contractual rights, and/or entities. We plan to value our assets (other than liquid non-real estate assets and securities, including cash and cash equivalents, or "liquid assets") at their cost for approximately the first six months following acquisition. After the first six months from acquisition, we plan to value such assets using information believed by us to be accurate and appropriate. There is no industry standard valuation method, making it possible for other analysts to arrive at different valuations. Our valuation methodology will not audited and may not reflect our fair market value if we were to list our common stock (or other assets) on a national exchange (or similar trading platform). Our asset valuations and calculations are subject to good faith assumptions and estimates determined by our management. As a result, our asset valuations may not accurately reflect the price we would achieve by liquidating our entire portfolio.

● Under the terms of the Company's certificate of incorporation and Holdings' limited liability company agreement, VBRE has the right to exchange its Class A Units of Holdings for shares of Class A Common Stock of the Company. Copies of our certificate of incorporation and Holdings' limited liability company agreement are attached as exhibits to this Offering Circular.

● The Company and VBRE have entered into a tax receivable agreement pursuant to which if the Company enjoys a tax benefit as a result of VBRE's exchange of Class A Units of Holdings for shares of Class A Common Stock of the Company, then the Company will share 85% of the amount of such tax benefit with VBRE (and other future owners of Class A Units of Holdings).

● The Company has agreed to enter into indemnification agreements with each of our directors. Currently, Thomas Paquin is our only director. A copy of the form of indemnification agreement is attached as an exhibit to this Offering Circular.

● VBRE and its subsidiaries and affiliates may be involved in, and may be compensated for, their participation in the acquisition, financing, and management of VictoryBase Properties and VB Property Companies in number of different ways, including ownership of common or preferred equity of the Company or VB Property Companies and their respective subsidiaries or affiliates, including without limitation, (i) ownership of common or preferred equity, or debt instruments, and (ii) earning financing fees, acquisition fees, asset management fees, project management fees, and other fees, in each case we plan to seek to ensure that any such transactions or fees are customary or otherwise fair and reasonable and no more favorable to VBRE and its subsidiaries and affiliates as would be paid in an arms-length, third-party transaction.

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**ERISA CONSIDERATIONS**

The Employee Retirement Income Security Act of 1974, as amended, or ERISA, is a broad statutory framework that governs most U.S. retirement and other U.S. employee benefit plans. ERISA and the rules and regulations of the Department of Labor, or the DOL, under ERISA contain provisions that should be considered by fiduciaries of employee benefit plans subject to the provisions of Title I of ERISA ("ERISA Plans") and their legal advisors. In particular, a fiduciary of an ERISA Plan should consider whether an investment in our common stock (or, in the case of a participant-directed defined contribution plan, or a Participant-Directed Plan, making our common shares available for investment under the Participant-Directed Plan) satisfies the requirements set forth in Part 4 of Title I of ERISA, including the requirements that (1) the investment satisfy the prudence and diversification standards of ERISA, (2) the investment be in the best interests of the participants and beneficiaries of the ERISA Plan, (3) the investment be permissible under the terms of the ERISA Plan's investment policies and governing instruments and (4) the investment does not give rise to a non-exempt prohibited transaction under ERISA or Section 4975 of the Code.

In determining whether an investment in our common stock (or making shares of our common stock available as an investment option under a Participant-Directed Plan) is prudent for ERISA purposes, a fiduciary of an ERISA Plan should consider all relevant facts and circumstances including, without limitation, possible limitations on the transferability of shares of our common stock, whether the investment provides sufficient liquidity in light of the foreseeable needs of the ERISA Plan (or the participant account in a Participant-Directed Plan), and whether the investment is reasonably designed, as part of the ERISA Plan's portfolio, to further the ERISA Plan's purposes, taking into consideration the risk of loss and the opportunity for gain (or other return) associated with the investment. It should be noted that we plan to invest our assets and conduct our operations in accordance with the business plan described in this offering circular, and that neither we nor any of our affiliates has any responsibility for developing any overall investment strategy for any ERISA Plan (or the participant account in a Participant-Directed Plan) or for advising any ERISA Plan (or participant in a Participant-Directed Plan) as to the advisability or prudence of an investment in us. Rather, it is the obligation of the appropriate fiduciary for each ERISA Plan (or participant in a Participant-Directed Plan) to consider whether an investment in our common stock by the ERISA Plan (or making such shares available for investment under a Participant-Directed Plan in which event it is the obligation of the participant to consider whether an investment in our common stock is advisable), when judged in light of the overall portfolio of the ERISA Plan, will meet the prudence, diversification and other applicable requirements of ERISA.

Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan, as well as those plans that are not subject to ERISA but that are subject to Section 4975 of the Code, such as individual retirement accounts, or IRAs and non-ERISA Keogh plans, or collectively with ERISA Plans, Plans, and certain persons (referred to as "parties in interest" for purposes of ERISA or "disqualified persons" for purposes of the Code) having certain relationships to Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to non-deductible excise taxes and other penalties and liabilities under ERISA and the Code, and the transaction might have to be rescinded. In addition, a fiduciary who causes an ERISA Plan to engage in a non-exempt prohibited transaction may be personally liable for any resultant loss incurred by the ERISA Plan and may be subject to other potential remedies.

A Plan that proposes to invest in our common stock (or to make shares of our common stock available for investment under a Participant-Directed Plan) may already maintain a relationship with us or one or more of our affiliates, as a result of which we or such affiliate may be a "party in interest" under ERISA or a "disqualified person" under the Code, with respect to such Plan (e.g., if we or such affiliate provides investment management, investment advisory or other services to that Plan). ERISA (and the Code) prohibits plan assets from being used for the benefit of a party in interest (or disqualified person). This prohibition is not triggered by "incidental" benefits to a party in interest (or disqualified person) that result from a transaction involving the Plan that is motivated solely by the interests of the Plan. ERISA (and the Code) also prohibits a fiduciary from using its position to cause the Plan to make an investment from which the fiduciary, its affiliates or certain parties in which it has an interest would receive a fee or other consideration or benefit. In this circumstance, Plans that propose to invest in our common stock should consult with their counsel to determine whether an investment in our common stock would result in a transaction that is prohibited by ERISA or Section 4975 of the Code.

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If our assets were considered to be assets of a Plan ("Plan Assets"), our management might be deemed to be fiduciaries of the investing Plan. In this event, the operation of the Company could become subject to the restrictions of the fiduciary responsibility and prohibited transaction provisions of Title I of ERISA and/or the prohibited transaction rules of Section 4975 of the Code.

The DOL has promulgated a final regulation under ERISA, 29 C.F.R. § 2510.3-101 (as modified by Section 3(42) of ERISA, the "Plan Assets Regulation"), that provides guidelines as to whether, and under what circumstances, the underlying assets of an entity will be deemed to constitute Plan Assets for purposes of applying the fiduciary requirements of Title I of ERISA (including the prohibited transaction rules of Section 406 of ERISA) and the prohibited transaction provisions of Code Section 4975.

Under the Plan Assets Regulation, the assets of an entity in which a Plan or IRA makes an equity investment will generally be deemed to be assets of such Plan or IRA unless the entity satisfies one of the exceptions to this general rule. Generally, the exceptions require that the investment in the entity be one of the following:

● in securities issued by an investment company registered under the Investment Company Act;

● in "publicly offered securities," defined generally as interests that are "freely transferable," "widely held" and registered with the SEC;

● in an "operating company" which includes "venture capital operating companies" and "real estate operating companies;" or

● in which equity participation by "benefit plan investors" is not significant.

The shares of common stock will constitute an "equity interest" for purposes of the Plan Assets Regulation, and the shares of common stock may not constitute "publicly offered securities" for purposes of the Plan Assets Regulation. In addition, the shares will not be issued by a registered investment company.

**The 25% Limit**.

Under the Plan Assets Regulation, and assuming no other exemption applies, an entity's assets would be deemed to include "plan assets" subject to ERISA on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25% or more of the value of any class of equity interests in the entity is held by "benefit plan investors" (the "25% Limit"). For purposes of this determination, the value of equity interests held by a person (other than a benefit plan investor) that has discretionary authority or control with respect to the assets of the entity or that provides investment advice for a fee with respect to such assets (or any affiliate of such a person) is disregarded. The term "benefit plan investor" is defined in the Plan Assets Regulation as (a) any employee benefit plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (b) any plan that is subject to Section 4975 of the Code and (c) any entity whose underlying assets include plan assets by reason of a plan's investment in the entity (to the extent of such plan's investment in the entity). Thus, while our assets would not be considered to be "plan assets" for purposes of ERISA so long as the 25% Limit is not exceeded. We intend to rely on this aspect of the Plan Assets Regulation.

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**Operating Companies**.

Under the Plan Assets Regulation, an entity is an "operating company" if it is primarily engaged, directly or through a majority-owned subsidiary or subsidiaries, in the production or sale of a product or service other than the investment of capital. In addition, the Plan Assets Regulation provides that the term operating company includes an entity qualifying as a real estate operating company, or REOC, or a venture capital operating company, or VCOC. An entity is a REOC if: (i) on its "initial valuation date and on at least one day within each annual valuation period," at least 50% of the entity's assets, valued at cost (other than short-term investments pending long-term commitment or distribution to investors) are invested in real estate that is managed or developed and with respect to which such entity has the right to substantially participate directly in management or development activities; and (ii) such entity in the ordinary course of its business is engaged directly in the management and development of real estate during the 12-month period. The "initial valuation date" is the date on which an entity first makes an investment that is not a short-term investment of funds pending long-term commitment. An entity's "annual valuation period" is a pre-established period not exceeding 90 days in duration, which begins no later than the anniversary of the entity's initial valuation date. Certain examples in the Plan Assets Regulation clarify that the management and development activities of an entity looking to qualify as a REOC may be carried out by independent contractors (including, in the case of a partnership, affiliates of the general partner) under the supervision of the entity. An entity will qualify as a VCOC if (i) on its initial valuation date and on at least one day during each annual valuation period, at least 50% of the entity's assets, valued at cost, consist of "venture capital investments," and (ii) the entity, in the ordinary course of business, actually exercises management rights with respect to one or more of its venture capital investments. The Plan Assets Regulation defines the term "venture capital investments" as investments in an operating company (other than a VCOC) with respect to which the investor obtains management rights.

If the 25% Limit is exceeded, we may try to operate in a manner that will enable us to qualify as a VCOC or a REOC or to meet such other exception as may be available to prevent our assets from being treated as assets of any investing Plan for purposes of the Plan Assets Regulation. Accordingly, we believe, on the basis of the Plan Assets Regulation, that our underlying assets should not constitute "plan assets" for purposes of ERISA. However, no assurance can be given that this will be the case.

If our assets are deemed to constitute "plan assets" under ERISA, certain of the transactions in which we might normally engage could constitute a non-exempt "prohibited transaction" under ERISA or Section 4975 of the Code. In such circumstances, in our sole discretion, we may void or undo any such prohibited transaction.

Prospective investors that are subject to the provisions of Title I of ERISA or Code Section 4975 should consult with their counsel and advisors as to the provisions of Title I of ERISA or Code Section 4975 relevant to an investment in our common stock.

As discussed above, although IRAs and non-ERISA Keogh plans are not subject to ERISA, they are subject to the provisions of Section 4975 of the Code, prohibiting transactions with "disqualified persons" and investments and transactions involving fiduciary conflicts. A prohibited transaction or conflict of interest could arise if the fiduciary making the decision to invest has a personal interest in or affiliation with our company or any of its respective affiliates. In the case of an IRA, a prohibited transaction or conflict of interest that involves the beneficiary of the IRA could result in disqualification of the IRA. A fiduciary for an IRA who has any personal interest in or affiliation with our company or any of its respective affiliates, should consult with his or her tax and legal advisors regarding the impact such interest may have on an investment in our shares with assets of the IRA.

Shares sold by us may be purchased or owned by investors who are investing Plan assets. Our acceptance of an investment by a Plan should not be considered to be a determination or representation by us or any of our respective affiliates that such an investment is appropriate for a Plan. In consultation with its advisors, each prospective Plan investor should carefully consider whether an investment in our company is appropriate for, and permissible under, the terms of the Plan's governing documents.

Governmental plans, foreign plans and most church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Code Section 4975, may nevertheless be subject to local, foreign, state or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel and advisors before deciding to invest in our common stock.

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**SECURITIES BEING OFFERED**

We are offering Shares of our Class A Common Stock. Except as otherwise required by law, our certificate of incorporation or bylaws, each stockholder shall be entitled to one vote for each Share held by such stockholder on the record date of any vote of our stockholders. However, our Class A Common Stock generally votes together with our Class B Common Stock. VBRE, as the holder of 1,000,000 shares of our Class B Common Stock, has the right to place 1,000,000 votes per share of Class B Common Stock held by VBRE. The Shares of our Class A Common Stock, when issued, will be fully paid and non-assessable.

It is anticipated that at least for the next 12 months the majority of our voting power will be held by our management through Thomas Paquin, as the manager of VBRE and as trustee of The Tom Paquin Irrevocable Trust, the sole owner of VBRE. VBRE is the owner of 1,000,000 shares of our Class B Common Stock (each of which is entitled to 1,000,000 votes per share) and 25,000 shares of our Class A Common Stock. Accordingly, the holders of Shares of our Class A Common Stock issued pursuant to this Offering Circular should not expect to be able to influence any decisions by our management through the voting power of such Class A Common Stock.

Our Class B Common Stock may only be held by holders of Class A Units of Holdings or shares of our Class A Common Stock. Shares of our Class B Common Stock will be cancelled upon being transferred to any person not holding Class A Common Stock our Class A Units of Holdings.

We do not expect to create any additional classes of our common stock during the next 12 months, but we are not limited from creating additional classes which may have preferred dividend, voting and/or liquidation rights or other benefits not available to holders of our common stock.

We do not expect to declare dividends for holders of our common stock in the foreseeable future. Dividends will be declared, if at all (and subject to rights of holders of additional classes of securities, if any), in the discretion of our Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of our capital stock, subject to the provisions of law, our bylaws and our certificate of incorporation. Before payment of any dividend, there may be set aside out of any of our funds available for dividends such sums as our Board of Directors, in its absolute discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any of our property, for future repurchases of our shares if we hereafter adopt a share repurchase program, or for such other purposes as our Board of Directors shall deem in our best interests.

The minimum subscription that will be accepted from an investor is generally $500, but we reserve the right to accept purchases of less than $500 in our sole discretion.

A subscription for Shares in this Offering may be made only by entering into a subscription agreement with us (electronically or in writing). The execution and tender of the documents required, as detailed in the materials, constitutes a binding offer to purchase the number of Shares stipulated therein and an agreement to hold the offer open until we accept or reject the offer, whichever occurs first.

We reserve the unqualified discretionary right to reject any subscription for Shares, in whole or in part. Our acceptance of your subscription will be effective when an authorized representative of the Company issues you written or electronic notification that the subscription was accepted.

There are no liquidation rights, preemptive rights, redemption provisions, sinking fund provisions, impacts on classification of the Board of Directors where cumulative voting is permitted or required related to our common stock, provisions discriminating against any existing or prospective holder of our common stock as a result of such stockholder owning a substantial amount of securities, or rights of stockholders that may be modified otherwise than by a vote of a majority or more of the shares outstanding, voting as a class defined in any corporate document as of the date of filing (it being understood that our Class A Common Stock and Class B Common Stock will generally vote together as a single class). Holders of membership interests of VictoryBase Holdings LLC have the right to convert such interests into shares of our Class A Common Stock as detailed above in this Offering Circular. Our common stock will not be subject to further calls or assessment by us. There are no restrictions on alienability of our common stock in the corporate documents other than those disclosed in this Offering Circular. At this time, we have engaged TWO12 Stock Transfer, LLC to serve as our transfer agent and registrant for the Shares. For additional information regarding the Shares, please review our bylaws, which are attached to this Offering Circular.

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**Exclusive Forum**

**Jury Trial Waiver**

The subscription agreement provides that each party to the subscription agreement waives the right to a jury trial of any claim they may have against the other arising out of or relating to the subscription agreement. If we were to oppose a jury trial demand based on such waiver, the court would determine whether the waiver was enforceable based upon the facts and circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. You will be subject to these provisions of the subscription agreement to the extent permitted by applicable law. The waiver of the right to a jury trial contained in the subscription agreement is not intended to be deemed a waiver by you of the Company's compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

**Arbitration**

**Fee-Shifting**

Our subscription agreements include a provision that provides that if the Company is a prevailing party in any legal proceeding brought by you as a result of a dispute under such agreement, the Company will be entitled to recover from you all costs of the proceeding and reasonable attorney fees, unless otherwise specifically prohibited by statute. The fee-shifting provision of the subscription agreements are not intended to be deemed a waiver by you of the Company's compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

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**DISQUALIFYING EVENTS DISCLOSURE**

Regulation A promulgated under the Securities Act prohibits an issuer from claiming an exemption from registration of its securities under such rule if the issuer, any of its predecessors, any affiliated issuer, any director, executive officer, other officer participating in the offering of the interests, general partner or managing member of the issuer, any beneficial owner of 20% or more of the voting power of the issuer's outstanding voting equity securities, any promoter connected with the issuer in any capacity as of the date hereof, any investment manager of the issuer, any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of the issuer's interests, any general partner or managing member of any such investment manager or solicitor, or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor has been subject to certain "Disqualifying Events" described in Rule 506(d)(1) of Regulation D subsequent to September 23, 2013, subject to certain limited exceptions. We are required to exercise reasonable care in conducting an inquiry to determine whether any such persons have been subject to such Disqualifying Events and is required to disclose any Disqualifying Events that occurred prior to September 23, 2013 to investors in the Company. We believe that we have exercised reasonable care in conducting an inquiry into Disqualifying Events by the foregoing persons, and we are aware of the no such Disqualifying Events.

It is possible that (a) Disqualifying Events may exist of which we are not aware, and (b) the SEC, a court, or other finder of fact may determine that the steps that we have taken to conduct our inquiry were inadequate and did not constitute reasonable care. If such a finding were made, we may lose its ability to rely upon exemptions under Regulation A, and, depending on the circumstances, may be required to register this Offering of our Class A Common Stock with the SEC and under applicable state securities laws or to conduct a rescission offer with respect to the securities sold in this Offering.

**INVESTOR ELIGIBILITY STANDARDS**

The Shares will be sold only to a person who certifies that (i) such person is an accredited investor, or (ii) the aggregate annual purchases by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. In the case of sales to fiduciary accounts (Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified Pension/Profit Sharing Plans or Trusts), the above suitability standards must be met by the fiduciary account, the beneficiary of the fiduciary account, or by the donor who directly or indirectly supplies the funds for the purchase of Shares. These standards represent minimum suitability requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in the Company is suitable for such persons.

You must represent in writing that you meet the applicable requirements set forth above and in your subscription agreement.

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**SECTION F/S<br> FINANCIAL STATEMENTS**

Combined Financial Statements and Report of Independent Certified Public Accountants and Supplementary Information

**VictoryBase Corporation and Affiliates**

December 31, 2021 and 2020

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**VictoryBase Corporation and Affiliates**

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| | |
|:---|:---|
| **Table of Contents** | |
| [Independent Auditor's Report](#b_001) | [58-59](#b_001) |
| [Combined Balance Sheets](#b_002) | [60](#b_002) |
| [Combined Statements of Operations](#b_003) | [61](#b_003) |
| [Combined Statements of Cash Flows](#b_004) | [62](#b_004) |
| [Combined Statements of Stockholder's Equity (Deficit)](#b_005) | [63](#b_005) |
| [Notes to Combined Financial Statements](#b_006) | [64-69](#b_006) |
| Supplementary Information: |  |
| &nbsp;&nbsp;&nbsp;[Combined Balance Sheet](#b_007) | [70](#b_007) |
| &nbsp;&nbsp;&nbsp;[Combined Statement of Operations](#b_008) | [71](#b_008) |

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![](image_003.jpg)

**Independent Auditor's Report**

Board of Directors and Stockholder

**VictoryBase Corporation and Affiliates** 

**Opinion**

We have audited the accompanying combined financial statements of **VictoryBase Corporation and Affiliates** (the "Company"), which comprise the combined balance sheets as of December 31, 2021 and 2020, and the related combined statements of operations, changes in stockholders' equity (deficit), and cash flow for the year ended December 31, 2021 and the period from August 13, 2020 to December 31, 2020, and the related notes to the combined financial statements.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Combined Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

**Responsibilities of Management for the Combined Financial Statements**

Management is responsible for the preparation and fair presentation of the combined financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of combined financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the combined financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the combined financial statements are available to be issued.

**Auditor's Responsibilities for the Audit of the Combined Financial Statements**

Our objectives are to obtain reasonable assurance about whether the combined financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the combined financial statements.

**McNAMARA and ASSOCIATES, PLLC CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES**

**also d/b/a ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES**

**TAMPA BAY**: 4920 W Cypress Street, Suite 102 \| Tampa, FL 33607 \| Office: 813.443.5048 \| Fax: 813.443.5053

**JACKSONVILLE**: 4720 Salisbury Road, Suite 223 \| Jacksonville, FL 32256 \| Office: 888.410.2323 \| Fax: 813.443.5053

**ORLANDO:** 1800 Pembrook Drive, Suite 300 \| Orlando, FL 32810 \| Office: 888.410.2323 \| Fax: 813.443.5053

**SOUTH FLORIDA**: 2000 Banks Road, Suite 218 \| Margate, FL 33063 \| Office: 754.800.3400 \| Fax: 813.443.5053

www.assurancedimensions.com

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![](image_003.jpg)

In performing an audit in accordance with generally accepted auditing standards, we:

● Exercise professional judgment and maintain professional skepticism throughout the audit.

● Identify and assess the risks of material misstatement of the combined financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the combined financial statements.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.

● Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the combined financial statements.

● Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

**Report on Supplemental Schedules**

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying supplemental schedules are presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Very truly yours,

MCNAMARA AND ASSOCIATES, PLLC

![](image_004.jpg)

Tampa, Florida

July 7, 2022

**McNAMARA and ASSOCIATES, PLLC CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES**

**also d/b/a ASSURANCE DIMENSIONS CERTIFIED PUBLIC ACCOUNTANTS & ASSOCIATES** 

**TAMPA BAY**: 4920 W Cypress Street, Suite 102 \| Tampa, FL 33607 \| Office: 813.443.5048 \| Fax: 813.443.5053

**JACKSONVILLE**: 4720 Salisbury Road, Suite 223 \| Jacksonville, FL 32256 \| Office: 888.410.2323 \| Fax: 813.443.5053

**ORLANDO:** 1800 Pembrook Drive, Suite 300 \| Orlando, FL 32810 \| Office: 888.410.2323 \| Fax: 813.443.5053

**SOUTH FLORIDA**: 2000 Banks Road, Suite 218 \| Margate, FL 33063 \| Office: 754.800.3400 \| Fax: 813.443.5053

www.assurancedimensions.com

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| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Combined Balance Sheets** |
| **As of December 31, 2021 and 2020** |

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| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;**Assets** | **2021** | **2020** |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $149546 | $2000 |
| &nbsp;&nbsp;&nbsp;Prepaid offering costs | 167366 | 85364 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 316912 | 87364 |
| Property and equipment, net | 6055347 |  |
| Other assets | 327528 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $6699787 | $87364 |
| &nbsp;&nbsp;&nbsp;**<u>Liabilities and Stockholder's Equity(Deficit)</u>** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $2818 | $— |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 131794 |  |
| &nbsp;&nbsp;&nbsp;Related party payable | 455631 | 229602 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 590243 | 229602 |
| Notes payable | 2643201 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 3233444 | 229602 |
| Stockholder's equity (deficit) |  |  |
| &nbsp;&nbsp;&nbsp;Class A common stock, 10,000,000 authorized 25,000 and 1,000,000 outstanding as of December 31, 2021 and 2020, respectively | 25 | 1000 |
| &nbsp;&nbsp;&nbsp;Class B common stock, 10,000,000 authorized 1,000,000 outstanding as of December 31, 2021 and 2020 | 1000 | 1000 |
| &nbsp;&nbsp;&nbsp;Additional paid in capital | 975 |  |
| &nbsp;&nbsp;&nbsp;Member's equity | 3672575 |  |
| &nbsp;&nbsp;&nbsp;Retained deficit | (208232) | (144238) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholder's equity(deficit) | 3466343 | (142238) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity(deficit) | $6699787 | $87364 |

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The accompanying notes are an integral part of these financial statements.

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| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Combined Statements of Operations** |
| **For the Year Ended December 31, 2021 and from August 13, 2020 to December 31, 2020** |

---

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Revenues | $249098 | $— |
| Operating expense |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation expense | 158562 |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 143352 | 144238 |
| &nbsp;&nbsp;&nbsp;Maintenance expense | 41167 |  |
| &nbsp;&nbsp;&nbsp;Property tax expense | 17249 |  |
| Total operating expenses | 360330 | 144238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income (loss) | (111232) | (144238) |
| Other income (expense): |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | (28301) |  |
|  | (28301) |  |
| Net income before income taxes | (139533) | (144238) |
| Income tax benefit (expense) |  |  |
| Net income | (139533) | (144238) |

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The accompanying notes are an integral part of these financial statements.

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| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Combined Statements of Cash Flows** |
| **For the Year Ended December 31, 2021 and from August 13, 2020 to December 31, 2020** |

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| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| **Cash from operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(139533) | $(144238) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 158562 |  |
| &nbsp;&nbsp;&nbsp;Increase (decrease) in cash due to changes in: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 2818 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 131794 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 153641 | (144238) |
| **Cash flows from investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Escrow deposits | (327528) |  |
| &nbsp;&nbsp;&nbsp;Net purchase of property and equipment | (6213909) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used by investing activities | (6541437) |  |
| **Cash flows from financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from notes payable | 2643201 |  |
| &nbsp;&nbsp;&nbsp;Contribution by shareholder | 6102857 | 2000 |
| &nbsp;&nbsp;&nbsp;Distributions to shareholder | (2354743) |  |
| &nbsp;&nbsp;&nbsp;Related party payable | 226029 | 229601 |
| &nbsp;&nbsp;&nbsp;Prepaid offering costs | (82002) | (85363) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 6535342 | 146238 |
| **Net increase in cash** | 147546 | 2000 |
| **Cash, beginning of period** | 2000 |  |
| **Cash, end of period** | $149546 | $2000 |
| Supplemental Disclosure of Cash Flow Information |  |  |
| &nbsp;&nbsp;&nbsp;Cash payments for interest | $28301 | $— |
| &nbsp;&nbsp;&nbsp;Cash payments for taxes | $— | $— |
| Non-cash financing activities Share return | $975 | $**—** |

---

The accompanying notes are an integral part of these financial statements.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Combined Statements of Stockholders' Equity (Deficit)** |
| **For the Year Ended December 31, 2021 and from August 13, 2020 to December 31, 2020** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A Common Stock** | **Class A Common Stock Par $.001** | **Class B Common Stock** | **Class B Common Stock Par $.001** | **Additional Paid in Capital** | **Retained Deficit** | **Noncontrolling Interest** | **Total Equity** |
| Balance, August 13, 2020 |  | $— |  | $— | $— | $— | $— | $— |
| Class A share issuance | 1000000 | 1000 |  |  |  |  |  | 1000 |
| Class B share issuance |  |  | 1000000 | 1000 |  |  |  | 1000 |
| Net loss |  |  |  |  |  | (144238) |  | (144238) |
| Balance, December 31, 2020 | 1000000 | $1000 | 1000000 | $1000 | $— | $(144238) | $— | $(142238) |
| Contribution by shareholder |  |  |  |  |  |  | 6102857 | 6102857 |
| Share forfeiture | (975000) | (975) |  |  | 975 |  |  |  |
| Distributions to shareholder |  |  |  |  |  |  | (2354743) | (2354743) |
| Net loss |  |  |  |  |  | (63994) | (75539) | (139533) |
| Balance, December 31, 2021 | 25000 | $25 | 1000000 | $1000 | $975 | $(208232) | $3672575 | $3466343 |

---

The accompanying notes are an integral part of these financial statements.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Notes to Combined Financial Statements** |
| **December 31, 2021 and 2020** |

---

**Note A – Nature of Business and Organization**

VictoryBase Corporation and Affiliates refers to the combined accounts of the following group of companies:

VictoryBase Corporation and Affiliates ("VBC"); VictoryBase Holdings LLC ("VBH"); and VictoryBase SC1 LLC ("VBS") (hereinafter collectively referred to as the "Company").

The following summarizes the background of each of the companies included in the accompanying combined financial statements:

● VBC was incorporated in August 2020 in the State of Delaware. Headquartered in Southlake, Texas. The Company makes residential real estate assets available for occupancy by its customers under base agreements.

● VBH was formed in December 2020 as a Texas limited liability company. The Company is a holding company for VBS and grants VBC and its customers the right to occupy residential real estate assets controlled by VBH under one or more control agreements.

● VBS was formed in February 2021 as a Texas limited liability company. The Company purchases and holds residential real estate assets and makes such assets available for control by VBH under one or more control agreements.

**Note B – Significant Accounting Policies**

The combined financial statements are prepared in accordance with accounting principles generally accepted in the United States of America.

**Basis of Presentation**

The accompanying combined financial statements include the accounts of VBC, VBH and VBS, which are under common ownership and management and are related in their operations. All significant intercompany balances and transactions have been eliminated in combination.

**Recently Issued Accounting Standards Not Yet Adopted**

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, *Leases (Topic 842),* intended to improve financial reporting about leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. However, unlike current GAAP—which requires only capital leases to be recognized on the balance sheet—the new ASU will require both types of leases to be recognized on the balance sheet. The ASU on leases will take effect for all non-public companies for fiscal years beginning after December 15, 2021.

On December 18, 2019, FASB issued Accounting Standards Update ASU 2019-12, Income Taxes (Topic 740), on Simplifying the Accounting for Income Taxes. The decisions reflected in the ASU update specific areas of ASC 740, Income Taxes, to reduce complexity while maintaining or improving the usefulness of the information provided to users of combined financial statements. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company does not believe that adoption will have a material impact on the combined financial statements.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the combined financial statements upon adoption.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Notes to Combined Financial Statements** |
| **December 31, 2021 and 2020** |

---

**Note B – Significant Accounting Policies (continued)**

**Cash and Cash Equivalents**

The Company considers all highly liquid instruments with an original maturity of less than three months to be cash and cash equivalents. The Company places its temporary cash investments with high quality financial institutions. At times, such investments may be in excess of FDIC insurance limits. The Company does not believe it is exposed to any significant credit risk on cash and cash equivalents.

**Property and Equipment**

Property and equipment are stated at cost. Major additions and betterments are charged to the property accounts while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expenses currently. When property or equipment is sold or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in income.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of estimated useful lives or the lease term, while all other assets are depreciated over estimated useful lives.

**Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of**

Long-lived assets such as property, plant and equipment and intellectual property subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If this review reveals an indicator of impairment, as determined based on estimated undiscounted cash flows, the carrying amounts of the related long-lived assets are adjusted to fair value. Management has determined that there has been no impairment in the carrying value of its long-lived assets as of December 31, 2021 and 2020.

**Revenue Recognition**

All revenues are recorded in accordance with ASC 606, Revenue from Contracts with Customers, which is recognized when:

(i) a contract with a customer has been identified, (ii) the performance obligation(s) in the contract have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to each performance obligation in the contract, and (v) the Company has satisfied the applicable performance obligation at a point in time.

Contracts are established with VBC's customers directly. The Company has determined that each base agreement with VBC's customers has one performance obligation. The Company recognizes all revenue at a point in time when the Company's performance obligation is completed. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. Payment is received once approved by the customer in accordance with each contract's payment terms. Sales taxes and other similar taxes are excluded from revenue.

**Income Taxes**

The Company accounts for income taxes under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 740, Income Taxes ("ASC 740"). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company adopted the income tax standard for uncertain tax positions. As a result of this implementation, the Company evaluated its tax positions and determined that it has no uncertain tax positions as of December 31, 2021 and 2020. The Company's 2020 and 2021 tax years are open for examination for federal and state taxing authorities.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Notes to Combined Financial Statements** |
| **December 31, 2021 and 2020** |

---

**Note B – Significant Accounting Policies (continued)**

**Use of Estimates**

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

**Organizational, Equity Transaction and Related Costs**

Organization and equity transaction costs of the Company are initially being paid by the Company or their affiliates on behalf of the Company. These organization and equity transaction costs include all expenses to be paid by the Company in connection with the formation of the Company and the qualification of the Offering, and the marketing and distribution of shares, including, without limitation, expenses for printing, and amending offering statements or supplementing offering circulars, mailing and distributing costs, telephones, Internet and other telecommunications costs, all advertising and marketing expenses, charges of experts and fees, expenses and taxes related to the filing, registration and qualification of the sale of shares under federal and state laws, including taxes and fees and accountants' and attorneys' fees. The Company anticipates that, pursuant to the Company's Articles of Incorporation (the "Articles of Incorporation") dated August 13, 2020, and the Amendment and Restatement thereof on December 21, 2020, the Company will be obligated to reimburse the Company, or its affiliates, as applicable, for organization and offering costs paid by them on behalf of the Company.

The Company may make reimbursement payments in one or more installments.

As of December 31, 2021 and 2020, the Company has incurred organization and equity transaction costs. These costs in the amount of approximately $385,000 and $230,000 are recorded in related party payables in the accompanying balance sheet as of December 31, 2021 and 2020, respectively. The Company is confident that the equity offering will close in fiscal 2022 and has recorded prepaid equity transaction related costs as of December 31, 2021 and 2020 of approximately $167,000 and $85,000, respectively.

**Fair Value**

ASC 820-10-05 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). The three levels of the fair value hierarchy under ASC 820-10-05 are described below:

Level 1 - Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 - Inputs, other than quoted market prices in active markets that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life.

Level 3 - Prices or valuations that require unobservable inputs that are both significant to the fair measurement and unobservable. Valuation under level 3 generally involves a significant degree of judgment from the investment advisor. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for the investments existed.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Notes to Combined Financial Statements** |
| **December 31, 2021 and 2020** |

---

**Note B – Significant Accounting Policies (continued)**

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company's goodwill is considered to be a non-recurring fair value measurement.

**Note C – Property, Plant and Equipment, Net**

The Company's property, plant and equipment at December 31, 2021 and 2020 consist of the following:

---

| | | | |
|:---|:---|:---|:---|
|  | **2021** | **2020** | **Lives** |
| Houses | $6136863 | $— | 20 years |
| Furniture and fixtures | 77046 |  | 7 years |
| Total depreciable property and equipment | 6213909 |  |  |
| Less: accumulated depreciation | (158562) |  |  |
| Net property, plant, and equipment | $6055347 | $— |  |

---

Total depreciation expense for the year ended December 31, 2021 was approximately $159,000. The Company acquired 26 homes in fiscal 2021.

**Note D – Notes Payable**

On September 8, 2021 the Company entered into a Notes Payable agreement for a maximum of $7,850,000 with a financial institution for the financing of 48 homes. The Notes Payable had a balance of approximately $2,643,000 as of December 31, 2021. The Notes Payable accrues interest at prime plus 1.50% (4.75% as of December 31, 2021) with interest payable on a monthly basis and principal and interest based on a 30 year amortization of the note beginning 25 months after the September 8, 2021 loan commencement date. The loan matures with a lump sum payment of the remaining principal on the maturity date of September 5, 2024. The Company has two twelve month extension options available assuming the proper extension is filed and the Company is not in default of the loan.

Future maturities of senior term notes payable at December 31, 2021 are as follows:

---

| | |
|:---|:---|
| **Year Ending <br> December 31,** | |
| 2022 | $— |
| 2023 | 37000 |
| 2024 | 2606201 |
| Total | $2643201 |

---

**Note E – Related Party Transactions**

The Company has a related party payable to its majority shareholder for approximately $456,000 and $230,000 as of December 31, 2021 and 2020, respectively. These funds were provided to the combined entities to begin operations.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Notes to Combined Financial Statements** |
| **December 31, 2021 and 2020** |

---

**Note F – Stockholder's Equity**

**Common Stock**

As of December 31, 2020, the total number of shares of all classes of stock that VBC is authorized to issue is Eleven Million (11,000,000), consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;1. Ten
 Million (10,000,000) shares of Class A common stock, with a par value of $0.001 per share (the "Class A Common Stock");
 and

&nbsp;&nbsp;&nbsp;&nbsp;2. One
 Million (1,000,000) shares of Class B common stock, with a par value of $0.001 per share (the "Class B Common Stock," and
 together with the Class A Common Stock, the "Common Stock").

Each share of Class A Common Stock shall entitle the record holder thereof to one vote on all matters on which stockholders generally are entitled to vote.

Each share of Class B Common Stock shall entitle the record holder thereof to one million (1,000,000) votes on all matters on which stockholders generally are entitled to vote.

Except as otherwise required in the Amended and Restated Articles of Incorporation or by applicable law, the holders of Common Stock shall vote together as a single class on all matters.

Except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to the Amended and Restated Articles of Incorporation.

The Class A Common Stock, as a class, holds 100% of the economic interests of the Company. The Class B Common Stock, as a class, holds virtually all of the voting interest in the Company. The Company sold 1,000,000 Class A Common Stock to Victory Base RE, LLC ("VBRE") for $1,000 and has sold 1,000,000 shares of Class B Common Stock, non-economic super voting (1,000,000 votes per share) shares to VBRE for $1,000 during the period from inception to December 31, 2020. During fiscal 2021 an agreement was reached with the sole shareholder to forfeit 975,000 shares of Class A stock.

During the year ended December 31, 2021, a shareholder contributed approximately $6,300,000 and received distributions back of approximately $2,400,000 related to VBS.

**Note G – Income Taxes**

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Income tax provision (benefit) at statutory rate of 21% | $(13500) | $(30290) |
| State taxes at 0%, net of federal benefit |  |  |
| Nondeductible items |  |  |
| Subtotal | (13500) | (30290) |
| Change in valuation allowance | 13500 | 30290 |
| Income Tax Expense | $— |  |
| Net deferred tax assets and liabilities were comprised of the following: |  |  |
| Net Operating Losses | $43790 | 30290 |
| Valuation allowance | (43790) | (30290) |
| Deferred tax asset, net | $— | $— |

---

As of December 31, 2021, the Company has estimated tax net operating loss carryforwards of approximately $208,000 which can be carried forward indefinitely. Utilization of these losses may be limited in accordance with IRC Section 382 in the event of certain ownership shifts.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Notes to Combined Financial Statements** |
| **December 31, 2021 and 2020** |

---

**Note H – Commitments and Contingencies**

**Contingencies**

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

As of December 31, 2021, the Company had a commitment to purchase an additional 22 houses for approximately $4,900,000.

**Note I – Subsequent Events**

Subsequent to December 31, 2021, the Company purchased 22 more homes for approximately $4,900,000. These homes were purchased using the Company's remaining availability on its Notes Payable.

Management has assessed subsequent events through July 7, 2022 the date on which the financial statements were available to be issued.

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Combined Balance Sheet** |
| **As of December 31, 2021** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase Corporation** | **VictoryBase Holdings LLC** | **VictoryBase SC1 LLC** | **Eliminations** | **Combined** |
| &nbsp;&nbsp;&nbsp;**<u>Assets</u>** |  |  |  |  |  |
| Current assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $72564 | $— | $76982 | $— | $149546 |
| &nbsp;&nbsp;&nbsp;Prepaid offering costs | 167366 |  |  |  | 167366 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 239930 |  | 76982 |  | 316912 |
| Property and equipment, net |  |  | 6055347 |  | 6055347 |
| Escrow for future home purchases |  |  | 327528 |  | 327528 |
| &nbsp;&nbsp;&nbsp;Total assets | $239930 | $— | $6459857 | $— | $6699787 |
| &nbsp;&nbsp;&nbsp;**<u>Liabilities and Stockholders' Equity</u>** |  |  |  |  |  |
| Current liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $— | $— | $2818 | $— | $2818 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 60960 |  | 70834 |  | 131794 |
| &nbsp;&nbsp;&nbsp;Related party payable | 385202 |  | 70429 |  | 455631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 446162 |  | 144081 |  | 590243 |
| Notes payable |  |  | 2643201 |  | 2643201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 446162 |  | 2787282 |  | 3233444 |
| Stockholders' equity |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Common stock Class A | 25 |  |  |  | 25 |
| &nbsp;&nbsp;&nbsp;Common stock Class B | 1000 |  |  |  | 1000 |
| &nbsp;&nbsp;&nbsp;APIC | 975 |  |  |  | 975 |
| &nbsp;&nbsp;&nbsp;Retained earnings | (208232) |  | (75538) |  | (283770) |
| &nbsp;&nbsp;&nbsp;Members' equity |  |  | 3748113 |  | 3748113 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | (206232) |  | 3672575 |  | 3466343 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $239930 | $— | $6459857 | $— | $6699787 |

---

See accompanying accountants' report

[**Table of Contents**](#toc)

---

| |
|:---|
| **VictoryBase Corporation and Affiliates** |
| **Combined Statement of Operations** |
| **As of December 31, 2021** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase Corporation** | **VictoryBase Holdings LLC** | **VictoryBase SC1 LLC** | **Eliminations** | **Combined** |
| Revenues | $249098 | 240891 | 240891 | $(481782) | $249098 |
| Operating expenses |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation expense |  |  | 158562 |  | 158562 |
| &nbsp;&nbsp;&nbsp;General and administrative | 72201 |  | 71151 |  | 143352 |
| &nbsp;&nbsp;&nbsp;Maintenance expense |  |  | 41167 |  | 41167 |
| &nbsp;&nbsp;&nbsp;Property tax expense |  |  | 17249 |  | 17249 |
| &nbsp;&nbsp;&nbsp;Subcontrol agreement expense | 240891 | 240891 |  | (481782) |  |
|  | 313092 | 240891 | 288129 | (481782) | 360330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating loss | (63994) |  | (47238) |  | (111232) |
| Other income (expense) |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  | (28301) |  | (28301) |
|  |  |  | (28301) |  | (28301) |
| Net income (loss) before taxes | (63994) |  | (75539) |  | (139533) |
| Income tax benefit |  |  |  |  |  |
| Net income (loss) | (63994) |  | (75539) |  | (139533) |

---

See accompanying accountants' report

[**Table of Contents**](#toc)

**INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**VictoryBase Corporation and Affiliates** 

**Combined Balance Sheet**

**As of June 30, 2022 (UNAUDITED) & December 31, 2021 (AUDITED)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase<br> Corporation** | **VictoryBase<br> Holdings LLC** | **VictoryBase<br> SC1 LLC** | **Combined Total<br> 30-Jun-22** | **Combined Total<br> 31-Dec-21** |
| **<u>Assets</u>** |  |  |  |  |  |
| Current assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $201608 | $- | $122840 | $324448 | $149546 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 5343 |  |  | 5343 |  |
| &nbsp;&nbsp;&nbsp;Related party receivable |  |  | 91298 | 91298 | 167366 |
| &nbsp;&nbsp;&nbsp;Prepaid offering costs | 198548 | - | - | 198548 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 405499 |  | 214137 | 619636 | 316912 |
| Property and equipment, net |  |  | 10584157 | 10584157 | 6055347 |
| Other Assets | - | 308 | 163617 | 163925 | 327528 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $405499 | $308 | $10961911 | $11367718 | 6699787 |
| **<u>Liabilities and Stockholders' Equity</u>** |  |  |  |  |  |
| Current liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $- | $- | $6239 | $6239 | 2818 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 111754 |  | 76571 | 188325 | 83999 |
| &nbsp;&nbsp;&nbsp;Related party payable | 405809 | 508 | 7616 | 413933 | 455631 |
| &nbsp;&nbsp;&nbsp;Security Deposits from Residents | 108470 | - | - | 108470 | 47795 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 626033 | 508 | 90426 | 716967 | 590243 |
| Notes payable | - | - | 7657979 | 7657979 | 2643201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 626033 | 508 | 7748405 | 8374946 | 3233444 |
| Stockholders' equity |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Common stock Class A | 25 |  |  | 25 | 25 |
| &nbsp;&nbsp;&nbsp;Common stock Class B | 1000 |  |  | 1000 | 1000 |
| &nbsp;&nbsp;&nbsp;APIC |  |  | 3420585 | 3420585 | 3672575 |
| &nbsp;&nbsp;&nbsp;Retained earnings | (222534) | (200) | (207079) | (429813) | (208232) |
| &nbsp;&nbsp;&nbsp;Members' equity | 975 | - | - | 975 | 975 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | (220534) | (200) | (207079) | 2992772 | 3466343 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $405499 | $308 | $7541327 | $11367718 | 6699787 |

---

[**Table of Contents**](#toc)

**VictoryBase Corporation and Affiliates** 

**Combined Statement of Operations** 

**For the period ending June 30, 2022 & June 30, 2021**

**(UNAUDITED)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase<br> Corporation** | **VictoryBase<br> Holdings LLC** | **VictoryBase <br>SC1 LLC** | **Eliminations** | **30-Jun-22<br> Combined** | **30-Jun-21<br> Combined** |
| Revenues | $434925 | $430027 | $430027 | $(860054) | $434925 | $10418 |
| Operating expenses |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation expense |  |  | 371974 |  | 371974 | 18331 |
| &nbsp;&nbsp;&nbsp;General and administrative | 19200 |  | 142230 |  | 161430 | 102876 |
| &nbsp;&nbsp;&nbsp;Maintenance expense |  |  | 47364 |  | 47364 | 310 |
| &nbsp;&nbsp;&nbsp;Property tax expense |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Subcontrol/Control agreement expense | 430027 | 430027 | - | (860054) | - | - |
|  | 449227 | 430027 | 561567 | (860054) | 580767 | 121518 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating loss | (14302) | - | (131541) | - | (145842) | (111100) |
| Other income (expense) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense | - | - | - | - | - | - |
|  | (14302) | - | (131541) | - | (145842) | (111100) |
| Net income (loss) before taxes | (14302) | - | (131541) | - | (145842) | (111100) |
| Income tax benefit | - | - | - | - | - | - |
| Net income (loss) | $(14302) | $- | $(131541) | $- | $(145842) | $(111100) |

---

[**Table of Contents**](#toc)

**VictoryBase Corporation and Affiliates** 

**Combined Statements of Stockholders' Equity (Deficit)**

**For the period from December 31, 2020 to December 31, 2021 (AUDITED) and**

**From December 31, 2021 to June 30, 2022 (UNAUDITED)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Class A<br> Common Stock** | **Class A<br> Common Stock<br> Par $.001** | **Class B<br> Common Stock** | **Class B<br> Common Stock<br> Par $.001** | **Additional<br> Paid in<br> Capital** | **Retained<br> Deficit** | **Noncontrolling<br> Interest** | **Total<br> Equity** |
| Balance, December 31, 2020 | 1000000 | $1000 | 1000000 | $1000 | $- | $(144238) | $- | $(142238) |
| &nbsp;&nbsp;&nbsp;Contribution by shareholder |  |  |  |  |  |  | 6102857 | 6102857 |
| &nbsp;&nbsp;&nbsp;Share forfeiture | (975000.00) | (975.00) |  |  | 975 |  |  |  |
| &nbsp;&nbsp;&nbsp;Distributions to shareholder |  |  |  |  |  |  | (2354743) | (2354743) |
| &nbsp;&nbsp;&nbsp;Net loss | - | - | - | - | - | (63994) | (75539) | (139533) |
| Balance, December 31, 2021 | 25000 | $25 | 1000000 | $1000 | $975 | $(208232) | $3672575 | $3466343 |
| &nbsp;&nbsp;&nbsp;Contribution by shareholder |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Share forfeiture |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Distributions to shareholder |  |  |  |  |  |  | (327528) | (327528) |
| &nbsp;&nbsp;&nbsp;Net loss | - | - | - | - | - | (14302) | (131541) | (145842) |
| Balance, June 30, 2022 | 25000 | $25 | 1000000 | $1000 | $975 | $(222534) | $3213506 | $2992973 |

---

[**Table of Contents**](#toc)

**VictoryBase Corporation and Affiliates**

**Combined Statements of Cash Flows** 

**For the period ending June 30, 2022 & June 30, 2021**

**(UNAUDITED)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase<br> Corporation** | **VictoryBase<br> Holdings LLC** | **VictoryBase <br>SC1 LLC** | **Total<br> 30-Jun-22** | **Total<br> 30-Jun-21** |
| **Cash from operating activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net Income | $(14302) | $- | $(131541) | $(145842) | $(111100) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income provided by operating activities: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  |  | 371974 | 371974 | 18331 |
| &nbsp;&nbsp;&nbsp;Increase (decrease) in cash due to changes in: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts Receivable | (5343) |  |  | (5343) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable |  |  | 3421 | 3421 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | 159264 | - | 5738 | 165001 | 35352 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 139619 | - | 249591 | 389211 | (57416) |
| **Cash flows from investing activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Escrow deposits |  |  | 327528 | 327528 | (795844) |
| &nbsp;&nbsp;&nbsp;Net purchase of property and equipment | - | - | (5064402) | (5064402) | (2955190) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used by investing activities | - | - | (4736873) | (4736873) | (3751034) |
| **Cash flows from financing activities** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from notes payable |  |  | 5014777 | 5014777 |  |
| &nbsp;&nbsp;&nbsp;Contribution by shareholder |  |  |  |  | 3675024 |
| &nbsp;&nbsp;&nbsp;Distributions to shareholder |  |  | (327528) | (327528) |  |
| &nbsp;&nbsp;&nbsp;Related party receivable |  |  | (91298) | (91298) | (8070) |
| &nbsp;&nbsp;&nbsp;Related party payable | 20607 |  | (62812) | (42205) | 181675 |
| &nbsp;&nbsp;&nbsp;Prepaid offering costs | (31182) |  |  | (31182) | (21746) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | (10575) |  | 4533139 | 4522564 | 3826884 |
| **Net increase in cash** | 129044 |  | 45858 | 174902 | 18434 |
| **Cash, beginning of period** | 72564 | - | 76982 | 149546 | 2000 |
| **Cash, end of period** | $201608 | $- | $122840 | $324448 | $20434 |
| Supplemental Disclosure of Cash Flow Information |  |  |  |  |  |
| Cash payments for interest |  |  | $113697 | $113697 | $- |
| Cash payments for taxes |  |  |  |  |  |
| Non-cash financing activities Share return |  |  |  |  |  |

---

[**Table of Contents**](#toc)

**UNAUDITED, PRO FORMA FINANCIAL STATEMENTS** 

**Pro Forma Financial Information for Assets acquired by VictoryBase NY1, LLC**

As noted above in this Offering Circular, in February 2023, our subsidiary, VictoryBase NY1, LLC ("NY1"), acquired a multi-unit residential real estate property in Sackets Harbor, New York known as the Creekside Lane Apartments ("Creekside") for approximately $7.9 million. The purchase price was paid as follows: (i) approximately $5.9 million in cash, plus (ii) the issuance of $2 million of preferred membership interests of NY1 to the seller of such properties. NY1 borrowed $5.9 million from a savings bank to finance the cash portion of the purchase price. NY1 incurred approximately $300,000 in closing costs in connection with this acquisition.

The following unaudited pro forma condensed combined financial information present the combination of the financial information of the Company and Creekside adjusted to give effect to the anticipated acquisition and related transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Rule 8-05 of Regulation S-X.

The unaudited pro forma condensed combined balance sheet as of June 30, 2022, combines the historical balance sheet of the Company and the unaudited historical balance sheet of Creekside on a pro forma basis as if the acquisition and related transactions, summarized below, had been consummated on June 30, 2022. The unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2022, and the year ended December 31, 2021, combine the historical statements of operations of the Company and unaudited historical statements of operations of Creekside for such periods on a pro forma basis as if the acquisition and related transactions, summarized below, had been consummated on January 1, 2021, the beginning of the earliest period presented:

● The formation of NY1 as a wholly owned subsidiary of Holdings;

● The amendment of the Limited Liability Company Agreement of Holdings to create a new class of units of Holdings called Class C Units;

● The sale and issuance of 30,000 Class C Units of Holdings to VBRE for $300,000;

● The contribution of $300,000 from Holdings to NY1;

● NY1's acquisition of Creekside in exchange for (i) approximately $5.9 million in cash, plus (ii) the issuance of $2 million of preferred membership interests of NY1 to the seller of Creekside; and

● NY1 borrowing $5.9 million from a savings bank to finance the cash portion of the purchase price of Creekside.

[**Table of Contents**](#toc)

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give pro forma effect to events that are: (i) directly attributable to the acquisition; (ii) factually supportable; and (iii) with respect to the statements of operations, expected to have a continuing impact on the Company's results following the completion of the acquisition.

The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with:

● the accompanying notes to the unaudited pro forma condensed combined financial statements;

● the historical audited financial statements of the Company as of December 31, 2021, and the historical unaudited financial statements of the Company for the period from January 1, 2022, through June 30, 2022, and the related notes, each of which is incorporated by reference; and

● other information relating to the Company and Creekside contained in this Offering Circular.

Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial statements are described in the accompanying notes. The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the acquisition occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial statements do not purport to project the future operating results or financial position of the Company following the completion of the acquisition. The unaudited pro forma adjustments represent management's estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

**Creekside's Historic Statements of Operations for the 12 months ending December 31, 2021, and the 6 months ending June 30, 2022**

The following historic statements of operations are the Company's best estimates of Creekside's performance during those periods based upon information provided to the Company by the seller of Creekside and the Company's estimates based upon publicly available information. The Company has not and cannot verify the accuracy or completeness of these historic statements of operations. We do not yet have final historical numbers for Creekside for 2022, so we have estimated that the revenues and expenses for the first 6 months of 2022 were exactly one half of our estimates for 2021. We have no reason to think that Creekside's results in 2022 were substantially different than the 2021 results.

[**Table of Contents**](#toc)

**Creekside Lane Apartments Estimated Historical Condensed Statement of Operations (Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **12 months ended 12/31/2021** | **6 months ended 6/30/2022** |
| Revenues | 743957 | 371979 |
| Operating expenses | 107294 | 53647 |
| Depreciation expense | 343513 | 171757 |
| General and administrative | 64289 | 32145 |
| Maintenance expense | 126731 | 63366 |
| Property tax expense | 38904 | 19452 |
| Subcontrol agreement expense |  | 0 |
|  | 680731 | 340366 |
| Operating Income/loss | 63226 | 31613 |
| Other income (expense) |  |  |
| Interest expense | (105662) | (52831) |
| Net income (loss) before taxes | (42436) | (21218) |
| Income tax benefit | 0 | 0 |
| Net income (loss) | (42436) | (21218) |

---

**Unaudited Pro Forma Combined Statements of Operations for the 12 months ending December 31, 2021, and the 6 months ending June 30, 2022**

Likewise, the following unaudited pro forma statements of operations are the Company's best estimates of the combined performance of the Company and Creekside, assuming NY1's acquisition of the Creekside occurred January 1, 2021, are based in part upon information that has been provided to the Company by the anticipated seller of Creekside. The Company has not and cannot verify the accuracy or completeness of such information provided by the anticipated seller of Creekside statements of operations.

[**Table of Contents**](#toc)

**VictoryBase Corporation and Affiliates**

**Combined Statement of Operations**

**For the Year Ended December 31, 2021**

**(UNAUDITED, PRO FORMA)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase Corporation** | **VictoryBase Holdings LLC** | **VictoryBase SC1 LLC** | **Creekside Lane Apartments** | **Eliminations** | **Combined** |
| Revenues | $249098 | 240891 | 240891 | 743957 | $(481782) | $993055 |
| Operating expenses |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation expense |  |  | 158562 | 269090 |  | 427652 |
| &nbsp;&nbsp;&nbsp;General and administrative | 72201 |  | 71151 | 64289 |  | 207641 |
| &nbsp;&nbsp;&nbsp;Maintenance expense |  |  | 41167 | 234025 |  | 275192 |
| &nbsp;&nbsp;&nbsp;Property tax expense |  |  | 17249 | 38904 |  | 56153 |
| &nbsp;&nbsp;&nbsp;Subcontrol agreement expense | 240891 | 240891 |  |  | (481782) |  |
|  | 313092 | 240891 | 288129 | 606308 | (481782) | 966638 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating gain (loss) | (63994) | (0) | (47238) | 137649 |  | 26417 |
| Other income (expense) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  | (28301) | (293768) |  | (322069) |
|  |  |  | (28301) | (293768) |  | (322069) |
| Net income (loss) before taxes | (63994) | (0) | (75539) | (156119) |  | (295652) |
| Income tax benefit |  |  |  |  |  |  |
| Net income (loss) | (63994) | (0) | (75539) | (156119) |  | (295652) |

---

See accompanying accountants' report

[**Table of Contents**](#toc)

**VictoryBase Corporation and Affiliates**

**Combined Statement of Operations** 

**For the period ending June 30, 2022**

**(UNAUDITED, PRO FORMA)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase Corporation** | **VictoryBase Holdings LLC** | **VictoryBase SC1 LLC** | **Creekside Lane Apartments** | **Eliminations** | **30-Jun-22<br> Combined** |
| Revenues | $434925 | $430027 | $430027 | $371979 | $(860054) | $806903 |
| Operating expenses |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation expense |  |  | 371974 | 171757 |  | 543731 |
| &nbsp;&nbsp;&nbsp;General and administrative | 19200 |  | 142230 | 32145 |  | 193575 |
| &nbsp;&nbsp;&nbsp;Maintenance expense |  |  | 47364 | 117013 |  | 164377 |
| &nbsp;&nbsp;&nbsp;Property tax expense |  |  |  | 19452 |  | 19452 |
| &nbsp;&nbsp;&nbsp;Subcontrol/Control agreement expense | 430027 | 430027 |  |  | (860054) |  |
|  | 449227 | 430027 | 561567 | 340367 | (860054) | 921134 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating loss | (14302) |  | (131541) | 31612 |  | (114230) |
| Other income (expense) |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  |  | (146884) |  | (146884) |
|  | (14302) |  | (131541) | (146884) |  | (292726) |
| Net income (loss) before taxes | (14302) |  | (131541) | (115272) |  | (261114) |
| Income tax benefit |  |  |  |  |  |  |
| Net income (loss) | $(14302) | $— | $(131541) | $(115272) | $— | $(261114) |

---

[**Table of Contents**](#toc)

In addition to the assumptions described above, the foregoing pro forma statements of operations are based on the following assumptions and considerations:

● The note issued to the bank to acquire Creekside is interest-only during the time periods of the pro forma financial statements.

● Depreciation expense is only an estimate. For tax purposes, we may elect to depreciate on a different rate and use different assumptions as those shown above. Depreciation of Creekside properties was based upon as an estimated value of the real property improvements of $7.4 million for 27.5 year straight line depreciation.

● All expenses of Creekside are estimates and could differ based on actual historical and future expenses.

● We anticipate that our management of Creekside will be more efficient and thus lower operating expenses. We may be unable to achieve such expense savings. Our expenses may be higher than we have estimated.

● Creekside has historically been the beneficiary of a local tax incentive program that called for Creekside to make a Payment in Lieu of Taxes that was lower than standard property taxes. This program is expiring, so we have estimated an increase in local property taxes payable.

● We anticipate a rise in interest expense as compared to historical interest expense in part because NY1 will be acquiring Creekside with a larger senior note than the seller has previously carried.

**Unaudited Pro Forma Combined Balance Sheet as of June 30, 2022**

The following is an unaudited pro forma combined balance sheet of the Company and Creekside as of June 30, 2022.

[**Table of Contents**](#toc)

**VictoryBase Corporation and Affiliates** 

**Combined Balance Sheet** 

**As of June 30, 2022**

**(UNAUDITED, PRO FORMA)** 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **VictoryBase<br> Corporation** | **VictoryBase Holdings LLC** | **VictoryBase SC1 LLC** | **Creekside Lane Apartments\*** | **Combined Total<br> 30-Jun-22** |
| &nbsp;&nbsp;&nbsp;**<u>Assets</u>** | | | | | |
| Current assets |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash | $201608 | $— | $122840 | $269456 | $593904 |
| &nbsp;&nbsp;&nbsp;Cash - Security Deposits from Residents |  |  |  | 62375 | 62375 |
| &nbsp;&nbsp;&nbsp;Accounts receivable | 5343 |  |  |  | 5343 |
| &nbsp;&nbsp;&nbsp;Related party receivable |  |  | 91298 |  | 91298 |
| &nbsp;&nbsp;&nbsp;Prepaid offering costs | 198548 |  |  |  | 198547.95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 405499 |  | 214137 | 331831 | 951467 |
| Property and equipment, net |  |  | 10584157 | 7459153 | 18043310 |
| Other Assets |  | 308 | 163617 |  | 163924.93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $405499 | $308 | $10961911 | $7790984 | $19158702 |
| &nbsp;&nbsp;&nbsp;**<u>Liabilities and Stockholders' Equity</u>** |  |  |  |  |  |
| Current liabilities |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $— | $— | $6239 | $— | $6239 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 111754 |  | 76571 |  | 188325 |
| &nbsp;&nbsp;&nbsp;Related party payable | 405809 | 508 | 7616 |  | 413933 |
| &nbsp;&nbsp;&nbsp;Security Deposits from Residents | 108470 |  |  | 62375 | 170845 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 626033 | 508 | 90426 | 62375 | 779342 |
| Notes payable |  |  | 7657979 | 5900000 | 13557979 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 626033 | 508 | 7748405 | 5962375 | 14337321 |
| Stockholders' equity |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Common stock Class A | 25 |  |  |  | 25 |
| &nbsp;&nbsp;&nbsp;Common stock Class B | 1000 |  |  |  | 1000 |
| &nbsp;&nbsp;&nbsp;APIC |  |  | 3420585 |  | 3420585 |
| &nbsp;&nbsp;&nbsp;Retained earnings | (222534) | (200) | (207079) | (271391) | (701204) |
| &nbsp;&nbsp;&nbsp;Members' equity | 975 |  |  | 2100000 | 2100975 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | (220534) | (200) | 3213506 | 1828609 | 4821381 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $405499 | $308 | $10961911 | $7790984 | $19158702 |

---

[**Table of Contents**](#toc)

Item 16. Exhibits

**INDEX TO EXHIBITS**

---

| | | | |
|:---|:---|:---|:---|
| **Description** | **Item** |  | **Exhibit** |
| [Placement Agent Agreement with Entoro Securities, LLC](vb-253g2ex1z1.htm) | Item 17.1 | # | [1.1](vb-253g2ex1z1.htm) |
| [Certificate of Incorporation](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex2z1.htm) | Item 17.2 | \* | [2.1](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex2z1.htm) |
| [Bylaws](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex2z2.htm) | Item 17.2 | \* | [2.2](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex2z2.htm) |
| Instruments defining rights of securityholders: | Item 17.4 |  |  |
| &nbsp;&nbsp;&nbsp;[Form of Subscription Agreement](vb-253g2ex4z1.htm) |  | # | [4.1](vb-253g2ex4z1.htm) |
| Material Contracts | Item 17.6 |  |  |
| &nbsp;&nbsp;&nbsp;[Tax Receivable Agreement](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex6z1.htm) |  | \* | [6.1](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex6z1.htm) |
| &nbsp;&nbsp;&nbsp;[LLC Agreement of VictoryBase Holdings LLC](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex6z2.htm)<u> </u> |  | \* | [6.2](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex6z2.htm) |
| &nbsp;&nbsp;&nbsp;[First Amendment to LLC Agreement of VictoryBase Holdings LLC](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z3.htm) |  | ^ | [6.3](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z3.htm) |
| &nbsp;&nbsp;&nbsp;[Second Amendment to LLC Agreement of VictoryBase Holdings LLC](vb-253g2ex6z4.htm) |  | # | [6.4](vb-253g2ex6z4.htm) |
| &nbsp;&nbsp;&nbsp;[Form of Indemnification Agreement](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex6z3.htm) |  | \* | [6.](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex6z3.htm)<u>5</u> |
| &nbsp;&nbsp;&nbsp;[Form of Master Control and Contribution Agreement](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z6.htm) |  | ^ | [6.6](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z6.htm) |
| &nbsp;&nbsp;&nbsp;[Contribution Agreement (to Contribute SC1 to Holdings)](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z7.htm) |  | ^ | [6.7](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z7.htm) |
| &nbsp;&nbsp;&nbsp;[Form of Sub-Control Agreement](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z8.htm) |  | ^ | [6.8](https://www.sec.gov/Archives/edgar/data/1836735/000152013823000080/vb-253g2ex6z8.htm) |
| &nbsp;&nbsp;&nbsp;[LLC Agreement of NY1](vb-253g2ex6z9.htm) |  | [#](vb-253g2ex6z9.htm) | [6.9](vb-253g2ex6z9.htm) |
| &nbsp;&nbsp;&nbsp;[NY1 Loan Agreement](vb-253g2ex6z10.htm) |  | [#](vb-253g2ex6z10.htm) | [6.10](vb-253g2ex6z10.htm) |
| &nbsp;&nbsp;&nbsp;[NY1 Loan Note](vb-253g2ex6z11.htm) |  | [#](vb-253g2ex6z11.htm) | [6.11](vb-253g2ex6z11.htm) |
| &nbsp;&nbsp;&nbsp;[SC1 Loan Agreement](vb-253g2ex6z12.htm) |  | [#](vb-253g2ex6z12.htm) | [6.12](vb-253g2ex6z12.htm) |
| &nbsp;&nbsp;&nbsp;[SC1 Loan Note](vb-253g2ex6z13.htm) |  | [#](vb-253g2ex6z13.htm) | [6.13](vb-253g2ex6z13.htm) |
| Consents | Item 17.11 |  |  |
| &nbsp;&nbsp;&nbsp;[Consent of McNamara & Associates, PLLC](vb-253g2ex11z1.htm) |  | # | [11.1](vb-253g2ex11z1.htm) |
| &nbsp;&nbsp;&nbsp;[Consent of Cantey Hanger LLP (included in Exhibit 12.1)](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex12z1.htm) |  |  | [11.2](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex12z1.htm) |
| [Legal Opinion of Cantey Hanger LLP](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex12z1.htm) | Item 17.12 | \* | [12.1](https://www.sec.gov/Archives/edgar/data/1836735/000152013821000770/vbco-1aex12z1.htm) |

---

------

\* Previously filed as exhibit to Offering Statement filed December 9, 2021. <br> ^ Previously filed as exhibit to Supplement to Offering Statement filed January 30, 2023. <br> # Filed herewith.

[**Table of Contents**](#toc)

**SIGNATURES**

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Worth, Texas, on March 31, 2023.

VICTORYBASE CORPORATION

---

| |
|:---|
| /s/ Thomas Paquin |
| Thomas Paquin |
| Chief Executive Officer |
| Principal Executive Officer |
| Principal Financial Officer |
| Principal Accounting Officer |
| Sole Director |

---

March 31, 2023

This offering statement has been signed by the following persons in the capacities and on the dates indicated.

---

| |
|:---|
| /s/ Thomas Paquin |
| Thomas Paquin |
| Chief Executive Officer |
| Principal Executive Officer |
| Principal Financial Officer |
| Principal Accounting Officer |
| Sole Director |

---

March 31, 2023

**ACKNOWLEDGEMENT ADOPTING TYPED SIGNATURES**

The undersigned hereby authenticate, acknowledge and otherwise adopt the typed signatures above and as otherwise appear in this filing and Offering.

---

| |
|:---|
| /s/ Thomas Paquin |
| Thomas Paquin |
| Chief Executive Officer |
| Principal Executive Officer |
| Principal Financial Officer |
| Principal Accounting Officer |
| Sole Director |

---

March 31, 2023

## Ex1Sa-1

![](image_005.jpg)

**ENTORO SECURITIES, LLC – REG A - PLACEMENT AGENT AGREEMENT**

---

| | |
|:---|:---|
| **Required Information and Summary** | **Required Information and Summary** |
| **Date:** | 2/7/2023 |
| **"Issuer" or Company Legal Name:** | VictoryBase Corporation |
| **Tax and Issuer/Company ID:** | EIN: 85-3850063 |
| **"Domiciled":** | Delaware |
| **"Type" of Entity:** | Corporation |
| **"Offering" Name:** | N/A |
| **[Reserved]:** |  |
| **Issuer/Company Contact Information** | **Issuer/Company Contact Information** |
| **Primary Contact:** | Thomas Paquin |
| **Authorized Signatory:** | Thomas Paquin |
| **Signatory Title:** | CEO |
| **Address:** | 550 Reserve St, suite 190, Southlake, TX 76092 |
| **Email:** | tpaquin@victorybase.com |
| **Work Number:** | N/A |
| **Mobile Number:** | 817-521-4344 |
| **[Reserved]:** |  |
| **Issuer/Company Counsel Contact Information** | **Issuer/Company Counsel Contact Information** |
| **Firm:** | Cantey Hanger LLP |
| **Primary Contact:** | Doug Clayton |
| **Address:** | 600 W. Sixth Street, Suite 300, Fort Worth, TX 76102 |
| **Email:** | dclayton@canteyhanger.com |
| **Work Number:** | 817-877-2890 |
| **Mobile Number:** | N/A |
| **[Reserved]:** |  |
| **Entoro Securities, LLC Contact Information** | **Entoro Securities, LLC Contact Information** |
|  | 333 W. Loop N., Suite 333 <br> Houston, TX 77024, USA<br>+1.713.823.2900 Main<br>www.entoro.com |
| **Authorized Representative:** | James C. Row, CFA, Managing Partner<br>jrow@entoro.com |
| **[Reserved]:** |  |

---

---

| | |
|:---|:---|
| **Reg A - Offering Summary – Additional Information in Section 2 and Exhibit B** | **Reg A - Offering Summary – Additional Information in Section 2 and Exhibit B** |
| **Instrument:** | Class A Common Stock |
|  **Maximum Offering Size:** | $75,000,000, subject to increase by issuer |
| **Currency:** | United States Dollars |
| **Tier 1 or 2:** | Tier 2 |
| **Advisory/Consulting Fee:** | $10000 |
| **Advance on Expenses:** | $10,000, covers due diligence expenses, technology platform setup costs, other necessary support. Refundable to extent not used. |
| **Offering Success Fee:** | ***<u>Cash Compensation:</u>*** 1.0% of the gross proceeds of the Offering; or 5% of the gross proceeds facilitated by Placement Agent or Soliciting Dealers<br>***<u>Equity Compensation</u>:*** none<br>***<u>Digital Securities Compensation</u>:*** N/A |
| **Conversion Feature:** | No |
| **Warrants/Options:** | No |
| **Digital Securities:** | No |
| **Minimum Purchase Amount (per investor):** | $500 |
| **Subscription Agreement:** | TBD |
| **[Reserved]:** | [Reserved] |
|  **Description of the Offering and the Securities** | **Description of the Offering and the Securities** |
| Issuer is VictoryBase Corporation, a Delaware corporation.<br>Entoro Securities will work as Exclusive Placement Agent and Broker Dealer of Record for Base Commission, and reasonable efforts for additional compensation, to find subscribers for up to $75,000,000 worth of Shares, priced at $10.00 per Share, pursuant to an exempt offering in accordance with "Tier 2" of Regulation A (17 C.F.R. §230.251 et seq.) of the Securities Act of 1933, as amended (the "33 Act"). | Issuer is VictoryBase Corporation, a Delaware corporation.<br>Entoro Securities will work as Exclusive Placement Agent and Broker Dealer of Record for Base Commission, and reasonable efforts for additional compensation, to find subscribers for up to $75,000,000 worth of Shares, priced at $10.00 per Share, pursuant to an exempt offering in accordance with "Tier 2" of Regulation A (17 C.F.R. §230.251 et seq.) of the Securities Act of 1933, as amended (the "33 Act"). |
| **Additional Information** | **Additional Information** |
| **Signed Entoro NDANC Agreement:** | No, N/A |
| **Status with SEC:** | Qualified |
| **Background Check:** | TBD |
| **Escrow:** | TBD |
| **Escrow Agent Information:** | [TBD] |
| **Transfer Agent Info:** | [TBD] |
| **Issuer Audit Years:** | 2020, 2021 |
| **"Entoro":** | Means Entoro LLC, parent of both Entoro Securities and OfferBoard |
| **"Entoro Securities":** | Means Entoro Securities, LLC, the broker-dealer (CRD#35192) |
| **"OfferBoard":** | Means OfferBoard, LLC, the syndication and technology platform |
| **Distribution Capable:** | Yes |
| **Offer Expiration:** | TBD |
| **Document Version:** | 2023.02.07 |

---

**Entoro Reg A Placement Agent Agreement**<sub>2</sub>

**Signature page**

**In Witness whereof**, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.

---

| | |
|:---|:---|
| &nbsp;&nbsp;**The Issuer recognizes and understands:** | &nbsp;&nbsp;**The Issuer recognizes and understands:** |
| &nbsp;&nbsp;***Please Check the Box*** | &nbsp;&nbsp;**Topic** |
|  | &nbsp;&nbsp;Entoro Securities works on a Best Efforts Basis |
|  | &nbsp;&nbsp;Background checks are required (FINRA/SEC) |
|  | &nbsp;&nbsp;Client utilization of approved investor funnels is critical; <u>failure to use approved funnels will result in additional fees & possibly termination</u>. Issuance and VictoryBase Technology are approved for use. |
|  | &nbsp;&nbsp;Securities marketing <u>can only be</u> conducted when the proper due diligence and marketing materials have been completed with Disclosures and Disclaimers |
|  | &nbsp;&nbsp;Advance on expenses is due on execution of this Agreement. Advisory/consulting fees are due on the latter of SEC qualification or FINRA approval of this Agreement, unless arrangements for subsequent payment are explicitly stated in this Agreement. |

---

We look forward to working with you toward the successful conclusion of this engagement and developing a long-term relationship with the Issuer.

---

| | |
|:---|:---|
| &nbsp;&nbsp;**Confirmed, Agreed and Accepted:**<br>**VictoryBase Corporation**  | &nbsp;&nbsp;<br>**Entoro securities, LLC**<br>**Placement Agent**<br>|
| &nbsp;&nbsp;By: ____________________________<br>Name: Thomas Paquin <br> Title: CEO<br>Date: 2/7/2023 | &nbsp;&nbsp;By: ____________________________<br>Name: James C. Row <br> Title: Managing Partner<br>Date: 2/7/2023 |

---

**Entoro Reg A Placement Agent Agreement**<sub>3</sub>

2/7/2023

**Thomas Paquin**

CEO

**VictoryBase Corporation**

550 Reserve St, suite 190, Southlake, TX 76092

***Re: Engagement Reg A Placement Agent Agreement***

 ****

Dear Thomas Paquin:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Placement Agent Agreement (this "**Agreement**") sets forth the terms under which Entoro Securities, LLC, a FINRA and SEC registered broker-dealer ("**we**" or "**Placement Agent**"), is being engaged to act as the exclusive and managing broker dealer for VictoryBase Corporation ("**you**" or the "**Issuer**" and, together with Placement Agent, the "**Parties**") in connection with a proposed best efforts Regulation A offering by the Issuer of its securities (the "**Securities**"). Placement Agent represents and warrants that Placement Agent is currently, and at all times during the term of this Agreement will remain, licensed and registered with the SEC, FINRA, and any governmental authority or self-regulatory organization that requires Placement Agent to be licensed or registered to provide services under this Agreement.

The terms of our engagement are as follows:

2. **The Offering**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) We will seek to assist you to raise capital through a Regulation A, Tier 2 offering (the "**Offering**") of the Securities to accredited and non-accredited investors (the "**Investors**") in an exempt transaction under Regulation A of the Securities Act of 1933, as amended (the "**Securities Act**"). We expect that the Offering will result in gross proceeds to the Issuer of up to $75,000,000. The actual terms and amount of the Offering will depend on market conditions, and will be subject to negotiation between the Issuer, Placement Agent and the prospective investors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Issuer expressly acknowledges that: (i) the Offering will be undertaken on a "best efforts" basis, (ii) Placement Agent will not be required to purchase any Securities from the Issuer, and (iii) the execution of this Agreement does not constitute a commitment by Placement Agent to consummate any transaction contemplated hereunder and does not ensure a successful Offering or the ability of Placement Agent to secure any financing on behalf of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) During the Term (as defined below), the Issuer and its affiliates agree not to engage any other broker-dealer or intermediary and shall not utilize a placement agent, broker-dealer or other intermediary to solicit, negotiate with or enter into any agreement with any investor or other financing source unless such engagement is through Placement Agent. The Issuer represents and warrants that the execution, delivery and performance of this Agreement does not violate the terms of any agreement or understanding to which Issuer or its affiliates are a party or to which Issuer or its affiliates are bound with any other person or entity.

**Entoro Reg A Placement Agent Agreement**<sub>4</sub>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) You acknowledge that we may ask other FINRA and SEC member broker-dealers to participate as soliciting dealers ("**Soliciting Dealers**") for the Offering. Upon appointment of any such Soliciting Dealer, we shall be permitted to re-allow all or part of our fees and expense allowance as described below. Such Soliciting Dealer shall automatically receive the benefits of this Agreement, including the indemnification rights provided for herein upon their execution of a soliciting dealer agreement (the "**Soliciting Dealer Agreement**") with us that confirms that such Soliciting Dealer is entitled to the benefits of this Agreement, including the indemnification rights provided for herein. Unless otherwise agreed to by the Issuer, the Issuer will not be responsible for paying any placement agency fees, commissions or expense reimbursements to any Soliciting Dealers retained by Placement Agent that are in excess of the fees and expense reimbursement provided for in this Agreement. The Soliciting Dealer Agreement shall be in such form as we reasonably determine. Placement Agent shall ensure that any Soliciting Dealer is licensed and registered with the SEC, FINRA, and any governmental authority or self-regulatory organization that requires Soliciting Dealer to be licensed or registered to provide services under the applicable Soliciting Dealer Agreement. Furthermore, Placement Agent shall (and shall cause each Soliciting Dealer to) provide all services hereunder in an honest and ethical manner and in full compliance with good industry practices and in compliance with all applicable state and federal securities laws and regulations and rules and regulations of FINRA and any other applicable government authority or self-regulatory organization.

3. **Fees and Expenses**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) As compensation to Placement Agent for its services hereunder, Issuer agrees to pay Placement Agent, concurrent with each Closing of the Offering, the compensation described in Exhibit B. The Offering Success Fee identified in Exhibit B shall be payable with respect to any Securities sold to any Investor. An Investor is any person or entity that has executed or otherwise entered into a subscription agreement or other form of sale or purchase order related to the Offering. Source of facilitation of specific investments, as needed, will be determined by use of designated URLs, tracking pixels, investor-entered ID codes, referral source dropdown menus, or other supporting evidence as shall be mutually agreed by the Parties, including but not limited to CRM software or email records.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any Advisory/Consulting Fee described in Exhibit B is nonrefundable, and payable to Placement Agent within five days of the latter of FINRA Rule 5110 approval of this Agreement or SEC qualification of the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any Advance on Expenses described in Exhibit B is payable to Placement Agent within five days of execution of this Agreement, and is refundable to the extent not used. Moreover, Issuer agrees to reimburse Placement Agent for all out-of-pocket expenses incurred in connection with its engagement hereunder, including (x) all reasonable travel (which shall include, without limitation, business or first-class airfare for a flight longer than four hours), lodging and related incidental expenditures, (y) the reasonable fees and expenses of Placement Agent's legal counsel incurred in connection with (i) the performance of the matters contemplated hereby and (ii) the payment of all fees and expenses due to Company hereunder, (excluding in connection with any fee dispute), and (z) all reasonable amounts paid to other outside professionals or experts, accountants, independent consultants retained in connection with Placement Agent's performance of the matters contemplated hereby in connection with an Offering (including expenses incurred and charged by such outside professionals or experts, accountants, independent consultants); *provided, however,* that any such expenses other than expenses incurred by Placement Agent described in clause 2(d)(y)(ii) above, which individually, or in the aggregate, exceed $10,000.00 must be approved in advance by the written consent of the Issuer which approval shall not be unreasonably withheld; and *provided further*, that upon any such approval by Issuer, Issuer shall make payment in advance to Placement Agent of the estimated amount of such out-of-pocket expenses. Maximum aggregate fees and expenses to be paid or reimbursed to, or paid on behalf of, Placement Agent with or without Issuer approval shall not exceed $40,000. That maximum includes any fees or disbursements of Placement Agent outside counsel referenced in Section 2(e)(vi), below. Any excess costs or fees for goods or services sought by Issuer in relation to Offering shall be paid directly by Issuer to relevant third parties. Placement Agent agrees to provide any documents reasonably requested by Issuer in support of its expenses.

**Entoro Reg A Placement Agent Agreement**<sub>5</sub>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) In addition, the Issuer shall pay for reasonable fees and expenses incurred by it in connection with the Offering, including without limitation, (i) all reasonable filing fees and communication expenses relating to the qualification of the Securities to be sold in the Offering with the Securities and Exchange Commission (the "**Commission**"), any necessary notice filings with state securities regulators of the states in which Securities under Offering will be sold, and the filing of the Offering Materials with the Financial Industry Regulatory Authority ("**FINRA**") under FINRA Rule 5110, (ii) the reasonable costs of all mailing and printing of the Offering documents, the Offering Statement (as defined below), the Offering Circular (as defined below) and all amendments, supplements and exhibits thereto and as many preliminary and final Offering Circulars as Placement Agent may reasonably deem necessary, (iii) the reasonable costs of preparing, printing and delivering electronic certificates representing such Securities; (iv) the costs and expenses of the transfer agent for such Securities; (v) the reasonable costs and expenses of the Issuer's accountants and the fees and expenses of the Issuer's legal counsel and other agents and representatives; and (vi) the reasonable fees and disbursements of outside counsel for the Placement Agent to a maximum of $15,000; and (vii) the costs and expenses of any third party marketing, advertising or promotional efforts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Upon the execution of this Agreement, Placement Agent shall direct Issuer to engage a third party background check provider—at Issuer's own expense via direct engagement with such background check provider—for the purpose of generating reports regarding the Issuer's officers, directors and significant stockholders. Placement Agent will rely on reports generated by such service providers as part of its due diligence process and bad actor checks.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Issuer will use its reasonable best efforts, in cooperation with the Placement Agent, to qualify the Securities for offering and sale under the applicable securities laws of such states and foreign jurisdictions as the Placement Agent may designate and maintain such qualifications in effect so long as required to complete the placement of the Securities; *provided, however*, that the Issuer shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. While both Parties acknowledge that the following activity is responsibility of Issuer, to the extent the Placement Agent prepares and files any documentation necessary to qualify and maintain the qualification of the offer and sale of the Securities under the laws of any state or foreign jurisdiction, the Issuer shall deliver to the Placement Agent in advance of any such filing the applicable state filing fees and will reimburse the Placement Agent for its reasonable costs and expenses in making any such filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Issuer may request that Placement Agent, at its discretion, post the Offering on OfferBoard<sup>®</sup> (or any affiliate of same), an online deal marketing, investor outreach and technology platform operated by the Placement Agent's affiliate OfferBoard, LLC, a Delaware limited liability company ("OfferBoard"). If Issuer opts to host a standalone investment onboarding funnel on its website or elsewhere, OfferBoard will integrate its investor onboarding, recordkeeping and compliance processes with those of Issuer or any relevant third party. OfferBoard will handle all KYC, CIP, AML, and OFAC for investors participating under OfferBoard, as well as integration with Issuer's or any relevant third party technology provider's software. OfferBoard's participation in any Offering shall be limited to introduction of the Offering to potential investors and OfferBoard will not participate in the preparation of any Offering Materials nor Authorized Sales Materials nor have any responsibility for the contents thereof. Regardless of whether the Offering is posted on OfferBoard, the Issuer understands and agrees that certain aspects of the Offering may be conducted through OfferBoard's technology platform or facilities. To the extent necessary, the Issuer consents to the posting of information concerning the Offering on OfferBoard, subject to the confidentiality undertakings and agreements referenced in Sections 7 and Exhibit C of this Agreement. All information concerning the Issuer posted on OfferBoard shall be considered Offering Materials and/or Authorized Sales Materials. There is a technology fee associated with any use of OfferBoard as described in this Section, which shall be paid by Issuer, before the posting of an Offering on OfferBoard. Beyond what is stated above in this Section 2(h), there is no other contract or agreement governing the terms and arrangements of the services to be provided to Issuer by OfferBoard.

**Entoro Reg A Placement Agent Agreement**<sub>6</sub>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Parties intend and agree that Issuer will only accept investments through OfferBoard or the processing systems of other third party regulatory technology ("reg tech") providers explicitly approved by Placement Agent in writing, to include VictoryBase owned technology. Manual review and approval of subscription and compliance documents—which both Parties acknowledge to be the regulatory responsibility of Placement Agent for the Offering described in this Agreement—generated and submitted manually, or completed using document execution solutions such as DocuSign, are significantly more onerous and time-consuming than review and approval of same through an approved reg tech platform. As such, in the event that Issuer accepts any investments manually as described above in this Section 2(i), Issuer agrees to pay Placement Agent $300 per hour for work related to review, communications regarding and approval of same, to a maximum of $25,000. In the event that billable hours for work related to such manual review and approval exceeds $25,000, Placement Agent reserves the right to terminate this Agreement for material breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) All fees and any other amounts payable hereunder are payable in U.S. dollars, free and clear of any United States or foreign withholding taxes or deductions and shall be payable to the account designated by Placement Agent under "Bank Information" in Exhibit B of this Agreement. No later than thirty (30) days following expiration or earlier termination of this Agreement, Placement Agent shall submit to Issuer a final invoice that sets forth the total of all Fees and reimbursable expenses (and any past-due payments) owed to Placement Agent under this Agreement, and payment of all such amounts shall be made by the Issuer to Placement Agent no later than thirty (30) days following the date of such final invoice. Any late payments of such fees and expenses shall be deemed in immediate default and deducted in full from any proceeds or raised capital. The Issuer's obligations pursuant to this section shall survive expiration or earlier termination of this Agreement.

4. **Term of Engagement; Relationship of Parties**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The term of Placement Agent's engagement hereunder (the "**Term**") shall commence on the mutual execution of this Agreement and end on the earlier to occur of: (i) the final Closing of the Offering; or (iii) ten (10) business days after either party gives the other written notice of termination hereunder; provided, however, that the Issuer shall not provide Placement Agent with written notice of termination for at least one hundred twenty (120) days from the date that the Offering Statement for the Offering is qualified by the Securities and Exchange Commission. Moreover, upon a material default (with grounds for such default including but not limited to failure of Issuer to comply with relevant securities laws) by either Party, this Agreement may be terminated immediately upon written notice by the non-breaching Party. Upon any such termination, any fees, and expenses due to Placement Agent shall be remitted to Placement Agent promptly (including fees and expenses accrued before, but invoiced after, such termination). The Term of this Agreement may be extended as may be agreed by mutual written consent of the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon termination, Placement Agent will be entitled to collect all fees, if any, earned through the date of termination, and the Issuer will pay or reimburse Placement Agent for its out-of-pocket expenses, subject to Sections 2(d) and 2(e) hereof. The Issuer agrees that: (a) any termination or completion of Placement Agent's engagement hereunder shall not affect the Issuer's obligation to indemnify Placement Agent, the Soliciting Dealers and the affiliates of Placement Agent and the Soliciting Dealers as provided for herein, (b) any termination of Placement Agent's engagement hereunder shall not affect the Issuer's obligation to pay fees as provided for in Section 2(a) hereof; and (c) any termination of Placement Agent's engagement hereunder shall not affect the Issuer's obligation to pay fees and reimburse the expenses accruing prior to such termination as provided for herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding any termination of this Agreement pursuant to the terms hereof or otherwise, if at any time after the termination of this Agreement and on or before the twelve (12) month period following the termination of this Agreement (the "**Residual Period**"), the Issuer enters into a definitive commitment relating to the sale of Securities to, or facilitated by, any person or entity (including such person or entity's affiliates, and each of its and such affiliates' respective equity holders, officers, directors, employees, consultants, agents) that Placement Agent introduced to the Issuer and/or with whom Placement Agent had substantive communications with on behalf of the Issuer (each a "Potential Residual Investor"), the Issuer shall pay to Placement Agent fees in accordance with the terms and provisions of Section 2(a) hereof. Within 10 business days of the termination of this Agreement, Placement Agent will provide Issuer with a written list of each Potential Residual Investor. Any person not named on such list during such 10 business day period will be irrebuttably be presumed to not be a Potential Residual Investor.

**Entoro Reg A Placement Agent Agreement**<sub>7</sub>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Nothing contained in this Agreement shall be construed to place Placement Agent and the Issuer in the relationship of partners or joint ventures. Neither Placement Agent nor the Issuer shall represent itself as the agent or legal representative of the other for any purpose whatsoever nor shall either have the power to obligate or bind the other in any manner whatsoever. The Issuer's engagement of Placement Agent is not intended to confer rights upon any person not a party hereto (including shareholders, directors, officers, employees or creditors of the Issuer) as against Placement Agent or its affiliates, or their respective directors, officers, employees or agents, successors or assigns. Placement Agent, in performing its services hereunder, shall at all times be an independent contractor. No promises or representations have been made, except as expressly set forth in this Agreement, and the parties have not relied on any promises or representations except as expressly set forth in this Agreement. Nothing contained herein should be construed as creating any fiduciary duties between the Issuer and Placement Agent.

**5.** **Offering Materials; Representations and Warranties.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If the proposed offering is a Regulation A offering, the Issuer shall, as soon as practicable following the date hereof, prepare and file with the Commission and the appropriate state securities authorities, an Offering Statement on Form 1-A (the "**Offering Statement**") under the Securities Act, and an Offering Circular included therein (the "**Offering Circular**") covering the Securities to be sold in the Offering (collectively, the "**Offering Materials**"). If the Issuer's offering has already been qualified by the SEC as of the date of its engagement of Placement Agent, Issuer will, as soon as is practicable, supplement its Offering Materials with SEC, describing the nature and terms of its engagement of Placement Agent. The Offering Statement (including the Offering Circular therein), and all amendments and supplements thereto, will be in form satisfactory to Placement Agent and counsel to Placement Agent and will contain such interim and other financial statements and schedules as may be required by the Securities Act and rules and regulations of the Commission thereunder. Placement Agent and its counsel shall be given the opportunity to make such review and investigation in connection with the Offering Statement and the Issuer as they deem desirable. Placement Agent and the Issuer shall mutually agree on the use of proceeds of the Offering, which shall be described in detail within the Offering Circular, it being further understood and agreed that, except as may expressly approved by Placement Agent, no proceeds from the Offering will be used to pay outstanding loans owed by the Issuer to any Issuer officers, directors or stockholders or to redeem any securities of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Offering Statement will include this Agreement as an exhibit to the Offering Statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Issuer hereby represents, warrants and agrees with Placement Agent that upon qualification of the Offering Statement, the Offering Circular will comply with the Securities Act, Regulation A promulgated thereunder and any other rules and regulations (as applicable) of the Commission (the "**Rules and Regulations**"), and the Offering Circular and any and all authorized printed sales literature or other sales materials prepared and authorized by the Issuer for use with potential investors in connection with the Offering ("**Authorized Sales Materials**"), including without limitation, all testing the waters material under Rule 255, when used in conjunction with the Offering Circular, will not contain any untrue statements of material facts or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; <u>provided</u>, <u>however</u>, that the foregoing provisions of this Section 5(c) will not extend to such statements contained in or omitted from the Offering Circular or Authorized Sales Materials as are primarily within the knowledge of Placement Agent and are based upon information furnished by Placement Agent in writing to the Issuer specifically for inclusion therein.

**Entoro Reg A Placement Agent Agreement**<sub>8</sub>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Issuer hereby authorizes Placement Agent to transmit to the prospective Investors the Offering Circular and Authorized Sales Materials. The Issuer will advise Placement Agent immediately of the occurrence of any event or any other change known to the Issuer which results in the Offering Statement, including the Offering Circular, or the Authorized Sales Materials containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein or previously made, in light of the circumstances under which they were made, not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Issuer further agrees that Placement Agent may rely upon, and shall be a third-party beneficiary of, the representations and warranties and applicable covenants and agreements made to the investors in connection with the Offering. In addition, immediately prior to the initial and any subsequent Closing of the Offering, the Issuer shall execute and deliver to Placement Agent a representation letter in the style of Exhibit E of this Agreement (the "**Representation Letter**") pursuant to which it will make representations and warranties to Placement Agent of the type that are customarily found in placement agency and underwriting agreements for offerings like the Offering. Such Representation Letter and the representations made therein are incorporated into this Agreement by reference as if set forth in full herein.

6. **Conditions to Initial and Subsequent Closing of the Offering**. The Offering and all closings from escrow shall be conditioned upon, among other things, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Satisfactory completion by Placement Agent of its due diligence investigation and analysis of: (i) the Issuer's business, prospects, industry, financial condition and its arrangements with its officers, directors, employees, affiliates, customers and suppliers, (ii) the audited historical financial statements of the Issuer as required by the SEC (including any relevant stub period reviews), and (iii) the Issuer's projected financial results for the fiscal year ending December 31, 2021 and 2022;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Approval of the Offering by Placement Agent investment committee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) FINRA shall not have finally determined that the compensation payable to Placement Agent hereunder is unreasonable under FINRA Rule 5110;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Issuer completion of required notice filings and related requirements in any states where Securities have been sold under the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Continued full compliance by Issuer with all relevant securities laws and other relevant laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Placement Agent compliance review and approval of all prospective investors in the Offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Neither the Issuer nor any of its affiliates has, either prior to the initial filing or the qualification date of the Offering Statement, made any offer or sale of any securities which are required to be "integrated" pursuant to the Securities Act or the regulations thereunder with the offer and sale of the Securities pursuant to the Offering Statement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Issuer maintaining a PCAOB registered firm of independent certified public accountants acceptable to Placement Agent and the Issuer, including, without limitation, the Issuer's existing auditor (which Placement Agent agrees is acceptable), which will have responsibility for the preparation of the financial statements and the financial exhibits to be included in the Offering Statement, it being agreed that the Issuer will continue to engage a PCAOB registered accounting firm of comparable quality (as may be determined by the Issuer's audit committee or board of directors) for a period of at least three years after the Closing so long as the Issuer is required to file reports with the SEC during such period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Issuer maintaining a transfer agent for the Issuer's Securities reasonably acceptable to Placement Agent and continuing to retain such transfer agent for a period of two (2) years after the Closing;

**Entoro Reg A Placement Agent Agreement**<sub>9</sub>

7. **Indemnification, Contribution, and Confidentiality.** The Issuer agrees to indemnify Placement Agent and its controlling persons, representatives, and agents in accordance with the indemnification provisions set forth in Exhibit A hereto, and the parties agree to the confidentiality provisions of Exhibit C hereto, all of which are incorporated herein by reference. These provisions will apply regardless of whether the Offering is consummated.

8. **Governing Law; Venue.** This Agreement shall be governed by and construed in accordance with the laws of the State of Texas applicable to contracts executed and to be wholly performed therein without giving effect to its conflicts of laws principles or rules. The Issuer and Placement Agent agree that any dispute concerning this Agreement shall be resolved exclusively through binding arbitration before FINRA pursuant to its arbitration rules. Arbitration will be venued in Harris County or Houston, Texas USA (the "**Agreed Forum**"). Each of the Issuer and Placement Agent agree that the Agreed Forum is not an "inconvenient forum" for proceedings hereunder, and each hereby agree to the personal jurisdiction of the Agreed Forum and that service of process by mail to the address for such party as set forth in this letter (or such other address as a party hereto shall notify the other in writing) constitute full and valid service for such proceedings.

9. **Limitation on Liability.** Notwithstanding any provision of this Agreement to the contrary, the Issuer agrees that neither Placement Agent nor its affiliates, and the respective officers, directors, employees, agents, and representatives of Placement Agent, its affiliates and each other person, if any, controlling Placement Agent or any of its affiliates, shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Issuer for or in connection with the engagement and transaction described herein in an amount excess of the actual fees paid to Placement Agent hereunder.

10. **Announcement of Offering.** If the Offering is consummated, Placement Agent may, at its own expense, place a customary announcement in such newspapers and periodicals as Placement Agent may desire announcing the Closing of the Offering, the name of the Issuer, the securities issued and the gross proceeds of the Offering. The parties agree that any such announcement will be subject to approval by the Issuer prior to dissemination by Placement Agent and that such approval will not be unreasonably withheld.

11. **Advice to the Board.** The Issuer acknowledges that any advice given by Entoro to Issuer is solely for benefit and use of the Board of Directors of the Issuer and may not be used, reproduced, disseminated, quoted or referred to, without our prior written consent.

12. **Other Engagements** **.** Nothing in this Placement Agent Agreement shall be construed to limit the ability of Placement Agent or its respective affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory, or any other business relationship with entities other than the Issuer, notwithstanding that such entities may be engaged in a business which is similar to or competitive with the business of the Issuer, and notwithstanding that such entities may have actual or potential operations, products, services, plans, ideas, customers or supplies similar or identical to the Issuer's, or may have been identified by the Issuer as potential merger or acquisition targets or potential candidates for some other business combination, cooperation or relationship. The Issuer acknowledges and agrees that it does not claim any proprietary interest in the identity of any other entity in its industry or otherwise, and that the identity of any such entity is not confidential information under Exhibit C of this Placement Agent Agreement. Notwithstanding the foregoing, Placement Agent will not represent any competitor of the Company without first giving the Company notice of such proposed representation and an opportunity to terminate this Agreement without penalty.

13. **Survivability.** If any provision of this Agreement is held illegal or unenforceable in a judicial proceeding, such provision shall be severed and shall be inoperative, and the remainder of this Agreement shall remain operative and binding on the Parties.

**Entoro Reg A Placement Agent Agreement**<sub>10</sub>

IN THE EVENT THAT FINRA, OR ANY OTHER REGULATOR WITH RELEVANT JURISDICTION, REQUIRES OR OTHERWISE SEEKS MODIFICATIONS TO THIS AGREEMENT, THE PARTIES ACKNOWLEDGE THAT ANY CLAUSES OF THIS AGREEMENT NOT EXPLICITLY MENTIONED BY THE REGULATOR AS BEING IN NEED OF MODIFICATION ARE NOT ELIGIBLE FOR REVISION OR RENEGOTIATION, AND SHALL REMAIN IN PLACE IN ANY SUBSEQUENT VERSIONS OF THIS AGREEMENT EXACTLY AS WRITTEN AS OF THE DATE OF INITIAL EXECUTION OF THIS AGREEMENT.

14. **Entire Agreement.** This Agreement constitutes the entire Agreement between the parties and supersedes and cancels any and all prior or contemporaneous arrangements, understandings and agreements, written or oral, between them relating to the subject matter hereof, with the sole exclusion of any NDA executed between the Parties, which is incorporated in its entirety herein by reference.

15. **Successors and Assigns.** The benefits of this Agreement shall inure to the parities hereto, their respective successors and assigns and to the indemnified parties hereunder and their respective successors and assigns, and the obligations and liabilities assumed in this Agreement shall be binding upon the parties hereto and their respective successors and assigns. Notwithstanding anything contained herein to the contrary, neither Placement Agent nor the Issuer shall assign to an unaffiliated third party any of its obligations hereunder.

16. **Counterparts.** For the convenience of the parties, this Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

\* \* \* \* \* \* \* \* \* \* \* \*

**Entoro Reg A Placement Agent Agreement**<sub>11</sub>

**EXHIBIT A**

**INDEMNIFICATION AND CONTRIBUTION**

SECTION 1**. <u>Indemnification.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;A. Indemnification
 of Placement Agent.

The Issuer agrees to indemnify and hold harmless the Placement Agent, its affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) (each, an "Affiliate")), including any and all Soliciting Dealers, partners, officers and directors, and each person, if any, who controls the Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act (Placement Agent and each such person being an "**Indemnified Party**"), as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) against
 any and all loss, liability, claim, damage and expense whatsoever, as reasonably incurred,
 arising out of (A) any untrue statement or alleged untrue statement of a material fact included
 in the Offering Statement, Offering Circular, Authorized Sales Materials, the Representation
 Letter or any information forming the basis for content in any of the aforementioned; or
 the omission or alleged omission in the Offering Statement, Offering Circular, Authorized
 Sales Materials, the Representation Letter or any information forming the basis for content
 in any of the aforementioned, of a material fact necessary in order to make the statements
 therein, in the light of the circumstances under which they were made, not misleading; or
 (B) the breach or alleged breach of any representation, warranty or covenant of the Issuer
 under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) against
 any and all loss, liability, claim, damage and expense whatsoever, as reasonably incurred,
 to the extent of the aggregate amount paid in settlement of any litigation, or any investigation
 or proceeding by any governmental entity, commenced or threatened, or of any claim whatsoever
 based upon any such untrue statement or omission, or any such alleged untrue statement or
 omission by the Issuer; *provided that* (subject to Section 1, B. of Exhibit A, below)
 any such settlement is effected with the written consent of the Issuer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) against
 any and all expense whatsoever, as reasonably incurred (including the fees and disbursements
 of counsel chosen by the Placement Agent reasonably incurred) in investigating, preparing
 or defending against any litigation, or any investigation or proceeding by any governmental
 entity, commenced or threatened, or any claim whatsoever, commenced or threatened, based
 upon any such untrue statement or omission, or any such alleged untrue statement or omission,
 to the extent that any such expense is not paid under (i) or (ii) above.

&nbsp;&nbsp;&nbsp;&nbsp;B. Settlement

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The
 Issuer will not, without the prior written consent of Placement Agent, settle any litigation
 relating to Placement Agent's engagement hereunder unless such settlement includes
 an express, complete, and unconditional release of Placement Agent and Indemnified Parties
 with respect to all claims asserted in such litigation or relating to Placement Agent's
 engagement hereunder; such release to be set forth in an instrument signed by all parties
 to such settlement.

**Entoro Reg A Placement Agent Agreement**<sub>12</sub>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) If
 at any time an indemnified party shall have requested an indemnifying party to reimburse
 the indemnified party for fees and expenses of counsel, such indemnifying party agrees that
 it shall be liable for any settlement of the nature contemplated by Section 1.A. of
 Exhibit A effected without its written consent if

1) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request,

2) such indemnifying party shall have received notice of the terms of such settlement at least 30 days before such settlement being entered into and

3) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request (other than those fees and expenses that are being contested in good faith) before the date of such settlement.

&nbsp;&nbsp;&nbsp;&nbsp;C. Limitations

Issuer will not be liable to Placement Agent or Indemnified Parties to the extent that any loss, claim, damage or liability is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from Placement Agent or Indemnified Party's willful misconduct or gross negligence or breach of this Agreement. Issuer also agrees that Placement Agent and Indemnified Parties shall not have any liability (whether direct or indirect, in contract or tort or otherwise) to Issuer or its security holders or creditors related to or arising out of the engagement of Placement Agent pursuant to, or the performance by Placement Agent or Indemnified Parties of the services contemplated by, this Agreement except to the extent that any loss, claim, damage or liability is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from Placement Agent's or Indemnified Parties' willful misconduct or gross negligence or breach of this Agreement.

SECTION 2**. <u>Contribution</u>**

&nbsp;&nbsp;&nbsp;&nbsp;A. If
 the indemnification provided for in Section 1 hereof is for any reason unavailable to or
 insufficient to hold harmless an indemnified party in respect of any losses, liabilities,
 claims, damages or expenses referred to therein, then each indemnifying party shall contribute
 to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred
 by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect
 the relative benefits received by the Issuer on the one hand, and the Placement Agent, on
 the other hand, from the offering of the Securities pursuant to this Agreement or (ii) if
 the allocation provided by clause (i) is not permitted by applicable law, in such proportion
 as is appropriate to reflect not only the relative benefits referred to in clause (i) above
 but also the relative fault of the Issuer, on the one hand, and the Placement Agent, on the
 other hand, in connection with the statements or omissions which resulted in such losses,
 liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The
relative benefits received by the Issuer, on the one hand, and the Placement Agent, on the other hand, in connection with the offering
of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from
the Offering (before deducting expenses) received by the Issuer, on the one hand, and the total placement fees received by the Placement
Agent, on the other hand, bear to the aggregate initial aggregate offering price of the Securities.

**Entoro Reg A Placement Agent Agreement**<sub>13</sub>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The
relative fault of the Issuer, on the one hand, and the Placement Agent, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Issuer or by the Placement Agent, as the case may be, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2 of Exhibit A were determined
by *pro rata* allocation or by any other method of allocation which does not take account of the equitable considerations referred
to above in this Section 2 of Exhibit A. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 2 of Exhibit A shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any
governmental entity, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission
or alleged omission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Notwithstanding
the provisions of this Section 2 of Exhibit A, the Placement Agent shall not be required to contribute any amount in excess of the placement
fees set forth in Section 2(a) of the Engagement Agreement received by it in connection with the placement of the Securities by it as
agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) No
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) For
purposes of this Section 2 of Exhibit A, each person, if any, (i) who controls the Placement Agent within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act and the Placement Agent's Affiliates, selling agents, partners, officers and directors
shall have the same rights to contribution as the Placement Agent, and (ii) who controls the Issuer within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act and the Issuer's Affiliates, directors, officers, employees and subsidiaries shall
have the same rights to contribution as the Issuer.

**Entoro Reg A Placement Agent Agreement**<sub>14</sub>

**<u>EXHIBIT B</u>**

**Offering Fees**

A.  ***Initial Advisory/Consulting Fee*** – A non-refundable, cash fee of $10,000 payable by
 wire transfer to the bank account designated by Placement Agent below within five days of
 the latter of FINRA Rule 5110 approval of the Agreement to which this Exhibit is attached,
 or SEC qualification of the Offering.

B.  ***Advance on Expenses*** – An initial upfront $10,000 cash advance payment, covering expenses
 anticipated to be incurred by Placement Agent including due diligence expenses, technology
 platform setup costs and other support necessary prior to qualification of the Offering.
 Advance is payable by wire transfer to the bank account designated by Placement Agent below
 upon the signing of this Agreement. Advance is refundable to the extent not used, incurred
 or provided to Issuer.

C.  ***Offering Success Fee*** – In addition to the fees set forth above, the Issuer shall pay
 to Placement Agent by wire transfer to the bank account designated below, as compensation
 for the services provided by Placement Agent hereunder, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Cash
 Compensation: cash equal to 1.0% of the gross proceeds from
 the sale of the Securities in the Offering; or 5% of the gross proceeds from the sale of
 the Securities in the Offering facilitated by Placement Agent or Soliciting Dealers, it being
 understood that no purchase of Securities by customers or prospective customers of the Company
 will be considered facilitated by Placement Agent or Soliciting Dealers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Equity
 Compensation: 0%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. Digital
 Securities: N/A

D.  ***[Intentionally omitted]*** 

E.  ***Due Dates*** – The Offering Success Fee is due and payable to Placement Agent at or
 before the Closing of any Offering (or before each Closing, if more than one).

If the Issuer fails to pay any fee or advance due hereunder (including Initial or Monthly Advisory/Consulting or Offering Success Fees, and Advance on Expenses) within five days of after the date which such fees are due, Placement Agent may at its sole discretion deem such failure to pay as a material breach of this Agreement and elect to terminate the Agreement pursuant to Section 3(a) above. Any cash fee due but not yet paid shall be deemed in immediate default and deducted in full from any proceeds or raised capital. Any non-cash fee due but unpaid hereunder (including but not limited to any Digital Securities allocation or fee) shall be in immediate default.

F.  ***Other*** – [Reserved]

**Entoro Securities Bank Information:**

Entoro Securities, LLC

Attn: James C. Row

Wells Fargo Bank, N.A.

420 Montgomery Street

San Francisco CA94104

Account #: 9822502408

ABA 121000248

SWIFT: WFBIUS6S

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| | |
|:---|:---|
| **Entoro Reg A Placement Agent Agreement** | **15** |

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**EXHIBIT C**

**INFORMATION TO BE SUPPLIED; CONFIDENTIALITY**

Capitalized terms used in this Exhibit shall have the meanings ascribed to such terms in the Agreement to which this Exhibit is attached. The language in this Exhibit is intended to supplement, and not supersede, the Confidentiality, Non-Disclosure and Non-Circumvention Agreement executed previously by the Parties under separate cover, and hereby incorporated as part of this Agreement by reference.

In connection with the activities of Placement Agent on behalf of the Issuer as set forth in the engagement agreement to which this Exhibit is attached (the "Agreement"), the Issuer will furnish Placement Agent with all financial and other information regarding the Issuer that Placement Agent reasonably believes appropriate to its engagement (all such information so furnished by the Issuer, whether furnished before or after the date of this Agreement, being referred to, collectively with the Placement Materials, as the "Confidential Information"). The Issuer will provide Placement Agent with access to the officers, directors, employees, independent accountants, legal counsel, and other advisors and consultants of the Issuer. The Issuer recognizes and agrees that Placement Agent (i) will use and rely primarily on the Confidential Information and information available from generally recognized public sources in performing the services contemplated by this Agreement without independently verifying the Confidential Information or such other information, (ii) does not assume responsibility for the accuracy or completeness of the Confidential Information or such other information, and (iii) will not make an appraisal of any assets or liabilities owned or controlled by the Issuer or its market competitors.

Placement Agent will maintain the confidentiality of the Confidential Information during the Term of this Agreement and following the termination or expiration of the Term and, unless and until such information shall have been made publicly available by the Issuer or by others without breach of a confidentiality agreement, shall disclose the Information only to its officers, employees, legal counsel, and authorized representatives, as authorized by the Issuer or as required by law or by order of a governmental authority or court of competent jurisdiction. In the event that Placement Agent is legally required to make disclosure of any of the Confidential Information, Placement Agent will: (i) give prompt notice to the Issuer prior to such disclosure, to the extent that Placement Agent can practically do so, (ii) reasonably assist the Issuer at the Issuer's cost in seeking a protective order or other relief from the disclosure of the Confidential Information and (iii) if compelled to disclose Confidential Information, limit such disclosure to only those matters which it is compelled to disclose.

The term "**Confidential Information**" does not include information which (i) is or becomes generally available to the public other than as a result of an unauthorized disclosure thereof by Placement Agent or any Investor; (ii) was available on a non-confidential basis prior to its disclosure; or (iii) becomes available on a non-confidential basis from a third party source who is not known to be under a confidentiality obligation. Entoro shall have the right to retain indefinitely contact information for any Investors participating in the Offering that is the subject of the Agreement to which this Exhibit is attached, if and only if such Investors participated due to facilitation efforts by Entoro. Such information shall not be considered to be "Confidential Information" under this Exhibit, solely to the extent that Entoro may solicit such Investors regarding future investment opportunities on which it has been engaged, or to facilitate account creation on web platforms owned by Entoro or Entoro-affiliated companies. Evidence of facilitation of specific investments will be determined using methodology described in Section 2(a) of the Agreement, or as otherwise mutually agreed by the Parties.

Notwithstanding the foregoing, Placement Agent, as a FINRA Member Firm, shall be permitted to retain one copy of any Confidential Information provided hereunder to the extent required by its compliance procedures and may disclose such Confidential Information to representatives of FINRA or the SEC, to the extent required by applicable rules and regulations of such regulatory bodies, without prior notice to the Issuer.

---

| | |
|:---|:---|
| **Entoro Reg A Placement Agent Agreement** | **16** |

---

Nothing in this Agreement shall be construed to limit the ability of Placement Agent or its respective affiliates to pursue, investigate, analyze, invest in, or engage in investment banking, financial advisory or any other business relationship with entities other than the Issuer, notwithstanding that such entities may be engaged in a business which is similar to or competitive with the business of the Issuer, and notwithstanding that such entities may have actual or potential operations, products, services, plans, ideas, customers or supplies similar or identical to the Issuer's, or may have been identified by the Issuer as potential merger or acquisition targets or potential candidates for some other business combination, cooperation or relationship. The Issuer expressly acknowledges and agrees that it does not claim any proprietary interest in the identity of any other entity in its industry or otherwise, and that the identity of any such entity is not Confidential Information for purposes hereof.

Notwithstanding the foregoing, Placement Agent will not represent any competitor of the Company with out first giving the Company notice of such proposed representation and an opportunity to terminate this Agreement without penalty.

---

| | |
|:---|:---|
| **Entoro Reg A Placement Agent Agreement** | **17** |

---

**<u>EXHIBIT E</u>**

**Form of Representation Letter to be Delivered Pursuant to Section 5(E)**

The undersigned, Thomas Paquin, the President, Chief Executive Officer, and Chief Financial Officer of Issuer, a corporation formed under the laws of the State of Delaware, each hereby certifies in his capacity as an officer and not in an individual capacity, pursuant to Section 5(e) of the Placement Agent Agreement, dated 2/7/2023, between VictoryBase Corporation (the "Issuer") and Entoro Securities, LLC (the "Placement Agent") that:

(i) There has been no change or event with respect to the Issuer taken as a whole that would constitute a Material Adverse Effect since the date of the Placement Agent Agreement.

(ii) The representations and warranties of the Issuer in the Placement Agent Agreement are true and correct with the same force and effect as though expressly made at and as of the Closing Time.

(iii) The Issuer has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or before the Closing Time.

Capitalized terms used herein shall have the same meanings ascribed to them in the Placement Agent Agreement.

IN WITNESS WHEREOF, we have hereunto signed our names as of the date first written above.

---

| | |
|:---|:---|
| ISSUER | ISSUER |
| By: VictoryBase Corporation | By: VictoryBase Corporation |
| By: | <u> </u> |
| Name: | <u> </u> |
| Title: | President, CEO and CFO |

---

**18**

## Ex1Sa-4

**"EQUITY AGREEMENT"**

**SUBSCRIPTION AGREEMENT**

**THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.** THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT THE MARKET FOR SUCH INVESTMENT MAY BE LIMITED, SPORADIC OR NON-EXISTANT AND IS EXPECTED TO CONTINUE TO BE LIMITED, SPORADIC OR NON-EXISTANT FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET CURRENTLY EXISTS FOR THE SHARES.

**THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "<u>SECURITIES ACT</u>"), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND STATE SECURITIES OR BLUE SKY LAWS.** ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "<u>SEC</u>"), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION, OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THIS SUBSCRIPTION AGREEMENT (THIS "<u>AGREEMENT</u>") OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO INVESTOR IN CONNECTION WITH THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

**INVESTORS WHO ARE NOT "ACCREDITED INVESTORS" (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN <u>SECTION 4</u>.** VICTORYBASE CORPORATION (THE "<u>COMPANY</u>") IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY THE INVESTOR IN THIS AGREEMENT AND THE OTHER INFORMATION PROVIDED BY INVESTOR IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

**PROSPECTIVE INVESTORS MAY NOT TREAT THE CONTENTS OF THIS AGREEMENT, THE OFFERING CIRCULAR, OR ANY OF THE OTHER MATERIALS MADE AVAILABLE BY THE COMPANY (COLLECTIVELY, THE "<u>OFFERING MATERIALS</u>") OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING "TESTING THE WATERS" MATERIALS) AS INVESTMENT, LEGAL OR TAX ADVICE.** IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED. EACH PROSPECTIVE INVESTOR SHOULD CONSULT THE INVESTOR'S OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISOR AS TO INVESTMENT, LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THE INVESTOR'S PROPOSED INVESTMENT.

**THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY.** THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS "ESTIMATE," "PROJECT," "BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

**THE COMPANY MAY NOT BE OFFERING THE SHARES IN EVERY STATE.** THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SHARES ARE NOT BEING OFFERED.

**THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THIS OFFERING.** NOTHING CONTAINED IN THE OFFERING MATERIALS IS OR SHOULD BE RELIED UPON AS A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THE COMPANY.

**THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SHARES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE.** EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SHARES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

ii

**"EQUITY AGREEMENT"**

**SUBSCRIPTION AGREEMENT**

This Subscription Agreement (this "<u>Agreement</u>"), which VictoryBase Corporation, a Delaware corporation (the "<u>Company</u>"), sometimes refers to as an "Equity Agreement," is entered into as of the date set forth on the signature page hereto, by and between the Company and the Investor identified on <u>Schedule 1</u> attached hereto (whether one or more, "<u>Investor</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Subscription</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Investor hereby irrevocably subscribes for and agrees to purchase shares (the "<u>Shares</u>") of the Company's common stock, par value $0.001 per share ("<u>Common Stock</u>") upon the terms and conditions set forth in this Agreement. The rights of Common Stock are as set forth in the Company's Certificate of Incorporation, as amended, and Bylaws, as amended, included in the Exhibits to the Offering Statement of the Company filed with the SEC (as amended, if applicable, the "<u>Offering Statement</u>"). Investor shall purchase the Shares at the "<u>Purchase Price Per Share</u>" set forth on <u>Schedule 1</u> attached hereto upon the following schedule:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) On the date hereof, Investor shall purchase the "<u>Initial Number of Shares</u>" set forth on <u>Schedule 1</u> attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If Investor has checked the box on <u>Schedule 1</u> attached hereto indicating that Investor will be making "<u>Monthly Purchases</u>" (a "<u>Monthly Purchaser</u>"), then Investor shall also purchase a number of shares each month equal to the "<u>Monthly Share Amount</u>" set forth on <u>Schedule 1</u> attached hereto for the "<u>Number of Months</u>" set forth on <u>Schedule 1</u> attached hereto. Any such monthly purchases shall be made on the first day of each month following the date of this Agreement. If the Company and its broker-dealer accept the subscription contemplated by this Agreement and Investor is a Monthly Purchaser, then Investor is committed to purchase, and the Company is committed to sell, all the subscribed Shares at the Purchase Price Per Share. Neither party may terminate this Agreement until all of the Monthly Purchases subscribed for have been made and accepted by the Company and the broker-dealer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Investor understands that the Shares are being offered pursuant to an offering circular, dated January 31, 2022 (as supplemented and amended, if applicable, the "<u>Offering Circular</u>"), originally filed with the SEC on February 1, 2022, as part of the Offering Statement, which can be accessed through the SEC's EDGAR database, which is available here: https://www.sec.gov/cgi-bin/browse-edgar?company=victorybase&match=&filenum=&State=&Country=&SIC=&myowner=exclude&action=getcompany. By executing this Agreement, Investor acknowledges that Investor has received this Agreement and has had access to copies of the Offering Circular and Offering Statement including exhibits thereto and any other information required by Investor to make an investment decision via the SEC's EDGAR database.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Subject to the last two sentences of this paragraph, Investor's subscription hereunder may be accepted or rejected in whole or in part, at any one time prior to the Termination Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Investor only a portion of the number of the Shares that Investor has subscribed to purchase hereunder. The Company will notify Investor whether this subscription is accepted (whether in whole or in part) or rejected. If Investor's subscription is rejected, Investor's payment (or portion thereof if partially rejected) will be returned to Investor without interest and all of Investor's obligations hereunder shall terminate. Notwithstanding the foregoing, once the Company accepts the subscription contemplated by this Agreement, then Investor is committed to purchase, and the Company is committed to sell, all of the Shares subscribed for and accepted at the Purchase Price Per Share. Once a Monthly Purchaser's subscription is accepted, neither party may terminate this Agreement until all of the Monthly Purchases subscribed and accepted for have been made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) The aggregate number of shares of Common Stock that may be sold in this offering shall not exceed 7,500,000 shares (the "<u>Maximum Shares</u>"). The Company may accept subscriptions until the termination of the Offering in accordance with its terms (the "<u>Termination Date</u>"). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a "<u>Closing Date</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) In the event of rejection of this subscription in its entirety, or in the event the sale of the Shares (or any portion thereof) to Investor is not consummated for any reason, this Agreement shall have no force or effect, except for <u>Section 5</u> hereof, which shall remain in force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) This Agreement may not be assigned or otherwise transferred by Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Purchase Procedure</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Payment</u>. Investor shall deliver to [____] (the "<u>Escrow Agent</u>"), as the Company's escrow agent, payment for the purchase price of the Shares by ACH electronic transfer, wire transfer, credit card, or debit card, to the Escrow Agent's account designated by the Company. Payment for the Shares shall be due and payable as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) An
 amount equal to the product of (A) the Initial Number of Shares, multiplied by (B) the Purchase
 Price Per Share, shall be due and payable contemporaneously with the execution and delivery
 of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) If
 Investor is also a Monthly Purchaser, then an amount equal to (A) the product of (A) the
 Monthly Share Amount, multiplied by (B) the Purchase Price Per Share, shall be due and payable
 on the first day of each month beginning on the first month following the date hereof and
 continuing for the Number of Months set forth on <u>Schedule 1</u> attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Issuance of Shares</u>. The Shares will not be certificated. Upon acceptance of a subscription by the Company and its broker-dealer, Investor's funds will be released from escrow. As soon as practicable following the date of the release of funds from escrow upon any purchase of Shares under this Agreement and the acceptance of such purchase by the Company and its broker-dealer, the Company will issue to Investor any Shares purchased under this Agreement, and Investor shall receive notice and evidence of the digital entry of the number of the Shares owned by Investor reflected on the books and records of the Company, which books and records shall bear a notation that the Shares were sold in reliance upon Regulation A, Tier 2 ("<u>Regulation A</u>"), promulgated under the Securities Act of 1933, as amended (the "<u>Securities Act</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Representations and Warranties of the Company</u>. The Company represents and warrants to Investor that the following representations and warranties are true and complete in all material respects as of the date hereof, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have "knowledge" of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have "knowledge" of a particular fact or other matter if one of the Company's current officers has, or at any time had, actual knowledge of such fact or other matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Organization and Standing</u>. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Agreement and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Issuance of the Shares</u>. The issuance, sale and delivery of the Shares in accordance with this Agreement has been duly authorized by all necessary corporate action on the part of the Company. The Shares, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Agreement, will be duly and validly issued, fully paid and non-assessable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Authority for Agreement</u>. The execution and delivery by the Company of this Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Shares) are within the Company's powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>No filings</u>. Assuming the accuracy of Investor's representations and warranties set forth in <u>Section 4</u> hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Capitalization</u>. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Shares in the offering described in the Offering Statement is as set forth "Description of Capital Stock" in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Financial statements</u>. Complete copies of the Company's audited financial statements consisting of the balance sheet of the Company, and the related statements of income, stockholders' equity and cash flows (the "<u>Financial Statements</u>"), and any unaudited financial statements (the "<u>Interim Financial Statements</u>") appear in the Offering Circular. The Financial Statements and Interim Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated. The Financial Statements have been audited by an independent accounting firm within the rules and regulations adopted by the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Proceeds</u>. The Company shall use the proceeds from the issuance and sale of the Shares as set forth in "Use of Proceeds" in the Offering Circular.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Litigation</u>. There is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company's knowledge, currently threatened in writing (a) against the Company, or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Representations and Warranties of Investor</u>. By executing this Agreement, Investor (and, if Investor is purchasing the Shares subscribed for hereby in a fiduciary capacity, the person or persons for whom Investor is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Requisite Power and Authority</u>. Investor has all necessary power and authority under all applicable provisions of law to execute and deliver this Agreement and any other agreements required hereunder and to carry out their provisions. All action on Investor's part required for the lawful execution and delivery of this Agreement and other agreements required hereunder have been or will be effectively taken prior to the date hereof. Upon Investor's execution and delivery, this Agreement and other agreements required hereunder will be valid and binding obligations of Investor, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights, and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Investment Representations</u>. Investor understands that the Shares have not been registered under the Securities Act. Investor also understands that the Shares are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Investor's representations contained in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>No Market and Continued Economic Risk</u>. Investor acknowledges and agrees that there is currently no public market for the Shares and that there is no guarantee that a liquid market for resale of the Shares will ever exist. Investor must bear the economic risk of this investment indefinitely, and the Company has no obligation to take any steps with respect to facilitating active trading of the Shares. Investor acknowledges that Investor is able to bear the economic risk of losing Investor's entire investment in the Shares. Investor also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Accredited Investor Status or Investment Limits</u>. Investor represents that either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Investor
 is an "accredited investor" within the meaning of Rule 501 of Regulation D under
 the Securities Act, as described on <u>Appendix A</u> of this Agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The
 Aggregate Purchase Price set forth on <u>Schedule 1</u> attached hereto, together with any
 other amounts previously used to purchase Securities in this offering, does not exceed 10%
 of the greater of Investor's (1) annual income, or (2) net worth.

Investor represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Shareholder information</u>. Within five days after receipt of a request from the Company, Investor hereby agrees to provide such information with respect to its status as a shareholder (or potential shareholder) and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject. **Investor further agrees that in the event it transfers any Securities, it will require the transferee of such Securities to agree to provide such information to the Company as a condition of such transfer.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Company Information</u>. Investor understands that the Company is subject to all the risks that apply to early-stage companies, whether or not those risks are explicitly set out in the Offering Circular. Investor has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company's business, management and financial affairs with officers and management of the Company and has had the opportunity to review the Company's operations and facilities. Investor has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Investor acknowledges that except as set forth herein, no representations or warranties have been made to Investor, or to Investor's advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Valuation</u>. Investor acknowledges that the price of the Shares was set by the Company arbitrarily and no warranties are made as to value. Investor further acknowledges that future offerings of Securities may be made at lower valuations, with the result that Investor's investment will bear a lower valuation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Domicile</u>. Investor maintains Investor's domicile (and is not a transient or temporary resident) at the address shown on the signature page.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>No Brokerage Fees</u>. There are no claims for brokerage commission, finders' fees or similar compensation incurred by Investor in connection with the transactions contemplated by this Agreement or related documents based on any arrangement or agreement entered into or binding upon Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>Foreign Investors</u>. If Investor is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Investor hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Shares or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Shares, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Shares. Investor's subscription and payment for and continued beneficial ownership of the Shares will not violate any applicable securities or other laws of Investor's jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>ERISA</u>. On the signature page of this Agreement, Investor has correctly indicated by check mark if Investor is a "benefit plan investor" (as defined in Department of Labor Regulation Section 2510.2-101 (the "<u>DOL Regulation</u>")).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Broker-Dealer</u>. Investor understands and acknowledges that Entoro Securities, LLC, a Delaware limited liability company ("<u>Entoro</u>"), is serving as the Company's broker-dealer, and is providing compliance and administrative services to the Company for the offering of securities pursuant to Regulation A as described in the Offering Statement (the "<u>Offering</u>"). These services include a comprehensive compliance review of all prospective investors in the Offering. While Entoro has not recommended this investment to you, and while your decision to invest in the Company creates no formal relationship between the Company's investors and Entoro, as the Company's broker-dealer, Entoro requires that you affirm that you have reviewed Entoro's most current, then in effect, Customer Relationship Summary (Form CRS), as available at https://docsend.com/view/fx2se9uv5wtagf9r. By signing this Agreement, you hereby affirm that you have reviewed such Custom Relationship Summary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Survival of Representations and Indemnity</u>. The representations, warranties and covenants made by Investor herein shall survive the termination of this Agreement. Investor agrees to indemnify and hold harmless the Company and its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys' fees, including attorneys' fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by Investor to comply with any covenant or agreement made by Investor herein or in any other document furnished by Investor to any of the foregoing in connection with this transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Governing Law; Arbitration; Jurisdiction; Waiver of Jury Trial</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Governing Law</u>. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware without regard to its conflict of laws principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Arbitration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) In the event of any controversy or dispute between the Company and Investor arising out of or in connection with this Agreement, the parties shall attempt, promptly and in good faith, to resolve any such dispute. If we are unable to resolve any such dispute within a reasonable time (not to exceed thirty (30) days), then either party may submit such controversy or dispute to mediation. If the dispute cannot be resolved through mediation, then the parties shall be free to pursue arbitration as described below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) After exhausting the mediation process in <u>Section 6(b)(i)</u> above, upon written request of either Investor or the Company, any controversy or claim between or among the parties hereto including but not limited to those arising out of or relating to this Agreement, any related agreements or instruments executed in connection with the this Agreement (the "<u>Transaction Documents</u>"), including any claim based on or arising from an alleged tort, shall be determined by binding arbitration in accordance with the Federal Arbitration Act (or if not applicable, the applicable state law), the Commercial Arbitration Rules of the American Arbitration Association, and the "Special Rules" set forth below unless both parties, in their respective sole discretion, agree in writing to mediate the dispute prior to submitting to binding arbitration. In the event of any inconsistency, the Special Rules shall control. Judgment upon any arbitration award may be entered in any court having jurisdiction. Any party to this Agreement may bring an action, including a summary or expedited proceeding, to compel arbitration of any controversy or claim to which this agreement applies in any court having jurisdiction over such action. The party that requests arbitration has the burden to initiate the arbitration proceedings pursuant to and by complying with the Commercial Arbitration Rules of the American Arbitration Association and shall pay all associated administrative and filing fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The arbitration shall be conducted in the City of Fort Worth, Tarrant County, Texas and administered by the American Arbitration Association. All arbitration hearings will be commenced within sixty (60) days of the written request for arbitration, and if the arbitration hearing is not commenced within the sixty (60) days, the party that requested arbitration shall have waived its election to arbitrate. Nothing in this Agreement shall be deemed to (i) limit the applicability of any otherwise applicable statutes of limitation or repose and any waivers contained in this Agreement; or (ii) limit the right of the Company hereto (A) to exercise self-help remedies such as (but not limited to) setoff, or (B) to obtain from a court provisional or ancillary remedies such as (but not limited to) injunctive relief or the appointment of a receiver in accordance with applicable law. The Company may exercise such self-help remedies or obtain such provisional or ancillary remedies before, during or after the pendency of any arbitration proceeding brought pursuant to this Agreement or any other Transaction Document. Neither this exercise of self-help remedies nor the institution or maintenance of an action for provisional or ancillary remedies shall constitute a waiver of the right of any party, including the claimant in any such action, to arbitrate the merits of the controversy or claim occasioning resort to such remedies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) Investor AND THE COMPANY AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further, unless both Investor and the Company agree otherwise, the arbitrator may not consolidate more than one person's claims with Investor's claims, and may not otherwise preside over any form of a representative or class proceeding. **WITHOUT LIMITING THE FOREGOING, INVESTOR SPECIFICALLY acknowledges and agrees that by entering into this Arbitration Provision** **:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)** **Investor Is giving up Investor'S right to have a trial by jury to resolve any dispute ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY;** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)** **Investor is giving up Investor'S right to serve as a representative or to participate as a member of a class of claimants in any lawsuit filed against THE COMPANY ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANACTIONS CONTEMPLATED HEREBY; AND** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)** **Investor agrees that all disputes ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANACTIONS CONTEMPLATED HEREBY shall be resolved by binding arbitration <u>ONLY</u> on an individual basis with Investor. Therefore, the Arbitrator shall not conduct class arbitration.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) This <u>Section 6(b)</u> applies to claims under the U.S. federal securities laws arising out of or related to this Agreement and the transactions contemplated hereby. The scope of this <u>Section 6(b)</u> is to be given the broadest possible interpretation that is enforceable. Notwithstanding the foregoing, nothing in this <u>Section 6(b)</u> will be deemed a waiver of compliance with the federal securities laws and the rules and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Waiver of Jury Trial</u>. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF EITHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF, EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. This <u>Section 6(c)</u> applies to claims under the U.S. federal securities laws arising out of or related to this Agreement and the transactions contemplated hereby. The scope of this <u>Section 6(c)</u> is to be given the broadest possible interpretation that is enforceable. Notwithstanding the foregoing, nothing in this <u>Section 6(c)</u> will be deemed a waiver of compliance with the federal securities laws and the rules and regulations thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Attorney Fees</u>. If the Company is a prevailing party in any legal proceeding brought as a result of a dispute under this Agreement, the Company will be entitled to recover from the non-prevailing party all costs of the proceeding and reasonable attorney fees, unless otherwise specifically prohibited by statute. The term "prevailing party" means the party that the court determines is the prevailing party, regardless of whether that party obtains any monetary, declaratory, injunctive, equitable, or nominal relief. For monetary claims, no award of damages is necessary for the court to determine that the party has prevailed. For nonmonetary claims, no equitable relief is necessary for the court to determine that the party has prevailed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Notices</u>. Notice, requests, demands and other communications relating to this Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed on the date of such delivery to the address of the respective parties as follows; or (d) delivered to the Company via the Company's website or mobile application via the link labeled "Legal Notices"; or (e) delivered to Investor via the message center of the Company's website or mobile application:

If to the Company, to: VictoryBase Corporation Attention: Investor relations P.O. Box 617 Roanoke, TX 76262 <br>If to an Investor, to Investor's address or email address as shown on the signature page hereto;

or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Miscellaneous</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement is not transferable or assignable by Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Investor and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) None of the provisions of this Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) In the event any part of this Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) This Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Shares shall be immediately subject to this Agreement, to the same extent that the Shares, immediately prior thereto, shall have been covered by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

[*Signature page follows.*]

The undersigned have executed this Agreement as of ____________, 20___.

**INVESTOR:** 

---

| | | | |
|:---|:---|:---|:---|
|  |  | *If the Shares are to be purchased in joint names, both Investors must sign*: | *If the Shares are to be purchased in joint names, both Investors must sign*: |
| Signature | Signature | Signature | Signature |
| Name (Please Print) | Name (Please Print) | Name (Please Print) | Name (Please Print) |
| Email address | Email address | Email address | Email address |
| Address 1 | Address 1 | Address 1 | Address 1 |
| Address 2 | Address 2 | Address 2 | Address 2 |
| City | State | City | State |
| Zip/Postal | Country | Zip/Postal | Country |
| Telephone Number | Telephone Number | Telephone Number | Telephone Number |
| Tax ID No. | Tax ID No. | Tax ID No. | Tax ID No. |
| Date |  | Date |  |

---

Please indicate by check mark below if Investor is a "benefit plan investor" (as defined in DOL Regulation). The DOL Regulation defines a "benefit plan investor" as (i) an employee benefit plan, whether or not subject to Title I of ERISA, (ii) any plan described in Section 4975(e)(1) of the Internal Revenue Code (such as an individual retirement account or Keogh plan), or (iii) any entity whose underlying assets include plan assets by reason of a plan's investment in the entity.

☐ Investor is a "benefit plan investor."

☑ Investor is NOT a "benefit plan investor."

VictoryBase Corporation

Subscription Agreement

By signing below, the Company hereby accepts the subscription under the foregoing Agreement.

---

| |
|:---|
| **COMPANY:** |
| VictoryBase Corporation |
| By: |
| Name: |
| Title: |

---

VictoryBase Corporation

Subscription Agreement

**<u>Schedule 1</u>**

---

| | |
|:---|:---|
| "<u>Purchase Price Per Share</u>": | $10.00 |
| "<u>Initial Number of Shares</u>": | [_____] |
| "<u>Monthly Purchases</u>"? (If yes, check box): | ☐ |
| (If yes, complete the following): |  |
| "<u>Monthly Share Amount</u>": | [_____] |
| "<u>Number of Months</u>": | [_____] |
| The Shares will be owned by, and should be recorded on the Company's books as held in the name(s) of:<br>|  |
| <u> </u> |  |
| (print name of owner or joint owners) |  |
| "<u>Aggregate Number of Shares</u>": | [*Sum of (i) Initial Number of Shares, and (ii) the product of (A) Monthly Share Amount, if any, and (B) the Number of Months*] |
| "<u>Aggregate Purchase Price</u>": | [*Product of (i) Aggregate Number of Shares, and (ii) the Purchase Price Per Share*] |

---

**<u>APPENDIX A</u>**

*An "accredited investor" includes the following categories of investors:*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Securities Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership, or limited liability company, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Any natural person whose individual net worth, or joint net worth with that person's spouse or spousal equivalent, exceeds $1,000,000.

For purposes of calculating net worth under this paragraph (5):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) The person's primary
residence shall not be included as an asset;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) Indebtedness that
is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale
of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of
securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence,
the amount of such excess shall be included as a liability); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Indebtedness that
is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the
sale of securities shall be included as a liability;

Appendix A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in §230.506(b)(2)(ii);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8) Any entity in which all of the equity owners are accredited investors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9) Any entity, of a type not listed in paragraph (1), (2), (3), (7), or (8), not formed for the specific purpose of acquiring the securities offered, owning investments in excess of $5,000,000. For purposes of this paragraph (9), "investments" is defined in rule 2a51-1(b) under the Investment Company Act of 1940;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10) Any natural person holding in good standing one or more professional certifications or designations or credentials from an accredited educational institution that the SEC has designated as qualifying an individual for accredited investor status.

In determining whether to designate a professional certification or designation or credential from an accredited educational institution for purposes of this paragraph (10), the SEC will consider, among others, the following attributes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) The
 certification, designation, or credential arises out of an examination or series of examinations
 administered by a self-regulatory organization or other industry body or is issued by an
 accredited educational institution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) The
 examination or series of examinations is designed to reliably and validly demonstrate an
 individual's comprehension and sophistication in the areas of securities and investing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) Persons
 obtaining such certification, designation, or credential can reasonably be expected to have
 sufficient knowledge and experience in financial and business matters to evaluate the merits
 and risks of a prospective investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) An
 indication that an individual holds the certification or designation is either made publicly
 available by the relevant self-regulatory organization or other industry body or is otherwise
 independently verifiable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11) Any natural person who is a "knowledgeable employee," as defined in rule 3c-5(a)(4) under the Investment Company Act of 1940, of the issuer of the securities being offered or sold where the issuer would be an investment company, as defined in section 3 of the Investment Company Act of 1940, but for the exclusion provided by either section 3(c)(1) or section 3(c)(7) of the Investment Company Act of 1940;

Appendix A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12) Any "family office," as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. With
 assets under management in excess of $5,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. That
 is not formed for the specific purpose of acquiring the securities offered; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Whose
 prospective investment is directed by a person who has such knowledge and experience in financial
 and business matters that such family office is capable of evaluating the merits and risks
 of the prospective investment; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13) Any "family client," as defined in rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940, of a family office meeting the requirements in paragraph (12) and whose prospective investment in the issuer is directed by such family office pursuant to paragraph (12)(iii).

Appendix A

## Ex1Sa-6

**SECOND Amendment to**

**LIMITED LIABILITY COMPANY AGREEMENT**

**OF**

**VICTORYBASE HOLDINGS LLC**

This SECOND Amendment to LIMITED LIABILITY COMPANY AGREEMENT (this "<u>Amendment</u>"), dated as of February 10, 2023 (the "<u>Effective Date</u>"), amends the Limited Liability Company Agreement, dated December 9, 2020, of VictoryBase Holdings LLC, a Texas limited liability company (the "<u>Company</u>"), as amended by the First Amendment thereto, dated January 1, 2023 (as amended, the "<u>LLC Agreement</u>"), and is hereby adopted by the Manager of the Company. Capitalized terms used but not defined in this Amendment shall have the meanings given to such terms in the LLC Agreement.

<u>Recitals</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Sections
 3.2 and 3.3 of the LLC Agreement permit the Manager of the Company to (i) create one or more
 classes or series of Units, (ii) issue such additional Units upon such terms as the Manager
 shall determine, and (iii) amend the LLC Agreement as necessary in connection with the issuance
 of additional Units and admission of additional Members without the requirement of any consent
 or acknowledgement of any other Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. The
 Manager desires to amend the LLC Agreement for the purposes of (i) creating a new class of
 Units to be called Class C Units, and (ii) reflecting the issuance of 30,000 Class C Units
 (as defined below) to VictoryBase RE, LLC, a Texas limited liability company (" <u>VBRE</u> "),
 and (iii) admitting VBRE as a member of the Company with respect to such Class C Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. As
 set forth herein, the Class C Units (in whole, but not in part) will be exchangeable at any
 time and from time to time, with the mutual consent of the Manager and the holder(s) of Class
 C Units for Class A Units at a conversion ratio that results in the exchanging holder of
 Class C Units receiving Class A Units with a fair market value equal to the fair market value
 of the Class C Units being exchanged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D. Effective
 October 28, 2022, the Company formed VictoryBase NY1, LLC, a Texas limited liability company
 (" <u>NY1</u> "), and the Company is the sole holder of common membership interests
 of NY1;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E. On
 or about the Effective Date, the Company will be contributing (the " <u>Class C Contribution</u> ")
 an amount equal to $300,000 (the " <u>Class C Contribution Amount</u> ") to
 NY1, and NY1 will use such funds to pay a portion of the purchase price for certain real
 property in Sackets Harbor, New York (the " <u>NY1 Properties</u> "); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. As
 described more fully below, until the Class C Units are exchanged for Class A Units in accordance
 with the terms of this Amendment, all profits and losses (and items of income, expenses,
 gains and losses) related to the Company's ownership of common membership interests
 in NY1 will be allocated exclusively to the holder(s) of the Class C Units.

NOW, THEREFORE, the LLC Agreement is hereby amended as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Creation and Designation of Class C Units</u>. The Manager hereby creates and designates a new class of units to be called Class C Units. The Class C Units shall have the rights and obligations set forth on <u>Exhibit C</u> attached hereto and otherwise enjoy the rights of Units of the Company under the Company Agreement. In exchange for the contribution of the Class C Contribution Amount to the Company on or about the Effective Date, the Company will issue 30,000 Class C Units to VBRE effective as of the Effective Date, and VBRE is hereby admitted as a member of the Company with respect to such Class C Units.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Amendments to Article I</u>. Article I of the LLC Agreement is hereby amended to add the following definition thereto:

"<u>Class C Units</u>" means Units representing a fractional part of the Company Interests of the Members and having the rights and obligations specified with respect to the Class C Units in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Amendment to Section 4.1</u>. Section 4.1 of the LLC Agreement is hereby amended by added the following introductory phrase prior to paragraph (a) thereof (to apply to paragraphs (a) and (b) thereof):

"Subject to the rights of the holders of Class C Units set forth in Sections 1 and 2 of <u>Exhibit C</u> attached hereto and the rights of holders of any other class of series of Units hereafter created and issued by the Manager,"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Amendment to Section 5.2</u>. Section 5.2 of the LLC Agreement is hereby amended by added the following phrase to the end of the introductory sentence thereof:

", subject to the rights of the holders of Class C Units set forth in Section 3 of <u>Exhibit C</u> attached hereto and the rights of holders of any other class of series of Units hereafter created and issued by the Manager"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Amendment to Section 5.3</u>. Section 5.3 of the LLC Agreement is hereby amended by added the following phrase prior to paragraph (a) thereof (to apply to paragraphs (a) through (g) thereof):

"Subject to the rights of the holders of Class C Units set forth in Section 4 of <u>Exhibit C</u> attached hereto and the rights of holders of any other class of series of Units hereafter created and issued by the Manager,"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Amendment to Section 5.5</u>. Section 5.5 of the LLC Agreement is hereby amended by added the following phrase "prior to paragraph (a) thereof (to apply to paragraphs (a) through (f) thereof):

"Subject to the rights of the holders of Class C Units set forth in Section 5 of <u>Exhibit C</u> attached hereto and the rights of holders of any other class of series of Units hereafter created and issued by the Manager,"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Amendment to Section 11.1</u>. Section 11.1 of the LLC Agreement is hereby amended to (i) re-number the existing Section 11.1 as paragraph (a) of Section 11.1, and (ii) add a new paragraph (b) to Section 11.1 to read in its entirety as follows:

"(b) <u>Exchange Rights for Class C Units</u>. At any time after the two-year anniversary of the Effective Date (or sooner with the prior written consent of the holders of a majority of the Class C Units then outstanding) the Manager may cause all (but not less than all) of the Class C Units to be exchanged into Class A Units (a "<u>Class C Unit Exchange</u>"). Such Class C Units shall be exchangeable pursuant to this <u>Section 11.1(b)</u> at a conversion ratio that results in each former holder of Class C Units receiving Class A Units with a fair market value equal to the fair market value of the Class C Units being exchanged. The fair market value shall be determined by mutual agreement of the Manager and the holders of a majority of the Class C Units, but if no such agreement can be reached, such fair market value will be determined by an experienced independent appraiser reasonably selected by the Manager."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <u>Amendment to Schedule A</u>. Schedule A to the LLC Agreement is hereby amended to read in its entirety as set forth on <u>Schedule A</u> attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <u>Addition of Exhibit C</u>. A new Exhibit C is hereby to the LLC Agreement to read in its entirety set forth on <u>Exhibit C</u> hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <u>No Other Amendments</u>. Except as specifically set forth above, all terms and conditions of the LLC Agreement shall remain unchanged and in full force and effect and not be affected by this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <u>Governing Law</u>. This Amendment shall be governed by the internal law of the State of Texas, without regard to its conflict-of-laws provisions.

[*Signature page follows.*]

IN WITNESS WHEREOF, the undersigned Manager of the Company has executed this Amendment as of the date first written above.

---

| | |
|:---|:---|
| **MANAGER**: | **MANAGER**: |
| VICTORYBASE CORPORATION | VICTORYBASE CORPORATION |
| By: |  |
|  | &nbsp;&nbsp;&nbsp;Thomas Paquin, |
|  | &nbsp;&nbsp;&nbsp;Chief Executive Officer |

---

Second Amendment to

Limited Liability Company Agreement

of

VictoryBase Holdings LLC

<u>Schedule A</u>

<u>Schedule of Members</u>

<u>of</u> 

<u>VictoryBase Holdings LLC</u>

As of February 10, 2023

---

| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**Name and Address of Member** | &nbsp;&nbsp;**Name and Address of Member** | &nbsp;&nbsp;**Number of <br> Units** | &nbsp;&nbsp;**Class of <br> Units** |
| &nbsp;&nbsp;**VictoryBase RE, LLC** | &nbsp;&nbsp;**VictoryBase RE, LLC** | &nbsp;&nbsp;715066 | &nbsp;&nbsp;Class A |
| &nbsp;&nbsp;<u>Physical address</u>: <br> 550 Reserve Street, <br> Suite 190 <br> Southlake, TX 76092<br> Attn: Thomas Paquin | &nbsp;&nbsp;<u>Mailing address</u>:<br> P.O. Box 617 <br> Roanoke, TX 76262 <br> Attn: Thomas Paquin<br>E-mail: tpaquin@victorybase.com | &nbsp;&nbsp;715066 | &nbsp;&nbsp;Class A |
| &nbsp;&nbsp;<u>Physical address</u>: <br> 550 Reserve Street, <br> Suite 190 <br> Southlake, TX 76092<br> Attn: Thomas Paquin | &nbsp;&nbsp;<u>Mailing address</u>:<br> P.O. Box 617 <br> Roanoke, TX 76262 <br> Attn: Thomas Paquin<br>E-mail: tpaquin@victorybase.com | &nbsp;&nbsp;30000 | &nbsp;&nbsp;Class C |
| &nbsp;&nbsp;**VictoryBase Corporation** | &nbsp;&nbsp;**VictoryBase Corporation** | &nbsp;&nbsp;1 | &nbsp;&nbsp;Class B |
| &nbsp;&nbsp;<u>Physical address</u>:<br> 550 Reserve Street, <br> Suite 190<br> Southlake, TX 76092<br> Attn: Thomas Paquin | &nbsp;&nbsp;<u>Mailing address</u>:<br> P.O. Box 617<br> Roanoke, TX 76262<br> Attn: Thomas Paquin<br>E-mail: tpaquin@victorybase.com<br>| &nbsp;&nbsp;1 | &nbsp;&nbsp;Class B |

---

<u>Exhibit C</u>

<u>Class C Units</u>

The Class C Units shall have the rights and responsibilities as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Separate Accounting of NY1 Division</u>. Notwithstanding any provision of the LLC Agreement to the contrary, the Company will separately account for any assets (including without limitation the Class C Contribution) and operations and any Net Profits and/or Net Losses (and related items of income, expenses, gains and losses) related to the Company's ownership of common membership interests of NY1 (including without limitation a reasonable amount of Company overhead allocated thereto) (collectively, the "<u>NY1 Division</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Distributions under Section 4.1(a)</u>. If the Manager declares Distributions to the Members under <u>Section 4.1(a)</u> of the LLC Agreement, the Company will allocate the aggregate amount of such Distributions as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1. Any Distributions of assets of the NY1 Division will be distributed exclusively to the holders of Class C Units, proportionately based upon the number of Class C Units held by such holders of Class C Units; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2. Any Distribution of other assets (not part of the NY1 Division) will be allocated among the holders of Class A Units and Class B Units, in accordance with <u>Section 4.1(a)</u> of the LLC Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Tax Distributions under Section 4.1(b)</u>. If the Company makes any Tax Distributions to the Members under <u>Section 4.1(b)</u> of the LLC Agreement, then the Company will allocate the aggregate amount of such Tax Distributions as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1. Any Tax Distributions of assets of the NY1 Division will be distributed exclusively to the holders of Class C Units, proportionately based upon the number of Class C Units held by such holders of Class C Units; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2. Any Tax Distributions of other assets (not part of the NY1 Division) will be distributed exclusively to the holders of Class A Units and Class B Units, in accordance with <u>Section 4.1(b)</u> of the LLC Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <u>Allocations under Section 5.2</u>. Notwithstanding any provision of <u>Section 5.2</u> to the Agreement to the contrary, all Net Profits and Net Losses (and items of income, expenses, gains and losses) of the NY1 Division will be allocated exclusively to the holder(s) of Class C Units. All other Net Profits and Net Losses (and items of income, expenses, gains and losses) for all other assets or operations of the Company (excluding the NY1 Division) will be allocated exclusively to the holders of Class A Units and Class B Units, such Net Profits and Net Losses to be allocated among the Class A Members and Class B Members in accordance with <u>Sections 5.2(a) and 5.2(b)</u> of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <u>Regulatory Allocations under Section 5.3</u>. Notwithstanding any provision of <u>Section 5.3</u> of the Agreement to the contrary, the Company will separately account for the NY1 Division. All regulatory allocations under <u>Section 5.3</u> of the Agreement related to the NY1 Division will be allocated exclusively to the holder(s) of Class C Units and will be excluded in its entirety from the Net Profits and Net Losses allocated among the holders of Class A Units and Class B Units in accordance with <u>Sections 5.3(a) through 5.2(f)</u> of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <u>Tax Allocations under Section 5.5</u>. Notwithstanding any provision of <u>Section 5.5</u> of the Agreement to the contrary, the Company will separately account for the NY1 Division. All tax allocations related to the NY1 Division will be allocated exclusively to the holder(s) of Class C Units and will be excluded in their entirety from the tax allocations allocated among the holders of Class A Units and Class B Units in accordance with <u>Sections 5.5(a) through 5.5(f)</u> of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <u>Liquidation Option</u>. At any time any Class C Units are outstanding, holders of a majority of the outstanding Class C Units shall have the right (the "<u>Liquidation Option</u>") to require the Company to either (i) sell all of the Company's interests in NY1 and distribute the proceeds thereof (net of expenses and a reasonable reserve for future expenses) to the holders of Class C Units (an "<u>NY1 Equity Sale</u>"), or (ii) cause the Company to cause NY1 to sell the NY1 Properties and all other assets held by NY1 and distribute the proceeds thereof (after paying all liabilities of NY1 or making reasonable reserves for any such liabilities) to the members of NY1 (and then the Company shall distribute such distributions received from NY1 (after paying all liabilities of the Company related to the NY1 Division or making reasonable reserves for any such liabilities) to the holders of Class C Units (an "<u>NY1 Liquidation</u>"). Holders of a majority of the Class C Units may exercise their Liquidation Option on behalf of all holders of Class C Units by providing written notice of such exercise to the Company (a "<u>Liquidation Notice</u>"). Upon receipt of a Liquidation Notice, the Company shall use commercially reasonable efforts to expeditiously seek to effectuate an NY1 Equity Sale or an NY1 Liquidation.

[*End of document*.]

## Ex1Sa-6

EXECUTION VERSION 2.9.23

**LIMITED LIABILITY COMPANY AGREEMENT**

**OF**

**VICTORYBASE NY1, LLC**

**(a Texas limited liability company)**

Dated as of February 10, 2023

THE INTERESTS ISSUED UNDER THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "<u>SECURITIES ACT</u>"), OR REGISTERED OR QUALIFIED UNDER THE APPLICABLE STATE SECURITIES LAWS, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION AND QUALIFICATION PROVIDED IN THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE STATE SECURITIES LAWS, OR UNLESS SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

IN ADDITION, THE INTERESTS ISSUED UNDER THIS AGREEMENT MAY BE SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH HEREIN.

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| **ARTICLE 1** **DEFINITIONS AND TERMS** | **ARTICLE 1** **DEFINITIONS AND TERMS** | **1** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 | Definitions | 1 |
| **ARTICLE 2 THE COMPANY AND ITS BUSINESS** | **ARTICLE 2 THE COMPANY AND ITS BUSINESS** | **8** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 | Formation of Company; Admission of Preferred Member and Issuance of Preferred Member Interest | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 | Name | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 | Principal Office | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 | Registered Office and Registered Agent | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 | Period of Duration | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 | Business and Purpose of the Company | 8 |
| **ARTICLE 3** **MEMBERS AND CAPITAL CONTRIBUTIONS** | **ARTICLE 3** **MEMBERS AND CAPITAL CONTRIBUTIONS** | **9** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 | Names and Addresses of Members | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 | Preferred Member Interest | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 | Capital Contributions | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 | Additional Contributions | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 | Redemption of Preferred Member Interest | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 | Rights With Respect To Capital | 10 |
| **ARTICLE 4** **CAPITAL ACCOUNTS AND ALLOCATIONS** | **ARTICLE 4** **CAPITAL ACCOUNTS AND ALLOCATIONS** | **10** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 | Capital Accounts | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 | Allocations | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 | Special Allocations and Compliance with Section 704(b) | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 | Tax Matters | 13 |
| **ARTICLE 5** **DISTRIBUTIONS** | **ARTICLE 5** **DISTRIBUTIONS** | **14** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 | Distributions of Available Cash and Net Capital Proceeds | 14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 | Effect of Transfers | 14 |
| **ARTICLE 6** **MANAGEMENT; OFFICERS** | **ARTICLE 6** **MANAGEMENT; OFFICERS** | **15** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 | Management; Officers | 15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 | Management Duties, Authority and Powers | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 | Restrictions on Manager's and Officers' Authority | 16 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 | Duty of Care; Fiduciary Duties | 17 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 | Advances and Reimbursement to the Manager | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 | Limitations on Liability of the Manager to Members | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 | Other Business Ventures | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.8 | Successor Manager | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.9 | Compensation of the Manager, Officers and Preferred Member | 18 |
| **ARTICLE 7** **MEMBERS' MEETINGS, RIGHTS, OBLIGATIONS AND LIABILITIES** | **ARTICLE 7** **MEMBERS' MEETINGS, RIGHTS, OBLIGATIONS AND LIABILITIES** | **18** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 | Limitation of Liability | 18 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 | No Participation in Management | 18 |

---

- i -

---

| | | |
|:---|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 | Return of Capital Contributions | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 | Rights to Remove Manager | 19 |
| **ARTICLE 8** **RESTRICTIONS ON TRANSFER OR CONVERSION OF INTERESTS** | **ARTICLE 8** **RESTRICTIONS ON TRANSFER OR CONVERSION OF INTERESTS** | **19** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 | Transfer or Assignment of Interests | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 | Express Intention to Transfer | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 | Admission of New Members | 20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 | Void Transfers | 20 |
| **ARTICLE 9** **ADDITIONAL CAPITAL CONTRIBUTIONS** | **ARTICLE 9** **ADDITIONAL CAPITAL CONTRIBUTIONS** | **20** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 | Additional Capital Contributions | 20 |
| **ARTICLE 10 BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS** | **ARTICLE 10 BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS** | **21** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 | Maintenance of Books and Records | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 | Bank Accounts | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 | Tax Matters Handled by the Manager | 21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4 | Reports | 22 |
| **ARTICLE 11 TERMINATION AND DISSOLUTION** | **ARTICLE 11 TERMINATION AND DISSOLUTION** | **23** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 | Dissolution | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 | Statement of Intent to Dissolve | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 | Conduct of Business | 23 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4 | Distribution of Net Proceeds | 23 |
| **ARTICLE 12 INDEMNIFICATION OF MEMBERS, THE MANAGER AND THEIR AFFILIATES** | **ARTICLE 12 INDEMNIFICATION OF MEMBERS, THE MANAGER AND THEIR AFFILIATES** | **24** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 | Indemnification of the Members | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2 | Guarantee of Company Indebtedness | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3 | Expenses | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.4 | Assets of the Company | 24 |
| **ARTICLE 13 UNILATERAL SALE RIGHT** | **ARTICLE 13 UNILATERAL SALE RIGHT** | **25** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 | Unilateral Sale Right | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2 | Cooperation of the Members | 25 |
| **ARTICLE 14 MISCELLANEOUS PROVISIONS** | **ARTICLE 14 MISCELLANEOUS PROVISIONS** | **25** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.1 | Counterparts | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.2 | Survival of Rights | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.3 | Severability | 25 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.4 | Notices | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.5 | Construction | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.6 | Section Headings | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.7 | GOVERNING LAW | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.8 | VENUE | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.9 | WAIVER OF JURY TRIAL | 27 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.10 | Pronouns and Plurals | 27 |

---

- ii -

&nbsp;&nbsp;&nbsp;&nbsp;14.11 Time
 of the Essence 27

&nbsp;&nbsp;&nbsp;&nbsp;14.12 Members'
 Representations and Warranties 27

&nbsp;&nbsp;&nbsp;&nbsp;14.13 Third
 Party Beneficiaries 27

&nbsp;&nbsp;&nbsp;&nbsp;14.14 Assignment;
 Successors and Assigns 27

&nbsp;&nbsp;&nbsp;&nbsp;14.15 Amendment 28

&nbsp;&nbsp;&nbsp;&nbsp;14.16 Partition 28

&nbsp;&nbsp;&nbsp;&nbsp;14.17 Entire
 Agreement 28

&nbsp;&nbsp;&nbsp;&nbsp;14.18 Waiver 28

&nbsp;&nbsp;&nbsp;&nbsp;14.19 Attorneys'
 Fees 28

&nbsp;&nbsp;&nbsp;&nbsp;14.20 Confidentiality 29

**EXHIBITS**

A Property Legal Description

B Representations and Warranties

C Form Certificate of Redemption

- iii -

**LIMITED LIABILITY COMPANY AGREEMENT**

**OF**

**VICTORYBASE NY1, LLC**

THIS LIMITED LIABILITY COMPANY AGREEMENT of VICTORYBASE NY1, LLC, a Texas limited liability company (the "<u>Company</u>"), is made, entered into and effective as of February 10, 2023, by and between LAWLER REALTY, LLC, a New York limited liability company, as a member of the Company ("<u>Preferred Member</u>"), and VICTORYBASE HOLDINGS LLC, a Texas limited liability company, as a member of the Company ("<u>Common Member</u>") and the initial Manager.

**RECITALS**

WHEREAS, the Company was formed pursuant to the provisions of the Texas Revised Uniform Limited Liability Company Act, Texas Code, Title 6, Sections 18-101, et seq., as amended from time to time (the "<u>Act</u>"), pursuant to that certain Certificate of Formation of the Company, dated October 28, 2022 (the "<u>Certificate of Formation</u>"), filed in the office of the Secretary of State of Texas (the "<u>Secretary of State</u>") on October 28, 2022; and

WHEREAS, each of Common Member and Preferred Member desires to enter into this Agreement to set forth the respective rights and obligations of the Members and the Manager, effective as of the date hereof and on the terms and conditions as set forth in this Agreement; and

NOW, THEREFORE, in consideration of the mutual covenants and the promises contained herein (the receipt and sufficiency of which being hereby acknowledged), the parties hereto, intending to be legally bound, do hereby agree as follows:

**ARTICLE 1<u><br> DEFINITIONS AND TERMS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 **<u>Definitions</u>**. Unless the context otherwise requires, the following terms shall have the following meanings for the purposes of this Agreement:

"<u>Act</u>" has the meaning set forth in the Recitals to this Agreement.

"<u>Adjusted Capital Account Deficit</u>" means, with respect to any Member for any period, the deficit balance, if any, in such Member's Capital Account as of the end of such period, after giving effect to the following adjustments:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Credit to such Capital Account any amounts that such Member is deemed obligated to restore as described in the penultimate sentence of Treasury Regulation Section 1.704-2(g)(1) and in Treasury Regulation Section 1.704-2(i)(5); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Debit to such Capital Account the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistent therewith.

"<u>Affiliate</u>" means, with respect to any specified Person, a Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the Person specified.

"<u>Agreement</u>" means this Limited Liability Company Agreement and all Exhibits referred to herein and attached hereto, each of which is made a part hereof, as amended, supplemented or otherwise modified from time to time. Words such as "herein", "hereinafter", "hereto", "hereby" and "hereunder", when used with reference to this Agreement, refer to this Agreement as a whole, unless the context otherwise requires.

"<u>Authorized Signatory</u>" has the meaning set forth in <u>Section 6.1.3</u>.

"<u>Available Cash</u>" means, for each Fiscal Year or other period, all cash receipts of the Company from all sources, proceeds from rental or business interruption insurance and any funds released during such period from cash reserves previously established, without reduction for any non-cash charges, but less amounts used during such Fiscal Year or other period (i) to pay current operating expenses and to pay or establish reasonable reserves for future expenses, fees, commissions, debt payments, capital improvements and replacements, environmental remediation, rehabilitation and construction costs and other contingencies of the Company, (ii) to pay any expenditures made, or expenses incurred, by the Company and any subsidiary in connection with a sale or refinancing, or (iii) reserves retained from such cash receipts or the proceeds of a sale as determined by the Manager.

"<u>Book Basis</u>" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the initial Book Basis of any asset contributed (or deemed contributed) to the Company shall be such asset's gross fair market value at the time of such contribution as reasonably determined by the Members;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the Book Basis of all Company assets may be adjusted in the discretion of Members to equal their respective gross fair market values, as reasonably determined by the Members, at the times specified in Treasury Regulations Section 1.704-1(b)(2)(iv)(f);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any adjustments to the adjusted basis of any asset of the Company pursuant to Section 734 or Section 743 of the Code shall be taken into account in determining such asset's Book Basis in a manner consistent with Treasury Regulations Section 1.704-1(b)(2)(iv)(m);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the Book Basis of any Company asset distributed or deemed distributed by the Company to any Member shall be adjusted immediately prior to such distribution to equal its gross fair market value as of the date of distribution, as reasonably determined by the Members; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) if the Book Basis of an asset has been determined pursuant to clause (a), (b) or (c) of this definition, such Book Basis shall thereafter be adjusted in the same manner as would the asset's adjusted basis for federal income tax purposes, except that depreciation deductions shall be computed based on the asset's Book Basis as so determined, rather than on its adjusted tax basis.

"<u>Business Day</u>" means any day other than a Saturday, Sunday or other day on which national banks in Dallas, Texas, or New York, New York, are required or permitted to be closed.

"<u>Business of the Company</u>" means the purpose of the Company as described in <u>Section 2.6</u>.

"<u>Capital Account</u>" means the separate account maintained for each Member under <u>Section 4.1</u> hereof.

"<u>Capital Event</u>" means (i) any sale, transfer, or other disposition or liquidation of the Property (including a foreclosure sale of the Property to an unaffiliated third party) or the Interests in the Company; (ii) the refinancing of the Senior Loan; or (iii) a casualty (where the proceeds are not to be used for reconstruction), condemnation or a similar event with respect to any part of the Property (other than business interruption or rental loss insurance proceeds), where the gross proceeds from such event exceed $100,000.

"<u>Capital Contribution</u>" means the cash, cash equivalents, promissory obligations and the fair market value of property other than cash (net of liabilities which the Company assumes or takes the property subject to) contributed, or deemed contributed, to the capital of the Company by a Member.

"<u>Capital Proceeds</u>" means, with respect to any Capital Event, all amounts paid to or received by or on behalf of the Company in connection with such Capital Event.

"<u>Certificate of Formation</u>" has the meaning ascribed thereto in the Recitals to this Agreement, as the same may be amended from time to time.

"<u>Code</u>" means the Internal Revenue Code of 1986, as amended (or any corresponding provision or provisions of any succeeding law).

"<u>Common Equity Investment</u>" means the Capital Contributions made by the Common Member.

"<u>Common Member</u>" has the meaning ascribed thereto in the introductory paragraph of this Agreement and its permitted successors and assigns who or which acquires part or all of the Common Member Interest and are admitted as a substitute member of the Company pursuant to the provisions of this Agreement.

"<u>Common Member Interest</u>" means the Interest in the Company issued to Common Member in consideration of the Common Equity Investment.

"<u>Company</u>" has the meaning ascribed thereto in the introductory paragraph of this Agreement.

"<u>Company Minimum Gain</u>" means "partnership minimum gain" as defined in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d)(1).

"<u>Company Property</u>" means any assets of the Company, whether tangible or intangible, or any portion thereof.

"<u>Control</u>" and its corollaries means the possession, directly or indirectly, 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, which may be subject to certain veto or consent rights of another Person over certain matters.

"<u>Dissolution</u>" means (a) when used with reference to the Company, the earlier to occur of the events described in <u>Section 11.1</u> and (b) when used with reference to any Member, the earlier to occur of the date upon which (i) there is a Dissolution of the Company and (ii) such Member's entire Interest in the Company is terminated by means of a distribution or series of distributions by the Company to such Member.

"<u>Effective Date</u>" means the date of execution of this Agreement by the parties hereto.

"<u>Fiscal Year</u>" means the taxable year of the Company, which shall begin on January 1 and end on December 31, or such other taxable year as required by Section 706(b) of the Code.

"<u>Governmental Authority</u>" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

"<u>Indemnitee</u>" has the meaning ascribed thereto in <u>Section 12.1</u>.

"<u>Interest</u>" means any limited liability company interest in the Company, including, without limitation, the Preferred Member Interest and the Common Member Interest.

"<u>IRR</u>" means the annual discount rate, which shall be applied to a designated Member's Capital Contributions to and distributions from the Company, at which the net present value of such Member's Capital Contributions to and distributions from the Company equals zero; calculated from the actual date such Capital Contribution was made or the actual date such distribution was received, as the case may be. A Member's IRR shall be calculated on the basis of the actual number of days elapsed over a 365- or 366-day year, as the case may be, using cumulative annual compounding. For purposes of this Agreement, IRR shall be calculated using the XIRR function of Microsoft Excel.

"<u>Lender Guaranties and Indemnities</u>" shall mean any guaranty or indemnity provided by a Person in connection with a Senior Loan, including, without limitation, any payment guaranty, recourse carve-out guaranty, environmental indemnity, tax and interest guaranty, completion guaranty or carry guaranty.

"<u>Loan Guarantor</u>" shall have the meaning set forth in <u>Section 12.1</u>.

"<u>Losses</u>" means any and all claims, suits, liabilities, actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts paid in settlement of whatever kind or nature (including, without limitation legal fees and other costs of defense).

"<u>Major Decision</u>" shall have the meaning set forth in <u>Section 6.3</u>.

"<u>Manager</u>" means, as of the Effective Date, the Common Member, or, if applicable, its replacement selected to manage the Company pursuant to this Agreement. The Manager is hereby designated as a "manager" of the Company within the meaning of Section 18-101(10) of the Act.

"<u>Mandatory Redemption Date</u>" means February 10, 2028.

"<u>Members</u>" means, collectively, the Common Member and Preferred Member and any other Person who or which holds an Interest and is admitted as a member of the Company in accordance with this Agreement. Reference to a "Member" shall be to any one of the Members.

"<u>Member Nonrecourse Debt</u>" means "partner nonrecourse debt," as defined in Treasury Regulations Section 1.704-2(b)(4).

"<u>Member Nonrecourse Debt Minimum Gain</u>" means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a nonrecourse liability of the Company, determined in accordance with Treasury Regulations Sections 1.704-2(i)(2) and (3).

"<u>Member Nonrecourse Deductions</u>" means "partner nonrecourse deductions," as defined in Treasury Regulations Section 1.704-2(i)(2).

"<u>Net Capital Proceeds</u>" means, with respect to any Capital Event, all Capital Proceeds, less (a) amounts paid or payable in respect of the Senior Loan, (b) reasonable and customary costs and expenses incurred in connection with such Capital Event (including the cost to rebuild or replace the damaged or condemned portion of the Property), (c) any additional liabilities of the Company which are required to be satisfied in connection with the occurrence of such Capital Event out of the Capital Proceeds, and (d) and such reserves as the Manager may reasonably determine are required to be established in connection with the occurrence of such Capital Event.

"<u>Net Profits</u>" and "<u>Net Losses</u>" mean, for any period, the taxable income or loss, respectively, of the Company for such period, in each case as determined for U.S. federal income tax purposes, but computed with the following adjustments:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) items of income, gain, loss and deduction (including, without limitation, gain or loss on the disposition of any Company asset and depreciation or other cost recovery deduction or expense) shall be computed based upon the Book Basis of the Company's assets rather than upon such assets' adjusted bases for U.S. federal income tax purposes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any tax-exempt income received by the Company shall be deemed for these purposes only to be an item of gross income;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) any expenditure of the Company described in Section 705(a)(2)(B) of the Code (or treated as described therein pursuant to Treasury Regulations under Section 704(b) of the Code) shall be treated as a deductible expense;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) there shall be taken into account any separately stated items under Section 702(a) of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) if the Book Basis of any Company asset is adjusted pursuant to clauses (ii) or (iv) of the definition thereof, the amount of such adjustment shall be taken into account in the period of adjustment as gain or loss from the disposition or deemed disposition of such asset for purposes of computing Net Profits and Net Losses; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) items of income, gain, loss, or deduction or credit allocated pursuant to <u>Section 4.3</u> shall not be taken into account.

"<u>Nonrecourse Deductions</u>" has the meaning ascribed thereto in Treasury Regulations Section 1.704-2(b)(1).

"<u>Notices</u>" has the meaning set forth in <u>Section 13.4</u>.

"<u>Officers</u>" has the meaning set forth in <u>Section 6.1.3</u>.

"<u>Permitted Transfer</u>" has the meaning set forth in <u>Section 8.1</u>.

"<u>Person</u>" includes any natural person, corporation, trust, association, joint stock company, partnership, limited liability company, joint venture or other entity and any government or agency, instrumentality or political subdivision thereof.

"<u>Preferred Equity Balance</u>" means, as of the date of determination, an amount equal to (i) the Preferred Equity Investment, <u>minus</u> (ii) all distributions made to Preferred Member pursuant to <u>Section 5.1.2(a)</u>.

"<u>Preferred Equity Investment</u>" means Preferred Member's Capital Contribution on the Effective Date in the amount of $2,000,000.00.

"<u>Preferred Member</u>" has the meaning ascribed thereto in the introductory paragraph of this Agreement and its permitted successors and assigns who or which acquires the Preferred Member Interest and are admitted as Members of the Company pursuant to this Agreement.

"<u>Preferred Member Interest</u>" means the Interest in the Company issued to Preferred Member in consideration of the Preferred Equity Investment.

"<u>Priority Return</u>" means, for any Fiscal Year, a return on investment calculated at the rate of six percent (6%) per annum return, compounding annually, on the Preferred Equity Balance, with such Priority Return commencing to accrue on the date the Preferred Equity Investment is made to the Company.

"<u>Property</u>" means that certain property located in Sackets Harbor, Jefferson County, New York, being more particularly described on <u>Exhibit A</u> attached hereto and made a part hereof, together will all buildings and improvements thereon.

"<u>Purchase Agreement</u>" means that certain Purchase and Sale Agreement dated February 10, 2023, together with all amendments thereto, by and between the Company, as purchaser, and Preferred Member, as seller, in connection with the purchase and sale of the Property.

"<u>Redemption Date</u>" means the date on which the Redemption in Full occurs.

"<u>Redemption in Full</u>" means the Required Redemption Amount has been paid in full.

"<u>Regulations</u>" means the federal income tax regulations promulgated by the Treasury Department under the Code, as such regulations may be amended from time to time. All references herein to a specific section of the Regulations shall be deemed also to refer to any corresponding provisions of succeeding Regulations.

"<u>Regulatory Allocations</u>" has the meaning set forth in <u>Section 4.3.6</u> hereof.

"<u>Required Redemption Amount</u>" means, as of the date of determination, an amount equal to the sum of (i) the Preferred Equity Balance, <u>plus</u> (ii) the amount sufficient for the Preferred Member to achieve a 7.5% IRR on the Preferred Equity Investment (inclusive of all distributions made (or deemed made) to the Preferred Member).

"<u>Secretary of State</u>" has the meaning ascribed thereto in the Recitals of this Agreement.

"<u>Senior Lender</u>" means, the holder of the Senior Loan, or any successor holders from time to time.

"<u>Senior Loan</u>" means any loan or financing secured by a mortgage, deed of trust or similar real property lien filed against the Property which will be used to finance the costs of acquiring the Property.

"<u>Senior Loan Documents</u>" means any loan agreement, promissory note or other evidence of indebtedness and all deeds of trust, mortgages and security agreements, assignments, financing statements, pledges and collateral security agreements delivered in connection with the Senior Loan, and any replacement, renewal, extension, substitution, addition, supplement, amendment or modification of any of the foregoing entered into in accordance with the terms of this Agreement.

"<u>Transfer</u>" has the meaning ascribed thereto in <u>Section 8.1</u>. The terms "<u>Transferee</u>", "<u>Transferor</u>" or "<u>Transferred</u>" shall have the meanings correlative thereto.

"<u>Treasury Regulation</u>" or "<u>Regulation</u>" means, with respect to any referenced provision, such provision of the regulations of the United States Department of the Treasury.

**ARTICLE 2<u><br> THE COMPANY AND ITS BUSINESS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 **<u>Formation of Company; Admission of Preferred Member and Issuance of Preferred Member Interest</u>**. The Company was formed pursuant to the provisions of the Act by the execution, delivery and filing of the Certificate of Formation with the Secretary of State in accordance with and pursuant to the Act. The Manager and Members hereby ratify the filing of the Certificate of Formation of the Company. The rights and liabilities of the Members, the management of the affairs of the Company and the conduct of its business shall be as provided in the Act, except as herein otherwise expressly provided.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 **<u>Name</u>**. The name of the Company is "VictoryBase NY1, LLC" or such other name as the Manager shall select from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 **<u>Principal Office</u>**. The Company shall maintain its principal place of business at c/o VictoryBase Holdings LLC, 550 Reserve St., Suite 190, Southlake, TX 76092, or at such other place as the Manager may determine from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 **<u>Registered Office and Registered Agent</u>**. The Company's initial registered offices and registered agent shall be as set forth in the Certificate of Formation. The registered office and registered agent may be changed by the Manager from time to time by filing the address of the new registered office and/or the name of the new registered agent with the Secretary of State pursuant to the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5 **<u>Period of Duration</u>**. The period of duration of the Company commenced on the date of the filing of the Certificate of Formation with the Secretary of State and shall continue in perpetuity, unless the Company is dissolved sooner in accordance with the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6 **<u>Business and Purpose of the Company</u>**. The business purpose of the Company (the "<u>Business of the Company</u>") is limited solely to engaging in the following activities:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.1 To, either directly or through one or more subsidiaries wholly owned (directly or indirectly) by the Company, acquire, own, hold, lease, operate, develop, improve, renovate, rehabilitate, manage, sell, finance, refinance and/or transfer any portion of the Property; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.2 transacting any and all lawful business for which a limited liability company may be organized under the Act that is incident, necessary or appropriate to accomplish the foregoing, including, without limitation, contracting for necessary or desirable services of professionals and others.

**ARTICLE 3<u><br> MEMBERS AND CAPITAL CONTRIBUTIONS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 **<u>Names and Addresses of Members</u>**. The addresses of the Members are:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.1 <u>Common Member</u>: c/o VictoryBase Holdings LLC, 550 Reserve St., Suite 190, Southlake, Texas 76092, Attention: Thomas Paquin.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.2 <u>Preferred Member</u>: c/o Lawler Realty, 206 Ambrose Street, Sackets Harbor, New York 13685, Attention: Corry Lawler.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 **<u>Preferred Member Interest</u>**. Preferred Member shall (a) have the rights and obligations set forth in this Agreement, and (b) unless approved by the Common Member, the Preferred Member, and Manager in writing, not have any right or obligation to contribute additional capital or property in excess of its Preferred Equity Investment to, or in respect of debts, liabilities or other obligations of, the Company, or to make loans to the Company. Upon Redemption in Full of the Preferred Member Interest, Preferred Member shall immediately be deemed to have withdrawn from the Company, its entire Interest in the Company shall immediately be redeemed, terminate and be cancelled, and Preferred Member shall have no further rights or obligations hereunder, except for any rights of indemnification or other claims accruing prior to the Redemption Date or which by their terms survive such withdrawal. In connection with such Redemption in Full of the Preferred Member Interest, the Preferred Member shall promptly execute and deliver any documents reasonably requested by the Company or the Common Member to evidence and confirm that the Preferred Member Interest has been redeemed in full, that the Preferred Member has no further interest in the Company and that the Company and the Common Member have been released in full from any and all claims arising from or relating to the Preferred Member's interest in the Company. Such release and confirmation of redemption shall be substantially in the form of <u>Exhibit C</u> attached hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 **<u>Capital Contributions</u>**. Effective as of the Effective Date, the Members agree that (a) Common Member shall be deemed to have made a Capital Contribution in the amount of the initial Common Equity Investment, which shall be contributed by the Common Member on the Effective Date, and (b) Preferred Member shall be deemed to have made an in-kind Capital Contribution in the amount of the entire Preferred Equity Investment, which shall be contributed by the Preferred Member on the Effective Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 **<u>Additional Contributions</u>**. Except as expressly set forth in this Agreement (including pursuant to Article 9) or the Act, no Member shall be required or permitted to (a) make any additional Capital Contributions, or (b) make any loan to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 **<u>Redemption of Preferred Member Interest</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5.1 <u>Early Redemption</u>. The Preferred Member Interest may be redeemed in whole (by Redemption in Full) or in part at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5.2 <u>Mandatory Redemption</u>. A Redemption in Full of the Preferred Member Interest shall occur not later than the Mandatory Redemption Date. If a Redemption in Full does not occur on or prior to the Mandatory Redemption Date, then the provisions of Article 13 below shall apply.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5.3 <u>Effect of Redemption</u>. Promptly following Redemption in Full of the Preferred Member Interest, the Preferred Member Interest shall be redeemed and cancelled in accordance with <u>Section 3.2</u> above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6 **<u>Rights With Respect To Capital</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6.1 <u>Company Capital</u>. Except as expressly provided in this Agreement, (a) no Member shall have the right to receive any return of its Capital Contributions, and (b) no Capital Contribution may be returned in any form other than cash.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6.2 <u>No Interest on Capital Contributions</u>. Except as expressly provided in this Agreement, no Capital Contribution of any Member shall bear interest or otherwise entitle the contributing Member to any compensation for use of its Capital Contribution.

**ARTICLE 4<u><br> CAPITAL ACCOUNTS AND ALLOCATIONS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 **<u>Capital Accounts</u>**. A separate Capital Account will be maintained for each Member in accordance with Treasury Regulation Sections 1.704-1(b) and 1.704-2. Consistent therewith, the Capital Account of each Member will be determined and adjusted as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.1 Each Member's Capital Account will be credited with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any contributions of cash made by such Member to the capital of the Company and the fair market value of any property contributed by such Member to the capital of the Company (net of any liabilities to which such property is subject or which are assumed by the Company);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Member's distributive share of Net Profit and items thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any other increases required by Treasury Regulation Section 1.704-1(b)(2)(iv).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.2 Each Member's Capital Account will be debited with:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Any distributions of cash made from the Company to such Member plus the fair market value of any property distributed in kind to such Member (net of any liabilities to which such property is subject or which are assumed by such Member);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Member's distributive share of Net Loss and items thereof; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any other decreases required by Treasury Regulation Section 1.704-1(b)(2)(iv).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.3 No Member shall be required to restore any negative balance in his, her or its Capital Account.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.4 In the event that all or a portion of a Member's Interest is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.5 The Capital Account of each Member shall be adjusted to reflect any adjustment to the Book Basis of the Company's assets attributable to the application of Sections 734 or 743 of the Code to the extent required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1.6 Except as otherwise provided in this Agreement, whenever it is necessary to determine the Capital Account balance of any Member, the Capital Account balance of such Member shall be determined after giving effect to all allocations pursuant to this Article 4 and all contributions and distributions made prior to the time as of which such determination is to be made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 **<u>Allocations</u>**. After the application of <u>Section 4.3</u>, Net Profits and Net Losses for any taxable year, or portion thereof, shall be allocated among the Members in a manner such that the Capital Account of each Member, immediately after making such allocation, and after taking into account actual distributions made during such taxable year, or portion thereof, is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made to such Member pursuant to <u>Section 11.4.3</u> if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their Book Basis, all Company liabilities, including the Company's share of any liability of any entity treated as a partnership for U.S. federal income tax purposes in which the Company is a partner, were satisfied (limited with respect to each nonrecourse liability to the Book Basis of the assets securing such liability) and the net assets of the Company were distributed in accordance with <u>Section 11.4.3</u> to the Members immediately after making such allocation, minus (ii) such Member's share of Company Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets. Subject to the other provisions of this Article 4, an allocation to a Member of a share of Net Profit or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Profit or Net Loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 **<u>Special Allocations and Compliance with Section 704(b)</u>**. The following special allocations shall, except as otherwise expressly provided in this Agreement, be made in the following order:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.1 <u>Minimum Gain Chargeback</u>. If there is a net decrease in Company Minimum Gain during a Fiscal Year, so that an allocation is required by Treasury Regulations Section 1.704-2(f), each Member will be allocated, before any other allocation under this Article 4, items of income and gain for such Fiscal Year (and if necessary, subsequent years) in proportion to and to the extent of an amount equal to such Member's share of the net decrease in Company Minimum Gain determined in accordance with Treasury Regulations Section 1.704-2(g)(2). This <u>Section 4.3.1</u> is intended to comply with, and shall be interpreted consistently with, the "minimum gain chargeback" provisions of Treasury Regulations Section 1.704-2(f).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.2 <u>Minimum Gain Attributable to Member Nonrecourse Debt</u>. If there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations 1.704-2(i)(5), shall be specially allocated items of the Company's income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Treasury Regulations Section 1.704-2(i)(4). This <u>Section 4.3.2</u> is intended to comply with the "minimum gain chargeback" requirement of that Section of the Regulations and shall be interpreted consistently therewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.4 <u>Nonrecourse Deductions; Member Nonrecourse Deductions</u>. Nonrecourse Deductions shall be allocated among the Members in accordance with their Interests. Member Nonrecourse Deductions shall be specially allocated to the Member who bears (or is deemed to bear) the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Treasury Regulations Section 1.704-2(i)(2).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.5 <u>Limitation on Allocation of Losses</u>. To the extent that Net Losses or items of loss or deduction otherwise allocable to a Member hereunder would cause such Member to have an Adjusted Capital Account Deficit as of the end of the taxable year to which such Net Losses, or items of loss or deduction, relate (after taking into account the allocation of all items of income and gain for such taxable period), such Net Losses, or items of loss or deduction, shall not be allocated to such Member and instead shall be allocated to the Members in accordance with <u>Section 4.2</u> as if such Member were not a Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.6 <u>Regulatory Allocations</u>. Any allocations required to be made pursuant to <u>Section 4.3.1</u> through <u>Section 4.3.5</u> (the "<u>Regulatory Allocations</u>") (other than allocations, the effects of which are likely to be offset in the future by other special allocations) shall be taken into account, to the extent permitted by the Treasury Regulations, in computing subsequent allocations of income, gain, loss or deduction pursuant to <u>Section 4.2</u> so that the net amount of any items so allocated and all other items allocated to each Member shall, to the extent possible, be equal to the amount that would have been allocated to each Member pursuant to <u>Section 4.2</u> had such Regulatory Allocations under this <u>Section 4.3</u> not occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3.7 <u>Liquidation</u>. It is intended that prior to a distribution of the proceeds from a liquidation of the Company, the positive Capital Account balance of each Member shall be equal to the amount that such Member is entitled to receive pursuant to <u>Section 11.4.3</u>. Accordingly, notwithstanding anything to the contrary in this Article 4, to the extent permissible under Sections 704(b) of the Code and the Treasury Regulations promulgated thereunder, Net Profits and Net Losses and, if necessary, items of gross income and gross deductions, of the Company for the year of liquidation of the Company (or, if earlier, the year in which all or substantially all of the Company's assets are sold, transferred or disposed of) shall be allocated among the Members so as to bring the positive Capital Account balance of each Member as close as possible to the amount that such Member would receive if the Company were liquidated and all the proceeds were distributed in accordance with <u>Section 11.4.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4 **<u>Tax Matters</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.1 For federal income tax purposes, except as otherwise provided in this <u>Section 4.4</u>, each item of income, gain, loss and deduction shall be allocated among the Members in the same manner as its corresponding item of book income, gain, loss or deduction is allocated pursuant to this Article 4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.2 In accordance with Sections 704(b) and 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any Company asset contributed (or deemed contributed) to the capital of the Company shall, solely for federal income tax purposes, be allocated among the Members so as to take into account any variation between the adjusted basis of such Company asset for federal income tax purposes and its Book Basis upon its contribution (or deemed contribution). If the Book Basis of any Company asset is adjusted, subsequent allocations of taxable income, gain, loss and deduction with respect to such Company asset shall take account of any variation between the adjusted basis of such Company asset for federal income tax purposes and the Book Basis of such Company asset in the manner prescribed under Code Sections 704(b) and 704(c) and the Treasury Regulations thereunder. Any elections or decisions relating to such allocations shall be made by the Manager.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.3 If a Member acquires an Interest, redeems all or a portion of his, her or its Interest or transfers an Interest during a taxable year, the Net Profits or Net Losses (and other items referred to in <u>Sections 4.2 or 4.3</u>) attributable to such Interest for such taxable year shall be allocated between the transferor and the transferee by closing the books of the Company as of the date of the transfer, or by any other method permitted under Section 706 of the Code and the Treasury Regulations thereunder that is selected by the Members, <u>provided</u>, that in any event Net Profits or Net Losses (and other items referred to in <u>Sections 4.2 or 4.3</u>) attributable to any extraordinary non-recurring items of the Company shall be allocated between the transferor and the transferee by closing the books of the Company with respect to such items.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4.4 The provisions of this <u>Article 4</u> (and other related provisions in this Agreement) pertaining to the allocation of items of Company income, gain, loss, deductions, and credits shall be interpreted consistently with the Treasury Regulations, and to the extent unintentionally inconsistent with such Treasury Regulations, shall be deemed to be modified to the extent necessary to make such provisions consistent with the Treasury Regulations.

**ARTICLE 5<u><br> DISTRIBUTIONS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1 **<u>Distributions of Available Cash and Net Capital Proceeds</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.1 To the extent the Manager determines that there is Available Cash for distribution, such Available Cash shall be distributed quarterly by the Company to the Members in the following order and priority:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *First*, to the Preferred Member until the Preferred Member has received the Priority Return (including any accrued but unpaid Priority Return amount);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Second*, 75% to the Preferred Member and 25% to the Common Member, *pari passu*, until the Preferred Member has received aggregate distributions under this <u>Section 5.1</u> in an amount sufficient to achieve a return on investment equal to seven and one-half percent (7.5%) per annum return, compounded annually, on the Preferred Equity Investment as of the date of calculation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Thereafter*, the remainder, if any, to the Common Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1.2 To the extent the Manager determines that there are Net Capital Proceeds available for distribution, such Net Capital Proceeds shall be distributed by the Company to the Members in the following order and priority:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *First*, 100% to the Preferred Member until the Preferred Equity Balance has been reduced to Zero Dollars ($0.00);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Second*, 75% to the Preferred Member and 25% to the Common Member, *pari passu*, until a Redemption in Full has occurred; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) *Thereafter*, the remainder, if any, to the Common Member.

Notwithstanding anything to the contrary herein, to the extent sufficient funds exist, the Manager shall make distributions of Net Capital Proceeds within thirty (30) days of receipt.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2 **<u>Effect of Transfers</u>**. Distributions with respect to an Interest shall be made to the Person reflected on the books and records of the Company as owning an Interest on the date of the distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3 **<u>Offset of Distributions</u>**. Notwithstanding anything contained herein to the contrary, the Members agree that the Company is expressly permitted to offset all or any portion of the distributions payable to Preferred Member hereunder against, and to the extent of, any post-closing obligations of Preferred Member to the Company pursuant to the express terms of the Purchase Agreement, which are undisputed and remain unsatisfied following the expiration of any applicable notice and cure periods set forth in the Purchase Agreement, and said funds will be deemed to have been first distributed to Preferred Member and immediately paid by Preferred Member to the Company toward the outstanding balance of the unsatisfied post-closing obligations of Preferred Member under the Purchase Agreement. For purpose of clarity, if the Preferred Member disputes any claim that the Preferred Member has not satisfied its post-closing obligations under the Purchase Agreement, there shall be no right of offset until such disputed item is finally resolved, either by agreement between the parties or a final, non-appealable decision of a court of competent jurisdiction.

**ARTICLE 6<u><br> MANAGEMENT; OFFICERS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 **<u>Management; Officers</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.1 <u>Management</u>. Management of the Company shall be vested in the Manager in accordance with this Agreement. Except as otherwise provided in this Agreement, (a) the Common Member shall act as the Manager of the Company and shall have the authority, on behalf of the Company, to do all things appropriate to the accomplishment of the purposes of the Company, subject to and in accordance with this <u>Article 6</u>, unless and until removed in accordance with <u>Section 7.4</u> of this Agreement, and (b) each Member shall have the voting rights and other powers expressly designated to such Member in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.2 <u>Delegation</u>. The Manager may delegate to any person any or all of its powers, rights and obligations under this Agreement and may appoint, contract or otherwise deal with any person to perform any acts or services for the Company as the Manager may reasonably determine. Consistent with the foregoing, the Manager hereby delegates the power and authority to the Officers to cause the Company to enter into such contracts, documents, instruments and agreements as each such Officer determines appropriate in connection with the Business of the Company and the ability to execute and deliver any documents on behalf of the Company in connection with the Business of the Company to the Officers acting alone, without any vote or consent of any other person, pursuant to <u>Section 6.1.3</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1.3 <u>Officers</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Manager may, from time to time as it deems advisable, appoint officers of the Company (the "<u>Officers</u>") and assign in writing titles (including, without limitation, President, Vice President, Secretary and Treasurer) to any such person. Unless the Manager decides otherwise, if the title is one commonly used for officers of a business corporation formed under the Texas General Corporation Law, the assignment of such title shall constitute the delegation to such person of the authorities and duties that are normally associated with that office. Each Officer is hereby designated an "authorized person" within the meaning of the Act and as an authorized signatory ("<u>Authorized Person</u>") of the Company for purposes of the execution of documents, instruments and agreements in the name of and on behalf of the Company. In addition, each of the Officers, acting alone, is hereby authorized to cause the Company (on behalf of itself and on behalf of any related partnership, to which the Company is a general partner, or any related entity, which the Company manages) to enter into such documents, instruments and agreements as each Officer determines appropriate in connection with the business of the Company (or such business of such related entity) and is hereby authorized to execute and deliver any contracts, documents, instruments and agreements on behalf of the Company (on behalf of itself and on behalf of any related partnership, to which the Company is a general partner, or any related entity, which the Company manages) without any vote or consent of any other person. Any delegation pursuant to this <u>Section 6.1.3</u> may be revoked at any time by the Manager.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Manager appoints the following Officers to serve in the following offices of the Company: Thomas Paquin as President of the Company and John Sharkey as Vice President of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 **<u>Management Duties, Authority and Powers</u>**. The Members delegate to the Manager and any Officers appointed by the Manager the responsibility for supervising and undertaking the Business of the Company and making all decisions affecting the operations of the Company and the Property, subject to the consent and approval of the Members as required pursuant to <u>Section 6.3</u> and elsewhere in this Agreement. In connection therewith, the Manager and any Officers appointed by the Manager, acting alone, shall have the right, power and authority to do all such lawful acts and things as are not by the Act or this Agreement prohibited or directed or required to be exercised or done with the consent and approval of Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3 **<u>Restrictions on Manager's and Officers' Authority</u>**. Notwithstanding anything in this Agreement to the contrary, except as otherwise provided in this Agreement, neither the Manager nor any Officer shall cause the Company to take any of the following actions on behalf of the Company or with respect to the Property which would be a Major Decision unless approved by each Member in writing. For the purposes of this Agreement, any act or decision with respect to the matters set forth below in this <u>Section 6.3</u> shall constitute a "<u>Major Decision</u>":

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.1 Approving the assignment, transfer, sale, pledge or disposal of all or any portion of a Member's Interest or admitting a new or substituted member or partner to the Company, except in either case, as expressly permitted in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.2 Any agreement or arrangement entered into by the Company with any Member, Manager or their respective Affiliates, and any amendment or modification thereto; <u>provided</u>, <u>however</u>, that the foregoing shall not be a Major Decision (i) with respect to property management services provided by an Affiliate of Manager to the extent such agreement, arrangement, amendment or modification is made on arms-length, customary market terms and does not result in the subordination of the payment of the Priority Return or the Preferred Equity Balance or the redemption obligations relating to the Preferred Equity Investment in a manner adverse to the Preferred Member, or (ii) if the material terms of any such proposed agreement, arrangement, amendment or modification are submitted by the Manager to the Preferred Member for approval as a Major Decision, and the Preferred Member fails to object to such terms in writing within five (5) Business Days thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.3 The merger, consolidation or business combination of the Company with any other Person, (i) if the surviving entity or entities (a) would cease to be obligated to redeem the Preferred Equity Investment on the terms contemplated herein or (b) would have material indebtedness which would remain outstanding following such merger, consolidation or business combination, or (ii) which would otherwise result in the subordination of the payment of the Priority Return or the Preferred Equity Balance or the redemption obligations relating to the Preferred Equity Investment in a manner adverse to the Preferred Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.4 The Dissolution of the Company, except in accordance with the terms of the Company's organizational documents or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.5 A sale of the Property for a purchase price whereby the net proceeds would not provide for a Redemption in Full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.6 The issuance of any equity securities of the Company, or any right, option, warrant or security of any kind whatsoever, that is, or may become, convertible into or exchangeable for such equity securities with distribution, liquidation or redemption rights which rank senior to, or *pari passu* with, the distribution, liquidation or redemption rights of the Preferred Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.7 The reclassification, recapitalization or other reorganization that would adversely affect the rights of the Preferred Member with respect to a Redemption in Full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.8 Any amendment to this Agreement, if such amendment would adversely affect the rights of the Preferred Member with respect to a Redemption in Full or would otherwise affect the rights of the Preferred Member in connection with any decision for which Preferred Member's consent or approval is expressly required by the terms of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.9 Intentionally omitted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.10 Loan any funds to a Person, including but not limited to, any Member or Manager or any Affiliate of a Member or Manager.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.11 Change the primary business of the Company from its initial business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.12 Incur any indebtedness in excess of $250,000 other than Senior Loan, trade payables incurred in the ordinary course of business, or which may be required to fund actual operating deficits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.13 Incur any lease obligation that requires total aggregate payments in excess of $50,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3.14 Alter, amend or modify the terms of the Senior Loan Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4 **<u>Duty of Care; Fiduciary Duties</u>**. The Manager shall, at the expense of the Company, take such actions as the Manager reasonably determines to be in the Company's best interest and use reasonably prudent, good faith efforts to conduct the Company's business. Except as set forth in the immediately preceding sentence or as otherwise expressly provided in this Agreement, neither the Manager, nor any of its members, managers, officers, directors, attorney, agents, representative or employees, nor any Officers shall have any other duties to the Company or any Member, including any fiduciary duty, whether or not such duties or liabilities otherwise arise or exist in law or in equity, and each Member hereby expressly waives any such duties or liabilities; provided, that the foregoing shall not be construed as a waiver of the duty of good faith and fair dealing owed by the Manager and Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5 **<u>Advances and Reimbursement to the Manager</u>**. The Manager shall be entitled to receive, out of Company funds available therefor, reimbursements of all reasonable, actual, out-of-pocket costs and expenses incurred in connection with the Business of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6 **<u>Limitations on Liability of the Manager to Members</u>**. Anything in this Agreement to the contrary notwithstanding, but subject to the Act, neither the Manager, any Officer, any of the Manager's Affiliates nor any other Member shall be liable for the return of Capital Contributions of the Members or for any portion thereof (including, without limitation, the Preferred Equity Investment), it being expressly understood that any return of capital shall be made solely from the assets of the Company, nor shall the Manager, any Officer, any of the Manager's Affiliates nor any other Member be required to pay to the Company or to any Members any capital account deficits of any Member upon Dissolution of the Company or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7 **<u>Other Business Ventures</u>**. The Members and/or their respective Affiliates (including, without limitation, any member or manager thereof) may engage in or possess an interest in other business ventures of every nature and description, independently or with others, whether such ventures are competitive with the Company or otherwise; and neither the Company nor the other Members shall have any right by virtue of this Agreement in or to such independent ventures or to the income or profits derived therefrom.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.8 **<u>Successor Manager</u>**. Upon a resignation or removal of the Manager in accordance with this Agreement, the Common Member shall appoint a successor Manager.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.9 **<u>Compensation of the Manager, Officers and Preferred Member</u>**. No salaries or other benefits shall be paid to the Manager, any Officer nor any successor in its capacity as the Manager or to Preferred Member in its capacity as a Member.

**ARTICLE 7<u><br> MEMBERS' MEETINGS, RIGHTS, OBLIGATIONS AND LIABILITIES</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 **<u>Limitation of Liability</u>**. The Members will not be bound by, or be personally liable for, the expenses, liabilities or obligations of the Company except as otherwise provided in the Act. The Members will not be obligated to make any Capital Contributions other than as expressly provided in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 **<u>No Participation in Management</u>**. The Members, in their capacity as such, may not transact any business for the Company and will have no power to execute agreements on behalf of or otherwise bind or commit the Company, but they may exercise the rights and powers granted to them in this Agreement, including, without limitation, the right to give consents and approvals to the extent provided in this Agreement and the rights of the Manager set forth in Article 6. The exercise of any such rights and powers will be deemed to relate to the basic structure of the Company and not the exercise of control over the Business of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3 **<u>Return of Capital Contributions</u>**. Except as otherwise expressly provided in this Agreement, no Member will have the right to (a) demand a withdrawal, reduction or return of its Capital Contributions or receive interest thereon, (b) demand property other than cash in return of its Capital Contributions or, to the fullest extent permitted by law, bring an action for partition against the Company, or (c) receive any priority over any other Member with respect to the return of its Capital Contributions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.4 **<u>Rights to Remove Manager</u>**. The Manager shall only be removed by unanimous consent of the Members.

**ARTICLE 8<u><br> RESTRICTIONS ON TRANSFER OR CONVERSION OF INTERESTS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 **<u>Transfer or Assignment of Interests</u>**. Except as set forth in this <u>Section 8</u> with respect to a Permitted Transfer, (i) the Common Member shall not be permitted to Transfer all or any part of the Common Member Interest, nor shall any Transfer of a direct or indirect interest in Common Member be permitted to occur, without the prior written consent of the Preferred Member and Manager, and (ii) the Preferred Member shall not be permitted to Transfer all or any part of the Preferred Member Interest, nor shall any Transfer of a direct or indirect interest in the Preferred Member be permitted to occur, without the prior written consent of the Common Member and Manager. Any attempted direct or indirect transfer, hypothecation, pledge, encumbrance, or assignment (each, a "<u>Transfer</u>") of a Member's Interest, any part thereof or any right to receive distributions with respect thereto in violation of this <u>Section 8</u>, shall be void *ab initio* and have no force or effect. Any Transfer which satisfies the applicable requirements set forth in <u>Section 8.1.1</u>, <u>Section 8.1.2</u> and <u>Section 8.1.3</u> may be referred to herein as a "<u>Permitted Transfer</u>".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.1 The Manager may condition any proposed Transfer on the transferring Member providing, at the transferring Member's sole cost and expense, an opinion of counsel reasonably satisfactory to the Manager (both as to identity of counsel and content of the opinion) that such proposed Transfer (i) is exempt from or has or will comply with the registration and prospectus delivery requirements of the Securities Laws, (ii) will not subject the Company to registration as an investment company or election as a "business development company" under the Securities Laws, (iii) will not cause the Company to lose its status as a partnership for federal income tax purposes, (iv) will not cause the Company to become "publicly traded" within the meaning of Code Section 7704, and (v) any other terms, conditions or restrictions as the Manager may determine in its sole and absolute discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.2 <u>Preferred Member Transfers</u>. Subject to <u>Section 8.1.1</u>, the direct or indirect interests in the Preferred Member may be Transferred without restriction so long as (i) such Transfer is made in accordance with the terms and provisions of the Senior Loan Documents and (ii) no change of Control occurs with respect to Preferred Member as a result of such Transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1.3 <u>Common Member Transfers</u>. Subject to <u>Section 8.1.1</u>, the direct or indirect interests in the Common Member may be Transferred without restriction so long as such Transfer is made in accordance with the terms and provisions of the Senior Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2 **<u>Express Intention to Transfer</u>**. After the consummation of any Permitted Transfer, no transferee of a Member's Interest shall have the right to become a substituted Member unless and until such transferee has satisfied the requirements set forth in <u>Section 8.3</u> below to the satisfaction of the Manager, in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3 **<u>Admission of New Members</u>**. No Transfer shall be binding on the Company unless (a) the transferee shall execute and acknowledge an instrument, in form and substance reasonably satisfactory to the remaining Members, whereby it agrees to assume and be bound by all of the covenants, terms and conditions of this Agreement from and after the effective date of such Transfer, (b) a duplicate original of such instrument duly executed and acknowledged by the parties thereto is delivered to the Company, (c) the transferee shall pay all reasonable out-of-pocket expenses in connection with its admission as a Member (including, without limitation, all transfer taxes payable in connection therewith), and (d) such Transfer will not (i) cause the Company to be treated as a "publicly traded partnership" within the meaning of Section 7704 of the Code; (ii) violate the registration requirements of the United States Securities Act of 1933, as amended from time to time, the United States Securities Exchange Act of 1934, as amended from time to time, or of any applicable state securities laws, rules or regulations; and (iii) require the Company to register as an investment company under the United States Investment Company Act of 1940, as amended from time to time. If a Member transfers all of its Interest pursuant to this <u>Article 8</u>, the transferee shall be admitted to the Company as a member of the Company upon the later to occur of (i) its delivery of the executed and acknowledged instrument described in subsection (a) of this <u>Section 8.3</u> to the Company in accordance with clause (b) of this <u>Section 8.3</u>, and (ii) the payment to the Company by such transferee of the expenses set forth in clause (c) of this <u>Section 8.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4 **<u>Void Transfers</u>**. To the fullest extent permitted by law, any Transfer made in violation of this <u>Article 8</u> shall be of no force or effect and shall not bind or be recognized by the Company, and the transferring Member shall continue to be treated as a member for all purposes, and remain obligated under each and every provision, of this Agreement.

**ARTICLE 9<u><br> ADDITIONAL CAPITAL CONTRIBUTIONS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1 **<u>Additional Capital Contributions</u>**. Any provision of this Agreement that permits a Member to pay or incur an expense or obligation of the Company is intended to benefit Common Member and Preferred Member and, to the fullest extent permitted by law, shall not be construed as conferring any benefit upon any creditor of the Company (and no such creditor of the Company shall be a third-party beneficiary of this Agreement), and Common Member and Preferred Member shall not have any duty or obligation to any creditor of the Company to make any contribution to the Company or to issue any call for capital pursuant to this Agreement. If the Manager elects to request additional or supplemental capital or financing, including any additional Capital Contributions, for any reason (including to cause a Redemption in Full on the Mandatory Redemption Date), then the Manager shall request additional or supplemental financing from the Common Member (which request shall be deemed to have been given if a request for additional or supplemental capital or financing is given by the managing member of the Common Member to the Common Member's respective members). Only the Common Member shall have the right, but not the obligation, to fund such additional or supplemental capital or financing. Any such additional Capital Contributions made by the Common Member shall be deemed part of the Common Equity Investment. Notwithstanding anything to the contrary contained in this Agreement, (i) the Common Member shall have no obligation to make contributions of cash or any other property to the Company other than the initial Common Equity Investment, and (ii) the Preferred Member shall have no right or obligation to make contributions of cash or any other property to the Company other than the Preferred Equity Investment.

**ARTICLE 10<u><br> BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1 **<u>Maintenance of Books and Records</u>**. The Company's books and records shall be maintained and made available to the Members for inspection at the principal place of business of the Company or at the offices of any provider of administrative or similar services to the Company as the Manager may select. The financial and accounting books and records of the Company may be maintained in accordance with such accounting procedures and principles as the Manager may deem appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2 **<u>Bank Accounts</u>**. The Manager shall open and thereafter maintain one or more separate bank accounts at a bank and branch to be selected by the Manager, in its sole discretion, in the name of the Company in which there shall be deposited all the funds of the Company. No funds of any other Person shall be deposited in such account, and the funds in such account shall be used solely for the business of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3 **<u>Tax Matters Handled by the Manager</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.1 The Manager shall cause all Company tax returns to be timely filed with the applicable government authorities within allowable time periods, including extensions, and shall use reasonable efforts to provide such tax returns in a timely manner to the Members with the necessary information, including Schedule K-1s, with respect to the operations of the Company to allow the Members to file their own tax returns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.2 It is intended that the Company be treated as a partnership for federal income tax purposes and neither the Company nor any Member shall make any election (for tax purposes or otherwise) inconsistent with such treatment without the consent of all Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.3 The Manager shall be the "partnership representative" of the Company (the "<u>Partnership Representative</u>") within the meaning of the federal partnership tax audit provisions of the Bipartisan Budget Act of 2015, referred to hereinafter as the "<u>Partnership Audit Rules</u>", and shall serve until a successor is appointed by the Members. The Partnership Representative shall have authority, at the Partnership Representative's sole discretion, to take any action that may be taken by a "partnership representative" under the Code; <u>provided</u>, <u>however</u>, that for each taxable year for which the Company qualifies to elect to have the Partnership Audit Rules not apply, the Partnership Representative shall cause the Company to do so, and shall notify each Member of such election. In particular, and not by way of limitation, the Partnership Representative is authorized to represent the Company, at the Company's expense, in connection with all examinations of the Company's affairs by tax authorities, including administrative and judicial proceedings, and to expend Company funds for professional services and costs associated therewith. Any direct or indirect costs and expenses incurred by the Partnership Representative, acting in his, her or its capacity as such, shall be deemed costs and expenses of the Company, and the Company shall reimburse the Partnership Representative for such amounts. Notwithstanding the authority granted to a partnership representative under the Code or any other provision in this Agreement, the Partnership Representative (i) shall not take any material action as Partnership Representative, including, without limitation, making any election permitted under the Partnership Audit Rules and settling or compromising any matter raised by the Internal Revenue Service, without the approval of each Member who would be materially and adversely affected, such approval not to be unreasonably withheld, conditioned or delayed, and (ii) shall keep the other Members informed of, and give them the opportunity to participate in, all such matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3.4 Each Member will provide such cooperation and assistance, including executing and filing forms or other statements and providing information about the Member, as is reasonably requested by the Partnership Representative, to enable the Company to satisfy any applicable tax reporting or compliance requirements, to make any tax election or to qualify for an exception from or reduced rate of tax or other tax benefit or be relieved of liability for any tax regardless of whether such requirement, tax benefit or tax liability existed on the date such Member was admitted to the Company. If a Member fails to provide any such forms, statements, or other information requested by the Partnership Representative, such Member will be required to indemnify the Company for the share of any tax deficiency paid or payable by the Company that is due to such failure (as reasonably determined by the Manager). The obligations set forth in this <u>Section 10.3.4</u> will survive such Member's ceasing to be a Member in the Company and/or the termination, dissolution, liquidation and winding up of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4 **<u>Reports</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.1 Within 120 days following the end of each Fiscal Year (subject to reasonable delays in the event of the late receipt of any necessary financial statements or information), the Company shall provide each Member with unaudited financial statements of the Company for such Fiscal Year. Not later than the due date therefor (including any applicable extensions), the Company shall provide to each Member copies of such information as may be required for U.S. federal, state, local and foreign tax reporting purposes, including copies of Schedule K-l ("<u>Partner's Share of Income, Credits, Deductions, etc.</u>") or any successor schedule or form, for such Member. If the Company elects to extend the due date for reporting tax information to Members, the Company shall use commercially reasonable efforts to provide the Members with estimates of applicable tax reporting information for each fiscal year by the original due date for such information. Subject to <u>Section 13.23</u> hereof and Section 18-305 of the Act, the Manager shall use commercially reasonable efforts to deliver or otherwise make available to a Member such other information as is reasonably requested by such Member; <u>provided</u>, that such information may be obtained by the Manager without unreasonable expense or burden and is for purposes reasonably related to such Member's interest as a Member.

**ARTICLE 11<u><br> TERMINATION AND DISSOLUTION</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1 **<u>Dissolution</u>**. The Company shall be dissolved and its affairs wound up upon the first to occur of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.1 the unanimous written agreement of all Members to dissolve the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.2 the sale, exchange or other transfer of all or substantially all of the Property; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.3 the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Act.

The commencement of a bankruptcy by or against any Member shall not, in and of itself, result in the Dissolution of the Company or in the cessation of the Member being a member in the Company. The withdrawal or resignation of a Member or the Dissolution of a Member shall not, by itself, constitute a Dissolution of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2 **<u>Statement of Intent to Dissolve</u>**. To the extent contemplated by the Act, as soon as possible after the occurrence of any of the events specified in <u>Section 11.1</u>, the Company shall execute a statement of intent to dissolve in such form as prescribed by the Secretary of State.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3 **<u>Conduct of Business</u>**. Upon the Dissolution of the Company, the Company shall cease to carry on its business, except insofar as may be necessary for the winding up of its business in accordance with the Act, but the Company's separate existence shall continue in accordance with the Act. The Company shall terminate when (a) all of the assets of the Company shall have been distributed in the manner provided for in this Agreement and the Act, and (b) the Certificate of Formation shall have been cancelled in the manner provided for in the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4 **<u>Distribution of Net Proceeds</u>**. The Members shall continue to distribute Available Cash and Net Capital Proceeds during the winding-up period in the same manner and the same priorities as provided for in <u>Article 5</u>. Subject to the Act, the proceeds from the liquidation of Company Property shall be applied in the following order:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4.1 to the payment of creditors, in the order of priority as provided by law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4.2 to the establishment of such reserves that the Manager may reasonably deem necessary, appropriate or desirable for any contingent or unforeseen liabilities, debts or obligations of the Company arising out of or in connection with the Company operations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4.3 in the same manner and order as is set forth in <u>Section 5.1.2</u>.

It is expressly understood and agreed that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction of claims against the Company so as to enable the Manager to minimize the losses that may result from a liquidation.

**ARTICLE 12<u><br> INDEMNIFICATION OF MEMBERS, THE MANAGER<br> AND THEIR AFFILIATES</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1 **<u>Indemnification of the Members</u>**. To the fullest extent permitted by law, the Company shall indemnify and hold harmless the Members and their respective members, officers, directors, employees, agents and Affiliates (each, an "<u>Indemnitee</u>") from and against any Losses arising out of or incidental to the Business of the Company, regardless of whether the Indemnitee continues to be a Member, officer, director, employee, agent or Affiliate of the Member at the time any such liability or expense is paid or incurred, but only to the extent (i) the Indemnitee's conduct did not constitute fraud, willful misconduct or gross negligence, and (ii) the Indemnitee acted in a good faith, commercially reasonable manner. The Company shall indemnify and hold harmless any Person providing any Lender Guaranties and Indemnities (each such Person, a "<u>Loan Guarantor</u>") to the extent that such Loan Guarantor incurs any Losses under such Lender Guaranties and Indemnities, unless such Losses are incurred as the result of the fraud, gross negligence or willful misconduct of the Loan Guarantor or its Affiliates. Notwithstanding anything to the contrary contained in this Agreement, each Member shall indemnify and hold harmless any Loan Guarantor to the extent that such Loan Guarantor incurs any Losses under such Lender Guaranties and Indemnities as a result of such Member's or any of its Affiliate's fraud, gross negligence, willful misconduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2 **<u>Guarantee of Company Indebtedness</u>**. No Member shall enter into (or permit any Person related to a Member to enter into) any arrangement with respect to any liability of the Company that would result in such Member (or a Person related to such Member) under Regulations Section 1.752-4(b) bearing the economic risk of loss (within the meaning of Regulations Section 1.752-2) with respect to such liability, unless such arrangement has been consented to and approved by all of the Members. This <u>Section 12.2</u> shall not prohibit the Common Member from making any additional Capital Contributions under <u>Section 9.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3 **<u>Expenses</u>**. To the fullest extent permitted by law, expenses incurred by an Indemnitee in defending any claim, demand, action, suit or proceeding that is subject to <u>Section 12.1</u>, shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of evidence of an undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined that such Person is not entitled to be indemnified as authorized in <u>Section 12.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.4 **<u>Assets of the Company</u>**. Except to the extent any indemnification obligation arises as a result of a Member's or its Affiliate's fraud, gross negligence or willful misconduct pursuant to <u>Section 12.1</u>, (i) any indemnification under <u>Section 12.1</u> shall be satisfied solely out of the assets of the Company, and (ii) subject to the Act, no Member shall be subject to personal liability for or shall be required to fund or cause to be funded any obligation by reason of these indemnification provisions.

**ARTICLE 13<u><br> UNILATERAL SALE RIGHT</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1 **<u>Unilateral Sale Right</u>**. If, by the Mandatory Redemption Date, a Redemption in Full has not occurred, the Preferred Member shall have the unilateral right to market and sell the Property (the "<u>Unilateral Sale Right</u>"), provided, that (i) the minimum purchase price for any sale of the Property shall be for an amount such that the Net Capital Proceeds from such sale shall be sufficient to provide for a Redemption in Full upon distribution of such Net Capital Proceeds in accordance with <u>Section 5.1.2</u>, and (ii) any sale of the Property in connection with the Unilateral Sale Right must be an arms-length transaction on market terms, and the Property may not be sold to an Affiliate of the Preferred Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2 **<u>Cooperation of the Members</u>**. If the Preferred Member elects to exercise the Unilateral Sale Right, the Preferred Member may, but shall not be obligated to, cause the Manager to market, or engage real estate brokers to market, the Property on behalf of the Company. The Common Member, in its capacity as a member of the Company and as Manager, shall use commercially reasonable efforts to cooperate fully with the Preferred Member following the Preferred Member's election to exercise the Unilateral Sale Right, including by providing and executing any documents necessary to authorize and consummate a sale of the Property pursuant to the Unilateral Sale Right. Notwithstanding anything to the contrary contained in this Agreement, at any time prior to a sale of the Property pursuant to the Unilateral Sale Right, the Common Member, in its capacity as a member of the Company and as Manager, shall have the unilateral right to sell the Property, refinance the Company indebtedness and/or otherwise recapitalize the Property, provided, that the Net Capital Proceeds from any of the foregoing transactions shall be sufficient to provide for a Redemption in Full upon distribution of such Net Capital Proceeds in accordance with <u>Section 5.1.2</u>, and the Preferred Member shall use commercially reasonable efforts to cooperate fully with any such transaction, including by providing and executing any documents necessary to authorize and consummate such sale.

**ARTICLE 14<u><br> MISCELLANEOUS PROVISIONS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.1 **<u>Counterparts</u>**. This Agreement may be executed in several counterparts, and all counterparts so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart. Signature pages hereto that are delivered by facsimile or other electronic transmission method (including .pdf) shall be valid and effective for all purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.2 **<u>Survival of Rights</u>**. This Agreement shall be binding upon and, as to permitted or accepted successors, transferees and assigns, inure to the benefit of the Members and the Company and their respective heirs, legatees, legal representatives, successors, transferees and permitted assigns, in all cases whether by the laws of descent and distribution, merger, reverse merger, consolidation, sale of assets, other sale, operation of law or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.3 **<u>Severability</u>**. In the event any Section, or any sentence within any Section, is declared by a court of competent jurisdiction to be void or unenforceable, such sentence or Section shall be deemed severed from the remainder of this Agreement and the balance of this Agreement shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.4 **<u>Notices</u>**. In order to be effective, all notices, consents, approvals and disapprovals required or permitted by this Agreement to be given ("<u>Notices</u>") must be in writing and given by (a) personal delivery, (b) courier (with signed acknowledgment of receipt), (c) certified or registered mail, with return receipt requested, (d) overnight delivery service (such as FedEx or UPS, or (e) electronic mail transmission (provided that a confirmatory copy is sent by another method described in (a)-(d) within three (3) days thereafter), in each case to the address set forth below, or to such other address as such Member may specify from time to time in a written notice to the other Members. Any such notice, payment, demand or other communication shall be deemed to have been given or delivered upon receipt. Notices shall be valid only if served in the manner provided above. Notices may be sent by the attorneys for the respective parties, and each such Notice so served shall have the same force and effect as if sent by such party:

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| | |
|:---|:---|
| If to Preferred Member: | Lawler Realty, LLC |
|  | 206 Ambrose Street |
|  | Sackets Harbor, New York 13685 |
|  | Attn: Corry Lawler |
|  | Email: CL.HQ@lawmanhc.com |
| With a copy to: | Heather Sunser |
|  | Barclay Damon LLP |
|  | 125 East Jefferson Street |
|  | Syracuse, New York 13202 |
|  | Email: HSunser@barclaydamon.com |
| If to Common Member: | VictoryBase Holdings LLC |
|  | 550 Reserve Street, Suite 190 |
|  | Southlake, TX 76092 |
|  | Attn: John Sharkey |
|  | Email: jsharkey@victorybase.com |
| With a copy to: | Winstead PC |
|  | 500 Winstead Building |
|  | 2728 N. Harwood Street |
|  | Dallas, Texas 75201 |
|  | Attn: John M. Moore |
|  | Email: jmoore@winstead.com |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.5 **<u>Construction</u>**. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any of the Members.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.6 **<u>Section Headings</u>**. The captions of Sections in this Agreement are for convenience only and in no way define, limit, extend or describe the scope or intent of any of the provisions hereof, shall not be deemed part of this Agreement and shall not be used in construing or interpreting the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.7 **<u>GOVERNING LAW</u>**. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING WITH THE ACT AND THE OTHER INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW RULE OR PRINCIPLE THAT WOULD RESULT IN APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.8 **<u>VENUE</u>**. ANY ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY RIGHT ARISING OUT OF, THIS AGREEMENT WILL BE BROUGHT IN A COURT OF RECORD IN THE STATE OF NEW YORK, COUNTY OF JEFFERSON. PROCESS IN ANY ACTION OR PROCEEDING REFERRED TO IN THE PRECEDING SENTENCE MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD**.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.9 **<u>WAIVER OF JURY TRIAL</u>. PREFERRED MEMBER AND COMMON MEMBER,** TO THE FULLEST EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE, RELINQUISH AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF PREFERRED MEMBER OR COMMON MEMBER, OR ANY OF THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER PERSONS AFFILIATED WITH PREFERRED MEMBER OR COMMON MEMBER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.10 **<u>Pronouns and Plurals</u>**. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine and neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.11 **<u>Time of the Essence</u>**. Except as otherwise provided herein, time is of the essence in connection with each and every provision of this Agreement. Notwithstanding the foregoing, to the extent that any deadline, timeframe or other requirement is, by the terms of this Agreement, set to commence or end on a day that is not a Business Day, such deadline, timeframe or other requirement shall automatically be extended to commence or end on the date that is first Business Day thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.12 **<u>Members' Representations and Warranties</u>**. Each Member hereby makes to the Company and the other Member the representations and warranties set forth on <u>Exhibit B</u> attached hereto and incorporated herein and acknowledges that the other Member is expressly relying thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.13 **<u>Third Party Beneficiaries</u>**. There are no third-party beneficiaries of this Agreement except such Persons as may be entitled to the benefits of <u>Section 12.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.14 **<u>Assignment; Successors and Assigns</u>**. Except in connection with a Transfer of a Member's Interest in the Company effected in accordance with <u>Article 8</u>, neither this Agreement nor any of the parties' respective rights or obligations hereunder may be assigned or otherwise transferred by any party, whether by operation of law or otherwise, without the prior written consent of the other party, and any purported assignment or other transfer without such consent is void.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.15 **<u>Amendment</u>**. This Agreement may only be amended, modified, changed, supplemented or terminated by written instrument executed by all of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.16 **<u>Partition</u>**. The Members agree that the Property and any Company Property that the Company may own or have an interest in is not suitable for partition. To the fullest extent permitted by law, each of the Members hereby irrevocably waives any and all rights that it may have to maintain any action for partition of any Company Property in which the Company may at any time have a direct or indirect interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.17 **<u>Entire Agreement</u>**. This Agreement and the Certificate of Formation constitute the entire agreement of the Members with respect to, and supersede all prior written and oral agreements, understandings and negotiations with respect to the subject matter hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.18 **<u>Waiver</u>**. Any rights or obligations hereunder are only waived by written instrument signed by the party providing such waiver which states that it constitutes a waiver hereunder and specifies the provision hereof being waived. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.19 **<u>Attorneys' Fees</u>**. To the fullest extent permitted by law, (i) in the event of any litigation, arbitration or other dispute arising as a result of or by reason of this Agreement, the prevailing party in any such litigation, arbitration or other dispute shall be entitled to, in addition to any other damages assessed, its reasonable attorneys' fees, and all other costs and expenses incurred in connection with settling or resolving such dispute, (ii) the attorneys' fees which the prevailing party is entitled to recover shall include fees for prosecuting or defending any appeal and shall be awarded for any supplemental proceedings until the final judgment is satisfied in full, (iii) in addition to the foregoing award of attorneys' fees to the prevailing party, the prevailing party in any lawsuit or arbitration procedure on this Agreement shall be entitled to its reasonable attorneys' fees incurred in any post-judgment proceedings to collect or enforce the judgment, and (iv) this attorneys' fees provision is separate and several and shall survive the merger of this Agreement into any judgment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.20 **<u>Confidentiality</u>**. Each Member agrees that it shall not use, publish, disseminate, distribute or otherwise disclose all or any portion of the Confidential Information without the prior written approval of the Manager. In the event that a Member receives either a request to disclose any Confidential Information under the terms of a subpoena or order issued by a court or other governmental authority or advice of legal counsel that disclosure is required under applicable law, such Member agrees that, to the extent permitted by applicable law and reasonable practical, prior to disclosing any Confidential Information, it shall (i) immediately notify the Company of the existence and terms of, and the circumstances attendant to, such request or advice, (ii) consult with the Company as to the advisability of taking legally available steps to resist or narrow any such request or to otherwise eliminate the need for such disclosure, and (iii) if disclosure is required, cooperate with the Company to obtain a protective order or other reliable assurance that confidential treatment will be accorded to such portion of the Confidential Information as is required to be disclosed. "<u>Confidential Information</u>" means any proprietary or confidential information of or relating to the Company, including, but not limited to, any business information, intellectual property, trade secrets or other information relating to the businesses, products, services, customers, assets or liabilities of the Company, except for any information that is generally available to the public (other than through a breach by the party disclosing the same of its obligations under this Agreement).

***[NO FURTHER TEXT ON THIS PAGE]***

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

---

| |
|:---|
| <u>COMMON MEMBER</u>: |
| **VICTORYBASE HOLDINGS LLC,** |
| a Texas limited liability company |
| VictoryBase Corporation, |
| a Delaware corporation, |
| its managing member |
| By: |
| Name: Thomas Paquin |
| Title: Authorized Signatory |

---

[*Signatures continue on the following page.*]

[Signature Page to Limited Liability Company Agreement of VictoryBase NY1, LLC]

[*Signatures continued from the previous page.*]

---

| |
|:---|
| <u>PREFERRED MEMBER</u>: |
| **LAWLER REALTY, LLC**, |
| a New York limited liability company |
| Legacy Holdings of NNY, LLC, |
| a New York limited liability company, |
| its sole member |
| By: |
| Name: Corry Lawler |
| Title: Authorized Signatory |

---

[Signature Page to Limited Liability Company Agreement of VictoryBase NY1, LLC]

<u>Exhibit A</u>

**PROPERTY LEGAL DESCRIPTION**

ALL THAT TRACT OR PARCEL OF LAND situate northerly of Military Road in the Village of Sackets Harbor, County of Jefferson, and State of New York and being more particularly bounded and described as follows:

COMMENCING at an iron pipe found in the apparent northerly boundary of the aforesaid Military Road at the southeasterly corner of the second parcel described in lands conveyed to Kurt D. & Karin D. Norman (File Number 2003-8475) and running;

Thence North 60 degrees 26 minutes 23 seconds East along the apparent northerly boundary of the aforesaid Military Road a distance of 521.33 feet to a 5/8" iron rod set at its intersection with the easterly boundary of a 50' private right of way known as Creekside Lane and the Point of Beginning of the parcel herein described;

Thence North 42 degrees 41 minutes 38 seconds West along the easterly boundary of the aforesaid 50' private right of way known as Creekside Lane a distance of 339.83 feet to a point; Thence North 47 degrees 14 minutes 24 seconds West continuing along the easterly boundary of the aforesaid 50' private right of way known as Creekside Lane a distance of 121.09 feet to a point; Thence North 52 degrees 31 minutes 39 seconds West continuing along the easterly boundary of the aforesaid 50' private right of way known as Creekside Lane a distance of 201.25 feet to a point;

Thence North 55 degrees 45 minutes 49 seconds West continuing along the easterly boundary of the aforesaid 50' private right of way known as Creekside Lane a distance of 77.65 feet to a 5/8" iron rod set in the easterly boundary of Brady Road;

Thence northerly along the easterly boundary of the aforesaid Brady Road on a curve to the left, concave to the west, with a radius of 500.00 feet an arc length of 191.90 feet to a point, said curve having a chord bearing of North 38 degrees 21 minutes 53 seconds West and a chord distance of 190.70 feet;

Thence North 09 degrees 03 minutes 25 seconds East a distance of 46.04 feet to a 5/8" iron rod set;

Thence North 18 degrees 21 minutes 14 seconds West a distance of 200.45 feet to a 5/8" iron rod set;

Thence North 76 degrees 00 minutes 21 seconds West a distance of 362.55 feet to a 5/8" iron rod set;

Thence North 08 degrees 18 minutes 57 seconds East a distance of 145.13 feet to a point in a concrete sea wall located along Mill Creek;

Thence South 61 degrees 12 minutes 32 seconds East along said sea wall a distance of 58.48 feet to a point;

Thence South 65 degrees 48 minutes 57 seconds East continuing along said sea wall a distance of 434.49 feet to a point;

Thence South 43 degrees 51 minutes 05 seconds East continuing along said sea wall a distance of 333.36 feet to a point;

Thence South 42 degrees 26 minutes 38 seconds East continuing along said sea wall a distance of 253.10 feet to a point;

Thence South 37 degrees 29 minutes 33 seconds East continuing along said sea wall a distance of 390.35 feet to a point;

Thence South 45 degrees 47 minutes 12 seconds East continuing along said sea wall a distance of 135.56 feet to a point in said sea wall at its intersection with the apparent northerly boundary of the aforesaid Military Road;

Thence South 60 degrees 26 minutes 22 seconds West along the apparent northerly boundary of the aforesaid Military Road a distance of 156.16 feet to the Point of Beginning.

<u>Exhibit B</u>

**REPRESENTATIONS AND WARRANTIES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Mutual Representations</u>. Each of the Members on behalf of itself, severally, represents and warrants as of the date hereof to the other Members that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) it has all necessary power and authority to execute and deliver, and perform its obligations under, this Agreement as a Member; this Agreement has been duly authorized, executed and delivered by such Member and the constituent members or Members of such Member; this Agreement constitutes the valid and legal binding obligation of each Member and is enforceable against each Member in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, moratorium and other similar laws of general applicability affecting creditors rights and general equity principles; and no consent or approval from any Governmental Authority or any third party is required in connection with the execution and delivery of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) neither the execution of this Agreement by a Member nor the performance by each Member of its obligations hereunder will, to the best of each Member's knowledge, (i) conflict with or result in a breach of, the terms, conditions or provisions of, or constitute a default by any Member under, any agreement by which a Member is bound, or (ii) violate any restriction, requirement, covenant or condition contained in any agreement to which a Member is bound, or (iii) violate or conflict with any provision of any law to which such Member is subject;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) it has not relied on any representations, warranties or promises (written or oral) with respect to the Company or the Property except as expressly set forth herein; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) no funds or assets of any of Member constitutes property of, or are beneficially owned directly or indirectly, by any person subject to sanctions or trade restrictions under United States law ("<u>Embargoed Person</u>" or "<u>Embargoed Persons</u>") that are identified on (1) the "List of Specially Designated Nationals and Blocked Persons" maintained by the Office of Foreign Assets Control (OFAC), U.S. Department of the Treasury, and/or on any other similar list maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in the Company (whether directly or indirectly), is prohibited by law, or the Preferred Equity Investment made by Preferred Member would be in violation of law, or (2) Executive Order 13224 (September 23, 2001) issued by the President of the United States ("Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism"), any related enabling legislation or any other similar Executive Orders, and (b) no Embargoed Person has any direct interest or indirect interest, of any nature whatsoever in the Company, with the result that the investment in the Company (whether directly or indirectly), is prohibited by law or the Preferred Equity Investment is in violation of law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Investment Representations</u>. Each Member hereby makes the following representations and warranties to each other Member and the Company as follows, which are acknowledged and agreed to constitute material representations to be relied upon in connection with the organization of the Company and the issuance of Interests:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Such Member has full authority, power and capacity to execute, deliver and perform such Member's obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Such Member has duly authorized, executed and delivered this Agreement and has duly authorized the performance of such Member's obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Such Member's authorization, execution, delivery and performance under this Agreement do not and will not conflict with any document, agreement, order applicable to such Member or by which such Member or his or its property is bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) There is no litigation, arbitration or governmental investigation or proceeding pending or, to the knowledge of such Member, threatened against or affecting such Member or such Member's Affiliates that individually or when aggregated with one or more other such litigations, arbitrations or governmental investigations or proceedings has or might reasonably be expected to have a material adverse effect on such Member's ability to execute, deliver and perform this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Member understands and acknowledges that its Interest has not been registered for sale under any federal or state securities law and must be held indefinitely unless subsequently registered or an exemption from such registration is available (or with respect to the Preferred Membership Interest, until such Interest is redeemed in accordance with the terms of this Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Such Member (A) has such knowledge and experience in financial and business matters to be able to evaluate the merits and risks of an investment in the Interest, (B) has been given or had access to sufficient information regarding the Company to evaluate the merits and risks of an investment in the Interest and (C) has concluded that such Member is able to bear the risks of an investment in the Interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Such Member understands that the Interests are not traded and that no market is likely to exist for an Interest at the time of any desired resale. In addition, the Member understands that the transfer of an Interest is subject to certain restrictions set forth in this Agreement and under applicable federal and state securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Member is an *"accredited investor"* as defined in Rule 501(a) of Regulation D promulgated under the Securities Act; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The Member represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) such Member is a natural Person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) such Member possesses such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of his or her investments in the Interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) such Member's financial condition is such that he or she can afford to bear the economic risk of holding the Interests for an indefinite period of time and has adequate means for providing for his or her current needs and personal contingencies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) such Member can afford to suffer a complete loss of his or her investment in the Interests;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) all information which such Member has provided to the Company concerning himself or herself and his or her financial position is correct and complete as of the date of this Agreement and, if applicable, as of any later date on which the Member acquires any Interest; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F) such Member understands and has considered all risk factors related to the purchase of the Interests.

The foregoing representations and warranties shall survive the execution and delivery of this Agreement, any redemption of a Member's Interests, and any Dissolution of the Company.

<u>Exhibit C</u>

**FORM OF**

**CERTIFICATE OF REDEMPTION**

The undersigned (the "<u>Preferred Member</u>") hereby certifies that it is the holder of the Preferred Member Interest in VICTORYBASE NY1, LLC, a Texas limited liability company (the "<u>Company</u>"), and that concurrently herewith, all of the undersigned's Preferred Member Interest in the Company has been fully redeemed. From and after [_____________ ___, 202__] (the "<u>Redemption Date</u>"), the undersigned has no further interest in the Company. The undersigned does hereby release the Company and the Common Member in full from any and all claims arising from or relating to the undersigned's Preferred Member Interest in the Company other than as set forth in the preceding sentence. The undersigned further certifies that it has not heretofore sold, transferred, conveyed, assigned, encumbered or hypothecated any of the interest in the Company so redeemed. All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Limited Liability Company Agreement of the Company dated [_____________ ___, 202__] (as amended, restated or otherwise modified from time to time, the "<u>Agreement</u>").

---

| |
|:---|
| Dated: [_____________ ___, 202__] |
| **LAWLER REALTY, LLC**, |
| a New York limited liability company |
| Legacy Holdings of NNY, LLC, |
| a New York limited liability company, |
| its sole member |
| By: |
| Name: Corry Lawler |
| Title: Authorized Signatory |

---

## Ex1Sa-6

**<u>COMMERCIAL LOAN AGREEMENT</u>**

**TIDS LOAN AGREEMENT** (referred to herein as "Agreement") is made as of **February 10, 2023,** by and between **VICTORYBASE NYl, LLC,** a Texas limited liability company authorized to do business in New York State, with an address of 500 Reserve Street, Suite 190, Southlake, Texas 76092 (referred to herein as "Borrower"), **THOMAS PAQUIN,** with an address of 1812 Firenze Street, Keller, Texas 76262, **VICTORYBASE HOLDINGS LLC,** a Texas limited liability company, with an address of 500 Reserve Street, Suite 190, Southlake, Texas 76092, **CORRY J. LAWLER,** with an address of206 Ambrose Street, Sackets Harbor, New York 13685 and **LAWLER REALTY LLC,** a New York State limited liability company, with an address of 206 Ambrose Street, Sackets Harbor, New York 13685 (referred to herein jointly and severally as "Guarantor") with **WATERTOWN SAVJNGS BANK,** a New York savings bank, with an office located at 111 Clinton Street, Watertown, NY 13601 (referred to herein as "Lender").

**RECITALS**

Borrower has applied to Lender for a loan (referred to herein as "Loan") in the aggregate amount of **$5,915,000.00** for the purposes set forth herein. Borrower enters into this Agreement to establish the terms and conditions pursuant to which Lender makes the Loan and to confirm and ratify the terms and conditions set forth in that certain Loan Commitment Letter dated **August 3, 2022, amended on November 29, 2022, amended on December 23, 2022, and amended on February 6, 2023** (referred to herein as the "Loan Commitment Letter").

**NOW THEREFORE,** in consideration of the covenants, representations, warranties and agreement contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower hereby covenants and agrees as follows:

<u>Section 1</u>. **<u>DEFINED TERMS.</u>**

If used in this Agreement the following terms have the following meaning:

1.1 <u>"Absolute Assignment of Leases and Rents"</u> means that certain Absolute Assignment of Leases and Rents substantially in the form set forth in Exhibit 6, with appropriate insertions, to be executed by Borrower and delivered to lender at the Closing of the Loan, by which Borrower grants Lender the rights set forth therein to secure full payment of the Loan and complete performance of this Agreement.

1.2 <u>"Borrower"</u> means **VictoryBase NYl, LLC.**

1.3 <u>"Closing"</u> means the date on which the instruments described herein are executed and delivered and part or all of the loan proceeds are distributed to Borrower.

1.4 <u>"Consolidated Note"</u> means that certain modified and consolidated promissory note substantially in the form set forth in Exhibit 3, with appropriate insertions, to be executed by Borrower and delivered to Lender pursuant to §4 of this Agreement at the Closing of the Loan; and all amendments, modifications and extensions thereof.

1.5 <u>"Event of Default"</u> has the meaning set forth in §9.

1.6 <u>"Existing Mortgage"</u> means that certain mortgage made or assumed by Borrower in favor of Lender as follows:

Mortgage made by JEFFERSON COUNTY INDUSTRIAL DEVELOMENT AGENCY and LAWLER REALTY LLC to WATERTOWN SAVINGS BANK dated June 7, 2013 and recorded in the Jefferson County Clerk's Office on June 7, 2013, as Instrument No. 2013- 8115, in the principal amount of$2,900,000.00.

1.7 <u>"Financial Statements"</u> means any and all operating statements dealing with the financial condition of Borrower, including but not limited to balance sheets, income statements, and cash flow statements relating to the operation of the business located at the premises described in the Mortgage.

1.8 <u>"Guarantor"</u> means jointly and severally **Thomas Paquin, VictoryBase Holdings LLC, Corry J. Lawler and Lawler Realty LLC.**

1.9 <u>"Guaranty"</u> means that unlimited guaranty of the payment and performance of the Loan made and delivered by **Thomas Paquin, VictoryBase Holdings LLC, Corry J. Lawler and Lawler Realty LLC** substantially in the form set forth in Exhibit 8.

1.10 <u>"Hazard Insurance"</u> means insurance coverage against loss for the real and personal property used as collateral for the Loan. The policy(s) must name Watertown Savings Bank, its successors or assigns as mortgagee and loss payee.

1.11 <u>"Lender"</u> means WATERTOWN SAVINGS BANK, a savings bank organized and existing under the laws of the State of New York with an office located at 111 Clinton Street, Watertown, New York 13601.

1.12 <u>"Liability Insurance"</u> means general public liability insurance coverage for the real property used as collateral for the Loan as reasonably required by Lender.

1.13 <u>"Loan"</u> means the past, current and future extensions of credit made by Lender to Borrower in the aggregate amount of **$5,915,000.00** pursuant to the terms of this Agreement.

1.14 <u>"Loan Commitment Letter"</u> means the loan commitment letter dated **August 3, 2022, amended on November 29, 2022, amended on December 23, 2022, and amended on February 6, 2023,** true and complete copies of which are attached hereto as Exhibit 1.

1.15 <u>"Loan Papers"</u> means: (a) this Agreement and the Loan Commitment Letter; (b) any and all promissory notes, guaranties, mortgages, security agreements, assignments, modification agreements and any other instruments, documents, applications, written representations, and agreements executed and/or delivered pursuant to the tenns of this Agreement and relating directly or indirectly to the Loan; and (c) any and all future amendments, renewals, extensions, or supplements to any of the foregoing.

1.16 <u>"Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement"</u> means that certain mortgage modification agreement in substantially the same form as Exhibit 5, and with appropriate insertions, to be executed by Borrower and delivered to Lender at the Closing of the Loan, representing a valid first position security lien on the premises set forth therein. The Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement is sometimes referred to herein as the "Consolidated Mortgage".

1.17 <u>"New Mortgage"</u> means that certain Mortgage substantially in the form set forth in Exhibit 4, with appropriate insertions, to be executed by Borrower and delivered to Lender at the Closing of the Loan, by which Borrower grants Lender a new mortgage in and to the premises described therein to secure partial payment of the Loan and partial performance of this Agreement, to be consolidated with the Existing Mortgage to create a single first lien security interest in the premises described therein; and all further amendments, modifications and extensions thereof.

1.18 <u>"New Note"</u> means that certain promissory note substantially in the form set forth in Exhibit 2, with appropriate insertions, to be executed by Borrower and delivered to Lender pursuant to §4 of this Agreement at the Closing of the Loan; and all amendments, modifications and extensions thereof.

1.19 <u>"Security Agreement"</u> means that certain security agreement substantially in the form set forth in Exhibit 7, with appropriate insertions, to be executed by Borrower and delivered to Lender at the closing of the Loan, by which Borrower grants Lender a first lien security interest in and to the assets of Borrower as set forth therein to secure full payment of the Loan and complete performance of this Agreement.

<u>Section 2</u>. **<u>PURPOSE OF THE LOAN.</u>**

2.1 Borrower warrants that the Loan made by Lender pursuant to the terms of this Agreement is to be used solely for commercial or business purposes as outlined in the Loan Papers, and to **purchase real property located at Pike Road, Lot 15, Village of Sackets Harbor, Town of Hounsfield, Jefferson County, State of New York, known as tax map no. 81.77-1-27.5.**

<u>Section 3</u>. **<u>COMMITMENT OF LENDER.</u>**

3.1 Lender agrees to make the Loan to Borrower pursuant to the terms of this Agreement and the Loan Commitment Letter which is hereby incorporated by reference as if fully set forth herein.

<u>Section 4.</u> **<u>TERMS OF THE LOAN.</u>**

4.1 The Loan shall be evidenced by the existing note given in conjunction with the Existing Mortgage, the New Note substantially in the form set forth as Exhibit 2, and the Consolidated Note substantially in the fonn set forth as Exhibit 3, with appropriate insertions, made payable to the order of Watertown Savings Bank, made and delivered at Closing by Borrower.

<u>Section 5</u>. **<u>SECURITY FOR THE LOAN.</u>**

5 ..1 To secure full payment and complete performance of the obligations of the Borrower under this Agreement or any of the Loan Papers, Borrower shall execute and deliver at Closing the New Mortgage set forth as Exhibit 4, and the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement set forth as Exhibit 5, with appropriate insertions granting Lender a first position mortgage lien in and to the premises of the Borrower as set forth in the New Mortgage and Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement.

5.2 To secure full payment and complete performance of the obligations of the Borrower under this Agreement or any of the Loan Papers, Borrower shall execute and deliver at Closing the Security Agreement set forth as Exhibit 7, with appropriate insertions and related Financing Statements granting Lender a first lien security interest in and to the assets of Borrower as described therein.

5.3 To secure full payment and complete performance of the obligations of the Borrower under this Agreement or any of the Loan Papers, Borrower shall execute and deliver at Closing the Absolute Assignment of Leases and Rents set forth as Exhibit 6, with appropriate insertions and related Financing Statements.

5.4 To secure full payment and complete performance of the obligations of the Borrower under this Agreement or any of the Loan Papers, Guarantor shall execute and deliver at closing the Guaranty or Guaranties set forth as Exhibit 8.

5.5 To secure full payment and complete performance of the obligations of the Borrower under this Agreement or any of the Loan Papers, Borrower shall cause a reasonably acceptable insurance carrier to deliver evidence of reasonably acceptable Hazard Insurance coverage and Liability Insurance coverage at Closing.

5.6 In addition to, and not as a limitation of, all rights of offset that Lender may have under applicable law, upon the occurrence of an Event of Default, without notice to Borrower or Guarantor, Lender shall have the right to appropriate and apply to the payment of the Consolidated Note any and all balances, credits, deposits, accounts, or moneys of Borrower and/or Guarantor then and thereafter with the Lender.

<u>Section 6</u>. **<u>BORROWER'S AND GUARANTOR'S WARRANTIES.</u>**

To induce Lender to make the Loan, Borrower and Guarantor warrant to Lender that:

6.1 Borrower is duly formed under the laws of the State of Texas and existing in good standing under the laws of the State of New York.

6.2 The execution and delivery of this Agreement, the borrowing under this Agreement, the execution and delivery of the New Note, Consolidated Note, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Absolute Assignment of Leases and Rents, the Security Agreement and the Guaranty, and the performance by Borrower and Guarantor of the Borrower's obligations and the Guarantor's obligations under this Agreement and the Loan Papers are within the Borrower's and Guarantor's powers, have been duly authorized and all necessary action taken, have received all necessary governmental approvals, if any were required, and do not and will not contravene or conflict with any provision of law, articles of organization, by-laws or any agreement binding upon the Borrower or the Guarantor.

6.3 This Agreement, the New Note, the Consolidated Note, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Absolute Assignment of Leases and Rents, the Security Agreement and the Guaranty, when duly executed and delivered will be, legal, valid and binding obligations of the Borrower and the Guarantor enforceable against the Borrower and the Guarantor in accordance with their respective terms.

6.4 The Borrower's and the Guarantor's Financial Statements, if any, which have been furnished to the Lender accurately present the financial condition of Borrower and the Guarantor and the results of Borrower's or Guarantor's operations for the applicable periods, and since the date of the Financial Statements, if any, there has been no material adverse change in Borrower's or Guarantor's financial condition or operations.

6.5 No litigation, including, without limitation, arbitration proceedings or governmental proceedings, are pending or threatened against the Borrower or the Guarantor that would, if adversely determined, materially and adversely affect the financial condition or continued operations of the Borrower or the Guarantor. The Borrower and the Guarantor do not have any material contingent liabilities not provided for or disclosed in the Financial Statements.

6.6 The Borrower has incurred no indebtedness or obligation under leases which encumber the premises described in the Consolidated Mortgage except for current leases and none of the assets of the Borrower used as security for the Loan are subject to any mortgage, pledge, lien, encumbrance, or security interest except as set forth herein.

6.7 The representations and warranties of the Borrower contained in the Existing Mortgage, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Absolute Assignment of Leases and Rents and the Security Agreement are hereby confirmed and incorporated in this Agreement by reference. The premises described in the Consolidated Mortgage are in compliance with all applicable subdivision and other land use laws or regulations.

6.8 Borrower has duly complied with, and Borrower's business, operations, assets, equipment, property, leaseholds or other facilities, including but not limited to the premises described in the Consolidated Mortgage, are in compliance with, the provisions of all federal, state and local environmental, health and safety laws, codes and ordinances, and all rules and regulations promulgated thereunder. As of the execution of this Agreement, there has been no release or threatened release of oil or hazardous materials (including, without limitation, asbestos and polychlorinated biphenyls), hazardous substances or hazardous wastes or any other contaminant or pollutant at, on, to, into, or from the premises described in the Consolidated Mortgage and that no federal, state or local agency or authority has issued any claim, notification, order or violation or instituted any action, suit, or proceeding concerning oil or hazardous materials, hazardous substances or hazardous wastes or any other contaminant or pollutant with respect to the premises described in the Consolidated Mortgage or with respect to the release of such oil or hazardous materials, hazardous substances or hazardous wastes or any other contaminant or pollutant on any adjoining property. The Borrower is not aware of any condition or occurrence which could give rise to any such claim, notification, order, violation, action, suit, or proceeding.

6.9 No consent or approval is needed from any governmental agency for the transfer of the premises described in the Consolidated Mortgage under any environmental law, code, ordinance, rule or regulation.

6.10 Borrower has been issued and will maintain all required federal, state and local permits, licenses, certificates and approvals relating to (i) air emissions, (ii) discharges to surface or groundwater, (iii) noise emissions, (iv) solid or liquid waste disposal, (v) the use, generation, storage, transportation or disposal of toxic or hazardous substances or wastes (intended hereby and hereafter to include any and all such materials listed in any federal, state or local law, code or ordinance and all rules and regulations promulgated thereunder, as hazardous or potentially hazardous), or (vi) other environmental, health or safety matters.

6.11 Borrower has received no notice of, and neither knows of nor suspects, facts which might constitute any violations of any federal, state or local environmental, health or safety laws, codes or ordinances and any rules or regulations promulgated thereunder with respect to Borrower's business, operations, assets, equipment, property, leaseholds or other facilities, including but not limited to the premises described in the Consolidated Mortgage.

6.12 Except in accordance with a valid governmental permit license, certificate or approval, there has been no emission, spill, release or discharge into or upon (i) the air, (ii) soils or any improvements located thereon, (iii) surface water or groundwater, or (iv) the sewer, septic system or waste treatment, storage.or disposal system servicing the premises described in the Consolidated Mortgage, of any toxic or hazardous substances or wastes at or from the premises described in the Consolidated Mortgage; and accordingly the premises described in the Consolidated Mortgage are free of all toxic or hazardous substances or wastes.

6.13 There has been no complaint, order, directive, claim, citation or notice by any governmental authority or any person or entity with respect to (i) air emissions, (ii) spills, releases or discharges to soils or improvements located thereon, surface water, groundwater or the sewer, septic system or waste treatment, storage or disposal systems servicing the premises described in the Consolidated Mortgage, (iii) noise emissions, (iv) solid or liquid waste disposal, (v) the use, generation, storage, transportation or disposal of toxic or hazardous substances or waste or (vi) other enviromnental, health or safety matters affecting Borrower or Borrower's business, operations, assets, equipment, property, leaseholds, or other facilities, including but not limited to the premises described in the Consolidated Mortgage. There are no agreements, consent orders, decrees, judgments, licenses or permit conditions, or other directives of government which relate to the future use of the premises described in the Consolidated Mortgage or require any change in the present conditions of the premises described in the Consolidated Mortgage, nor is the premises described in the Consolidated Mortgage listed or proposed to be listed on either the federal National Priorities List or the New York State Inactive Hazardous Waste Disposal Site Registry.

6.14 Borrower has no indebtedness, obligation or liability, absolute or contingent, matured or not matured, with respect to the storage, treatment, clean-up or disposal of any solid wastes, hazardous wastes or other toxic or hazardous substances (including without limitation any such indebtedness, obligation or liability with respect to any current regulation, law or statute regarding such storage, treatment, clean-up or disposal). There is no adverse condition impairing, or which with notice or the passage of time or both would impair, the value of the premises described in the Consolidated Mortgage, and Borrower has no reason to believe any such condition exists relating to any toxic or hazardous substances or wastes. There are no electrical transformers, capacitors, or other equipment, items or articles on or at the premises described in the Consolidated Mortgage which contain polychlorinated biphenyls.

6.15 Borrower shall, unless Lender shall otherwise consent in writing: (a) be and remain in compliance with the provisions of all federal, state and local environmental, health and safety laws, codes and ordinances and all rules and regulations issued thereunder; (b) notify Lender immediately of any notice of a hazardous discharge or enviromnental complaint received from any governmental agency or any other party; (c) notify Lender immediately of any hazardous discharge from or affecting its premises, including but not limited to the premises described in the Consolidated Mortgage; (d) immediately contain and remove the same, in compliance with all applicable laws; (e) promptly pay any fine or penalty assessed in connection therewith, except as contested in good faith and by appropriate proceedings; (f) permit Lender to inspect the premises, to conduct tests thereon, and to inspect all books, correspondence and records pertaining thereto; and (g) at Lender's request, and at the Borrower's expense, provide a report of a qualified enviromnental engineer, satisfactory in scope, form, and content to the Lender, and such other and further assurances reasonably satisfactory to Lender that the condition has been corrected.

6.16 The Borrower and the Guarantor hereby agree to defend, indemnify, and hold Lender harmless from and against any and all claims, damages, judgments, penalties, costs and expenses (including without limitation by way of specification, the costs associated with administrative and judicial proceedings, engineering, consulting and attorneys' fees and court costs) arising directly or indirectly from the activities of Borrower, Borrower's predecessors in interest, or third parties with whom Borrower has a contractual relationship, or arising directly or indirectly from the violation of any environmental protection, health or safety law, whether such claims are asserted by any governmental agency or any other person. This indemnity shall survive any termination of this Agreement.

<u>Section 7</u>. **<u>BORROWER'S AND GUARANTOR'S COVENANTS.</u>**

Until full payment and complete performance of all obligations of Borrower under this Agreement, unless Borrower receives prior written approval of a deviation from Lender, Borrower and Guarantor covenant and agree with Lender that:

7.1 Borrower will promptly and fully perform all obligations imposed in connection with the Loan or under any of the Loan Papers and refrain from doing any act or acts that would violate any warranty, covenant or condition contained in any of the Loan Papers.

7.2 Borrower will promptly notify Lender of: (a) the existence and status of any litigation, arbitration proceedings, or governmental proceeding, that would, if adversely determined, materially and adversely affect the financial condition or continued operations of Borrower; and (b) any material adverse change in any material fact or circumstance represented or warranted by Borrower to Lender in any of the Loan Papers.

7.3 Borrower will not directly or indirectly consolidate or merge with any other person or entity, nor will Borrower assign or transfer, or attempt to do so, any of its rights, powers, duties, or obligations under the Loan or under any of the Loan Papers.

7.4 Borrower will maintain the Borrower's good standing under the applicable laws of the State of New York and will remain duly qualified and in good standing, authorized to do business in each jurisdiction where such qualification is required because of the nature of the Borrower's activities or properties.

7.5 Borrower will not, except in the ordinary course of Borrower's business, sell, transfer, convey, lease, or otherwise dispose of any of the assets used as security for the Loan.

7.6 Borrower and Guarantor will promptly deliver to Lender such Financial Statements or other information as Lender may reasonably request from time to time. The Financial Statements must meet the AICPA standards for a review. Lender reserves the right to require that the Financial Statements meet the AICPA standards for audited financial statements and that they be prepared by a Certified Public Accountant. In connection with the covenants contained in this paragraph, the Borrower and Guarantor agree to: (a) maintain complete and accurate books and records; (b) permit access by Lender to the books and records of Borrower and Guarantor; and (c) permit Lender to inspect the properties and operations of Borrower.

Not limiting the foregoing, Borrower and Guarantor agree to provide Federal tax returns to Lender on an annual basis and Guarantor agrees to provide personal financial statements to Lender every **18** months during the term of the Loan.

7.7 Borrower will not create or permit any mortgage, pledge, lien, encumbrance, lease or security interest to encumber or otherwise to affect any assets used as security for the Loan, other than the liens created in connection with the Loan and as set forth in this Agreement.

7.8 Borrower will pay or cause to be paid all taxes, assessments, and other liabilities when due, except as contested in good faith and by appropriate proceedings.

7.9 Borrower will maintain whatever insurance is required by law and any other insurance, to such an extent and against such hazards and liabilities, as is customarily maintained by companies or businesses similarly situated. Borrower will keep in force Hazard Insurance, showing Lender as an additional loss payee, covering the premises encumbered by the Consolidated Mortgage and the collateral identified in the Security Agreement, in an amount of coverage for the real property not less than the amount of the Mortgage and for the collateral identified in the Security Agreement not less than full replacement cost; in addition Borrower will maintain reasonably acceptable Liability Insurance and shall provide a true and complete copy(s) of the said insurance policy(s) to Lender with acceptable evidence of the prepayment of the applicable premium(s) for a period of one (1) year.

7.10 Borrower will include in each and every lease which affects or relates to the premises subject to the Mortgage, including but not limited to the lease identified in the Absolute Assignment of Leases and Rents, a clause reasonably acceptable to Lender by which both the Borrower (Landlord) and the Tenant acknowledge and agree that the lease is subject and subordinate to the rights of Lender pursuant to the terms of the Consolidated Mortgage, the Absolute Assignment of Leases and Rents and the Security Agreement, and shall deliver a true and complete copy of each and every such lease for Lender's review upon request by Lender.

7.11 Borrower will promptly deliver to Lender such additional assignments or other instruments requested by Lender which when executed and delivered will assign to Lender all of the right, title and interest to the leases, rents, issues, and profits of the premises covered by the Mortgage as further security for the payment of the loan. The said assignments or other instruments shall grant Lender absolute ownership of the leases, rents, issues, and profits of the premises covered by the Consolidated Mortgage.

<u>Section 8.</u> **<u>CONDITIONS OF LENDING.</u>**

8.1 The obligation of Lender to make the Loan is, in addition to the conditions specified in 8.2 of this Agreement and the conditions specified in the Loan Commitment Letter, subject to the conditions precedent that the Lender will have received all of the following documents or instruments, each duly executed and dated the same date as the Loan, in form and substance satisfactory to Lender: (a) <u>Note.</u> The New Note and Consolidated Note specified in §4. (b) <u>Mortgage.</u> The New Mortgage and the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement specified in §5. (c) <u>Absolute Assignment of Leases and Rents.</u> The Assignment specified in §5. (d) <u>Security Agreement.</u> The Security Agreement(s) specified in §5. (e) <u>Hazard Insurance.</u> Evidence of insurance coverage specified in §5. (f) <u>Liability Insurance.</u> Evidence of insurance coverage specified in §5. (g) <u>Title Insurance.</u> Borrower shall provide a Mortgage Title Insurance Policy in an amount of coverage equal to the amount of the Existing Mortgage and New Mortgage as consolidated by the Consolidated Mortgage in form and substance reasonably acceptable to Lender (i) <u>Other</u>. Such other documents or instruments as Lender may reasonably require.

8.2 The obligation of the Lender to make the Loan is subject to the following further conditions precedent: (a) No Event of Default has occurred and is continuing. (b) The warranties contained in §6 are true and correct as of the date of Closing, with the same effect as though made on the date of Closing.

<u>Section 9</u>. **<u>EVENTS OF DEFAULT.</u>**

9.1 Each of the following shall constitute an Event of Default under this Agreement: (a) A default in the payment when due, subject to any applicable grace period, of any principal or interest pursuant to the terms of the Consolidated Note. (b) A failure to pay when due, subject to any applicable grace period, any other indebtedness, whether for borrowed money or as a result of a guarantee, of the Borrower, or a default in the performance or observance of any obligation or condition with respect to any such other indebtedness if the effect of the default is to accelerate the maturity of the indebtedness to become due and payable prior to its expressed maturity. (c) A default in the payment when due, or in the performance or observance of any material obligation or condition agreed to by the Borrower, with respect to any material purchase or lease of goods or services which remains uncured after fifteen (15) days prior written notice by Lender to cure, unless the existence of the default is being contested by the Borrower in good faith and by appropriate proceedings. (d) The insolvency of the Borrower or Guarantor, an adjudication of bankruptcy or insolvency, or a general assignment for the benefit of creditors; or the institution by or against the Borrower or Guarantor of any bankruptcy, reorganization, debt arrangement, or other proceeding under any bankruptcy or insolvency law or any dissolution or liquidation proceeding which if instituted against the Borrower or a Guarantor is consented to or acquiesced in by the Borrower or the Guarantor or remains undismissed for thirty (30) days. (e) The failure of Borrower or a Guarantor to comply with or perform any provision of this Agreement not constituting an Event of Default under any of the other provisions of this section and the continuation of this failure for fifteen (15) days after notice thereof to the Borrower or Guarantor from the Lender. (f) The occurrence of an event of default under the Consolidated Note, the Existing Mortgage, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Absolute Assignment of Leases and Rents, or the Security Agreement. (g) The making by the Borrower or a Guarantor in this Agreement, the Consolidated Note, the Existing Mortgage, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Absolute Assignment of Leases and Rents, or the Security Agreement, of any warranty that is breached or is false or misleading in any material respect, or the furnishing by the Borrower to the Lender of any certificate, Financial Statement, report, notice, or other writing that is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified. (h) The cessation of existence or death of the Borrower or the cessation of the existence and/or the death of any Guarantor. (i) The failure of Borrower to continue operation of its business. G) **Any change to the ownership structure, membership, or management of Borrower, or of any entity having direct or indirect control of Borrower; provided, however, that the foregoing shall not apply, and shall not constitute an event of Default, with respect to any transfer of direct or indirect interests in VictoryBase Holdings LLC or its affiliates which results in a change to the ownership structure, membership, or management of Borrower or of any entity having direct or indirect control of Borrower, so long as (1) VictoryBase Holdings LLC continues to be the managing member of Borrower, and (2) VictoryBase Corporation continues to be the managing member of VictoryBase Holdings LLC.** (k) If there is a material adverse change in the financial or economic condition or prospects of the Borrower or any Guarantor hereunder.

9.2 **Notwithstanding anything herein to the contrary, upon Lawler Realty LLC being** paid its equity contribution **in full** by Borrower on or before five (5) years from the date of **this Agreement, and provided that no material event of default has occurred and remains uncured under the Consolidated Note or any of the other Loan Papers as that term is defined herein, Lawler Realty LLC may be removed as a member of Borrower.**

<u>Section 10</u>. **<u>EFFECT OF AN EVENT OF DEFAULT</u>**

10. l If an Event of Default shall occur, Lender may at its election, do any one or more of the following: (a) Declare the outstanding principal balance and all accrued interest under the Consolidated Note and any other note and any and all expenses or fees incurred by Lender under this Agreement immediately due and payable, without notice of any kind except as set forth herein, whereupon all the said principal, interest, expenses, and fees shall be due and payable. (b) Reduce any claim to judgment. (c) Foreclose on any mortgage or security interest given by Borrower. (d) Exercise any and all rights afforded by the Assignment. (e) Exercise any and all rights afforded by the Laws of the State of New York or any other jurisdiction.

10.2 The acceptance by Lender at any time or from time to time of part payment on the obligation shall not be deemed to be a waiver of any default then existing. No waiver by Lender of any default shall be deemed to be a waiver of any other then existing or subsequent default. No delay or omission by Lender in exercising any right under the Loan Papers shall impair such right or be construed as a waiver thereof or an acquiescence therein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof, or the exercise of any other right under the Loan Papers.

10.3 Any sum spent by Lender pursuant to the exercise of any right provided herein shall become part of the obligation of Borrower, and shall bear interest at the same rate as the Consolidated Note from the date spent until the date repaid by Borrower.

<u>Section 11</u>. **<u>GENERAL.</u>**

11.1 No delay on the part of Lender in the exercise of any right, power, or remedy shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or remedy preclude other or further exercise thereof or the exercise of any other right, power, or remedy.

11.2 This Agreement, the Loan Commitment Letter and the attached Exhibits embody the entire agreement between the parties, supersede all prior agreements and understandings, if any, relating to the subject matter hereof, and may be amended only by an instrument in writing executed by Borrower and Lender, and supplemented only by documents or instruments delivered or to be delivered in accordance with the express terms of this Agreement, the Loan Commitment Letter, and the attached Exhibits.

11.3 All covenants, agreements, undertakings, representations, and warranties made in this Agreement and in any of the Loan Papers shall survive the closing of the Loan.

11.4 Any notice under this Agreement to the Borrower or the Lender shall be in writing and, if by personal service, shall be deemed to have been given when personally served, if by overnight delivery service, shall be deemed to have been given upon delivery, and if mailed, shall be deemed to have been given five (5) days after the date sent by first class mail, postage prepaid, and addressed to the Borrower or the Lender at their respective addresses as set forth in this Agreement. Notices will be given at such other addresses as a party may reasonably designate by written notice received by the other parties to this Agreement. The addresses of the parties for the giving of any notice under this Agreement are as follows:

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| | |
|:---|:---|
| (a) <u>Lender:</u> | Watertown Savings Bank <br> 111 Clinton Street |
|  | Watertown, NY 13601 <br> Attn: President |
| <u>With a copy to:</u> | Peter L. Walton, Esq. <br> Kendall, Walton & Burrows |
|  | 120 Washington Street, Suite 500A <br> Watertown, New York 13601 |
| (b) <u>Borrower:</u> | VictoryBase NYl, LLC |
|  | 550 Reserve Street, Suite 190 |
|  | Southlake, Texas 76092 |

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| | |
|:---|:---|
| <u>Guarantor:</u> | Thomas Paquin <br> 1812 Firenze Street |
|  | Keller, Texas 76262 |
|  | Corry J. Lawler |
|  | 206 Ambrose Street |
|  | Sackets Harbor, New York 13685 |
|  | VictoryBase Holdings LLC <br> 550 Reserve Street, Suite 190 |
|  | Southlake, Texas 76092 |
|  | Lawler Realty LLC <br> 206 Ambrose Street |
|  | Sackets Harbor, New York 13685 |
| <u>With a copy to:</u> | John Moore, Esq. (attorney for VictoryBase NYl, LLC) <br> Winstead PC |
|  | 500 Winstead Building <br> 2728 N. Harwood Street <br> Dallas, Texas 75201 |
|  | Heather Sunser, Esq. (attorney for Lawler) <br> Barclay Damon LLP |
|  | Barclay Damon Tower <br> 125 East Jefferson Street |
|  | Syracuse, New York 13202 |

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11.5 The Borrower and the Guarantor agree to pay on demand all out-of-pocket costs and expenses of Lender, including the reasonable fees and out-of-pocket expenses of counsel for the Lender, in connection with the preparation, execution, delivery, and administration of this Agreement, and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith, and all out-of-pocket costs and expenses, including reasonable attorneys' fees and legal expenses, incurred by Lender in connection with the enforcement (including foreclosure of any mortgage or security interest) of this Agreement, the Consolidated Note, the Existing Mortgage, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Absolute Assignment of Leases and Rents, the Security Agreement, the Guaranty or any other instruments or documents, or any collateral security. Tn addition, Borrower agrees to pay, and hold Lender harmless from all liability for any stamp or other taxes that may be payable in connection with the execution or delivery of this Agreement, the borrowing hereunder, the issuance of the Consolidated Note or any other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection with this Agreement, or the recording of the New Mortgage or Consolidated Mortgage or the Financing Statements or any other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection with this Agreement. All obligations provided for in this paragraph shall survive any termination of this Agreement.

11.6 The Borrower and the Guarantor have executed this Agreement to acknowledge Borrower's and Guarantor's agreement to be bound by all terms, covenants, and conditions applicable to or binding upon Borrower or the Guarantor under this Agreement and agree to execute or re-execute such documents or instruments, during the term of this Loan, as are necessary to carry out this Agreement. Borrower and Guarantor shall, at any time and from time to time after the Closing, upon the reasonable request of Lender, do, execute, re-execute, acknowledge and deliver, or cause to be done, executed, re-executed, acknowledged and delivered, all such further acts, instruments or documents as may reasonably be required to carry out this Agreement, the Loan Commitment Letter, or the attached Exhibits. The Borrower's or Guarantor's failure to respond to Lender's request under this paragraph and assist Lender as set forth herein within ten (10) days of the request shall constitute an Event of Default under this Agreement.

11.7 This Agreement and the Loan Papers are being executed and delivered, and are intended to be perfonned, in the State ofN ew York, and the laws of such state shall govern the construction, validity, enforcement, and interpretation of this Agreement and the Loan Papers, except to the extent Federal laws otherwise govern this Agreement and the Loan Papers.

11.8 The headings of the Sections of this Agreement are inserted for convenience only and will not be deemed to affect the construction of this Agreement.

11.9 This Agreement shall be binding upon and inure to the benefit of Borrower and Guarantor, and their respective successors, assigns and distributees.

11.10 This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original for all purposes and all of which shall constitute collectively a single agreement. In making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

11.11 WAIVER OF JURY TRIAL. Any right to a trial by jury is hereby waived in any action or proceeding in connection with this instrument, the obligations, all matters contemplated hereby and documents executed in connection herewith, and it is agreed not to consolidate any such action with any other action in which a jury trial can be had.

11.12 Any legal action by any party against another relating in any way to this instrument, or the indebtedness, or any relationship between or conduct by the parties, whether at law or in equity, shall be commenced in the Supreme Court of the State of New York in and for Jefferson County, New York, or in such other court of competent jurisdiction as may be chosen by the Lender.

EXECUTED as of the day and year first above written.

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| | |
|:---|:---|
| BORROWER: | BORROWER: |
| **VICTORYBASE NY1, LLC,** | **VICTORYBASE NY1, LLC,** |
| a Texas limited liability company | a Texas limited liability company |
| By: | VictoryBase Holdings LLC, |
|  | a Texas limited liability company, |
|  | its managing member |
| By: | VictoryBase Corporation, <br> a Delaware corporation, <br> its managing member |
| By: |  |
|  | Name: Thomas Paquin |
|  | Title: Authorized Signatory |
| INDIVIDUAL GUARANTOR: | INDIVIDUAL GUARANTOR: |
| Corry J. Lawler, Individually | Corry J. Lawler, Individually |

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Commercial Loan Agreement - Signature Page

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| | |
|:---|:---|
| COMPANY GUARANTOR: | COMPANY GUARANTOR: |
| **VICTORYBASE HOLDINGS LLC** | **VICTORYBASE HOLDINGS LLC** |
| a Texas limited liability company | a Texas limited liability company |
| By: | VictoryBase Corporation, <br> a Delaware corporation, <br> its managing member |
| By: |  |
|  | Name: Thomas Paquin |
|  | Title: Authorized Signatory |
| LAWLER REALTY LLC | LAWLER REALTY LLC |
| By: Legacy Holdings of NNY, LLC | By: Legacy Holdings of NNY, LLC |
| By: Corry J. Lawler, Member | By: Corry J. Lawler, Member |

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Commercial Loan Agreement - Signature Page

**<u>INDEX OF EXHIBITS</u>**

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| | |
|:---|:---|
|  | EXHIBIT |
| Commitment Letter | 1 |
| New Note | 2 |
| Consolidated Note | 3 |
| New Mortgage | 4 |
| Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement | 5 |
| Absolute Assignment of Leases and Rents | 6 |
| Security Agreement | 7 |
| Guaranty | 8 |

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## Ex1Sa-6

**<u>MODIFIED AND CONSOLIDATED PROMISSORY NOTE</u>**

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| | |
|:---|:---|
| **$5915000.00** | **February 10, 2023** |

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**FOR VALUE RECEIVED, VICTORYBASE NY1, LLC,** a Texas limited liability company authorized to do business in New York State, with an address of 500 Reserve Street, Suite 190, Southlake, Texas 76092 (herein referred to as "Borrower"), hereby covenants and promises to pay to **WATERTOWN SAVINGS BANK,** a New York savings bank, with an address of 111 Clinton Street, Watertown, New York 13601 (referred to herein as "Lender"), or order, at Lender's address first above written or at such other address as Lender may designate in writing, the principal sum of **FIVE MILLION NINE HUNDRED FIFTEEN THOUSAND and 00/100 DOLLARS ($5,915,000.00),** in lawful money of the United States of America, together with interest thereon computed from the date hereof as set forth herein, until paid in full.

**Borrower covenants and agrees with Lender as follows:**

1. Borrower
 will pay the indebtedness evidenced by this Note as provided herein.

2. The
 interest rate charged on the outstanding principal balance shall be at the initial rate of **five percent (5.00%)** per annum. Interest is calculated on the basis of a 360-day year
 for the actual number of days the loan is outstanding.

3. A
 payment of accrued interest only will be made by the Borrower on **March 1, 2023.** 

4. Commencing on the **first day of April 2023,** and continuing on the first day of each consecutive month thereafter, Borrower shall make monthly payments of principal and interest payable in initial, equal monthly installments of **Thirty-Four Thousand Five Hundred Seventy Eight and 50/100 Dollars ($34,578.50)** each, to be applied first against late charges or other penalties or expenses for which Borrower is liable; accrued interest at the aforesaid rate on the outstanding principal amount; and then in reduction of principal. Borrower shall also make any required monthly escrow payments for real estate taxes and assessments pursuant to that certain Mortgage as consolidated between Borrower and Lender of even date herewith.

5. (a) The interest rate charged on the outstanding principal balance may change on the first (1st) day of **August 2027,** and on that day every sixtieth (60th) month thereafter. The date on which the interest rate shall change is referred to herein as the "Change Date". Beginning with the first Change Date, the interest rate shall be based on the weekly Five (5) year Treasury Constant Maturity Rate published in the Federal Reserve Statistical Release (referred to herein as the "Index"). The most recent Index figure available as of the date approximately forty-five days before each Change Date is called the "Current Index". If the Current Index is no longer available, the Lender shall choose a new index which is based upon comparable information. Before each Change Date, the Lender shall determine the new interest rate by adding **3.00%** to the Current Index and the resulting interest rate shall remain effective as the new interest rate until the next Change Date. The new interest rate shall become effective on the Change Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) On the Change Date, if the amount of the change between the prior interest rate and the new interest rate is less than 1/8 of 1 percentage point, the amount of the change will be rounded to zero. If the amount of the change is greater than 1/8 of 1 percentage point, the amount of the change will be rounded to the nearest 1/8 of 1 percentage point.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Notwithstanding any provisions herein contained to the contrary, the interest rate shall never be less than **five percent (5.00%)** per annum for the life of the loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Lender shall, at the same time as it calculates the new interest rate, determine the monthly payments that would be needed to repay in full the amount of principal that Borrower is expected to owe on the Change Date, taking into consideration the new interest rate, the Note's maturity date, and the requirement of substantially equal payments. The result of this calculation shall be the new amount of the monthly payment. Borrower shall pay the amount of the new monthly payment beginning on the first monthly payment date after the Change Date. The Lender shall mail or deliver to B01Tower a notice of any change in the interest rate and the amount of the new monthly payment before the effective date of any such change.

6. Borrower shall have the right to prepay all or a portion of the outstanding principal balance of the Note without any prepayment fee, PROVIDED, HOWEVER, that, in the event the Borrower might pay in full the remaining principal balance of the Note through the refinance of the indebtedness by another lending institution during the first five years of the term of this loan, then the Borrower shall incur a prepayment charge applicable to the outstanding principal balance at the rate of five percent (5%) in the first year, four percent (4%) in the second year, three percent (3%) in the third year, two percent (2%) in the fourth year, and one percent (1%) in the fifth year. The installment payments provided for in the Note shall continue without change after any such partial prepayment.

7. Notwithstanding any other provision contained herein to the contrary, on **March 1, 2048** (the "Maturity Date"), all outstanding principal and accrued interest shall be due and payable, if not sooner paid.

8. In the event that any portion of any payment due hereunder is not made within fifteen (15) days of the date such payment became payable, the Lender at its option may charge a Late Payment Charge equal to four cents ($.04) for each dollar ($1.00) so overdue to defray the expenses incident to handling such delinquent payments. The "Late Charge", if not previously paid, shall be added to and become a part of the next succeeding monthly payment. This paragraph shall not be deemed to extend or otherwise modify or amend the date when such payments are due hereunder.

9. The Lender may declare the entire unpaid amount of principal and interest under this Note to be immediately due and payable if Borrower fails to make any payment required by this Note within thirty (30) days of its due date.

10. This Note is governed by the terms and conditions contained in the Commercial Loan Agreement. All of the covenants, conditions and agreements contained in the Commercial Loan Agreement are incorporated by reference herein and are made a part hereof as if expressly set forth. In the event of any conflict between the terms of this Note and the terms of the Commercial Loan Agreement, the terms of the Commercial Loan Agreement shall be paramount and shall govern.

11. The holder of this Note may declare the entire unpaid amount of principal and interest under this Note to be immediately due and payable upon the occurrence of any event of default under the Commercial Loan Agreement, this Note, the Existing Mortgage, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Security Agreement, the Absolute Assignment of Leases and Rents securing this Note or any other loan document (collectively the "Loan Documents") beyond any applicable grace period provided for herein or in said Loan Documents. Forbearance to exercise this right to accelerate the maturity of the principal indebtedness with respect to any event of default shall not constitute a waiver of said right as to any other or subsequent event of default.

12. Borrower shall pay all costs and expenses, including reasonable attorney's fees, incurred by Lender in connection with the enforcement of this Note, the Existing Mortgage, the New Mortgage, the Mortgage Assumption, Modification, Consolidation, Extension and Spreader Agreement, the Security Agreement, the Absolute Assignment of Leases and Rents or any other loan document.

13. Borrower, and all guarantors, endorsers and sureties of this Note, hereby waive presentment for payment, demand, protest, notice of protest, notice of nonpayment, and notice of dishonor of this Note. Borrower and all guarantors, endorsers and sureties consent that Lender at any time may extend the time of payment of all or any part of the indebtedness secured hereby, or may grant any other indulgences.

14. Any notice or demand required or permitted to be made or given hereunder shall be deemed sufficiently made and given if given by personal service or five (5) days after the mailing of such notice or demand by certified mail, addressed, if to Borrower, at Borrower's address first above written, or if to Lender, at Lender's address first above written. Any party may change its address by like notice actually received by the other party or parties.

15. Nothing contained herein shall be construed as to require the Borrower to pay interest at a greater rate than the maximum allowed by law. If, however, from any circumstances, Borrower pays interest at a greater rate than the maximum amount allowed by law, the obligation to be fulfilled will be reduced to an amount computed at the highest rate of interest permissible under applicable law and if, for any reason whatsoever, Lender ever receives interest in an amount which would be deemed unlawful under applicable law, such interest shall be automatically applied to amounts owed, in Lender's sole discretion, or as otherwise allowed by applicable law.

16. All parties executing this Note shall be jointly and severally liable hereunder.

17. This Note shall be construed in accordance with and governed by the laws of the State of New York.

18. Any legal action by any party against another relating in any way to this instrument, or the indebtedness, or any relationship between or conduct by the parties, whether at law or in equity, shall be commenced in the Supreme Court of the State ofNew York in and for Jefferson County, New York, or in such other court of competent jurisdiction as may be chosen by the Lender.

19. This Note may not be changed or terminated orally, but only by an agreement in writing signed by the party against whom enforcement of any change, modification, termination, waiver, or discharge is sought.

20. <u>WAIVER OF JURY TRIAL. Any right to a trial by iury is hereby waived in any action or proceeding in connection with this instrument, the obligations, all matters contemplated hereby and documents executed in connection herewith, and it is agreed not to consolidate any such action with any other action in which a jury trial can be had.</u>

21. The gender and number used in this Note are used for reference only and shall apply with the same effect whether the parties are masculine, feminine, neuter, singular or plural.

22. This Note shall modify and consolidate the obligations of Borrower to Lender set forth in (1) a certain promissory note, assumed by Borrower, dated June 7, 2013, in the principal amount of $2,900,000.00 and (2) a certain promissory note made by Borrower and dated on even date herewith in the principal amount of $3,928,148.61. Except as herein modified, changed and/or amended, the terms and conditions of the original obligations are continued, ratified and affirmed.

*Signature Page to Follow*

IN **WITNESS WHEREOF,** Borrower has executed this Note on the date first above written.

---

| | |
|:---|:---|
| BORROWER: | BORROWER: |
| **VICTORYBASE NYl, LLC,** | **VICTORYBASE NYl, LLC,** |
| a Texas limited liability company | a Texas limited liability company |
| By: | VictoryBase Holdings LLC, |
|  | a Texas limited liability company, <br> its managing member |
| By: | VictoryBase Corporation, <br> a Delaware corporation, <br> its managing member |
| By: | /s/ Thomas Paquin |
|  | <u>Name:</u> Thomas Paquin |
|  | Title: Authorized Signatory |

---

STATE OF TEXAS) )ss: <br> COUNTY OF TARRANT)

On the __**g_** day of February 2023, before me personally appeared **THOMAS PAQUIN,** personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, entity or person upon behalf of which the individual acted, executed the instrument.

Modified and Consolidated Promissory Note - Signature Page

## Ex1Sa-6

**LOAN AGREEMENT**

**by and between**

**VICTORYBASE SC1, LLC**

**as Borrower, and**

**BANK OZK**

**as Bank**

**Table of Contents**

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| | | |
|:---|:---|:---|
| | | **Page** |
| Article I. Definitions | Article I. Definitions | 1 |
| Section 1.1 | Definitions | 1 |
| Section 1.2 | Use and Application of Terms | 9 |
| Article II. Loan. | Article II. Loan. | 10 |
| Section 2.1 | Loan | 10 |
| Section 2.2 | Interest Rate and Repayment | 10 |
| Section 2.3 | Equity Requirements | 10 |
| Section 2.4 | Intentionally Deleted | 11 |
| Section 2.5 | Replacement Reserve | 12 |
| Section 2.6 | Cash Flow Reserve | 12 |
| Section 2.7 | Security Interest in Accounts | 13 |
| Section 2.8 | Advances Do Not Constitute a Waiver | 13 |
| Section 2.9 | Prepayment | 13 |
| Section 2.10 | Flood Insurance Authorization | 13 |
| Section 2.11 | Extension Options | 14 |
| Article III. Collateral. | Article III. Collateral. | 16 |
| Section 3.1 | Collateral | 16 |
| Section 3.2 | Perfection | 16 |
| Section 3.3 | Casualty | 16 |
| Section 3.4 | Condemnation | 17 |
| Section 3.5 | Application of Net Proceeds | 17 |
| Section 3.6 | Release Price | 18 |
| Section 3.7 | Excess Release Reserve | 19 |
| Article IV. Conditions to the Advance | Article IV. Conditions to the Advance | 19 |
| Section 4.1 | Loan Documents and Perfection of Lien | 20 |
| Section 4.2 | UCC Search Results | 20 |
| Section 4.3 | Title Insurance Commitment | 20 |
| Section 4.4 | ALTA Survey | 20 |
| Section 4.5 | Environmental Assessment / Reliance Letter | 20 |
| Section 4.6 | Appraisal | 20 |
| Section 4.7 | Taxes | 20 |
| Section 4.8 | Utilities | 20 |
| Section 4.9 | Licenses and Permits | 20 |
| Section 4.10 | Flood Hazards | 21 |
| Section 4.11 | Insurance | 21 |
| Section 4.12 | Current Financial Statements | 21 |
| Section 4.13 | Taxpayer Identification Number | 21 |
| Section 4.14 | Authority Documents | 21 |
| Section 4.15 | Attorney's Opinion | 21 |
| Section 4.16 | Management Agreement | 21 |
| Section 4.17 | Agreements Related to Borrower | 21 |
| Section 4.18 | Leases | 21 |
| Section 4.19 | Consents and Approvals | 22 |
| Section 4.20 | Compliance with Laws; Governmental Approvals | 22 |
| Section 4.21 | Lien Waivers | 22 |
| Section 4.22 | Origination Fee | 22 |
| Section 4.23 | Pending Litigation | 22 |
| Section 4.24 | Ownership Structure | 22 |

---

---

| | | |
|:---|:---|:---|
| Section 4.25 | Equity | 22 |
| Section 4.26 | Beneficial Ownership Certification | 22 |
| Section 4.27 | Rental Agreement | 22 |
| Section 4.28 | Miscellaneous | 22 |
| Section 4.29 | Additional Conditions to Advance | 23 |
| Section 4.30 | Waiver of Conditions | 23 |
| Article V. Intentionally Deleted | Article V. Intentionally Deleted | 23 |
| Article VI. Representations and Warranties | Article VI. Representations and Warranties | 23 |
| Section 6.1 | No Default | 24 |
| Section 6.2 | No Actions | 24 |
| Section 6.3 | Title to Premises | 24 |
| Section 6.4 | Tax Returns | 24 |
| Section 6.5 | Validity of Loan Documents | 24 |
| Section 6.6 | Priority of Liens | 25 |
| Section 6.7 | No Untrue Statements | 25 |
| Section 6.8 | Permits and Licenses | 25 |
| Section 6.9 | Utilities | 25 |
| Section 6.10 | Environmental Condition of Premises | 25 |
| Section 6.11 | Zoning | 26 |
| Section 6.12 | No Violations | 26 |
| Section 6.13 | Contracts Respecting the Premises | 26 |
| Section 6.14 | Certification | 26 |
| Section 6.15 | OFAC | 26 |
| Section 6.16 | PATRIOT Act | 26 |
| Section 6.17 | Beneficial Ownership Regulation | 26 |
| Article VII. Borrower's Covenants and Agreements | Article VII. Borrower's Covenants and Agreements | 26 |
| Section 7.1 | Material Covenants | 26 |
| Section 7.2 | Payment/Performance | 27 |
| Section 7.3 | Further Assurances | 27 |
| Section 7.4 | Preservation of Contracts | 27 |
| Section 7.5 | Foundation and Other Surveys | 27 |
| Section 7.6 | Use of Loan Funds | 27 |
| Section 7.7 | Insurance | 27 |
| Section 7.8 | Taxes | 28 |
| Section 7.9 | Environmental Matters | 28 |
| Section 7.10 | Financial Statements, Tax Returns | 28 |
| Section 7.11 | Loans and Advances | 29 |
| Section 7.12 | Deposit Accounts | 29 |
| Section 7.13 | No Subordinate Financing, Sales or Transfers of Collateral, or Fundamental Changes in Borrower | 29 |
| Section 7.14 | Modification of Contracts | 29 |
| Section 7.15 | Cash Distributions | 29 |
| Section 7.16 | Single Purpose Entity | 29 |
| Section 7.17 | HVCRE | 30 |
| Section 7.18 | Guarantees, Contingent Liabilities and Loans | 30 |
| Section 7.19 | Good Standing | 30 |
| Article VIII. Events of Default; Remedies. | Article VIII. Events of Default; Remedies. | 30 |
| Section 8.1 | Events of Default | 30 |
| Section 8.2 | Rights and Remedies | 32 |
| Article IX. Miscellaneous | Article IX. Miscellaneous | 36 |
| Section 9.1 | Incorporation of Exhibits and Recitals; Customer and Loan Numbers | 36 |

---

---

| | | |
|:---|:---|:---|
| Section 9.2 | Amendments | 36 |
| Section 9.3 | Assignment, Ownership | 36 |
| Section 9.4 | Conflict | 37 |
| Section 9.5 | Benefit | 37 |
| Section 9.6 | No Partnership, Joint Venture or Agency | 37 |
| Section 9.7 | Disputes | 37 |
| Section 9.8 | Power of Attorney | 37 |
| Section 9.9 | Indemnity | 37 |
| Section 9.10 | Payment of Expenses | 38 |
| Section 9.11 | Documentary and Intangible Taxes; Additional Costs | 38 |
| Section 9.12 | Marshalling of Assets | 39 |
| Section 9.13 | Waiver of Statutory Rights | 39 |
| Section 9.14 | Jury, Venue, Jurisdiction | 39 |
| Section 9.15 | Cumulative Rights | 39 |
| Section 9.16 | No Waiver; No Course of Dealing; No Invalidity | 39 |
| Section 9.17 | Maintenance of Bank's Records | 40 |
| Section 9.18 | Credit Investigations; Sharing of Information; Control Agreements | 40 |
| Section 9.19 | Bank's Liability for Collateral | 40 |
| Section 9.20 | Publicity | 40 |
| Section 9.21 | Execution in Counterparts | 41 |
| Section 9.22 | Notices | 41 |
| Section 9.23 | Time of Essence | 41 |
| Section 9.24 | Term of Loan Agreement | 41 |

---

EXHIBITS:

---

| | |
|:---|:---|
| A | Land |

---

---

| | |
|:---|:---|
| B | Budget |

---

This **LOAN AGREEMENT** ("**Loan Agreement**"), entered into effective as of September 8, 2021 ("**Closing Date**") by **VICTORYBASE SC1, LLC**, a Texas limited liability company with a mailing address of 550 Reserve Street, Ste 190, South Lake, Texas 76092 ("**Borrower**"); to **BANK OZK,** an Arkansas state bank ("**Bank**"), with a mailing address of 1001 Morehead Square Drive, Suite 150, Charlotte, North Carolina 28203.

A. Borrower has applied to Bank for a loan up to the maximum amount of Seven Million Eight Hundred Fifty Thousand and No/100 Dollars ($7,850,000.00) ("**Loan**") to be used for the purpose of acquiring forty-eight (48) newly constructed Homes in Beaufort County, South Carolina ("**Project**").

B. Bank is willing to make the Loan based on the terms and conditions set forth in this Loan Agreement and the other Loan Documents.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Bank hereby agree as follows:

**Article I. Definitions.**

Section 1.1 <u>Definitions</u>. For the purposes hereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "Acceptable Accounting Standards" means GAAP or other sound and accepted accounting standards reasonably approved by Bank in writing, applied on a basis consistent with that of previous statements and which materially and accurately disclose the financial condition (including all contingent liabilities) of the party at issue.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "Account" means singularly and "Accounts" means collectively, the Cash Flow Reserve, Operating Account, and any other reserve or deposit account hereafter established by Borrower with Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "Advance" means a disbursement by Bank of any of the proceeds of the Loan or any insurance proceeds.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "Affiliate" means a Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with the Borrower. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting stock, by contract or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "Allocations" means the line items set forth in the Budget, including interest expense, operating losses, real estate taxes and insurance, and contingency, for which an Advance will be made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "Amortization Commencement Date" means the earlier of (i) the payment date first occurring twenty-five (25) months after the Closing Date, or (ii) the payment date first occurring after Stabilization, after which Amortization Commencement Date no further Advances shall be made under the Loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "Applicable Law" means as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule, regulation, ordinance, determination of an arbitrator, order of a court and determination, advisory opinion, order, guideline, finding or requirement of any other Governmental Authority, in each case applicable to and binding upon such Person or any of its properties or to which such Person or any of its properties is subject, either individually or jointly with another Person or Persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "Appraised Value" means the fair market value of the Premises (or any applicable portion thereof as required hereunder) as indicated by the appraisal prepared by an appraiser designated by Bank, in Bank's sole discretion, and presented and based upon such standards as may be reasonably required by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "Beneficial Ownership Certification" means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation and "Beneficial Ownership Regulation" means 31 C.F.R. §1010.230.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "Borrower's Deposit" means such cash amounts as Bank may reasonably deem necessary for Borrower to deposit with it in accordance with the provisions of <u>Section 3.5</u> of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "Budget" means the budget provided by Borrower, which is attached hereto as <u>Exhibit B</u> and which must be approved by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "Business Day" means any day that is not a Saturday, Sunday or other day on which banks in the jurisdiction whose laws govern this Loan Agreement are authorized or required to close.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "Cash Flow" means the Net Operating Income from the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) "Cash Flow Reserve" shall have the meaning set forth in <u>Section 2.7</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) "Cash Flow Reserve Initial Termination Date" means the date when the following conditions are all satisfied: (i) no Event of Default has occurred and is continuing, (ii) Stabilization has occurred, and (iii) Borrower has made the first of its principal and interest payments under the Note together with all contemporaneously required deposits and all other payments then due under the Note and other Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) "Cash Flow Sweep Period" means the following periods of time: (i) the period from the date hereof to the Cash Flow Reserve Initial Termination Date, and (ii) the period from the occurrence of a Cash Flow Sweep Trigger Event to the occurrence of a Cash Flow Sweep Satisfaction Event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) "Cash Flow Sweep Satisfaction Event" means the satisfaction of the following two (2) conditions: (i) no Event of Default has occurred and is continuing, and (ii) the Debt Service Coverage Ratio of the Premises, as determined by Bank, is equal to or greater than 1.35 to 1.00 for three (3) consecutive months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) "Cash Flow Sweep Trigger Event" means the occurrence of either of the following events at any time after the Cash Flow Reserve Initial Termination Date: (i) an Event of Default, or (ii) the Debt Service Coverage Ratio of the Premises, as determined by Bank, is less than 1.35 to 1.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) "Casualty" means any casualty, damage or injury, by fire or otherwise, to the Premises or any part thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) "Closing" means the date of the first Advance hereunder, which may occur on a date different than the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) "Collateral" shall have the meaning set forth in <u>Section 3.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "Collateral Assignments" means the collateral assignments, chattel mortgage and security agreements granting to Bank perfected first lien security interests in (1) first lien Security Instrument on the fixtures and Improvements comprising the Project, the description, location and value of which must be acceptable to the Bank; (2) first liens on all furniture, machinery, equipment, chattels, building materials and other personal property now or hereafter located on the Project and which was acquired with the proceeds of the Loan; (3) first lien priority assignment of all leases, rents, issues and profits arising out of or related to the Project; (4) all proceeds of above; (5) all contracts affecting the Land including, without limitation, all Leases relating to the Land and Improvements; (6) all rights relating to rents, issues and profits from the Land, and (7) any other property or property rights identified herein as being subject to a Collateral Assignment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) "Condemnation" means a temporary or permanent taking by any Governmental Authority as the result, in lieu or in anticipation, of the exercise of the right of condemnation or eminent domain, of all or any part of the Premises, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting the Premises or any part thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) "Condemnation Award" means any compensation paid by any Governmental Authorities (including, without limitation, any interest payable thereon) in connection with a Condemnation in respect of all or any part of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) "Debt Service" means the aggregate of scheduled interest and principal payments due for a 12 month period on the stated principal amount of the Loan (which shall include principal and interest payments due under the Loan).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) "Debt Service Coverage Ratio" shall mean annual Cash Flow divided by Debt Service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) "Default Condition" means the occurrence or existence of an event or condition which, upon the giving of notice or the passage of time, or both, would constitute an Event of Default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) "Draw Request" means a written request for any Advance, which shall be submitted for each requested Advance as set forth in <u>Section 2.3(a)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) "Event of Default" means an event of default as defined in <u>Section 8.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) "Excess Release Reserve" shall have the meaning set forth in <u>Section 3.7</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) "Extension Fee" means a fee to be paid by Borrower to Bank in order to exercise the First Extension Option and the Second Extension Option in the amount equal to the product of twenty one hundredths of one percent (0.20%) multiplied by the sum of (i) the outstanding principal balance payable in accordance with the Note and (ii) any then unadvanced portions of the Loan Amount which has not been curtailed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) "Extension Request" shall have the meaning set forth in <u>Section 2.12(a)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) "Financing Statements" means the UCC financing statements filed and/or recorded in order to perfect Bank's lien on certain personal property and fixtures as more particularly described therein, as well as all continuations and amendments thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) "First Extension Option" shall have the meaning set forth in <u>Section 2.12(a)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "First Extension Period" means a single period of one (1) year commencing on the day after the Original Maturity Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj) "First Extension Maturity Date" means the date that is one (1) year from the Original Maturity Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk) "Force Majeure" means any delay in the work due to strikes, acts of God, war, invasion, terrorism, governmental restrictions, orders or moratoria, uncontrollable interruption of utility services, enemy action, civil commotion or unrest, rioting, fire, unavoidable casualty, or other causes beyond the control of Borrower whether similar or dissimilar to the foregoing including, without limitation, any (i) cessation or delay of work in response to an order or directive by a governmental authority having jurisdiction over the Project, or (ii) unavailability of permits or inspections, in each case as a direct result of any actual or threatened pandemic and other severe human health risk declared or recognized by the Centers for Disease Control and Prevention of the United States or the World Health Organization; provided, however, that any lack of funds in excess of the Loan shall not be deemed a cause beyond the control of Borrower, and provided further, that that (a) Borrower must give notice to Bank within ten (10) days after the occurrence of an event which it believes to constitute Force Majeure, and (b) in no event shall Force Majeure extend the time for the performance of an Obligation by more than sixty (60) days in the aggregate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll) "GAAP" means generally accepted accounting principles, applied on a consistent basis, as set forth in opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants or in statements of the Financial Accounting Standards Board or their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a "consistent basis" when the accounting principles applied in a current period are comparable in all material respects to those accounting principles applied in preceding periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm) "Governmental Authorities" means any governmental or quasi-governmental (including health and environmental) office, officer or official whose consent or approval is required as a prerequisite to the operation and occupancy of the Improvements or the Premises, to the performance of any act or obligation, or the observance of any agreement, provision or condition of whatsoever nature herein contained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn) "Guarantor" means Thomas Paquin.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo) "Guaranty" means singularly and "Guaranties" means the Unconditional Guaranty of the Guarantor evidencing the direct and unconditional guaranty of the Guarantor of payment of all sums due under the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp) "Home" or "Homes" means any one of the forty-eight (48) newly constructed single family homes on the Land.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq) "HVCRE" means a loan classified as a High Volatility Commercial Real Estate Loan for the acquisition, development or construction of real property under the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (or any successor legislation) including, without limitation, any regulations promulgated pursuant thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr) "Improvements" means all improvements on the Land.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss) "Indebtedness" means with respect to any Person, all indebtedness, obligations and liabilities of such Person for money borrowed, all indebtedness of such Person for the acquisition of property, all indebtedness secured by any lien on the property of such Person whether or not such indebtedness is assumed by such Person, all liability of such Person by way of endorsements (other than for collection or deposit of negotiable instruments in the ordinary course of business), all contingent obligations of such Person and all capitalized leases and other items which in accordance with generally accepted accounting principles are classified as liabilities on a balance sheet;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt) "Land" means the real property described on <u>Exhibit A</u>, owned or to be acquired by Borrower or by such other Person identified in the Title Policy and encumbered by the Security Instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu) "Lease" or "Leases" means any and all leases, subleases, tenancies, licenses, occupancy agreements or agreements to lease all or any portion of the Premises, including but not limited to the Rental Agreements, and all extensions, renewals, amendments, modifications and replacements thereof, and any options, rights of first refusal or guarantees relating thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv) "Liabilities" means all Indebtedness and other obligations of every kind and nature of Borrower to Bank (including, without limitation, interest, premiums, penalties, charges, costs and expenses and other sums chargeable to Borrower by Bank), including, without limitation, all Indebtedness and other obligations arising under any of the Loan Documents and all Indebtedness and other obligations acquired by Bank from another Person, both now existing Indebtedness and other obligations and hereafter arising Indebtedness and other obligations from Borrower to Bank, howsoever evidenced, created, incurred, acquired or owing, whether primary, secondary, direct, contingent, fixed or otherwise, and including obligations of performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww) "Loan Amount" means the lesser of: (i) $7,850,000.00; (ii) 69.6 of the sum of Project Costs; or (iii) 54% of the Appraised Value of the Premises "as if stabilized" as set forth in that certain appraisal prepared by CB Richard Ellis dated April 29, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) "Loan Documents" means this Loan Agreement, the Note, the Security Instrument, the Collateral Assignments, the Guaranties, the Financing Statements and any other instruments, documents, statements and agreements evidencing the Loan, and any other instruments, documents, statements and agreements securing the Loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yy) "Loan-to-Value Ratio" means the quotient of (i) the sum of the outstanding principal balance due under the Note plus any as yet unadvanced amounts, divided by (ii) the Appraised Value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zz) "Material Adverse Change" means any event, circumstance, fact, condition, development or occurrence that has had or could be expected to have a material and adverse effect on any of: (i) the business, operations, condition (financial or otherwise), prospects, liabilities, assets, results of operations, capitalization, liquidity or any properties of Borrower or Guarantor; (ii) the value of the Premises; (iii) the ability of Borrower or Guarantor (or any Persons comprising Borrower or Guarantor), to pay and perform the Indebtedness; or (iv) the validity, enforceability or binding effect of any of the Loan Documents. Borrower acknowledges and agrees that a fact, event or circumstance which exists as of the date hereof which does not currently constitute a Material Adverse Change may, in the future, constitute a Material Adverse Change upon the occurrence of further adverse facts or circumstances (e.g., a pending litigation action pertaining to the Premises may, following future adverse procedural or substantive trial developments, become a Material Adverse Change).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aaa) "Maturity Date" means the Original Maturity Date, as such may have been extended pursuant to <u>Section 2.12</u> hereof, subject, however, to the right of acceleration as herein provided and as provided elsewhere in the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bbb) "Minimum Release Price" shall have the meaning set forth in <u>Section 3.6</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ccc) "Net Cash Flow" means Borrower's net cash flow from the Premises for any particular calendar month calculated on a cash basis inclusive of all cash or cash equivalent revenue of any nature whatsoever collected by Borrower in such calendar month and net of (i) all payments by Borrower to Bank during such month of principal and interest on the Loan pursuant to the Note, and (ii) all bona fide, third party, ordinary operating expenses paid by Borrower with respect to the Premises during such month. Payment of interest or other costs by Borrower using monies from an Advance from Bank shall not serve as a deduction pursuant to items (i) or (ii) above. Net Cash Flow shall be verified by Bank in Bank's reasonable discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ddd) "Net Operating Income" shall mean the sum of (i) the annualized trailing 6- month revenue for the Premises, less (ii) the greater of (a) trailing 12-month actual operating expenses incurred (adjusted in Bank's reasonable determination to account for any changes in occupancy), (b) the annual operating expenses contained in the most recent operating budget (adjusted in Bank's reasonable determination to account for any variances in occupancy), or (c) the annualized trailing 6-month actual operating expenses incurred (adjusted in Bank's reasonable determination to account for any seasonality), less (iii) the Replacement Reserve. The annualized trailing 6-month revenue for the Premises shall be determined utilizing a vacancy rate equal to the greater of (y) the actual vacancy, or (z) 8.0%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(eee) "Net Proceeds" means (i) the net amount of all insurance proceeds payable as a result of a Casualty to the Premises, after deduction of reasonable costs and expenses (including, but not limited to, reasonable attorneys' fees), if any, in collecting such insurance proceeds or (ii) the net amount of the Condemnation Award, after deduction of reasonable costs and expenses (including, but not limited to, reasonable attorneys' fees), if any, in collecting such Condemnation Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(fff) "Net Proceeds Deficiency" shall have the meaning set forth in <u>Section 3.5(c)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ggg) "Net Sales Proceeds" mean the actual gross proceeds from a bona fide arms- length sale of each Home, net of appraisal fees, title insurance, and other reasonable closing costs that are normal and customary for such transactions, provided, however, such closing costs shall not exceed seven percent (7%) of the gross sales proceeds and no fees shall be paid to Affiliates of Borrower or Guarantor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hhh) "Note" means the future advance promissory note from Borrower to Bank, dated as of the Closing Date, in the original principal amount of $7,850,000.00, together with any amendments, modifications, extensions, renewals, substitutions and replacements thereto or therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) "Obligations" means any and all of the covenants, conditions, warranties, representations and other obligations (other than to repay the Indebtedness) made or undertaken by Borrower, Guarantor or any other Person or party to the Loan Documents to Bank or others as set forth in the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jjj) "Operating Account" means the account with the Bank into which all revenues generated by the Premises are deposited.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kkk) "Original Maturity Date" means the date that is set forth in the Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lll) "Origination Fee" shall have the meaning set forth in <u>Section 4.22</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mmm) "Payment Date" means the date recurring each month on which Borrower makes scheduled payments under the Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nnn) "Permitted Encumbrances" means (i) liens, encumbrances, easements and other matters listed as exceptions to the final Title Policy and approved in writing by Bank, (ii) liens, encumbrances, easements and other matters imposed by law for taxes that are not yet due and payable or are being contested in good faith, (iii) liens, encumbrances, easements and other matters imposed by law, such as carriers', warehousemen's, mechanics', materialmen's, and repairmen's liens, arising in the ordinary course of business and securing obligations that are not overdue by more than 30 days or are being contested in good faith by appropriate proceedings as to which Borrower has set aside on its books adequate reserves with respect thereto, and (iv) pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance, social security laws or regulations and other forms of governmental insurance or benefits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ooo) "Permitted Transfers" means the transfer of any direct or indirect interest in Borrower that: (i) occurs by inheritance, devise, bequest or by operation of law upon the death of a natural person who is the owner of a direct or indirect ownership interest in Borrower; or (ii) is to a trust, partnership or other entity for family estate planning purposes; or (iii) constitutes an assignment of limited partner interests or other non-management beneficial ownership interests in Borrower so long as the general partner or managing member, as applicable, of Borrower, the ultimate ownership of such general partner and/or managing member of Borrower and the day-to-day management and control of Borrower do not change; provided, however, in order for any such transfer of an interest to qualify as a Permitted Transfer (1) no Default Condition or Event of Default shall have occurred and remain outstanding or shall occur solely as a result of such transfer, and (2) such a transfer must further (A) not constitute a Material Adverse Change, (B) not result (either singularly or in the aggregate with prior assignments) in any party as to which Bank has not undertaken its normal credit and/or regulatory review process (with reasonably satisfactory results) becoming an owner, directly or indirectly, in twenty percent (20%) or more of Borrower, and (C) be the subject of written notice to Bank within ten (10) days of such assignment together with copies of all applicable assignment documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ppp) "Person" means any corporation, limited liability company, limited liability partnership, general partnership, limited partnership, firm, association, joint venture, trust or any other association or legal entity, including any public or governmental body, quasi-governmental body, agency or instrumentality, as well as any natural person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qqq) "Personalty" means all furnishings, fixtures, equipment, inventory and other articles of tangible personal property now owned and all of the foregoing which may be hereafter acquired by Borrower, attached to, located on, contained in, or used exclusively in connection with the Land and Improvements, or any portion thereof, and all replacements thereof, all articles in substitution therefor and all accessions thereto, whether or not the same are or shall be attached to the Land and Improvements in any manner, together with all accounts, promissory notes and other instruments, chattel paper (both tangible and electronic), documents, deposit accounts, monies, investment property, financial assets and general intangibles of every nature and kind arising out of or in connection with the Premises, both now owned and all of the foregoing which may be hereafter acquired by Borrower, and all property described in the Collateral Assignments to the extent the same constitutes personal property, together with all proceeds and products thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rrr) "Premises" means the collective reference to the Land, the Improvements and the Personality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(sss) "Private Association" means the any property owners' association or similar association under any covenants and restrictions referenced in the Permitted Encumbrances.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ttt) "Project Costs" means the sum of the following: (i) the value of the Land, as determined by the Bank, (ii) the amount needed to fund the allocations set forth in the Budget, and (iii) the amount necessary to fund the costs and expenses in connection with closing the Loan, including, without limitation, reasonable attorney's fees and title costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uuu) "Rental Agreements" means a residential lease agreement for a Home on the standard rental form approved by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vvv) "Replacement Reserve" shall have the meaning set forth in <u>Section 2.6</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(www) "Restoration" means the repair and restoration of the Premises (or any portion thereof) after a Casualty or Condemnation to at least equal value and of substantially the same character as the Premises (or applicable portion thereof) was in immediately prior to such Casualty or Condemnation, with such alterations as may be reasonably approved by Bank, in accordance with Applicable Law and in accordance with plans and specifications approved in advance by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxx) "Second Extension Option" shall have the meaning set forth in <u>Section 2.12(b)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yyy) "Second Extension Period" means a single period of one (1) year commencing on the day after the First Extension Maturity Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zzz) "Second Extension Maturity Date" means the date that is one (1) year from the First Extension Maturity Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aaaa) "Security Instrument" means the deed of trust, mortgage, deed to secure debt, security deed or trust deed securing the Loan and if more than one, all such deeds of trust, mortgages, deeds to secure debt, security deeds or trust deeds executed by Borrower or some other Person for the benefit of Bank covering the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bbbb) "Stabilization" means Bank's written verification that the Debt Service Coverage Ratio with respect to the Premises is equal to or greater than 1.35x.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cccc) "Subsidiary" means singularly and "Subsidiaries" means collectively any Person which is controlled or owned, directly or indirectly, by Borrower.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dddd) "Taxes and Insurance Escrow" shall have the meaning set forth in <u>Section 2.5</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(eeee) "Tenant" means any Person or Persons who may become lessees or tenant of all or any part of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ffff) "Title Insurance Commitment" means a legally binding commitment by the Title Insurance Company to issue the Title Policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gggg) "Title Insurance Company" means the organization issuing the Title Policy, which organization must be a recognized national title insurance company, licensed to do business in the jurisdiction in which the Premises are located and otherwise acceptable to Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hhhh) "Title Policy" means the mortgagee title policy meeting the requirements of this Loan Agreement and Bank's title requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) "UCC" means the Uniform Commercial Code in effect from time to time in the jurisdiction whose laws govern this Loan Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jjjj) Any words or phrases which are not defined in this Loan Agreement but are defined in any of the other Loan Documents shall have the meaning given to such words or phrases in the Loan Document in which the same are defined, and any words or phrases which are not defined in this Loan Agreement or in any of the other Loan Documents but are defined in the UCC shall have the meaning given to them in the UCC.

Section 1.2 <u>Use and Application of Terms</u>. To the end of achieving the full realization by Bank of its rights and remedies under this Loan Agreement and the other Loan Documents, including payment in full of the Loan, in using and applying the various terms, provisions and conditions in this Loan Agreement and the other Loan Documents, the following shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the terms "hereby", "hereof", "herein", "hereunder" and any similar words refer to this Loan Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) words in the masculine gender mean and include correlative words of the feminine and neuter genders and words importing the singular numbered meaning include the plural number or a collective reference, and vice versa;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) words importing persons include firms, companies, associations, general partnerships, limited partnerships, limited liability partnerships, limited liability companies, trusts, business trusts, corporations and other organizations, including public and quasi-public bodies, as well as individuals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the use of the terms "including" or "included in", or the use of examples generally, are not intended to be limiting, but shall mean, without limitation, the examples provided and others that are not listed, whether similar or dissimilar;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) as the context requires, the word "and" may have a joint meaning or a several meaning and the word "or" may have an inclusive meaning or an exclusive meaning;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the words "attorney" and "counsel" are interchangeable in this Loan Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) the phrase "costs and expenses", or variations thereof, shall include, without limitation, reasonable attorneys' fees and fees of legal assistants, and reasonable fees of accountants, engineers, surveyors, appraisers and other professionals or experts – and all references to attorneys' fees or fees of legal assistants, or to fees of accountants, engineers, surveyors, appraisers or other professionals or experts shall mean reasonable fees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the phrase "highest contract rate of interest under the Note" shall refer to the highest rate at which interest accrues under the Note, including any Default Rate (as defined in the Note), or if there is more than one Note, the highest rate under all of the Note, and when used in this Loan Agreement it means that interest on an amount owing to Bank shall accrue at such rate to the same extent and in the same manner as it would if the amount owing to Bank was included in the principal evidenced by the Note bearing the highest contract rate of interest;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) this Loan Agreement shall not be applied, interpreted and construed more strictly against a Person because that Person or that Person's attorney drafted this Loan Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) if any party hereto is an organization, when any action is required or permitted to be taken, it is intended that the same will be undertaken through duly authorized employees or representatives of such party, or a partner, member, manager, officer or director, and any action taken by any of the foregoing Persons shall be presumed authorized absent a clear and convincing showing that the Person relying on such action knew or should have known that the Person acting was exceeding his authority.

**Article II. Loan.**

Section 2.1 <u>Loan</u>. Subject to the terms and conditions of this Loan Agreement, Bank will lend and Borrower will borrow up to the Loan Amount, such borrowing to be evidenced by the Note. The purpose of the Loan is to finance the Project. Loan proceeds may not be used for any other purpose without the prior written consent of Bank, which may be granted in Bank's sole and absolute discretion.

Section 2.2 <u>Interest Rate and Repayment</u>. The outstanding principal balance of the Loan shall bear interest, and principal and interest shall be repayable in accordance with the terms of the Note, together with the fees, premiums, charges and cost and expenses provided for therein. The monetary obligations Borrower now owes to Bank and those it may in the future owe to Bank under the other Loan Documents, unless otherwise provided in any of the other Loan Documents, shall be payable by Borrower upon demand of Bank, with interest thereon at the rate of interest set forth in the Note; and, like the amounts due and owing under the Note, the same shall be secured by the Collateral. From time to time, upon reasonable request from Bank, Borrower shall execute an agreement with Bank to confirm the repayment terms then applicable to the Loan. Payments of interest may be funded from the Note, but only to the extent budgeted and set forth in the Budget.

Section 2.3 <u>Advances</u>. Bank agrees that it will, from time to time, so long as there shall exist no Default Condition or Event of Default, disburse Loan proceeds to Borrower in accordance with the terms and provisions set forth below in this <u>Section 2.3</u> and elsewhere in this Loan Agreement. Without limiting the foregoing, but in furtherance thereof, Bank shall not be obligated to make any Advance which could, in Bank's sole discretion, cause the Loan to be classified as an HVCRE. Advances may be made by depositing the proceeds in the Operating Account. Borrower hereby irrevocably authorizes Bank to disburse Loan proceeds directly to the General Contractor, if required by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Draw Request</u>. For all Advances subsequent to the initial Advance, at least ten (10) Business Days prior to each Advance by Bank, Borrower must submit to Bank a Draw Request, which shall include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) a completed and properly executed disbursement form acceptable to Bank setting forth the amount of Loan proceeds desired;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) a Certificate of Occupancy for each Home a disbursement is requested;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) if requested by Bank, a title report dated within two (2) days of the Draw Request from the Title Insurance Company showing no state of facts objectionable to Bank, including an endorsement showing that title to the Land is vested in Borrower and that no claim for mechanics' or materialmen's liens or other encumbrances have been filed and remain in effect against the Premises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) such other information as may be required by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Advance Amount</u>. Following receipt of a Draw Request and provided the Draw Request complies with the terms of this Loan Agreement and all information therein is true, correct and otherwise accurate, Bank shall determine the amount of the Advance to be made under the Loan in accordance with the standards of this Loan Agreement.

Section 2.4 <u>Equity Requirements</u>. Prior to any Advance, Borrower agrees to provide an equity contribution to the Project in an amount equal to the greater of (i) $3,430,000.00, (ii) thirty and four tenths of one percent (30.4%) of the Project Costs, or (iii) the Project Costs <u>less</u> the Loan Amount. The remaining equity contribution to the Project must be cash equity. Without limiting the foregoing, but in furtherance thereof, prior to any Advance, Borrower shall invest (and at all times during the term of the Loan maintain) minimum equity in the Premises in an amount equal to not less than fifteen percent (15%) of the "as complete" value of the Premises.

Section 2.5 <u>Taxes and Insurance Escrow</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At the time of the Amortization Commencement Date, commencing on the Payment Date and thereafter on each Payment Date for the remaining term of the Loan, Borrower shall escrow with Bank insurance premiums and ad valorem taxes against or affecting the Premises as hereinafter set forth ("**Taxes & Insurance Escrow**"). The initial deposit designated by Bank shall take into account the due date (or, as applicable, earliest payment date without penalty) applicable for both ad valorem taxes and insurance premiums as well as the remaining additional monthly deposit dates between such initial deposit and the date such payments are so due. The subsequent monthly deposits into the Taxes & Insurance Escrow shall be determined by Bank taking into account (w) Bank's reasonable determination of the projected premiums that will next become due and payable on the insurance policies covering Borrower, the Premises or any part thereof or such other insurance policies required hereby or by the Loan Documents, (x) Bank's determination of the projected ad valorem taxes next due on the Premises or any part thereof, (y) any then current balance in the Taxes & Insurance Escrow or sums otherwise previously paid by Borrower against the foregoing obligations, and (z) the number of months to elapse before, in each case, such premiums or taxes shall become due. Bank shall be entitled to designate the deposited amounts such that adequate monies will be available for such purpose in the Taxes & Insurance Escrow at least one (1) month prior to the date when each such premium or taxes will become due (or when premiums or penalties shall thereafter be assessed).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any excess reserve shall, at the reasonable discretion of Bank, be credited by Bank on subsequent reserve payments or subsequent payments to be made on the Note by Borrower, and any deficiency shall be paid by Borrower to Bank on or before the date when Bank demands such payment to be made, but in no event after the date when such premiums and taxes shall become delinquent. In the event there exists a deficiency in such fund or reserve at any time when ad valorem taxes or insurance premiums are due and payable and Borrower fails to pay, Bank may, but shall not be obligated to, advance the amount of such deficiency on behalf of Borrower and such amounts so advanced shall become a part of the indebtedness secured by the Loan Documents, shall be immediately due and payable and shall bear interest at the Default Rate (as defined in the Note) from the date of such advance through and including the date of repayment. The interest of Borrower in all sums deposited with Bank under the provisions hereof or otherwise shall automatically transfer to the new holder of legal title to the Premises upon the transfer of legal title to the Premises, without implying Bank's consent to such transfer of legal title.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Borrower shall be responsible for ensuring the receipt by Bank, at least thirty (30) days prior to the respective due date for payment thereof, of all bills, invoices and statements for all ad valorem taxes and insurance premiums to be paid from the Taxes & Insurance Escrow. So long as no Event of Default has occurred and is continuing and no circumstance exists, which with the giving of notice, or passage of time, or both, would constitute an Event of Default, upon receipt of such information, Bank will disburse to Borrower sufficient funds from the Taxes & Insurance Escrow to pay such invoices and premiums. In the Event of Default, Bank shall have the right but not the obligation to directly pay the Governmental Authority or other party entitled thereto to the extent funds are available for such purpose in the Taxes & Insurance Escrow. In making any payment from the Taxes & Insurance Escrow, Bank shall be entitled to rely on any bill, statement or estimate procured from the appropriate public office or insurance company or agent without any inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the accuracy, validity, enforceability or contestability of any tax, assessment, valuation, sale, forfeiture, tax lien or title or claim thereof. Borrower hereby grants and conveys to Bank a security interest in the Taxes & Insurance Escrow and all funds now or hereafter accruing therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Upon Borrower's repayment in full of the indebtedness and satisfaction of all obligations under the Loan Documents, Borrower shall be entitled to a full return of any funds remaining in the Taxes & Insurance Escrow.

Section 2.6 <u>Replacement Reserve Escrow</u>. At the time of the Amortization Commencement Date, commencing on the Payment Date and thereafter on each Payment Date for the remaining term of the Loan, Borrower shall escrow with Bank reserves for capital improvements, repairs and replacements performed at the Project, including the performance of work to the roofs, chimneys, gutters, downspouts, paving, curbs, ramps, driveways, balconies, porches, patios, exterior walls, exterior doors and doorways, windows, carpets, appliances, fixtures, elevators and mechanical and HVAC equipment, in an amount equal to $150 per annum per Home ("**Replacement Reserve Escrow**"). Borrower hereby grants to Bank a security interest in the funds in the Replacement Reserve Escrow.

Section 2.7 <u>Cash Flow Reserve</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Borrower shall establish and maintain a reserve ("**Cash Flow Reserve**") with Bank for use and disbursement in accordance with the provisions of this section as additional security for Borrower's repayment of the indebtedness and satisfaction of the obligations under the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon the first (1st) calendar month in which a Net Cash Flow exists and at all times thereafter during any Cash Flow Sweep Period, Borrower shall deposit all Net Cash Flow accruing from the immediately preceding calendar month into the Cash Flow Reserve. Such monthly payment shall be made by Borrower on the Payment Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Borrower shall be entitled to a disbursement of some or all of the funds in the Cash Flow Reserve in the following different circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) For the purpose of paying debt service obligations with respect to the Loan, upon the request of Borrower, or with Bank's consent and approval (which consent and approval may be granted or withheld in Bank's reasonable discretion), for other operating or capital expenses for the Premises, as may be approved by Bank;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) All funds then on deposit in the Cash Flow Reserve shall, upon Borrower's request, be disbursed to Borrower upon the occurrence of the Cash Flow Reserve Initial Termination Date provided, however, that any un-advanced loan amounts will be curtailed before the Cash Flow Reserve will be curtailed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) In the event, after the occurrence of the Cash Flow Reserve Initial Termination Date, the Cash Flow Sweep Period is reestablished by virtue of the occurrence of a Cash Flow Sweep Trigger Event, such new balance of the Cash Flow Reserve shall be disbursed to Borrower upon the occurrence of a Cash Flow Sweep Satisfaction Event; provided, however, it is recognized that a Cash Flow Sweep Period may exist intermittently throughout the term of the Loan and that Borrower may be entitled, in multiple instances, to lump sum disbursements from the Cash Flow Reserve pursuant to this subsection (c)(iii); and upon Borrower's repayment in full of the indebtedness and satisfaction of all obligations under the Loan Documents, Borrower shall be entitled to a full return of the Cash Flow Reserve.

Section 2.8 <u>Security Interest in Accounts</u>. Borrower grants to Bank a first-priority perfected security interest in all of the Accounts and any and all monies now or hereafter deposited in each Account as additional security for the obligations of Borrower under the Loan Documents. Until expended, disbursed or applied in accordance herewith, the Accounts shall constitute additional security for the obligations of Borrower under the Loan Documents. Upon the occurrence of an Event of Default, Bank may, in addition to any and all other rights and remedies available to Bank, apply any sums then present in any or all of the Accounts to the reduction of the amounts owed to Bank under the Loan Documents, including without limitation, the outstanding principal balance of the Loan, in any order as Bank, in its sole discretion, may determine. The Accounts shall not constitute trust funds and may be commingled with other monies held by Bank. Borrower shall not, without obtaining the prior consent of Bank, further pledge, assign or grant any security interest in any Account, or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any Financing Statements, except those naming Bank as the secured party, to be filed with respect thereto. Borrower shall indemnify Bank and hold Bank harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including, without limitation, litigation costs and reasonable attorneys' fees and expenses actually incurred) arising from or in any way connected with the Accounts or the performance of the obligations for which the Accounts were established.

Section 2.9 <u>Advances Do Not Constitute a Waiver.</u> No Advance hereunder shall constitute a waiver of any of the conditions to Bank's obligations to make further advances nor, in the event Borrower is unable to satisfy any such condition, shall any such Advance have the effect of precluding Bank from thereafter declaring such inability to be an Event of Default hereunder.

Section 2.10 <u>Prepayment.</u> The Loan may be prepaid in whole or in part at any time; provided that: (i) such prepayment shall be designated clearly as such in writing as part of or as an attachment to the prepayment; and (ii) the Borrower shall pay Bank an amount equal to the Make-Whole Premium (as defined in the Note).

Section 2.11 <u>Flood Insurance Authorization</u>. The National Flood Insurance Reform Act of 1994 mandates the purchase of flood insurance when appropriate, if available. Therefore, Borrower hereby authorizes Bank, and its assigns, to purchase flood insurance during the life of the Loan Agreement. This authorization is extended only in the case where a determination is made subsequent to closing that flood insurance is necessary, because the Bank has reasonably determined the Land is located both in a Special Flood Hazard Area (SFHA) as determined by the Director of the Federal Emergency Management Agency (FEMA), and is a community participating in the National Flood Insurance Program (NFIP). In such event, unless a different standard is permitted by law or regulation and such standard is imposed, flood insurance shall be purchased in the amount of the Note or the maximum amount available under the NFIP, whichever is less. Such flood insurance policy may be purchased from any agent selected by Bank. The premiums and fees incurred shall be paid by Borrower and may be paid from the escrow funds on hand and the proper adjustments made to the monthly payments. Borrower agrees that if the Bank or any servicer is escrowing for items such as taxes and property insurance, they are required to also escrow for required flood insurance costs. Bank may provide Borrower with written notice that flood insurance must be purchased, the amount necessary, and an estimate of the cost. If there is a dispute or uncertainty on the part of the Bank or Borrower about the flood determination, they may jointly request FEMA to review and resolve whether the Land is located in an SFHA. FEMA will review the determination and provide the Bank and Borrower a final determination within 45 days. If no determination is made, Bank's assessment shall control.

Section 2.12 <u>Extension Options</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>First Extension Option</u>. Borrower shall have the right and option to extend the Original Maturity Date to a date ending upon the expiration of the First Extension Period ("**First Extension Option**"). The First Extension Option shall be granted to Borrower only if all of the following conditions have been simultaneously satisfied as of the commencement date of the First Extension Period (unless an earlier date is specified hereinbelow):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) receipt by Bank of a written request of Borrower ("**Extension Request**") given to Bank not less than forty-five (45) days prior to the Original Maturity Date but not more than ninety (90) days prior to the Original Maturity Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Borrower's satisfaction of all those requirements contained in <u>Section 5.1</u> hereof has occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) payment to Bank in cash, of the Extension Fee; provided, however at the time of the First Extension Option, Borrower may elect by written notice to Bank to curtail any un- advanced portion of the Loan Amount and in such event, the Extension Fee shall be computed only on the outstanding principal balance due under the Note;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) no Event of Default shall have occurred and be then existing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) no Material Adverse Change shall have occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) receipt by Bank (at Borrower's sole cost and expense) in form and substance acceptable to Bank dated within thirty (30) days of the Original Maturity Date of an appraisal evidencing an Appraised Value resulting in a Loan-to-Value Ratio less than or equal to sixty percent (60%); provided that, in the event such Loan-to-Value Ratio requirement is not satisfied, Borrower shall have the option to pay down the outstanding principal balance due under the Note, in such an amount as is necessary to satisfy such Loan- to-Value Ratio requirement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) to the extent Bank shall have reasonably determined that any of the Accounts are then currently underfunded in Bank's reasonable discretion, then Borrower shall have effectuated additional deposits into such Accounts to satisfy such concern;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Borrower shall have provided Bank with written evidence reasonably satisfactory to Bank that the Debt Service Coverage Ratio shall then equal or exceed 1.40x; provided that, in the event such Debt Service Coverage Ratio requirement is not satisfied, Borrower shall have the option to pay down the outstanding principal balance due under the amount, in such an amount as is necessary to satisfy such Debt Service Coverage Ratio requirement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) at Bank's election, Bank shall have received an updated title report from the Title Company showing the Security Instrument as a prior and paramount lien on the Premises, that title to the Land is vested in Borrower and that no claim for mechanics' or materialmen's liens then encumber the Premises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Borrower shall have paid all reasonable costs and expenses incurred by Bank in connection with such extension, including without limitation, underwriting, title and legal fees and costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Second Extension Option</u>. To the extent Borrower properly exercises the First Extension Option, Borrower shall have the right and option to extend the First Extension Maturity Date to a date ending upon the expiration of the Second Extension Period ("**Second Extension Option**"). The Second Extension Option shall be granted to Borrower only if all of the following conditions have been simultaneously satisfied as of the commencement date of the Second Extension Period (unless an earlier date is specified hereinbelow):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) receipt by Bank of an Extension Request from Borrower not less than forty-five (45) days prior to the First Extension Maturity Date but not more than ninety (90) days prior to the First Extension Maturity Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Borrower's satisfaction of all those requirements contained in <u>Section 5.1</u> hereof has occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) payment to Bank in cash, of the Extension Fee; provided, however at the time of the Second Extension Option, Borrower may elect by written notice to Bank to curtail any un- advanced portion of the Loan Amount and in such event, the Extension Fee shall be computed only on the outstanding principal balance due under the Note

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) no Event of Default shall have occurred and be then existing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) no Material Adverse Change shall have occurred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) receipt by Bank (at Borrower's sole cost and expense) in form and substance acceptable to Bank dated within thirty (30) days of the First Extension Maturity Date of an appraisal evidencing an Appraised Value resulting in a Loan-to-Value Ratio less than or equal to sixty percent (60%); provided that, in the event such Loan-to-Value Ratio requirement is not satisfied, Borrower shall have the option to pay down the outstanding principal balance due under the Note, in such an amount as is necessary to satisfy such Loan- to-Value Ratio requirement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) to the extent Bank shall have reasonably determined that any of the Accounts are then currently underfunded in Bank's reasonable discretion, then Borrower shall have effectuated additional deposits into such Accounts to satisfy such concern;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Borrower shall have provided Bank with written evidence reasonably satisfactory to Bank that the Debt Service Coverage Ratio shall then equal or exceed 1.40x; provided that, in the event such Debt Service Coverage Ratio requirement is not satisfied, Borrower shall have the option to pay down the outstanding principal balance due under the amount, in such an amount as is necessary to satisfy such Debt Service Coverage Ratio requirement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) at Bank's election, Bank shall have received an updated title report from the Title Company showing the Security Instrument as a prior and paramount lien on the Premises, that title to the Land is vested in Borrower and that no claim for mechanics' or materialmen's liens then encumber the Premises; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) Borrower shall have paid all reasonable costs and expenses incurred by Bank in connection with such extension, including without limitation, underwriting, title and legal fees and costs.

**Article III. Collateral.**

Section 3.1 <u>Collateral</u>. Subject to the Permitted Encumbrances, the Loan will be secured by a first- priority lien and security interest in the Premises, including without limitation the following (collectively, "**Collateral**"): (1) the Land and Improvements, (2) the Personalty, (3) the Accounts, (4) all leases relating to the Premises and all rents, issues and profits arising out of or related to the Premises, (5) all licenses and permits relating to any one or more of the Land, the Improvements and the Personalty, (6) all other property and property rights described in any one or more of the Security Instrument, the Collateral Assignments and any of the other Loan Documents, and (7) all proceeds, products, accessions, additions, replacements and substitutions of or to the foregoing property and property rights.

Section 3.2 <u>Perfection</u>. On the Closing Date, Bank will require that its liens and security interests in the Collateral described in <u>Section 3.1</u> be perfected through recording of such of the Loan Documents as may need to be recorded in order to achieve perfection and through Bank taking possession of such of the Collateral as may need to be in Bank's possession to achieve perfection. In addition, on the Closing Date, Bank shall require evidence satisfactory to it (1) that there are no liens and security interests prior to Bank's on any of the Collateral, (2) that Bank has a first priority lien and security interest in the Collateral, subject only to the Permitted Encumbrances, and (3) that no liens and security interests, including, without limitation, mechanic's liens and materialmen's liens, may at a date subsequent to Closing Date, attach to the Premises or otherwise be perfected against the Premises, or any part thereof, which, upon such attachment or perfection, would have lien priority superior to Bank's lien and security interest priority in the Collateral.

Section 3.3 <u>Casualty</u>. Borrower will give Bank prompt notice of any Casualty to the Premises and shall promptly commence and diligently prosecute to completion the Restoration of the Premises and otherwise comply with the provisions of <u>Section 3.5</u>. Borrower shall pay all costs and expenses of such Restoration (including, without limitation, any applicable deductibles under the insurance policies) whether or not such costs and expenses are covered by insurance. Bank may, but shall not be obligated to, make proof of loss if not made promptly by Borrower. In case of loss covered by policies of insurance, Bank (or, after foreclosure, the purchaser at the foreclosure sale) is hereby authorized, at Bank's option, either (i) to settle and adjust any claim under such policies without the consent of Borrower, or (ii) allow Borrower to agree with the insurance company or companies on the amount to be paid upon the loss; <u>provided however</u>, Borrower may settle and adjust any claim provided that (a) no Event of Default then exists, (b) the loss or the applicable Net Proceeds are less than Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00), and (c) such adjustment is carried out in a competent and timely manner, and provided further that in any case Bank shall and is hereby authorized to collect and receive any such insurance proceeds and the expenses incurred by Bank in the adjustment and collection of insurance proceeds shall be so much additional Indebtedness hereby secured and shall be reimbursed to Bank upon demand. Notwithstanding any Casualty, Borrower shall continue to pay the Indebtedness at the time and in the manner provided for in this Agreement, the Note and the other Loan Documents.

Section 3.4 <u>Condemnation</u> Borrower will give Bank prompt notice of any instituted or threatened in writing Condemnation proceeding affecting all or any part of the Premises and shall deliver to Bank a copy of any and all notices or papers served in connection with such Condemnation or related proceedings. Borrower may settle and compromise any Condemnation proceeding only with the prior consent of Bank (which consent shall not be unreasonably withheld or delayed) and Bank shall have the opportunity to participate, at Borrower's cost and expense, in any applicable litigation or proceeding and settlement discussions in respect thereof and Borrower shall from time to time deliver to Bank all instruments reasonably requested by Bank to permit such participation. Borrower shall, at its cost and expense, diligently prosecute any such litigation or proceeding, and shall consult with Bank, its attorneys and experts, and cooperate with them in the carrying on or defense of any such litigation or proceeding. Bank is hereby irrevocably appointed as Borrower's attorney-in-fact, coupled with an interest, with exclusive power to collect, receive and retain any Condemnation Award and to make any compromise or settlement in connection with any Condemnation. Notwithstanding any Condemnation, Borrower shall continue to pay the Indebtedness at the time and in the manner provided for in this Agreement, the Note and the other Loan Documents, and the Indebtedness shall not be reduced until any Condemnation Award shall have been actually received and applied by Bank, after the deduction of expenses of collection, to the reduction or discharge of the Indebtedness. If the Premises or any portion thereof is taken by any Governmental Authority, Borrower shall promptly commence and diligently prosecute to completion the Restoration of the Premises and otherwise comply with the provisions of <u>Section 3.5</u>. If the Premises is sold, through foreclosure or otherwise, prior to the receipt by Bank of the Condemnation Award, Bank shall have the right, whether or not a deficiency judgment on the Note shall have been sought, recovered or denied, to receive the Condemnation Award.

Section 3.5 <u>Application of Net Proceeds</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) If a Casualty or Condemnation has occurred to the Premises, Bank shall make the Net Proceeds available for Restoration as provided for in <u>Section 3.5(b)</u>, provided that each of the following conditions is satisfied:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) no Event of Default shall have occurred and be continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) (A) in the event the Net Proceeds are insurance proceeds, less than twenty-five percent (25%) of the net rentable square footage of the Premises has been damaged, destroyed or rendered unusable as a result of such Casualty, or (B) in the event the Net Proceeds are a Condemnation Award, (i) less than ten percent (10%) of the Land constituting the Premises is taken, (ii) such Land is located along the perimeter or periphery of the Premises, (iii) such taking does not materially impair the existing access to or parking at the Premises, and (iv) no portion of the Improvements is the subject of the Condemnation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Such Casualty or Condemnation does not allow any Leases to be terminated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Borrower shall commence the Restoration as soon as reasonably practicable (but in no event later than sixty (60) days after the occurrence of such Casualty or Condemnation) and shall diligently pursue the same to satisfactory completion in compliance with all Applicable Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) Bank shall be satisfied in its reasonable judgment that (A) the Restoration can be substantially completed on or before the earliest to occur of (i) six (6) months preceding the Maturity Date or (ii) the earliest date required for such completion pursuant to the terms of any Leases, and (B) the Premises (taking into account the Net Proceeds) shall continue, throughout the period of Restoration, to adequately secure the outstanding balance of the Loan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) the Net Proceeds, together with any cash or cash equivalent deposited by Borrower with Bank, are sufficient, in Bank's reasonable judgment, to pay for all costs and expenses of the Restoration in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Net Proceeds shall be paid directly to Bank and held by Bank and, until disbursed in accordance with the provisions of this Section, shall constitute additional security for the repayment of the Indebtedness and satisfaction of the Obligations. The Net Proceeds shall be disbursed by Bank to Borrower (or directly to third parties to pay costs or expenses of the Restoration) from time to time during the course of the Restoration, upon Bank being furnished with (1) evidence satisfactory to it that all requirements set forth in <u>Section 3.5(a)</u> have been satisfied; (2) evidence satisfactory to it that each of the conditions set forth in <u>Section 5.1</u> hereof have been satisfied; and (3) such architect's certificates, waivers of lien, contractor's sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Bank may reasonably require and approve; and Bank may, in any event, require that all plans and specifications for the Restoration be submitted to and approved by Bank prior to commencement of work. No payment made prior to the final completion of the Restoration shall exceed the value or cost of the work performed from time to time. Bank shall not be obligated to make disbursements of the Net Proceeds more frequently than once per calendar month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the opinion of Bank in consultation with a construction inspector, chosen by Bank, be sufficient to pay in full the balance of the costs and expenses which are estimated by such construction inspector to be incurred in connection with the completion of the Restoration, then Borrower shall deposit the deficiency ("**Net Proceeds Deficiency**") into the Borrower's Deposit with Bank before Bank makes any further disbursement of the Net Proceeds. The Net Proceeds Deficiency deposited with Bank shall be held by Bank and shall be disbursed for costs and expenses actually incurred in connection with the Restoration on the same terms and conditions applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant to this Section shall constitute additional security for the repayment of the Indebtedness and satisfaction of the Obligations. Bank may, at its reasonable election, disburse Net Proceeds for Restoration in accordance with this Section prior to any disbursement from the Borrower's Deposit for such purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) All (1) Net Proceeds not required to be made available for Restoration or (2) surplus which may remain out of Net Proceeds held by Bank after payment of all costs of Restoration, may be retained and applied by Bank toward the payment of the Indebtedness, whether or not then due and payable, in such order, proportion and priority as Bank in its reasonable discretion shall deem proper, or, at the reasonable discretion of Bank, the same may be paid, either in whole or in part, to Borrower for such purposes as Bank shall approve in its reasonable discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Notwithstanding the foregoing or anything to the contrary contained herein, to the extent Net Proceeds are sufficient to pay the then outstanding Indebtedness in full, such Net Proceeds shall be so applied, with the balance, if any, payable to Borrower.

Section 3.6 <u>Release Price</u> So long as no Default Condition or Event of Default shall have occurred and be continuing, Bank shall release its interest (i.e., the Security Instrument, Financing Statement, Collateral Assignments or any other assignment or security (including, but not limited to an assignment of leases and rents)) against a Home thereon upon receipt of payment from the Borrower of the minimum release price ("**Minimum Release Price**"), which shall be equal to which shall be equal to the greater of (a) 100% of the Net Sales Proceeds, or (b) 135% of the allocated Loan Amount for such portion of the Premises, provided all of the following conditions have been satisfied:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) No Event of Default shall have occurred and be continuing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Payment by Borrower to Bank of the Minimum Release Price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Such portion shall be a separate legal unit for purposes of, among other things, land use laws, real estate taxes and assessments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Simultaneously with the release, Borrower shall record a deed conveying fee simple title to the transferred portion to a bona fide third-party purchaser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) After giving effect to the release, the remaining portion of the Premises shall remain in full compliance with the standards of maintenance and operation at the Premises, and all applicable zoning, building, subdivision, land use, parking and other laws applicable to the Premises;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If requested by Bank in writing, Bank shall have received a title policy endorsement to the title insurance policy delivered to Bank in connection with the Loan (A) insuring Bank's interest in any easements created in connection with the release, (B) extending the effective date of the title policy to the effective date of the release, and (C) confirming no change in the priority of the Security Instrument on the remaining portion of the Premises or in the amount of the insurance or the coverage under the title policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Borrower shall, at its sole cost and expense, prepare any and all documents and instruments necessary to effect the release of such portion of the Premises, all of which shall be subject to the reasonable approval of Bank and Borrower shall also pay any reasonable expenses, including reasonable legal fees, incurred by Bank or its servicer to effect such release; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) If reasonably requested by Bank, Borrower shall execute such additional documents and instruments and obtain such opinions of counsel as are typical for transactions similar to such release.

Each payment of a Minimum Release Price received by the Bank shall be applied, at Bank's option, first to any outstanding costs and fees associated with the Loan, then to accrued but unpaid interest, and then to principal.

Section 3.7 <u>Excess Release Reserve</u>. Borrower shall create at Bank a deposit account ("**Excess Release Reserve**") into which any Minimum Release Price payment received in excess of the Loan balance at the time of receipt of such Minimum Release Price shall be deposited. Bank may, in its reasonable discretion, apply the Excess Release Reserve to pay any future amounts owing under the Loan.

**Article IV. Conditions to First Advance.**

All of the conditions set forth in this <u>Article IV</u> must be satisfied and completed, or the satisfaction and completion thereof waived by Bank, prior to any Advance by Bank. If all of the conditions are not met to Bank's satisfaction, or the completion thereof waived by Bank, Bank may, at its option, (1) withhold any Advance until the same are met, or (2) disburse and require that any unsatisfied terms and conditions be satisfied as a condition subsequent to Closing within such period of time as may be designated by the Bank.

Section 4.1 <u>Loan Documents and Perfection of Lien</u>. Bank shall have received fully executed and, if necessary, recorded or filed, originals of the Loan Documents as may be required by Bank prior to the first Advance, and all of the conditions listed in this Loan Agreement shall have been completed and satisfied, including, without limitation, perfection in favor of Bank of a first priority lien and security interest in all of the Collateral, subject only to the Permitted Encumbrances.

Section 4.2 <u>UCC Search Results</u>. Bank shall have received current UCC search results from such local and state filing offices as Bank may reasonably request, each showing no liens and security interests against any of the Collateral described in <u>Section 3.1</u>.

Section 4.3 <u>Title Insurance Commitment</u>. Bank shall have received the Title Policy, or the Title Insurance Commitment, with respect to the Premises issued by the Title Insurance Company, and such Title Policy, or Title Insurance Commitment, (1) shall have deleted, or shall have been marked to delete, all exceptions other than Permitted Encumbrances, (2) shall meet or have satisfied all requirements reasonably requested by Bank and (3) shall contain such endorsements as Bank deems appropriate (*e.g*., zoning, access, comprehensive). Without limiting the foregoing, but in addition thereto, the Title Policy, or marked up Title Insurance Commitment, shall insure in an amount up to the Loan Amount, Bank's first priority lien and security interest in the Land, and in the Improvements as they are being constructed, subject only to the Permitted Encumbrances and such other matters as Bank may approve; and Bank's first priority lien and security interest in the Land and in the Improvements as they are being constructed, shall be insured as superior and prior to any and all mechanic's liens and materialmen's liens which may be filed in the future relative to the Land and the Improvements.

Section 4.4 <u>Survey</u>. In lieu of an ALTA survey (dated not more than 90 days prior to the Closing Date) of the Land by a registered land surveyor, together with a surveyor's certificate with respect to such survey, subject to Bank's approval and complying with the Bank's survey requirements, Borrower shall show the property is platted.

Section 4.5 <u>Environmental Assessment / Reliance Letter</u>. Borrower shall provide to the Bank a current Phase I environmental assessment and reliance letter inuring to Bank's benefit with respect to the Land, the results and conclusions of which are in all respects satisfactory to Bank, in its reasonable discretion.

Section 4.6 <u>Appraisal</u>. Prior to the first Advance, Bank shall have received and approved a MAI appraisal of the Premises, performed in accordance with all Applicable Law by an independent appraiser selected by Bank and commissioned by and addressed to Bank, which is satisfactory to Bank in its reasonable discretion. The Borrower shall pay the cost of the appraisal.

Section 4.7 <u>Taxes</u>. Borrower shall have delivered to Bank evidence that ad valorem taxes and all general and special assessments on the Land have been paid through the most recent calendar year and are otherwise current in their payment under Applicable Law, and information as to tax parcel identification numbers, tax rates, estimated tax values, assessments and the identities of the taxing authorities.

Section 4.8 <u>Utilities</u>. Borrower shall deliver to Bank evidence satisfactory to Bank of the suitability and availability of water, sanitary sewer and storm water sewer, electric, gas, internet connectivity and other utilities needed for operation of the Project and to properly service the Premises in its intended use by providing a utilities facilities endorsement to the title policy, together with evidence satisfactory to Bank that all easements needed for the maintenance and use of such utilities are available.

Section 4.9 <u>Licenses and Permits</u>. If applicable, Bank shall have received copies of all necessary licenses and permits for the operation of the Improvements.

Section 4.10 <u>Flood Hazards</u>. Bank shall have received evidence that the Improvements are not located within an area identified as having "special flood hazards" as such term is used in the federal Flood Disaster Protection Act of 1973, and Bank shall have received a flood hazard certification for the Project (which the Bank may in its reasonable discretion order) which reflects that improvements will not be located in an area designated as a Zone V or Zone A flood hazard area.

Section 4.11 <u>Insurance</u>. Borrower shall have delivered to Bank evidence that Borrower has obtained each of the insurance policies required under the Security Instrument and <u>Section 7.7</u>, together with satisfactory evidence of premium payments.

Section 4.12 <u>Current Financial Statements</u>. Prior to the first Advance, Borrower and any other Person obligated for payment of the Loan or Borrower's performance shall have delivered to Bank complete and current financial statements, with the Bank's certification form attached, all in a form satisfactory to Bank.

Section 4.13 <u>Taxpayer Identification Number</u> Borrower and any other Person obligated for payment of the Loan or Borrower's performance shall have supplied to Bank their respective federal taxpayer identification numbers or social security numbers, as appropriate.

Section 4.14 <u>Authority Documents</u>. Bank shall have received from Borrower and from such other Persons as Bank may request, documents evidencing Borrower's and such other Persons' respective authority to enter into the Loan, such documents to include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) certified copy of the articles of organization/articles of incorporation/partnership agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) certificate of existence or good standing from the applicable Governmental Authorities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) certified copy of the operating agreement/by-laws/partnership agreement, together with all amendments thereto; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) certified copies of the resolutions authorizing the Loan and the execution and delivery of the Loan Documents.

Section 4.15 <u>Attorney's Opinion</u>. Borrower's and Guarantors' counsel shall have delivered to Bank its written opinion regarding the organization and operation of Borrower, the enforceability of the Loan Documents and such other matters as Bank may reasonably request, such opinion to be in all respects satisfactory to Bank and its counsel.

Section 4.16 <u>Management Agreement</u>. Borrower acknowledges there is no management agreement associated with the Premises. The Premises will be self-managed by the Borrower.

Section 4.17 <u>Agreements Related to Borrower</u>. The Bank shall have received and approved copies of all equity partnership agreements and similar documents related to Borrower.

Section 4.18 <u>Leases</u> If applicable, Bank shall have received and approved in writing: (i) true and correct copy of all Leases and guarantees thereof (if any); (ii) estoppel certificate and subordination and attornment agreements (including nondisturbance agreements if and to the extent agreed to by Bank in its reasonable discretion), in form and content satisfactory to Bank, from each Tenant; and (iii) evidence satisfactory to Bank of Borrower's compliance with the Leases.

Section 4.19 <u>Consents and Approvals</u>. Bank shall have received true and exact copies of any other consents and approvals of all Persons required in order for Borrower to construct, occupy and utilize the Improvements for its intended purpose and to comply with all of the terms of the Loan Documents, including those of any Private Association.

Section 4.20 <u>Compliance with Laws; Governmental Approvals</u>. Bank shall have received evidence that the Premises, and the intended uses of the Premises are in compliance with all Applicable Law and other restrictions and requirements applicable to the Premises, and that all governmental approvals as may be necessary to comply with all governmental requirements relating to the Project have been obtained and that applicable appeal periods have expired. The evidence of compliance may include letters, licenses, permits, certificates and other correspondence from the appropriate Governmental Authorities and Private Associations. The Applicable Law and other restrictions and requirements with which compliance and evidence of compliance will be necessary include, without limitation, the following: building codes, private building restrictions and covenants, safety, health and environmental protection laws (to include those relating to air and water quality, and those relating to mold and other fungi), disability accessibility and other local barrier laws, erosion control ordinances, doing business laws, licensing laws and zoning laws (the evidence submitted as to zoning should include the zoning designation made for the Land, the permitted uses of the Land under such zoning designation and zoning requirements as to parking, lot size, ingress, egress and building setbacks).

Section 4.21 <u>Lien Waivers</u>. Bank shall have received such lien waivers and lien affidavits as Bank may deem necessary or appropriate from mechanics, materialmen, contractors and other Persons who may be performing work on the Premises or who may supply materials, products or equipment thereto.

Section 4.22 <u>Origination Fee</u>. Borrower shall have paid to Bank the origination fee in the amount of Thirty Nine Thousand Two Hundred Fifty and No/100 Dollars ($39,250.00).

Section 4.23 <u>Pending Litigation</u>. Borrower shall have certified to Bank that no litigation or proceedings are pending or threatened in writing which might adversely affect Borrower's ability to perform Borrower's obligations under this Loan Agreement, Borrower's agreement with contractors or Borrower's development and operation of the Project.

Section 4.24 <u>Ownership Structure</u>. The ownership structure of the Borrower shall be reviewed and approved by the Bank.

Section 4.25 <u>Equity</u>. Borrower shall have contributed equity to the Project as required under <u>Section 2.3</u> hereof.

Section 4.26 <u>Beneficial Ownership Certification</u>. Borrower has provided to Bank the documentation and other information so reasonably requested in connection with applicable "know your customer" and anti-money-laundering rules and regulations, including the PATRIOT Act. Borrower has delivered a Beneficial Ownership Certification in relation to Borrower.

Section 4.27 <u>Rental Agreement</u>. Borrower shall deliver to Bank the approved form of Rental Agreement. <u>Miscellaneous</u>. Borrower shall deliver to Bank all of the Loan Documents (duly executed by all parties thereto to the extent any of such Loan Documents must be executed by the parties thereto in order to be enforceable against them) and all other items set forth in this Loan Agreement and which Bank or its counsel may require. Upon request, Borrower shall deliver such other documents, contracts, and information relating to the Project as the Bank reasonably requests.

Section 4.29 <u>Additional Conditions to Advance</u>. Bank shall not be obligated to make the first Advance if a Default Condition or an Event of Default shall exist.

Section 4.30 <u>Waiver of Conditions</u>. Bank may, at its option, waive any condition precedent to the first and any subsequent Advance, and either eliminate the condition or require that the condition be satisfied at some later time. A waiver by Bank of a condition must be in writing to be effective and a waiver as to one or more conditions shall not constitute a waiver as to other conditions and shall not establish a "course of dealing or practice" that would require a waiver of the same or a similar condition at some later time.

**Article V. Conditions Precedent to Advances Following the First Advance**

Section 5.1 <u>Periodic Advances</u>. All of the conditions set forth below in this <u>Section 5.1</u> must be satisfied before Bank is obligated to make any Advances after the first Advance and each of the conditions must be and remain satisfied at the time of each Advance subsequent to the first Advance. As in <u>Section 4.1</u>, all of the following conditions must be met or completed to Bank's satisfaction, unless waived by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Existing Conditions</u>. All of the conditions stated in <u>Article IV</u> must have been satisfied to Bank's satisfaction and they each must remain satisfied at the time of the Advance, or the satisfaction thereof waived by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Draw Request</u>. Borrower shall have delivered to Bank a Draw Request for each subsequent Advance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Subsequent Liens</u>. No other lien or other interest shall have been permitted to attach to the Premises superior or subordinate to the interest of Bank under the Security Instrument or under any of the other Loan Documents, except taxes for the current year, and other matters acceptable to Bank as evidenced by Bank's written consent thereto. All parties holding direct contracts with the Borrower related to the Project shall execute lien waivers prior to each Advance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Title Insurance</u>. Bank shall have received the Title Policy which conforms in all respects with the marked up Title Insurance Commitment that Bank received on the Closing Date. In the event periodic title endorsements are not required by the Title Insurance Company to be issued in connection with the Title Policy, Borrower nonetheless agrees to cause title endorsements to be issued to the Title Policy as required by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Equity</u>. Borrower shall have contributed equity to the Project as required under <u>Section 2.4</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>As-Built Survey</u>. If required by the County of Beaufort, South Carolina or City of Beaufort, South Carolina in connection with the Project, Bank shall have received a copy of an "as- built" survey prepared by a land surveyor registered as such in the jurisdiction in which the Premises are located, which survey meets in all respects the survey requirements of the Bank. The survey shall meet in all respects Bank's the survey requirements and contain a surveyor's certificate in a form satisfactory to Bank.

Section 5.2 <u>Requirements for the final Advance</u>. Bank shall not be obligated to make the final Advance of the Loan until all of the conditions set forth below in this <u>Section 5.2</u> have been satisfied. As in <u>Section 4.1</u> and <u>Section 5.1</u>, all of the following conditions must be met or completed to Bank's satisfaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Existing Conditions</u>. All of the conditions stated in <u>Article IV</u> and <u>Section 5.1</u> must have been satisfied to Bank's satisfaction and they each must remain satisfied at the time of the Advance, or the satisfaction thereof waived by Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Insurance</u>. Bank shall have received evidence of insurance in such amount, with such terms and with such provider as shall be acceptable to Bank.

**Article VI. Representations and Warranties**

In order to induce Bank to enter into this Loan Agreement and to make the Loan as herein provided, Borrower makes the following representations and warranties, all of which shall survive the execution and delivery of this Loan Agreement, the Note, the Security Instrument, the other Loan Documents and any inspections and examinations at any time made by or on behalf of Bank, and all of which shall be continuing representations and warranties from Borrower to Bank, except those representations and warranties which speak as of a specific date below:

Section 6.1 <u>No Default</u>. Borrower is not in default beyond any applicable notice and cure periods under any instrument, loan agreement, indenture, mortgage, deed of trust, deed to secure debt, security deed, security agreement, pledge agreement, guaranty agreement or other agreement to which it is a party, and Borrower is not in default under any of the foregoing agreements by which it may be bound, the default under which would result in a Material Adverse Change. Neither the execution and delivery of this Loan Agreement, the Note and the other Loan Documents, nor the consummation of the transactions herein and therein contemplated, nor compliance with the provisions hereof or thereof will violate any Applicable Law, or will conflict with, or result in the breach of, or constitute a default under, any instrument, loan agreement, indenture, mortgage, deed of trust, deed to secure debt, security deed, security agreement, pledge agreement, guaranty agreement or other agreement to which Borrower is a party.

Section 6.2 <u>No Actions</u>. There are no actions, suits or proceedings pending, and to the knowledge of Borrower threatened in writing, against or affecting Borrower before any court, arbitrator or Governmental Authority which might have a Material Adverse Change on any one or more of the following: (1) Borrower's business operations, (2) a substantial part of Borrower's assets, or (3) Borrower's ability to observe and perform its obligations to Bank under any of the Loan Documents as and when the same are required to be observed or performed.

Section 6.3 <u>Title to Premises</u>. As of the Closing Date, Borrower will have good and marketable fee simple title to and in all the Premises free and clear of all liens and encumbrances other than the liens of Bank and Permitted Encumbrances.

Section 6.4 <u>Tax Returns</u>. Borrower has filed all federal, state, local and other tax returns which are required to be filed by it. Borrower has paid all taxes, assessments and other governmental charges which became due and were required to be paid by Borrower up through the Closing Date, other than those which are due and payable for the current year without penalty or interest, and those being contested by Borrower in good faith by appropriate proceedings. Borrower has established reserves adequate for the payment of all federal, state, local and other tax liabilities, including those it is now contesting.

Section 6.5 <u>Validity of Loan Documents</u>. Upon execution and delivery, this Loan Agreement, the Note, the Security Instrument and the other Loan Documents are and the same shall be valid and binding agreements of Borrower, enforceable against Borrower in accordance with the terms thereof and hereof, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 6.7 <u>Priority of Liens</u>. Upon proper recordation of the Security Instrument, the Financing Statements and any of the other Loan Documents which Bank requires to be recorded or filed, Bank will hold a first priority security interest in and lien on the Collateral described therein free and clear of all liens, claims of lien and encumbrances, except for the Permitted Encumbrances.

Section 6.8 <u>No Untrue Statements</u>. This Loan Agreement and the certificates, written statements and other documents furnished to Bank by Borrower in connection with the Loan or in connection with any transaction contemplated hereby, and those furnished to Bank by any other Person on behalf of Borrower in connection with the Loan or in connection with any transaction contemplated hereby, do not contain any untrue statement of a material fact and do not omit disclosure of a material fact, which, by its omission, makes the statements contained herein or therein misleading. There is no fact known to Borrower which has not been disclosed to Bank in writing which materially affects any one or more of the following: (1) the Premises, (2) Borrower's business, prospects, profits or financial condition, or (3) the business, prospect, profits or financial condition of any other Person obligated, either primarily or secondarily, on the Loan. There is no fact known to Borrower which has not been disclosed to Bank in writing which materially affects the ability of Borrower to perform as and when required under each and all of the Loan Documents.

Section 6.9 <u>Permits and Licenses</u>. Borrower has obtained or has made provisions for obtaining all permits, licenses and approvals necessary for the operation of the Improvements, and there are no restrictions, covenants or other matters that prevent or may prevent the intended use of the Premises as stated by Borrower in one or more of the Loan Documents.

Section 6.10 <u>Utilities</u>. All utility services necessary for the operation of the Premises for their intended purposes as stated in one or more of the Loan Documents are presently available. The utilities are available through presently existing public or unencumbered private easements or rights-of-ways located at the boundaries of the Land. The utilities include but are not limited to, water supply, storm and sanitary sewer, electric, gas, telephone and internet connectivity facilities, and all such utilities are non-interruptible. There are no unpaid assessments for any of the utilities and there are no unpaid assessments for street or sidewalk paving and curbing, nor has Borrower received any notice of any proposed public improvements that would result in either general or special assessments being levied against the Premises or parts thereof. All utilities will inure to the benefit of Bank in the event of the foreclosure of the Premises, or a deed in lieu of foreclosure.

Section 6.11 <u>Environmental Condition of Premises</u>. The Premises described herein are and at all times while Bank has any interest in or lien on the Premises will continue to be in full compliance with all federal, state and local environmental Applicable Law, including, but not limited to, those relating to air and water quality, those relating to oil, gas and petroleum products, those related to lead based paints, those related to radon, those related to asbestos and those related to mold and other potentially harmful fungi. As of the date hereof, to the best of Borrower's knowledge and except as provided in that certain environmental report obtained by Borrower relating to the Land, by Newkirk Environmental Inc. dated June 30, 2021, a copy of which has been provided to Bank ("**Environmental Report**"), there are no hazardous materials, substances, wastes and other environmentally regulated substances (including, without limitation, gas, oil and other petroleum products, lead based paints and any materials containing asbestos) located on, in or under the Premises or used in connection therewith; or if there are any of the foregoing, (1) Borrower has fully disclosed to Bank in writing the existence, extent and nature of any such substances, (2) Borrower is legally authorized and empowered to maintain such substances on, in or under the Premises or use them in connection therewith, and (3) Borrower has obtained and will maintain all licenses, permits and approvals required with respect thereto, and Borrower is and will remain in full compliance with all of the terms, conditions and requirements of such licenses, permits and approvals.

Section 6.12 <u>Zoning</u>. The present and proposed use of the Premises is in compliance with all zoning ordinances. All municipal and other governmental and regulatory approvals have been obtained for the operation of the Premises for the purposes intended as stated in one or more of the Loan Documents.

Section 6.13 <u>No Violations</u>. There does not exist any notice of any uncorrected violation of any regulation, ordinance, rule, order or directive of any Governmental Authority with respect to the Premises.

Section 6.14 <u>Contracts Respecting the Premises</u>. As of the Closing Date, all contracts respecting the Premises and the use thereof, if any, including, without limitation, all Leases and all rental agreements with respect to the Premises, are in full force and effect and none of the parties to any of such contracts are in default under any of them. Borrower represents and warrants to Bank that as of the Closing Date there are no Leases affecting the Premises except as previously disclosed to Bank in writing.

Section 6.15 <u>Certification</u>. There is no fact or condition known to Borrower that constitutes a material or significant threat or risk to Borrower's performance under the Loan Documents.

Section 6.16 <u>OFAC</u>. Borrower (1) is not a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (2) does not engage in any dealings or transactions prohibited by Section 2 of such executive order, or is not otherwise associated with any such Person in any manner violative of Section 2, and (3) is not a Person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury's Office of Foreign Assets Control regulation or executive order.

Section 6.17 <u>PATRIOT Act</u> Without limiting Borrower's other representations and warranties in this <u>Article VI</u> relating to compliance with Applicable Law, Borrower is in compliance, in all material respects, with (1) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (2) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA PATRIOT) Act of 2001.

Section 6.18 <u>Beneficial Ownership Regulation</u>. Borrower qualifies as a "legal entity customer" under the Beneficial Ownership Regulation.

**Article VII. Borrower's Covenants and Agreements**

Borrower covenants and agrees with Bank that it will fully and promptly do and perform each and every one of the following covenants and agreements, or to the extent any of the covenants and agreements set forth below requires it to refrain from doing an act, it will so refrain:

Section 7.1 <u>Material Covenants</u>. Borrower acknowledges to Bank that the breach or default by Borrower of any of the covenants and agreements set forth in this <u>Article VII</u> is and the same shall be material.

Section 7.2 <u>Payment/Performance</u>. Borrower shall pay when due all sums owing to Bank under the Note, this Loan Agreement and the other Loan Documents, and Borrower shall promptly perform all other obligations of Borrower thereunder and hereunder.

Section 7.3 <u>Further Assurances</u>. On demand of Bank at any time and from time to time, Borrower shall do any act, and execute any additional documents consistent with the Loan Documents required by Bank to secure the Loan, confirm and perfect the lien of the Security Instrument and any other security documents and to comply with the Loan Documents, including, but not limited to, additional Financing Statements, new or replacement notes and agreements supplementing, extending and otherwise modifying any one or more of the Note, this Loan Agreement, the Security Instrument and the other Loan Documents.

Section 7.4 <u>Preservation of Contracts</u>. Borrower shall not, without the prior written approval of Bank, terminate or cancel its contracts or agreements with any Person furnishing labor, services, materials, parts or equipment to or in connection with the Improvements. Borrower shall not modify any contract with any Person furnishing labor, services, materials, parts or equipment to or in connection with the Improvements, without Bank's prior written consent. Subsequent to the Closing Date, Borrower must give Bank prior written notice of any architects, engineers, contractors, construction inspectors and other Persons who Borrower proposes to contract with. Borrower shall also provide Bank prior written notice of any Persons Borrower desires to contract with as additional architects, engineers, general contractors or other Persons to furnish labor, services, materials, parts or equipment in or to the Improvements. Bank has the right to approve or disapprove such substitutions and to approve or disapprove such additions in its reasonable discretion and to require the submission of any additional documentation Bank deems relevant regarding such substitutions and additions prior to making its decision on whether to approve or disapprove. <u>Intentionally Deleted</u>.

Section 7.6 <u>Use of Loan Funds</u>. Borrower shall use all Loan proceeds disbursed to Borrower solely in payment of costs and expenses itemized in the Budget, unless agreed to in writing otherwise by Bank. Without limiting the foregoing, but in addition thereto, Borrower shall not use any of the Loan proceeds, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

Section 7.7 <u>Insurance</u>. Borrower covenants to maintain insurance as required herein and in the other Loan Documents, including the insurance coverages set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) at all times from and after the Closing Date until the Loan and all other monetary and non-monetary obligations of Borrower to Bank under the Loan Documents are satisfied in full, general liability insurance covering risks customarily carried in similar properties having a use or uses similar to that being made of the Premises from time to time;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) if the Premises is located in an area designated as a flood zone or an area which Bank deems to be prone to flooding, a flood insurance policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) at all times from and after the Closing Date until the Loan and all other monetary and non-monetary obligations of Borrower to Bank under the Loan Documents are satisfied in full, workers' compensation insurance covering risks customarily carried in similar properties having a use or uses similar to that being made of the Premises from time to time; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) at all times from and after the Closing Date until the Loan and all other monetary and non-monetary obligations of Borrower to Bank under the Loan Documents are satisfied in full, business interruption insurance covering risks customarily carried in similar properties having a use or uses similar to that being made of the Premises from time to time.

All insurance shall be with insurance carriers approved by Bank with a Bests Insurance Reports policy holder's rating of at least "A" and a Best's Key Rating Class of at least "IX". The insurance must be in amounts acceptable to Bank and the form of the policies must be satisfactory to Bank and comply with Bank's insurance requirements. If applicable, such insurance shall also comply with any and all insurance requirements in each Lease. The flood insurance in (b) above, and the business interruption insurance in (d) above shall contain standard noncontributing mortgagee clauses showing Bank as the mortgagee/loss payee and an additional insured, and they each shall contain standard waiver of subrogation clauses and such other clauses and endorsements as Bank may require. The general liability insurance in (a) above shall include Bank as an additional insured and loss payee. Conformed copies of the policies, or certificates evidencing insurance coverages as required hereunder, shall be delivered to Bank as and when reasonably requested by Bank, or at such other times as may be specified in this Loan Agreement and the other Loan Documents. The conformed copies of the policies, or the certificates of insurance coverage, shall contain or be accompanied by an agreement with the insurer or insurers therein to give the Bank thirty (30) calendar days prior notice of intent to cancel. The conformed copies of the policies, or the certificates of insurance, shall be accompanied by evidence of payment of the premium therefor.

Section 7.8 <u>Taxes</u>. Upon the request of Bank, Borrower shall submit to Bank such receipts and other statements which shall evidence, to the satisfaction of Bank, that all taxes, general and special assessments and other items required to be paid by Borrower under this Loan Agreement and any of the other Loan Documents have been paid in full.

Section 7.9 <u>Environmental Matters</u>. Any environmental matters, hazardous materials, substances, wastes or other environmentally regulated substances (inclusive of oil, gas and other similar petroleum products) shall be governed by the terms of the Hazardous Substances Indemnity Agreement entered into by Borrower and Guarantors in favor of Bank of even date herewith.

Section 7.10 <u>Financial Statements, Tax Returns</u>. Borrower shall provide to Bank financial statements from time to time as Bank may reasonably require. The financial statements shall be in a form and shall cover such substantive matters as Bank may from time to time reasonably require. Without limiting the generality of the foregoing, at a minimum, Borrower shall provide Bank with the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Borrower shall submit an annual financial statement to Bank no later than sixty (60) days after fiscal year end for internally prepared financial statements and no later than one hundred twenty (120) days after fiscal year end for accountant prepared statements; and (which shall be preliminary without tax adjustments) prepared in accordance with Acceptable Accounting Standards and certified to by Borrower. Such statements shall include, at a minimum: a balance sheet; an income and expense statement; a statement showing contingent liabilities; detailed cash flow statements for the Project; and any supporting schedules or documentation which Bank may require.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Within thirty (30) days of filing, Borrower and each Guarantor shall submit to Bank a copy of its/his complete federal tax returns with supporting schedules and/or extensions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) If reasonably requested by Bank in its reasonable discretion, monthly management reports consisting of operations information, rent rolls, cash flows and a profit and loss statement as of the end of each calendar month, such management reports to be due no later than fifteen (15) days after the end of each month; provided, however, that Bank may adjust the frequency with which the management reports are reasonably requested by Bank based on (i) Borrower's compliance with the provisions hereof; and (ii) Borrower's performance metrics over the preceding twelve (12) months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Such additional information and statements, lists of assets and liabilities, aging of receivables and payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower's financial condition and business operations as Bank may reasonably request from time to time.

Section 7.11 <u>Loans and Advances</u>. Unless Bank otherwise consents in writing, Borrower shall not make any loans or advances to any Person and Borrower shall not permit any equity withdrawals from Borrower by any Person.

Section 7.12 <u>Deposit Accounts</u>. Until the Loan is paid in full, Borrower shall cause all its deposit accounts, exclusive of its property management accounts but including all Accounts, to be maintained with Bank.

Section 7.13 <u>No Subordinate Financing, Sales or Transfers of Collateral, or Fundamental Changes in Borrower</u>. During the term of the Loan, without the Bank's prior written consent, such consent not to be unreasonably withheld or delayed, there shall be (i) no secondary financing of the Land or Collateral, and no liens against the Land or Collateral subordinate to the liens in favor of the Bank; (ii) no sale or transfer of ownership of the Land or Collateral; (iii) no sale, pledge, encumbrance, assignment or transfer, voluntarily or involuntarily, whether by operation of law or otherwise, of any direct or indirect ownership interest in Borrower unless Bank has given its prior written approval and no change in the structure of Borrower shall be permitted; (iv) no change in the fiscal year end of the Borrower; and (v) no change in the character of Borrower's business.

Section 7.14 <u>Modification of Contracts</u>. Borrower shall not, without the prior written approval of Bank, terminate or modify any contracts relating to the purchase of the Premises, such approval not to be unreasonably withheld or delayed.

Section 7.15 <u>Cash Distributions</u>. Borrower shall not make any distributions to partners, members or shareholders which could cause the Loan to be classified as a HVCRE. In addition, Borrower shall not make any distributions to partners, members or shareholders during any Cash Flow Sweep Period or during period of time in which an Event of Default exists.

Section 7.16 <u>Single Purpose Entity</u>. Borrower's sole business purpose must be to own and operate the Premises. Borrower (a) must conduct business only in its own name, (b) may not engage in any business or own any assets unrelated to the Land and the Improvements, (c) may not have any Indebtedness other than (i) the principal, interest and other sums evidenced by the Note or the Loan Documents and any other amounts, payments or premiums payable under the Loan Documents, (ii) unsecured letters of credit or guarantees required by Governmental Authorities in connection with the operation of the Improvements, (iii) trade debt incurred in the ordinary course of operation of the Premises in such amounts as are normal and reasonable under the circumstances, provided that such debt is not evidenced by a note and is paid when due and provided in any event that the outstanding principal balance of such debt may not exceed at any one time one-half percent (.5%) of the outstanding Obligations, and (iv) equipment leases entered into in the ordinary course of the operation of the Premises, (d) must have its own separate books, records, and accounts (with no commingling of assets), (e) must hold itself out as being an entity separate and apart from any other Person, (f) must observe organizational formalities independent of any other entity, and (g) may not change its name, identity, or organizational structure unless otherwise expressly permitted pursuant to the terms of this Loan Agreement or any other Loan Document.

Section 7.17 <u>HVCRE</u>. Borrower shall at all times maintain sufficient equity in the Premises to ensure that the Loan is not categorized as an HVCRE.

Section 7.18 <u>Guarantees, Contingent Liabilities and Loans</u>. Borrower shall not at any time, without the prior written consent of Bank, directly or indirectly become or be liable in respect of any guaranty, or assume, guarantee, become surety for, endorse or otherwise agree to become directly or contingently liable upon or with respect to any obligation or liability of any other Person or entity, or make any loans to any of its directors, officers, partners, members, managers, shareholders, subsidiaries and affiliates.

Section 7.19 <u>Good Standing</u>. Borrower shall at all times remain in "good standing" in each jurisdiction where it operates, as such term, or similar term, is defined by the secretary of state or regulator body therein.

**Article VIII. Events of Default; Remedies.**

Section 8.1 <u>Events of Default</u>. The occurrence of any one or more of the following events shall constitute an "Event of Default" hereunder (after the expiration of any applicable notice and/or cure periods set forth below in this Loan Agreement):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the occurrence of any event of default under the Note or any of the other Loan Documents, including, without limitation, Borrower's failure to pay when due the principal of or interest on the Note or any other sums due thereunder, whether fees, charges, premiums or costs and expenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Borrower's breach of or default under any of the terms, conditions or covenants contained in this Loan Agreement or any of the other Loan Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the actual demolition, injury or waste to the Collateral, or any part thereof, which, in the sole opinion of Bank, may impair its value or the actual or threatened decline in value of the Collateral or any material part thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Borrower's assets, or any material part or portion thereof, are attached, seized, subjected to a writ or distress warrant, or are levied upon, or come into the possession of any trustee, receiver or Person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within thirty (30) days, or if Borrower is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower's assets, or if a notice of lien, levy or assessment is filed of record with respect to any of Borrower's assets by any Governmental Authority, and the same is not paid within thirty (30) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any Borrower shall (i) commence a voluntary case or other proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a custodian, trustee, receiver, liquidator or other similar official for such Borrower or any substantial part of such Borrower's property, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this subsection, (iii) apply for or consent to the appointment of a custodian, trustee, receiver, liquidator or other similar official for such Borrower or for a substantial part of such Borrower's assets, (iv) file an answer admitting the material allegations of a petition filed against such Borrower in any such proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take any action for the purpose of effecting any of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of any Borrower or such Borrower's debts, or any substantial part of such Borrower's assets, under any federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or (ii) the appointment of a custodian, trustee, receiver, liquidator or other similar official for any Borrower or for a substantial part of such Borrower's assets, and in any such case, such proceeding or petition shall remain undismissed for a period of sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Borrower's default under the terms of any instrument or other agreement to which this Loan Agreement or any of the other Loan Documents is subordinate or which is subordinate to this Loan Agreement or any of the other Loan Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) the death or mental incapacity of any Guarantor; provided, however that the death or mental incapacity of any Guarantor shall not be a default, provided neither Borrower nor any Guarantor is then otherwise in default under any of the Loan Documents, and provided further that, within sixty (60) days after the date of such death or mental incapacity, Borrower (A) provides Bank a reaffirmation from the executor of such Guarantor's estate (if applicable) reaffirming the obligations contained herein and certifying (with such evidence as Bank may reasonably request) that such estate maintains assets in an amount substantially similar to the assets of such Guarantor immediately prior to such death, or (B) provides a substitute guarantor reasonably acceptable to Bank, who (i) meets or exceeds the required financial strength and position necessary to cause the Guarantors collectively to meet or exceed any financial covenants set forth in the Loan Documents; (y) satisfies the underwriting criteria that Bank customarily uses in assessing potential guarantors; and (z) executes and delivers guaranty agreements in substantially the same form and substance as the Guaranties, subject only to changes based on the identity of the replacement Guarantor (or such other changes requested by replacement Guarantor that are acceptable to Bank in its sole discretion);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any false statement, material misrepresentation or withholding of facts by Borrower or any other Person in any loan application or other document provided by Borrower or any other Person to Bank or its agents, including any material misrepresentation made in this Loan Agreement, or in any presentation made by Borrower or any other Person to Bank or its agents, as to any matter relied upon by Bank in evaluating whether to extend financing to Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Borrower is enjoined, restrained or in any way prevented by any court order from constructing or operating the Improvements, which is not lifted, dismissed or otherwise released within thirty (30) days after the issuance of such order;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) the dissolution, termination of existence, merger or change in control of or in Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) any governmental authority takes action that Bank believes could have a Material Adverse Change on Borrower or Guarantors' financial condition or ability to repay any of the Obligations; any indictment or conviction of any Borrower, Guarantor, or any officer, director or stockholder of any Borrower for a felony offense under state or federal law, or a determination by Bank, in its sole discretion, that a Material Adverse Change in the financial condition of Borrower has occurred since the date of this Loan Agreement that could impair the ability of Borrower to perform its obligations as and when required under any of the Loan Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) intentional default by Borrower under any of the Rental Agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) Bank fails to have a first-priority security interest in the Collateral, subject to no other liens except Permitted Encumbrances; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) one or more final judgments are entered against Borrower or against the Guarantors, or any of them, and said judgments are not stayed or bonded over within thirty (30) days after entry;

Notwithstanding anything contained in the Loan Documents to the contrary, if Borrower fails to make any payment when due under the Loan Documents, no Event of Default shall be declared, and no right or remedy shall be exercised by Bank as a result thereof, unless Borrower shall have failed to pay such amount within five (5) days after due. Other than when a different time period is set forth in this <u>Section 8.1</u> above, in the event of a breach or default other than for nonpayment, Borrower shall have a period ("**Cure Period**") of thirty (30) days after the Borrower obtains actual knowledge of such failure or receives written notice of such failure to cure the same and an Event of Default shall not be deemed to exist during the Cure Period, provided further that if the Borrower commences to cure such failure during the Cure Period and is diligently and in good faith attempting to effect such cure, the Cure Period shall be extended for sixty (60) additional days, but in no event shall the Cure Period be longer than ninety (90) days in the aggregate; provided, however, that there shall be no obligation for the Bank to give notice and no right of Borrower to cure if the event or condition is either the institution of a voluntary bankruptcy, insolvency or receivership action, the giving of any material false or fraudulent representation to Bank, or the failure to keep the collateral free and clear of consensual liens not approved in writing in advance by Bank.

Section 8.2 <u>Rights and Remedies</u>. If an Event of Default shall occur under this Loan Agreement, in addition to any other right and remedy which may be available to Bank and without limiting any other right and remedy granted to Bank in the Loan Documents, which rights and remedies are fully exercisable by Bank as and when provided in such other Loan Documents, Bank shall have the rights and remedies set forth below in this <u>Section 8.2</u>, any and all of which it may exercise at its election, without notice of its election and without demand – subject, however, to applicable notice or grace periods, if any. No remedy herein conferred upon or reserved to the Bank is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Loan Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Bank to exercise any remedy reserved to it in this <u>Article VIII</u>, it shall not be necessary to give any notice, other than notice required herein or by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Acceleration of Maturity</u>. Bank may, at its option, accelerate and declare immediately due and payable the Note, as well as any of and all of the other Indebtedness and obligations owing under this Loan Agreement and the other Loan Documents that are not already due hereunder and that are not already due thereunder. Bank hereby agrees to provide Borrower notice of such acceleration of the maturity of the Note, provided that the failure of Bank to provide such notice shall not impair its rights and remedies under this Loan Agreement or to the Collateral. In addition to the foregoing, Bank may from time to time and at any time proceed to protect and enforce its rights and remedies under the Loan Documents (including its absolute and unconditional right to recover full payment of any and all of the obligations owing by Borrower, as well as those owing by other Persons to Bank) by any one or more of the following: judicial and non-judicial foreclosure proceedings as against all and any part of the Collateral, without regard to the situs of such Collateral; suits in equity; actions at law; and other appropriate legal, equitable and administrative proceedings to enforce full payment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Bank's Power of Enforcement</u>. Bank may by appropriate actions and proceedings seek to do and have done any and all of the following: (1) to enforce through actions at law and proceedings in equity, or both, payment of all and any part or parts of the obligations owing by Borrower to Bank under the Loan Documents, the performance of any of the terms in any of the Loan Documents, and any other rights and remedies available to Bank; (2) to foreclose and to authorize the foreclosure of all and any part or parts of the Collateral, or interests therein, and to sell and have sold, as an entirety or in separate lots or parcels, at one or more sales, the Collateral, or parts thereof or interests therein, under the power of sale granted in the Loan Documents (to the extent permitted by law) or the judgment or decree of a court or courts of competent jurisdiction; and (3) to pursue any other right and remedy available to it under the Loan Documents, at law and in equity. Bank may proceed either by such actions and proceedings or by the exercise of its powers with respect to entry and taking possession, or both, as Bank may determine in its discretion; and the same may be taken without regard to whether the Note (or any and all of the Notes if more than one) or any and all of the obligations owing to Bank under this Loan Agreement and the other Loan Documents shall be due and payable and without prejudice to the right of Bank thereafter to bring actions and proceedings for any default existing at the time any earlier action or proceeding was commenced. The taking of any action does not preclude Bank from taking subsequent action and Bank may continue taking subsequent actions at such time or times as it elects until the Loan and all other amounts owing to Bank under the Loan Documents are paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Bank's Rights to Enter and Take Possession, Operate and Apply Income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Right to Possession</u>. Borrower, upon demand of Bank, shall forthwith surrender to Bank the actual possession of all, or such part or parts of the Collateral, or interests therein, as Bank may direct; and if and to the extent permitted by law, Bank, through its own actions and through those of its agents, without any prior notice to Borrower and demand on Borrower, may enter and take possession of any and all of the Collateral, or interests therein, and may exclude Borrower and any other Persons wholly or partly therefrom – as Bank elects. If Bank takes possession of the Collateral or parts thereof or interests therein as aforesaid, Bank and Borrower shall have joint access to the books and records of Borrower – such joint access to be under and pursuant to procedures established by Bank, which procedures may call for Bank to possess the books and records with Borrower having access to them under the supervision of Bank. Upon Bank's possession of any of the Collateral or parts thereof or interests therein, Borrower will pay monthly in advance to Bank, or to any receiver appointed to collect the rents, income, proceeds and other benefits of the Collateral, the fair and reasonable rental value for the use and occupation of such part of the Collateral as may be left in the actual possession of Borrower (not in lieu of, but in addition to, all amounts which may be owing under the Loan Documents to Bank); and upon default in any such payment, Borrower will vacate and surrender possession of such part of the Collateral to Bank or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <u>Action for Possession</u>. If Borrower should fail for any reason to surrender possession or if Borrower should fail for any reason to deliver possession of the Collateral, or any part or parts thereof or interests therein, to Bank after the earlier of Bank's demand therefor or Bank's attempt to gain possession without prior demand, Bank may obtain, without prior notice to Borrower and without Borrower having a hearing thereon, a judgment or decree conferring on Bank and Bank's agents the right to immediate possession of all of the Collateral, or such part or parts thereof or interests therein, as Bank may elect, and a judgment or decree requiring Borrower to surrender and deliver immediate possession of all of the Collateral to Bank, or such part or parts thereof or interests therein, as Bank may elect. If Bank seeks such a judgment or decree, Borrower does hereby consent in advance to the entry of such judgment or decree without prior notice to Borrower and without Borrower having a hearing thereon; Borrower reserving, however, the right to challenge at a subsequent time the existence of an Event of Default. Borrower shall pay to Bank, upon demand, all costs and expenses of obtaining such judgment or decree, including reasonable compensation to Bank, its attorneys and agents; and all such costs and expenses shall, until paid, be secured by the lien and security interest of Bank in the Collateral, and shall be payable on demand with interest from date of demand at the highest contract rate payable under the Note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <u>Management of Collateral</u>. Upon each and every entering into and taking of possession of the Collateral, or part or parts thereof or interests therein, by the Bank through its own actions and by the Bank through those of its agents and other Persons, Bank may directly and through its agents and other Persons, hold, store, use, operate, construct, install, complete, repair, restore, preserve, protect, manage and control all and any part or parts of, and interests in the Collateral, and conduct the business related thereto; and, without limiting the foregoing, from time to time and at any time, the Bank may do and the Bank may have done or direct the doing of any one or more of the following through itself, its agents and such other Persons as Bank deems appropriate under the circumstances:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A) make all necessary and proper maintenance, repairs, renewals, replacements, additions, betterments and improvements to the Premises and parts thereof, and in connection therewith, purchase and otherwise acquire fixtures, personal property and other types of property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B) insure and keep the Collateral and parts thereof insured;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C) manage and operate the Collateral and parts thereof, and exercise all the rights and powers of Borrower in its name and otherwise with respect to the same;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D) enter into agreements with others to exercise the powers herein granted Bank, all as Bank from time to time may determine; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E) collect and receive all the rents, income, proceeds and other benefits from, related to and arising out of the Collateral and each and all parts thereof and interests therein, including those past due, those currently due and those thereafter becoming due.

The powers granted to Bank in this <u>Section 8.2</u> are and the same shall be deemed to be powers coupled with an interest, and cannot be revoked. All sums expended by Bank pursuant to any of the foregoing listed matters shall be deemed to have been disbursed to Borrower, evidenced by the Note and secured by the Security Instrument and all other Loan Documents and shall be deemed a necessary expenditure for the preservation of Bank's security, whether or not the amounts advanced or expended exceed the maximum amount of advances set forth in the Note and the Security Instrument. Borrower hereby also assigns and quitclaims to Bank all sums undisbursed under the Loan, such assignment and quitclaim to be effective only upon the occurrence of an Event of Default. The assignment and rights contained in this <u>Section 8.2</u> shall be in addition to, and not in derogation of, the rights of Bank contained in any other Loan Document. In connection with its management of the Collateral as aforesaid, Bank shall apply any monies received by Bank in such priority as Bank may determine, or such priority as may be required under any Applicable Law, to: (1) payment of any and all of the obligations owing to Bank under the Loan Documents, including the Loan; (2) payment of any deposits for taxes, assessments and insurance premiums; (3) payment of the cost of insurance, taxes, assessments and other expenses and charges upon the Collateral or any parts thereof or interest therein, (4) payment of any amounts due and payable on any other Indebtedness of Borrower, whether prior or subsequent to the liens and security interest of Bank, (5) payment of the compensation, disbursements and costs and expenses of the agents, attorneys and other representatives of Bank, (6) payment of any amounts deemed necessary by Bank to otherwise protect and preserve the Collateral and the lien and security interest of Bank and (7) payment of such other amounts as Bank deems necessary to assure to Bank the repayment of the Loan and all other obligations owing to Bank under the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Payments to Preserve Collateral</u>. Bank, at its election, and without notice to Borrower, may, to protect and preserve its interest in the Collateral, and to assure repayment of the Loan and all other obligations owing under the Loan Documents, make any payments which Borrower has failed to make and any sum so paid shall be deemed an obligation secured by Bank's security interest and be immediately due and payable from Borrower upon demand with interest thereon at the highest contract rate applicable under the Note, but such payment by Bank shall not release Borrower from its obligations or constitute a waiver of a default hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Receiver</u>. Bank, to the extent permitted by law and without regard to the value, adequacy and occupancy of all or any part of the Collateral, or any interests therein, and without prior notice to Borrower and without Borrower having a hearing thereon, shall be entitled as a matter of right, if it so elects, to the appointment of a receiver or other similar official to: (1) enter upon and take possession of any and all of the Collateral and any interests therein, (2) preserve, protect, manage and control the Collateral or those parts or interests over which it takes possession; and (3) collect all rents, income, proceeds and other benefits thereof and apply the same as Bank directs, or if so required, as the court which appointed such receiver or other similar official may direct. The costs and expenses, including receiver's fees, attorneys' fees and agent's compensation, incurred pursuant to the powers herein contained shall be deemed an obligation of Borrower owing to Bank under this Loan Agreement and the same shall be secured by Bank's lien and security interest in the Collateral and shall be payable upon demand with interest from the date of demand at the highest contract rate under the Note. Bank and any receiver or similar official appointed as provided herein shall be liable to account only for such rents, income, proceeds and other benefits actually received by Bank or such other Person, whether received pursuant to this <u>Section 8.2</u> or under other provisions of this Loan Agreement. Notwithstanding the appointment of any receiver or other similar official, Bank shall be entitled as pledgee to the possession and control of any money, deposits, accounts, account receivables, documents, chattel paper, documents of title, instruments, payment intangibles and other general intangibles and other property and property rights and interests at the present and any future time held by, or payable or deliverable under the terms of the Loan Documents to Bank.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Set-off and Recoupment</u>. Bank may, at its option and at any time or times without prior notice to Borrower, set-off and apply toward payment of the Loan and other amounts now owing and amounts which may become owing by Borrower under the Loan Documents, and otherwise exercise its rights of recoupment, as to any and all (1) balances and deposits of Borrower held by Bank, (2) Indebtedness and other obligations at any time owing to or for the credit and account of Borrower by Bank and (3) Indebtedness and other obligations at any time owing to or for the credit and account of Borrower by any of Bank's Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Suits to Protect the Collateral</u>. Bank shall have the power and authority, at any time and from time to time, to institute and maintain any suits and proceedings as Bank may deem advisable in its judgment (1) to prevent the impairment or threatened impairment of the Collateral, or any part or parts thereof or interests therein, by any acts and inactions which may be unlawful or which may be in breach of this Loan Agreement and any of the other Loan Documents, (2) to preserve and protect its interest in the Collateral and each and all parts thereof and interests therein, including its liens and security interests therein, and (3) to restrain the enforcement of or compliance with any legislation and any other governmental enactment, rule and order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule and order might impair Bank's lien and security interest in the Collateral, or be prejudicial to Bank's interest in any other manner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>Proofs of Claim</u>. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, adjustment, composition and other judicial proceedings affecting Borrower, any Person obligated on any of Borrower's obligations, any of Borrower's creditors and any of Borrower's property, Bank, to the extent permitted by law and at any time or times, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have its claims allowed in such proceedings for the entire amount due and payable by Borrower under the Loan Documents, at the date of the institution of such proceedings, and for any additional amounts which may become due and payable by Borrower after such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>Discontinuance of Proceedings; Position of Parties Restored</u>. If Bank shall have proceeded to enforce any right and remedy under the Loan Documents by foreclosure, entry or otherwise and such proceedings shall have been discontinued or abandoned for any reason, or such proceedings shall have resulted in a final determination adverse to Bank, then and in every such case Borrower and Bank shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Bank shall continue as if no such proceedings had occurred or had been taken.

**Article IX. Miscellaneous.**

Section 9.1 <u>Incorporation of Exhibits and Recitals; Customer and Loan Numbers</u>. All exhibits, supplements, schedules, addenda and other attachments to this Loan Agreement are by this reference incorporated herein and made a part hereof as if fully set forth in the body of this Loan Agreement; provided, however, the failure to correctly complete any exhibit, supplement, schedule, addenda or attachment hereto shall not affect Borrower's duties and Bank's rights hereunder if such corrected information can be obtained from any of the other Loan Documents. The recitals set forth in this Loan Agreement are also a part of this Loan Agreement. The Customer and Loan Numbers, if any, stated in this Loan Agreement are for Bank's internal business use and reference only and do not and shall not limit the scope and extent of Bank's security interest or the Indebtedness and other obligations evidenced hereby, referenced herein and secured hereby. The captions herein are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this Loan Agreement nor the intent of any provision hereof.

Section 9.2 <u>Amendments</u>. Subject to the exercise by Bank of its rights and remedies as set forth in this Loan Agreement and without limiting any of such rights and remedies, this Loan Agreement may not be modified, amended, waived, extended, changed, discharged and terminated orally or by any act or failure to act on the part of Borrower or Bank, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge and termination is sought.

Section 9.3 <u>Assignment, Ownership</u>. The terms, provisions and conditions in this Loan Agreement shall be binding upon and inure to the benefit of the heirs, successors, assigns and personal representatives of the parties hereto; provided, however, Borrower shall not assign this Loan Agreement and any of its rights, interests, duties and obligations hereunder (inclusive of the proceeds of the Loan and other moneys to be advanced under or on account of this Loan Agreement) in whole or in part without the prior written consent of Bank, and any such assignment (whether voluntary or by operation of law) without said consent shall be void. Provided, further, there shall be no change in the control of Borrower unless Bank, in its reasonable discretion, has given its prior written approval. It is expressly recognized and agreed that Bank may assign, sell or transfer this Loan Agreement, the Note and any other Loan Documents, in whole or in part, to any Person and, in the event of such assignment, Bank shall thereafter be relieved of all liability hereunder to the extent of the assignment or transfer.

Section 9.4 <u>Conflict</u>. It is the intention of the parties that this Loan Agreement and the other Loan Documents be interpreted in a consistent manner; provided, however, in the event of any irreconcilable conflict in the provisions of this Loan Agreement and the provisions of any of the other Loan Documents, the provisions of this Loan Agreement shall control.

Section 9.5 <u>Benefit</u>. This Loan Agreement is made and entered into for the sole protection and benefit of Bank and Borrower, their successors and assigns, all third party beneficiary rights are expressly negated, and no other Person or Persons shall have any right to action hereon or rights to the Loan proceeds at any time, nor shall Bank owe any duty whatsoever to any claimant for labor performed or material furnished in connection with the construction of the Improvements, if any, or to apply any undisbursed portion of the Loan to the payment of any such claim, or to exercise any right or power of Bank hereunder or arising from any Default Condition or Event of Default by Borrower.

Section 9.6 <u>No Partnership, Joint Venture or Agency</u>. This Loan Agreement and the other Loan Documents shall not in any respect be interpreted, deemed or construed as making Bank a partner or joint venturer with Borrower, nor shall they or any of them be interpreted, deemed or construed as making Bank the agent or representative of Borrower. The relationship of Bank to Borrower is that of a creditor to an obligor or debtor; and in furtherance thereof and in explanation thereof, Bank has no fiduciary, trust, guardian, representative, partnership, joint venturer and other similar relationship to or with Borrower and no such relationship shall be drawn and implied from any of the Loan Documents or any of Bank's actions and inactions hereunder or with respect hereto – and, Bank has no obligation to Borrower and any other Person relative to administration of the Loan and administration of the Collateral, or any part or parts thereof or interests therein. In no event shall Bank be liable for debts and claims accruing or arising against Borrower.

Section 9.7 <u>Disputes</u>. Where disputes have arisen which, in the reasonable opinion of Bank, may endanger fulfillment of any condition precedent or covenant herein, Bank may agree to disburse Loan proceeds for the account of Borrower without prejudice to Borrower's rights, if any, to recover said proceeds from the party to whom paid. Such agreement or agreements may take the form which Bank, in its reasonable discretion, deems proper, including, but without limiting the generality of the foregoing, agreements to indemnify (on behalf of Borrower) any title insurer against possible assertion of lien claims, agreements to pay disputed amounts and the like. All sums paid or agreed to be paid pursuant to such undertaking shall be advances of Loan proceeds.

Section 9.8 <u>Power of Attorney</u>. Upon an Event of Default, Borrower does hereby irrevocably constitute and appoint Bank its true and lawful attorney with full power of substitution, for it and in its name, place and stead, to execute, deliver and file such agreements, documents, notices, statements and records, to include, without limitation, Financing Statements, and to do and undertake such other acts as Bank, in its sole discretion, deems necessary or advisable to effect the terms and conditions of this Loan Agreement and to otherwise protect and preserve the security of the lien and security interests in the Collateral, and Bank's interests therein. The foregoing appointment is and the same shall be coupled with an interest in favor of Bank.

Section 9.9 <u>Indemnity</u>. Borrower hereby agrees to defend, protect, indemnify and hold harmless Bank and each and all of Bank's shareholders, directors, officers, employees, attorneys and agents (individually and collectively, "**Indemnified Parties**"), from and against any and all claims, actions, liabilities, damages, costs and expenses (including, without limitation, all costs and expenses incurred in the investigation and defense of any matter) ("**Indemnified Liabilities**") asserted against, imposed upon and incurred by the Indemnified Parties, both direct and indirect and regardless of the basis of the Indemnified Liabilities (i.e., whether based on federal, state or local laws, rules, regulations and ordinances, common law, an equitable cause, contract, tort or otherwise), as a result of or arising from or relating to any one or more of (1) this Loan Agreement, (2) the other Loan Documents, (3) the transactions contemplated by this Loan Agreement, (4) any credit extended or used hereunder, (5) any act done or omitted by any Person, or any event occurring in connection therewith, and (6) the exercise of any rights and remedies under this Loan Agreement and the exercise of any rights and remedies under any of the other Loan Documents, including, without limitation, the acquisition of the Collateral by Bank by way of foreclosure of the lien and security interests thereon, deed in lieu of such foreclosure or otherwise, except in all of the instances enumerated in (1) through (6), the indemnification obligations of Borrower shall not extend to Indemnified Liabilities resulting solely from the gross negligence or willful misconduct of the Person otherwise to be indemnified hereunder. In the event this indemnity is unenforceable as a matter of law as to a particular matter or consequence referred to herein, it shall be enforceable to the full extent permitted by law. The obligations of Borrower under this Section are independent of all other rights and obligations set forth herein and shall survive the payment of the Loan and the termination of this Loan Agreement.

Section 9.10 <u>Payment of Expenses</u>. Without limiting any other provision of this Loan Agreement relating to Borrower's payment of costs and expenses incurred by Bank and those incurred by others on behalf of Bank, but in addition thereto, whether or not the Loan is made and all of the Loan proceeds disbursed, Borrower shall pay to Bank, on demand, each and all of any costs and expenses incurred by Bank, incurred by others on behalf of Bank and incurred by Bank for Borrower: (1) in order to meet Bank's requirements in connection with the Loan, (2) in connection with the making of the Loan, and (3) in connection with the enforcement of Bank's rights and remedies under the Loan Documents, including, payments to third persons of amounts Borrower is required to pay to such third persons under and pursuant to the terms of any of the Loan Documents, protecting Bank's interest in the Collateral, collecting any amount owing by Borrower and owing by other Persons under the Loan Documents and in enforcing its rights under any of the Loan Documents with respect to the Collateral. All of the foregoing costs and expenses shall be paid with interest thereon at the highest contract rate prescribed in the Note from the date paid or incurred by or on behalf of Bank until such costs and expenses are paid by Borrower. All sums so paid and expended by Bank, and the interest thereon, shall be added to and be secured by Bank's lien and security interests in the Collateral.

Section 9.11 <u>Documentary and Intangible Taxes; Additional Costs</u>. To the extent not prohibited by law and notwithstanding who is liable for payment of the taxes or fees, Borrower shall pay, on Bank's demand, (1) all intangible personal property taxes, documentary stamp taxes, excise taxes and other similar taxes assessed, charged and required to be paid in connection with the Loan and any extension, renewal and modification thereof, and (2) all intangible personal property taxes, documentary stamp taxes, excise taxes and other similar taxes assessed, charged and required to be paid in connection with this Loan Agreement and any of the other Loan Documents, and any extension, renewal and modification of any of the foregoing. If, with respect to this Loan Agreement and the transactions hereunder, any Applicable Law (x) subjects Bank to any tax (except federal, state and local income taxes on the overall net income of Bank), (y) imposes, modifies or deems applicable any deposit insurance, reserve, special deposit and other similar requirement against assets held by, deposits in, and loans by Bank, or (z) imposes upon Bank any other condition, and the result of any of the foregoing is to increase the cost to Bank, reduce the income receivable by Bank or impose any expense upon Bank with respect to the Loan, Borrower agrees to pay to Bank the amount of such increase in cost, reduction in income or additional expense within thirty (30) days following presentation by Bank of a statement of the amount and setting forth Bank's calculation thereof, all in reasonable detail, which statement shall be deemed true and correct absent manifest error.

Section 9.12 <u>Marshalling of Assets</u>. Borrower hereby waives, to the extent permitted by law, the benefit of all appraisal, homestead, valuation, stay, extension, reinstatement and redemption laws now in force and any which may in the future come to be in force and all rights of marshalling in the event of any sale under the Loan Documents of the Collateral, or any part or parts thereof or any interests therein. Further, Borrower hereby expressly waives on behalf of Borrower, and on behalf of each and every Person acquiring any interest in or title to the Collateral or any part thereof subsequent to the date of this Loan Agreement and on behalf of all other Persons to the extent permitted by law, any or all rights of redemption from sale under any order or decree of foreclosure of this Loan Agreement.

Section 9.13 <u>Waiver of Statutory Rights</u> Borrower waives any right to require Bank to bring any action against any other Person and to require that resort be had to any security and to any balances of any deposit or other accounts on the books of Bank in favor of any other Person; and, without limiting the foregoing, but in furtherance thereof, Borrower waives any rights Borrower otherwise might have or may have in the future under North Carolina General Statute Section 26-7, *et seq*., and any other laws that require or may require Bank to recover against some other Person, or to realize upon any security which Bank holds for the Loan. Borrower also waives any and all right of subrogation, contribution, reimbursement and indemnity whatsoever and any right of recourse to and with respect to the assets and property of any Person that is or may be security for the Loan.

Section 9.14 <u>Jury, Venue, Jurisdiction</u>. This Loan Agreement shall be deemed to have been executed and delivered in the State of North Carolina, regardless of where the signatories may be located at the time of execution. This Loan Agreement and the other Loan Documents shall be governed by and construed in accordance with the substantive laws of the aforesaid jurisdiction, excluding, however, the conflict of law and choice of law provisions thereof. Notwithstanding the foregoing, to the extent any of the Collateral is located in another jurisdiction or other jurisdictions, the laws of the jurisdictions in which the Collateral is located shall govern with respect to Bank's and Borrower's rights in and to Collateral located in such other jurisdictions and Bank's remedies relative thereto. Borrower: (1) to the extent permitted by law, waives any right to a trial by jury in any action arising from or related to this Loan Agreement and any of the other Loan Documents; (2) irrevocably submits to the jurisdiction of the state or federal courts of the State of North Carolina; and (3) irrevocably waives, to the fullest extent Borrower may effectively do so, the defense of improper venue or an inconvenient forum to the maintenance of any such action or proceeding. Nothing in this Section shall affect or impair Bank's right to serve legal process in any manner permitted by law or Bank's right to bring any action or proceeding against Borrower or Borrower's property in the courts of any other jurisdiction.

Section 9.15 <u>Cumulative Rights</u>. The rights, powers and remedies of Bank under this Loan Agreement shall be in addition to all rights, powers and remedies given to Bank by virtue of any Applicable Law, those given in equity, those given to Bank under the other Loan Documents and those given under any other agreement, all of which rights, powers and remedies shall be cumulative and may be exercised by Bank from time to time and at any number of times successively, concurrently and alternatively without impairing Bank's rights under this Loan Agreement and under any of the other Loan Documents.

Section 9.16 <u>No Waiver; No Course of Dealing; No Invalidity</u>. No delay or forbearance by Bank in exercising any and all of its rights and remedies under this Loan Agreement and those under any of the other Loan Documents, and no delay or forbearance of Bank in exercising any and all rights and remedies otherwise afforded by law and in equity, shall operate as a waiver thereof or preclude the exercise thereof during the continuance of any Default Condition or Event of Default as set forth herein or in the event of any subsequent Default Condition or Event of Default hereunder. If Bank is requested to waive a Default Condition or an Event of Default or forbear taking action relative thereto, Bank may condition any waiver or forbearance it elects to grant Borrower on payment by Borrower of such fees to Bank as Bank deems appropriate under the circumstances and may condition any such waiver or forbearance on Borrower reimbursing Bank for all costs and expenses Bank incurs in connection with such waiver or forbearance. Also, no act or inaction of Bank under this Loan Agreement and under any of the other Loan Documents shall be deemed to constitute or establish a "course of performance or dealing" that would require Bank to so act or refrain from acting in any particular manner at a later time under similar or dissimilar circumstances. Wherever possible each provision of this Loan Agreement and the other Loan Documents shall be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Loan Agreement and if any provision of any of the other Loan Documents shall be prohibited or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Loan Agreement and those of the other Loan Documents, or the application thereof shall be in a manner and to an extent permissible under Applicable Law.

Section 9.17 <u>Maintenance of Bank's Records</u>. Borrower acknowledges and agrees that Bank is authorized to maintain, store and otherwise retain the Loan Documents in their original, inscribed tangible form or a record thereof in an electronic medium or other non-tangible medium which permits such record to be retrieved in a perceivable form; that a record of any of the Loan Documents in a non-tangible medium which is retrievable in a perceivable form shall be the agreement of Borrower to the same extent as if such Loan Document was in its original, inscribed tangible medium and such a record shall be binding on and enforceable against Borrower notwithstanding the same is in a non-tangible form and notwithstanding the signatures of the signatories hereof or thereof are electronic, typed, printed, computer generated, facsimiles or other reproductions, representations and forms; and that Bank's certification that a non-tangible record of any of the Loan Documents is an accurate and complete copy or reproduction of the original, inscribed tangible form shall be conclusive, absent clear and convincing evidence of the incorrectness of said certification, and such non-tangible record or a reproduction thereof shall be deemed an original and have the same force and effect as the original, inscribed tangible form.

Section 9.18 <u>Credit Investigations; Sharing of Information; Control Agreements</u>. Bank is irrevocably authorized by Borrower to make and have made such credit investigations as it deems appropriate to evaluate Borrower's credit and financial standing not more than once every twelve months unless an Event of Default shall have occurred and be continuing, and Borrower authorizes Bank to share with consumer reporting agencies and creditors its experiences with Borrower and other information in Bank's possession relative to Borrower. Bank shall not have any obligation and responsibility to (1) provide information to any third persons relative to Bank's security interest in the Collateral, this Loan Agreement and otherwise with respect to Borrower, (2) subordinate its liens and security interests in the Collateral to the interests of any Person, and (3) enter into control agreements relative to the Collateral.

Section 9.19 <u>Bank's Liability for Collateral</u>. Notwithstanding anything in this Loan Agreement and any of the other Loan Documents to the contrary, Bank may at any time or times during the term of this Loan Agreement make such payments and do or cause to be done such acts as Bank considers necessary or advisable to protect the Collateral and to preserve, protect and perfect or continue the perfection of its security interest in the Collateral. So long as Bank complies with reasonable banking practices, Bank shall not be liable and responsible for the Collateral, or any part thereof or interest therein, and without limiting the foregoing, Bank shall not have any responsibility for any one or more of the following: (1) the safekeeping of the Collateral, (2) any loss and damage occurring to the Collateral, regardless of the cause for such loss and damage, (3) any diminution in the value of the Collateral, and (4) any act or default of any carrier, warehouseman, bailee, forwarding agency and other Person whomsoever. All risk of loss, damage and destruction of the Collateral shall be borne by Borrower.

Section 9.20 <u>Publicity</u>. Bank shall have the right to secure printed publicity through newspaper and other media concerning the Premises and source of financing.

Section 9.21 <u>Execution in Counterparts</u>. This Loan Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement, and in making proof of this Loan Agreement, it shall not be necessary to produce or account for more than one such counterpart (subject always to the provisions of <u>Section 9.17</u> relating to maintenance of records).

Section 9.22 <u>Notices</u>. All notices or other communications required or permitted to be given pursuant to this Loan Agreement shall be in writing and shall be considered as properly given (i) if mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested; (ii) by delivering same in person to the intended addressee; (iii) by delivery to a reputable independent third party commercial delivery service for same day or next day delivery and providing for evidence of receipt at the office of the intended addressee; or (iv) sent via email (so long as notice is also sent by at least one other method set forth herein). Notice so mailed shall be effective upon two (2) Business Days' following its deposit (properly addressed) with the United States Postal Service or any successor thereto; notice given by personal delivery shall be effective only if and when received by the addressee; notice sent by a reputable commercial delivery service shall be effective upon the transmitting parties' receipt of written verification of delivery from such reputable commercial delivery service at the proper address indicated hereinbelow; notice sent via email shall be effective on the Business Day following the date the email transmission is sent; and notice given by other means shall be effective only if and when received at the designated address of the intended addressee. Borrower and the Bank may, by written notice given hereunder, designate a different address where communications should be sent and Bank may require that all communications sent to it be sent electronically or in some other non-tangible medium. For purposes of notice, the addresses of the parties shall be as set forth below:

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| | |
|:---|:---|
| If to Bank: | Bank OZK |
|  | 1001 Morehead Square Drive, Suite 150 <br> Charlotte, North Carolina 28203 |
|  | Attn: C. Anthony Swainey, Jr. |
| With a copy to: | Parker Poe Adams & Bernstein LLP |
|  | 620 South Tryon Street Suite 800 <br> Charlotte, North Carolina 28202 <br> Attn: Wanda C. Townsend |
| If to Borrower: | VictoryBase SC1, LLC |
|  | 550 Reserve Street, Suite 190 |
|  | Southlake, Texas 76092 |
|  | Attn: <u>____________________</u> |
| With a copy to: | Novit & Scarminach, P.A. |
|  | The Jade Building Suite 400 <br> 52 New Orleans Road |
|  | Hilton Head Island, SC 29928 <br> Attn: Robert M. Deeb, Jr. |

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Section 9.23 <u>Time of Essence</u>. Time is of the essence for the performance of all of Borrower's covenants and agreements set forth in this Loan Agreement and in each of the other Loan Documents.

Section 9.24 <u>Term of Loan Agreement</u>. This Loan Agreement shall become effective on the Closing Date and shall continue in full force and effect until the last to occur of (1) payment in full of the Loan and all other amounts now owing and which may in the future be owing to Bank under the Loan Documents, or (2) termination of Bank's obligation to make Advances under this Loan Agreement or the Note. Notwithstanding the foregoing, Bank shall have the right to limit, declare a moratorium on and terminate its obligation to make Advances immediately and without notice upon the occurrence and during the continuance of a Default Condition or an Event of Default and such action by Bank shall not constitute a termination of this Loan Agreement and Borrower's obligations under this Loan Agreement and the other Loan Documents; and shall not adversely affect or impair Bank's lien or security interests in the Collateral.

**[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]**

**[SIGNATURE PAGE 1 OF 2 TO LOAN AGREEMENT]**

The undersigned have executed this Loan Agreement as of the Closing Date.

**BANK:**

**BANKOZK**

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| | |
|:---|:---|
| By: | /s/ C. Anthony Swainey, Jr. |
| Name: | C. Anthony Swainey, Jr. |
| Title: | Middle Market Commercial Real Estate Division |

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(Signatures Continue on Next Page)

**[SIGNATURE PAGE 2 OF 2 TO LOAN AGREEMENT]**

**BORROWER:** 

<br> ****

<br> **VICTORYBASE SCI, LLC,**

a Texas limited <u>liability company</u>

By: /s/ <u>Thomas Paquin__</u>______________<u>(SEAL)</u>

Name: Thomas Paquin

Title: Manager

<u>Exhibit A</u>

Legal Description of Land

ALL those certain pieces, parcels or lots of land, situate, lying and being in the Town of Port Royal in Beaufort County, South Carolina, being shown as Lots 1, 2, 3, 4, 17, 24, 28, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47 and 48 on a plat prepared by David E. Gasque, RLS, of Gasque & Associates, Inc. for Windsong of Beaufort, LLC, entitled "Subdivision of Lot 35, Section 16 1S-2W, prepared for Windsong of Beaufort, LLC, Burton Area, Beaufort County, South Carolina", dated May 4, 2020, and recorded May 11, 2020 in Plat Book 154 at Page 14 in the Office of the Register of Deeds for Beaufort County, South Carolina. For a more accurate and complete description of said property, reference may be had to the above referenced plat of record.

Together with all appurtenant easement rights pursuant to that Declaration of Covenants, Conditions and Restrictions for Windsong recorded in Book 3870, Page 383, and re-recorded in Book 3947, Page 2897, in the Office of the Register of Deeds for Beaufort County, South Carolina.

<u>DERIVATION:</u> Being the same property conveyed from Village Park Homes, LLC, to VictoryBase SC1, LLC by deed dated May 28, 2021, and recorded June 1, 2021 in Book 4018 at Page 2734 in the Office of the Register of Deeds for Beaufort County, South Carolina, deed dated June 30, 2021, and recorded July 2, 2021 in Book 4032 at Page 3039 in the Office of the Register of Deeds for Beaufort County, South Carolina, deed dated July 27, 2021, and recorded July 28, 2021 in Book 4042 at Page 3035 in the Office of the Register of Deeds for Beaufort County, South Carolina, deed dated August 26, 2021, and recorded August 31, 2021 in Book 4055 at Page 0936 in the Office of the Register of Deeds for Beaufort County, South Carolina, deed dated August 31, 2021, and recorded September 2, 2021 in Book 4056 at Page 1136 in the Office of the Register of Deeds for Beaufort County, South Carolina.

<u>Exhibit B</u>

Budget

![](image_006.jpg)

## Ex1Sa-6

Loan No. 5561000340 I

**<u>PROMISSORY</u> <u>NOTE</u>**

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| | |
|:---|:---|
| **$7850000.00** | **As of September 8, 2021** |

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FOR VALUE RECEIVED, **VICTORYBASE SCI, LLC,** a Texas limited liability company **("Borrower"),** with a mailing address of 550 Reserve Street, Suite 190, Southlake, Texas 76092, promises to pay to the order of **BANK OZK,** an Arkansas state bank, with offices in Charlotte, North Carolina **("Bank"),** or to the order of any subsequent holder hereof, in lawful money of the United States of America, the principal sum of Seven Million Eight Hundred Fifty Thousand and No/I 00 Dollars ($7,850,000.00), or so much thereof as may be advanced under the terms and conditions of that certain Loan Agreement of even date herewith by and between Borrower and Bank (as amended, restated, and otherwise modified from time to time, the **"Loan Agreement")** together with interest on the unpaid principal balance from the date hereof **("Loan")** at the initial interest rate per annum equal to the *Wall Street Journal* Prime Rate at the time of closing plus one and one half percent (1.50%); provided, however, that during the term of the Loan the interest rate shall not be less than four and three quarters of one percent (4.75%). ***All terms capitalized herein and not otherwise defined shall have the meanings set forth in the Loan Agreement.***

Section 1. <u>Interest Rate</u>. For purposes of this Promissory Note **("Note"),** the *"Wall Street Journal* Prime Rate" shall mean the Prime Rate, which can change daily, as published in the Eastern Edition of The Wall Street Journal, a publication owned and operated by Dow Jones & Company, Inc. Interest shall accrue on a three hundred sixty (360) actual days basis. It is specifically understood by Borrower that the interest rate may change on a daily basis and that the monthly payment amounts payable by the Borrower will change monthly as the interest rate changes. In the event the *Wall Street Journal* ceases to be available to Bank for any reason or ceases to provide such rate listing, the interest rate applicable to the outstanding principal balance will be determined based upon an alternate index selected by Bank in its discretion.

Section 2. <u>Payment of Principal and Interest</u>. Borrower shall make consecutive monthly payments of interest only in arrears beginning on October 5, 2021, and continuing on the fifth (5th) day of each month thereafter until the Amortization Commencement Date (as defined in the Loan Agreement). Commencing on the Amortization Commencement Date and continuing on the fifth (5th) day of each month thereafter to and including the Maturity Date, Borrower shall make consecutive monthly payments of principal and interest according to a declining thirty (30) year amortization schedule **("Monthly P&I Payments").** The indebtedness evidenced hereby shall mature on September 5, 2024 **("Original Maturity Date"),** when one final payment of the entire balance of principal, accrued and unpaid interest, fees, premiums, charges and costs and expenses then outstanding on this Note shall be due and payable in full; provided, however that the Original Maturity Date is subject to: (a) the First Extension Option, in which case the Maturity Date shall be that date which is twelve (12) months from the Original Maturity Date, (b) the Second Extension Option, in which case the Maturity Date shall be that date which is twenty-four (24) months from the Original Maturity Date, and (c) the right of acceleration as provided in the Loan Documents. For the avoidance of doubt, (i) if the Maturity Date is extended pursuant to the First Extension Option, Borrower shall continue to make the Monthly P&I Payments during such extension period, with one final payment of the entire balance of principal, accrued and unpaid interest, fees, premiums, charges and costs and expenses then outstanding on this Note due and payable in full on the date which is twelve (12) months from the Original Maturity Date; and (ii) if the Maturity Date is further extended pursuant to the Second Extension Option, Borrower shall continue to make the Monthly P&I Payments during such extension period, with one final payment of the entire balance of principal, accrued and unpaid interest, fees, premiums, charges and costs and expenses then outstanding on this Note due and payable m full on the twenty-four (24) months from the Original Maturity Date.

Section 3. <u>No Revolver Features.</u> It is expressly agreed and understood that this Note does not evidence a revolving facility and that no principal amount prepaid or otherwise paid by Borrower may be reborrowed by Borrower.

Section 4. <u>Payments.</u> All installments of principal and interest shall be payable to Bank at Post Office Box 196, Ozark, Arkansas 72949, or such other place as Bank or the holder hereof may designate in writing from time to time. All payments made under this Note shall be applied, to the extent thereof, to late charges, to accrued but unpaid interest, to unpaid principal, and to any other sums due and unpaid to Bank under the Loan Documents, in such manner and order as Bank may elect in its sole discretion, any instructions from Borrower or anyone else to the contrary notwithstanding. Remittances shall be made without offset, demand, counterclaim, deduction, or recoupment (each of which is hereby waived) and shall be accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks. Acceptance by Bank of any payment in an amount less than the amount then due on any indebtedness shall be deemed an acceptance on account only, notwithstanding any notation on or accompanying such partial payment to the contrary, and shall not in any way (a) waive or excuse the existence of an Event of Default, (b) waive, impair or extinguish any right or remedy available to Bank hereunder or under the other Loan Documents, or (c) waive the requirement of punctual payment and performance or constitute a novation in any respect. Payments received after 2:00 p.m. shall be deemed to be received on, and shall be posted as of, the following Business Day. Whenever any payment under this Note or any other Loan Document falls due on a day which is not a Business Day, such payment may be made on the next succeeding Business Day. **"Business Day"** means a day other than a Saturday, Sunday, legal holiday or any other day when the Bank is authorized or required by applicable law to be closed.

Section 5. <u>Late Charge</u>. Borrower shall pay to the Bank a late charge for any installment not received by the Bank within fifteen (15) days after the installment is due in the amount of four percent (4%) of the installment due or the maximum amount permitted by North Carolina law, whichever is less; such late charge shall apply separately to each installment past due, but shal I only be assessed once as to each late payment. Borrower stipulates and agrees that any such late charge(s) shall not be deemed to be additional interest nor applied to principal, but shall be an assessment to induce timely performance of the terms of this Note.

Section 6. <u>Prepayment.</u> Subject to the terms of this Paragraph, Borrower shall have the right to prepay, at any time and from time to time, without fee, premium or penalty except as described herein the entire unpaid principal balance of this Note or any portion thereof, but together with the amount of the then accrued but unpaid interest on the amount of principal being so prepaid; provided, however, any such prepayment must also be accompanied by Bank's simultaneous receipt of the applicable Make Whole Premium (as defined below) from Borrower. Any tender of funds by Borrower characterized as a prepayment may be allocated by Bank to such outstanding amounts due hereunder or under the Loan Agreement as Bank may elect, including, without limitation, an application first to any costs or expenses as may then be owing by Borrower to Bank. Any such partial payments of principal shall be applied in an inverse order of maturity to the last maturing installment(s) of principal.

For the purposes of this Note, **"Make Whole Premium"** shall mean an amount equal to One Hundred Fifty Thousand and No/I 00 Dollars ($150,000.00) less the sum of the aggregate amount of regular, monthly non default interest that has accrued and been paid as of the date of such prepayment; provided, however, it is expressly agreed and understood that (I) except as expressly indicated in item (4) of this sentence, the Make Whole Premium shall be due under any and all circumstances where all or any portion of the obligation under this Note is paid prior to the scheduled payment date therefor and prior to the Maturity Date, whether such prepayment is voluntary or involuntary, even if such prepayment results from Bank's acceleration of the Maturity Date of this Note upon an Event of Default (and irrespective of whether foreclosure proceedings have been commenced), and shall be in addition to any other sums due hereunder or under the Loan Agreement or any of the other documents executed in connection with the Loan, (2) the Origination Fee (as defined in the Loan Agreement) or any other fee, cost or expense paid by Borrower (other than monthly non default interest that has accrued and been paid as of the date of such prepayment) shall not be included in the determination of "regular, monthly non default interest that has accrued and been paid as of the date of such prepayment" for purposes of the foregoing calculation, (3) the Make Whole Premium with respect to any partial prepayment shall be calculated on a pro rata basis based upon the proportion such prepaid principal amount bears to the outstanding principal balance of the Loan before prepayment, and (4) no Make Whole Premium shall be applicable with respect to any prepayment resulting from application of insurance or condemnation proceeds as provided in the Loan Agreement at any time during the term of the Loan.

All payments and prepayments made by Borrower are to be applied first to any late charges, then in the reduction of interest then due at the rate stated herein, and any amount remaining after such payment of interest shall be applied in reduction of the outstanding principal balance due hereunder.

Section 7. <u>Costs of Collection.</u> If this Note is placed in the hands of an attorney for collection, by suit or otherwise, or for the protection of Bank's interest hereunder, Borrower shall pay all costs of collection and all court costs and reasonable attorneys' fees, costs and expenses incurred by Bank, including, but not limited to, all reasonable attorneys' fees, costs and expenses incurred in any bankruptcy proceeding in which any Borrower or any other obligor appears as a debtor. All attorneys' fees charged hereunder shall be reasonable in amount based on standard hourly rates and actual time served.

Section 8. <u>Default Rate of Interest</u>. From and after the Maturity Date hereof or the date of an Event of Default (in the event of acceleration of the Loan by reason of Borrower's default or otherwise), the entire indebtedness due hereunder including any accrued interest, late charges and prepayment premiums shall bear interest at the lesser of twelve percent (12%) or the maximum rate of interest allowable under the laws of the State of North Carolina or applicable federal laws **("Default Rate")** until payment in full of all principal and interest, and late payment charges due hereunder are made.

Section 9. <u>Waivers.</u> Borrower and any endorsers or guarantors hereof severally waive presentment, demand, protest, and notice of protest, demand, dishonor and nonpayment and agree that Bank or any subsequent holder may, without any obligation on the part of Bank to do so and without releasing the liability of the Borrower or any endorser or guarantor hereof, grant multiple extensions or renewals hereof in whole or in part, from time to time without notice to any of them, successively or otherwise and for any term or terms and Bank or any such holder hereof shall not be liable for or prejudiced by the failure to collect or for a lack of diligence in bringing suit under this Note or any renewals or extensions hereof for any default hereunder.

Section 10. <u>Security and Remedies.</u> Borrower authorizes Bank, without notice or demand and without affecting its liability hereunder, from time to time, to: (i) take and hold security for the payment of this Note or any renewals or extensions hereof; (ii) perfect such security or refrain from perfecting such security, whether or not such security is required as a condition to the making of the Loan evidenced by this Note; (iii) exchange, enforce, waive or release (whether intentionally or unintentionally) any such security, or any part thereof; (iv) foreclose upon such security in accordance with the terms of the Security Instrument; and (v) settle, release, compromise with, or substitute the undersigned, accommodation party, endorser, guarantor or other obligor of this Note. Notwithstanding the foregoing, this Note is secured by, among other things, the Loan Agreement, the Security Instrument, Assignment of Leases, and a Hazardous Substances Indemnity Agreement, all dated of even date herewith, and all as may be amended, restated, and otherwise modified from time to time, and may now or hereafter be secured by other mortgages, guaranties, deeds of trust, assignments, security agreements, or other instruments of pledge or hypothecation.

Section 11. <u>Savings Clause</u>. It is the intention of Bank and the undersigned to comply strictly with applicable usury law and, accordingly, Borrower hereby waives any claim of usury unless such claim is brought to the Bank's attention in writing. In no event, and upon no contingency, shall the holder hereof ever be entitled to receive, collect or apply as interest, any interest, fees, charges, or other payments equivalent to interest, in excess of the maximum effective contract rate which Bank may lawfully charge under applicable statutes and laws from time to time in effect; and in the event that the holder hereof ever receives, collects, or applies as interest, any such excess, such amount which, but for this provision, would be excessive interest, shall be applied to the reduction of the principal amount of the Loan; and if the principal amount of the Loan, all lawful interest thereon and all lawful fees and charges in connection therewith, are paid in full, any remaining excess shall forthwith be paid to the Borrower, or other party lawfully entitled thereto. Any provision hereof or any other agreement between the holder hereof and the undersigned, that operates to bind, obligate, or compel the undersigned to pay interest in excess of such maximum effective contract rate shall be construed to require the payment of the maximum rate only. The provisions of this section shall be given precedence over any other provision' contained herein, or in any other agreement between the holder and the undersigned that is in conflict with the provisions of this section.

Section 12. <u>Bankruptcy and Sunset Provision.</u> Notwithstanding any other provision herein to the contrary, if any payment received by Bank under this Note is rescinded, avoided or for any reason returned by Bank because of any adverse claim or threatened action by a bankruptcy trustee or otherwise, the returned payment shall remain payable as an obligation of all parties liable under this Note, including but not limited to any guarantors.

Section 13. <u>Governing Law and Jurisdiction</u>. This Note shall be construed according to the laws of the State of North Carolina and applicable federal laws, notwithstanding conflicts of law principles. Borrower hereby consents to the venue and jurisdiction of the state and federal courts located in Mecklenburg County, North Carolina for any matter related hereto or arising herefrom.

Section 14. <u>Severability.</u> If any provision hereof shall be construed to be invalid or unenforceable, the remaining provisions hereof shall not be affected by such invalidity or unenforceability. Each term or provision hereof shall, however, be valid and be enforced to the fullest extent permitted by law.

Section 15. <u>Events of Defaults; Remedies</u>. If an Event of Default as defined in the Loan Agreement shall occur, this Note shall be in default and subject to all of the rights and remedies set forth in the Loan Agreement. If any holder of this Note retains an attorney in connection with any Event of Default or at maturity or to collect, enforce or defend this Note or any Guaranty in any lawsuit or in any probate, reorganization, bankruptcy, arbitration or other proceeding, or if Borrower sues any holder in connection with this Note or any Guaranty and does not prevail, then Borrower agrees to pay to each such holder, in addition to principal, interest and any other sums owing to Bank hereunder and under the Guaranty, all costs and expenses incurred by such holder in trying to collect this Note or in any such suit or proceeding, including, without limitation, reasonable attorneys' fees and expenses, investigation costs and all court costs, whether or not suit is filed hereon, whether before or after the Maturity Date, or whether in connection with bankruptcy, insolvency or appeal, or whether collection is made against Borrower or any guarantor or endorser or any other person primarily or secondarily liable hereunder. "Reasonable attorneys' fees" as used herein shall mean attorneys' fees actually incurred at standard hourly rates without regard to statutory presumption.

Section 16. <u>Heirs, Successors and Assigns.</u> The terms of this Note and of the other Loan Documents shall bind and inure to the benefit of the heirs, devisees, representatives, successors and assigns of the parties. The foregoing sentence shall not be construed to permit Borrower to assign the Loan except as otherwise permitted under the Loan Documents. As further provided in the Loan Agreement, Bank may, at any time, sell, transfer, or assign this Note, the Security Instrument and the other Loan Documents, and any or all servicing rights with respect thereto.

Section 17. <u>Commercial Purpose</u>. Borrower warrants that the Loan is being made solely to acquire or carry on a business or commercial enterprise, and/or Borrower is a business or commercial organization. Borrower further warrants that all of the proceeds of this Note shall be used for commercial purposes and stipulates that the Loan shall be construed for all purposes as a commercial loan, and is made for other than personal, family, household or agricultural purposes.

Section 18. <u>Incorporation of Loan Agreement.</u> The Loan Agreement is fully incorporated herein by reference. To the extent of any conflict between the terms of this Note, the Loan Agreement and the other Loan Documents, the terms of the Loan Agreement will govern and control. The Loan Agreement and this Note will be read and construed as one agreement.

**[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]**

**[SIGNATURE PAGE TO PROMISSORY NOTE]**

**IN WITNESS WHEREOF,** Borrower has duly executed this Note under seal as of the day and year first above written.

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| |
|:---|
| **BORROWER:** <br>**VICTORYBASE SCl, LLC,** |
| a Texas limited liability company |
| By: _________________ (SEAL) |
| Name: Thomas Paquin |
| Title: Manager |

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## Ex1Sa-11

**CONSENT OF INDEPENDENT AUDITOR**

We consent to the use, in this Amendment #1 to Form 1-A, of our independent auditor's report dated July 7, 2022, with respect to the audited combined financial statements of VictoryBase Corporation, a Delaware corporation, as of December 31, 2021 and 2020, and the related combined statements of operations, changes in stockholders' equity (deficit), and cash flows for the year ended December 31, 2021 and the period from August 13, 2020 to December 31, 2020, and the related notes to the financial statements.

Very truly yours,

MCNAMARA AND ASSOCIATES, PLLC

Tampa, Florida

March 20, 2023