# EDGAR Filing Document

**Accession Number:** 0001821075
**File Stem:** 0001213900-23-025594
**Filing Date:** 2023-3
**Character Count:** 151500
**Document Hash:** 5708b47a0412d6165554a7baac6e302c
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-025594.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001213900-23-025594

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 18

**CONFORMED PERIOD OF REPORT**: 20230327

**ITEM INFORMATION**: Entry into a Material Definitive Agreement

**ITEM INFORMATION**: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230331

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Appreciate Holdings, Inc.
- **CENTRAL INDEX KEY:** 0001821075
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE AGENTS & MANAGERS (FOR OTHERS) [6531]
- **IRS NUMBER:** 852426917
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39758
- **FILM NUMBER:** 23788890

**BUSINESS ADDRESS:**
- **STREET 1:** 6101 BAKER ROAD, SUITE 200
- **CITY:** MINNETONKA
- **STATE:** MN
- **ZIP:** 55345
- **BUSINESS PHONE:** 9524708888

**MAIL ADDRESS:**
- **STREET 1:** 6101 BAKER ROAD, SUITE 200
- **CITY:** MINNETONKA
- **STATE:** MN
- **ZIP:** 55345

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PROPTECH INVESTMENT CORP. II
- **DATE OF NAME CHANGE:** 20200813

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

Date of Report (Date of earliest event reported): **March 27, 2023**

**Appreciate Holdings, Inc.**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Delaware** | **001-39758** | **83-2426917** |
| (State or other jurisdiction <br> of incorporation) | (Commission File Number) | (I.R.S. Employer<br> Identification No.) |

---

---

| | |
|:---|:---|
| **6101 Baker Road, Suite 200 Minnetonka, MN**<br>| **55345** |
| (Address of principal executive offices) | (Zip Code) |

---

(952) 470-8888

(Registrant's telephone number, including area code)

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

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbols** | **Name of each exchange on which registered** |
| Class A Common Stock, par value $0.0001 per share | SFR | The Nasdaq Stock Market LLC |
| Warrants to purchase Class A Common Stock, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | SFRWW | The Nasdaq Stock Market LLC |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

**Item 1.01** **Entry into a Material Definitive Agreement.**

From March 27, 2023 through March 31, 2023, Appreciate Holdings, Inc. (the "Company") issued USD $1,207,500 aggregate principal amount of convertible debentures to several accredited investors (the "Debentures"). The investors paid USD $402,500 to acquire the debentures (a 67% original issue discount) and the purchasers included an entity affiliated with Director Scott Honour, Directors M. Joe Beck, Gloria Fu, Marcy Haymaker and Laurie Hawkes and the Company's CEO and Director Chris Laurence (the "Financing"). In connection with the issuance of the Debentures, the Company issued pro rata to the investors warrants to purchase an aggregate of 1,000,000 shares of Class A Common Stock of the Company, $0.0001 par value. The warrants are immediately exercisable at an exercise price of $5.00 per share and include a cashless exercise provision. The warrants expire five (5) years from the date of issuance.

The Debentures mature twelve (12) months after the date of issuance, unless extended by the Company, and accrue no interest. In the event the Company raises senior secured capital that repays outstanding senior debt, then the Debentures will automatically be exchanged into that new security at the face amount of the Debentures. For any other offering completed by the Company, holders of the Debentures will have the option to exchange into the new security. Standard events of default are included in the Debentures, pursuant to which the holder may declare the Debentures immediately due and payable.

The Debentures are secured by the Company's assets, but rank as senior subordinated indebtedness, ranking junior to the Company's secured facility with St. Cloud Capital Partners III SBIC, LP ("St. Cloud") and senior to any other debt of the Company. The Company entered into a security agreement with respect to the Debentures and a Subordination Agreement with St. Cloud.

The foregoing description of the Debentures, Warrant, Security Agreement and Subordination Agreement are qualified by reference to the full text of the form of Debenture, Warrant, Security Agreement and Subordination Agreement which are filed as Exhibits 4.1, 4.2, 10.1 and 10.2 hereto and incorporated herein by reference.

In connection with the Financing, certain investors owning 1,709,481 shares of Class A Common Stock were released from the Lock Up Period contained in the Investor Rights Agreement dated November 29, 2022 entered into in connection with the Business Combination Transaction. The release from the Lock Up Period facilitates such persons and/or entities to pledge such Registrable Securities Beneficially Owned to obtain financing, which funds are to be loaned to the Company on the same terms as contained in the Financing and, if necessary, to permit the lender to sell such securities, if required, pursuant to the terms and condition of any pledge or margin agreement. The foregoing description of Amendment No. 1 to the Investor Rights Agreement dated November 29, 2022 is qualified by reference to the full text of the form of Amendment No. 1 to the Investor Rights Agreement which is filed as Exhibit 10.3 hereto and incorporated herein by reference.

This disclosure does not constitute an offer to sell, or the solicitation of an offer to buy nor shall there be any sales of the Company's securities in any state in which such offer, solicitation or sale would be unlawful. The securities mentioned herein have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act and applicable state securities laws.

**Item 2.03** **Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant**

The disclosures set forth in Item 1.01 of this Current Report are incorporated by reference herein.

**Item 9.01. Financial Statements and Exhibits.**

***(d) Exhibits.***

---

| | |
|:---|:---|
| **Exhibit** | **Description** |
| 4.1 | [Form of Debenture dated as of March 27, 2023](ea176132ex4-1_appreciate.htm) |
| 4.2 | [Form of Warrant dated as of March 27, 2023](ea176132ex4-2_appreciate.htm) |
| 10.1 | [Form of Security Agreement dated as of March 27, 2023](ea176132ex10-1_appreciate.htm) |
| 10.2 | [Form of Subordination Agreement dated as of March 27, 2023](ea176132ex10-2_appreciate.htm) |
| 10.3 | [Amendment No. 1 to Investor Rights Agreement dated as of March 27, 2023](ea176132ex10-3_appreciate.htm) |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

**SIGNATURE**

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

---

| | | |
|:---|:---|:---|
|  | **Appreciate Holdings, Inc.** | **Appreciate Holdings, Inc.** |
| Date: March 31, 2023 | By: | /s/ Christopher Laurence |
|  | Name: | Christopher Laurence |
|  | Title: | Chief Executive Officer |

---

## Exhibit 4.1

**Exhibit 4.1**

ThIS SUBORDINATED CONVERTIBLE DEBENTURE AND SUCH OTHER SECURITIES ISSUABLE UPON CONVERSION HEREOF have not been registered under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"), or any state securities laws and may not be sold or otherwise transferred or disposed of except pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or an opinion of counsel satisfactory to counsel to the issuer that an exemption from registration under the Securities Act and any applicable state securities laws is available.

**APPRECIATE HOLDINGS, INC.**

**Series 1 Subordinated Convertible Debenture**

---

| | |
|:---|:---|
| **[$_________ Principal Value]** | Minneapolis, MN |
| **[$_________ OID Value]** | March ___, 2023 |

---

FOR VALUE RECEIVED, the undersigned, Appreciate Holdings, Inc., a Delaware corporation (the "<u>Company</u>"), hereby promises to pay to the order of [___________], or its successors and registered assigns ("<u>Purchaser</u>"), the principal sum of **[_________________ and __/100 Dollars ($________.__)]**, on the earlier of (i) 364 days from the date hereof ("<u>Maturity Date</u>") or (ii) immediately upon earlier acceleration in accordance with Section 5 hereof, unless this Subordinated Convertible Debenture (this "<u>Debenture</u>") is converted pursuant to a conversion, as set forth in Section 1 of this Debenture ("<u>Conversion</u>"), prior to the Maturity Date. The Company is issuing this Debenture pursuant to an offering of up to Two Million Five Hundred Thousand and No/100 ($2,500,000.00) (subject to increase by the Company and the Collateral Agent) in aggregate principal amount of Subordinated Convertible Debentures of like tenor (such Debentures, the "<u>Series 1 Convertible Debentures</u>"), the Series 1 Convertible Debentures are being issued at a 66.667% original issue discount (OID), and, as a result, Purchaser has invested **[[_________________ and __/100 Dollars ($________.__)]** in consideration for this Debenture. As a result of the OID, this Debenture shall not bear interest.

1. <u>Conversion Rights</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Mandatory Conversion</u>. In the event the Company issues and sells any Equity Securities with an aggregate sales price of not less than Twenty Five Million Dollars ($25,000,000), excluding amounts received upon the conversion of the Debentures and any other convertible securities of the Company, to investors prior to the repayment or conversion of this Debenture in a single or series of related offerings or other financings (a "<u>Qualified Financing</u>"), then the outstanding principal amount of this Debenture shall automatically convert without any further action by Purchaser or Collateral Agent upon the closing of such Qualified Financing, into the same Equity Securities offered in connection with such Qualified Financing of the Company. As used herein, "<u>Equity Securities</u>" shall mean any equity securities, and securities convertible into or exchangeable for equity securities, of any class or series of the Company, except that such defined term shall not include any security granted, issued and/or sold by the Company to any employee, consultant or other service provider of the Company in such capacity. Upon such conversion of this Debenture, Purchaser hereby agrees to execute and deliver to the Company any and all transaction documents related to the Qualified Financing, including a purchase agreement and other ancillary agreements, with customary representations and warranties and transfer restrictions (including a 180-day lock-up agreement), and having the same terms as those agreements entered into by the investors purchasing Equity Securities in the Qualified Financing and Purchaser shall receive the same rights as all other investors purchasing Equity Securities in the Qualified Financing, except as it relates to any board representation and observer rights may vary among holders of the Company's Equity Securities and will be as set forth in the applicable transaction documents. Purchaser and Collateral Agent also agree to deliver the original of this Debenture (or a notice to the effect that the original Debenture has been lost, stolen or destroyed and an agreement acceptable to the Company whereby Purchaser agrees to indemnify the Company from any loss incurred by it in connection with this Debenture) at the closing of the Qualified Financing for cancellation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Voluntary Conversion</u>. In the event that this Debenture has not matured or converted pursuant to Section 1(a), the Debenture may be converted upon the approval of the Collateral Agent and the Majority Investors into Equity Securities of the Company in connection with the issuance of any Equity Securities (other than a Qualified Financing) occurring any time after the date hereof on the same terms as those agreements entered into by the investors purchasing Equity Securities in connection with such other issuance, and Purchaser shall receive the same rights as other investors purchasing Equity Securities in connection with such other issuance, except as it relates to any board representation and observer rights may vary among holders of the Company's Equity Securities and will be as set forth in the applicable transaction documents. "<u>Majority Investors</u>" shall mean the purchasers of the Series 1 Convertible Debentures holding at least fifty percent (50%) of the outstanding principal amount of all Debentures issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Fractional Equity Securities; Interest</u>. No fractional Equity Securities shall be issued upon conversion of this Debenture. In lieu of the Company issuing any fractional Equity Securities to Purchaser upon the conversion of this Debenture, the Company may, in its sole discretion, issue to Purchaser an additional Equity Security (i.e. common stock).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Effect of Conversion</u>. Upon conversion of this Debenture in full and the payment of any amounts specified in this Section 1, the Company shall be forever released from all its obligations and liabilities under this Debenture. Upon satisfaction of the conditions set forth in Section 1, this Debenture shall be deemed converted and of no further force and effect, whether or not it is delivered for cancellation as set forth in this section.

2. <u>Surrender of Debenture</u>. As promptly as practicable after the date of the conversion of this Debenture (the "<u>Conversion Date</u>") the Company shall reflect the conversion on the books of the Company, in accordance with the provisions hereof. Such conversion shall be deemed to have been made on the Conversion Date and Purchaser in whose name any conversion interest pursuant to Section 1(a) or 1(b), as applicable, hereof shall be issuable shall be deemed to have become the holder of record of such conversion interest on the Conversion Date.

3. <u>Payment; Prepayment</u>. If all amounts owing under this Debenture have not previously been converted in accordance with Section 1 of this Debenture, the entire outstanding principal amount of this Debenture shall be due and payable on the Maturity Date; provided that the Collateral Agent, with the written consent of the Majority Investors and the Company, shall be entitled to extend the Maturity Date. Principal may be prepaid by the Company in whole or in part without premium or penalty; provided that the Company shall give to Purchaser at least twenty (20) calendar days' notice of its intent to pay the principal amount, in whole or in part, during which time Purchaser may exercise his, her or its conversion rights as set forth in this Debenture.

4. <u>Debentures Pari Passu</u>. Each of the Series 1 Convertible Debentures shall rank equally without preference or priority of any kind over one another, and all payments and recoveries under any other document payable on account of principal on the Series 1 Convertible Debentures shall be paid and applied ratably and proportionately on all outstanding Series 1 Convertible Debentures on the basis of their original principal amount.

5. <u>Events of Default</u>. The entire unpaid principal amount of this Debenture shall become and be immediately due and payable upon written demand of [_________________], as Collateral Agent on behalf of Purchaser and other purchasers of the Series 1 Convertible Debentures (the "<u>Collateral Agent</u>"), if any Event of Default shall occur and be continuing (which is not cured within any applicable cure period). The Company shall be in default hereunder upon the happening of any of the following events or conditions (each such event or condition hereinafter referred to as an "<u>Event of Default</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) the Company shall fail to pay within ten (10) days following written notice from Purchaser to the Company of the date due any principal or other payments due under this Debenture;

&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 Company shall default in the due and timely performance of any term, condition, or covenant contained in this Debenture, other than as provided in subsection (a) above, which default is not cured within thirty (30) days following written notice from Purchaser to 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;(c) the Company shall commence a voluntary proceeding seeking liquidation, reorganization, or other relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official for it or a substantial part of its property or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it or shall make a general assignment for the benefit of creditors or shall generally fail to pay its debts as they become due or shall take any corporate action to authorize any of the foregoing; 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;(d) any involuntary proceeding shall be commenced against the Company seeking liquidation, reorganization, or other relief with respect to it or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official for it or a substantial part of its property, and such involuntary proceeding shall remain undismissed and unstayed for a period of thirty (30) days.

6. <u>Transfer or Exchange</u>. Whenever this Debenture shall be surrendered at the address provided in Section 14 below, or any other address that the Company specifies to Purchaser in writing, for transfer or exchange, accompanied by (i) a written instrument of transfer duly executed by Purchaser (or its duly authorized attorney in writing), and if requested by the Company, (ii) an opinion of counsel establishing that the transfer is exempt from the registration requirements of state and federal securities laws, the Company shall execute and deliver in exchange therefore a new Debenture or Debentures (dated effective as of the date hereof), as may be requested by the transferee, in the same aggregate unpaid principal amount and payable on the same date as the principal amount of the Debenture or Debentures so surrendered.

7. <u>Loss or Destruction of Debenture</u>. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Debenture and of indemnity reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Debenture (in case of mutilation), the Company will make and deliver in lieu of this Debenture a new Debenture of like tenor and unpaid principal amount and dated as of the date of delivery of such new Debenture.

8. <u>Waiver; Presentment</u>. The Company and each surety, guarantor, endorser, and other party liable for payment of any sums of money payable on this Debenture, jointly and severally, waive notice, presentment, demand for payment, protest, notice of protest and non-payment or dishonor, notice of acceleration, notice of intent to accelerate, notice of intent to demand, diligence in collecting, grace, and all other formalities of any kind, and hereby fully consents to all extensions without notice for any period or periods of time and partial payments, before or after maturity, and any impairment of any collateral securing this Debenture, all without prejudice to Purchaser. Purchaser shall similarly have the right to deal in any way, at any time, with one or more of the foregoing parties without notice to any other party, and to grant any such party any extensions of time for payment of any of said indebtedness, or to release or substitute part or all of the collateral securing this Debenture, or to grant any other indulgences or forbearances whatsoever, without notice to any other party and without in any way affecting the personal liability of any party hereunder.

9. <u>Security Agreement</u>. The obligations under this Debenture are secured pursuant to the terms of a Security Agreement by the Company in favor of Collateral Agent on behalf of each Purchaser, dated effective as of the date hereof (the "<u>Security Agreement</u>").

10. <u>Issuance of Warrants</u>. In connection with this Debenture, Purchaser shall also receive warrants (the "<u>Warrants</u>"), to purchase [_____] shares of the Company's Class A common stock, par value $0.0001 per share, which shall have an original exercise price of $5.00 per share of fully-paid and non-assessable shares (or equivalent equity interests) of the Company's capital stock. Such warrant shall be in substantially in the form as attached hereto as <u>Exhibit A</u>.

11. <u>Successors and Assigns</u>. This Debenture, and the obligations and rights of the Company hereunder, shall be binding upon and inure to the benefit of the Company, Purchaser, and their respective heirs, successors and assigns.

12. <u>Seniority; Subordination</u>. This Debenture is subject to the terms of a subordination agreement (the "<u>Subordination Agreement</u>"), of even date hereof, executed and delivered by Purchaser in favor of St. Cloud Capital Partners III SBIC, LP (or one of its Affiliates) (the "<u>Senior Lender</u>"), under which payment of this Debenture is expressly subordinated to liabilities in favor of the Senior Lender in the manner and to the extent provided in the Subordination Agreement. In the event that any other lender provides replacement financing for some or all of the debt financed by the Senior Lender, the Purchaser agrees to enter into and become bound by one or more commercially reasonable subordination agreements in favor of such replacement lender(s), whereupon payment of this Debenture shall also be subordinated to such replacement financing in the manner and to the extent provided in any additional or replacement Subordination Agreement. In addition, if Borrower desires to secure additional financing from an institutional lender to finance the operation or expansion of the Business and such lender requires the subordination of this Debenture as a condition to providing such financing, then Purchaser agrees to not unreasonably withhold its consent to such subordination and execution of a corresponding subordination agreement.

13. <u>Currency</u>. All payments shall be made in the currency of the United States of America as at the time of payment shall be legal tender therein for the payment of public and private debts.

14. <u>Notices</u>. Any notice, demand, request, instruction, correspondence, or other document required or permitted to be given hereunder by any party to the other shall be in writing and delivered (i) in person, (ii) by facsimile or email, (iii) by a nationally recognized overnight courier service requiring acknowledgment of receipt of delivery, or (iv) by United States certified mail, postage prepaid and return receipt requested, as follows:

if to the Company, to:

Appreciate Holdings, Inc.

Attn: Chris Laurence

6101 Baker Rd, Suite 200

Minnetonka, Minnesota 55345

with a copy (which will not constitute notice) to:

Winthrop & Weinstine, P.A.

Attn: Dean D. Willer

225 South Sixth Street, Suite 3500

Minneapolis, MN 55402

if to Purchaser, to the address set forth on the signature page hereto.

Notice shall be deemed given, received, and effective on: (i) if given by personal delivery or courier service, the date of actual receipt by the receiving party, or if delivery is refused on the date delivery was first attempted; (ii) if sent by confirmed facsimile or email during normal business hours of the recipient, on the date of delivery and, if not so confirmed, then on the next business day, or (iii) if given by certified mail, the third day after being so mailed if posted with the United States Postal Service. Any person entitled to notice may change any address to which notice is to be given to it by giving notice of such change of address as provided in this Section 14. The inability to deliver notice because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date such attempt was first made. A party's authorized counsel may deliver any notice on such party's behalf.

15. <u>Original Issue Discount</u>. The Company and Purchaser agree (i) that the loan evidenced by the Debenture is debt for federal income tax purposes, (ii) that the Series 1 Convertible Debentures constitute a single debt instrument for purposes of Sections 1271 through 1275 of the Code and the Treasury Regulations thereunder (pursuant to Treasury Regulations Section 1.1275-2(c)), (iii) that such debt instrument is and will be issued with an OID based upon the actual funding of thirty three percent (33%) of the principal amount of the Debenture, and that such debt instrument is described in Treasury Regulations Section 1.1272-1(c)(2) and therefore is governed by the rules set out in Treasury Regulations Section 1.1272-1(c), including Section 1.1272-1(c)(5), and is not governed by the rules set out in Treasury Regulations Section 1.1275-4, (iv) that any calculation by the Company regarding the amount of OID for any accrual period on the Debenture shall be subject to review and reasonable approval of the Collateral Agent, on behalf of Purchaser, and (v) to adhere to this Agreement for federal income tax purposes and not to take any action or file any tax return, report or declaration inconsistent herewith. The inclusion of this Section 15 is not an admission by Purchaser that it is subject to United States taxation.

16. <u>Entire Agreement</u>. This Debenture, the Security Agreement, and the Warrants constitute the entire agreement between the parties and supersede any prior understandings, agreements, or representations by or between the parties, written or oral, to the extent they relate in any way to the subject matter hereof.

17. <u>Amendments</u>. This Debenture may only be amended or modified in a writing signed by the Company and Collateral Agent, with the written consent of the Majority Investors.

18. <u>Governing Law; Venue</u>. This Debenture shall be governed by and construed in accordance with the domestic laws of the State of Delaware without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. All actions and proceedings arising out of or relating to this Debenture shall be heard and determined in any state or federal court sitting in the County of Hennepin, State of Minnesota. The Company and Purchaser expressly and irrevocably, consent and submit to the personal jurisdiction of any of such courts, (ii) consent to the service of any complaint, summons, notice or other process relating to any such action or proceeding by delivery thereof to such party by hand or by certified mail, delivered or addressed as set forth in Section 14 hereof, (iii) waive any claim or defense in any such action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum *non conveniens* or any similar basis and (iv) agree not to directly or indirectly bring or assert any claim, action or other proceeding in any jurisdiction or forum other than the state and federal courts sitting in the County of Hennepin, State of Minnesota. The Company and Purchaser agree that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or in equity.

19. <u>WAIVER OF JURY TRIAL</u>. EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY TO THE MAXIMUM EXTENT PERMITTED BY LAW IN ANY ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS DEBENTURE AND THE TRANSACTIONS IT CONTEMPLATES. THIS WAIVER APPLIES TO ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH OF THE PARTIES ACKNOWLEDGES THAT IT HAS RECEIVED THE ADVICE OF COMPETENT COUNSEL IN CONNECTION HEREWITH.

19. <u>Counterparts</u>. This Debenture may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument, and all signatures need not appear on any one counterpart. Executed copies of the signature pages of this Debenture sent by facsimile or transmitted electronically in portable document format or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

[*No further text appears; signature page follows*]

IN WITNESS WHEREOF, this Debenture has been executed and delivered on the date first above written by the duly authorized representative of the Company.

---

| | |
|:---|:---|
| APPRECIATE HOLDINGS, INC. | APPRECIATE HOLDINGS, INC. |
| By: |  |
| Name: | Chris Laurence |
| Its: | Chief Executive Officer |

---

**AGREED AND ACCEPTED:**

---

| | | |
|:---|:---|:---|
| (eNTITY) |  | (individual) |
| PURCHASER: | . | PURCHASER: |
| Signed: |  | Signed: |
| Name: |  | Name: |
| Its: |  | |

---

Address:   Address:   <br>   <br>  

[SIGNATURE PAGE TO DEBENTURE]

&nbsp;&nbsp;&nbsp;&nbsp;<br>

## Exhibit 4.2

**Exhibit 4.2**

**THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.**

**PURSUANT TO THE TERMS OF <u>SECTION 1</u> OF THIS WARRANT, ALL OR A PORTION OF THIS WARRANT MAY HAVE BEEN EXERCISED, AND THEREFORE THE ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.**

**Appreciate Holdings, Inc.**

**Warrant To Purchase Class A Common Stock**

Warrant No.: **«No»**

Number of Shares of Common Stock: **«No. Warrant Shares»**

Date of Issuance: ___________ ("<u>Issuance Date</u>")

Appreciate Holdings, Inc., a Delaware corporation (the "<u>Company</u>"), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, **«Warrant_Name»**, the registered holder hereof or its permitted assigns (the "<u>Holder</u>"), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the "<u>Warrant</u>"), at any time or times prior to the Expiration Date (as defined below), **«No. Warrant Shares Written»** (**«No. Warrant Shares»**) fully paid nonassessable shares of Class A Common Stock, par value $0.0001 per share (the "<u>Warrant Shares</u>"). Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in <u>Section 16</u>. Pursuant to the Series 1 Subordinated Convertible Debenture Agreement (the "<u>Debenture Agreement</u>"), signed by and between the Company and Purchaser (as defined therein) offering Series 1 Convertible Debentures (the "<u>Debentures</u>"), this Warrant is one of a series of warrants (collectively, the "<u>Warrants</u>"), with an aggregate right to purchase up to One Million (1,000,000) shares of Class A Common Stock (such aggregate number of shares of Class A Common Stock is subject to increase in the sole discretion of the Board of Directors of the Company), containing substantially identical terms and conditions described in the Debenture Agreement.

1. <u>EXERCISE OF WARRANT.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Mechanics of Exercise</u>. Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the Issuance Date but not after 11:59 p.m., New York time, on the Expiration Date, in whole or in part (but not as to fractional shares), by delivery of a written notice, in the form attached hereto as <u>Exhibit A</u> (the "<u>Exercise Notice</u>") of the Holder's election to exercise this Warrant. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Within two (2) Trading Days of the delivery of such Exercise Notice, if both (A) the Holder is not electing a Cashless Exercise (as defined below) pursuant to <u>Section 1(d)</u> of this Warrant and (B) a registration statement registering the issuance of the Warrant Shares under the Securities Act of 1933, as amended (the "<u>Securities Act</u>"), is effective and available for the issuance of the Warrant Shares, payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the "<u>Aggregate Exercise Price</u>") in cash or wire transfer of immediately available funds (a "<u>Cash Exercise</u>"). The Holder shall not be required to surrender this Warrant in order to effect an exercise hereunder; provided, however, that in the event that this Warrant is exercised in full or for the remaining unexercised portion hereof, the Holder shall deliver this Warrant to the Company for cancellation within a reasonable time after such exercise. On or before the first Trading Day following the date on which the Company has received the Exercise Notice (the date upon which the Company has received the Exercise Notice, the "<u>Exercise Date</u>"), the Company shall transmit by facsimile or e-mail transmission an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company's transfer agent for the Class A Common Stock (the "<u>Transfer Agent</u>"). The Company shall deliver any objection to the Exercise Notice on or before the first Trading Day following the later of the date on which the Holder has delivered the Exercise Notice. On or before the second Trading Day following the date on which the Company has received the Exercise Notice, provided the Aggregate Exercise Price has been received by the Company prior to such Trading Day (the "<u>Share Delivery Date</u>"), the Company shall, (X) <u>provided</u> that the Transfer Agent is participating in The Depository Trust Company ("<u>DTC</u>") Fast Automated Securities Transfer Program (the "<u>FAST Program</u>") and so long as the certificates therefor are not required to bear a legend regarding restriction on transferability, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y), if the Transfer Agent is not participating in the FAST Program or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company's share register in the name of the Holder or its designee, for the number of shares of Class A Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Notice (assuming payment of the Aggregate Exercise Price is made within two (2) Trading Days after delivery of the Exercise Notice), the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder's DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be. So long as there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or if this Warrant is being exercised via cashless exercise, Warrant Shares shall be issued electronically free of any legends. If this Warrant is submitted in connection with any exercise pursuant to this <u>Section 1(a)</u> and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Trading Days after any such submission and at its own expense, issue a new Warrant (in accordance with <u>Section 7(d)</u>) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant has been and/or is exercised. The Company shall pay any and all taxes and other expenses of the Company (including overnight delivery charges) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant; <u>provided</u>, <u>however</u>, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an affiliate thereof. The Holder shall be responsible for income tax liability that may arise as a result of holding or transferring this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Exercise Price</u>. For purposes of this Warrant, "<u>Exercise Price</u>" means $5.00, subject to adjustment as provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Company's Failure to Timely Deliver Securities</u>. If the Company shall fail for any reason or for no reason to issue to the Holder within three (3) Trading Days of the Exercise Date a certificate for the number of shares of Class A Common Stock to which the Holder is entitled and register such shares of Class A Common Stock on the Company's share register or to credit the Holder's balance account with DTC for such number of shares of Class A Common Stock to which the Holder is entitled upon the Holder's exercise of this Warrant, and if on or after such Trading Day the Holder purchases, or another Person purchasers on the Holder's behalf or for the Holder's account (in an open market transaction or otherwise) shares of Class A Common Stock to deliver in satisfaction of a sale by the Holder of shares of Class A Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a "<u>Buy-In</u>"), then the Company shall, within three (3) Business Days after the Holder's written request and in the Holder's discretion, in its discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions, if any) for the shares of Class A Common Stock so purchased (the "<u>Buy-In Price</u>"), at which point the Company's obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Class A Common Stock, times (B) the VWAP (as reported by Bloomberg) on the date of the event giving rise to the Company's obligation to deliver such certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Cashless Exercise</u>. Notwithstanding anything contained herein to the contrary, if (i) the Company exercises the right not to register the Warrant Shares in accordance with the provisions of <u>Section 8</u> hereof or (ii) a registration statement covering the Warrant Shares that are the subject of the Exercise Notice (the "<u>Unavailable Warrant Shares</u>") is not effective, or the prospectus contained therein is not available for the issuance or resale of the Warrant Shares to/by the Holder, then, in the case of clause (i) the Holder may only, and in the case of clause (ii) the Holder may in its sole discretion, exercise this Warrant in whole or in part by, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, electing instead to receive upon such exercise the "<u>Net Number</u>" of shares of Class A Common Stock determined according to the following formula (a "<u>Cashless Exercise</u>"):

Net Number = <u>(A - B) (X)</u>

&nbsp;&nbsp;&nbsp;&nbsp;(A) For purposes of the foregoing formula:

A = the VWAP for the twenty (20) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.

B = the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

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| | |
|:---|:---|
| X = | the total number of shares with respect to which this Warrant is then being exercised. |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Rule 144</u>. For purposes of Rule 144(d) promulgated under the Securities Act, as in effect on the date hereof, assuming the Holder is not an affiliate of the Company, the Company acknowledges and agrees that the Warrant Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the Issuance Date. The Company acknowledges and agrees that, in accordance with Section 3(a)(9) of the Securities Act, any Warrant Shares issued in a Cashless Exercise, shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this <u>Section 1(e)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Disputes</u>. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Beneficial Ownership</u>. The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person's affiliates) would beneficially own in excess of 4.99% (the "<u>Maximum Percentage</u>") of the shares of Class A Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Class A Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Class A Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Class A Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>"). For purposes of this Warrant, in determining the number of outstanding shares of Class A Common Stock, the Holder may rely on the number of outstanding shares of Class A Common Stock as reflected in the most recent of (1) the Company's most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission (the "<u>Commission</u>"), as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Class A Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm to the Holder the number of shares of Class A Common Stock then outstanding. In any case, the number of outstanding shares of Class A Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Class A Common Stock was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, (ii) any such increase or decrease will apply only to the Holder, and (iii) Lake Street Landlords, LLC and LSS Sustainable SPAC LLC may exceed 9.99%. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this <u>Section 1(g)</u> to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

2. <u>ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES</u>. The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Adjustment upon Subdivision or Combination of Class A Common Stock</u>. If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Class A Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Issuance Date combines (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Class A Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this <u>Section 2(a)</u> shall become effective at the close of business on the date the subdivision or combination becomes effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Other Events</u>. If any event occurs of the type contemplated by the provisions of this <u>Section 2</u> but not expressly provided for by such provisions (including, without limitation, by means of the granting of stock appreciation rights or phantom stock rights), then the Company's Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this <u>Section 2(b)</u> will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this <u>Section 2</u>.

3. <u>RIGHTS UPON DISTRIBUTION OF ASSETS</u>. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Class A Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) (a "<u>Distribution</u>"), then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Class A Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Maximum Percentage and/or the fact that such event may have occurred prior to the Issuance Date) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Class A Common Stock are to be determined for the participation in such Distribution.

4. <u>PURCHASE RIGHTS</u>. In addition to any adjustments pursuant to <u>Section 2</u> above, if at any time the Company grants, issues or distributions any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Class A Common Stock (the "<u>Purchase Rights</u>"), then in each such case, the Company shall reserve Options, Convertible Securities or Purchase Rights for distribution to the Holder upon exercise of this Warrant so that, in addition to the shares of the Class A Common Stock to which such Holder is entitled, such Holder will receive upon such exercise the amount and kind of such Options, Convertible Securities or Purchase Rights which such Holder would have received if the Holder had, immediately prior to the record date for the distribution of the Options, Convertible Securities or Purchase Rights, exercised this Warrant in full (without regard to any limitations on exercise hereof, including without limitation, the Maximum Percentage and/or the fact that such event may have occurred prior to the Issuance Date)

5. <u>NONCIRCUMVENTION</u>. The Company hereby covenants and agrees that the Company will not, by amendment of its Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith comply with all the provisions of this Warrant and take all actions consistent with effectuating the purposes of this Warrant. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Class A Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Class A Common Stock upon the exercise of this Warrant, and (iii) so long as this Warrant is outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Class A Common Stock, solely for the purpose of effecting the exercise of this Warrant, 100% of the number of shares of Class A Common Stock issuable upon exercise of this Warrant then outstanding (without regard to any restrictions or limitations on exercise).

6. <u>WARRANT HOLDER NOT DEEMED A SHAREHOLDER</u>. Except as otherwise specifically provided herein, the Holder, solely in such Person's capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person's capacity as the Holder of this Warrant, any of the rights of a shareholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a shareholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

7. <u>REISSUANCE OF WARRANTS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Transfer of Warrant</u>. If this Warrant is to be transferred, the Holder shall, five (5) days after written notice to the Company, surrender this Warrant to the Company and deliver the completed and executed Assignment Form, in the form attached hereto as <u>Exhibit B</u>, and if requested by the Company, provide an Opinion of Counsel (as defined below), whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with <u>Section 7(d)</u>), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with <u>Section 7(d)</u>) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Lost, Stolen or Mutilated Warrant</u>. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with <u>Section 7(d)</u>) representing the right to purchase the Warrant Shares then underlying this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Exchangeable for Multiple Warrants</u>. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with <u>Section 7(d)</u>) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Class A Common Stock shall be given.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Issuance of New Warrants</u>. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to <u>Section 7(a)</u> or <u>Section 7(c)</u>, the Warrant Shares designated by the Holder which, when added to the number of shares of Class A Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

8. <u>Registration Statement</u>. Within One Hundred Eighty (180) days after the date hereof, the Company shall file with the Commission a registration statement (which shall be on Form S-3 unless the Company is not then eligible to use Form S-3 to register the Warrant Shares) for the registration under the Securities Act of the Warrant Shares (the "<u>Additional Registration Statement</u>"), and it shall take such reasonable action as is necessary to qualify for sale, in those states in which the Warrant was initially offered by the Company, the Warrant Shares, provided, however, that no such qualification shall be required in any jurisdiction where, as a result thereof, the Company would be subject to service of general process or to taxation as a foreign corporation doing business in such jurisdiction. The Company shall use its commercially reasonable efforts to cause the Additional Registration Statement to become effective as promptly as practicable and shall use its commercially reasonable efforts to maintain the effectiveness and availability of such registration statement until the earlier of (i) the expiration of this Warrant in accordance with its terms or (ii) the time this Warrant is no longer outstanding. No Holder shall be named as an "underwriter" in such Additional Registration Statement without the Holder's consent. The Company shall take all commercially reasonable action to include the Warrant Shares for listing on an Eligible Market. Notwithstanding the provisions of this <u>Section 8</u>, the Company shall not be required to file or maintain the effectiveness of an Additional Registration Statement in the event that the Company delivers to the Collateral Agent and the Holder an opinion (in form and substance reasonably satisfactory to the Collateral Agent and the Holder) of outside counsel to the Company reasonably satisfactory to the Collateral Agent to the effect that the issuance of the Warrant Shares to the Holder is exempt from the registration requirements of the Securities Act and may be freely resold by the Holder if it is not an affiliate at the time of exercise without further registration under the Securities Act pursuant to a cashless exercise effected pursuant to the terms of this Warrant (the "<u>Opinion of Counsel</u>"). In the event that the Company (i) determines that it does not wish to file and maintain the effectiveness of an Additional Registration Statement in compliance with the terms of this paragraph, (ii) elects instead to permit the Holder of this Warrant to effect a cashless exercise of this Warrant pursuant to the terms of this Warrant, and (iii) delivers the Opinion of Counsel, no later than four (4) Business Days after the delivery of such Opinion of Counsel, the Company shall issue a press release announcing that it has determined not to file and maintain the effectiveness of an Additional Registration Statement, and explaining in reasonable detail the basis on which the Warrant Shares may be issued to and freely resold by the Holder upon the exercise of this Warrant. Any exercise of this Warrant after the issuance of such press release shall only be effected by cashless exercise as provided in <u>Section 1(d)</u> above.

9. <u>NOTICES</u>. The Company shall provide Holder with prompt written notice of all actions taken pursuant to this Warrant. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in writing, will be mailed (a) if within the domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and (c) will be deemed given (i) if delivered by first-class registered or certified mail domestic, three Business Days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one Business Day after so mailed, (iii) if delivered by International Federal Express, two Business Days after so mailed and (iv) if delivered by facsimile or electronic mail, upon electronic confirmation of receipt, and will be delivered and addressed 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) if to the Company, to:

Appreciate Holdings, Inc.

6101 Baker Rd Suite 200

Minnetonka, MN 55345

Attn: Chris Laurence

With a copy (which will not constitute notice) to:

Winthrop & Weinstine, P.A.

225 South Sixth Street, Suite 3500

Minneapolis, MN 55402

Facsimile: (612) 604-6800

Attn: Dean D. Willer

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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 to the Holder, at the address of the Holder appearing on the books of the Company.

10. <u>AMENDMENT AND WAIVER</u>. Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Collateral Agent and Majority Holders. Any such amendment shall apply to all Warrants and be binding upon all registered holders of such Warrants. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Warrants unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the holders of the Warrants.

11. <u>GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL</u>. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of Minnesota located in Hennepin County and the United States District Court for the District of Minnesota for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Holder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Holder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. **EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.**

12. <u>CONSTRUCTION; HEADINGS</u>. This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

13. <u>DISPUTE RESOLUTION</u>. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder, which approval shall not be unreasonably withheld, or (b) the disputed arithmetic calculation of the Warrant Shares to the Company's independent, outside accountant. The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations. The prevailing party (which, for purposes of this Warrant, is the party whose determinations or calculations is closest to those of the investment bank or the accountant, as the case may be) in any dispute resolved pursuant to this <u>Section 13</u> shall be entitled to the full amount of all reasonable expenses, including all costs and fees paid or incurred in good faith, in relation to the resolution of such dispute. Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

14. <u>REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF</u>. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

15. <u>TRANSFER</u>. Subject to applicable laws, this Warrant may be offered for sale, sold, transferred or assigned pursuant to Section 7(a) without the consent of the Company.

16. <u>CERTAIN DEFINITIONS</u>. For purposes of this Warrant, the following terms shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "<u>Bloomberg</u>" means Bloomberg Financial Markets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "<u>Business Day</u>" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "<u>Class A Common Stock</u>" means (i) the Company's shares of Class A Common Stock, par value $0.0001 per share, and (ii) any share capital into which such Class A Common Stock shall have been changed or any share capital resulting from a reclassification of such Class A Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "<u>Collateral Agent</u>" has the meaning given in the Series 1 Convertible Subordinated Debentures, issued in connection herewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "<u>Convertible Securities</u>" means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Class A Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "<u>Eligible Market</u>" means the Principal Market, The New York Stock Exchange, Inc., The NYSE MKT, The NASDAQ Capital Market or The NASDAQ Global Select Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "<u>Expiration Date</u>" means the fifth (5<sup>th</sup>) anniversary of the Issuance Date or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market, or, if the Principal Market is not the principal trading market for the Class A Common Stock, then on the principal securities exchange or securities market on which the Class A Common Stock is then traded (a "<u>Holiday</u>"), the next date that is not a Holiday.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "<u>Majority Investors</u>" has the meaning given in the Series 1 Convertible Subordinated Debentures, issued in connection herewith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "<u>Options</u>" means any rights, warrants or options to subscribe for or purchase shares of Class A Common Stock or Convertible Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "<u>Person</u>" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "<u>Principal Market</u>" means the NASDAQ Global Market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "<u>Trading Day</u>" means any day on which the Class A Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Class A Common Stock, then on the principal securities exchange or securities market on which the Class A Common Stock are then traded; *provided* that "Trading Day" shall not include any day on which the Class A Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Class A Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "<u>Weighted Average Price</u>" or "<u>VWAP</u>" means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its "Volume at Price" function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by OTC Markets LLC. If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to <u>Section 13</u> with the term "Weighted Average Price" being substituted for the term "Exercise Price." All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

**[Signature Page Follows]**

**IN WITNESS WHEREOF,** the Company has caused this Warrant to Purchase Class A Common Stock to be duly executed as of the Issuance Date set out above.

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| |
|:---|
| **APPRECIATE HOLDINGS, INC.** |
| By: |
| Name: |
| Title: |

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**EXHIBIT A**

**EXERCISE NOTICE**

**TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS**

**WARRANT TO PURCHASE COMMON STOCK**

**APPRECIATE HOLDINGS, INC.** 

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Class A Common Stock, par value $0.0001 per share ("<u>Warrant Shares</u>") of Appreciate Holdings, Inc., a Delaware corporation (the "<u>Company</u>"), evidenced by the attached Warrant to Purchase Common Stock (the "<u>Warrant</u>"). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Form of Exercise Price</u>. The Holder intends that payment of the Exercise Price shall be made as:

____________ a "<u>Cash Exercise</u>" with respect to _________________ Warrant Shares; and/or

____________ a "<u>Cashless Exercise</u>" with respect to _______________ Warrant Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Payment of Exercise Price</u>. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Delivery of Warrant Shares</u>. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant and, after delivery of such Warrant Shares, _____________ Warrant Shares remain subject to the Warrant.

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| | |
|:---|:---|
| Date: | _______________ __, ______ |
| &nbsp;&nbsp;&nbsp;Name of Registered Holder | &nbsp;&nbsp;&nbsp;Name of Registered Holder |
| By: |  |
|  | Name: |
|  | Title: |

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**EXHIBIT B**

**ASSIGNMENT FORM**

**APPRECIATE HOLDINGS, INC.** 

*(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)*

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

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| | | |
|:---|:---|:---|
| Name: | Name: | <u> </u> |
| | | (Please Print) |
| Address: | Address: | <u> </u> |
| | | (Please Print) |
| Dated: | _______________ __, ______ |  |
| Holder's Signature: | |  |
| Holder's Address: | |  |

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NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

## Exhibit 10.1

**Exhibit 10.1**

**SECURITY AGREEMENT**

THIS SECURITY AGREEMENT (this "<u>Agreement</u>"), is entered into effective as of the ___ day of March, 2023, by Appreciate Holdings, Inc., a Delaware corporation located at 6101 Baker Rd Suite 200, Minnetonka, MN 55345, on behalf of itself and all of its subsidiaries (collectively, the "<u>Borrower</u>"), for the benefit of those persons who have each executed a signature page hereto as a secured party (each a "<u>Secured Party</u>" and collectively, the "<u>Secured Parties</u>") following making a financial accommodation to Borrower, and Lake Street Landlords, LLC ("<u>Collateral Agent</u>"), solely in its capacity as Collateral Agent.

In order to secure the prompt and complete payment of the indebtedness and performance of the obligations evidenced by one or more Series 1 Convertible Debentures in an aggregate amount of up to Two Million Five Hundred and No/100 ($2,500,000.00) (subject to increase with the consent of the Collateral Agent and the Company) issued to the Secured Parties by Borrower and other additional indebtedness that the Company may issue from time to time with the consent of the Collateral Agent (collectively, the "<u>Debentures</u>"), not to be unreasonably withheld, conditioned or delayed (all such debts, liabilities and obligations of Borrower to the Secured Party herein collectively referred to as the "<u>Secured Obligations</u>"), the parties hereto desire to enter into this Agreement. In all cases, decisions to be made by the Secured Parties hereunder shall be made by the Collateral Agent (as defined below) on behalf of the Secured Parties.

1. <u>SECURITY INTEREST AND COLLATERAL</u>. In order to secure the prompt and complete payment and performance of the Secured Obligations, Borrower hereby pledges, assigns and grants to each Secured Party a security interest (herein called the "<u>Security Interest</u>") in all of Borrower's right, title and interest, whether now owned or hereafter acquired, in and to the following property (such property collectively referred to as the "<u>Collateral</u>"):

all property and assets of Borrower including, without limitation, any and all furniture, fixtures, machinery, equipment, inventory, accounts, deposit accounts, receivables, cash on hand, vehicles, prepaid insurance, letter of credit rights, supplies, patents, patent rights, copyrights, trademarks, trade names, goodwill, royalty rights, franchise rights, chattel paper (including, but not limited to, electronic chattel paper and tangible chattel paper), contract rights, commercial tort claims, data processing records and systems, supporting obligations, license rights, documents, instruments, investment property, software, payment intangibles, general intangibles and any and all other goods, now owned or hereafter acquired by Borrower and wherever located, together with all supporting obligations, substitutions and replacements for and products and proceeds of any of the foregoing property and, in the case of all tangible Collateral, together with (i) all accessories, attachments, parts, equipment, accessions and repairs now or hereafter attached or affixed to or used in connection with any such goods, and (ii) all warehouse receipts, bills of lading and other documents now or hereafter covering such goods.

together with all substitutions and replacements for and products and proceeds of any of the foregoing property.

2. <u>REPRESENTATIONS, WARRANTIES AND AGREEMENTS</u>. Borrower hereby represents and warrants to, and covenants and agrees with, each Secured Party as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Borrower will not change its name or any trade name or "d/b/a" under which it currently operates or conducts business, or its Federal Employee Identification Number, mailing address, or place(s) of business unless, in each such case, Borrower shall have given the Collateral Agent not less than fifteen (15) days' prior written notice of such event or occurrence, which shall be extended as necessary to provide the Collateral Agent a reasonably sufficient opportunity to take such steps (with the cooperation of Borrower to the extent necessary or advisable) as are reasonably necessary or advisable to properly maintain the validity, perfection and priority of the Secured Parties' Security Interest in the Collateral in accordance with the terms of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Borrower has (or will have at the time Borrower acquires rights in Collateral hereafter acquired or arising) and will (i) maintain absolute and valid title to each item of Collateral free and clear of all liens, except the Security Interest and such other security interests described on <u>Exhibit A</u> hereto (collectively, along with the Security Interest, the "<u>Permitted Interests</u>"), (ii) defend title to the Collateral against all claims or demands of all Persons other than the Secured Parties and those holding Permitted Interests, and (iii) defend the Security Interest of the Secured Parties in such Collateral and the priority thereof against any liens.

 ****

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Borrower has full right and all necessary power and authority to grant to the Secured Parties the Security Interest in such Collateral pursuant hereto. The execution and delivery by Borrower of this Agreement does not require the consent of any other Person and this Agreement constitutes a legal, valid and binding obligation of Borrower and creates a security interest which is enforceable against Borrower in all Collateral which Borrower now owns or hereafter acquires, except as enforceability may be limited by (i) bankruptcy, insolvency, fraudulent conveyances, reorganization or similar laws relating to or affecting the enforcement of creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law), and (iii) requirements of reasonableness, good faith and fair dealing. When financing statements have been filed in the appropriate offices against Borrower, each Secured Party will have a fully-perfected security interest in the Collateral owned by Borrower, with priority over all others other than the holder of Permitted Interests, in which a security interest may be perfected by filing in such offices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) All rights to payment and all instruments, documents, chattel paper and other agreements constituting or evidencing Collateral are (or will be when arising or issued) the valid, genuine and legally enforceable obligation, subject to no defense, set-off or counterclaim (other than those arising in the ordinary course of business) of each account debtor or other obligor named therein or in Borrower's records pertaining thereto as being obligated to pay such obligation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Borrower will (i) other than taxes and other governmental charges contested in good faith and by appropriate proceedings, promptly pay all taxes and other governmental charges levied or assessed upon or against any Collateral or upon or against the creation, perfection or continuance of the Security Interest; (ii) keep all Collateral free and clear of all liens, except the Security Interests and the Permitted Interests; (iii) at all reasonable times, permit the Collateral Agent or its representatives to examine or inspect any Collateral, wherever located, and to examine, inspect and copy Borrower's books and records pertaining to the Collateral and its business and financial condition and to discuss with account debtors and other obligors requests for verifications of amounts owed to Borrower; (iv) keep accurate and complete records pertaining to the Collateral and pertaining to Borrower's business and financial condition and will submit to the Collateral Agent such periodic reports concerning the Collateral and Borrower's business and financial condition as the Collateral Agent may from time to time reasonably request; (v) if the Collateral Agent at any time reasonably requests, promptly deliver to the Collateral Agent any instrument, document or chattel paper constituting Collateral, duly endorsed or assigned by Borrower to the Secured Parties; (vi) from time to time execute such financing statements as the Collateral Agent may reasonably deem required to be filed in order to perfect the Security Interest and, if any Collateral is covered by a certificate of title, execute such documents as may be required to have the Security Interest properly noted on a certificate of title; (vii) pay when due or reimburse the Collateral Agent or any Secured Party on demand for all costs of collection of any of the Secured Obligations and, subject to any limitations set forth in the Debentures, all other out-of-pocket expenses (including in each case all attorneys' fees) incurred by the Collateral Agent or any Secured Party in connection with the creation, perfection, satisfaction or enforcement of the Security Interest or the execution or creation, continuance or enforcement of this Agreement or any or all of the Secured Obligations including, without limitation, expenses incurred in any litigation or bankruptcy or insolvency proceedings; (viii) execute, deliver or endorse any and all instruments, documents, assignments, security agreements and other agreements and writings which the Collateral Agent may at any time reasonably request in order to secure, protect, perfect or enforce the Security Interest and the Secured Parties' rights under this Agreement including, without limitation, an assignment of claim with respect to any account which is a government receivable; (ix) not use or keep any Collateral, or permit it to be used or kept, for any unlawful purpose or in violation of any federal, state or local law, statute or ordinance; (x) permit the Collateral Agent at any time and from time to time to send requests to account debtors or other obligors for verification of amounts owed to Borrower; and (xi) conduct its business in the ordinary course of business. If Borrower at any time fails to perform or observe any agreement contained in this <u>Section 2(f)</u>, and if such failure shall continue for a period of thirty (30) calendar days after the Collateral Agent gives Borrower written notice thereof, the Collateral Agent may (but need not) perform or observe such agreement on behalf and in the name, place and stead of Borrower (or, at the Collateral Agent's option, in the Secured Parties' own name) and may (but need not) take any and all other actions which the Collateral Agent may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of liens, the performance of obligations under contracts or agreements with account debtors or other obligors (other than Permitted Interests), the procurement and maintenance of insurance, the execution of financing statements, the endorsement of instruments, and the procurement of repairs, transportation or insurance); and, except to the extent that the effect of such payment would be to render any loan or forbearance of money usurious or otherwise illegal under any applicable law, Borrower shall thereupon pay the Collateral Agent or any Secured Party on demand the amount of all moneys expended and all costs and expenses (including reasonable attorneys' fees) incurred by the Collateral Agent or any such Secured Party in connection with or as a result of the Collateral Agent's performing or observing such agreements or taking such actions, together with interest thereon from the date expended or incurred by the Collateral Agent or such Secured Party at the lowest rate provided for in the Debentures. To facilitate the performance or observance by the Collateral Agent of such agreements of Borrower, Borrower hereby irrevocably appoints (which appointment is coupled with an interest) the Collateral Agent, or its delegate, as the attorney-in-fact of Borrower with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file, in the name and on behalf of Borrower, any and all instruments, documents, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Borrower under this <u>Section 2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Borrower hereby authorizes the Collateral Agent to file, and if requested will execute and deliver to the Collateral Agent, all financing statements describing the Collateral and other documents and take such other actions as may from time to time reasonably be requested by the Collateral Agent in order to maintain a perfected security interest in and, if applicable, control of, the Collateral. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of collateral that describes such property in any other manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to ensure that the perfection of the security interest in the Collateral granted to the Secured Parties herein, including, without limitation, describing such property as "all assets" or "all personal property, whether now owned or hereafter acquired."

3. <u>ASSIGNMENT OF INSURANCE</u>. Borrower hereby assigns to the Collateral Agent for the benefit of the Secured Parties, as additional security for the payment of the Secured Obligations, any and all moneys (including, but not limited to, proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of Borrower under or with respect to, any and all policies of insurance covering the Collateral, and Borrower hereby directs the issuer of any such policy to pay any such moneys to the Collateral Agent for the benefit of the Secured Parties in the event an Event of Default (an "<u>Event of Default</u>") has occurred (as such term is defined in the Debentures) and is continuing on the date upon which such amounts are paid. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may on behalf of the Secured Parties (but need not) in its name for the benefit of the Secured Parties or in Borrower's name, execute and deliver proofs of claim, receive all such monies (subject to Borrower's rights), endorse checks and other instruments representing payment of such monies, and adjust, litigate, compromise or release any claim against the issuer of any such policy.

4. <u>COLLECTION OF ACCOUNTS</u>. The Collateral Agent may on behalf of the Secured Parties, or at the Collateral Agent's request, Borrower shall, upon the occurrence and during the continuance of an Event of Default, notify any account debtor or any obligor on an instrument to make payment directly to a post office box specified by and under the sole control of the Collateral Agent, whether or not the Collateral Agent was theretofore making collections with respect thereto, and the Collateral Agent shall be entitled to take control of any proceeds thereof for the benefit and on behalf of the Secured Parties. If so requested by the Collateral Agent, Borrower shall insert appropriate language on each invoice directing its customers to make payment to such post office box. Borrower hereby authorizes and directs the Collateral Agent to deposit into a special collateral account to be established and maintained with the Collateral Agent all checks, drafts and cash payments, received in said lock box. All deposits in said collateral account shall constitute proceeds of Collateral and shall not constitute payment of any of the Secured Obligations. At its option, the Collateral Agent may, at any time, apply finally collected funds on deposit in said collateral account to the payment of the Secured Obligations in such order of application as the Collateral Agent may determine, or permit Borrower to withdraw all or any part of the balance on deposit in said collateral account. If a collateral account is so established Borrower agrees that it will promptly deliver to the Collateral Agent for deposit into said collateral account, all payments on accounts and chattel paper received by it. All such payments shall be delivered to the Collateral Agent in the form received (except for Borrower's endorsement where necessary). Until so deposited, all payments on accounts and chattel paper received by Borrower shall be held in trust by Borrower for and as the property of the Secured Parties and shall not be commingled with any funds or property of Borrower.

5. <u>REMEDIES</u>. Upon the occurrence of an Event of Default and at any time thereafter, the Collateral Agent may exercise, on behalf and for the benefit of the Secured Parties, any one or more of the following rights in addition to any other remedies available under the Debentures or available at law: (i) exercise and enforce any or all rights and remedies available after default to a secured party under the Uniform Commercial Code ("<u>UCC</u>") in effect in the applicable jurisdiction, including but not limited to the right to take possession of any Collateral, proceeding without judicial process or by judicial process (without a prior hearing or notice thereof, which Borrower hereby expressly waives), and the right to sell, lease or otherwise dispose of or use any or all of the Collateral; (ii) the Collateral Agent may require Borrower to assemble the Collateral and make it available to the Collateral Agent at a place to be designated by the Collateral Agent which is reasonably convenient to both parties; (iii) exercise its rights under any lessors' agreements regardless of whether or not Borrower is in default under such leases; and (iv) exercise or enforce any or all other rights or remedies available to the Secured Parties by law or agreement against the Collateral, against Borrower or against any other Person or property. The Collateral Agent is hereby granted a non-exclusive, worldwide and royalty-free license to use or otherwise exploit all trademarks, franchises, copyrights and patents of Borrower that the Collateral Agent deems necessary or appropriate to the disposition of any Collateral. If notice to Borrower of any intended disposition of Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in <u>Section 7(c)</u> hereof) at least ten (10) calendar days prior to the date of intended disposition or other action.

6. <u>APPOINTMENT OF AGENT; INDEMNIFICATION OF AGENT</u>. (a) Each Secured Party appoints Lake Street Landlords, LLC to act, and Lake Street Landlords, LLC agrees to act, as Collateral Agent for such Secured Party pursuant to the terms of this Agreement, the Debentures, that certain Subordination Agreement between each Secured Party (the "<u>Subordination Agreement</u>") and all other agreements or instruments related thereto (collectively, the "<u>Loan Documents</u>") and to execute and enter into the Loan Documents and (i) to take actions on such Secured Party's behalf that are expressly permitted under the provisions of this Agreement, the Loan Documents and all other instruments or agreements relating hereto or thereto, and (ii) to exercise such powers and perform such duties as are, in each case, expressly delegated to the Collateral Agent by the terms hereof and thereof. Collateral Agent shall have the sole power and authority to declare a default or an Event of Default under the Debentures, waive any default or an Event of Default under the Debentures and exercise any rights and remedies under the Debentures, THIS SECURITY AGREEMENT. The Collateral Agent may be removed with the written consent of the Majority Investors (as such term is defined in the Debentures). The Collateral Agent may resign at any time for any reason by submitting a written resignation to the Majority Investors. Such resignation shall be effective upon the date set forth thereon. Vacancies as a result of the removal, resignation, death or incapacity (as applicable) of the Collateral Agent shall be filled by the Majority Investors.

THE COLLATERAL AGENT HAS CONSENTED TO SERVE AS COLLATERAL AGENT HEREUNDER ON THE EXPRESS UNDERSTANDING, AND EACH SECURED PARTY, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT, SHALL BE DEEMED TO HAVE AGREED, THAT THE COLLATERAL AGENT SHALL HAVE NO DUTY AND SHALL OWE NO OBLIGATION OR RESPONSIBILITY (FIDUCIARY OR OTHERWISE), REGARDLESS OF WHETHER AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, TO SUCH SECURED PARTIES, OTHER THAN THE DUTY TO PERFORM ITS EXPRESS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS IN ACCORDANCE WITH THEIR RESPECTIVE TERMS, SUBJECT IN ALL EVENTS TO THE PROVISIONS OF THIS AGREEMENT LIMITING THE RESPONSIBILITY OR LIABILITY OF THE COLLATERAL AGENT HEREUNDER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Collateral Agent shall not be required to ascertain or inquire as to (i) any statement, warranty or representation made herein or in connection herewith or in connection with any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Collateral Agent. Neither the Collateral Agent nor any officer, agent or representative thereof shall be personally liable for any action taken or omitted to be taken by any such Person in connection with this Agreement or any Loan Document except for its own gross negligence or willful misconduct or, in the case of the Collateral Agent, in the case of the loss of any moneys in the possession of the Collateral Agent, for the failure of the Collateral Agent to accord such moneys the same care as a prudent person in the same or similar circumstances would accord its own assets. The Collateral Agent may execute any of the powers granted to it under this Agreement and perform any duty hereunder either directly or by or through sub-agents or attorneys-in-fact, and shall not be responsible for the negligence (including gross negligence) or misconduct (including willful misconduct) of any sub-agents or attorneys-in-fact selected by it with the care that a prudent person in similar circumstances would have employed in such selection. The Collateral Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective affiliates. The exculpatory provisions set forth in this <u>Section 6</u> and in the other Loan Documents shall apply to any such sub-agent and to the affiliates of the Collateral Agent and any such sub-agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Whenever in the performance of its duties under this Agreement the Collateral Agent shall deem it necessary or desirable that a matter be proved or established with respect to Borrower or any other Person in connection with the taking, suffering or omitting of any action hereunder by the Collateral Agent, such matter may be conclusively deemed to be proved or established by a certificate executed by an officer of such Person, and the Collateral Agent shall have no liability with respect to any action taken, suffered or omitted in reliance thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Collateral Agent shall be fully protected in relying upon any resolution, statement, certificate, instrument, opinion, report, notice (including any notice of an Event of Default or of the cure or waiver thereof), request, consent, order or other paper or document or oral conversation (including, telephone conversations) which it in good faith believes to be genuine and correct and to have been signed, presented or made by the proper party. The Collateral Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any notice, certificate or opinion furnished to the Collateral Agent in connection with this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Collateral Agent shall not be deemed to have actual, constructive, direct or indirect notice or knowledge of the occurrence of any Event of Default unless and until the Collateral Agent shall have received written notice thereof from any Secured Party or Borrower. The Collateral Agent shall have no obligation whatsoever either prior to or after receiving such a notice to inquire whether an Event of Default has, in fact, occurred and shall be entitled to rely conclusively, and shall be fully protected in so relying, on any notice so furnished to it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The remedies of the Collateral Agent hereunder and under the other Loan Documents shall include, but not be limited to, the disposition of the Collateral by foreclosure or other sale and the exercising of all remedies of a secured lender under the UCC, bankruptcy laws or similar laws of any applicable jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) To the extent the exercise of the rights, powers and remedies of the Collateral Agent in accordance with this Agreement requires that any action be taken by any Secured Party, such Secured Party shall take such action and cooperate with the Collateral Agent to ensure that the rights, powers and remedies of all Secured Parties are exercised in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Collateral Agent may at any time and from time to time following the occurrence and during the continuance of an Event of Default, in the Collateral Agent's own name, in the name of a nominee of the Collateral Agent, or in the name of Borrower communicate (by mail, telephone or otherwise) with the account debtors of Borrower, parties to contracts with Borrower and obligors with respect to instruments of Borrower to verify with such Persons, to the Collateral Agent's satisfaction, the existence, amount, terms of, and any other matter relating to, accounts, instruments, chattel paper, payment intangibles and/or other receivables that are Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Borrower irrevocably authorizes the Collateral Agent and appoints the Collateral Agent as its attorney in fact (i) at any time and from time to time in the sole discretion of the Collateral Agent (1) to execute on behalf of Borrower as debtor and to file financing statements necessary or desirable in the Collateral Agent's reasonable discretion to perfect and to maintain the perfection and priority of the Secured Parties' Security Interest in the Collateral, (2) to file a reproduction of this Agreement or any financing statement with respect to the Collateral as a financing statement and to file any other financing statement or amendment of a financing statement (which would not add new collateral or add a debtor) in such offices as the Collateral Agent in its reasonable discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the Secured Parties' Security Interest in the Collateral, and (3) to discharge past due taxes, assessments, charges, fees or liens on the Collateral; (ii) at any time following the occurrence and during the continuance of an Event of Default, (1) to endorse and collect any cash proceeds of the Collateral and to apply the proceeds of any Collateral received by the Collateral Agent to the Secured Obligations, (2) to demand payment or enforce payment of the receivables in the name of the Collateral Agent or Borrower and to endorse any and all checks, drafts, and other instruments for the payment of money relating to the receivables, (3) to sign Borrower's name on any invoice or bill of lading relating to Borrower's receivables, drafts against any account debtor of Borrower, assignments and verifications of Borrower's receivables, (4) to exercise all of Borrower's rights and remedies with respect to the collection of Borrower's receivables and any other Collateral, (5) to settle, adjust, compromise, extend or renew Borrower's receivables (including, without limitation, making, settling and adjusting claims in respect of Collateral under policies of insurance and making all determinations and decisions with respect thereto), (6) to settle, adjust or compromise any legal proceedings brought to collect Borrower's receivables, (7) to prepare, file and sign Borrower's name on a proof of claim in bankruptcy or similar document against any account debtor of Borrower, (8) to prepare, file and sign any Borrower's name on any notice of lien, assignment or satisfaction of lien or similar document in connection with Borrower's receivables, (9) to change the address for delivery of mail addressed to Borrower to such address as the Collateral Agent may designate and to receive, open and dispose of all mail addressed to Borrower; and (iii) to do all other acts and things reasonably necessary to carry out the terms of this Agreement; and Borrower agrees to reimburse the Collateral Agent on demand for any reasonable payment made or any reasonable documented expense incurred by the Collateral Agent in connection with any of the foregoing; provided that this authorization shall not relieve Borrower of any of its obligations under this Agreement or any other Loan Document. All acts of said attorney or designee are hereby ratified and approved by Borrower. The powers conferred on the Collateral Agent, for the benefit of the Collateral Agent and the Secured Parties, under this <u>Section 6(i)</u> are solely to protect the Secured Parties' interests in the Collateral and shall not impose any duty upon the Collateral Agent or any Secured Party to exercise any such powers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) Neither the Collateral Agent nor any Secured Party shall be obligated to preserve any rights Borrower may have against any other Person, to realize on the Collateral at all or in any particular manner or order, or to apply any cash proceeds of Collateral in any particular order of application. Further, the Collateral Agent shall have no obligation to clean-up or otherwise prepare the Collateral for sale. The Collateral Agent and each Secured Party shall use reasonable care with respect to the Collateral in its possession or under its control. Neither the Collateral Agent nor any Secured Party shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Collateral Agent or such Secured Party, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent that applicable law imposes duties on the Collateral Agent to exercise remedies in a commercially reasonable manner, Borrower acknowledges and agrees that it would be commercially reasonable for the Collateral Agent (i) to fail to incur expenses deemed significant by the Collateral Agent to prepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third parry consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors or other Persons obligated on Collateral or to remove liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against account debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as Borrower, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Collateral Agent against risks of loss, collection or disposition of Collateral or to provide to the Collateral Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Collateral Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Collateral Agent in the collection or disposition of any of the Collateral. Borrower acknowledges that the purpose of this <u>Section 6(j)</u> is to provide non-exhaustive indications of what actions or omissions by the Collateral Agent would be commercially reasonable in the Collateral Agent's exercise of remedies against the Collateral and that other actions or omissions by the Collateral Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this <u>Section 6(j)</u>. Without limitation upon the foregoing, nothing contained in this <u>Section 6(j)</u> shall be construed to grant any rights to Borrower or to impose any duties on the Collateral Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this <u>Section 6(j)</u>.

7. <u>SUBORDINATION</u>. Notwithstanding anything to the contrary contained in or implied by the other provisions of this Agreement, the Secured Parties and Collateral Agent acknowledge that, after the execution of the Subordination Agreement, the security agreement granted by this Agreement shall be subordinate to St. Cloud Capital Partners III SBIC, L.P. and any other senior lenders with which the Collateral Agent may otherwise authorize to have a senior lien. The Collateral Agent may authorize the subordination of the Secured Parties' security interest under this Agreement.

8. <u>MISCELLANEOUS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement can be waived, modified or amended only explicitly in a writing signed by the Collateral Agent. A waiver signed by the Collateral Agent on behalf of the Secured Parties shall be effective only in the specific instance and for the purpose given.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Mere delay or failure to act shall not preclude the exercise or enforcement of any of the Secured Parties' rights or remedies. All rights and remedies of the Secured Parties shall be cumulative and may be exercised singularly or concurrently by the Collateral Agent on behalf of the Secured Parties, at the Collateral Agent's option, and all shall be available to the Collateral Agent for the benefit of the Secured Parties until all the Secured Obligations have been paid and performed in full, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor bar the exercise or enforcement of any other.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Any notice, demand, request, instruction, correspondence, or other document required or permitted to be given hereunder by any party to the other shall be in writing and delivered (i) in person, (ii) by a nationally recognized overnight courier service requiring acknowledgment of receipt of delivery, (iii) by United States certified mail, postage prepaid and return receipt requested, or (iv) by facsimile, as follows:

if to Borrower, to:

Appreciate Holdings, Inc.

6101 Baker Rd Suite 200

Minnetonka, MN 55345

Attn: Chris Laurence

With a copy (which will not constitute notice) to:

Winthrop & Weinstine, P.A.

225 South Sixth Street, Suite 3500

Minneapolis, MN 55402

Facsimile: (612) 604-6800

Attn: Dean D. Willer

if to a Secured Party, to the addresses set forth on such Secured Party's respective signature page(s) to this Agreement, in each case, with a copy to Collateral Agent.

if to the Collateral Agent, to:

Lake Street Landlords, LLC

Northern Pacific Group

315 Lake Street East

Wayzata, MN 55391

Attention: Scott Honour

Email: shonour@northernpacificgroup.com

Notice shall be deemed given, received, and effective on: (i) if given by personal delivery or courier service, the date of actual receipt by the receiving party, or if delivery is refused on the date delivery was first attempted; (ii) if given by certified mail, the third day after being so mailed if posted with the United States Postal Service; and (iii) if given by facsimile, the date on which the facsimile is transmitted if confirmed by transmission report during the transmitter's normal business hours, or at the beginning of the next business day after transmission if confirmed at any time other than the transmitter's normal business hours. Any Person entitled to notice may change any address to which notice is to be given to it by giving notice of such change of address as provided in this <u>Section 8(c)</u>. The inability to deliver notice because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date such attempt was first made. A party's authorized counsel may deliver any notice on such party's behalf.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This Agreement shall be binding upon and inure to the benefit of Borrower, each Secured Party and the Collateral Agent and their respective heirs, representatives, successors and assigns and shall take effect when signed by Borrower and delivered to the Secured Parties, and Borrower waives notice of the Secured Parties' or the Collateral Agent's acceptance hereof. The Secured Parties or the Collateral Agent on behalf of the Secured Parties may execute this Agreement if appropriate for the purpose of filing, but the failure of any such party to execute this Agreement shall not affect or impair the validity or effectiveness of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware and, unless the context otherwise requires, all terms used herein which are defined in the UCC of Minnesota or Delaware, as applicable for Borrower and each subsidiary, as in effect in said state shall have the meanings therein stated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) If any provision or application of this Agreement is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications which can be given effect, and this Agreement shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. All representations and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation and payment of the Secured Obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) All actions and proceedings arising out of, or relating to, this Agreement shall be heard and determined in any state or federal court sitting in the County of Hennepin, State of Minnesota. Each of the parties, by execution and delivery of this Agreement, (i) expressly and irrevocably, consents and submits to the personal jurisdiction of any of such courts, (ii) consents to the service of any complaint, summons, notice or other process relating to any such action or proceeding by delivery thereof to such party by hand or by certified mail, delivered or addressed as set forth in <u>Section 8(c)</u> hereof, (iii) waives any claim or defense in any such action or proceeding based on any alleged lack of personal jurisdiction, improper venue or *forum non conveniens* or any similar basis and (iv) agrees not to directly or indirectly bring or assert and claim, action or other proceeding in any jurisdiction or forum other than the state and federal courts sitting in the County of Hennepin, State of Minnesota. Each party agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY TO THE MAXIMUM EXTENT PERMITTED BY LAW IN ANY ACTION OR OTHER LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS IT CONTEMPLATES. THIS WAIVER APPLIES TO ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH OF THE PARTIES ACKNOWLEDGES THAT IT HAS RECEIVED THE ADVICE OF COMPETENT COUNSEL IN CONNECTION HEREWITH.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Collateral Agent and the Secured Parties each acknowledges that (a) the Loan Documents were prepared by legal counsel for the Borrower, which does not represent the Collateral Agent or the Secured Parties; (b) the Collateral Agent and the Secured Parties each has consulted with and has been represented by legal counsel of such party's own choice in connection with the meaning, interpretation, negotiation, drafting and effect of the Loan Documents or has had to opportunity to do so but has chosen not to do so; and (c) the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Loan Documents or any exhibits or amendments to the Loan Documents.

*[signature page to follow]*

**IN WITNESS WHEREOF**, Borrower has executed and delivered this Security Agreement as of the date and year first above written.

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| | |
|:---|:---|
| APPRECIATE HOLDINGS, INC. | APPRECIATE HOLDINGS, INC. |
| By: |  |
| Name: | Chris Laurence |
| Its: | Chief Executive Officer |

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| | |
|:---|:---|
| **AGREED AND ACCEPTED:** | **AGREED AND ACCEPTED:** |
| Lake Street landlords, llc | Lake Street landlords, llc |
| as Collateral Agent for the benefit of the | as Collateral Agent for the benefit of the |
| Secured Parties | Secured Parties |
| By: |  |
| Name: | Scott Honour |
| Its: | Chairman |

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SIGNATURE PAGE TO SECURITY AGREEMENT – Appreciate Holdings, Inc.

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| | |
|:---|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** | **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: | SECURED PARTY: |
| Thomas J Holland Revocable Trust<br> dated Sept 5 2007 | Thomas J Holland Revocable Trust<br> dated Sept 5 2007 |
| By: |  |
| Name: | Thomas J Holland |
| Its: | Trustee |

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| |
|:---|
| Address: |
| Facsimile: |

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SIGNATURE PAGE TO SECURITY AGREEMENT – Appreciate Holdings, Inc.

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| | |
|:---|:---|
| By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above: | By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above: |
| SECURED PARTY: | SECURED PARTY: |
| By: |  |
| Name: | Eric Bunting |

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---

| |
|:---|
| Address: |
| Facsimile: |

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| |
|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: |
| Macabel Holdings, Inc. |
| By: |
| Name: |
| Its: |

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---

| |
|:---|
| Address: |
| Facsimile: |

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| |
|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: |
| Laurie Hawkes TTEE LAH Trust |
| By: |
| Name: |
| Its: |

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---

| |
|:---|
| Address: |
| Facsimile: |

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 ****

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| | |
|:---|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** | **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: | SECURED PARTY: |
| By: |  |
| Name: | Christopher Laurence |

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---

| |
|:---|
| Address: |
| Facsimile: |

---

 

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| | |
|:---|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** | **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: | SECURED PARTY: |
| By: |  |
| Name: | Milton Joseph Beck |

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---

| |
|:---|
| Address: |
| Facsimile: |

---

 

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| |
|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: |
| The Sanderson Family Trust |
| By: |
| Name: |
| Its: |

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---

| |
|:---|
| Address: |
| Facsimile: |

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| | |
|:---|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** | **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: | SECURED PARTY: |
| Honour Capital Partnership LP | Honour Capital Partnership LP |
| By: |  |
| Its: | General Partner |

---

Signed:   <br> Name:   <br> Its:  

Address:

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| | |
|:---|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** | **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: | SECURED PARTY: |
| By: |  |
| Name: | Gloria H Fu |

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---

| |
|:---|
| Address: |
| Facsimile: |

---

 

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| | |
|:---|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** | **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** |
| SECURED PARTY: | SECURED PARTY: |
| By: |  |
| Name: | Marcy A Haymaker |

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| |
|:---|
| Address: |
| Facsimile: |

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| | |
|:---|:---|
| **By signing below, I agree to the terms and conditions hereof and to the appointment of the Collateral Agent as set forth above:** | |
| (eNTITY) | (individual) |
| SECURED PARTY: | SECURED PARTY: |
| By: | Signed: |
| Name: | Name: |
| Its: |  |
| Address: | Address: |
| Facsimile: | Facsimile: |

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<u>EXHIBIT A</u>

PERMITTED INTERESTS

&nbsp;&nbsp;&nbsp;&nbsp;1. Liens in favor of St. Cloud Capital Partners III SBIC, L.P. in connection
with that certain Securities Purchase Agreement, dated as of November 7, 2016 (as the same was and may be amended, restated, replaced,
renewed, supplemented, refinanced, extended or otherwise modified or restated from time to time).

## Exhibit 10.2

**Exhibit 10.2**

SUBORDINATION AGREEMENT

THIS SUBORDINATION AGREEMENT (this "<u>Agreement</u>") is made and entered into as of March ___, 2023, by and among Appreciate Holdings, Inc., a Delaware corporation, RW National Holdings, LLC, a Delaware limited liability company, and RW Opco, LLC, a Delaware limited liability company (regardless of whether one or more, collectively, the "<u>Borrower</u>") and the undersigned (the "<u>Subordinated Creditor</u>"), in favor of St. Cloud Capital Partners III SBIC, LP, a Delaware limited partnership ("<u>Senior Lender</u>"). The Credit Agreement (as defined below) requires that Borrower and Subordinated Creditor enter into this Agreement as a condition to entering into a Subordinated Loan (as defined below) with Subordinated Creditor. Subordinated Creditor acknowledges that it has received value under the Credit Agreement in entering into this Agreement or any other subordination agreement requested by any other lender to the Borrower or its affiliates. In consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. <u>Definitions</u>. As used herein, the following capitalized
terms shall have the following meanings:

"<u>Credit Agreement</u>" shall mean, collectively, (i) that certain Securities Purchase Agreement, dated as of November 7, 2016 (as the same has been or may be amended, restated, replaced, renewed, supplemented, refinanced, extended or otherwise modified or restated from time to time) among the Senior Lender, Borrower and certain of Borrower's affiliates; and (ii) that certain Loan Agreement, dated January 2, 2019 (as the same has been or may be amended, restated, replaced, renewed, supplemented, refinanced, extended or otherwise modified or restated from time to time), among Bridgewater Bank (the successor in interest to Senior Lender), Borrower and certain of Borrower's affiliates.

"<u>Senior Claim</u>" shall mean all of Borrower's indebtedness and liabilities to Senior Lender now existing or hereafter arising, direct or indirect, absolute or contingent, joint or several, whether as maker, endorser, surety, guarantor or otherwise, as well as the notes or other instruments evidencing the same, and any extensions, renewals, restatements or refinancings thereof, including, without limitation, the obligations of Borrower to Senior Lender under the Credit Agreement and the documents related thereto.

"<u>Subordinated Claim</u>" shall mean all of Borrower's indebtedness and liabilities to the Subordinated Creditor, now existing or hereafter arising, direct or indirect, absolute or contingent, joint or several, whether as maker, endorser, surety, guarantor or otherwise, as well as the notes or other instruments evidencing the same, and any extensions, renewals, restatements or refinancings thereof, including, without limitation, the obligations of Borrower to the Subordinated Creditor under the Subordinated Loans.

"<u>Subordinated Loans</u>" shall mean those certain Series 1 Subordinated Convertible Debentures purchased by the Subordinated Creditor at this time and from time to time, whether or not evidenced by a promissory note or other debt instrument.

2. <u>Limitations on Payment</u>. Subordinated Creditor will not receive, or take action to collect or enforce, payment from Borrower, and Borrower will not make payment to Subordinated Creditor of the Subordinated Claim or any part thereof, without the prior written consent of Senior Lender; <u>provided that</u> so long as no Event of Default has occurred and is then occurring, Borrower may pay regularly scheduled principal and interest payments on the Subordinated Loans when due so long as, after giving effect to such payments, Borrower continues to be in compliance with all terms, conditions and covenants contained in the Credit Agreement. Except for the receipt of regularly scheduled principal and interest payments as set forth in the immediately preceding sentence, Subordinated Creditor will not, without the prior written consent of Senior Lender, receive or take any action to collect or enforce, payment in cash, by setoff or otherwise, of the Subordinated Claim or any part thereof from Borrower or any trustee in bankruptcy, receiver, or other liquidator of any part of Borrower's property, or from any other person. Until payment in full of the Senior Claim, any payment received by Subordinated Creditor pursuant to the immediately preceding sentence shall promptly be delivered to Senior Lender for application to the Senior Claim, in such order as Senior Lender shall elect. Nothing herein shall prevent Subordinated Creditor from converting the Subordinated Loans to Equity Securities (as such term is defined therein) OR ENTITLE SENIOR LENDER TO ANY SECURITIES, PROCEEDS OR OTHER VALUE AS A RESULT OF SUCH CONVERSION. UPON THE CONVERSION of the subordinated loans into equity securities, this agreement shall terminate and shall no longer be in force or effect.

3. <u>Priority of Security Interest</u>. Any now existing or hereafter arising security interest in Borrower's now owned or hereafter acquired property held from time to time by Senior Lender shall have priority in all respects as to any now existing or hereafter arising security interests in Borrower's now owned or hereafter acquired property held from time to time by Subordinated Creditor. The priorities specified herein are applicable irrespective of the time or order of attachment or perfection of security interests or the time or order of filing of financing statements or the giving or failure to give notice of the acquisition or expected acquisition of any security interest by Senior Lender or Subordinated Creditor.

4. <u>Senior Lender Priority</u>. In the event of the bankruptcy of, or the appointment of a trustee, receiver or other representative or liquidator for any of the property of Borrower, or in the event Borrower shall become the subject of any proceeding of any character under any federal or state bankruptcy or insolvency act or law, all moneys and other property allocated or allocable to the Subordinated Claim and which would be payable or deliverable to Subordinated Creditor in the absence of the provisions of this Agreement shall be paid and delivered directly to Senior Lender for application by Senior Lender to the Senior Claim, in such order as Senior Lender shall elect, until full payment of the Senior Claim with the excess, if any, to be paid to the Subordinated Creditor, regardless of whether Subordinated Creditor or Senior Lender or both file a claim on behalf of the Subordinated Claim in any such proceeding. Senior Lender is hereby irrevocably appointed attorney-in-fact for Subordinated Creditor with full power to act in the place and stead of Subordinated Creditor in all matters relating to or affecting the Subordinated Claim, until full payment of all Senior Claims, including the right to make, present, file and vote such proofs of claim against Borrower on account of all or any part of said Subordinated Claim, as Senior Lender may deem advisable and to receive and collect any and all dividends or other payments ("<u>Dividends</u>") made thereon and to apply the same on account of the Senior Claim. The Subordinated Creditor will execute and deliver to the Senior Lender such instruments as may be required by Senior Lender to enforce any and all such Subordinated Claim, to effectuate the aforesaid power of attorney and to effect collection of any and all Dividends which may be made at any time on account thereof. As collateral securing payment of the Senior Claim, Subordinated Creditor hereby transfers and assigns to the Senior Lender the Subordinated Claim and all collateral security and guaranties therefor to which Subordinated Creditor may be entitled. Senior Lender may file one or more financing statements concerning any security interest hereby created without the signature of Subordinated Creditor.

5. <u>Pay Over of Funds</u>. In the event that Subordinated Creditor receives any payment or property (other than Equity Securities received as a result of the conversion of the Subordinated Loan) on the Subordinated Claim in violation of the terms of this Agreement, such payments shall be held in trust by Subordinated Creditor and Subordinated Creditor will forthwith pay over or deliver the same to Senior Lender to be held by Senior Lender as cash collateral securing the Senior Claim.

6. <u>Undertakings Unaffected</u>. Subordinated Creditor's undertakings herein shall not be affected or impaired by (a) any neglect or omission on the part of Senior Lender to look to or to preserve any collateral at any time securing payment of the Senior Claim, or (b) any act on the part of Senior Lender in releasing, cancelling or surrendering all or part of such collateral, or in extending the time for payment with respect to all or any part of the Senior Claim or such collateral, or in enforcing or realizing upon such collateral. No notice whatsoever need be given to Subordinated Creditor at any time of the Senior Claim or the amount or amounts thereof, whether now existing or hereafter arising, or any increase or decrease therein, or any payments thereof, or with respect to any collateral, or in any other respect.

7. <u>Limitation on Transfer</u>. Subordinated Creditor will not assign, pledge or otherwise transfer, or permit or suffer to be assigned, pledged or otherwise transferred, or execute any power of attorney with respect to, the Subordinated Claim or any part thereof, unless such assignee, pledger or transferee agrees in writing to be bound by the terms and conditions of this Agreement.

8. <u>Legend</u>. Each note or other instrument evidencing the Subordinated Claim shall forthwith if now outstanding and otherwise upon issuance be stamped or otherwise noted in writing upon the face thereof by Subordinated Creditor with a notation reading substantially as follows:

"This note or instrument is subject to a Subordination Agreement dated March 27, 2019, among maker and payee thereof and St. Cloud Capital Partners III SBIC, LP, which is made a part hereof by reference."

9. <u>Acceleration</u>. In the event of any breach of this Agreement, Senior Lender shall have the right, at its option, and in addition to any other rights Senior Lender may have, to declare the Senior Claim immediately due and payable without notice or demand.

10. <u>No Commitment to Extend Credit</u>. Nothing herein creates, or implies the existence of, any commitment on the part of Senior Lender to extend credit to Borrower.

11. <u>Continuing Nature of Subordination</u>. This Agreement shall be irrevocable and shall continue effective until the Subordinated Loans shall have been paid in full. This is a continuing agreement of subordination and Senior Lender may continue, at any time and without notice to Subordinated Creditor, to extend credit or other financial accommodations and loan monies to or for the benefit of Borrower on the faith hereof.

12. <u>GOVERNING LAW</u>. THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.

13. <u>COSTS, EXPENSES AND ATTORNEYS' FEES</u>. If any party hereto institutes any arbitration or judicial or administrative action or proceeding to enforce any provisions of this Agreement, or alleging any breach of any provision hereof or seeking damages or any remedy, the losing party or parties shall pay to the prevailing party or parties all costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of such prevailing party's in-house counsel), expended or incurred by the prevailing party or parties in connection therewith, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Senior Lender or any other person) relating to Borrower, Subordinated Creditor or any other person or entity.

14. <u>Notices</u>. Except as otherwise expressly provided herein, any notice required or desired to be served, given or delivered hereunder shall be in writing and shall be deemed to have been validly served, given or delivered upon receipt when personally delivered or sent by facsimile transmission or overnight courier, or when duly deposited in the United States mails, certified or registered, with proper postage prepaid, addressed to the party to be notified as follows:

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| | |
|:---|:---|
| If to Borrower, to: | Appreciate Holdings, Inc. |
|  | 6101 Baker Rd Suite 200 |
|  | Minnetonka, MN 55345 |
|  | Attn: Chris Laurence, Chief Executive Officer |

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With a copy (which will not constitute notice) to:

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| |
|:---|
| Winthrop & Weinstine, P.A. |
| 225 South Sixth Street, Suite 3500 |
| Minneapolis, MN 55402 |
| Attn: Dean D. Willer |

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If to Subordinated Creditor, to the address set forth on the signature page hereto.

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| | |
|:---|:---|
| If to Senior Lender: | St. Cloud Capital Partners III SBIC, LP |
|  | 10866 Wilshire Blvd., Suite 1450 |
|  | Los Angeles, CA 90024 |
|  | Attn: Ben Hom |

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Each party hereto may change its address for notice by giving notice to the other parties as provided herein.

15. <u>Further Assurances</u>. From time to time after the date hereof, at the request of Borrower and without further consideration, the Subordinated Creditor shall, from time to time, execute and deliver such additional instruments, documents, subordination agreements with any other lender(s) to the Borrower, conveyances or assurances and take such other actions as shall be necessary, or otherwise reasonably requested by another party, to confirm and assure the rights and obligations provided for in this Agreement or any other subordination agreement with a lender(s) to the Borrower and render effective the consummation of the transactions contemplated hereby.

16. <u>Miscellaneous</u>. This Agreement is binding not only upon Subordinated Creditor and Borrower, but also upon the heirs, representative, successors and assigns of each of them, and is enforceable not only by Senior Lender but also by its successors and any assignee of or participant in the Senior Claim, but shall not inure to the benefit of or be enforceable by any other party or subordinate the Subordinated Claim to any claim other than the Senior Claim. This Agreement may be executed in any number of counterparts, each of which shall be an original with the same effect as if the signatures thereto and hereto were upon the same document. This Agreement may be amended by the written consent of the Borrower, Collateral Agent and Senior Lender. The section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. The singular form of any word used in this Agreement shall include the masculine and feminine forms, and vice versa.

*[Signature Pages to Follow]*

 

IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of the day and year first above written.

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| | |
|:---|:---|
| BORROWER: | BORROWER: |
| APPRECIATE HOLDINGS, INC. | APPRECIATE HOLDINGS, INC. |
| RW National Holdings, LLC | RW National Holdings, LLC |
| RW Opco, LLC | RW Opco, LLC |
| By: |  |
| Name: | Chris Laurence |
| Its: | Chief Executive Officer |

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*[Additional Signature Page to Follow]*

 

*[Signature page - Subordination Agreement - St. Cloud Capital Partners III SBIC, LP]*

 

 

IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of the day and year first above written.

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| Thomas J Holland Revocable Trust dated Sept 5 2007 | Thomas J Holland Revocable Trust dated Sept 5 2007 |
| By: |  |
| Name: | Thomas J Holland |
| Its: | Trustee |

---

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| By: |  |
| Name: | Eric Bunting |

---

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| |
|:---|
| Subordinated Creditor: |
| Macabel Holdings, Inc. |
| By: |
| Name: |
| Its: |

---

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| Laurie Hawkes TTEE LAH Trust | Laurie Hawkes TTEE LAH Trust |
| By: |  |
| Name: | Laurie Hawkes |
| Its: | Trustee |

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| By: |  |
| Name: | Christopher Laurence |

---

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| By: |  |
| Name: | Milton Joseph Beck |

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| The Sanderson Family Trust | The Sanderson Family Trust |
| By: |  |
| Name: |  |
| Its: | Trustee |

---

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| Honour Capital Partnership LP | Honour Capital Partnership LP |
| By: |  |
| Its: | General Partner |
| Signed: |  |
| Name: |  |
| Its: |  |

---

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| By: |  |
| Name: | Gloria H Fu |

---

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| | |
|:---|:---|
| Subordinated Creditor: | Subordinated Creditor: |
| By: |  |
| Name: | Marcy A Haymaker |

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*[Signature page - Subordination Agreement - St. Cloud Capital Partners III SBIC, LP]*

IN WITNESS WHEREOF, the parties have executed this Subordination Agreement as of the day and year first above written.

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| |
|:---|
| SENIOR LENDER: |
| St. Cloud Capital Partners III SBIC, LP |
| Signed: |
| By: |
| Its: |

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*[Signature page - Subordination Agreement - St. Cloud Capital Partners III SBIC, LP]*

## Exhibit 10.3

**Exhibit 10.3**

**<u>AMENDMENT NO. 1</u>**

**<u>TO THE INVESTOR RIGHTS AGREEMENT</u>**

THIS AMENDMENT NO. 1 TO THE INVESTOR RIGHTS AGREEMENT (this "<u>Amendment</u>"), dated as of March 27, 2023 (the "<u>Effective Date</u>"), is made by and among (i) Appreciate Holdings, Inc. (formerly known as PropTech Investment Corporation II), a Delaware corporation ("<u>Appreciate</u>," the "<u>Company</u>," or "<u>PubCo</u>"); (ii) Lake Street Landlords, LLC, a Delaware limited liability company ("<u>Lake Street</u>"); (iii) each of the parties listed as a "Holder" on the signature pages attached hereto constituting, in the aggregate, more than fifty percent (50%) of the Registrable Securities Beneficially Owned (each, a "<u>Holder</u>" and, collectively, the "<u>Holders</u>"); and (iv) HC PropTech Partners II LLC, a Delaware limited liability company (the "<u>Sponsor</u>"). Each of Appreciate, Lake Street, the Holders, and the Sponsor may be referred to herein as a "<u>Party</u>" and collectively as the "<u>Parties</u>." Capitalized terms used but not otherwise defined herein shall have the respective meanings set forth in the Investor Rights Agreement (as defined below).

**<u>BACKGROUND</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A. Appreciate, Lake Street, all of the holders of Registrable Securities, and the Sponsor entered into that certain Investor Rights Agreement, dated as of November 29, 2022 (the "<u>Investor Rights Agreement</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B. In accordance with Section <u>4.4</u> of the Investor Rights Agreement, the Parties desire to amend the Investor Rights Agreement, and Lake Street and the Holders executing this Amendment beneficially own more than fifty percent (50%) of the Registrable Securities as required to amend the Investor Rights Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. The purpose of this Amendment is to exempt the persons listed on <u>Appendix 1</u> hereto and incorporated herein by reference from the Lock-Up Period as described in <u>Section 3.1(a)</u> of the Investor Rights Agreement for the sole purpose, and only to the extent necessary, to permit the pledge of or margin borrowing against the Registrable Securities which funding will result in financing for the Company. For the purposes of clarity, no holder shall be permitted to sell or transfer any securities other than as necessary to pledge such securities for a loan, which proceeds will be used to lend to the Company.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

**<u>AGREEMENT</u>**

&nbsp;&nbsp;&nbsp;&nbsp;1. <u>Capitalized Terms</u>. Capitalized terms, unless otherwise defined herein, shall have the meanings
ascribed to them in the Investor Rights Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;2. <u>Amendment to Section 3.1(b)</u> is hereby amended by adding the following sentence at the end of the
section:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Notwithstanding anything in Sections 3.1 or 3.2 of the Investor Rights Agreement, shares of Registrable
Securities Beneficially Owned held by the persons or entities listed on <u>Appendix 1</u> hereto and incorporated herein by reference,
shall not be subject to the Lock-Up Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The persons and entities listed on <u>Appendix 1</u> hereto confirm and acknowledge that the release from
the Lock Up Period is necessary to complete transactions necessary to provide the funding for their intended loans.

&nbsp;&nbsp;&nbsp;&nbsp;3. <u>Entire Agreement</u>. This Amendment shall supersede and replace any prior discussions or agreement
relating to this topic and any such prior agreements shall be null and void.

[The remainder of this page intentionally left blank]

IN WITNESS WHEREOF, each of the Parties has duly executed this Amendment No. 1 to the Investor Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **<u>PUBCO:</u>** | **<u>PUBCO:</u>** |
| **APPRECIATE HOLDINGS, INC.** | **APPRECIATE HOLDINGS, INC.** |
| /s/ Christopher Laurence | /s/ Christopher Laurence |
| Name: | Christopher Laurence |
| Title: | Chief Executive Officer |
| **<u>SPONSOR:</u>** | **<u>SPONSOR:</u>** |
| **HC PROPTECH PARTNERS II LLC** | **HC PROPTECH PARTNERS II LLC** |
| /s/ Thomas D. Hennessey | /s/ Thomas D. Hennessey |
| Name: | Thomas D. Hennessey |
| Title: | Managing Member |

---

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| | |
|:---|:---|
| **<u>LAKE STREET/HOLDERS:</u>** | **<u>LAKE STREET/HOLDERS:</u>** |
| **Lake Street Landlords, LLC** | **Lake Street Landlords, LLC** |
| **By: Northern Pacific Growth Investment Partners, L.P.** | **By: Northern Pacific Growth Investment Partners, L.P.** |
| **Its: Managing Member** | **Its: Managing Member** |
| **By: Northern Pacific Group GP I, LLC** | **By: Northern Pacific Group GP I, LLC** |
| **Its: General Partner** | **Its: General Partner** |
| /s/ Scott Honour | /s/ Scott Honour |
| Name: | Scott Honour |
| Title: | President |
| **LSS Sustainable SPAC LLC** | **LSS Sustainable SPAC LLC** |
| **By: Northern Pacific Growth Investment Partners, L.P.** | **By: Northern Pacific Growth Investment Partners, L.P.** |
| **Its: Managing Member** | **Its: Managing Member** |
| **By: Northern Pacific Group GP I, LLC** | **By: Northern Pacific Group GP I, LLC** |
| **Its: General Partner** | **Its: General Partner** |
| /s/ Scott Honour | /s/ Scott Honour |
| Name: | Scott Honour |
| Title: | President |
| **Christopher Laurence** | **Christopher Laurence** |
| /s/ Christopher Laurence | /s/ Christopher Laurence |
| Name: | Christopher Laurence |
| **Kevin Ortner** | **Kevin Ortner** |
| /s/ Kevin Ortner | /s/ Kevin Ortner |
| Name: | Kevin Ortner |

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**<u>Appendix 1</u>**

Thomas Hennessy

Daniel Hennessy