PART II AND III

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. The Information in this preliminary offering circular is not complete and may be changed. These securities may not be sold until the offering statement filed with the Securities and Exchange Commission is qualified. This preliminary offering circular is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 12, 2019.

PRELIMINARY OFFERING CIRCULAR

Up to      Shares of CaliberCos Inc. Class A Common Stock

CaliberCos Inc., a Delaware corporation (the “Company”, “Caliber”, “us” or “we”), is a leading vertically integrated regional private equity real estate sponsor providing a full suite of traditional real estate services. We own, operate, and invest in real estate both on our own and through our investment management platform. We are offering up to      shares and our selling securityholders are offering up to      million shares of our Class A Common Stock at $     per share. There is no minimum investment in CaliberCos Inc. Class A Common Stock (the “Caliber Class A Common Stock”).

We intend to offer the Caliber Class A Common Stock on a continuous basis directly through the Caliber website located at www.caliberIPO.com. This offering is being conducted on a “best-efforts” basis by the Company and its officers, which means that the parties will use commercially reasonable best efforts to offer to sell Caliber Class A Common Stock. The Company and its officers will not receive any commission or any other remuneration for any sales of Caliber Class A Common Stock.

The aggregate initial offering price of Caliber Class A Common Stock will not exceed $50,000,000 in any 12-month period. This includes the value of shares that may be sold by certain selling security holders as further set forth in this offering circular. We expect to offer Common Stock in this offering until the earlier of  (i) the date at which the maximum offering amount has been sold; (ii)            , 2020, the date that is twelve months from the date that this offering is qualified by the U.S. Securities and Exchange Commission (the “Commission) unless extended by us for an additional ninety (90) days, in our sole discretion, without notice to or consent from investors or (iii) the date at which the offering is earlier terminated by the Company in its sole discretion, which may occur at any time. The offering is being conducted on a best-efforts basis without any minimum aggregate investment target. The Company may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to the Company. Notwithstanding the foregoing, funds tendered by investors in connection with the sale of Class A Common Stock by the selling securityholders will not be made available to the Company.

We intend to offer and sell our Class A Common Stock in this offering to accredited investors and non-accredited investors. The proceeds of this offering, other than proceeds from the sale of Class A Common Stock by the selling securityholders, will be used primarily for general corporate purposes, including repayment of indebtedness and the cost of this offering. For more information on Caliber Class A Common Stock being offered, please see the sections entitled “SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS AND SELLING SECURITYHOLDERS” and “Plan of Distribution” beginning on pages 54 and 66 of this offering circular, respectively.

Caliber Class A Common Stock may be purchased by accredited investors and non-accredited investors. This offering circular does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of Caliber Class A Common Stock in any states where such offer or solicitation would be unlawful, prior to registration or qualification under the laws of any such state.

Shares Offered by the Company	Price Per Share to Public		Proceeds to Company(1)
Per Offered Share	​	$	​	$
Maximum Offering Amount	​	$	​	$	​

Shares Offered by the Selling Securityholders	Price Per Share to Public		Proceeds to Selling Securityholders
Per Offered Share	​	$	​	$
Maximum Offering Amount	​	$	​	$	​

(1)

Does not include expenses of the offering, including legal and accounting expenses and costs of blue sky compliance. Aggregate offering expenses payable by us are estimated to be approximately $     if

all shares offered are sold. We have agreed to pay WealthForge Securities, LLC (“WealthForge”) a basic transaction fee of 0.5% of the gross proceeds of this offering for the processing of investors in the offering. See “Plan of Distribution” for further information and details regarding compensation payable to WealthForge in connection with this offering.

We are an “emerging growth company” under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements. This Offering Circular follows the disclosure format of Part I of Form S-1 pursuant to the general instructions of Part II(a)(1)(ii) of Form 1-A.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.

This offering is inherently risky. See “Risk Factors” on page 7.

The approximate date of the proposed sale to the accredited and non-accredited investors is as soon as practicable after the offering is qualified by the Commission.

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. THE COMPANY MAY ELECT TO SATISFY ITS OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF THE COMPANY’S SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

Table of Contents

SUMMARY	1
RISK FACTORS	7
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	21
USE OF PROCEEDS	22
DILUTION	23
BUSINESS	24
CORPORATE OFFICE	30
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
MANAGEMENT	49
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS	52
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS AND SELLING SECURITYHOLDERS	54
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS	56
SECURITIES BEING OFFERED	62
ADDITIONAL REQUIREMENTS AND RESTRICTIONS	65
PLAN OF DISTRIBUTION	66
ERISA CONSIDERATIONS	70
INVESTMENT COMPANY ACT CONSIDERATIONS	72
REPORTS	74
LEGAL MATTERS	75
EXPERTS	75
FINANCIAL STATEMENTS	F-1
PART III — EXHIBITS	III-1
SIGNATURES	III-2

i

SUMMARY

This summary highlights information contained elsewhere in this offering circular and does not contain all of the information that may be important to you. You should read this entire offering circular carefully, including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial statements and related notes.

Please note that Caliber is not a traditional fund or asset manager but is instead a private equity sponsor that does not render investment advice to any investors in our Caliber sponsored projects. In this offering circular, we (i) refer to our Caliber sponsored projects in this prospectus as “funds”, (ii) refer to deferred compensation that we receive from our Caliber sponsored projects as “carried interests” and (iii) refer to total project assets as “Assets Under Management” or “AUM” despite our not possessing discretionary authority over such amounts nor do we render investment advice or hold ourselves out as investment advisors.

Unless the context otherwise requires, we use the terms “Caliber”, “Company”, “we”, “us” and “our” in this offering circular to refer to CaliberCos Inc., a Delaware corporation.

General

We are a leading, vertically integrated regional private equity real estate sponsor providing a full suite of traditional real estate services. We own, operate, and invest in real estate both on our own and through our individual operating companies. We manage all aspects of the real estate investment deal continuum including fundraising, asset acquisition, construction and development, property management, asset management, brokerage services, and asset disposition.

Since inception through December 31, 2018, we have raised approximately $283 million of capital from accredited investors and purchased real property at cost for an aggregate purchase price of approximately $237 million. Our aggregate net capital raised has increased at an average annual growth rate of 39% (from $29 million to $144 million) over the five-year period ended December 31, 2018. Caliber’s acquisition strategy and ability to successfully raise investment capital resulted in revenue of $70.7 million and adjusted EBITDA of $2.4 million for the year ended December 31, 2018, a year over year increase from 2017 of 10% and 2%, respectively. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Cautionary Statement Regarding Non-GAAP Measures” for a discussion of the components of adjusted EBITDA. As of December 31, 2018, none of our sponsored programs had suffered any loss of principal or projected interest; however, there can be no assurance that such performance will continue in the future.

At December 31, 2018 and 2017, our assets under management, or AUM of real property at cost, was approximately $249 million and $214 million, respectively, our capital under management, or Capital AUM was approximately $144 million and $107 million, respectively, and the value of our real property portfolio, or Fair Value AUM was approximately $375 million and $279 million, respectively. The following table summarizes the growth that we have experienced over the past two years, using a roll forward of market value of assets under management.

​	Year Ended December 31,
​	2018			2017
Consolidated Results	​	​	​	​	​	​
Total AUM Rollforward – @ Fair Value	​	​	​	​	​	​
Balance, Beginning	​	$	278,572,186	​	$	204,112,874
Assets Acquired	​	​	29,957,391	​	​	17,943,621
Construction/Renovation	​	​	13,016,662	​	​	25,421,170
Market Appreciation/(Depreciation)	​	​	64,926,964	​	​	42,339,202
Assets Sold	​	​	(11,916,203)	​	​	(11,244,681)
Balance, End	​	$	374,557,000	​	$	278,572,186

We have experienced significant growth in our asset portfolio and we expect to see increased growth and performance under the Caliber model (A significant driver of this growth is the release of our qualified opportunity zone fund, the Caliber Tax Advantaged Opportunity Zone Fund or CTAF, that we have

1

formed under the Opportunity Zone Provisions of the federal tax legislation. Investment of realized capital gains in the fund provides investors with potentially significant tax deferral and tax savings benefits. See page 27 for additional details). Our model puts our investors’ profit first. Unlike many other traditional asset managers, our annual fees are not influenced by the size of AUM (however, similar to traditional asset managers, we do earn a 35% carried interest on assets sold).

The Company’s operations are organized into eight reportable segments for management and financial reporting purposes, which are broadly separated in two categories; real estate services (Fund Management, Construction and Development, Property Management, Real Estate Brokerage) and real estate operations (Hospitality, Residential, Commercial, and Diversified). Each segment works closely together and plays a critical role in supporting our investment strategy by providing local market intelligence and real-time data for evaluating investments, generating proprietary transaction flow and creating value through efficient implementation of asset management strategies. We primarily earn revenue from our eight segments as follows:

•

Fund Management.   Fund management and similar fees earned for managing a Caliber sponsored fund. This includes an annual fee that is generally structured as a percentage of the capital raised into the fund, a one-time fee earned from raising member interests into a Caliber sponsored fund, and income generated from distribution and returns of capital from investments.

•

Construction and Development.   Fees and other charges earned as the general contractor on construction and remodeling services provided to our funds and other third parties.

•

Property Management.   Revenues and fees for property management services provided by the Company for third-party-owned properties, are generally based upon percentages of the rental revenue or base gross rent generated by such properties. Property management revenue also includes fees charged to third-party property management customers for leasing commissions, which are generally a flat fee or based on the amount of the new lease executed, with a minimum flat fee.

•

Brokerage.   We earn real estate brokerage commissions by acting as a broker for residential and commercial real estate owners and investors seeking to buy or sell properties, including investment properties, as well as primary residences. The brokerage additionally earns fees by acting as the broker of record in the acquisition and disposition of Company or fund assets.

•

Real Estate Sales.   Sales proceeds from the sale of our single-family homes.

•

Hospitality Revenue.   Revenues generated primarily by the rental operations of the hotel properties we own or manage. This primarily consists of revenue earned from room rentals, food and beverage sales, banquet and group sales and other hotel operating activities.

•

Rental Income.   Revenues generated primarily by the rental operations of the residential (multi-family and single-family), and commercial properties we own or manage.

•

Other.   Other revenues consist primarily of fees and other amounts received from third parties, earned in connection with services rendered by the Company for certain real estate transactions. In addition, sales of our assets from the Company’s portfolios or funds.

Our revenues have grown primarily as a result of growth in our asset base and service offerings. This has resulted in increased fees from assets under management, additional fees from new services, increased investment from our existing and new investors, and increased average investment size. We anticipate that our future growth will continue to depend in part on attracting new investors to our new and existing funds. We expect that many investors will be particularly interested in investing in our qualified opportunity zone fund, CTAF, based on considerable tax deferral and savings benefits provided from this type of investment under the Opportunity Zone Provisions. See page 27 for additional details regarding this fund. We plan to increase our sales and marketing spend to attract investors as well as continue to identify and acquire opportunistic real estate assets, using appropriate leverage. As we have invested more resources into our sales and marketing divisions and demonstrated success with previously completed deal cycles, we expect to be able to increase the velocity of investment dollars into our funds at a faster rate than in the past.

2

The following information summarizes the trend in our real estate services unconsolidated revenues and unconsolidated EBITDA for the past four years as a result of deploying this strategy.(1)

(1)

Unconsolidated real estate services represent the combined performance of all of Caliber’s real estate services segments and certain legacy assets that are wholly owned by the Company (ie. Caliber Auction Homes) which are included as a portion of the Residential Segment. This presentation reflects the underlying performance of the private equity real estate sponsor.

We have historically financed our operations primarily through a combination of operating cash flows, private offerings of our equity securities, and secured and unsecured debt. At December 31, 2018, we had approximately $7.3 million in corporate debt which carries interest rates ranging from 8.25% up to 12.0%, resulting in approximately $0.9 million in interest expense for the year. We plan on using approximately $7.3 million of the net proceeds of this offering to eliminate this debt in favor of more competitive financing which we believe will be readily available after the completion of this offering. For this reason, we believe we will be able to recognize substantial cost savings and generate increased cash flow from core operations, as well as enabling us to introduce more affordable financing from traditional sources to take advantage of market opportunities which may have previously been unavailable.

Strategy and Competitive Strengths

We are focused on creating wealth for our clients by providing access to high quality real estate investments. Caliber believes that capital organized privately into structured funds offers investors an optimal balance of risk-adjusted return and investment performance. By allowing investors, who may not otherwise be able to purchase a large asset, to participate with a minimum investment as low as $35,000, Caliber provides typical real estate investors access to sophisticated strategies and assets that they may not otherwise have.

While Caliber’s business model is in part analogous to that of a financial asset manager, our model is built on a full-service approach. We have complemented traditional asset management functions with construction, property management, and deal expertise that we believe creates a competitive advantage against other traditional asset managers’ models. Compared to non-traded REITs that often come with high cost structures for investors, we offer reduced product origination costs and fund-level fees. By eliminating many of the fees earned at the fund level, and sizing the remaining fees to cover Company overhead, Caliber aligns its profitability with that of its investors. For example, rather than charge a fund-level acquisition fee, as many non-traded REITs do, and then further hire and pay third party real estate brokers, Caliber eliminates the fund-level fee and acts as the broker directly, earning at or below market commissions. Similarly, as opposed to charging the fund a construction management fee and then further hire a third party general contractor, Caliber acts as the general contractor, controls the project, and eliminates the double layer of fees. We believe our approach allows us to drive down the cost burden that is borne by funds under a traditional asset management model, increase returns to investors of those funds, and generate long-term sustainable cash flows.

In addition, under Caliber’s approach, we distribute cash to fund investors where there is either a) current income from the investments (rents, etc.) or b) a capital event, such as a sale of an asset or a cash-out refinance. We see substantial opportunity in ensuring distributions are paid from asset income, not investor contributions or borrowed funds. Caliber’s approach offers investors, and their wealth managers, well-structured products with a management team aligned to their success.

3

Our competitive strengths include:

•

Extensive relationship and sourcing network.   We leverage our real estate services businesses in order to source deals for our funds. In addition, our management has extensive relationships with major industry participants in each of the markets in which we currently operate. Their local presence and reputation in these markets have enabled them to cultivate key relationships with major holders of property inventory, in particular, financial institutions, throughout the real estate community.

•

Targeted market opportunities.   We focus on markets that have a long-term trend of population growth and income improvement, with a particular focus on Arizona, Colorado, Nevada and Utah, which are states with business and investment-friendly state and local governments. We generally avoid engaging in direct competition in over-regulated and saturated markets.

•

Structuring expertise and speed of execution.   Prior real property acquisitions completed by us have taken a variety of forms, including direct property investments, joint ventures, participating loans and investments in performing and non-performing mortgages with the objective of long-term ownership. We believe we have developed a reputation of being able to quickly execute, as well as originate and creatively structure acquisitions, dispositions and financing transactions.

•

Vertically integrated platform for operational enhancement.   We have a hands-on approach to real estate investing and possess the local expertise in property management, leasing, construction management, development and investment sales, which we believe enable us to invest successfully in select submarkets.

•

Focus on the middle market.   Our focus on middle market opportunities offers our investors significant alternatives to active, equity investing that provide attractive returns to investors. This focus has allowed us to offer a diversified range of real estate investment opportunities, particularly for accredited investors.

•

Risk protection and investment discipline.   We underwrite our investments based upon a thorough examination of property economics and a critical understanding of market dynamics and risk management strategies. We conduct an in-depth sensitivity analysis on each of our acquisitions. This analysis applies various economic scenarios that include changes to rental rates, absorption periods, operating expenses, interest rates, exit values and holding periods. We use this analysis to develop our disciplined acquisition strategies.

CaliberCos Inc. was originally founded as Caliber Companies, LLC, organized under the laws of Arizona, and commenced operations in January 2009. In 2015, the Company was reorganized as CaliberCos Inc. as a Nevada corporation. In June 2018, we reincorporated in the State of Delaware. Our corporate office is located at 8901 E Mountain View Rd., Ste 150, Scottsdale, Arizona 85258. Our telephone number is (480) 295-7600. Our website address is www.caliberco.com. We do not incorporate information on or accessible through our website into this offering circular, and you should not consider any information on, or that can be accessed through our website as a part of this offering circular. In June 2019 we amended and restated our certificate of incorporation to (i) effect the authorization of Class A Common Stock and Class B Common Stock, which is identical in all respects to Class A Common Stock, but is entitled to 10 votes per share and is convertible at any time on a one-for-one basis into shares of Class A Common Stock, (ii) reclassify all shares of Common Stock owned by Jennifer Schrader, our President and Chief Operating Officer, and John C. Loeffler, II, our Chief Executive Officer, into Class B Common Stock.

4

The Offering

Securities offered by the Company

Up to [    ] shares of Caliber Class A Common Stock, offered by the Company and our officers on a best-efforts basis. For the avoidance of doubt, no shares of Class B Common Stock are being offered for sale pursuant to this Offering Circular.

Securities offered by the Selling Securityholders

Up to [    ] shares of Caliber Class A Common Stock, offered by the Selling Securityholders on a best-efforts basis.

Caliber Class A Common Stock

Caliber Class A Common Stock offered by the Company and the Selling Securityholders is priced at $     per share for the duration of this offering.

Principal Amount of Caliber Class A Common Stock

We will not issue securities hereby having gross proceeds in excess of  $50 million nor will we issue any securities under Regulation A having gross proceeds in excess of  $50 million, during any 12-month period. The securities we offer hereby will be offered on a continuous basis.

Regulation A Tier

Tier 2

Caliber Class A Common Stock Purchasers

Accredited investors pursuant to Rule 501 and non-accredited investors. Pursuant to Rule 251(d)(2)(C), non-accredited investors who are natural persons may only invest the greater of 10% of their annual income or net worth. Non-natural non-accredited persons may invest up to 10% of the greater of their net assets or revenues for the most recently completed fiscal year.

Securities outstanding prior to this Offering Circular

15,597,276 shares of Caliber Class A Common Stock, 12,474,692 shares of Caliber Class B Common Stock, and 1,657,396 shares of Series A Preferred Stock are issued and outstanding as of June 6, 2019(1).

Manner of Offering

See section titled “Plan of Distribution and Selling Securityholders” beginning on page 66.

How to Invest

Visit https://www.caliberipo.com.

Market for Caliber Class A Common Stock

There is no public market for the shares of Caliber Class A Common Stock. We will covenant to use our best efforts to cause our common stock to be listed on a national securities exchange within 12 months of the completion of this offering. However, there can be no assurance that we will be able to obtain such listing, or if we do obtain it, that a market will ever develop.

Use of Proceeds

If we sell $50,000,000 of gross proceeds from the sale of our securities under this offering circular, we estimate our net proceeds, after deducting estimated expenses, will be approximately $    . The proceeds of this offering will be used primarily for general corporate purposes, including repayment of indebtedness and the cost of this offering. See “Use of Proceeds.”

5

Termination of the Offering

The Offering will terminate upon the earlier of  (i) such time as all of the shares of Caliber Class A Common Stock have been sold pursuant to this offering circular; (ii)            , 2020, the date that is twelve months from the date that this offering is qualified by the U.S. Securities and Exchange Commission unless extended by us for an additional ninety (90) days, in our sole discretion, without notice to or consent from investors or (iii) the date at which the offering is earlier terminated by the Company in its sole discretion, which may occur at any time,
We reserve the right to terminate the Offering at any time and for any reason, without notice to or consent from any purchaser of shares of Caliber Class A Common Stock in the Offering.

Terms of the Offering

All subscriptions are irrevocable, subject to acceptance by the Company. We may accept or reject any subscription, in whole or in part, for any reason, in our sole discretion.

Selected Risks Associated with Our Business

Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this summary. These risks include, but are not limited to, the following:

•

Our business could be harmed by an economic slowdown and downturn in real estate asset values, property sales and leasing activities.

•

Poor performance of our funds would cause a decline in our revenue and results of operations and could adversely affect our ability to raise capital for future funds.

•

Decreases in the performance of the properties we manage are likely to result in a decline in the amount of property management fees and leasing commissions we generate.

•

Our business depends in large part on our ability to raise capital from investors. If we were unable to raise such capital, we would be unable to collect management fees or deploy such capital into investments, which would materially reduce our revenues and cash flow and adversely affect our financial condition.

•

The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could harm our business.

•

The Company is controlled by its executive officers.

•

There is no current market for any of our shares of stock.

(1)

Does not give effect to the conversion of shares of Series A Preferred Stock to Caliber Class A Common Stock, conversion of convertible debt securities issued by Caliber into Caliber Class A Common Stock, vesting of any issued and outstanding Caliber Class A Common Stock grants, and exercise of any warrants or stock options issued by Caliber outstanding as of December 31, 2018.

6

RISK FACTORS

Investing in Caliber Class A Common Stock involves a high degree of risk, and no assurance can be given that you will realize your investment objectives or that you will not lose your entire investment in our shares. You should carefully consider the following risks and uncertainties in addition to all other information included in this Offering Circular before purchasing shares of Caliber Class A Common Stock. There are numerous and varied risks that may prevent us from achieving our goals. If any of these risks actually occurs, our business, financial condition or results of operations may be materially adversely affected. You should invest in Caliber Class A Common Stock only if you can afford to lose your entire investment.

You should carefully review this section for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. YOU SHOULD CONSULT WITH YOUR ATTORNEY OR FINANCIAL ADVISOR PRIOR TO MAKING AN INVESTMENT.

Risks Related to Our Business

The success of our business is significantly related to general economic conditions and the real estate industry, and, accordingly, our business could be harmed by an economic slowdown and downturn in real estate asset values, property sales and leasing activities.

Our business is significantly related to general economic conditions in the real estate industry. The real estate markets in which we operate are cyclical and depend on national and local economic conditions. Many factors that are beyond our control affect the real estate market and could affect our ability to sell properties and other investments for the price, on the terms or within the time frame desired. These factors include general economic conditions, the availability of financing, interest rates and other factors, including supply and demand. In addition, the economic condition of each local market where we operate may depend on one or more key industries within that market, which, in turn, makes our business sensitive to the performance of those industries.

We have in the past and expect in the future to be negatively impacted by, periods of economic slowdown or recession, and corresponding declines in the demand for real estate and related services, within the markets in which we operate. The previous recession and the downturn in the real estate market resulted in and may in the future result in:

•

a decline in actual and projected sale prices of real estate properties

•

higher interest rates, higher loan costs, less desirable loan terms and a reduction in the availability of mortgage loans;

•

a decrease in the availability of lines of credit and other sources of capital used to purchase real estate investments; and

•

a general decline in rents due to defaulting tenants or less favorable terms for renewed or new leases.

We could lose part or all of our investments in real estate assets, which could have a material adverse effect on our financial condition and results of operations.

There is the inherent possibility in all of our real estate investments that we could lose all or part of our investment. Real estate investments are generally illiquid, which may affect our ability to change our asset mix in response to changes in economic and other conditions. The value of our investments can also be diminished by:

•

civil unrest, acts of war and terrorism and acts of God, including earthquakes, hurricanes and other natural disasters (which may result in uninsured or underinsured losses);

7

•

the impact of present or future legislation (including environmental regulation, changes in laws concerning foreign ownership of property, changes in tax rates, changes in zoning laws and laws requiring upgrades to accommodate disabled persons) and the cost of compliance with these types of legislation; and

•

liabilities relating to claims, to the extent insurance is not available or is inadequate

The historical returns attributable to our funds should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our common stock.

An investment in our common stock is not an investment in any of our funds. You should not conclude that positive performance of our funds will necessarily result in positive returns on an investment in our common stock. The historical performance of our funds is relevant to us primarily insofar as it is indicative of management fees we have earned in the past and may earn in the future and our reputation and ability to raise new funds.

In addition, the historical returns of our funds may not be indicative of any future returns of these or from any future funds we may raise due for a number of factors including:

•

market conditions during previous periods may have been more favorable for generating positive performance than the market conditions we may experience in the future; and

•

our funds’ returns may have previously benefited from investment opportunities and general market conditions that may not recur, and we may not be able to achieve the same returns or profitable investment opportunities or deploy capital as quickly.

We incur risks with respect to each segment of our business. The decline of any single segment could impact our business.

We derive revenues in substantial part from:

•

construction and development fees, which are based on the work completed on our fund assets or other third-party projects

•

capital raising fees, which are based generally on the amount of capital raised into or invested in our funds;

•

fund management fees, which are based generally on the amount of capital committed to or invested in our funds;

•

property management fees are derived from overseeing the day to day operation of properties we acquire and sell; and

•

brokerage commissions derived from the purchase and sale of properties for our funds and others.

The reduction of slowdown in investment and development activities in any of these segments could have a material adverse effect on our business and results of operations.

Risks Related to Fund Management

Poor performance of our funds would cause a decline in our revenue and results of operations and could adversely affect our ability to raise capital for future funds.

If a fund performs poorly, we risk receiving little or no fund management fees with regards to the fund and little income or possibly losses from such fund. In addition, poor fund performance may deter future investment in our funds, thereby decreasing the capital invested in our funds and thus, our management fee income. Alternatively, in the event of poor fund performance, investors could demand lower fees or fee concessions for existing or future funds which would likewise decrease our revenue.

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A portion of our revenue, net income and cash flow is variable, which may make it difficult for us to achieve steady earnings growth on a quarterly basis.

A portion of our revenue, net income and cash flow is variable, as the completion of the sale of assets and earning of any carried interest that we receive from our funds can vary from quarter to quarter and year to year. In addition, investment income that we may earn from our funds are volatile.

The timing and amount of asset sales and the earning of any carried interest are uncertain and contribute to the volatility of our results. It takes a substantial period of time to identify attractive investment opportunities, to raise funds needed to make an investment and then to realize the cash value or other proceeds of an investment through a sale, recapitalization or other exit. Even if an investment proves to be profitable, it may be several years before any profits can be realized in cash or other proceeds. We cannot predict when, or if, any realization of a return on investments will occur. If we were to have a realization event in a particular quarter or year, it may have a significant impact on our results for that particular quarter or year that may not be replicated in subsequent periods. We recognize revenue on investments in our funds only when earned or realized.

With respect to our funds that generate carried interest, the timing and receipt of such carried interest varies with the life cycle of our funds and/or achieving certain minimum cash flow hurdles. We receive carried interest payments only upon realization of achieving certain minimum investment returns by the relevant fund, which contributes to the volatility of our cash flow.

We may be subject to litigation risks and may face liabilities and damage to our professional reputation as a result.

We make investment decisions on behalf of investors in our funds that could result in substantial losses. This may subject us to the risk of legal liabilities or actions alleging negligent misconduct, breach of fiduciary duty or breach of contract. Further, we may be subject to third-party litigation arising from allegations that we improperly exercised control or influence over portfolio investments.

Legal liability could have a material adverse effect on our businesses, financial condition or results of operations or cause reputational harm to us, which could harm our businesses. We depend, to a large extent, on our business relationships and our reputation for integrity and professional services to attract and retain investors and to pursue investment opportunities for our funds. As a result, allegations of improper conduct by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities or the investment industry in general, whether or not valid, may harm our reputation, which may be damaging to our businesses.

Risks Related to Property Management and the Maintenance and Development of Real Estate Assets.

Decreases in the performance of the properties we manage are likely to result in a decline in the amount of property management fees and leasing commissions we generate.

Our property management fees are generally structured as a percentage of the revenues generated by the properties that we manage, and our leasing commissions typically are based on the value of the lease commitments. As a result, our revenues are adversely affected by decreases in the performance of the properties we manage and declines in rental value. Property performance depends upon, among other things, our ability to control operating expenses (some of which are beyond our control) and financial conditions generally and in the specific areas where properties are located and the condition of the real estate market generally. If the performance or rental values of the properties we manage decline, our management fees and leasing commissions from such properties could be materially adversely affected.

The concentration of our funds’ investments in a limited number of regions and sectors may make our funds’ business vulnerable to adverse conditions in such regions and to a downturn or slowdown in the sectors. As a result, our funds’ investments may lose value and they may experience losses.

We invest primarily in real estate assets located in a limited number of geographic locations, specifically, in the Phoenix and Tucson, Arizona marketplaces. Investing in a limited number of regions carries the risks associated with significant geographical concentration. Geographic concentration of

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properties exposes our projects to adverse conditions in the areas where the properties are located, including general economic downturns, increased competition, real estate conditions, terrorist attacks, potential impacts from labor disputes, and natural disasters occurring in such markets. Such major, localized events in our primary investment areas could adversely affect our business and revenues, which would adversely affect our results of operations and financial condition.

Our property portfolios are comprised primarily of hospitality, commercial, and multifamily and single-family rental properties and development projects. As a result, we are subject to risks inherent in investments in such types of property. The potential effects on our revenue and profits resulting from a downturn or slowdown in these sectors could be more pronounced than if we had more fully diversified our investments.

We may be unsuccessful in developing or renovating the properties we acquire, resulting in investment losses.

Part of our investment strategy is to locate and acquire real estate assets that are yet undeveloped or which we believe are undervalued and to improve them to increase their resale value. Acquiring properties that are not yet developed or in need of substantial renovation or redevelopment is subject to the uncertainties associated with the development and construction of real property, including those related to re-zoning land for development, environmental concerns and our builder’s ability to build in conformity with plans, specifications, budgeted costs and timetables. In addition, there is a risk that we overestimate the value of the property or that the cost or time to complete the renovation or redevelopment will exceed the budgeted amount. Such delays or cost overruns may arise from:

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shortages of materials or skilled labor

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a change in the scope of the original project

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difficulty in obtaining necessary zoning, land-use, environmental, building, occupancy and other governmental permits and authorizations;

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the discovery of structural or other latent defects in the property after we acquire the property; and

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delays in obtaining tenants

Any failure to complete a development or renovation project in a timely manner and within budget or to sell or lease the project after completion could have a material adverse effect upon our business, results of operation and financial condition. In addition, we hire and supervise third-party contractors to provide construction and engineering services for our properties. While our role is limited to that of a supervisor, we may be subjected to claims for construction defects or other similar actions. Adverse outcomes from litigation could have a material adverse effect on our business, financial condition and results of operations.

We may be subject to potential environmental liability.

Under various federal, state and local laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the clean-up of hazardous or toxic substances and may be liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by governmental entities or third parties in connection with the contamination. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances, even when the contaminants were associated with previous owners or operators. The costs of investigation, remediation or removal of hazardous or toxic substances may be substantial, and the presence of those substances, or the failure to properly remediate those substances, may adversely affect the owner’s or operator’s ability to sell or rent the affected property or to borrow using the property as collateral. The presence of contamination at a property can impair the value of the property even if the contamination is migrating onto the property from an adjoining property. Additionally, the owner of a site may be subject to claims by parties who have no relation to the property based on damages and costs resulting from environmental contamination emanating from the site.

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In connection with the direct or indirect ownership, operation, management and development of real properties, we may be considered an owner or operator of those properties or as having arranged for the disposal or treatment of hazardous or toxic substances. Therefore, we may be potentially liable for removal or remediation costs.

Before consummating the acquisition of a particular piece of real property, it is our policy to retain independent environmental consultants to conduct an environmental review of the real property, including performing a Phase I environmental review. These assessments typically include, among other things, a visual inspection of the real properties and the surrounding area and a review of relevant federal, state and historical documents. It is possible that the assessments we commission do not reveal all environmental liabilities or that there are material environmental liabilities of which we are currently unaware. Future laws, ordinances or regulations may impose material environmental liability and the current environmental condition of our properties may be affected by tenants, by the condition of land or operations in the vicinity of those properties, or by unrelated third parties. Federal, state, and local agencies or private plaintiffs may bring actions against us in the future, and those actions, if adversely resolved, may have a material adverse effect on our business, financial condition and results of operations.

Actions of any joint venture partners that we may have could reduce the returns on joint venture investments.

At times we enter into joint ventures or partnerships to acquire and develop properties. Such investments may involve risks not otherwise present with other methods of investment, including:

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that our co-venturer, or partner in an investment could become insolvent or bankrupt;

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that such co-venturer, or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;

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that such co-venturer, or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

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that disputes between us and our co-venturer, or partner may result in litigation or arbitration that would increase expenses.

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment.

Our leasing activities depend on various factors, including tenant occupancy and rental rates, which, if adversely affected, could cause our operating results to suffer.

A significant portion of our property management business involves facilitating the leasing of commercial and residential space. Our revenues may be adversely affected if we fail to promptly find tenants for substantial amounts of vacant space, if rental rates on new or renewal leases are significantly lower than expected, or if reserves for costs of re-leasing prove inadequate. A default or termination by a commercial tenant or a large number of residential tenants on their lease payments would cause us to lose the revenue associated with such leases and require us to find an alternative source of revenue to meet mortgage payments, if any, and prevent a foreclosure. In the event of a significant tenant default we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment and re-leasing such property. If significant tenants default on or terminate a lease, we may be unable to release the property for the rent previously received or sell the property without incurring a loss.

Our reliance on third-parties to operate certain of our properties may harm our business.

In some instances, we rely on third-party property managers and hotel operators to manage our properties. These third parties are directly responsible for the day-to-day operation of our properties with limited supervision by us, and they often have potentially significant decision-making authority with respect to those properties. These third parties may fail to manage our properties effectively or in accordance with their agreements with us, may be negligent in their performance and may engage in criminal or fraudulent activity. If any of these events occur, we could incur losses or face liabilities from the loss or injury to our property or to persons at our properties. In addition, disputes may arise between us and these third-party

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managers and operators, and we may incur significant expenses to resolve those disputes or terminate the relevant agreement with these third parties and locate and engage competent and cost-effective service providers to operate and manage the relevant properties.

We are also parties to hotel management agreements under which unaffiliated third-party property managers manage our hotel properties. If any of these events occur, our relationships with any franchisors may be damaged, we may be in breach of our franchise agreement, and we could incur liabilities resulting from loss or injury to our property or to persons at our properties. In addition, from time to time, disputes may arise between us and our third-party managers regarding their performance or compliance with the terms of the hotel management agreements, which in turn could adversely affect us. If we are unable to resolve such disputes through discussions and negotiations, we may choose to terminate our management agreement, litigate the dispute or submit the matter to third-party dispute resolution, the expense of which may be material and the outcome of which may harm our business, operating results or prospects.

Competition with third parties in acquiring and leasing properties and other real estate investments may reduce our profitability.

We face significant competition with respect to the acquisition of properties, including REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies, online investment platforms and other investors, many of which have greater resources than us. We may not be able to compete successfully for investments. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If we acquire properties at higher prices, our funds’ returns will be lower, and the value of their assets may not increase or may decrease significantly below the amount paid for such assets.

Any apartment communities we may acquire competes with numerous housing alternatives in attracting residents, including single-family homes, as well as owner occupied single- and multifamily homes available to rent. Competitive housing in a particular area and the increasing affordability of owner occupied single- and multifamily homes available to rent or buy caused by declining mortgage interest rates and government programs to promote home ownership could adversely affect our ability to attract or retain residents or increase or maintain rents.

We could lose part or all of our investments in real estate assets, which could have a material adverse effect on our financial condition and results of operations.

Real estate investments are generally illiquid, which may affect our ability to change our portfolio in response to changes in economic and other conditions. Moreover, we may not be able to unilaterally decide the timing of the disposition of an investment, and as a result, we may not control when and whether any gain will be realized or loss avoided. The value of our investments can also be diminished by:

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civil unrest, acts of war and terrorism and acts of God, including earthquakes, hurricanes and other natural disasters (which may result in uninsured or underinsured losses);

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the impact of present or future legislation including environmental regulation, changes in laws concerning foreign ownership of property, changes in tax rates, changes in zoning laws and laws requiring upgrades to accommodate disabled persons) and the cost of compliance with these types of legislation; and

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liabilities relating to claims, to the extent insurance is not available or is inadequate.

In the event that we underestimate the risks relative to the price we pay for a particular investment, we may experience losses with respect to such investment.

Risks Related to our Real Estate and Securities Brokerage Services

If we fail to comply with laws and regulations applicable to us in our role as a real estate or securities broker, property/facility manager or developer, we may incur significant financial penalties.

We are subject to numerous federal, state, local and foreign laws and regulations specific to the services we perform in our brokerage business, as well as laws of broader applicability, such as tax, securities and employment laws. Brokerage of real estate sales and leasing transactions require us to maintain applicable

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licenses in each state in which we perform these services. If we fail to maintain our licenses or conduct these activities without a license, or violate any of the regulations covering our licenses, we may be required to pay fines, return commissions received or have our licenses suspended or revoked.

As a licensed real estate broker, we and our licensed employees are subject to certain statutory due diligence, disclosure and standard-of-care obligations. Failure to fulfill these obligations could subject us or our employees to litigation from parties who purchased, sold or leased properties that we brokered or managed. In addition, we may become subject to claims by participants in real estate sales claiming that we did not fulfill our statutory obligations as a broker.

Risks Related to Our Company

Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. The possibility of increased regulatory focus could result in additional burdens on our business. Changes in tax law and other legislative or regulatory changes could adversely affect us.

Our fund management, property management and brokerage businesses are subject to extensive regulation. We are subject to regulation, including periodic examinations, by governmental and self-regulatory organizations in the jurisdictions in which we operate. Many of these regulators are empowered to conduct investigations and administrative proceedings that can result in fines, suspensions of personnel or other sanctions, including censure, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer or investment adviser from registration or memberships. Even if an investigation or proceeding did not result in a sanction or the sanction imposed against us or our personnel by a regulator were small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing clients or fail to gain new fund management or financial advisory clients. In addition, we regularly rely on exemptions from various requirements of the U.S. Securities Act of 1933, as amended, or the Securities Act, the Exchange Act, the U.S. Investment Company Act of 1940, as amended, or the Investment Company Act, and the U.S. Employee Retirement Income Security Act of 1974, as amended, in conducting our fund management activities. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties whom we do not control. If for any reason these exemptions were to become unavailable to us, we could become subject to regulatory action or third-party claims and our business could be materially and adversely affected. If we were deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as conducted and could have a material adverse effect on our business.

In addition, we may be adversely affected as a result of new or revised legislation or regulations imposed by governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which we conduct business.

If we were deemed to be an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our businesses as conducted and could have a material adverse effect on our businesses.

An entity will generally be deemed to be an “investment company” for purposes of the Investment Company Act if:

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it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or

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absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.

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Our exemptions from the registration requirements of an investment company under the Investment Company Act are threefold:

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Our parent company does not meet the asset test component of the definition of  “investment company” under the Investment Company Act as summarized above;

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Our investment subsidiaries qualify under the exemption afforded by Section 3(c)(5)(C) of the Investment Company Act; and

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Our intermediate subsidiaries qualify under the exemption afforded by Section 3(c)(6) of the Investment Company Act. See “Investment Company Considerations.”

We are engaged primarily in the business of investing services for real estate and real estate-related assets and not primarily in the business of investing, reinvesting or trading in securities. We hold ourselves out as a vertically integrated investment firm and do not propose to engage primarily in the business of investing, reinvesting or trading in securities. Accordingly, we do not believe that we are, or following this offering will be, required to register as an investment company for purposes of the Investment Company Act. Furthermore, following this offering, we will have no material assets other than interests in certain wholly owned subsidiaries (within the meaning of the Investment Company Act), which in turn will have either direct interests in real estate assets or LLC member/LP partnership interests in affiliated funds. We do not believe that, based on current rules and interpretations, the equity interests in our wholly owned subsidiaries or the LLC member interests consolidated or unconsolidated affiliated funds qualify as investment securities under the Investment Company Act.

The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend to conduct our operations so that we will not be deemed to be an investment company under the Investment Company Act. If anything were to happen that would cause us to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on capital structure, the ability to transact business with affiliates and the ability to compensate senior employees, could make it impractical for us to continue our businesses as currently conducted, impair the agreements and arrangements between and among us, our funds and our senior management, or any combination thereof, and have a material adverse effect on our businesses, financial condition and results of operations. In addition, we may be required to limit the amount of investments that we make as a principal or otherwise conduct our businesses in a manner that does not subject us to the registration and other requirements of the Investment Company Act.

We may not be successful in competing with companies in the real estate services and investment industry, some of which may have substantially greater resources than we do.

Real estate investment and services businesses are highly competitive. Many of our competitors have greater financial resources and a broader market presence than we do. We compete with respect to:

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Diversification of our revenue stream across the deal continuum, including brokerage fees on buying and selling assets, construction fees on repositioning assets, and property management fees on certain multi- and single-family assets; and

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Competitive fee structures on our fund management services

Our business depends in large part on our ability to raise capital from investors. If we were unable to raise such capital, we would be unable to collect management fees or deploy such capital into investments, which would materially reduce our revenues and cash flow and adversely affect our financial condition.

We depend on the capital markets to grow our balance sheet along with third-party equity and debt financings to acquire properties. We intend to continue to raise a significant amount of third-party equity and debt to acquire real estate assets in the ordinary course of our business. We depend on debt financing from a combination of seller financing, the assumption of existing loans, government agencies and financial institutions. We depend on equity financing from equity partners, which may include public/private

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companies, pension funds, family offices, financial institutions, endowments and money managers. Our access to capital funding is uncertain. Our inability to raise additional capital on terms reasonably acceptable to us could jeopardize the future growth of our business.

Our ability to raise capital from investors depends on a number of factors, including many that are outside our control. Investors may downsize their investment allocations to alternative managers, including private funds and hedge funds, to rebalance a disproportionate weighting of their overall investment portfolio among asset classes. Poor performance of our funds could also make it more difficult for us to raise new capital. Our investors and potential investors continually assess our funds’ performance independently and relative to market benchmarks and our competitors, and our ability to raise capital for existing and future funds depends on our funds’ performance. If economic and market conditions deteriorate, we may be unable to raise sufficient amounts of capital to support the investment activities of future funds. If we were unable to successfully raise capital, our revenue and cash flow would be reduced, and our financial condition would be adversely affected.

We depend on our founders, senior professionals and other key personnel, and our ability to retain them and attract additional qualified personnel is critical to our success and our growth prospects.

We depend on the diligence, skill, judgment, business contacts and personal reputations of our founders, senior professionals and other key personnel. Our future success will depend upon our ability to attract and retain senior professionals and other personnel. Our executives have built highly regarded reputations in the real estate industry. Our executives attract business opportunities and assist both in negotiations with lenders and potential joint venture partners and in the representation of large and institutional clients. If we lost their services, our relationships with lenders, joint ventures and clients would diminish significantly.

In addition, certain of our officers have strong regional reputations, and they aid in attracting and identifying opportunities and negotiating for us and on behalf of our clients. As we continue to grow, our success will largely depend on our ability to attract and retain qualified personnel in all areas of business. We may be unable to continue to hire and retain a sufficient number of qualified personnel to support or keep pace with our planned growth.

We have in the past incurred and may continue in the future to incur significant amounts of debt to finance acquisitions, which could negatively affect our cash flows and subject our properties or other assets to the risk of foreclosure.

We have historically financed new acquisitions with cash derived from secured and unsecured loans and lines of credit. For instance, we typically purchase real property with loans secured by a mortgage on the property acquired. We could become more highly leveraged, resulting in an increase in debt service costs that could adversely affect our results of operations and increase the risk of default on debt. We may incur additional debt from time to time to finance strategic acquisitions, investments, joint ventures or for other purposes. If we incur additional debt, the risks associated with our leverage, including our ability to service our debt, would increase. Our governing documents do not contain any limitations on the amount of debt we may incur, and we do not have a formal policy limiting the amount of debt we may incur in the future. Subject to the restrictions set forth in our debt agreements, our board of directors may establish and change our leverage policy at any time without shareholder approval.

Some of our debt bears interest at variable rates. As a result, we are subject to fluctuating interest rates that may impact, adversely or otherwise, results of operations and cash flows. We may be subject to risks normally associated with debt financing, including the risks that:

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cash flow may be insufficient to make required payments of principal and interest;

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existing indebtedness on our properties may not be refinanced and our leverage could increase our vulnerability to general economic downturns and adverse competitive and industry conditions, placing us at a disadvantage compared to those of our competitors that are less leveraged;

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our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our business and in the commercial real estate services industry;

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our failure to comply with the restrictive covenants in the documents governing our indebtedness could result in an event of default that, if not cured or waived, results in foreclosure on substantially all of our assets; and

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the terms of available new financing may not be as favorable as the terms of existing indebtedness

If we are unable to satisfy the obligations owed to any lender with a lien on one of our properties, the lender could foreclose on the real property or other assets securing the loan and we would lose that property or asset. The loss of any property or asset to foreclosure could have a material adverse effect on our business, financial condition and results of operations.

Rapid growth of our businesses may be difficult to sustain and may place significant demands on our administrative, operational and financial resources.

Our assets under management have grown significantly in the past, and we are pursuing further growth in the near future, both organic and through acquisitions. Our rapid growth has placed, and planned growth, if successful, will continue to place, significant demands on our legal, accounting and operational infrastructure, and has increased expenses. The complexity of these demands, and the expense required to address them, is a function not simply of the amount by which our assets under management has grown, but of the growth in the variety and complexity of, as well as the differences in strategy between, our different funds. In addition, we are required to continuously develop our systems and infrastructure in response to the increasing sophistication of the investment management market and legal, accounting, regulatory and tax developments.

Our future growth will depend in part on our ability to maintain an operating platform and management system sufficient to address our growth and will require us to incur significant additional expenses and to commit additional senior management and operational resources.

We may enter into new lines of business and expand into new investment strategies, geographic markets and businesses, each of which may result in additional risks and uncertainties in our businesses.

We intend, if market conditions warrant, to grow our businesses by increasing assets under management in existing businesses and expanding into new investment strategies, geographic markets and businesses. We may pursue growth through acquisitions of critical business partners or other strategic initiatives, which may include entering into new lines of business.

Attempts to expand our businesses involve a number of special risks, including some or all of the following:

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the required investment of capital and other resources;

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the diversion of management’s attention from our core businesses;

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the assumption of liabilities in any acquired business;

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the disruption of our ongoing businesses;

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entry into markets or lines of business in which we may have limited or no experience;

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increasing demands on our operational and management systems and controls;

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compliance with additional regulatory requirements;

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potential increase in investor concentration; and

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the broadening of our geographic footprint, increasing the risks associated with conducting operations in certain jurisdictions where we currently have no presence.

Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If a new business does not generate sufficient revenues or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected. Our strategic initiatives may include joint ventures, in which case we will be subject to additional risks and uncertainties in that we may be dependent

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upon, and subject to liability, losses or reputational damage relating to systems, controls and personnel that are not under our control. Because we have not yet identified these potential new investment strategies, geographic markets or lines of business, we cannot identify all of the specific risks we may face and the potential adverse consequences on us and their investment that may result from any attempted expansion.

If we are unable to maintain and protect our intellectual property, or if third parties assert that we infringe their intellectual property rights, our business could suffer.

Our business depends, in part, on our ability to identify and protect proprietary information and other intellectual property such as our client lists and information and business methods. We rely on a combination of trade secrets, confidentiality policies, non-disclosure and other contractual arrangements and copyright and trademark laws to protect our intellectual property rights. However, we may not adequately protect these rights, and their disclosure to, or use by, third parties may harm our competitive position. Our inability to detect unauthorized use of, or to take appropriate or timely steps to enforce, our intellectual property rights may harm our business.

Also, third parties may claim that our business operations infringe on their intellectual property rights. These claims may harm our reputation, cost us money to defend, distract the attention of our management and prevent us from offering some services.

Confidential intellectual property is increasingly stored or carried on mobile devices, such as laptop computers, which increases the risk of inadvertent disclosure where the mobile devices are lost or stolen and the information has not been adequately safeguarded or encrypted. This also makes it easier for someone with access to our systems, or someone who gains unauthorized access, to steal information and use it to our disadvantage. Advances in technology, which permit increasingly large amounts of information to be stored on mobile devices or on third-party “cloud” servers, may exacerbate these risks.

The consolidation of investment funds or operating businesses of our portfolio companies could make it more difficult to understand the operating performance of the Company and could create operational risks for the Company.

Under applicable US GAAP standards, we may be required to consolidate certain of our funds, limited liability companies, partnerships or operating businesses if we determine that these entities are VIEs and that the Company is the primary beneficiary of the VIE. The consolidation of such entities could make it difficult for an investor to differentiate the assets, liabilities, and results of operations of the Company apart from the assets, liabilities, and results of operations of the consolidated VIEs. The assets of the consolidated VIEs are not available to meet our liquidity requirements. The assets of the consolidated VIEs are not available to meet our liquidity requirements. As of December 31, 2018 and 2017 the total assets of our consolidated VIEs reflected in our consolidated balance sheets were $162 million and $137 million, respectively, and as of December 31, 2018 and 2017, the total liabilities of our consolidated VIEs reflected in our consolidated balance sheets were $132 million and $104  million, respectively.

Insiders will exercise significant control over our company and all corporate matters.

Our directors and executive officers beneficially owned, in the aggregate, approximately   % of our outstanding capital stock as of December 31, 2018. Upon the completion of this offering, and assuming they do not purchase shares in this offering, it is expected that this same group will continue to hold a majority of our outstanding capital stock. Additionally, two members of this group, Mr. John C. Loeffler, II and Ms. Jennifer Schrader each own Class B Common Stock of the Company, which provide “super-voting” rights in the form of ten (10) votes for every share of Class B Common Stock owned by Mr. Loeffler and Ms. Schrader. Together Mr. Loeffler and Ms. Schrader exercise 88.89% voting control over the Company prior to this offering and will exercise [      ]% voting control over the Company after this offering, assuming all shares offered by the selling securityholder are sold. Please see page 54 — “Security Ownership of Management and Certain Securityholders and Selling Securityholders” for more information. As a result, if they act together, these shareholders will be able to exercise significant influence over all matters submitted to our shareholders for approval, including the election of directors and approval of significant corporate transactions, such as (i) making changes to our articles of incorporation whether to issue additional common stock and preferred stock, (ii) employment decisions, including compensation

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arrangements; and (iii) whether to enter into material transactions with related parties.. This concentration of ownership may also have the effect of delaying or preventing a third party from acquiring control of our company which could adversely affect the price of our common stock.

Conflicts of interest exist between our company and related parties.

Conflicts of interest exist and may arise in the future as a result of the relationships between our company and our officers, directors and owners, on the one hand, and our funds and its investors, on the other hand. We earn fees from our funds, including our carried interest which value is a direct result from the performance of our funds. There may be instances where the interests of our funds and the investors in such funds diverge from those of our company which could result in conflicts of interest. In resolving these conflicts, our board of directors and executive officers have a fiduciary duty to our shareholders. In addition, as we operate as a Fund Manager through a wholly-owned subsidiary, our company has a fiduciary duty to investors in the funds we manage. Unless the resolution of a conflict is specifically provided for in the operating agreements of such funds, our board of directors may consider any factors they determine in good faith to consider when resolving a conflict. An independent third party is not required to evaluate the resolution. As a result of the foregoing, there may be instances where any such conflicts are resolved in a manner which favors the interests of our funds and their investors over our shareholders.

Our Bylaws have an exclusive forum for adjudication of disputes provision which limits the forum to the Delaware Court of Chancery for certain actions against the Company.

Section 4 of Article VII of our Bylaws dictates that the Delaware Court of Chancery is the sole and exclusive forum for certain actions including derivative action or proceeding brought on behalf of the Company; an action asserting a breach of fiduciary duty owed by an officer, director, employee or to the shareholders of the Company; any claim arising under Delaware corporate law; and any action asserting a claim governed by the internal affairs doctrine. We also intend this exclusive forum provision to apply to claims under the federal securities laws. While management believes limiting the forum is a benefit, shareholders could be inconvenienced by not being able to bring an action in another forum they find favorable. Note that there is uncertainty as to whether a court would enforce this provision as it relates to claims under the federal securities laws and that shareholders will not be deemed to have waived the company’s compliance with federal securities laws and the rules and regulations thereunder.

A Delaware corporation is allowed to mandate in its corporate governance documents a chosen forum for the resolution of state law based shareholder class actions, derivative suits and other intra-corporate disputes. The Company’s management believes limiting state law based claims to Delaware will provide the most appropriate outcomes as the risk of another forum misapplying Delaware law is avoided, Delaware courts have a well-developed body of case law and limiting the forum will preclude costly and duplicative litigation and avoids the risk of inconsistent outcomes. Additionally, Delaware Chancery Courts can typically resolve disputes on an accelerated schedule when compared to other forums.

Our business could be adversely affected by security breaches through cyber-attacks, cyber intrusions or otherwise.

We face risks associated with security breaches, whether through cyber-attacks or cyber intrusions over the internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our information technology networks and related systems. These risks include operational interruption, private data exposure and damage to our relationship with our customers, among others. A security breach involving our networks and related systems could disrupt our operations in numerous ways that could ultimately have an adverse effect on our financial condition and results of operations.

Risks Related to the Offering

An investment in our shares is a speculative investment and, therefore no assurance can be given that you will realize your investment objectives.

No assurance can be given that investors will realize a return on their investments in us or that they will not lose their entire investment in our shares. For this reason, each prospective investor of our shares

18

should carefully read this Offering Circular. ALL SUCH PERSONS OR ENTITIES SHOULD CONSULT WITH THEIR ATTORNEY OR FINANCIAL ADVISOR PRIOR TO MAKING AN INVESTMENT.

There has been no active public market for our common stock prior to this offering, and an active trading market may not be developed or sustained following this offering, which may adversely impact the market for shares of our Class A Common Stock and make it difficult to sell your shares.

Prior to this offering, there was no active market for our common stock. We do not know the extent to which investor interest will lead to the development and maintenance of a liquid trading market, if at all. We intend to list our common stock on a national securities exchange in the future; however, any such listing may not occur until months or years after the termination of this offering, if at all. As a result, investors should view our common stock as an illiquid investment. Further, if we do list our shares on a national securities exchange, or another trading market develops, no assurance can be given that the market price of shares of our common stock will not fluctuate or decline significantly in the future or that stockholders will be able to sell their shares when desired on favorable terms, or at all.

This is a fixed price offering and the Offering Price may not accurately represent the current value of us or our assets at any particular time. Therefore, the Offering Price may not be supported by the value of our assets at the time of your purchase.

This is a fixed price offering, which means that the Offering Price is fixed and will not vary based on the underlying value of our assets at any time. Our Board has determined the Offering Price in its sole discretion. The Offering Price has been based on an internal valuation analysis of our Company as a whole. Although we believe the valuation to be fair as of the date it was determined, the fixed offering price established for our shares may not be supported by the current value of our Company or our assets at any particular time.

If investors successfully seek rescission, we would face severe financial demands that we may not be able to meet.

Our Shares have not been registered under the Securities Act of 1933, or the Securities Act, and are being offered in reliance upon the exemption provided by Section 3(b) of the Securities Act and Regulation A promulgated thereunder. We represent that this Offering Circular does not contain any untrue statements of material fact or omit to state any material fact necessary to make the statements made, in light of all the circumstances under which they are made, misleading. However, if this representation is inaccurate with respect to a material fact, if this offering fails to qualify for exemption from registration under the federal securities laws pursuant to Regulation A, or if we fail to register the Shares or find an exemption under the securities laws of each state in which we offer the Shares, each investor may have the right to rescind his, her or its purchase of the shares sold hereunder and to receive back from our Company his, her or its purchase price with interest. Such investors, however, may be unable to collect on any judgment, and the cost of obtaining such judgment may outweigh the benefits. If investors successfully seek rescission, we would face severe financial demands we may not be able to meet and it may adversely affect any non-rescinding investors.

We do not intend to pay dividends in the foreseeable future.

We have the authority to retain all of our earnings for the future operation and expansion of our business. While we are obligated to pay dividends on our outstanding shares of Series A Preferred Stock, we do not intend to make any cash distributions to holders of our common stock in the foreseeable future. Investors should not expect to receive income on an ongoing basis from an investment in us.

Risks Related to Benefit Plan Investors

Fiduciaries investing the assets of a trust or pension or profit sharing plan must carefully assess an investment in our Company to ensure compliance with ERISA.

In considering an investment in our Company of a portion of the assets of a trust or a pension or profit-sharing plan qualified under Section 401(a) of the Code and exempt from tax under Section 501(a), a

19

fiduciary should consider (i) whether the investment satisfies the diversification requirements of Section 404 of ERISA; (ii) whether the investment is prudent, since the shares sold hereunder are not freely transferable and there may not be a market created in which the shares sold hereunder may be sold or otherwise disposed; and (iii) whether interests in our Company or the underlying assets owned by our Company constitute “Plan Assets” under ERISA. See “ERISA Considerations.”

YOU SHOULD CONSULT WITH YOUR OWN ATTORNEYS, ACCOUNTANTS AND OTHER PROFESSIONAL ADVISORS AS TO THE LEGAL, TAX, ACCOUNTING AND OTHER CONSEQUENCES OF AN INVESTMENT IN CALIBER CLASS A COMMON STOCK.

PURSUANT TO INTERNAL REVENUE SERVICE CIRCULAR NO. 230, BE ADVISED THAT ANY FEDERAL TAX ADVICE IN THIS COMMUNICATION, INCLUDING ANY ATTACHMENTS OR ENCLOSURES, WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED BY ANY PERSON OR ENTITY TAXPAYER, FOR THE PURPOSE OF AVOIDING ANY INTERNAL REVENUE CODE PENALTIES THAT MAY BE IMPOSED ON SUCH PERSON OR ENTITY. SUCH ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTION(S) OR MATTER(S) ADDRESSED BY THE WRITTEN ADVICE. EACH PERSON OR ENTITY SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

20

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This offering circular contains forward-looking statements that are based on our beliefs and assumptions and on information currently available to us. The forward-looking statements are contained principally in “Offering Circular Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Description of Our Business.” Forward-looking statements include information concerning our possible or assumed future results of operations and expenses, business strategies and plans, competitive position, business environment, and potential growth opportunities. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Those risks include those described in “Risk Factors” and elsewhere in this offering circular. Given these uncertainties, you should not place undue reliance on any forward-looking statements in this offering circular. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this offering circular. You should read this offering circular and the documents that we have filed as exhibits to the Form 1-A of which this offering circular is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Any forward-looking statement made by us in this offering circular speaks only as of the date on which it is made. Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward- looking statements, even if new information becomes available in the future. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

21

USE OF PROCEEDS

There is no minimum amount of shares necessary to be sold hereunder. Because the offering is a “best efforts” offering without a minimum offering amount, we may close the offering without sufficient funds for all the intended purposes set out below.

The net proceeds of a fully subscribed offering, after total offering expenses, will be approximately $46.0 million. Caliber plans to use these proceeds as follows:

•

Approximately $25.0 million towards the acquisition and redevelopment of similar strategic real estate projects.

•

Approximately $7.3 million to repay high interest rate debt in favor of more competitive financing which we believe will be readily available after the completion of this offering. This outstanding debt to be repaid consists of unsecured promissory notes with outstanding principal balances ranging from $9,272 to $1,050,000, and interest rates ranging from 8.25% to 12.0% and maturity dates ranging from January 2019 to November 2019. The unsecured promissory notes are held by approximately 66 individuals which generally have a 12-month term and are extended on an annual basis; the notes have been extended through December 2019. There are no penalties or fees related to the extension of notes or failure to repay when due. The proceeds of the notes were used for working capital. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Unsecured Corporate Debt.”

•

Approximately $5.5 million will be used for infrastructure enhancements to our operating and controls systems.

•

Approximately $8.0 million will be used for general corporate purposes.

We will not receive any proceeds from sale of shares of common stock by the Selling Securityholders. If the offering size were to be $25.0 million, then we estimate that the net proceeds to Caliber would be approximately $23.0 million. In such an event, Caliber would still be able to use the proceeds as outlined above, albeit certain initiatives would be reduced or scaled back. For example, Caliber would adjust its use of proceeds by limiting in size and scope acquisition and redevelopment real estate projects. If the offering size were to be $5.0 million, we estimate that the net proceeds to Caliber would be approximately $4.6 million. In such an event, Caliber would be in a position to and intends to repay approximately $3.0 million of its outstanding debt as set forth above.

We do not have agreements or commitments for any redevelopment projects at this time. Other than the payment of the Company’s officers’ and directors’ salaries, none of the proceeds of this offering will be used to compensate or otherwise make payments to our subsidiaries’ officers or directors. General corporate purposes may include, but are not limited to, the costs of this offering, including our outside legal and accounting expenses, employee payroll, rent and real estate expenses, utilities, computer hardware and software and promotion and marketing. Our management has sole discretion regarding the use of proceeds from the sale of Caliber Class A Common Stock. We reserve the right to change the use of proceeds as business demands dictate.

22

DILUTION

If you invest in Caliber Class A Common Stock, your interest will be diluted to the extent of the difference between the $     offering price per share (the “Offering Price”) of Caliber Class A Common Stock and the pro forma net tangible book value per share of Caliber Class A Common Stock immediately after this offering. Dilution results from the fact that the Offering Price is substantially in excess of the pro forma net tangible book value per share attributable to the existing equity holders.

Our pro forma net tangible book value per share as of December 31, 2018 was approximately $    , or approximately $     per share of Caliber Class A Common Stock on a fully diluted basis. Pro forma net tangible book value represents the amount of total tangible assets less total liabilities. Pro forma net tangible book value per share represents pro forma net tangible book value divided by the number of shares of Caliber Class A Common Stock outstanding on a fully diluted basis.

The following table illustrates the substantial and immediate dilution per share of Caliber Class A Common Stock to a purchaser in this offering, assuming issuance of all shares of Caliber Class A Common Stock in this offering:

On Basis of Full Conversion of Issued Instruments	$50 Million Raise
Price per share	​	$
Shares issued	​
Capital raised	​	$
Less: Estimated offering costs	​	$	(    )
Net Offering Proceeds	​	$
Net tangible book value pre-offering(1)	​	$
Net tangible book value post-offering	​	$
Shares issued and outstanding pre-offering assuming full conversion(2)	​
Post-offering shares issued and outstanding	​
Net tangible book value per share prior to offering(1)(2)	​	$
Increase/(Decrease) per share attributable to new investors	​	$
Net tangible book value per share after offering	​	$
Dilution per share to new investors ($)	​	$
Dilution per share to new investors (%)	​	​	%

(1)

Net tangible book value is based on the net tangible equity attributable to equity holders of the Company as of December 31, 2018.

(2)

Assumes conversion of all issued shares of Series A Preferred Stock to Caliber Class A Common Stock, vesting of all issued and outstanding Caliber Class A Common Stock grants, and exercise of all warrants issued by Caliber.

​

Shares Purchased

Total Consideration

Average Price Per Share

Assuming Maximum Number of Shares Sold:

Number

Percentage

Amount

Percentage

Existing Caliber Stockholders(1)

​

27,974,212

​

100.0%

​

$

12,411,308

​

100.0%

​

$

0.44

New Caliber Class A Common Stockholders(2)

​

​

%

​

$

​

%

​

$

Total

​

​

100.0%

​

$

​

%

​

​

​

(1)

Does not give effect to the conversion of shares of Series A Preferred Stock to Caliber Class A Common Stock, conversion of convertible debt securities issued by Caliber to Caliber Class A Common Stock, vesting of any issued and outstanding Caliber Class A Common Stock grants, and exercise of any warrants issued by Caliber outstanding as of December 31, 2018 or the repurchase of shares by the Company from a founder. See “Interest of Management and Others in Certain Transactions.”

(2)

Assumes the issuance of all shares of Caliber Class A Common Stock in this offering.

23

BUSINESS

We are focused on creating wealth for our clients by providing access to high quality real estate investments. Caliber believes that capital organized privately into structured funds offers investors an optimal balance of risk-adjusted return and investment performance. By allowing investors who may not otherwise be able to purchase a large asset, to participate with a minimum investment as low as $35,000, Caliber provides typical real estate investors access to sophisticated strategies and assets that they may not otherwise have.

While Caliber’s business model is in part analogous to that of a financial asset manager, our model is built on a full-service approach. We have complemented traditional asset management functions with construction, property management, and deal expertise that we believe creates a competitive advantage against other traditional asset manager models. Compared to non-traded REITs that often come with high cost structures for investors, we offer reduced product origination costs and fund-level fees. By eliminating many of the fees earned at the fund level, and sizing the remaining fees to cover Company overhead, Caliber aligns its profitability with that of its investors. We believe our approach allows us to drive down the cost burden that is borne by funds under a traditional asset management model, increase returns to investors of those funds, and generate long-term sustainable cash flows. Caliber is organized as follows:

The Company’s operations are organized into eight reportable segments for management and financial reporting purposes, which are broadly separated in two categories; real estate services (Fund Management, Construction & Development, Property Management, Real Estate Brokerage) and real estate operations (Hospitality, Residential, Commercial, and Diversified). Each segment works closely together and plays a critical role in supporting our investment strategy by providing local market intelligence and real-time data for evaluating investments, generating proprietary transaction flow and creating value through efficient implementation of asset management strategies.

Fund Management

Fund Management represents the Company’s fund management activities along with back office and corporate support functions including accounting and human resources. It also includes the activities associated with Caliber Securities, LLC, which generates fees from capital raising. We act as an asset manager of our private equity real estate funds, or Funds, which have diversified investment objectives. Generally, Caliber Services, LLC, and its subsidiaries, or Caliber Services, act as manager of the Funds. As of December 31, 2018, our assets under management, or AUM of real property at cost, consisted of $249 million and the value of our real property portfolio, or Fair Value AUM, was approximately

24

$375 million. Since inception through December 31, 2018, we have raised over $283 million from accredited investors. For the years ended December 31, 2018 and 2017, we generated approximately $8.4 million and $3.9 million of revenue from our fund management activities, respectively, of which approximately $3.7 million and $1.8 million, respectively, are eliminated in consolidation. On an unconsolidated basis, Caliber’s fund management fees represented approximately 10% and 13% of corporate entity’s total unconsolidated revenues for the years ended December 31, 2018 and 2017, respectively.

We earn fund management fees for services rendered to each of the Funds by Caliber Services. Below is an overview of the fees we earn:

•

Set-Up Fee.   We charge an initial one-time fee related to the initial formation, administration and set-up of the applicable Fund.

•

Financing Fee.   We earn a fee upon the closing of a loan with a third party lender. This fee does not exceed 1% of the total loan and will not exceed 3% of the total loan after considering all other origination fees charged by lenders and brokers involved in the transaction.

•

Management Fee.   We receive an annual management fee in an amount equal to 1.50% of the non-affiliate capital contributions to each of the Funds.

•

Carried Interest.   We receive 20%-35% of all cash distributions from (i) the operating cash flow of each Fund, after payment to the related Fund investors of any accumulated and unpaid priority preferred returns and repayment of preferred capital contributions; and (ii) the cash flow resulting from the sale or refinance of any real estate assets held by each Fund, after payment to the related Fund investors of any accumulated and unpaid priority preferred returns and repayment of preferred capital contributions. Our Funds’ preferred returns range from 6% to 12%.

The amounts that Caliber is entitled to receive from each Fund are governed by the terms of the Fund operating agreements. Generally, once investors receive distributions equal to their preferred return, Caliber receives 35% of operating cash flows from each Fund. With respect to the Caliber Residential Advantage Fund, L.P. (“CRAF”), investors are entitled to 80% of cash flows and Caliber is entitled to 20% of cash flows.

Through our wholly owned Arizona registered issuer-dealer, Caliber Securities, LLC, we earn fees from raising capital into our Funds. Our contracts with our funds are typically fixed fee arrangements which approximate no more than 3.50% on the dollars raised for any one project. For the years ended December 31, 2018 and 2017, we generated approximately $1.4 million and $0.5 million, respectively of which approximately $0.3 million and $0.1 million, respectively are eliminated in consolidation. On an unconsolidated basis, Caliber Securities represented approximately 2.0% of the Company’s total unconsolidated earnings for the years ended December 31, 2018 and 2017, respectively.

Construction and Development

Our Construction and Development segment represents the Company’s activities associated with asset remodeling and refurbishment and ground up construction. The majority of the revenues generated by this segment are earned from work completed on assets held in our funds. Caliber Development, LLC, or Caliber Development, a wholly owned subsidiary of Caliber Services, LLC, acts as the general contractor on our projects. Our strategy for this segment is to complete high-quality work while maintaining competitive margins so that the benefits are passed along to the investors of the related funds. For the years ended December 31, 2018 and 2017, we generated approximately $9.4 million and $20.5 million, respectively of which approximately $4.8 million and $16  million, respectively are eliminated in consolidation. On an unconsolidated basis, Caliber Development represented approximately 11% and 76% of Corporate entity’s total unconsolidated earnings for the years ended December 31, 2018 and 2017, respectively.

Property Management

Keeping our single family and multi-family properties rented is the primary focus of our Property Management division. Through our wholly-owned subsidiary Caliber Realty Group, LLC, or Caliber Realty, we provide property management services to both our funds and third-party property owners. In some instances, we may engage an external service provider to assist in increasing occupancy for specific

25

and niche assets. Revenues in this segment are driven by property management fees, which are generally based upon percentages of the rental revenue or gross rent generated by such properties. Property management revenue also includes fees charged to property management customers for leasing commissions, which are generally based on the amount of the new lease executed with a minimum flat fee. For the years ended December 31, 2018 and 2017, we generated approximately $0.5 million and $0.7 million, respectively of which approximately $0.2 million and $0.2 million, respectively are eliminated in consolidation. On an unconsolidated basis, Property Management represented approximately 1% and 2%, of the Company’s total unconsolidated earnings for the years ended December 31, 2018 and 2017.

Real Estate Brokerage

Whenever Caliber is involved in a transaction involving real estate acquisition or sale, we collect fees for brokering the arrangement, through Caliber Realty. For the years ended December 31, 2018 and 2017, we generated approximately $1.9 million and $1.9 million, respectively of which approximately $1.6 million and $1.6 million, respectively are eliminated in consolidation. On an unconsolidated basis, real estate brokerage represented approximately 2% and 7% of the Company’s total unconsolidated earnings for the years ended December 31, 2018 and 2017, respectively.

Our Fund Portfolio

The following discussion relates to the activities of our various consolidated and unconsolidated Funds which are generally structured as separate limited liability companies or partnerships. Outside of its interests as the manager or general partner of these funds, CaliberCos’ benefits in these entities are limited to CaliberCos’ direct membership or partnership interests, if any. Investors in CaliberCos should understand that the majority of the profit and/or loss of any of these Funds or rights and obligations to its related assets and liabilities, respectively, is limited or in some cases unavailable.

The following chart presents the name (acronym), total contributed net capital, total investments at cost, and total investments at fair value of the funds in our hospitality, residential, and commercial segments, as of December 31, 2018.

​	​	As of December 31, 2018
Fund Name	Fund Inception Date	Contributed Capital, Net(1)			Investments, at Cost(2)			Investments, at Fair Value(3)
Hospitality:	​	​	​	​	​	​	​	​	​	​
CHPH, LLC (“CHPH”)	October 2012	​	$	10,339,740	​	$	23,601,256	​	$	32,800,000
Indian Bend Hotel Group, LLC (“IBHG”)	September 2014	​	​	4,225,842	​	​	11,292,069	​	​	15,000,000
44th & McDowell Hotel Group, LLC (“44th”)	May 2015	​	​	8,249,646	​	​	22,539,770	​	​	30,700,000
Tucson East, LLC (“Tucson East”)	May 2016	​	​	9,696,091	​	​	20,709,181	​	​	25,300,000
47th Street Phoenix Fund, LLC (“47th Street”)	October 2016	​	​	12,994,123	​	​	36,368,833	​	​	47,800,000
CH Ocotillo	June 2018	​	​	5,367,820	​	​	12,124,992	​	​	13,800,000
Elliot 10	September 2017	​	​	3,410,000	​	​	16,763,431	​	​	17,300,000
SF Alaska, LP (“Salmon Falls”)	August 2015	​	​	5,666,974	​	​	10,239,693	​	​	13,500,000
Edgewater Hotel Group, LLC (“Edgewater”)	October 2015	​	​	1,620,279	​	​	2,874,180	​	​	4,300,000
​	​	​	​	61,570,515	​	​	156,513,405	​	​	200,500,000
Residential:	​	​	​	​	​	​	​	​	​	​
GC Square, LLC (“GC Square”)	September 2015	​	​	6,280,570	​	​	12,943,775	​	​	25,000,000
Palms Weekly Portfolio, LP (“Palms”)	July 2016	​	​	6,650,000	​	​	15,050,353	​	​	24,500,000
South Mountain Square, LLC (“SMS”)	June 2012	​	​	—	​	​	4,725,059	​	​	10,800,000
Circle Lofts, LLC (“Eclipse”)	November 2016	​	​	2,491,043	​	​	8,447,794	​	​	11,500,000
The Roosevelt I, LLC (“Roosevelt”)	January 2016	​	​	2,017,379	​	​	5,110,604	​	​	7,000,000
CDIF Sunrise, LLC (“Treehouse”)	April 2014	​	​	7,727,619	​	​	12,711,942	​	​	18,200,000
Caliber Residential Advantage Fund, LP (“CRAF”)	August 2016	​	​	6,247,511	​	​	3,778,884	​	​	4,700,000
​	​	​	​	31,414,122	​	​	62,768,411	​	​	101,700,000

26

​	​	As of December 31, 2018
Fund Name	Fund Inception Date	Contributed Capital, Net(1)			Investments, at Cost(2)			Investments, at Fair Value(3)
Commercial:	​	​	​	​	​	​	​	​	​	​
SIP Coffee & Beer Kitchen, LLC (“Sip”)	February 2017	​	​	394,286	​	​	394,286	​	​	600,000
AZ24HR Storage Kingman, LLC (“Kingman”)	December 2016	​	​	58,025	​	​	536,823	​	​	900,000
1040 N VIP Blvd, LLC (“VIP”)	December 2015	​	​	161,025	​	​	1,957,537	​	​	1,500,000
1601 Athol Ave, LLC (“Athol”)	December 2015	​	​	74,866	​	​	1,299,952	​	​	1,800,000
Logan Airport Storage, LLC (“Logan”)	February 2016	​	​	205,518	​	​	1,832,997	​	​	1,800,000
CDIF Baywood, LLC (“Baywood”)	December 2013	​	​	85,220	​	​	77,689	​	​	100,000
CH Mesa Holdings, LLC (“Mesa”)	July 2017	​	​	3,813,804	​	​	8,199,229	​	​	10,400,000
J-25 Johnstown Holdings, LLC (“J-25”)	May 2017	​	​	2,684,355	​	​	5,200,982	​	​	37,600,000
Fiesta Tech Owners, LLC (“Fiesta Tech”)	March 2016	​	​	1,804,998	​	​	4,860,929	​	​	8,000,000
​	​	​	​	9,282,097	​	​	24,360,424	​	​	62,700,000
Total Funds	​	​	$	102,266,734	​	$	243,642,240	​	$	364,900,000

Non-Fund Assets	​	​	​	​	​	​
Residential:	​	​	​	​	​	​
Caliber Auction Homes, LLC	​	​	​	4,111,640	​	6,900,000
Saddleback Ranch, LLC (“Saddleback”)	​		​	1,122,437	​	3,500,000
Total Assets Under Management	$	102,266,734	$	248,876,317	$	375,300,000

(1)

Capital contributions since the inception of the Fund, net of any redemptions (i.e. returns of original capital invested).

(2)

Carrying value of real estate assets owned by the Fund.

(3)

Estimated fair value of assets owned by the Fund; estimated based on recent appraisals, discounted cash flow analysis, and other valuation techniques as deemed appropriate.

Our diversified segment is presented below. The Funds included in this segment are invested in the assets included in the table above, and therefore are presented separately to avoid double counting.

​	​	As of December 31, 2018
Fund Name	Fund Inception Date	Contributed Capital, Net(1)		Investments, at Cost(2)		Investments, at Fair Value(3)
CDIF, LLC (“CDIF”)	May 2013	​	35,054,997	​	34,533,954	​	43,900,000
Caliber Diversified Opportunity Fund II, LP (“CDOF II”)	June 2017	​	13,819,088	​	11,015,551	​	21,310,000
Caliber Fixed Income Fund, LLC (“CFIF”)(4)	March 2014	​	—	​	—	​	—
Caliber Fixed Income Fund II, LLC (“CFIF II”)	April 2015	​	7,400,810	​	—	​	—
Caliber Fixed Income Fund III, LLC (“CFIF III”)	April 2018	​	9,882,515	​	—	​	—
Caliber Tax Advantage Fund (“CTAF”)	August 2018	​	12,870,000	​	10,293,908	​	10,293,908
​	​	​	79,027,410	​	55,843,413	​	75,503,908

(4)

CFIF was the Company’s first private lending Fund, which closed and was liquidated in May 2016. Total capital contributed to the Fund was $10.7 million, and the fund produced an annual return of 10% on the contributed capital through its existence.

We focus our offerings on middle market accredited investors. To meet our investors’ changing needs and demand for quality real asset opportunities, we manage investments in an increasingly wide range of Funds across a line of complementary strategies. We have demonstrated an ability to consistently generate attractive and differentiated investment returns across these investment strategies and through various market environments. We believe the scope of our product offering, our expertise in various investment strategies and our proficiency in attracting and satisfying our investor base has enabled, and will continue to enable, us to increase our assets under management across each of our investment groups in a balanced manner. Our Open and Evergreen Funds currently consist of the following:

•

Caliber Tax Advantaged Opportunity Zone Fund, LP.   Caliber Tax Advantaged Opportunity Zone Fund, LP, a Delaware limited partnership, or CTAF, was formed in August 2018. CTAF’s

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investment objective is to raise capital from investors who are looking to obtain federal income tax benefits from Sections 1400Z-1 and 1400Z-2 (the “Opportunity Zone Provisions”) of the Internal Revenue Code; and deploy that capital in investments within certain designated Opportunity Zones that have been identified by Treasury of the United States.

•

CH Ocotillo Inv Fund, LLC.   The CH Ocotillo Inv Fund, LLC, a Delaware limited liability company or CH Ocotillo, was formed in June 2018. CH Ocotillo’s investment objective is to acquire, own, and operate a 106-guest room, full service Holiday Inn branded hotel in Chandler, Arizona.

•

Caliber Fixed Income Fund III, LP.   Caliber Fixed Income Fund III, LLC, a Delaware limited liability company, or CFIF III, was formed in April 2018. CFIF III’s investment objective is to generate annual returns to investors of 8.25% – 9.25% and targets first and second position loans on real estate assets.

•

Elliot 10 Fund, LLC.   The Elliot 10 Fund, LLC, a Delaware limited liability company, or Elliot 10, was formed in September 2017. Elliott 10’s investment objective is to acquire, own, and operate a 169-guest room, full service Four Points by Sheraton branded hotel located in Phoenix, Arizona.

•

Caliber Diversified Opportunity Fund II, LP.   Caliber Diversified Opportunity Fund II, LP, a Delaware limited partnership, or CDOF II, was formed in June 2017. CDOF II’s investment objective is to acquire or originate a portfolio of commercial, multi-family, hospitality and self-storage real estate investments in primary, secondary and select tertiary markets.

•

47th Street Phoenix Fund, LLC.   The 47th Street Phoenix Fund, LLC, a Delaware limited liability company, or 47th Street, was formed in October 2016. 47th Street’s investment objective is to acquire, own, and operate a 259-guest room, full service Hilton branded hotel in Phoenix, Arizona.

•

Caliber Residential Advantage Fund, LP.   Caliber Residential Advantage Fund, LP, a Delaware limited partnership, or CRAF, was formed in August 2016. CRAF’s investment objective is to acquire a portfolio of residential real estate in primary, secondary and select tertiary markets.

Hospitality

Our Hospitality segment represents one of Caliber’s largest fund segments accounting for 62.9% and 53.7% of our total assets under management at December 31, 2018 and 2017, respectively. Through the Funds we manage, we acquire hotels in certain opportunistic situations in which we are able to purchase at a discount to replacement cost or can implement our value-add investment approach. As of December 31, 2018, we have a total of 9 hotels under management, located in Tucson, Chandler, Phoenix, and Scottsdale, Arizona and Ketchikan, Alaska. Our portfolio of hotels represents over 1,400 rooms under management across multiple brands including Crowne Plaza, Sheraton, Hampton Inn, Holiday Inn, and Hilton.

We earn property operating revenue from our hospitality operations consisting of revenues generated primarily by the hotel properties we own. This includes revenue from room rentals, food and beverage sales, banquet and group sales and other hotel operating activities. For the years ended December 31, 2018 and 2017, we generated hospitality revenues of approximately $51 million and $46  million, respectively.

Residential

Our Residential segment includes single-family homes owned by our wholly-owned subsidiary, Caliber Auction Homes, LLC, and single and multi-family properties held by our funds. We pursue single-family acquisition opportunities as part of our Caliber Residential Advantage Fund investment strategy where we acquire undervalued homes and transform them through major or minor remodeling. Currently, all our single-family properties are located in Arizona. As of December 31, 2018, we have a total of 34 single-family properties under management.

We pursue multi-family opportunities where we believe we can unlock value through a myriad of strategies, including asset rehabilitation, repositioning and creative recapitalization. We focus primarily on apartments in supply-constrained, in-filled markets. As of December 31, 2018, we have purchased over 831 units across 6 separate apartment complexes.

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Our residential segment represents approximately 27.3% and 32.4% of total assets under management at December 31, 2018 and 2017, respectively.

Commercial

Our Commercial segment includes properties representing both traditional office space and self-storage facilities. As of December 31, 2018, we are involved in 9 different commercial properties, located in Gilbert, Mesa, Kingman, and Casa Grande, Arizona, Henderson, Nevada, Johnstown, Colorado, and Logan, Utah.

Our Commercial segment represents approximately 9.8% and 13.8% of total assets under management at December 31, 2018 and 2017, respectively.

Competition

The investment management industry is intensely competitive, and we expect it to remain so. We compete primarily on a regional, industry and asset basis.

We face competition both in the pursuit of fund investors and investment opportunities. Generally, our competition varies across business lines, geographies and financial markets. We compete for outside investors based on a variety of factors, including investment performance, investor perception of investment managers’ drive, focus and alignment of interest, quality of service provided to and duration of relationship with investors, business reputation, and the level of fees and expenses charged for services. We compete for investment opportunities based on a variety of factors, including breadth of market coverage and relationships, access to capital, transaction execution skills, the range of products and services offered, innovation, and price.

We compete with real estate funds, specialized funds, hedge fund sponsors, financial institutions, private equity funds, corporate buyers and other parties. Many of these competitors in some of our businesses are substantially larger and have considerably greater financial, technical and marketing resources than are available to us. Many of these competitors have similar investment objectives to us, which may create additional competition for investment opportunities. Some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities. In addition, some of these competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make. Corporate buyers may be able to achieve synergistic cost savings with regard to an investment that may provide them with a competitive advantage in bidding for an investment. Lastly, institutional and individual investors are allocating increasing amounts of capital to alternative investment strategies. Several large institutional investors have announced a desire to consolidate their investments in a more limited number of managers. We expect that this will cause competition in our industry to intensify and could lead to a reduction in the size and duration of pricing inefficiencies that our funds seek to exploit.

Regulatory and Compliance Matters

Our businesses, as well as the financial services industry generally, are subject to extensive regulation, including periodic examinations, by governmental agencies and self-regulatory organizations or exchanges in the jurisdictions in which we operate relating to, among other things, anti-money laundering laws, and privacy laws with respect to client information, and some of our funds invest in businesses that operate in highly regulated industries. Each of the regulatory bodies with jurisdiction over us have regulatory powers dealing with many aspects of financial services, including the authority to grant, and in specific circumstances to cancel, permissions to carry on particular activities. Any failure to comply with these rules and regulations could expose us to liability and/or reputational damage. In addition, additional legislation, increasing regulatory oversight of fundraising activities, changes in rules promulgated by self-regulatory organizations or exchanges or changes in the interpretation or enforcement of existing laws and rules may directly affect our mode of operation and profitability.

We intend to continue to conduct our operations so that neither we nor any subsidiaries we own nor ones we may establish will be required to register as an investment company under the Investment Company Act of 1940, as amended (“Investment Company Act”). The loss of our exclusion from regulation pursuant

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to the Investment Company Act could require us to restructure our operations, sell certain of our assets, or abstain from the purchase of certain assets, which could have an adverse effect on our financial condition and results of operations. See “Risk Factors — Risks Related to Our Company — If we were deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as conducted and could have a material adverse effect on our business” and “Investment Company Act Considerations”.

Corporate Office

Our corporate office is located at 8901 E. Mountain View Rd., Suite 150, Scottsdale, Arizona, 85258, which we lease. We believe that we our current space is suitable and adequate for conducting our business, however, we may need to relocate offices in the future in the event that we hire additional employees.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Offering Circular. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this Offering Circular for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Our business is focused on creating wealth for our clients by providing access to high quality real estate investments. While Caliber’s business model may seem analogous to that of a financial asset manager, we have complemented that responsibility with construction, property management, and deal expertise that creates a competitive advantage against other traditional asset managers models. We believe our approach allows us to drive down the cost burden that is borne by funds under a traditional asset management model, increase returns to investors of those funds, and generate long-term sustainable cash flows to Caliber that are largely resistant to economic cyclicality.

The Company’s operations are organized into eight reportable segments for management and financial reporting purposes, which are broadly separated in two categories; real estate services (Fund Management, Construction & Development, Property Management, Real Estate Brokerage) and real estate operations (Hospitality, Residential, Commercial, and Diversified).

Real Estate Services

Fund Management — Our fund anagement segment represents our sponsorship and project management activities with respect to our 15 funds, each of which has differing investment objectives, sizes, and growth opportunities. This segment also includes our Caliber Securities, LLC, the issuer dealer who raises capital exclusively for our funds. Caliber Securities, LLC generates fees of up to 3.5% on the capital raised.

Construction and Development — Our construction and development segment operates as a general contractor on all of Caliber’s construction projects including ground up builds, remodels and repairs and maintenance. As of December 31, 2018 and 2017, approximately 97% and 98.2%, respectively, of the segment’s revenues were derived from projects performed on the assets held by our funds and had approximately $12 million and $36 million, respectively, of projects in various stages of completion.

Property management — Our property management segment manages the single family and multi-family assets of our fund portfolio and other similar assets held and owned by third parties. As of December 31, 2018 and 2017, approximately 95.6% and 73.5%, respectively, of the segment’s revenues were derived from assets held by our funds.

Real estate brokerage — Our real estate brokerage segment is involved in executing the buying and selling of all our fund assets and completing the buy and sell transactions of other properties for third parties. As of December 31, 2018 and 2017, our brokerage segment completed approximately $79 million and $62 million, respectively, in transactions generating approximately $1.9 million and $1.9 million, respectively, of brokerage fees.

Real Estate Operations

Hospitality — Our hospitality segment includes 9 hotels with operations in Phoenix, Scottsdale, Chandler and Tucson, Arizona and Ketchikan, Alaska. As of December 31, 2018 and 2017, our hospitality segment had approximately $201 million and $147 million, respectively, of assets under management.

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Residential — Our residential segment includes our 7 multi-family assets and our single-family asset portfolio held in CRAF and Caliber Auction Homes, LLC. As of December 31, 2018 and 2017, our residential segment had approximately $112 million and $90 million of assets under management.

Commercial — Our commercial segment includes our 2 office buildings and 3 self-storage facilities. As of December 31, 2018 and 2017, our commercial segment had approximately $63 million and $39 million, respectively, of assets under management.

Diversified — Our diversified segment includes our diversified fund portfolio (CDIF and CDOF II), and our lending funds (CFIF II and CFIF III). As of December 31, 2018 and 2017, our diversified segment had approximately $76 million and $92 million, respectively of assets under management.

Each segment works closely together and plays a critical role in supporting our investment strategy by providing local market intelligence and real-time data for evaluating investments, generating proprietary transaction flow and creating value through efficient implementation of fund management strategies. We earn management fees pursuant to contractual arrangements with Caliber funds and allocate certain direct and indirect costs related to overhead and marketing. We also earn a performance-based fee from our funds which is typically in the form of a special residual allocation of income known as carried interest, but only to the extent that certain minimum investment results are achieved by the related fund. Under US GAAP, we are required to consolidate some of the investment funds that we manage. However, for segment reporting purposes, we present revenues and expenses on a basis that deconsolidates these funds and includes our other funds that are not consolidated.

Trends Affecting Our Business

In December 2017, the President signed the Tax Cuts and Jobs Act, or TCJA, providing a significant overhaul to the U.S. federal tax code. We expect the TCJA to be a net positive impact to the U.S. economy. In particular, Congress established the Qualified Opportunity Zone program (the “QOZ Program”), which provides preferential tax treatment to tax payers who invest eligible capital gains into qualified opportunity funds (“QOFs”). The Caliber Tax Advantaged Opportunity Zone Fund, LP is a QOF that will invest its capital into qualified opportunity zones (“QOZs”) and take advantage of this program. IRS and Treasury regulations are forthcoming and we will continue to monitor and evaluate the interpretations as they are issued.

Our success at raising new capital into our funds is impacted by the extent to which new investors see alternative assets as a viable option for capital appreciation and/or income generation. We have experienced increased volatility in the stock market throughout 2018 with the Cboe Volatility index more than doubling to 36.07 in December, before ending the year at 25.42 or 130%. As the markets continue to demonstrate unpredictable trends, we believe the increasing appetite for stable real assets will be a continuing trend. Since our inception we have continued to successfully raise capital into our funds with our total capital raised through December 31, 2018 exceeding $250 million. We expect that our fundraising capabilities will continue into 2019. While we have had historical successes, there can be no assurance that fundraises for our new and existing funds will experience similar success. See “Risk Factors — Risks Related to Our Company”. Our business depends in large part on our ability to raise capital from investors. If we were unable to raise such capital, we would be unable to collect management fees or deploy such capital into investments, which would materially reduce our revenues and cash flow and adversely affect our financial condition.

We remain confident about our ability to find, identify, and source new investment opportunities that meet the requirements and return profile of our investment funds despite headwinds associated with increased asset valuations, competition and increased overall cost of credit. We continue to identify strategic acquisitions on off-market terms and anticipate that this trend will continue as we begin to branch outside of Arizona. We are at a point in our deal cycle where some of our funds have begun to exit significant parts of their portfolios while other are approaching a potential harvesting phase. We have complemented these cycles with other newer funds that will maintain management fees while providing continued sources of activity for our construction and development segment. We expect this trend to continue into 2019, and therefore expect management fees and construction fees to increase year over year.

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Acquiring new assets includes being able to negotiate favorable loans on both a short and long-term basis. We forecast and project our returns using assumptions about, among other things, the types of loans that we can expect the market to extend for a particular type of asset. This becomes more complex when the asset also requires construction financing. We may also need to refinance existing loans that are due to mature. Factors that affect these arrangements include the interest rate and economic environment, the estimated fair value of the real property, and the profitability of the asset’s historical operations.

The demand from investors is dependent upon the type of asset, the type of return it will generate (current cash flow, long term capital gains, or both) and the actual return earned by our Fund investors relative to other comparable or substitute products. General economic factors and conditions, including the general interest rate environment and unemployment rates, may affect an investor’s ability and desire to invest in real estate. For example, a significant interest rate increase could cause a projected rate of return to be insufficient after considering other risk exposures. Additionally, if weakness in the economy emerges and actual or expected default rates increase, investors in our Funds may delay or reduce their investments. However, we believe our approach to investing and the capabilities that Caliber manages throughout the deal cycle will continue to offer an attractive value proposition to investors.

Stock-Based Compensation

Stock-based compensation includes the expense related to restricted stock grants made to our employees. All stock-based awards made to employees are recognized in the consolidated financial statements based on their estimated fair value on the date of grant. As of December 31, 2018, the fair value of the shares granted had been established by our board of directors primarily based upon a Section 409A valuation provided by an independent third-party valuation firm.

Stock-based compensation expense is recognized on a straight-line basis over the requisite service period of the awards, which is generally the vesting term of 4 years.

Share awards issued to non-employees are recorded at their fair value on the awards’ grant date, which is estimated using the same methodology described above.

Key Financial Measures

Our key financial measures are discussed in the following pages. Additional information regarding these key financial measures and our other significant accounting policies can be found in Note 2 to the consolidated financial statements included herein.

Total Revenue

We generate the majority of our revenue from (i) construction and development income, (ii) fund management fees, (iii) brokerage commissions, (iv) hospitality income, (v) real estate sales, and (vi) rental income.

Construction and Development Income.   We earn construction and development income for providing construction management and general contractor services to third-party clients and our Funds. Construction and development income is recognized at the time services are performed. We measure the progress toward completion of the project to determine the amount of revenue and profit to be recognized in each reporting period. Profit is recorded based upon the product of estimated contract profit-at-completion times the current percentage-complete for the contract. Our progress estimates are based upon estimates of the total cost to complete the project, which considers, among other things, the current project schedule and anticipated completion date, as well as estimates of the extent of progress toward completion. While progress is generally based upon costs incurred in relation to total estimated costs at completion, we also use alternative methods including physical progress, labor hours incurred to total estimated labor hours at completion or others depending on the type of project.

Fund Management Fees.   Fund management fees include management fees and performance fees. We earn management fees for sponsorship and project management activities with respect to Caliber funds in which we hold a general partner interest. Fund management fees exclude the reimbursement of any company expenses paid by the Company on behalf of the Funds pursuant to the respective fund operating

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agreements, including professional fees, expenses associated with the acquisition, and other fund administrative expenses. Performance fees are comprised of either annual incentive fees which are earned when the related fund has achieved a minimum stated annual rate of return or performance-based capital allocation from fund limited partners/members to us, commonly known as carried interest. Caliber recognizes carried interest revenue when its earned and our carry is deemed collectible.

Brokerage Commissions.   We earn real estate brokerage commissions by acting as a broker for real estate owners seeking to sell or investors seeking to buy properties. We also earn these fees on transactions that are consummated for each of our funds. Revenues from real estate brokerage commissions are typically recognized at the close of escrow. Real estate brokerage commissions are typically based upon the value of the property.

Hospitality Income.   We recognize hospitality income based on activities generated by our consolidated hotel assets which include room rentals, food and beverage sales, and other sales.

Real Estate Sales.   Real estate sales are comprised of sales proceeds from the sale of single-family homes and recognized generally when the sale of an asset has been completed, cash has been received, and the risks and rewards of ownership have transferred to the buyer.

Rental Income.   Rental income includes periodic rent collected from each of our single-family, multi-family, and commercial assets. Revenue is recognized when earned and collectability is reasonably assured.

Total Expenses

Total expenses include cost of sales associated with each of hospitality, construction, real estate, and brokerage, operating costs, general and administrative, marketing and advertising, franchise fees, management fees, and depreciation.

Cost of Sales — Hospitality.   These costs of sales include salaries and materials incurred to generate revenue for room rentals and food and beverage sales at our hotels.

Cost of Sales — Construction/Development.   These represent the materials, labor and overhead applied to each of the construction projects the Company was involved in.

Cost of Sales — Real Estate.   These costs represent the historical basis of the properties that were sold in the period.

Cost of Sales — Brokerage.   These costs represent the commissions paid by the Company to its brokers who were involved in closing the associated real estate transaction.

Operating Costs.   Operating costs include payroll related to our operating properties, repairs and maintenance costs, insurance, property taxes, utilities, and ground leases amortization.

General and administrative.   General and administrative expenses include corporate level payroll, professional fees, travel and related expenses and communications and information services. We expect that general and administrative expenses will vary due to infrequent or unusual items such as expenses associated with litigation and contingencies. Also, in periods of significant fund raising, our general and administrative expenses will increase accordingly.

Marketing and advertising.   The majority of our marketing and advertising spend is done by our hotel operations to help increase room stays and promote corporate events. This category also contains the costs spent directly by Caliber to hold Caliber Summit monthly and annual events. These events raise awareness in the investment community about Caliber’s newest funds and is an important part of Caliber’s ability to raise capital for new projects.

Franchise fees.   These fees are paid by the hotels to maintain their brand each year and are based on a percentage of the revenue generated by each hotel respectively.

Management fees.   These costs represent fees paid to third-party service providers. All management fees paid to Caliber by a consolidated fund, are eliminated in consolidation.

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Depreciation.   Depreciation is recorded using the straight-line method over the estimated useful lives of the related property, plant, and equipment and ranges from 3 to 40 years depending on the asset type.

Impairment.   If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset.

Other (Income) Expenses

Other (Income) expenses include interest expense, interest income, (gains)/losses from deposition of real estate, and all other non-operating income and expenses.

Cautionary Statement Regarding Non-GAAP Measures

We present assets under management or “AUM”, EBITDA, and Adjusted EBITDA in this Offering Circular, which are not recognized financial measures under accounting principles generally accepted in the United States of America (“GAAP”), as supplemental disclosures because we regularly review the metrics to evaluate our funds, measure our performance, identify trends, formulate financial projections and make strategic decisions.

Assets under management.   AUM refers to the assets we manage or advise. We monitor two types of AUM:

(i)

Capital AUM — This is the total debt and equity capital raised from accredited investors in our Funds at any point in time. We use this information to monitor, among other things, the amount of ‘preferred return’ that would be paid at the time of a distribution. Our asset management fees are based on a percentage of capital raised so we monitor Capital AUM to understand and predict our earnings. We earn asset management fees on the equity capital raised into our Funds, and do not earn fees on debt capital or any capital raised directly in CaliberCos Inc.

(ii)

Fair Value (“FV”) AUM — This is the aggregate fair value of the real estate assets we manage or advise. We value our operating assets annually to help make sale and hold decisions and to evaluate whether an existing asset would benefit from refinancing or recapitalization. This also gives us insight into our carried interest.

EBITDA.   EBITDA represents earnings before net interest expense, income taxes, depreciation, and amortization.

Adjusted EBITDA.   Adjusted EBITDA represents earnings before net interest expense, income taxes, depreciation, amortization, impairment expense, loss on extinguishment of debt, severance payments, founders income tax reimbursement, and certain cash and non-cash charges related to legal and accounting costs associated with getting the Company prepared for filing this Offering Circular.

Our calculation of Capital AUM and FV AUM may differ from our competitors, thereby making these metrics non-comparable to our competitors. Our AUM calculations are not based on any definition of AUM that is set forth in the respective operating agreements governing the funds we manage or advise.

When analyzing our operating performance, investors should use these measures in addition to, and not as an alternative for, their most directly comparable financial measure calculated and presented in accordance with GAAP. We generally use these non-GAAP financial measures to evaluate operating performance and for other discretionary purposes. We believe that these measures provide a more complete understanding of ongoing operations, enhance comparability of current results to prior periods and may be useful for investors to analyze our financial performance because they eliminate the impact of selected charges that may obscure trends in the underlying performance of our business. Because not all companies use identical calculations, our presentation of EBITDA and adjusted EBITDA may not be comparable to similarly identified measures of other companies.

EBITDA and adjusted EBITDA are not intended to be measures of free cash flow for our discretionary use because they do not consider certain cash requirements such as tax and debt service payments. These measures may also differ from the amounts calculated under similarly titled definitions in

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our debt instruments, which amounts are further adjusted to reflect certain other cash and non-cash charges and are used by us to determine compliance with financial covenants therein and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

Consolidation of Certain Caliber Funds

The Company consolidates all entities that it controls either through majority voting interest or as the primary beneficiary of variable interest entities. On January 1, 2016, the Company adopted ASU 2015-2, Consolidation (Topic 810): Amendments to the Consolidation Analysis, which provides a revised consolidation model for all reporting entities to use in evaluating whether to consolidate certain types of legal entities. Certain of Caliber’s funds are consolidated by Caliber even though Caliber has only a minority economic interest in those funds. Caliber’s financial statements reflect the assets, liabilities, revenues, expenses, and cash flows of the Consolidated Funds, on a gross basis. The majority of the economic interest in the Consolidated Funds, which are held by fund investors or other third parties, are attributed to noncontrolling interests in our consolidated financial statements. All of our management fees, construction revenues, and certain other amounts earned by Caliber from those funds are eliminated in consolidation. Further information on our consolidation policy can be found in Note 2 to the consolidated financial statements included in this Form 1-A.

As of December 31, 2018 and 2017, our Consolidated Funds represent approximately 59.4% and 63.6% of our AUM, respectively, and 55.7% and 33.8% of our management fees, respectively.

Consolidated Results of Operations

Comparison of Years Ended December 31, 2018 and 2017

The following table and discussion provides insight into our consolidated results of operations for the years ended December 31, 2018 and 2017.

​	2018			2017			Change			Change
Total revenues	​	$	70,672,140	​	$	64,419,136	​	$	6,253,004	​	9.7%
Total expenses	​	​	71,593,143	​	​	63,331,217	​	​	8,261,926	​	13.0%
Operating Income	​	​	(921,003)	​	​	1,087,919	​	​	(2,008,922)	​	-184.7%
Total other expenses, net	​	​	12,152,622	​	​	9,593,503	​	​	2,559,119	​	26.7%
Net Loss Before Income Taxes	​	​	(13,073,625)	​	​	(8,505,584)	​	​	(4,568,041)	​	53.7%
Provision for (benefit from) income taxes	​	​	—	​	​	—	​	​	—	​	0.0%
Net Loss	​	​	(13,073,625)	​	​	(8,505,584)	​	​	(4,568,041)	​	53.7%
Net loss attributable to noncontrolling interests	​	​	(10,080,924)	​	​	(5,802,121)	​	​	(4,278,803)	​	73.7%
Net Loss Attributable to CaliberCos, Inc.	​	$	(2,992,701)	​	$	(2,703,463)	​	$	(289,238)	​	10.7%

For the years ended December 31, 2018 and 2017, total revenue was $70.7 million and $64.4 million, respectively, representing a year-over-year increase of $6.3 million or 9.7%. Of the increase in revenue, $2.6 million is due to revenue generated by two new hotels that we acquired in July 2018. In addition, we were successful in generating an additional $2.7 million from increases to rate and occupancy across our hotel portfolio. We continued to increase fund management fees by approximately $3.1 million corresponding to the increased growth of our consolidated capital under management of approximately $23 million and the opening of our Caliber Tax Advantaged Fund, and Caliber Fixed Income Fund III. This was offset by a reduction in our real estate sales of approximately $1.5 million as we continue to sell the remainder of the Caliber Auction Homes portfolio.

For the years ended December 31, 2018 and 2017, total expenses were $71.6 million and $63.3 million, respectively, representing a year-over-year increase of  $8.3 million or 13.0%. The increase is driven primarily in our hospitality and fund management segments. Increases in our hospitality segment are driven by the acquisition of two new hotels in July 2018 in addition to the increased performance of our hotel portfolio. These changes drove a $2.2 million increase in cost of goods sold, $1.5 million increase of operating costs (net of certain reclassifications out of general and administrative expenses), $0.5 million

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increase in marketing and advertising, $0.5 million increase in franchise fees, and $1.1 million increase in depreciation expense. As we continued to raise more capital and acquire more assets, we realized increases in our fund management segment resulting in increases of  $3.1 million in operating costs and $0.2 million in advertising and marketing. These changes were offset by a decrease in expenses for the other segments.

For the years ended December 31, 2018 and 2017, total other expenses were $12.2 million and $9.6 million, respectively, representing a year-over-year increase of  $2.6 million or 26.7%. The increase relates to higher interest expense generated by the addition of two new hotels and the refinancing of approximately $95 million in debt that was due in the period. This was offset by the sale of our Uptown apartments in 2017 which generated a $1.6 million gain in the prior year. In addition, we have historically financed our operations primarily through a combination of operating cash flows, private offerings of our equity securities, and secured and unsecured debt. At December 31, 2018, we had approximately $7.3 million in corporate debt which carries interest rates ranging from 8.25% up to 12.00%, resulting in approximately $0.9 million in interest expense for the year. We plan on using approximately $7.3 million of the net proceeds of the Offering to eliminate this debt in favor of more competitive financing which we believe will be readily available after the completion of this offering. For this reason, we believe we will be able to recognize substantial cost savings and generate increased cash flow from core operations, as well as enabling us to introduce more affordable financing from traditional sources to take advantage of market opportunities which may have previously been unavailable.

Segment Analysis

The following discussion is specific to our various segments for the periods presented. Our segment information is presented in a format consistent with the information senior management uses to make operating decisions, assess performance and allocate resources.

For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our Consolidated Funds. As a result, segment revenues from construction and development income, fund management fees, and brokerage income are different than those presented on a consolidated US GAAP basis because these fees are eliminated in consolidation when they are derived from a consolidated fund. Furthermore, segment expenses are also different than those presented on a consolidated US GAAP basis due to the exclusion of fund expenses that are paid by the consolidated funds.

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Comparison of Years Ended December 31, 2018 and 2017

Fund Management

The following table presents our results of operations for our Fund Management segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​		​		​		​
Fund management	​	8,381,850	​	3,997,765	​	4,384,085	​	109.7%
Total revenues	​	8,381,850	​	3,997,765	​	4,384,085	​	109.7%
Expenses	​		​		​		​
Operating costs	​	6,403,829	​	3,309,369	​	3,094,460	​	93.5%
General and administrative	​	2,412,934	​	2,202,841	​	210,093	​	9.5%
Marketing and advertising	​	487,814	​	272,402	​	215,412	​	79.1%
Depreciation	​	85,783	​	98,365	​	(12,582)	​	-12.8%
Total expenses	​	9,390,360	​	5,882,977	​	3,507,383	​	59.6%
Operating Loss	​	(1,008,510)	​	(1,885,212)	​	876,702	​	-46.5%
Other (Income) Expenses	​		​		​		​
Other (income) expenses, net	​	(28,571)	​	152,498	​	(181,069)	​	-118.7%
Interest income	​	—	​	(856)	​	856	​	-100.0%
Interest expense	​	939,314	​	1,463,763	​	(524,449)	​	-35.8%
Total other expenses, net	​	910,743	​	1,615,405	​	(704,662)	​	-43.6%
Net Loss	​	(1,919,253)	​	(3,500,617)	​	1,581,364	​	-45.2%

Fund management revenues increased by $4.4 million from 2017 to 2018. Approximately $0.6 million of this increase relates to management fees. We generally earn between 1.0% to 1.5% on the total capital managed for each fund and we successfully raised $49.7 million in 2018 compared to $34.7 million in 2017. We also increased our accounting fee charged to the funds by approximately $1.0 million to recognize the additional headcount which was needed to support the management of the funds. In addition, fee income increased by $1.5 million from 2017 to 2018, due largely to organization and set up fees earned upon the creation of the Caliber Tax Advantaged Opportunity Zone Fund, LP and the Caliber Fixed Income Fund III, LP in 2018. We generated approximately $0.6 million in fees from activities which supported the refinancing of approximately $95 million in loans that matured in the year which was an increase of $0.4 million from prior year. Finally, we generated approximately $1.4 million in capital raise fees through Caliber Securities, LLC on raised capital into our funds. The fees earned are fixed in nature but are structured to be 3.5% or less of the total capital raised into any one fund. These earnings increased by $0.8 million from 2017 to 2018.

Operating costs increased from 2017 to 2018 by approximately $3.1 million largely due to an increase in corporate payroll and issuing employee stock options. Our employee stock options were issued on June 30, 2018 and we recognized approximately $1.3 million in compensation expense through December 31, 2018 from vesting.

General and administrative costs increased year over year by approximately $0.2 million. This increase is primarily due to additional professional fees, specifically in legal and accounting, we incurred as a result of getting our offering document prepared and other related matters.

Marketing and advertising increase from 2017 to 2018 by approximately $0.2 million or 79% largely due to the increased costs of hosting the annual Caliber Summit (three-day conference) and Summit Series throughout the year (one to three-hour micro events) with our existing and potential investors, and increased costs from third party fees to support ongoing efforts to streamline and clarify the Caliber brand.

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Other (income) expenses, net decreased by approximately $0.2 million from 2017 to 2018 due to additional write offs of fixed assets compared to prior year which was offset by the gain on the sale of Uptown Apartment’s ownership interest.

Construction and Development

The following table presents our results of operations for our Construction and Development segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​	​	​	​	​	​	​	​
Construction and development	​	9,425,377	​	20,565,534	​	(11,140,157)	​	-54.2%
Other	​	9,399	​	—	​	9,399	​	100.0%
Total revenues	​	9,434,776	​	20,565,534	​	(11,130,758)	​	-54.1%
Expenses	​	​	​	​	​	​	​	​
Cost of sales – construction	​	​	​	​	​	​	​	​
and development	​	8,824,608	​	18,622,858	​	(9,798,250)	​	-52.6%
Operating costs	​	685,756	​	543,337	​	142,419	​	26.2%
General and administrative	​	41,492	​	35,609	​	5,883	​	16.5%
Marketing and advertising	​	2,275	​	8,904	​	(6,629)	​	-74.4%
Total expenses	​	9,554,131	​	19,210,708	​	(9,656,577)	​	-50.3%
Operating (Loss) Income	​	(119,355)	​	1,354,826	​	(1,474,181)	​	-108.8%
Other Expenses	​	​	​	​	​	​	​	​
Other expenses	​	—	​	9,718	​	(9,718)	​	-100.0%
Total other expenses	​	—	​	9,718	​	(9,718)	​	-100.0%
Net (Loss) Income	​	(119,355)	​	1,345,108	​	(1,464,463)	​	-108.9%

Construction and development revenues decreased to $9.4 million from $20.6 million for the years ended December 31, 2018 and 2017, respectively. The $11.2 million decrease in revenue was a result of more expansive construction projects being completed in 2017. In particular our Hilton hotel located in Tucson was undergoing a full remodel whose total project cost was estimated to be approximately $8.5 million. In addition, we began the rebuild of our student housing project in GC Square, LLC. This project is estimated to be approximately $5.5 million. Both major projects were completed by early 2018. No major projects were started in 2018 which resulted in the year over year decrease in revenues.

Cost of sales and operating costs decreased consistently with revenues. We have focused on maintaining margins between 5% and 15% on our construction work. Higher average margins are billed on work completed for third-party projects. When Caliber completes construction and development work on our Caliber managed assets, we typically charge a much lower margin in an effort to cover our overhead. The majority of the work completed in 2018 and 2017 was on our Caliber managed assets.

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Property Management

The following table presents our results of operations for our Property Management segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​	​	​	​	​	​	​	​
Rental income	​	854	​	—	​	854	​	100.0%
Property management	​	476,381	​	700,870	​	(224,489)	​	-32.0%
Other	​	87,475	​	—	​	87,475	​	100.0%
Total revenues	​	564,710	​	700,870	​	(136,160)	​	-19.4%
Expenses	​	​	​	​	​	​	​	​
Operating costs	​	195,699	​	677,813	​	(482,114)	​	-71.1%
General and administrative	​	53,221	​	87,483	​	(34,262)	​	-39.2%
Marketing and advertising	​	31	​	—	​	31	​	100.0%
Management fees	​	1,075	​	880	​	195	​	22.2%
Total expenses	​	250,026	​	766,176	​	(516,150)	​	-67.4%
Net Income (Loss)	​	314,684	​	(65,306)	​	379,990	​	-581.9%

Property management income and expenses decreased year over year due to the sale of our Mountain View Square multi-family property. We have also started to transition some of our property management activities to third party providers in an effort to increase the performance of some of our niche assets.

Real Estate Brokerage

The following table presents our results of operations for our Real Estate Brokerage segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​	​	​	​	​	​	​	​
Brokerage	​	1,892,329	​	1,860,411	​	31,918	​	1.7%
Total revenues	​	1,892,329	​	1,860,411	​	31,918	​	1.7%
Expenses	​	​	​	​	​	​	​	​
Cost of sales – brokerage	​	1,033,162	​	1,445,458	​	(412,296)	​	-28.5%
Operating costs	​	94,941	​	15,748	​	79,193	​	502.9%
General and administrative	​	110,390	​	124,385	​	(13,995)	​	-11.3%
Marketing and advertising	​	715	​	60,003	​	(59,288)	​	-98.8%
Total expenses	​	1,239,208	​	1,645,594	​	(406,386)	​	-24.7%
Operating Income	​	653,121	​	214,817	​	438,304	​	204.0%
Other Expenses	​	​	​	​	​	​	​	​
Other expenses	​	160	​	—	​	160	​	100.0%
Interest expense	​	743	​	3,478	​	(2,735)	​	-78.6%
Total other expenses	​	903	​	3,478	​	(2,575)	​	-74.0%
Net Income	​	652,218	​	211,339	​	440,879	​	208.6%

Our brokerage cost of sales decreased by approximately $0.4 million from 2017 to 2018, mainly due to a smaller portion of our sales being completed by third party brokers in 2018 compared to 2017. In 2018, 58% of our brokerage sales were completed by third party brokers, compared to 80% in 2017.

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Hospitality

The following table presents our results of operations for our Hospitality segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​	​	​	​	​	​	​	​
Hospitality	​	50,866,351	​	46,283,522	​	4,582,829	​	9.9%
Total revenues	​	50,866,351	​	46,283,522	​	4,582,829	​	9.9%
Expenses	​	​	​	​	​	​	​	​
Cost of sales – hospitality	​	20,142,966	​	18,185,547	​	1,957,419	​	10.8%
Operating costs	​	10,640,885	​	7,545,355	​	3,095,530	​	41.0%
General and administrative	​	3,496,893	​	5,110,525	​	(1,613,632)	​	-31.6%
Marketing and advertising	​	3,897,823	​	3,398,913	​	498,910	​	14.7%
Franchise fees	​	3,580,300	​	3,067,828	​	512,472	​	16.7%
Management fees	​	3,919,837	​	2,498,623	​	1,421,214	​	56.9%
Depreciation	​	6,662,663	​	5,518,624	​	1,144,039	​	20.7%
Total expenses	​	52,341,367	​	45,325,415	​	7,015,952	​	15.5%
Operating (Loss) Income	​	(1,475,016)	​	958,107	​	(2,433,123)	​	-254.0%
Other (Income) Expenses	​	​	​	​	​	​	​	​
Other expenses, net	​	726,910	​	532,391	​	194,519	​	36.5%
Interest income	​	(35,301)	​	—	​	(35,301)	​	100.0%
Interest expense	​	9,805,722	​	7,786,175	​	2,019,547	​	25.9%
Total other expenses, net	​	10,497,331	​	8,318,566	​	2,178,765	​	26.2%
Net Loss	​	(11,972,347)	​	(7,360,459)	​	(4,611,888)	​	62.7%

Hospitality revenues increased by approximately $4.6 million from 2017 to 2018. Approximately $2.6 million of this increase was due to the acquisition of two hotels in Q3 – 2018; the Sheraton Four Points - Tempe and the Holiday Inn and Suites – Ocotillo. In addition, our hotel operations were successful at driving up rate and occupancy at all of our Arizona hotel assets. This resulted in approximately $2.7 million of additional revenues from 2017 to 2018. Our average rate and occupancy increased at our Arizona properties by 1.25% and 5.28%, respectively from 2017 to 2018.

Hospitality total expenses increased from 2017 to 2018 by approximately $7 million due to the two additional hotels that were added to the portfolio in 2018. Both of these hotels incurred significant changeover costs as part of their on-boarding.

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Residential

The following table presents our results of operations for our Residential segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​	​	​	​	​	​	​	​
Real estate sales	​	6,289,200	​	7,877,470	​	(1,588,270)	​	-20.2%
Rental income	​	8,204,318	​	7,613,774	​	590,544	​	7.8%
Property management	​	60,804	​	—	​	60,804	​	100.0%
Other	​	75,675	​	—	​	75,675	​	100.0%
Total revenues	​	14,629,997	​	15,491,244	​	(861,247)	​	-5.6%
Expenses	​	​	​	​	​	​	​	​
Cost of sales – real estate	​	5,435,336	​	7,085,829	​	(1,650,493)	​	-23.3%
Operating costs	​	4,361,579	​	4,218,934	​	142,645	​	3.4%
General and administrative	​	431,494	​	609,122	​	(177,628)	​	-29.2%
Marketing and advertising	​	263,180	​	158,075	​	105,105	​	66.5%
Management fees	​	1,072,093	​	728,129	​	343,964	​	47.2%
Depreciation	​	2,560,219	​	2,157,223	​	402,996	​	18.7%
Impairment	​	839,250	​	460,906	​	378,344	​	82.1%
Total expenses	​	14,963,151	​	15,418,218	​	(455,067)	​	-3.0%
Operating Income	​	(333,154)	​	73,026	​	(406,180)	​	391.1%
Other (Income) Expenses	​	​	​	​	​	​	​	​
Other expenses, net	​	(179,867)	​	264,641	​	247,271	​	93.4%
Interest income	​	(33,801)	​	(23,571)	​	(10,230)	​	43.4%
Gain on disposition of real estate	​	(2,608,061)	​	(1,478,865)	​	(1,129,196)	​	76.4%
Interest expense	​	2,618,240	​	2,598,563	​	19,677	​	0.8%
Total other expenses, net	​	(203,489)	​	1,360,768	​	(872,478)	​	-64.1%
Net Loss	​	(129,665)	​	(1,287,742)	​	1,158,077	​	-89.9%

Sales in our Residential segment decreased by approximately $1.6 million from 2017 to 2018. We sold 35 homes from our Caliber Auction Home portfolio in 2017 compared to 26 homes sold in 2018. These transactions also had a similar effect on cost of sales decreasing it by $1.7 million year over year.

Rental income increased by approximately $0.6 million from 2017 to 2018. Approximately $0.4 million was generated from our GC Square property operating for a full year in 2018 after completion of its construction in late 2017. In addition, we realized approximately $0.2 million of additional rental income from the growth of the Caliber Residential Advantage Fund, LP portfolio which grew by 24 properties throughout 2018.

Expenses, less cost of sales, increased by approximately $1.2 million. Management fees increased by approximately $0.3 million due to the growth of the Caliber managed portfolio. Depreciation increased by approximately $0.4 million due to a full year of operations at our GC Square property after we completed construction late in 2017. Finally, impairment increased by approximately $0.4 million due to the continued erosion of the remaining value of our legacy Caliber Auction Home inventory.

Total other expenses, net decreased by approximately $1.6 million from 2017 to 2018. This was due in large part to the gain on the sale of our Mountain View Square property which generated a gain of approximately $2.6 million in 2018 compared to the sale of our Uptown apartments in 2017 which resulted in a gain of approximately $1.5 million. The remaining $0.4 million decrease was caused by a net gain from the receipt of insurance proceeds at GC Square in 2018 from a claim due from storm damage sustained to the property in 2016.

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Commercial

The following table presents our results of operations for our Commercial segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​	​	​	​	​	​	​	​
Rental income	​	959,077	​	964,115	​	(5,038)	​	-0.5%
Total revenues	​	959,077	​	964,115	​	(5,038)	​	-0.5%
Expenses	​	​	​	​	​	​	​	​
Operating costs	​	550,412	​	744,332	​	(193,920)	​	-26.1%
General and administrative	​	292,237	​	30,448	​	261,789	​	859.8%
Marketing and advertising	​	40,726	​	60,895	​	(20,169)	​	-33.1%
Management fees	​	234,518	​	264,604	​	(30,086)	​	-11.4%
Depreciation	​	270,841	​	440,375	​	(169,534)	​	-38.5%
Total expenses	​	1,388,734	​	1,540,654	​	(151,920)	​	-9.9%
Operating Loss	​	(429,657)	​	(576,539)	​	146,882	​	-25.5%
Other (Income) Expenses	​	​	​	​	​	​	​	​
Other expenses, net	​	94,119	​	17,501	​	76,618	​	437.8%
Gain on disposition of real estate	​	(699,222)	​	(492,362)	​	(206,860)	​	42.0%
Interest expense	​	1,309,209	​	640,343	​	668,866	​	104.5%
Total other expenses, net	​	704,106	​	165,482	​	538,624	​	325.5%
Net Loss	​	(1,133,763)	​	(742,021)	​	(391,742)	​	52.8%

The Commercial segment saw an increase in total other expenses, net of approximately $0.6 million from 2017 to 2018. This was due an increase in interest expense of approximately $0.7 million from our investment in CH Mesa, LLC. The mortgage on this portfolio of buildings in downtown Mesa was entered into throughout the last quarter of 2017. Our expense in 2018 represents a full year of interest. This was partially offset by a gain on the disposition of a small parcel of land at our project in Johnstown, Colorado which we sold to the Colorado Department of Transportation so they can build access roads to our property.

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Diversified

The following table presents our results of operations for our Diversified segment:

​	Year Ended December 31,				​	​	​	​
​	2018		2017		Change		Change
Revenues	​	​	​	​	​	​	​	​
Fund management	​	—	​	30,000	​	(30,000)	​	-100.0%
Total revenues	​	—	​	30,000	​	(30,000)	​	-100.0%
Expenses	​	​	​	​	​	​	​	​
Operating costs	​	636,854	​	36,086	​	600,768	​	1664.8%
General and administrative	​	1,620,256	​	796,882	​	823,374	​	103.3%
Marketing and advertising	​	76,658	​	70,006	​	6,652	​	9.5%
Management fees	​	1,039,150	​	771,718	​	267,432	​	34.7%
Total expenses	​	3,372,918	​	1,674,692	​	1,698,226	​	101.4%
Operating Loss	​	(3,372,918)	​	(1,644,692)	​	(1,728,226)	​	105.1%
Other (Income) Expenses	​	​	​	​	​	​	​	​
Other income	​	—	​	(1,217)	​	1,217	​	-100.0%
Income from investments	​	(2,383,746)	​	(3,807,830)	​	1,424,084	​	-37.4%
Interest income	​	(1,212,541)	​	(1,414,847)	​	202,306	​	-14.3%
Interest expense	​	2,419,432	​	2,649,432	​	(230,000)	​	-8.7%
Total other income, net	​	(1,176,855)	​	(2,574,462)	​	1,397,607	​	-54.3%
Net (Loss) Income	​	(2,196,063)	​	929,770	​	(3,125,833)	​	-336.2%

Our Diversified segment experienced the opening of two new funds to the Caliber portfolio; the Caliber Fixed Income Fund III, LP (CFIFIII) and the Caliber Tax Advantaged Opportunity Fund, LP (CTAF) in 2018. We raised approximately $10.2 million into CFIFIII and approximately $12.9 million into CTAF in 2018. The opening of these two funds resulted in approximately $2.2 million of additional expenses due to origination and fund set up fees, marketing costs, and management fees.

For the years ended December 31, 2018 and 2017, CDIF, LLC generated a total of approximately $2.4 million and $3.8 million, respectively of investment income. The decrease year over year was attributable to $2.9 million from the refinancing of the Treehouse apartments in 2017, offset by the sale of the Mountain View apartments in 2018 which generated $1.3 million of investment income.

Interest expense decreased by approximately $0.2 million from December 31, 2017 to December 31, 2018. A portion of the decrease is due to the declined size of Caliber Fixed Income Fund II, LLC (CFIFII). The decrease of CFIF II was somewhat offset by the addition of CFIFIII.

Investment Valuations

The investments that are held by our Funds are generally considered to be illiquid and have no readily ascertainable market prices. We value these investments based on our estimate of their fair value as of the date of determination. We estimate the fair value of our Fund’s investments based on a number of inputs built within forecasting models which are either developed by a third party or by our internal finance team. The models generally rely on discounted cash flow analysis and other techniques and may include independently sourced market parameters. The material estimates and assumptions used in these models include the timing and expected amounts of cash flows, income and expenses for the property, the appropriateness of discount rates used, overall capitalization rate, and, in some cases, the ability to execute, estimated proceeds and timing of expected sales and financings. The majority of our assets utilize the income approach to value the property. The overall capitalization rate for the Hospitality, Residential, and

44

Commercial segment range from 7.75% – 8.50%, 6.00% – 6.50%, and 7.25% – 7.50%, respectively. Where appropriate, management may obtain additional supporting evidence of values from methods generally utilized in the real estate investment industry, such as appraisal reports and broker price opinion (BPO) reports.

With respect to the underlying factors that led to the significant market appreciation in the current year, we identify assets that are undervalued and/or underperforming at the time of acquisition. Such assets generally undergo some form of repositioning soon after our acquisition in order to help drive increased appreciation and operating performance. Once the repositioning is complete, we focus on increasing the asset’s net operating income, thereby further increasing the value of the asset. Making below-market acquisitions, adding value through development activities, and increasing free cash flow with proper management all represent a material component to our core business model and have contributed to the significant market appreciation in the current year.

Assets under Management

The following table presents Capital AUM and FV AUM by segment as of December 31, 2018 and 2017.

Capital AUM

​	2018			2017
Hospitality	​	$	39,338,449	​	$	32,716,015
Residential	​	​	20,059,553	​	​	16,776,624
Commercial	​	​	5,428,238	​	​	1,615,000
Diversified	​	​	79,027,410	​	​	56,128,969
​	​	$	143,853,649	​	$	107,236,608

FV AUM

​	2018			2017
Hospitality	​	$	200,346,000	​	$	149,699,999
Residential	​	​	111,572,000	​	​	90,307,900
Commercial	​	​	62,639,000	​	​	38,564,287
​	​	$	374,557,000	​	$	278,572,186

The table below represents the change in appreciation on portfolio investments of our funds. See “— Segment Analysis’ above for a detailed discussion by segment of the activity affecting total FV AUM for each of the periods presented.

Capital AUM

​	2018			2017
Beginning of year	​	$	107,236,609	​	$	92,060,634
Originations	​	​	49,644,702	​	​	27,696,552
Redemptions	​	​	(13,027,662)	​	​	(12,520,577)
End of year	​	$	143,853,650	​	$	107,236,609

FV AUM

​	2018			2017
Beginning of year	​	$	278,572,186	​	$	204,112,872
Assets acquired	​	​	29,957,391	​	​	17,943,620
Construction/Renovation	​	​	13,016,662	​	​	25,421,170
Market appreciation/depreciation, net	​	​	64,926,964	​	​	42,339,205
Asset sold	​	​	(11,916,203)	​	​	(11,244,681)
End of year	​	$	374,557,000	​	$	278,572,186

45

The investments that are held by our Funds are generally considered to be illiquid and have no readily ascertainable market prices. We value these investments based on our estimate of their fair value as of the date of determination. We estimate the fair value of our Fund’s investments based on a number of inputs built within forecasting models which are either developed by a third party or by our internal finance team. The models generally rely on discounted cash flow analysis and other techniques and may include independently sourced market parameters. The material estimates and assumptions used in these models include the timing and expected amounts of cash flows, the appropriateness of discount rates used, and, in some cases, the ability to execute, estimated proceeds and timing of expected sales and financings. Where appropriate, management may obtain additional supporting evidence of values from methods generally utilized in the real estate investment industry, such as appraisal reports and broker price opinion (BPO) reports.

Management’s overall strategy for identifying investment opportunities starts with the identification of assets which we believe are undervalued and/or underperforming at the time of acquisition. These assets generally undergo some form of repositioning soon after acquisition to help drive increased appreciation and operating performance. Once the repositioning is complete, our management team focuses on increasing the asset’s net operating income, thereby further increasing the value of the investment. Making below-market acquisitions, adding value through development activities, and increasing free cash flow with proper management all represent a material component to our core business model. Management expects to develop substantial market appreciation as each of these three activities is executed upon.

EBITDA and Adjusted EBITDA

The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA for the period presented:

​	Year Ended December 31,
​	2018			2017
Net Loss Attributable to CaliberCos Inc.	​	$	(2,992,701)	​	$	(2,703,463)
(1) Add:	​			​
Interest expense	​	​	1,504,214	​	​	2,562,393
Provision for income taxes	​	​	—	​	​	—
Depreciation expense	​	​	334,128	​	​	518,256
Amortization expense	​	​	—	​	​	41,220
EBITDA	​	​	(1,154,359)	​	​	418,406
(1) Add:	​			​
Impairment expense	​	​	839,250	​	​	460,906
Loss on extinguishment of debt	​	​	—	​	​	40,301
Severance expense	​	​	25,000	​	​	150,000
Share buy back	​	​	48,600	​	​	—
ESOP	​	​	1,333,000	​	​	—
Founders income tax reimbursement	​	​	140,000	​	​	200,000
Form 1-A costs	​	​	1,130,486	​	​	1,039,195
Adjusted EBITDA	​	$	2,361,977	​	$	2,308,808

(1)

Includes only those amounts attributable to CaliberCos Inc.

We may experience ongoing losses in our business due to the lifecycle of the assets we hold. Our investment strategy often identifies distressed and opportunistic assets which often times, require some level of remodeling or repositioning projects. In order to complete these projects timely, it is often necessary to cease operations which has a negative impact on short term profitability and cash flows. Once the projects are completed, management brings the assets back online. Achieving full capacity can take between 24 to

46

36 months of operations. For the years ended December 31, 2018 and 2017, our loss experience was a result of the mixture of assets that were in various stages of their respective lifecycle and project completion time horizons. The chart below summarizes our various assets and the scale (in dollars) and timing of their rehabilitation/stabilization.

Entity/Fund	Property	Total Construction Cost			Construction Start Date	Construction Completion Date	2018 EBITDA
CHPH, LLC	Crown Plaza Hotel Phoenix Airport	​	$	11,700,000	November 2013	December 2016	​	$	1,234,995
Indian Bend Hotel Group, LLC	Hampton Inn & Suites Scottsdale/Riverwalk	​	​	N/A	N/A	N/A	​	​	1,046,688
44th & McDowell Hotel Group, LLC	Holiday Inn & Suites Phoenix Airport North	​	​	6,063,000	August 2015	March 2018	​	​	970,542
Tucson East, LLC	Hilton Tucson East	​	​	9,500,000	July 2016	May 2018	​	​	468,771
Elliot 10 Fund, LLC	Four Points by Sheraton	​	​	856,700	January 2019	June 2019	​	​	(1,463,383)
CH Ocotillo Inv Fund, LLC	Holiday Inn & Suites Chandler	​	​	N/A	N/A	N/A	​	​	(294,170)
47th Street Phoenix Fund, LLC	Hilton Phoenix Airport	​	​	352,375	June 2017	June 2019	​	​	3,818,261
Edgewater Hotel Group, LLC	Rodeway Inn Edgewater	​	​	100,000	April 2019	June 2019	​	​	(507,100)
SF Alaska, LP	Salmon Falls Resort	​	​	400,000	January 2016	June 2019	​	​	(813,867)
Uptown Square, LLC	Uptown Apartments	​	​	100,000	April 2014	December 2017	​	​	(8,618)
South Mountain Square, LLC	South Mountain Apartments	​	​	291,000	January 2018	May 2018	​	​	411,805
GC Square, LLC	GC Square Apartments	​	​	6,731,500	December 2016	October 2018	​	​	(48,303)
Palms Weekly Portfolio, LP	Palms Weekly Apartment Portfolio	​	​	N/A	N/A	N/A	​	​	1,551,715
CDIF, LLC	Mountain View Square Apartments	​	​	N/A	N/A	N/A	​	​	2,657,419
CDIF, LLC	Treehouse Apartments	​	​	6,900,000	March 2014	June 2017	​	​	871,815
CDIF, LLC	A 24Hr Storage	​	​	N/A	N/A	N/A	​	​	2,697
CDIF, LLC	Baywood Square Professional Park	​	​	325,000	September 2015	November 2016	​	​	5,514
Fiesta Tech Owners, LLC	Fiesta Tech Commercial Center	​	​	N/A	N/A	N/A	​	​	(9,980)
1040 VIP, LLC	24X7 Automated Storage	​	​	N/A	N/A	N/A	​	​	(65,605)
1601 Athol Avenue, LLC	24X7 Automated Storage	​	​	N/A	N/A	N/A	​	​	(19,014)
Logan Airport Storage, LLC	Logan Airport Storage	​	​	N/A	N/A	N/A	​	​	(73,958)
CH Mesa Holdings, LLC	Downtown Mesa Commercial Portfolio	​	​	N/A	N/A	N/A	​	​	(60,319)
J-25 Johnstown Holdings, LLC	The Villages at Johnstown	​	​	N/A	N/A	N/A	​	​	666,952
The Roosevelt I, LLC	The Roosevelt	​	​	922,400	October 2016	December 2018	​	​	(209,406)
Circle Lofts, LLC	Eclipse	​	​	7,200,000	January 2017	July 2019	​	​	(500)
Saddleback Ranch, LLC	Saddleback Ranch	​	​	N/A	N/A	N/A	​	$	—

Liquidity and Capital Resources

Each of our Funds and the related assets that are acquired by those funds are established as separate legal entities with limited liability. Therefore, the cash flows generated by these entities, whether through operations or financing, are unavailable for general corporate purposes.

We have historically financed our operations primarily through a combination of operating cash flows, private offerings of our equity securities, and secured and unsecured debt.

We hold our excess unrestricted cash in bank accounts with several high quality financial institutions. We believe that our current capital position is sufficient to meet our current liquidity needs for at least the next 12 months, however, there can be no assurance that our current capital position will meet our liquidity needs for such period.

Equity Financings

Since inception through December 31, 2018, we have raised approximately $16.3 million from the sale of common and convertible preferred stock to third parties and management. The funds received from the issuance of our stock sales have been used for operating expenditures and refinancing our higher interest debt.

47

Unsecured Corporate Debt

As of December 31, 2018, we have issued and outstanding approximately $7.3 million of unsecured promissory notes with outstanding principal balances ranging from $9,272 to $1,050,000, and interest rates ranging from 8.25% to 12.0% and maturity dates ranging from January 2019 to November 2019. This outstanding debt resulted in approximately $0.9 million in interest expense for the year ended December 31, 2018. We plan on using approximately $7.3 million of the net proceeds of the Offering to eliminate this debt in favor of more competitive financing which we believe will be readily available after the completion of this offering. For this reason, we believe we will be able to recognize substantial cost savings and generate increased cash flow from core operations, as well as enabling us to introduce more affordable financing from traditional sources to take advantage of market opportunities which may have previously been unavailable.

48

MANAGEMENT

Name	Position	Age
Executive Officers:	​	​
John C. “Chris” Loeffler II	Chief Executive Officer and Chairman of the Board	34
Jennifer Schrader	President & Chief Operating Officer and Director	36
Jade Leung	Chief Financial Officer	44
Roy Bade	Executive Vice President Construction and Development	56
Directors:	​	​
John C. “Chris” Loeffler II	Chief Executive Officer and Chairman of the Board	34
Jennifer Schrader	President & Chief Operating Officer and Director	36
William J. Gerber	Director, Chairman of Governance Committee	61
Christopher Pair Garza	Director, Chairman of Compensation Committee	64
Michael Trzupek	Director, Chairman of Audit Committee	48

All of our executive officers and significant employees work full-time for us. There are no family relationships between any director, executive officer, or significant employee. During the past five years, none of the persons identified above has been involved in any bankruptcy or insolvency proceeding or convicted in a criminal; proceeding, excluding traffic violations and other minor offenses.

John C. “Chris” Loeffler, II, Chief Executive Officer

Chris Loeffler is a Co-Founder of Caliber and currently serves as the Company’s Chief Executive Officer. In this role, Chris develops overall company strategy in concert with his Co-Founders and the Company’s Executive Committee and ensures that strategy is communicated to the Caliber team and the general market. Chris leads the growth of the Company’s investment services including acting as the fund manager for Caliber’s private investment funds. Chris seeks out opportunities and strategic relationships to grow the Company’s investment base — both in investment capital and opportunistic projects. Prior to serving as the Company’s CEO, Chris utilized knowledge and skillsets acquired as an auditor for PricewaterhouseCoopers, LLP to develop the Company’s business systems. Mr. Loeffler has a Bachelor of Arts from the California Polytechnic State University.

Jennifer Schrader, President & Chief Operating Officer

Jennifer Schrader is President, Chief Operating Officer and Co-Founder of Caliber. Ms. Schrader has management responsibility over the day to day operations of the company’s four segments and the investments strategies of our fund portfolios. Ms. Schrader previously served as Designated Broker of Caliber Realty, overseeing the sale of over $50,000,000 in investment properties. She is an active member of the National Association of Realtors as well as the Scottsdale Area and Arizona Association of Realtors. Ms. Schrader is the recipient of the Arizona Commercial Real Estate (AZRE) lists of  “Most Influential Women in Arizona” and “Influential Millennial”, as well as being named one of Real Estate Forum’s “50 under 40”.

Jade Leung, Chief Financial Officer

Jade Leung is Chief Financial Officer and Corporate Treasurer of Caliber. Mr. Leung leads corporate financial planning, reporting, operational analysis and optimization, and treasury/risk management across Caliber’s four segments and our fund portfolios. Mr. Leung previously served as Caliber’s Vice President of Finance and led the execution and oversight of the company’s new financial reporting infrastructure, managed the complex external audit process and implemented best practices instrumental for achieving the company’s strategic growth plan. Preceding his time with Caliber, Mr. Leung served in a broad range of management roles during his 14-year tenure with PricewaterhouseCoopers (PwC), where he led audit and accounting advisory engagements for some of the firm’s top 50 global public and private companies. During that time, he managed domestic and foreign Initial and Secondary Public Offerings helping

49

companies raise over $2 billion in capital and debt. He completed his accounting and business finance at Ryerson University, and holds a Bachelor of Arts in Psychology from the University of British Columbia. Mr. Leung maintains his status as a Certified Public Accountant.

Roy Bade, Executive Vice President — Construction and Development

Roy Bade is the Director of Commercial Projects and co-manager of the Caliber Distressed Income Fund “CDIF”. Roy plays a critical role in analyzing potential properties, maximizing returns on existing properties and overseeing all aspects of construction at Caliber. He has over 30 years’ experience in Arizona as a principal, operating construction and development companies that have completed over $200,000,000 in developed real estate. He has successfully developed dozens of projects including multi-family, custom home, retail centers, mini-storage, industrial complexes, office building and medical complexes. In addition to ground up development, Roy has completed several hundred tenant improvements from a standard office build out to medical surgery centers. A graduate of Washington State University in 1984 with a degree in Business Computer Systems, Roy received his Commercial General Contractor’s license in 1986 and his AZ Real Estate Broker’s license in 1988. Roy has worked actively with many cities’ development departments and was recently Chairman for Peoria’s Design Standards Advisor Board as well as their construction Board of Appeals.

William J. Gerber, Director and Chairman of Governance Committee

William J. Gerber served as Chief Financial Officer of TD Ameritrade Holding Corporation (Nasdaq: AMTD) (TD Ameritrade), a provider of securities brokerage services and related technology-based financial services to retail investors, traders and independent registered investment advisors, from October 2006 to October 2015 and has extensive financial experience. In May 2007, he was named Executive Vice President of TD Ameritrade. In his role as Chief Financial Officer, he oversaw investor relations, business development, certain treasury functions and finance operations, including accounting, business planning and forecasting, external and internal reporting, tax and competitive intelligence. From May 1999 until October 2006, he served as the Managing Director of Finance at TD Ameritrade, during which time he played a significant role in evaluating merger and acquisition opportunities.

Prior to joining TD Ameritrade, he served as Vice President of Acceptance Insurance Companies, Inc., where he was responsible for all aspects of mergers and acquisitions, investment banking activity, banking relationships, investor communications and portfolio management. Prior to joining Acceptance, Mr. Gerber spent eight years with Coopers & Lybrand, now known as PricewaterhouseCoopers, serving as an audit manager primarily focusing on public company clients.

Mr. Gerber was named to Institutional Investor Magazine’s All-America Executive Team as one of the top three CFOs in the Brokerage, Asset Managers and Exchanges category (2012 and 2013). He was also named a member of the CNBC CFO Council (2013 and 2014). Since January 2017, he has served on the Board of Directors of Northwestern Mutual Series Fund, a mutual fund company. He has also served on the Board of Directors of the U.S. holding company for the Royal Bank of Canada since July 2016 and Streck, Inc., a privately held company, since March 2015. He also serves on the Boys Town National Board of Trustees. Mr. Gerber holds a B.B.A. in Accounting from the University of Michigan. Mr. Gerber is also a CPA in the State of Michigan.

Christopher Pair Garza, Director and Chairman of Compensation Committee

Christopher Pair Garza was Former President and Chief Executive Officer of Herbalife, the $5 Billion Public/Global Nutrition/​ Personal Care Company. Before becoming CEO, Mr. Pair's primary responsibility as EVP/ COO was international expansion. He personally established operations in 35 countries on 5 continents with typical operating profit within 6 months. He managed all aspects of Global Business Operations, including distribution, regulatory compliance, building Shanghai manufacturing facilities, buying raw materials, establishing sales and marketing campaigns, managing inventory and product development. He is recognized as an expert in International Network Marketing and Direct Sales.

50

Since the successful sale of Herbalife to Whitney and Company, Mr. Pair has been the President of Cynergy Partners, Inc., an Investment and Consulting Company he Founded. The company specializes in the Consumer Product, Network Marketing, and International Expansion elements of the global business community; and has completed a number of successful assignments and transactions.

Mr. Pair is also the former Vice-Chairman and a Director of The Direct Selling Association, as well as a former Director of the Consumer Health Products Association. Mr. Pair holds a master of Business Administration and Business and a Bachelor of Science in Business Administration from the University of Redlands.

Michael Trzupek, Director and Chairman of Audit Committee

Michael Trzupek is the Chief Financial Officer of Premera Blue Cross, Washington’s leading health plan. Mr. Trzupek holds a key leader at Premera, overseeing accounting, financial planning and analysis, and investment and treasury. He comes to Premera from Providence St. Joseph Health System, where he served as Group Vice President, executing finance functions, strategic planning and budgeting, as well as the evaluation of affiliations, acquisitions and strategic investments. Prior, he was a corporate finance General Manager at Microsoft, focused on business planning for the company’s hardware products, including Xbox and Surface. He started his financial career at Intel. Mr. Trzupek received his Master of Business Administration from the University of Chicago. He is a member of the Board of Directors at the Seattle Aquarium, as well as an advisory board member for eCapital Advisors.

51

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Compensation of our Executive officers for the fiscal year ended December 31, 2018 was as follows:

Name	Position	Salary ($)		Bonus ($)(a)		All Other Compensation ($)(b)(c)		Total ($)
Chris Loeffler	Chief Executive Officer/Co Founder	​	194,826	​	84,835	​	100,422	​	380,083
Jennifer Schrader	President and Chief Operating Officer/​Co Founder	​	205,925	​	101,296	​	82,300	​	389,521
Jade Leung	Chief Financial Officer	​	172,066	​	81,255	​	7,043	​	260,364
Roy Bade	Executive Vice President Construction and Development	​	172,066	​	24,255	​	10,676	​	206,998

(a)

The amounts reported in this column reflect the annual cash bonus payments made for performance.

(b)

Amounts reported in this column reflect employer 401(k) contributions, gym and club memberships, and auto. Other forms of compensation are as follows: with respect to Chris Loeffler and Jennifer Schrader, tax payments totaling $58,000 and $39,870 respectively in consideration for the conversion of their member interests in Caliber Companies, LLC into the equivalent number of shares of common stock of CaliberCos, Inc.

(c)

While not listed in the table above, each of Messrs. Gerber, Pair, and Trzubek will be compensated $50,000 per year for their services as Directors of the Board. They have also each been granted nonstatutory stock options subject to a vesting schedule, which enables each party to purchase up to 25,000 shares of Class A Common Stock of the Company.

2017 Incentive Stock Plan

We have adopted a 2017 Omnibus Incentive Stock Plan (the “Plan”). An aggregate of 5,000,000 shares of our common stock is reserved for issuance and available for awards under the Plan, including incentive stock options granted under the Plan. The Plan administrator may grant awards to any employee, director, consultant or other person providing services to us or our affiliates. As of December 31, 2018 and 2017, options representing 3,113,597 and zero shares have been made under the Plan, respectively.

The Plan shall be initially administered by the Board. The Plan administrator has the authority to determine, within the limits of the express provisions of the Plan, the individuals to whom awards will be granted, the nature, amount and terms of such awards and the objectives and conditions for earning such awards. The Board may at any time amend or terminate the Plan, provided that no such action may be taken that adversely affects any rights or obligations with respect to any awards previously made under the Plan without the consent of the recipient. No awards may be made under the Plan after the tenth anniversary of its effective date.

Awards under the Plan may include incentive stock options, nonqualified stock options, restricted shares of common stock and restricted stock units.

Stock Options.   The Plan administrator may grant to a participant options to purchase our common stock that qualify as incentive stock options for purposes of Section 422 of the Internal Revenue Code (“incentive stock options”), options that do not qualify as incentive stock options (“non-qualified stock options”) or a combination thereof. The terms and conditions of stock option grants, including the quantity, price, vesting periods, and other conditions on exercise will be determined by the Plan administrator. The exercise price for stock options will be determined by the Plan administrator in its discretion, but non-qualified stock options and incentive stock options may not be less than 100% of the fair market value of one share of our company’s common stock on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise price may not be less than 110% of the fair market value of one share of common stock on the date the stock option is granted. Stock options must be exercised within a period fixed by the Plan administrator that may not exceed ten years from the date of grant, except that in the case of incentive stock options granted to a

52

holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise period may not exceed five years. At the Plan administrator’s discretion, payment for shares of common stock on the exercise of stock options may be made in cash, shares of our common stock held by the participant or in any other form of consideration acceptable to the Plan administrator (including one or more forms of  “cashless” or “net” exercise).

Restricted Shares and Restricted Units.   The Plan administrator may award to a participant shares of common stock subject to specified restrictions (“restricted shares”). Restricted shares are subject to forfeiture if the participant does not meet certain conditions such as continued employment over a specified forfeiture period and/or the attainment of specified performance targets over the forfeiture period.

Grants of Plan-Based Awards in 2018

The following table provides information concerning stock options awards granted in 2018, to our executive officers:

Name	Grant Date		Units Granted		Grant Date Fair Value
Jade Leung	​	6/30/2018	​	650,000*	​	$	476,450
Roy Bade	​	6/30/2018	​	750,000*	​	$	549,750

*

75% of such stock options vested as of December 31, 2018.

Key Man Insurance

We own key man life insurance policies in the amounts of  $5 million for Mr. Loeffler and $2 million for Ms. Schrader.

53

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
AND SELLING SECURITYHOLDERS

As of the date of this Offering Circular, the following table sets forth information regarding beneficial ownership of our capital stock by:

•

each person, or group of affiliated persons, known by us to beneficially own 5% or more of our common stock;

•

each of our named executive officers;

•

each of our directors and director nominees; and

•

all of our current executive officers, directors and director nominees as a group.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within sixty (60) days through the conversion or exercise of any convertible security, warrant, option, or other right. More than one (1) person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within sixty (60) days, by the sum of the number of shares outstanding as of such date. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.

Unless otherwise noted below, the address of each person listed on the table is c/o CaliberCos Inc., 8901 E. Mountain View Rd., Ste 150, Scottsdale, Arizona 85258.

​

Shares Beneficially Owned Prior to Offering(1)

​

​

Shares Beneficially Owned After Offering

​

Class A Common Stock

Class B Common Stock

% Total Voting Power(2)

Common Stock Offered for Sale(3)

Class A Common Stock(4)

Class B Common Stock(4)

% Total Voting Power(2)(4)

Name of Beneficial Owner

Shares

%

Shares

%

​

​

​

​

Shares

%

Shares

%

​

Named Executive Officers and Directors

​

​

​

​

​

​

​

​

​

​

​

Jennifer Schrader(3)(5)

​

—

​

—

​

6,239,846

​

50.02%

​

44.46%

​

[   ]

​

—

​

—

​

[   ](3)

​

[   ]%

​

[   ]%

John C. Loeffler, II(3)

​

—

​

—

​

6,234,846

​

49.98%

​

44.43%

​

[   ]

​

—

​

—

​

[   ](3)

​

[   ]%

​

[   ]%

Roy Bade

​

593,750(6)

​

2.13%

​

—

​

—

​

1.00%

​

[   ]

​

[   ](6)

​

[   ]%

​

—

​

—

​

[   ]%

Jade Leung

​

514,583(6)

​

1.85%

​

—

​

—

​

1.00%

​

[   ]

​

[   ](6)

​

[   ]%

​

—

​

—

​

[   ]%

William J. Gerber

​

25,000

​

[   ]%

​

—

​

—

​

1.00%

​

[   ]

​

[   ]

​

[   ]%

​

—

​

—

​

[   ]%

Christopher Pair Garza

​

25,000

​

[   ]%

​

—

​

—

​

1.00%

​

[   ]

​

[   ]

​

[   ]%

​

—

​

—

​

[   ]%

Michael Trzupek

​

25,000

​

[   ]%

​

—

​

—

​

1.00%

​

[   ]

​

[   ]

​

[   ]%

​

—

​

—

​

[   ]%

Directors and Executive Officers as a Group (7 Persons)(7)

​

13,658,025

​

49.62%

​

​

​

​

​

93.89%

​

[   ]

​

[   ]

​

[   ]%

​

[   ]

​

[   ]%

​

[   ]%

5% Beneficial Owners: Donnie Schrader(5)(8)

​

6,221,846

​

22.76%

​

—

​

—

​

4.43%

​

[   ]

​

[   ]

​

[   ]%

​

—

​

—

​

[   ]%

(1)

Applicable percentage ownership is based on 15,597,276 shares of Caliber Class A Common Stock and 12,474,692 shares of Class B Common Stock outstanding as of June 6, 2019. Does not give effect to the conversion of shares of Series A Preferred Stock to Caliber Class A Common Stock, conversion of convertible debt securities issued by Caliber into Caliber Class A Common Stock, vesting of any issued and outstanding Caliber Class A Common Stock grants, and exercise of any warrants or stock options issued by Caliber outstanding as of June 6, 2019.

54

(2)

Percentage total voting power represents voting power with respect to all shares of our Class A Common Stock and Class B Common Stock, as a single class. Each holder of Class B Common Stock shall be entitled to ten votes per share of Class B Common Stock and each holder of Class A Common Stock shall be entitled to one vote per share of Class A Common Stock on all matters submitted to our stockholders for a vote. The Class A Common Stock and Class B Common Stock vote together as a single class on all matters submitted to a vote of our stockholders, except as may otherwise be required by law. The Class B Common Stock is convertible at any time by the holder into shares of Class A Common Stock on a share-for-share basis.

(3)

With respect to shares of Class A Common Stock offered for sale by Jennifer Schrader and John C. Loeffler, II, upon sale, the Class B Common Stock sold by Ms. Schrader and Mr. Loeffler convert automatically into shares of Class A Common Stock. As such each of Ms. Schrader and Mr. Loeffler are treated in this table as Selling Securityholders (defined below) of shares of Class A Common Stock.

(4)

Assumes all shares offered by Jennifer Schrader, John C. Loeffler, II, Roy Bade, Jade Leung and Donnie Schrader (collectively, the “Selling Securityholders”) are sold.

(5)

Jennifer and Donnie Schrader are married and each disclaims beneficial ownership over the other’s stockholdings.

(6)

Represents vested stock options and options exercisable within 60 days of December 31, 2019.

(7)

Includes 1,108,333 stock options vested as of and exercisable within 60 days of December 31, 2019.

(8)

In September 2018, the Company agreed to repurchase all 6,221,846 shares (“Buyback Program”) owned by Donnie Schrader for $2.70 per share of common stock in exchange for an amendment to his shareholder voting rights and other company protections. Among other things, the Buyback Program is terminated when the Company completes an initial public offering and is listed on a national exchange. The shares are being reacquired at various amounts ranging from 6,000 to 10,000 units on a monthly basis until such time as the Company has satisfied the termination conditions or until all of the shares have been reacquired, which could be in 2075. As of December 31, 2018, an aggregate of 18,000 shares had been repurchased by the Company.

55

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

Affiliated Transactions; Affiliated Ownership or Control of Managed Properties

CDIF

In April 2016, the Company assumed an unsecured promissory note payable by CDIF, an affiliated entity which is managed by the Company, to a third-party in exchange for issuing 170,940 shares of common stock and 85,470 shares of preferred stock to the third party. At the time of the transaction the outstanding principal balance of the promissory note was $500,000. The note accrued interest at a rate of 18.00% for the first 90 days after origination and 15.00% thereafter. The note required monthly interest only payments until maturity. The original term of the note was 12 months and it matured in October 2016; however, the maturity date was extended to June 2017 upon mutual agreement between the parties. The note was paid in full in June 2017.

SF Alaska, LP

The Company, through one of its consolidated VIE’s, entered into an unsecured $50,250 promissory note with SF Alaska, LP in August 2016. The note was to mature in August 2018, but the Company extended the maturity date to August 2020. The note has an interest rate of 12.00% per annum and no payments are required prior to maturity. The note may be prepaid in whole, or in part, without penalty. During the years ended December 31, 2018 and 2017, the Company earned $3,919 and $5,583, respectively, of interest in connection with the note. Interest due to the Company of $4,480 and $561, was outstanding at December 31, 2018 and 2017, respectively. At December 31, 2018 and 2017, the outstanding principal balance of the loan was $27,978.

The Company, through one of its consolidated VIE’s, entered into an unsecured $100,000 promissory note with SF Alaska, LP in August 2018. The note matures in January 2020 and has an interest rate of 12.00% per annum. No payments are required prior to the maturity of the note. The note may be prepaid in whole or in part without penalty. During the year ended December 31, 2018 the Company earned $4,011 of interest in connection with the note. Interest due to the Company of  $4,011 was outstanding at December 31, 2018. At December 31, 2018, the outstanding principal balance of the loan was $100,000.

CDOF II

In June 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured $250,000 promissory note with Caliber Diversified Opportunity Fund II, LP (“CDOF II”), an affiliated entity, which is managed by the Company. The note was to mature in June 2019 and had an interest rate of 12.00% per annum. No payments were required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the years ended December 31, 2018 and 2017, the Company earned $25,249 and $15,205, respectively, of interest in connection with the note. The note was paid in full in November 2018.

Fund Management

The Company manages multiple private equity real estate funds. We earn asset management and other fees for the services provided and enter into an agreement with each private equity real estate fund outlining the terms and fees to be earned. In general:

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We charge an initial one-time fee related to the initial formation, administration, and set up of the fund (“Set Up Fees”). For the years ended December 31, 2018 and 2017, the Company earned $1,600,000 and $750,000, respectively, of Set Up Fees in connection with newly opened funds.

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We are entitled to receive reimbursement for certain expenses incurred or paid on behalf of the fund, which may include an allocation of certain administrative and overhead costs. We also receive an annual asset management fee equal to 1.00% – 1.50% of the non-affiliate capital contributions related to the on-going management of the assets owned by the fund and the overall fund administration (collectively, “Asset Management Fees”). During the years ended December 31, 2018 and 2017, the Company earned $1,641,815 and $837,983, respectively, of Asset Management Fees.

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•

We are entitled to 20.00% – 35.00% of all cash distributions from the operating cash flows of the fund, after the payment of all priority preferred returns, and the repayment of any preferred capital contributions. We are also entitled to 20.00% – 35.00% of all cash distributions from the cash flows resulting from the sale or refinance of the assets of the fund, after the payment of all priority preferred returns, and the repayment of all capital contributions (collectively, “Carried Interest”). During the years ended December 31, 2018 and 2017, the Company earned $68,257 and $73,843, respectively, of Carried Interest.

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We receive fees for services primarily relating to the marketing, offering, registering, and selling of equity and debt instruments of the affiliates (collectively, “Capital Raise Fees”). During the years ended December 31, 2018 and 2017, the Company earned $1,106,781 and $428,567, respectively, of Capital Raise Fees from related parties.

During the years ended December 31, 2018 and 2017, amounts due to the Company from related parties for fund management services totaled $1,302,125 and $815,048, respectively.

Property Management

The Company provides property management services and oversees the day-to-day operations of multiple residential and commercial assets owned by the funds managed by the Company. In general, the initial terms of each property management agreement are 12 months, however, the agreement automatically renews every 12 months for an additional 12 months. Per the terms of each agreement, the Company generally earns a fixed monthly fee, plus additional variable fees related to leasing, marketing, maintenance, and administrative activities (collectively, “Property Management Fees”). During the years ended December 31, 2018 and 2017, the Company earned $320,566 and $149,556, respectively, of Property Management Fees from related parties. At December 31, 2018 and 2017, amounts due to the Company from related parties for Property Management Fees totaled $1,992 and $6,312, respectively.

Selling Agent Agreements

The Company entered into multiple agreements with affiliated entities in which we receive fees for services primarily relating to the marketing, offering, registering, and selling of equity and debt instruments of the affiliates (collectively, “Capital Raise Fees”). For the years ended December 31, 2018 and 2017, the Company earned $1,382,807 and $428,567, respectively, of Capital Raise Fees from related parties. As of December 31, 2018 and 2017, amounts due to the Company from related parties for Capital Raise Fees totaled $252,680 and $399,126, respectively.

Construction and Development

The Company regularly provides development, construction, and maintenance services to its affiliates, including the private equity real estate funds it manages. The fee arrangement with each affiliate entity varies; however, the arrangements are generally structured as cost incurred, plus a market rate of profit margin. For the years ended December 31, 2018 and 2017, the Company recognized $4,324,588 and $4,237,274, respectively, of construction and development revenue from related parties. At December 31, 2018 and 2017, amounts due to the Company from related parties for construction, development, and maintenance services totaled $731,188 and $833,292, respectively.

Home Sales

Since 2016, the Company has sold multiple single-family homes to Caliber Residential Advantage Fund, LP and its subsidiary (“CRAF”), a private equity real estate fund managed by the Company. For the years ended December 31, 2018 and 2017, the Company recognized real estate sales revenue of $1,122,003 and $2,146,570, respectively. In connection with each sale, the loan on the property, which was held by Caliber Fixed Income Fund II, LLC, a separate affiliated entity, was repaid in full.

Real Estate Brokerage

The Company earns commissions in exchange for providing real estate brokerage services related to the purchase and sale of residential and commercial assets owned by the funds managed by the Company. The amount of commissions earned vary based on the size and complexity of each transaction, as well as other

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factors. For the years ended December 31, 2018 and 2017, the Company recognized $206,765 and $173,636, respectively of brokerage revenue from related parties.

CFIF II

In July 2015, the Company entered into multiple unsecured promissory notes with Caliber Fixed Income Fund II, LLC (“CFIF II”), a related party, for the purpose of financing the purchase, development, and renovation of residential and commercial properties. The notes have an interest rate of 11.00% per annum and require monthly interest-only payments until maturity. The notes generally have a term of 12 months and are required to be repaid at the earlier of i) the sale of the related property, or ii) the stated maturity date. The notes can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the years ended December 31, 2018 and 2017, the Company incurred $689,124 and $1,151,123, respectively, of interest expense in connection with the notes. The interest payable at December 31, 2018 and 2017, was $1,110,650 and $1,163,166, respectively. At December 31, 2018 and 2017, the total outstanding principal balance of the notes was $4,830,000 and $8,687,000, respectively.

CFIF III

In December 2018, the Company entered into two unsecured promissory notes with Caliber Fixed Income Fund III, LP (“CFIF III”), which allows the Company to borrow up to $515,000. The notes have an interest rate of 12.00% per annum and require monthly interest-only payments until maturity. The notes mature in December 2019 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $7,275 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $132. At December 31, 2018, the total outstanding principal balance of the notes were $514,310.

In July 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $700,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note matures in September 2020 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $31,224 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $31,224. At December 31, 2018, the total outstanding principal balance of the notes was $610,041.

In May 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $4,000,000. The note has an interest rate of 10.00% per annum and requires monthly interest-only payments until maturity. The note matures in August 2020 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $174,086 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $174,086. At December 31, 2018, the total outstanding principal balance of the notes was $3,244,760.

In August 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $1,000,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note matures in February 2021 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $17,427 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $17,427. At December 31, 2018, the total outstanding principal balance of the notes was $802,061.

In July 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $900,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note had a stated maturity of September 2020 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $18,561 of interest expense in connection with the notes. The note was paid in full in December 2018.

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In June 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $200,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note had a stated maturity of June 2020 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $1,414 of interest expense in connection with the notes. The note was paid in full in December 2018.

CDIF

In January 2016, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with CDIF, which allows the fund to borrow up to $2,000,000. The note was to mature in January 2018, but the Company extended the maturity date to October 2018. The note had an interest rate of 12.00% per annum and no payments were required prior to maturity. The note may be prepaid in whole, or in part, without penalty. In June 2016, $500,000 of the principal outstanding in connection with the note was converted to an equity investment in the fund. During the years ended December 31, 2018 and 2017, the Company incurred $7,261 and $23,421, respectively, of interest expense in connection with the note. The interest payable at December 31, 2017, was $0. The note was paid in full in September 2018.

In April 2016, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with CDIF, which allowed the Company to borrow up to $3,000,000. The note had a stated maturity of April 2018 and had an interest rate of 12.00% per annum. No payments were required prior to the maturity of the note. In November 2016, $1,500,000 of the principal outstanding in connection with the note was converted to an equity investment in the Company. An additional $400,000 of outstanding principal was settled through the issuance of Class C member interest to an affiliate of CDIF. During the year ended December 31, 2017 the Company incurred $23,721 of interest expense in connection with the note. The note was paid in full in September 2017.

In June 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with CDIF, which allowed the Company to borrow up to $800,000. The note matures in June 2019 and has an interest rate of 12.00% per annum. No payments are required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the year ended December 31, 2018, the Company incurred $47,447 of interest expense in connection with the note. The interest payable at December 31, 2018 was $9,063. At December 31, 2018, the outstanding principal balance of the note was $306,301.

CDOF II

In August 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with Caliber Diversified Opportunity Fund II, LP, which allows the fund to borrow up to $165,000. The note was to mature in August 2018 and had an interest rate of 12.00% per annum. No payments were required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the years ended December 31, 2018 and 2017, the Company incurred $4,882 and $7,920, respectively, of interest expense in connection with the note. The interest payable at December 31, 2017 was $7,920. At December 31, 2017, the outstanding principal balance of the note was $165,000. The note was paid in full in March 2018.

In June 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with Caliber Diversified Opportunity Fund II, LP, which allows the Company to borrow up to $250,000. The note matures in June 2019 and has an interest rate of 12.00% per annum. No payments are required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the year ended December 31, 2018, the Company incurred $17,873 of interest expense in connection with the note. The interest payable at December 31, 2018 was $5,463. At December 31, 2018, the outstanding principal balance of the note was $151,250.

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Management

In March 2013, the Company entered into a promissory note in the amount of $185,000 with a former member of executive management. The unpaid principal balance accrues interest at a rate of 0.87% per annum. The note had an original maturity date of December 31, 2018. Per the terms of the note, no payment is due until maturity and the note may be prepaid at any time without penalty. At December 31, 2018 and 2017, the outstanding principal balance of the note was $185,000. During the years ended December 31, 2018 and 2017, the Company incurred $1,610 of interest expense in connection with the note. The interest outstanding at December 31, 2018 and 2017, was $9,340 and $7,730, respectively.

In February 2015, the Company entered into an unsecured promissory note in the amount of $75,000 with a member of executive management. The note had an interest rate of 15.00% per annum and required monthly interest-only payments until maturity. The note may be prepaid in whole, or in part, without penalty. During the year ended December 31, 2017, the Company incurred and paid $4,938 of interest expense in connection with the note. The note had an original maturity date of August 2015; however, the maturity was extended until April 2017 upon the mutual agreement of the parties. The note was paid in full in April 2017.

Hotel Management

The Company has entered into multiple agreements with Heavlin Management Company, LLC (“HMC”), an affiliated entity through common ownership of certain of the Company’s consolidated subsidiaries, to operate each of the Company’s hotel properties. The term of the agreements is generally 10 years and may be extended for an additional 10 years upon mutual consent of the Company and HMC. HMC oversees the day-to-day operations and management responsibilities of each hotel property. Per the terms of the agreements, HMC receives a monthly fee equal to 3.00 – 4.00% of gross revenue, and may also receive an annual incentive fee, not to exceed 1.00% of gross operating revenues, by exceeding owner approved budgets for revenue and profits (collectively, “Hotel Management Fees”). Hotel Management Fees for the years ended December 31, 2018 and 2017, totaled $1,611,173 and $1,446,414, respectively. During the years ended December 31, 2018 and 2017, the Company did not incur any incentive fees related to Hotel Management Fees. Pursuant to one of the hotel management arrangements, HMC also earns an annual fixed fee of  $100,000. In addition to the Hotel Management Fees, HMC also charges the Company for certain shared services including sales and marketing, information technology, and human resources. Expenses for shared services for the years ended December 31, 2018 and 2017, totaled $1,158,855 and $892,191, respectively. The Company also reimburses HMC for expenses incurred or paid on its behalf. At December 31, 2018 and 2017, amounts due to HMC totaled $300,241 and $283,110, respectively. HMC utilizes the Company’s payroll service provider and reimburses the Company for payroll and other costs paid on their behalf. At December 31, 2018 and 2017, $37,831 and $88,450 of reimbursement was due to the Company from HMC, respectively.

Withdrawal Agreement

In November 2014, the Company entered into an agreement with a former co-manager and member of one of the Company’s consolidated subsidiaries which outlined the terms of his resignation as co-manager and assignment of his member interest. In consideration for his resignation as co-manager and assignment of his member interest, the Company agreed to issue 55,556 shares of its common stock to the individual or his designee, provide the individual with $35,000 of construction services at no cost to the individual, and pay the individual or his designee up to $540,000 in cash, as outlined in the agreement. At December 31, 2018 and 2017, $386,990 and $481,672, respectively.

Other

In the normal course of business, the Company has various amounts due from related parties, including affiliate entities and individuals, for various expenses paid for by the Company on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. At December 31, 2018 and 2017, other amounts due from related parties were $276,169 and $863,551, respectively.

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In the normal course of business, the Company has various amounts due to related parties, including affiliate entities and individuals, for various expenses paid for by the affiliates on the Company’s behalf and other short-term payment advances. These amounts are generally unsecured, interest-free, and due on demand. At December 31, 2018 and 2017, other amounts due to related parties were $217,303 and $73,437, respectively.

Certain of our real estate holdings that have been financed through third-party lending arrangements are guaranteed by individual affiliates of the Company.

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SECURITIES BEING OFFERED

General

The Company and the Selling Securityholders are offering up to      shares of Class A Common Stock.

The following description summarizes the most important terms of the Company’s capital stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of Caliber’s amended and restated certificate of incorporation and bylaws, copies of which have been filed as exhibits to the Offering Statement of which this Offering Circular is a part. For a complete description of Caliber’s capital stock, you should refer to the amended and restated certificate of incorporation and bylaws and to the applicable provisions of Delaware law.

The Company is authorized to issue up to 125,000,000 shares of capital stock, of which (i) 100,000,000 shares are Class A Common Stock with a par value $0.001 per share; (ii) 15,000,000 shares are Class B Common Stock with a par value $0.001 per share; and (ii) 10,000,000 shares are Preferred Stock with a par value of  $0.001 per share.

Class A Common Stock

As of December 31, 2018, 27,974, 212 and 27,956,212 shares of Common Stock were issued and outstanding, respectively. As of June 6, 2019, 15,663,776 and 15,597,276 shares of Class A Common Stock were issued and outstanding, respectively.

Voting.   The holders of the Class A Common Stock are entitled to one (1) vote for each share of Class A Common Stock held at all meetings of stockholders (and written actions in lieu of meetings). The Caliber Class A Common Stock is not subject to cumulative voting.

Dividends.   Subject to the preferences applicable to the Preferred Stock, the holders of the Class A Common Stock are entitled to, on an equal basis with the holders of Class B Common Stock, receive dividends when and if declared by the Company’s board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock.

Class B Common Stock

As of June 6, 2019, 12,474,692 shares of Class B Common Stock were issued and outstanding. For the avoidance of doubt, no shares of Class B Common Stock are offered for sale pursuant to this Offering Circular.

Voting.   The holders of the Class B Common Stock are entitled to ten (10) votes for each share of Class B Common Stock held at all meetings of stockholders (and written actions in lieu of meetings). The Caliber Class B Common Stock is not subject to cumulative voting.

Dividends.   Subject to the preferences applicable to the Preferred Stock, the holders of the Class B Common Stock are entitled to, on an equal basis with the holders of Class A Common Stock, receive dividends when and if declared by the Company’s board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock.

Series A Preferred Stock

As of December 31, 2018 and June 6, 2019, 1,657,396 shares of Series A Preferred Stock (the “Series A Stock”) were issued and outstanding.

Voting.   Our Series A Stock votes together with the Common Stock and not as a separate class except as otherwise required by law. Each share of Series A Stock has a number of votes equal to the number of shares of Common Stock then issuable upon conversion of such share of Series A Stock.

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Dividends.   The Series A Stock carries an annual 12.0% non-cumulative dividend, payable quarterly on a pro-rata basis, when and if declared by the Board of Directors and upon a liquidation, prior in preference and payment to dividends on the holders of Class A Common Stock and Class B Common Stock.

Liquidation.   In the event of a Liquidation Event, the holders of the Series A Stock are entitled to receive, prior and in preference to the holders of the Common Stock, an amount per share equal to the Series A Stock original issue price of  $2.25 per share, plus any declared but unpaid dividends on such shares of Series A Stock.

Conversion.   The holders of each share of Series A Stock have the right, at any time to convert each share of Series A Stock into one and one-quarter shares of Class A Common Stock. The Series A Stock shall be automatically converted into Class A Common Stock (one share of Series A Stock converting into one and one-quarter shares of Class A Common Stock) upon the Common Stock publicly trading at a per share price on a weighted average over 20 trading days at a market capitalization of at least $100 million. The conversion rate of the Series A Stock will be adjusted for stock dividends, stock splits and similar issuances.

Redemption.   The Series A Stock includes a mandatory redemption feature whereby the Company must redeem four years from the date of issuance at $2.25 per share plus any accrued and unpaid dividends. The Company has the option to redeem the Series A stock after three years from the date of issuance at $2.3625 per share if called before the end of year four. The Company is obligated to maintain an interest reserve/sinking fund for a redemption of the Series A Stock.

Anti-Takeover Provisions

Certificate of Incorporation and Bylaws

Because our stockholders do not have cumulative voting rights, our stockholders holding a majority of the outstanding shares of common stock outstanding will be able to elect all of our directors.

The foregoing provisions will make it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain control of us by replacing our board of directors. Since our board of directors has the power to retain and discharge our officers, these provisions could also make it more difficult for existing stockholders or another party to effect a change in management. In addition, the authorization of undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change our control.

These provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us. These provisions are also designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and may have the effect of deterring hostile takeovers or delaying changes in our control or management.

Section 203 of the Delaware General Corporation Law

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:

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before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

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upon closing of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting

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stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

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on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least 662∕3% of the outstanding voting stock that is not owned by the interested stockholder.

In general, Section 203 defines business combination to include the following:

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any merger or consolidation involving the corporation and the interested stockholder;

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any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or

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the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation.

In general, Section 203 defines an “interested stockholder” as an entity or person who, together with the person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15% or more of the outstanding voting stock of the corporation.

Exclusive forum for adjudication of disputes provision which limits the forum to the Delaware Court of Chancery for certain actions against the Company.

Section 4 of Article VII of our Bylaws dictates that the Delaware Court of Chancery is the sole and exclusive forum for certain actions including derivative action or proceeding brought on behalf of the Company; an action asserting a breach of fiduciary duty owed by an officer, director, employee or to the shareholders of the Company; any claim arising under Delaware corporate law; and any action asserting a claim governed by the internal affairs doctrine. We also intend this exclusive forum provision to apply to claims under the federal securities laws. While management believes limiting the forum is a benefit, shareholders could be inconvenienced by not being able to bring an action in another forum they find favorable. Note that there is uncertainty as to whether a court would enforce this provision as it relates to claims under the federal securities laws and that shareholders will not be deemed to have waived the company’s compliance with federal securities laws and the rules and regulations thereunder.

A Delaware corporation is allowed to mandate in its corporate governance documents a chosen forum for the resolution of state law based shareholder class actions, derivative suits and other intra-corporate disputes. The Company’s management believes limiting state law based claims to Delaware will provide the most appropriate outcomes as the risk of another forum misapplying Delaware law is avoided, Delaware courts have a well-developed body of case law and limiting the forum will preclude costly and duplicative litigation and avoids the risk of inconsistent outcomes. Additionally, Delaware Chancery Courts can typically resolve disputes on an accelerated schedule when compared to other forums.

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ADDITIONAL REQUIREMENTS AND RESTRICTIONS

Restrictions Imposed by the USA PATRIOT Act and Related Acts

In accordance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, the securities offered hereby may not be offered, sold, transferred or delivered, directly or indirectly, to any “unacceptable investor,” which means anyone who is:

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a “designated national,” “specially designated national,” “specially designated terrorist,” “specially designated global terrorist,” “foreign terrorist organization,” or “blocked person” within the definitions provided under the Foreign Assets Control Regulations of the United States, or U.S., Treasury Department;

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acting on behalf of, or an entity owned or controlled by, any government against whom the U.S. maintains economic sanctions or embargoes under the Regulations of the U.S. Treasury Department;

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within the scope of Executive Order 13224 — Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism, effective September 24, 2001;

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a person or entity subject to additional restrictions imposed by any of the following statutes or regulations and executive orders issued thereunder: the Trading with the Enemy Act, the National Emergencies Act, the Antiterrorism and Effective Death Penalty Act of 1996, the International Emergency Economic Powers Act, the United Nations Participation Act, the International Security and Development Cooperation Act, the Nuclear Proliferation Prevention Act of 1994, the Foreign Narcotics Kingpin Designation Act, the Iran and Libya Sanctions Act of 1996, the Cuban Democracy Act, the Cuban Liberty and Democratic Solidarity Act and the Foreign Operations, Export Financing and Related Programs Appropriations Act or any other law of similar import as to any non-U.S. country, as each such act or law has been or may be amended, adjusted, modified or reviewed from time to time; or

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designated or blocked, associated or involved in terrorism, or subject to restrictions under laws, regulations, or executive orders as may apply in the future similar to any of those described above.

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PLAN OF DISTRIBUTION

The aggregate initial offering price of Caliber Class A Common Stock will not exceed $50,000,000 in any 12-month period. We and the selling securityholders expect to offer Common Stock in this offering until the earlier of  (i) the date at which the maximum offering amount has been sold; (ii)            , 2020, the date that is twelve months from the date that this offering is qualified by the U.S. Securities and Exchange Commission (the “Commission) or (iii) the date at which the offering is earlier terminated by the Company in its sole discretion, which may occur at any time. The offering is being conducted on a best-efforts basis without any minimum aggregate investment target. The Company may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to the Company.

We are offering the shares hereunder on a “best efforts” basis. Our officers and directors may participate in the sales process for the offering. We will not pay any commission or remuneration to our Company’s directors or officers for any sales efforts they may make. In directly sourcing investors, our officers and directors will rely on Rule 3a4-1 of the Securities Exchange Act of 1934, “Associated Persons of an Issuer Deemed not to be Brokers.” The applicable portions of the rule state that associated persons of an issuer, which include natural persons who are officers, directors, partners or employees of the issuer and its affiliates, shall not be deemed brokers if such persons a) perform substantial duties at the end of the offering for the issuer; b) are not broker-dealers; and c) do not participate in selling securities more than once every 12 months, except for any of the following activities: i) preparing written communication, but no oral solicitation; or ii) responding to inquiries provided that the content is contained in the applicable registration statement; or iii) performing clerical work in effecting any transaction.

There is no public market for the shares of Caliber Class A Common Stock.

We have engaged WealthForge, a broker-dealer registered with the Securities and Exchange Commission and a member of FINRA, to perform the following functions in connection with this offering:

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qualify investors, including, but not limited to, conducting Know Your Customer, OFAC checks and AML compliance;

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gather additional information or clarification from prospective investors, working as necessary with us and/or our agents;

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provide us with prompt notice for subscriptions that cannot be accepted; and

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transmit the subscription information data to our transfer agent.

As compensation for the services listed above, we have agreed to pay WealthForge a basic transaction fee of 0.5% of the gross proceeds of this offering to support the offering once the offering statement is qualified and the offering commences.

WealthForge is not participating as an underwriter of the offering and under no circumstance will it, as part of this offering, solicit any investment in the company, recommend the company’s securities or provide investment advice to any prospective investor. Rather, WealthForge’s involvement in the offering is limited to acting as an accommodating broker-dealer. WealthForge does not expressly or impliedly affirm the completeness or accuracy of this Offering Circular. All inquiries regarding this offering or services provided by WealthForge and its affiliates should be made directly to us.

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Investment Limitations

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

How much can you invest if you are a non-accredited investor?

If you do not meet any of the categories listed below, you are a non-accredited investor in this Offering. Non-accredited investors may invest in this offering no more than: (a) 10% of the greater of annual income or net worth (for natural persons); or (b) 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons).

How much can you invest if you are an accredited investor?

If you meet any of the following categories, you are an accredited investor as defined under Rule 501 of Regulation D. Accredited investors are exempt from the above limitation*. If you meet one of the following tests you should qualify as an accredited investor:

(i)

You are a natural person who has had individual income in excess of  $200,000 in each of the two most recent years, or joint income with your spouse in excess of  $300,000 in each of these years, and have a reasonable expectation of reaching the same income level in the current year;

(ii)

You are a natural person and your individual net worth, or joint net worth with your spouse, exceeds $1,000,000 at the time you purchase shares (please see below on how to calculate your net worth);

(iii)

You are an executive officer or general partner of the issuer or a manager or executive officer of the general partner of the issuer;

(iv)

You are an organization described in Section 501I(3) of the Internal Revenue Code of 1986, as amended, or the Code, a corporation, a Massachusetts or similar business trust or a partnership, not formed for the specific purpose of acquiring the shares, with total assets in excess of $5,000,000;

(v)

You are a bank or a savings and loan association or other institution as defined in the Securities Act, a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, an insurance company as defined by the Securities Act, an investment company registered under the Investment Company Act of 1940, as amended, or the Investment Company Act, or a business development company as defined in that act, any Small Business Investment Company licensed by the Small Business Investment Act of 1958 or a private business development company as defined in the Investment Advisers Act of 1940;

(vi)

You are an entity (including an Individual Retirement Account trust) in which each equity owner is an accredited investor;

(vii)

You are a trust with total assets in excess of  $5,000,000, your purchase of shares is directed by a person who either alone or with their purchaser representative(s) (as defined in Regulation D promulgated under the Securities Act) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, and you were not formed for the specific purpose of investing in the shares; or

(viii)

You are a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has assets in excess of  $5,000,000.

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How to Invest

Subscription Agreement

All investors will be required to complete and execute a subscription agreement in the form filed as an exhibit to the Offering Statement of which this offering circular is a part concurrently with payment in full via wire transfer, electronic funds transfer via ACH, or check deposit with your subscription purchase price in accordance with the instructions in the subscription agreement.

The offering is being conducted on a best-efforts basis without any minimum aggregate investment target. The Company may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be available to the Company.

You will be required to represent and warrant in your subscription agreement that you are an accredited investor as defined under Rule 501 of Regulation D or that your investment in the Securities does not exceed 10% of your net worth or annual income, whichever is greater, if you are a natural person, or 10% of your revenues or net assets, whichever is greater, calculated as of your most recent fiscal year if you are a non-natural person. By completing and executing your subscription agreement you will also acknowledge and represent that you have received a copy of this Offering Circular, you are purchasing the shares for your own account.

Right to Reject Subscriptions.   After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been received, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, generally without interest and without deduction.

Acceptance of Subscriptions.   Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

Investment in the offering made by employees of our Company does not guaranty continued employment with our Company. Investment in the offering made by vendors of our Company does not guaranty continued business with our Company.

Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).

NOTE: For the purposes of calculating your net worth, or Net Worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the shares.

In order to purchase shares and prior to the acceptance of any funds from an investor, an investor will be required to represent, to our Company’s satisfaction, that he is either an accredited investor or is in compliance with the 10% of net worth or annual income limitation on investment in this offering.

Book-Entry, Delivery and Form

The shares may be issued to investors in book-entry only format and may be represented by global certificates deposited with a nominee holder or (ii) reflected on the books of the transfer agent. We anticipate that such nominee holder will be the Depository Trust Company, or DTC, or its nominee Cede & Co. The shares may also be direct registered under the name of the stockholder.

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So long as nominees as described above are the registered owners of the certificates representing the shares, such nominees will be considered the sole owners and holders of the shares for all purposes of the shares, with respect to the shares. Beneficial Owners of shares will not be entitled to have certificates representing the same registered in their names, will not receive or be entitled to receive physical delivery of the shares in definitive form and will not be considered the owners or holders under the Indenture, including for purposes of receiving any reports delivered by us or the trustee pursuant to the Indenture, or by us. Accordingly, each person owning a beneficial interest in shares registered to DTC or its nominee must rely on either the procedures of DTC or its nominee in order to exercise any rights of a stockholder.

The Depository Trust Company

We have obtained the information in this section concerning DTC and its book-entry systems and procedures from sources that we believe to be reliable. The description of the clearing system in this section reflects our understanding of the rules and procedures of DTC as they are currently in effect. DTC could change its rules and procedures at any time.

DTC will act as securities depositary for the shares registered in the name of its nominee, Cede & Co. DTC is:

•

a limited-purpose trust company organized under the New York Banking Law;

•

a “banking organization” under the New York Banking Law;

•

a member of the Federal Reserve System;

•

a “clearing corporation” under the New York Uniform Commercial Code; and

•

a “clearing agency” registered under the provisions of Section 17A of the Exchange Act.

DTC holds securities that its direct participants deposit with DTC. DTC facilitates the settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in direct participants’ accounts, thereby eliminating the need for physical movement of securities certificates.

Direct participants of DTC include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its direct participants. Indirect participants of DTC, such as securities brokers and dealers, banks and trust companies, can also access the DTC system if they maintain a custodial relationship with a direct participant.

Purchases of shares under DTC’s system must be made by or through direct participants, which will receive a credit for the shares on DTC’s records. The ownership interest of each beneficial owner is in turn to be recorded on the records of direct participants and indirect participants. Beneficial owners will not receive written confirmation from DTC of their purchase, but beneficial owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct participants or indirect participants through which such beneficial owners entered into the transaction. Transfers of shares are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests.

Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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ERISA CONSIDERATIONS

An investment in us by an employee benefit plan is subject to additional considerations. This is because investments by employee benefit plans are subject to ERISA’s fiduciary responsibility and prohibited transaction provisions and to restrictions imposed by Code Section 4975. The term “employee benefit plan” includes without limitation qualified pension, profit-sharing and stock bonus plans, Keogh plans, simplified employee pension plans and tax deferred annuities or IRAs established or maintained by an employer or employee organization. Among other things, consideration should be given to:

•

whether the investment is prudent under Section 404(a)(1)(B) of ERISA;

•

whether in making the investment, the investing plan will satisfy the diversification requirements of Section 404(a)(1)(C) of ERISA; and

•

whether the investment will result in recognition of unrelated business taxable income by the plan and, if so, the potential after-tax investment returns.

The Employee Retirement Income Security Act of 1974, as amended, or ERISA, is a broad statutory framework that governs most U.S. retirement and other U.S. employee benefit plans. ERISA and the rules and regulations of the Department of Labor, or the DOL, under ERISA contain provisions that should be considered by fiduciaries of employee benefit plans subject to the provisions of Title I of ERISA, or ERISA Plans, and their legal advisors. The person having investment discretion concerning assets of an employee benefit plan is generally referred to as a “fiduciary”. Such person should determine whether an investment in us is authorized by the applicable governing plan instrument and whether it is a proper investment for the plan.

ERISA Section 406 and Code Section 4975 prohibit employee benefit plans from engaging in specified transactions involving “plan assets” with parties that are “parties in interest” under ERISA or “disqualified persons” under the Code with respect to the plan.

In addition to considering whether the purchase of shares is a prohibited transaction, a fiduciary of an employee benefit plan should consider whether the plan will, by investing in us, be deemed to own an undivided interest in our assets, with the result that our operations would be subject to the regulatory restrictions of ERISA, including its prohibited transaction rules, as well as the prohibited transaction rules of the Code.

The Department of Labor regulations provide guidance concerning whether assets of an entity in which employee benefit plans acquire equity interests would be deemed “plan assets” under certain circumstances. Under these regulations, an entity’s assets would not be considered to be “plan assets” if, among other things:

(1)

equity interests acquired by employee benefit plans are publicly offered securities — for example, the equity interests are widely held by 100 or more investors independent of the issuer and each other, freely transferable and registered under some provisions of the federal securities laws;

(2)

the entity is an “operating company” — for example, it is primarily engaged in the production or sale of a product or service other than the investment of capital either directly or through a majority-owned subsidiary or subsidiaries; or

(3)

there is no significant investment by benefit plan investors, which is defined to mean that less than 25% of the value of each class of equity interest is held by the employee benefit plans referred to above.

We do not intend to limit investment by benefit plan investors in us because we believe that we qualify as an “operating company”. If the Department of Labor were to ever take the position that we are not an operating company and we had significant investment by benefit plans, then we may become subject to the regulatory restrictions of ERISA which would likely have a material adverse effect on our business and the value of Caliber Class A Common Stock.

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Plan fiduciaries contemplating a purchase of shares offered hereunder are highly encouraged to consult with their own counsel regarding the consequences under ERISA and the Code in light of the serious penalties imposed on persons who engage in prohibited transactions or other violations.

ACCEPTANCE OF ORDERS ON BEHALF OF PLANS IS IN NO RESPECT A REPRESENTATION BY OUR BOARD OF DIRECTORS OR ANY OTHER PARTY RELATED TO US THAT THIS INVESTMENT MEETS THE RELEVANT LEGAL REQUIREMENTS REGARDING INVESTMENTS BY ANY PARTICULAR PLAN OR THAT AN INVESTMENT WITH US IS APPROPRIATE FOR ANY PARTICULAR TYPE OF PLAN. THE PERSON WITH INVESTMENT DISCRETION SHOULD CONSULT THEIR ATTORNEY AND FINANCIAL ADVISORS AS TO THE APPROPRIATENESS OF AN INVESTMENT IN US BASED ON CIRCUMSTANCES OF THE PARTICULAR PLAN.

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INVESTMENT COMPANY ACT CONSIDERATIONS

We intend to continue to conduct our operations so that neither we nor any subsidiaries we own nor ones we may establish will be required to register as an investment company under the Investment Company Act. A person will generally be deemed to be an “investment company” for purposes of the Investment Company Act if, absent an available exception or exemption, it (i) is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or (ii) owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.

Our parent company does not meet the quantitative requirements of the definition of an “investment company” based on its most recent balance sheet, and we do not believe it will qualify under such definition under our present business model for the foreseeable future.

With respect to our subsidiaries, we rely on an exclusion from the definition of investment company provided by either Section 3(c)(5)(C) or Section 3(c)(6) of the Investment Company Act. Section 3(c)(5)(C) of the Investment Company Act, as interpreted by SEC staff, that requires us to invest at least 55% of our assets in “mortgages and other liens on and interests in real estate,” or Qualifying Real Estate Assets, and at least 80% of our assets in Qualifying Real Estate Assets plus real estate-related assets.

Investment Subsidiaries

Our investment subsidiaries will continue to invest in and manage a diversified portfolio of commercial real estate investments. We expect to use a significant majority of the net proceeds from this offering to invest and hold at least 55% of our investment subsidiaries’ total assets in Qualifying Real Estate Assets, which include fee interests in real estate and may also include commercial real estate loans (including senior mortgage loans, subordinated mortgage loans, mezzanine debt and participations (also referred to as B-Notes) that meet certain criteria outlined by the staff of the SEC), each of which are Qualifying Real Estate Assets. In addition, each such subsidiary will hold at least 80% of its total assets in a combination of Qualifying Real Estate Assets and real estate-related assets. We will monitor our investment subsidiaries’ holdings under the 55% test and the 80% test in order to comply with Section 3(c)(5)(C) and related guidance.

Based on these holdings, we believe that none of our investment subsidiaries are required to register as an investment company under the Investment Company Act. Consequently, we expect to continue to conduct our operations to continue to avail our investment subsidiaries of such exemptions from registration as an investment company under the Investment Company Act.

Intermediate Subsidiaries

With respect to certain intermediate holding companies that we operate, such entities are typically wholly owned by our parent company or another wholly owned subsidiary. Section 3(c)(6) of the Investment Company Act excludes from the definition of  “investment company” any company primarily engaged, directly or through majority-owned subsidiaries, in a business, among others, described in Section 3(c)(5)(C) of the Investment Company Act.

Under the Investment Company Act, a majority-owned subsidiary of a person is defined as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority-owned subsidiary of such person. For purposes of Section 3(c)(6), we intend to treat companies in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries. Currently we and our wholly owned subsidiary Caliber Companies, LLC, own 50% or more of subsidiaries that include: Caliber Services, LLC, Caliber Development, LLC, Caliber Auction Homes, LLC (which also includes wholly owned single purpose real estate holding companies), CHPH Manager, LLC, Caliber Lending, LLC, Caliber Hospitality, LLC, Caliber Realty Group, LLC, Caliber Securities, LLC, HI Hotel Manager, LLC, GC Square Manager, LLC, Roosevelt Tempe Manager, LLC, Fiesta Tech Manager, LLC, 47th St Phoenix Airport Manager, LLC, Tucson East Manager, LLC, Palms Weekly Portfolio GP, LLC, Circle Lofts Manager, LLC, and CRA Manager, LLC.

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To the extent we hold our real estate investments through intermediate holding subsidiaries, we rely on Section 3(c)(6) of the Investment Company Act. As with Section 3(c)(5)(C) with respect to our investment subsidiaries, we expect to conduct our operations to continue to avail our intermediate subsidiaries of the exemption from registration as an investment company pursuant to Section 3(c)(6).

The assets we and our subsidiaries may acquire are limited by the provisions of the Investment Company Act, the rules and regulations promulgated under the Investment Company Act, and interpretative guidance from the SEC and its staff. These limitations may adversely affect our performance. In addition, to the extent SEC staff provides different or more specific guidance regarding any of the matters bearing upon such exclusions, we may be required to adjust our strategy accordingly. Any additional guidance from the SEC or its staff could provide additional flexibility to us, or it could further inhibit our ability to pursue the strategies we have chosen. The loss of our exclusion from regulation pursuant to the Investment Company Act could require us to restructure our operations, sell certain of our assets, or abstain from the purchase of certain assets, which could have an adverse effect on our financial condition and results of operations. See “Risk Factors — Risks Related to Our Company — If we were deemed an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as conducted and could have a material adverse effect on our business”.

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REPORTS

We will furnish the following reports, statements, and tax information to each stockholder:

Reporting Requirements under Tier II of Regulation A.   Following this Tier II, Regulation A offering, we will be required to comply with certain ongoing disclosure requirements under Rule 257 of Regulation A. We will be required to file: (i) an annual report with the SEC on Form 1-K; (ii) a semi-annual report with the SEC on Form 1-SA; (iii) current reports with the SEC on Form 1-U; and (iv) a notice under cover of Form 1-Z. The necessity to file current reports will be triggered by certain corporate events, similar to the ongoing reporting obligation faced by issuers under the Exchange Act, however the requirement to file a Form 1-U is expected to be triggered by significantly fewer corporate events than that of the Form 8-K. Parts I & II of Form 1-Z will be filed by us if and when we decide to and are no longer obligated to file and provide annual reports pursuant to the requirements of Regulation A.

Annual Reports.   As soon as practicable, but in no event later than one hundred twenty (120) days after the close of our fiscal year, ending December 31, our board of directors will cause to be mailed or made available, by any reasonable means, to each Stockholder as of a date selected by the board of directors, an annual report containing financial statements of the Company for such fiscal year, presented in accordance with GAAP, including a balance sheet and statements of operations, company equity and cash flows, with such statements having been audited by an accountant selected by the board of directors. The board of directors shall be deemed to have made a report available to each Stockholder as required if it has either (i) filed such report with the SEC via its Electronic Data Gathering, Analysis and Retrieval, or EDGAR, system and such report is publicly available on such system or (ii) made such report available on any website maintained by the Company and available for viewing by the Stockholders.

Tax Information.   On or before January 31st of the year immediately following our fiscal year, which is currently January 1st through December 31st, we will send to each Stockholder such tax information as shall be reasonably required for federal and state income tax reporting purposes.

Stock Certificates.   We do not anticipate issuing stock certificates representing shares purchased in this offering to the Common Stockholders. However, we are permitted to issue stock certificates and may do so at the request of our transfer agent. The number of shares held by each Common Stockholder, will be maintained by us or our transfer agent in our company register.

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LEGAL MATTERS

Certain legal matters regarding the securities being offered by this offering circular will be passed upon for us by Manatt, Phelps & Phillips, LLP, Costa Mesa, California.

EXPERTS

Our historical consolidated financial statements as of and for the years ended December 31, 2018 and 2017 have been audited by Marcum LLP, an independent registered public accounting firm, as set forth in their report. We have included our consolidated financial statements in this registration statement in reliance on Marcum LLP’s report, given on the authority of such firm as experts in accounting and auditing.

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CALIBERCOS INC. AND SUBSIDIARIES
 
CONTENTS

Reports of Independent Registered Public Accounting Firm	F-2
Financial Statements	​
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Changes in Stockholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-6 – F-7
Notes to Consolidated Financial Statements	F-8 – F-53

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of
CaliberCos, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CaliberCos, Inc. and Subsidiaries (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Marcum LLP
Marcum LLP

We have served as the Company’s auditor since 2016.

New York, NY
April 9, 2019

F-2

CaliberCos Inc. and Subsidiaries
Consolidated Balance Sheets

​	December 31,
​	2018			2017
Assets	​	​	​	​	​	​
Real estate investments	​	​	​	​	​	​
Land and land improvements	​	$	25,580,075	​	$	20,261,083
Buildings and building improvements	​	​	110,400,125	​	​	91,537,069
Furniture, fixtures, and equipment	​	​	23,745,343	​	​	19,728,145
Real estate assets under construction	​	​	1,154,966	​	​	13,523,716
Real estate assets held for sale	​	​	11,062,577	​	​	1,424,335
Total real estate investments, at cost	​	​	171,943,086	​	​	146,474,348
Accumulated depreciation	​	​	(17,972,715)	​	​	(13,764,437)
Total real estate investments, net	​	​	153,970,371	​	​	132,709,911
Cash	​	​	5,954,795	​	​	6,106,778
Restricted cash	​	​	4,873,295	​	​	6,656,826
Accounts receivable, net	​	​	1,311,404	​	​	1,041,984
Other receivables	​	​	88,542	​	​	89,505
Notes receivable – related parties	​	​	127,978	​	​	277,978
Due from related parties	​	​	2,357,796	​	​	3,021,545
Prepaid and other assets	​	​	3,450,616	​	​	2,874,681
Total Assets	​	$	172,134,797	​	$	152,779,208
Liabilities, Mezzanine Equity, and Stockholders’ (Deficit) Equity	​	​	​	​	​	​
Notes payable (net of deferred financing costs of  $2,814,976 and $1,949,834 at December 31, 2018 and 2017, respectively)	​	​	122,741,088	​	​	100,946,351
Notes payable – related parties	​	​	10,643,723	​	​	9,126,978
Accounts payable	​	​	1,890,981	​	​	4,276,388
Accrued interest	​	​	1,308,828	​	​	2,302,028
Accrued share-based payments	​	​	1,381,526	​	​	1,381,526
Buyback obligation	​	​	13,577,152	​	​	—
Accrued expenses	​	​	3,996,216	​	​	3,395,620
Due to related parties	​	​	2,261,919	​	​	2,009,115
Advance key money, net	​	​	1,200,000	​	​	1,275,000
Above-market ground lease, net	​	​	3,887,665	​	​	4,013,072
Other liabilities	​	​	1,782,680	​	​	1,580,550
Total Liabilities	​	​	164,671,778	​	​	130,306,628
Commitments and contingencies	​	​	​	​	​	​
Mezzanine equity – Series A convertible, mandatorily redeemable preferred stock, $0.001 par value; 2,564,103 shares authorized and 1,657,396 and 1,386,229 issued and outstanding at December 31, 2018 and 2017, respectively	​	​	3,841,934	​	​	3,180,480
Stockholders’ (Deficit) Equity	​	​	​	​	​	​
Common stock, $0.001 par value; 90,000,000 shares authorized, 27,974,212 and 27,956,212 shares issued and outstanding, respectively at December 31, 2018 and 26,797,477 shares issued and outstanding at December 31, 2017	​	​	27,974	​	​	26,797
Paid-in capital	​	​	14,172,135	​	​	10,676,358
Less treasury stock, at cost, 18,000 shares repurchased and 6,221,846 forward repurchase shares	​	​	(13,625,752)	​	​	—
Accumulated deficit	​	​	(24,665,638)	​	​	(21,223,501)
Stockholders’ deficit attributable to CaliberCos Inc.	​	​	(24,091,281)	​	​	(10,520,346)
Stockholders’ equity attributable to noncontrolling interests	​	​	27,712,366	​	​	29,812,446
Total Stockholders’ Equity	​	​	3,621,085	​	​	19,292,100
Total Liabilities, Mezzanine Equity, and Stockholders’ (Deficit) Equity	​	$	172,134,797	​	$	152,779,208

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

F-3

CaliberCos Inc. and Subsidiaries
Consolidated Statements of Operations

​	Year Ended December 31,
​	2018			2017
Revenues	​	​	​	​	​	​
Hospitality	​	$	49,341,339	​	$	44,062,107
Construction and development	​	​	4,630,343	​	​	4,615,982
Real estate sales	​	​	6,289,200	​	​	7,877,470
Rental income	​	​	4,968,010	​	​	4,972,803
Fund management	​	​	4,666,853	​	​	1,661,830
Property management	​	​	325,113	​	​	485,730
Brokerage	​	​	303,975	​	​	314,647
Other	​	​	147,307	​	​	428,567
Total revenues	​	​	70,672,140	​	​	64,419,136
Expenses	​	​	​	​	​	​
Cost of sales – hospitality	​	​	18,921,957	​	​	16,727,488
Cost of sales – construction and development	​	​	4,356,164	​	​	4,105,738
Cost of sales – real estate	​	​	5,327,572	​	​	6,930,938
Cost of sales – brokerage	​	​	106,572	​	​	54,585
Operating costs	​	​	19,626,511	​	​	14,432,049
General and administrative	​	​	5,508,173	​	​	6,871,151
Marketing and advertising	​	​	4,356,915	​	​	3,530,813
Franchise fees	​	​	3,563,149	​	​	3,032,198
Management fees	​	​	1,952,714	​	​	1,621,222
Depreciation	​	​	7,034,166	​	​	5,564,129
Impairment	​	​	839,250	​	​	460,906
Total expenses	​	​	71,593,143	​	​	63,331,217
Operating (Loss) Income	​	​	(921,003)	​	​	1,087,919
Other (Income) Expenses	​	​	​	​	​	​
Other expenses, net	​	​	306,530	​	​	638,207
Interest income	​	​	(41,650)	​	​	(24,261)
Gain on disposition of real estate	​	​	—	​	​	(1,478,865)
Interest expense	​	​	11,887,742	​	​	10,458,422
Total other expenses, net	​	​	12,152,622	​	​	9,593,503
Net Loss Before Income Taxes	​	​	(13,073,625)	​	​	(8,505,584)
Provision for (benefit from) income taxes	​	​	—	​	​	—
Net Loss	​	​	(13,073,625)	​	​	(8,505,584)
Net loss attributable to noncontrolling interests	​	​	10,080,924	​	​	5,802,121
Net Loss Attributable to CaliberCos Inc.	​	$	(2,992,701)	​	$	(2,703,463)
Basic and diluted net loss per share attributable to common stockholders	​	$	(0.13)	​	$	(0.12)
Weighted-average basic and diluted common shares outstanding	​	​	27,405,332	​	​	25,299,392

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

F-4

CaliberCos Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity

​

CaliberCos Inc.

Noncontrolling Interests

Total Stockholders’ Equity

​

Common Stock

Paid in Capital

Treasury Stock

Accumulated Deficit

​

Shares

Par Value

Balances at January 1, 2017

​

24,064,751

​

$

24,065

​

$

7,018,415

​

$

—

​

$

(18,306,345)

​

$

30,999,082

​

$

19,735,217

Issuance of common stock

​

540,157

​

​

540

​

​

972,569

​

​

—

​

​

—

​

​

—

​

​

973,109

Settlement of share-based payments

​

1,325,324

​

​

1,325

​

​

1,125,200

​

​

—

​

​

—

​

​

—

​

​

1,126,525

Conversion of notes payable to common stock

​

867,245

​

​

867

​

​

1,560,174

​

​

—

​

​

—

​

​

—

​

​

1,561,041

Distribution to preferred stock holders

​

—

​

​

—

​

​

—

​

​

—

​

​

(197,825)

​

​

—

​

​

(197,825)

Accretion of mezzanine equity value

​

—

​

​

—

​

​

—

​

​

—

​

​

(15,868)

​

​

—

​

​

(15,868)

Contributions from noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

12,015,046

​

​

12,015,046

Redemptions of noncontrolling interest

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(5,715,524)

​

​

(5,715,524)

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,684,037)

​

​

(1,684,037)

Net loss

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,703,463)

​

​

(5,802,121)

​

​

(8,505,584)

Balances at December 31, 2017

​

26,797,477

​

​

26,797

​

​

10,676,358

​

​

—

​

​

(21,223,501)

​

​

29,812,446

​

​

19,292,100

Consolidation of VIEs

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

6,614,319

​

​

6,614,319

Issuance of common stock

​

1,029,058

​

​

1,029

​

​

1,865,171

​

​

—

​

​

—

​

​

—

​

​

1,866,200

Settlement of obligations

​

48,840

​

​

48

​

​

82,980

​

​

—

​

​

—

​

​

—

​

​

83,028

Conversion of noncontrolling interest to common stock

​

30,619

​

​

31

​

​

55,910

​

​

—

​

​

—

​

​

(55,941)

​

​

—

Conversion of notes payable to common stock

​

97,630

​

​

98

​

​

183,805

​

​

—

​

​

—

​

​

—

​

​

183,903

Repurchases and retirement of common stock

​

(29,412)

​

​

(29)

​

​

(24,971)

​

​

​

​

​

—

​

​

—

​

​

(25,000)

Treasury stock acquired –  buyback obligation

​

—

​

​

—

​

​

—

​

​

(13,625,752)

​

​

—

​

​

—

​

​

(13,625,752)

Equity based compensation expense

​

—

​

​

—

​

​

1,332,882

​

​

—

​

​

—

​

​

—

​

​

1,332,882

Distribution to common stock holders

​

—

​

​

—

​

​

—

​

​

—

​

​

(7,601)

​

​

—

​

​

(7,601)

Distribution to preferred stock holders

​

—

​

​

—

​

​

—

​

​

—

​

​

(390,508)

​

​

—

​

​

(390,508)

Accretion of mezzanine equity value

​

—

​

​

—

​

​

—

​

​

—

​

​

(51,327)

​

​

—

​

​

(51,327)

Contributions from noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

7,904,323

​

​

7,904,323

Redemptions of noncontrolling interest

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(4,346,024)

​

​

(4,346,024)

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,135,833)

​

​

(2,135,833)

Net loss

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,992,701)

​

​

(10,080,924)

​

​

(13,073,625)

Balances at December 31, 2018

​

27,974,212

​

$

27,974

​

$

14,172,135

​

$

(13,625,752)

​

$

(24,665,638)

​

$

27,712,366

​

$

3,621,085

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

F-5

CaliberCos, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

​	Year Ended December 31,
​	2018			2017
Cash Flows From Operating Activities	​	​	​	​	​	​
Net loss	​	$	(13,073,625)	​	$	(8,505,584)
Adjustments to reconcile net loss to net cash provided by operating activities:	​	​	​	​	​	​
Depreciation	​	​	7,034,166	​	​	5,564,129
Amortization of deferred financing costs	​	​	1,991,663	​	​	2,305,174
Amortization of advance key money	​	​	(75,000)	​	​	(75,000)
Amortization of above-market ground lease	​	​	(125,407)	​	​	(125,409)
Impairment	​	​	839,250	​	​	460,906
Equity based compensation	​	​	1,332,882	​	​	—
Loss on retirement of real estate assets	​	​	472,878	​	​	—
Loss on equity method investment	​	​	—	​	​	67,000
Loss on extinguishment of debt	​	​	—	​	​	203,556
Gain on disposition of real estate	​	​	—	​	​	(1,478,865)
Changes in operating assets and liabilities:	​	​	​	​	​	​
Real estate assets held for sale	​	​	4,786,172	​	​	5,186,228
Accounts receivable, net	​	​	(269,420)	​	​	123,128
Other receivables	​	​	963	​	​	849,269
Due from related parties	​	​	663,749	​	​	(1,866,271)
Prepaid and other assets	​	​	177,593	​	​	168,609
Accounts payable	​	​	(229,445)	​	​	222,600
Accrued interest	​	​	(993,200)	​	​	(473,861)
Accrued expenses	​	​	1,240,596	​	​	56,087
Due to related parties	​	​	(920,818)	​	​	481,133
Other liabilities	​	​	221,956	​	​	554,396
Net cash provided by operating activities	​	​	3,074,953	​	​	3,717,225
Cash Flows From Investing Activities	​	​	​	​	​	​
Acquisitions of real estate assets	​	​	(20,053,510)	​	​	—
Investments in real estate assets	​	​	(8,064,970)	​	​	(16,635,780)
Proceeds from disposition of real estate	​	​	—	​	​	3,015,000
Proceeds from the settlement of property-related insurance claims	​	​	982,714	​	​	827,646
Funding of notes receivable – related parties	​	​	(100,000)	​	​	(250,000)
Payment received on notes receivable – related parties	​	​	250,000	​	​	130,272
Net cash used in investing activities	​	$	(26,985,766)	​	$	(12,912,862)
Cash Flows From Financing Activities	​	​	​	​	​	​
Capital lease payments	​	​	(19,826)	​	​	(13,308)
Payment of deferred financing costs	​	​	(3,146,805)	​	​	(1,503,331)
Payment of loan extinguishment fees	​	​	—	​	​	(666,994)
Proceeds from notes payable	​	​	94,878,271	​	​	43,088,783
Repayments of notes payable	​	​	(72,020,259)	​	​	(36,656,105)
Proceeds from notes payable – related parties	​	​	4,438,544	​	​	762,000
Repayments of notes payable – related parties	​	​	(5,272,494)	​	​	(5,501,892)
Proceeds from the issuance of preferred stock	​	​	595,897	​	​	573,617
Proceeds from the issuance of common stock	​	​	1,921,214	​	​	973,109
Repurchases and retirement of common stock	​	​	(25,000)	​	​	—

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

F-6

CaliberCos, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Continued)

​	Year Ended December 31,
​	2018			2017
Payments of treasury stock – buyback obligation	​	$	(48,600)	​	$	—
Distributions to preferred stockholders	​	​	(390,508)	​	​	(197,825)
Distributions to common stockholders	​	​	(7,601)	​	​	—
Contributions from noncontrolling interest holders	​	​	7,904,323	​	​	12,015,046
Redemptions of noncontrolling interests	​	​	(4,596,024)	​	​	(5,465,524)
Distributions to noncontrolling interest holders	​	​	(2,235,833)	​	​	(1,584,037)
Net cash provided by financing activities	​	​	21,975,299	​	​	5,823,539
Net Decrease in Cash and Restricted Cash	​	​	(1,935,514)	​	​	(3,372,098)
Cash and Restricted Cash at Beginning of Year	​	​	12,763,604	​	​	16,135,702
Cash and Restricted Cash at End of Year	​	$	10,828,090	​	$	12,763,604
Reconciliation of Cash and Restricted Cash	​	​	​	​	​	​
Cash at beginning of year	​	​	6,106,778	​	​	3,159,333
Restricted cash at beginning of year	​	​	6,656,826	​	​	12,976,369
Cash and restricted cash at beginning of year	​	​	12,763,604	​	​	16,135,702
Cash at end of year	​	​	5,954,795	​	​	6,106,778
Restricted cash at end of year	​	​	4,873,295	​	​	6,656,826
Cash and restricted cash at end of year	​	$	10,828,090	​	$	12,763,604

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

F-7

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Organization and Basis of Presentation

Organization

CaliberCos Inc., a Delaware corporation, and its consolidated subsidiaries (collectively, the “Company”, “Caliber”, “we”, “our”, and “us”), is an asset manager of private equity real estate funds and provider of a full suite of traditional real estate services. CaliberCos Inc. was formed in November 2014, and originally began as Caliber Companies, LLC, an Arizona limited liability company, which commenced operations in January 2009. The real estate asset management business includes the management of private equity real estate funds and direct real estate investments in residential, commercial, and hospitality assets. We also provide capital raising services to the private equity real estate funds we manage. The Company provides real estate services for the assets it manages, as well as for third party customers, including construction, development, real estate brokerage, and property management services. In addition to providing asset management and real estate services, the Company also owns a portfolio of single-family homes which are held for rental and/or sale. Our business is organized into eight reportable segments, which we analyze in two categories; real estate services (Fund Management, Construction & Development, Property Management, Real Estate Brokerage) and real estate operations (Hospitality, Residential, Commercial, and Diversified). At December 31, 2018, we had operations in Arizona, Nevada, Utah, Colorado, and Alaska.

In June 2018, the Company changed its state of incorporation from Nevada to Delaware.

In general, the private equity real estate funds Caliber manages are organized as operating partnerships, in which multiple unrelated passive investors own partnership interest and Caliber is designated as the manager and/or general partner of the partnership. Depending on the legal structure and arrangements between Caliber and the funds, we may or may not consolidate the partnerships for financial reporting purposes. For funds in which Caliber is determined to be the controlling party for financial reporting purposes, the fund is consolidated, and the passive investors’ ownership is presented as noncontrolling interest in the accompanying consolidated financial statements. For funds in which Caliber is not determined to be the controlling party for financial reporting purposes, the fund is not consolidated, and any fees earned from the fund are included in fund management revenue in the accompanying consolidated financial statements (see Note 2).

In September 2018, the Company filed a Form 1-A related to a Regulation A (“Reg A”) offering. Reg A is an exemption to the securities registration requirement found in the Securities Act of 1933 which allow private companies to make exempt public offerings of up to $50 million in securities, as required by the Jumpstart Our Business Startups Act.

Basis of Presentation

The accompanying consolidated financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements include the accounts of CaliberCos Inc., its wholly-owned and majority-owned subsidiaries, and the consolidated entities that are considered to be a variable interest entity (“VIE”), of which the Company is determined to be the primary beneficiary.

Note 2 — Summary of Significant Accounting Policies

Consolidation

The accompanying consolidated financial statements include our accounts and those of our consolidated subsidiaries, which are comprised of VIEs in which we are the primary beneficiary and voting interest entities (“VOEs”), in which we determined we have a controlling financial interest, under the “Consolidations” Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards

F-8

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Codification (“ASC”) (Topic 810). The equity and net income or loss attributable to noncontrolling interests in subsidiaries is shown separately in the accompanying consolidated balance sheets, statements of operations, and statements of changes in stockholders’ equity. All significant intercompany balances and transactions have been eliminated in consolidation.

Variable Interest Entities

We determine if an entity is a VIE based on several factors, including whether the equity holders, as a group, lack the characteristics of a controlling financial interest. We make judgments regarding which types of activities most significantly impact the entity’s economic performance first on a qualitative analysis, then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in a VIE.

Determining which reporting entity, if any, has a controlling financial interest in a VIE is primarily a qualitative analysis focused on identifying which reporting entity has both (1) the power to direct the activities of a VIEs that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgement.

We consolidate any VIE for which we are the primary beneficiary and disclose significant VIEs of which we are not the primary beneficiary, as well as disclose our maximum exposure to loss related to the VIEs that are consolidated (see Note 3).

Voting Interest Entities

Entities that do not qualify as VIEs are generally assessed for consolidation as VOEs. For VOEs, we consolidate the entity if we have a controlling financial interest in the entity. We have a controlling financial interest in a VOEs if  (1) for legal entities other than partnerships, we own a majority voting interest in the VOEs or, for limited partnerships and similar entities, we own a majority of the entity’s kick-out rights through voting limited partnership interests and (2) non-controlling shareholders or partners do not hold substantive participating rights, and no other conditions exist that would indicate that we do not control the entity.

Use of Accounting Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Company makes significant estimates regarding the useful lives of depreciable assets, real estate and other investment impairment, the allocation of purchase price for business combinations and asset acquisitions, income taxes, and the consolidation of VOEs and VIEs.

Reclassification

Certain reclassifications of previously reported amounts have been made to conform to the current year presentation. Such reclassifications did not impact net loss or stockholders’ equity as previously reported.

Investments in Unconsolidated Entities

Our investments in unconsolidated entities in which we have the ability to exercise significant influence over operating and financial policies, but do not control, are accounted for under the equity method of

F-9

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

accounting. We eliminate transactions with such equity method subsidiaries to the extent of our ownership in such entities. Accordingly, our share of the earnings or loss from these entities, in which our investment is accounted for under the equity method basis, is included in consolidated net income or loss. All other investments held on a long-term basis are valued at cost less any impairments. At December 31, 2018 and 2017, the balance of our investments in unconsolidated entities was $570,351 and $174,895, respectively, which is included in prepaid and other assets on the accompanying consolidated balance sheets. In certain situations, the Company has invested only a nominal amount of cash, or no cash at all, into a venture. However, as the manager of the venture, we are entitled to 20 – 35% of the residual cash flow (“carried interest”) produced by the venture after the payment of any priority returns.

Under both the equity and cost method, impairment losses are recognized upon evidence of other-than-temporary losses of value. When evaluating investments that are not actively traded on a public market for impairment, we generally use a discounted cash flow approach to estimate the fair value of our investments and/or look to comparable activities in the marketplace. Management’s judgment is required in developing the assumptions for the discounted cash flow approach. These assumptions include net asset values, internal rates of return, discount and capitalization rates, interest rates and financing terms, rental rates, timing of leasing activity, estimates of lease terms and related concessions, and other factors. When determining if impairment is other-than-temporary, we also look to the length of time and the extent to which fair value has been less than cost as well as the financial condition and near-term prospects of each investment. None of our recorded investments were considered to be impaired at December 31, 2018 or 2017.

Accounting for Real Estate Investments

Upon the acquisition of real estate properties, a determination is made as to whether the acquisition meets the criteria to be accounted for as an asset acquisition or a business combination. The determination is primarily based on whether the assets acquired, and liabilities assumed meet the definition of a business. The determination of whether the assets acquired, and liabilities assumed meet the definition of a business includes a single or similar asset threshold. In applying the single or similar asset threshold, if substantially all the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the assets acquired, and liabilities assumed are not considered a business. Most of our acquisitions meet the single or similar asset threshold, due to the fact that substantially all the fair value of the gross assets acquired is attributable to the real estate assets acquired.

Acquired real estate properties accounted for as asset acquisitions are recorded at cost, including acquisition and closing costs. The Company allocates the cost of real estate properties to the tangible and intangible assets and liabilities acquired based on their estimated relative fair values. We determine the fair value of tangible assets, such as land, building, furniture, fixtures and equipment, using a combination of internal valuation techniques that consider comparable market transactions, replacement costs and other available information and fair value estimates provided by third party valuation specialists, depending upon the circumstances of the acquisition. We determine the fair value of identified intangible assets (or liabilities), which typically relate to in-place leases, using a combination of internal valuation techniques that consider the terms of the in-place leases, current market data for comparable leases, and fair value estimates provided by third party valuation specialists, depending upon the circumstances of the acquisition.

If a transaction is determined to be a business combination, the assets acquired, liabilities assumed, and any identified intangibles are recorded at their estimated fair values on the transaction date, and transaction costs are expensed in the period incurred.

F-10

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Cost Capitalization and Depreciation

We capitalize costs, including certain indirect costs, incurred in connection with our construction and development activities. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with capital addition activities at the asset level. We also capitalize interest, property taxes and insurance during periods in which redevelopment, development and construction projects are in progress. We commence capitalization of costs, including certain indirect costs, incurred in connection with our capital addition activities, at the point in time when activities necessary to get the assets ready for their intended use are in progress. This includes when assets are undergoing physical construction, as well as when apartment homes are held vacant in advance of planned construction, provided that other activities such as permitting, planning and design are in progress. We cease the capitalization of costs when the assets are substantially complete and ready for their intended use, which is typically when construction has been completed and apartment homes or other properties are available for occupancy. We charge the cost of ordinary repairs, maintenance and resident turnover to operating expense, as incurred.

Depreciation for all tangible real estate assets is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives of our real estate assets are as follows:

Building and building improvements	15 – 40 years
Furniture, fixtures, and equipment	3 – 7 years

For the years ended December 31, 2018 and 2017, depreciation expense was $7,034,166 and $5,564,129, respectively.

Impairment of Long-Lived Assets

Real estate and other long-lived assets to be held and used are stated at cost, less accumulated depreciation and amortization, unless the carrying amount of the asset is determined to not be recoverable. If events or circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, we make an assessment of its recoverability by comparing the carrying amount to our estimate of the undiscounted future cash flows of the asset, excluding interest charges. If the carrying amount exceeds the aggregate undiscounted future cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the asset.

For the years ended December 31, 2018 and 2017, we recorded impairment losses of  $839,250 and $460,906, respectively, related to certain single-family homes. The estimated fair value (level 3) of the single-family homes, which was based on a combination of internal valuations using available market data and third-party valuations, was determined to be less than the carrying value at the respective measurement date.

Real Estate Assets Held for Sale

An asset or asset group is classified as held for sale when certain criteria are met including management’s approval for sale, the availability of the asset or asset group to be sold in its present condition, and the likelihood of the sale occurring within the next twelve months is probable. At such time, if the asset was being depreciated, depreciation is no longer recognized. Assets held for sale are recorded at the lower of their carrying value, or estimated net realizable value, less costs to sell. The estimates used in the determination of the net realizable value of real estate held for sale are based on known factors to the Company at the time such estimates are made and management’s expectations of future operations and economic conditions. Should the estimate or expectations used in determining net realizable value deteriorate in the future, the Company may be required to recognize impairment charges or write-offs related to these real estate assets held for sale.

F-11

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Advance Key Money

We have entered into certain arrangements in which hotel franchisors or their affiliates have provided the Company with financing as part of a franchise arrangement. The Company has been advanced funds upon entering into a franchise agreement and is not required to repay the funds as long as the franchise agreement is not terminated prior to its scheduled maturity. The potential amount of funds that would be required to be repaid decreases with the passage of time. The Company records a liability equal to the initial amount of funds received, which is amortized over the term of the franchise agreement and recorded as a reduction of franchise fee expense, which is included in operating expenses in the accompanying consolidated statements of operations.

Cash

Cash includes cash in bank accounts. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit of  $250,000. At times, the Company’s cash balances may exceed federally insured levels. Although the Company bears risk on amounts in excess of those insured by the FDIC, it has not experienced and does not anticipate any losses due to the high quality of the institutions where the deposits are held.

Restricted Cash

Restricted cash consists of tenant security deposits and cash reserves required by certain loan agreements for capital improvements and repairs. As improvements and repairs are completed, related costs incurred by the Company are funded from the reserve accounts. Restricted cash also includes cash held in escrow accounts by mortgage companies on behalf of the Company for payment of property taxes, insurance, and interest.

Cash Held for Others

We manage cash in our role as an agent for certain of our property management clients. At December 31, 2018 and 2017, we had cash held for others in the amount of  $395,716 and $630,885, respectively. These amounts are not included in the balances on our consolidated balance sheets.

Concentration of Credit Risk

Substantially all of the Company’s revenues are generated from the management, ownership and/or operations of real estate assets located in Arizona, Alaska, Colorado, Nevada, and Utah. The Company mitigates the associated risk by:

•

diversifying our investments in real estate assets across multiple asset types, including office, hospitality, single-family, multi-family, and self-storage properties;

•

diversifying our investments in real estate assets across multiple geographic locations including different markets and sub-markets in Arizona, Alaska, Colorado, Nevada, and Utah;

•

diversifying our investments in real estate assets across assets at differing points of stabilization, and in varying states of cash flow optimization; and

•

maintaining financing relationships with a diversified mix of lenders (differing size and type), including large national banks, local community banks, private equity lenders, and insurance companies.

F-12

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Mezzanine Equity

The Company may issue one or more series of preferred stock. Preferred stock, which is subject to mandatory redemption by the Company, is presented as temporary, or mezzanine, equity, and presented separate from permanent equity on the accompanying consolidated balances sheets. The Series A preferred stock is mandatorily redeemable at a fixed price on a fixed or determinable date. Also, it contains a put option which allows the holder to convert the Series A preferred stock into common stock of the Company at any time prior to redemption. As a result, the Company concludes that the Series A Preferred Stock would not meet the characteristics of being mandatorily redeemable until the conversion option expires. Accordingly, the Series A preferred stock is presented as mezzanine equity on the accompanying consolidated balance sheets. Mezzanine equity is initially recorded at fair value on the issuance date. If it is probable that the equity instrument will become redeemable, the carrying amount of the instrument is accreted up over time using the effective-interest method, such that the carrying value equals the redemption value on the redemption date.

Noncontrolling Interests in Consolidated Real Estate Partnerships

We report the unaffiliated partners’ interests in the net assets of our consolidated real estate partnerships as noncontrolling interests within consolidated stockholders’ equity. Noncontrolling interests consist primarily of equity interests held by limited partners in consolidated real estate partnerships. We generally attribute to noncontrolling interests their share of income or loss of the consolidated partnerships based on their proportionate interest in the results of operations of the partnerships, including their share of losses even if such attribution results in a deficit noncontrolling interest balance within our equity and partners’ capital accounts.

The terms of the partnership agreements generally require the partnerships to be liquidated following the sale of the underlying real estate assets. As the general partner in these partnerships, we ordinarily control the execution of real estate sales and other events that could lead to the liquidation, redemption or other settlement of noncontrolling interests. The terms of certain partnership agreements outline differing classes of equity ownership, some of which are redeemable by the partnership at the partnership manager’s discretion.

Advertising Costs

Advertising costs are expensed as incurred. For the years ended December 31, 2018 and 2017, advertising costs totaled $494,570 and $426,715, respectively.

Deferred Financing Costs

Deferred financing costs represent costs incurred in connection with obtaining long-term debt and are capitalized and amortized over the term of the related debt obligation using the straight-line method. Amounts amortized are reported as a component of interest expense in the consolidated statements of operations. U.S. GAAP requires that the effective interest method be used to recognize amortization; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under the effective interest method. Capitalized deferred financings costs, net of accumulated amortization, are offset against and included in notes payable on the accompanying consolidated balance sheets.

F-13

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Inventory

The Company holds certain items in inventory in connection with its hotel operations. The inventory consists of food, beverage products and hotel gift shop items, which are carried at the lower of cost or net realizable value, determined on a first-in, first-out basis. At December 31, 2018 and 2017, the Company’s inventory balance was $201,443 and $178,239, respectively, which is included in prepaid and other assets on the accompanying consolidated balance sheets.

Revenue Recognition

Hospitality

Hospitality revenues are generated by the Company’s hotel properties, and are comprised of charges for room rentals, food and beverage sales, and other hotel operating activities. These revenues are recorded net of any sales and occupancy taxes collected from guests. Revenues are recognized as earned, which is defined as the date upon which a guest occupies a room or utilizes the hotel property’s services, and the point of sale for food and beverage sales. To the extent guests or groups pre-pay for rooms or services to be provided by the hotel the amounts are recorded as deferred revenue and are recognized as the room night occurs or service is provided.

Construction and Development

The Company provides construction related services to affiliates and third parties, which include the build-out of tenant space, the renovation of hospitality, residential, and commercial real estate, and general real estate repair and maintenance services. In addition, the Company provides development services for ground-up development and repositioning of real estate assets.

Revenues related to cost-plus contracts are recognized on the basis of costs incurred during the period plus fees earned. Revenues from fixed-price contracts are recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to estimated total costs for each contract. This method is used because management considers incurred costs to be the best available measure of progress on these contracts. Because of the inherent uncertainties in estimating costs, it is as least reasonably possible that the estimates used could change within the near term.

The asset, “Costs in excess of billings” included in prepaid and other assets on the accompanying consolidated balance sheets represents revenues recognized in excess of amounts billed. The liability, “Billings in excess of costs” included in other liabilities on the accompanying consolidated balance sheets represents billings in excess of revenues recognized. In addition, the Company generates revenue from construction and development services which is recognized when the services are rendered.

Real Estate Sales

Real estate sales are comprised of sales proceeds from the sale of single-family homes. All other real estate assets sold are recognized in other (income) expenses. Revenue from the sale of real estate is recognized when title is transferred, all consideration is exchanged, and all conditions precedent to closing are performed.

Rental Income

Rental income includes the revenues generated primarily by the rental operations of the residential (multi-family and single-family) properties owned and/or managed by the Company. The Company’s revenues generated by residential properties, which primarily consist of rental income and include rents that

F-14

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

each tenant pays in accordance with the terms of each lease, are reported on a straight-line basis over the initial noncancelable term of the lease, net of any concessions, and are recognized when earned and collectability is reasonably assured. These revenues are recorded net of any sales and occupancy taxes collected from tenants.

Fund Management

Fund management revenue includes fees earned for managing private equity real estate funds. We generally earn initial, one-time fees at the inception of a fund, and separate on-going, annual asset management fees. Asset management fees are generally based on 1.5% of capital contributed into a particular fund and reimbursement for costs incurred on behalf of a fund, which includes an allocation of overhead costs, and are recalculated annually. Fund management revenue also includes fees earned on raising capital. We enter into fixed fee arrangements with our affiliates to provide certain services associated with marketing, soliciting, and selling member interests of the affiliated private equity real estate funds. In addition, fund management revenue also includes fees earned on certain real estate transactions and fees based on the performance of certain funds. The fees included in fund management revenue are charged and recognized in the period the related services are provided.

Property Management

Property management revenue includes fees charged for property management services. Revenues are generally based upon percentages of the rental revenue or base rent generated by the properties being managed. These fees are recognized when earned under the provisions of the related management agreements. Property management revenue also includes fees charged to property management customers for leasing commissions. These fees are generally a flat fee or based on the amount of the new lease executed and are charged at the time a tenant enters into a lease agreement for the customer’s property. These fees are recognized when earned under the provisions of the related management agreements, and generally at the time the lease is executed.

Our clients reimburse us for certain expenses incurred on their behalf. Our treatment of these reimbursements is based upon the terms of the underlying contract. We use certain indicators as to whether we record the reimbursements on a gross versus net basis, such as whether we are the primary obligor on the contracts, whether the contract is based on a fixed fee, credit risk, and our discretion in making vendor selections and establishing prices.

In certain instances, we have determined we are acting as the principal in the transaction and, accordingly, report these reimbursements as revenue on a gross basis with the total costs reflected in operating expenses. Reimbursement revenue is recognized when the underlying reimbursable costs are incurred.

Brokerage

We earn real estate brokerage commission revenue by acting as a broker for residential and commercial real estate owners and investors seeking to buy and/or sell properties, including investment properties, as well as primary residences. Revenues from real estate brokerage commissions are typically recognized at the close of escrow or transfer of title.

F-15

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

In certain instances, we have determined we are acting as the principal in the brokerage transaction and, accordingly, report these commissions as revenue on a gross basis with the total costs reflected in brokerage expenses. When we determine we are not acting as the principal in the transaction and are acting as an agent, we report the transaction on a net basis, presenting the brokerage commission revenue net of any related brokerage commission expenses.

Accounts Receivable

Accounts receivable primarily consists of amounts due from guests or groups for hotel rooms and services provided by the hotel properties. Accounts receivable also include due, but unpaid, rental payments. The Company continually reviews receivables and determines collectability by taking into consideration the history of past write-offs, collections, current credit conditions, tenant payment history, the financial condition of the tenants, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is uncertain, the Company will record an increase in the allowance for doubtful accounts. Amounts that are determined to be uncollectible with a high degree of certainty are written-off through bad debt expense, which is included in other expenses, net on the accompanying consolidated statements of operations. At December 31, 2018 and 2017, the Company did not record an allowance for doubtful accounts.

Interest Rate Caps

The Company utilizes interest rate caps, derivative financial instruments, to reduce interest rate risk. The Company does not hold or issue derivative financial instruments for trading purposes. Accounting and reporting standards for derivative instruments and hedging activities require the Company to recognize all derivatives as either assets or liabilities on the consolidated balance sheets and measure those instruments at fair value. Changes in the fair value of those instruments are reported in earnings or other comprehensive income (loss) depending on the use of the derivative and whether it qualifies for hedge accounting. The accounting for gains and losses associated with changes in the fair value of the derivative and the effect on the financial statements will depend on its hedge designation and whether the hedge is highly effective in achieving offsetting changes in the fair value of cash flows of the asset or liability hedged. At December 31, 2018 and 2017, the Company’s interest rate caps were estimated to have fair values (level 3) equal to zero (see Note 7).

Earnings Per Share

Basic earnings per share attributable to common stockholders is computed by dividing net income (loss) attributable to CaliberCos Inc. less dividends on preferred stock and accretion of mezzanine equity value by the weighted average number of shares outstanding during each period. The computation of diluted income (loss) per share attributable to common stockholders further assumes the potential dilutive effect of potential common shares, which includes warrants. To the extent the inclusion of potential common shares is anti-dilutive, the potential common shares are excluded from the computation of diluted income (loss) per share attributable to common stockholders.

Related Parties

In the normal course of business, the Company enters into transactions with related parties. Related parties include affiliates of the entity, entities under common control as the Company, significant stockholders and members of their immediate families, executive management and members of their immediate families, and other parties that can significantly influence the management and operating policies of the Company.

F-16

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Income Taxes

The Company accounts for income taxes under the asset and liability method in accordance with FASB ASC 740, “Accounting for Income Taxes”. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured by applying enacted tax rates and laws and are released in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are provided against deferred tax assets when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

A valuation allowance is required to reduce the balance of a deferred tax asset if it is determined that it is more-likely-than-not that all or some portion of the deferred tax asset will not be realized due to the lack of sufficient taxable income or other limitation on the Company’s ability to utilize the loss carryforward.

We recognize the impact of an income tax position, if that position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Related interest and penalties are classified as income taxes in the financial statements. See Note 9 for more information regarding unrecognized income tax benefits.

Fair Value of Financial Instruments

We disclose the fair value of financial instruments in accordance with FASB ASC 825, “Financial Instruments”. We estimate the fair value of our financial instruments using available market information and established valuation methodologies. The estimates of fair value are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.

Fair Value Measurements

The Company’s fair value measurement and disclosures consist of a three-level valuation hierarchy. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the ability to observe the inputs employed in the measurement using market participant assumptions at the measurement date. An asset’s or liability’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

•

Level 1 inputs — quoted prices in active markets for identical assets or liabilities that can be accessed at the measurement date.

•

Level 2 inputs — inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

•

Level 3 inputs — unobservable inputs for the asset or liability. These unobservable inputs reflect assumptions about what market participants would use to price the asset or liability and are developed based on the best information available in the circumstances (which might include the reporting company’s own data).

F-17

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Share-Based Payments

The Company has granted stock to non-employees in non-capital raising transactions as compensation for services provided. For stock grants to non-employees, the fair value of the share-based payment is determined based upon the measurement date fair value. The measurement date may be either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete. The fair value of the Company’s common stock grants is estimated using market factors, such as the current private market selling price of the Company’s common stock at the measurement date, depending on the terms of each arrangement. Non-employee share-based payment charges are recognized based on the terms of each arrangement, and share-based payment charges are generally recognized as the related service is provided. The average vesting period is 4 years.

Share-Based Compensation

In July 2017, the Company’s Board of Directors approved the 2017 Incentive Stock Plan (the “2017 Plan”), which was amended in June 2018 to authorize the issuance of up to 5.0 million shares of common stock. In June 2018, the Company’s Board of Directors approved and issued approximately 3.0 million employee stock options to existing employees. The Company estimates the fair value of stock options using the Black-Scholes valuation model, which requires certain assumptions that can materially impact the estimation of fair value and related compensation expense. The assumptions used to estimate fair value include the price of our common stock, the expected volatility of our common stock, the risk-free interest rate, and the expected term of stock option awards. Management elected to recognize forfeitures as they occur pursuant to ASU 2016-09 Compensation — Stock Compensation. As a result, no forfeiture rate was assumed.

Segment Information

The Company’s operations are organized into eight reportable segments for management and financial reporting purposes, which are divided into two categories; real estate services (Fund Management, Construction & Development, Property Management, Real Estate Brokerage) and real estate operations (Hospitality, Residential, Commercial, and Diversified). In accordance with ASC 280, “Segment Reporting”, in determining the most appropriate reportable segments, we considered the information our chief operating decision maker assesses when evaluating the operating performance of our assets, based on our share of operating income (loss), including similar economic and other characteristics, and the nature of operating or revenue producing activity.

Recent Accounting Pronouncements

Revenue Recognition

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09, and related amendments, provide comprehensive guidance for recognizing revenue from contracts with customers. Revenue is recognized when the entity transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The guidance includes a five-step framework that requires an entity to: (i) identify the contract(s) with customers, (ii) identify the performance obligations within the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations within the contract, and (v) recognize revenue when the entity satisfies a performance obligation. ASU 2014-09 also requires additional disclosure regarding the nature and timing of the Company’s revenue transactions. The amendments in ASU 2014-09 are effective for the Company for its fiscal year beginning after December 15, 2018 and interim periods in its fiscal year

F-18

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the potential impact the adoption of ASU 2014-09 will have on our consolidated financial statements and below is a summary of the Company’s expected revenue recognition assessment by significant revenues.

Hospitality

The majority of payments are made by the customer when hospitality services are provided. The Company recognizes revenue from hospitality services at a point in time as the performance obligation is satisfied.

Construction and Development

The Company recognizes construction contract revenue over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. Construction contracts are generally accounted for as a single performance obligation and are not segmented between types of services. The Company recognizes revenue using the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost.

Real Estate Sales

The Company recognizes real estate sales at a point in time. Each transaction is treated as a single performance obligation and revenue is recognized when the transaction is completed, when the performance obligation is satisfied.

Rental Income

Rental income is not within the scope of ASU 2014-09 and would fall under the lease guidance below.

Fund Management and Property Management

Revenues from fund management and property management are monthly fees contracts. The Company recognizes these revenues over time, as performance obligations are satisfied, due to the continuous services provided required by the contract. Each service provided is generally accounted for as a single performance obligation. The Company recognizes revenue equally throughout the term of the performance obligation.

Brokerage

The Company recognizes brokerage revenue at a point in time. Brokerage revenue is mainly commissions received from services provided during a transaction. Each transaction is treated as a single performance obligation and revenue is recognized when the transaction is completed, when the performance obligation is satisfied. The Company has determined it is acting as an agent and reports revenue on a net basis.

Equity-Based Compensation

Compensation expense relating to the issuance of equity-based awards to Caliber employees and non-employees is measured at fair market value on the grant date. In June 2018, the Company adopted Accounting Standards Update 2018-07, Compensation — Stock Compensation (Topic 718), which aligned the accounting for non-employee equity-based awards with the accounting for employee equity-based awards, retroactive to January 1, 2018. The compensation expense for awards that vest over a future service period is recognized over the relevant service period on a straight-line basis. The compensation expense for awards that do not require future service is recognized immediately. The Company recognizes equity-based award forfeitures in the period they occur as a reversal of previously recognized compensation expense. The reduction in compensation expense is determined based on the specific awards forfeited during that period.

F-19

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 2 — Summary of Significant Accounting Policies (continued)
 

Leases

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”), which will require that a lessee recognize assets and liabilities on the balance sheet for all leases with a lease term of more than 12 months, with the result being the recognition of a right of use asset and a lease liability and the disclosure of key information about the entity’s leasing arrangements. ASU 2016-02 retains a distinction between finance leases (i.e., capital leases under current U.S. GAAP) and operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current U.S. GAAP. The amendments in ASU 2016-02 are effective for the Company for its fiscal year beginning after December 15, 2019, and interim periods in its fiscal year beginning after December 15, 2020, with early adoption permitted. A modified retrospective approach is required for existing leases that have not expired upon adoption. We are currently evaluating the potential impact the adoption of ASU 2016-02 will have on our consolidated financial statements. We expect to utilize the practical expedients as part of our adoption of ASU 2016-02.

Cash Flow Statement

In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which is intended to address diversity in practice related to how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for reporting periods beginning after December 15, 2018 for non-public entities, with the option to early adopt, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company adopted ASU 2016-15 in the fourth quarter of 2018 and applied the standard retrospectively for all periods presented. There were no reclassifications from the adoption of ASU 2016-15.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Restricted Cash (“ASU 2016-18”), which provides guidance on the presentation of restricted cash and restricted cash equivalents in the statement of cash flows. ASU 2016-18 requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows. ASU 2016-18 is effective for reporting periods beginning after December 15, 2018 for non-public entities, with the option to early adopt, and requires retrospective adoption unless it is impracticable to apply, in which case it is to be applied prospectively as of the earliest date practicable. The Company adopted ASU 2016-18 in the fourth quarter of 2018 and applied the standard retrospectively for all periods presented. For the year ended December 31, 2017, the Company included restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statements of cash flows and removed the change in restricted cash provided by operating and investing activities. Accordingly, the adoption of ASU 2016-18 resulted in a decrease in net cash provided by operating activities of  $632,739 and an increase in net cash used in investing activities of  $5,686,804 for the year ended December 31, 2017.

Note 3 — VIEs

At December 31, 2018 and 2017, the Company’s consolidated financial statements included twelve and ten entities, respectively, all of which are real estate operating entities, consolidated as VIEs. For the year ended December 31, 2018, the Company consolidated Elliot & 51st Street LLC in June 2018 and CH Ocotillo, LLC in July 2018 because the Company was determined to be the primary beneficiary.

F-20

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 3 — VIEs (continued)
 

The assets, liabilities, and noncontrolling interests of the aforementioned VIEs consolidated at the date of consolidation for the year ended December 31, 2018 consisted of the following:

​	2018
Assets	​	​	​
Cash	​	$	1,055,832
Acquisition deposits	​	​	7,530,000
Prepaid and other assets	​	​	753,528
Total Assets	​	$	9,339,360
Liabilities and Noncontrolling Interests	​	​	​
Notes payable – related parties	​	$	2,350,695
Accounts payable	​	​	110,927
Due to related parties	​	​	263,419
Total Liabilities	​	​	2,725,041
Noncontrolling interests	​	​	6,614,319
Total Liabilities and Noncontrolling Interests	​	$	9,339,360

Management has determined that the equity holders in these entities, as a group, lack the power to direct the activities that most significantly impact the entity’s economic performance and/or have disproportionate voting rights relative to their equity. In addition, the Company has all the decision-making power with respect to the activities of these entities, and none of the equity holders in the entities have substantive protective or participating rights to remove the power from the Company. The Company was determined to be the primary beneficiary of each of these entities since it has the power to direct the activities of the entities and the right to absorb losses, generally in the form of guarantees of indebtedness.

Generally, the assets of the individual consolidated VIEs can be used only to settle liabilities of each respective individual consolidated VIEs and the liabilities of the individual consolidated VIEs are liabilities for which creditors or beneficial interest holders do not have recourse to the general credit of the Company. The Company has provided financial support to certain consolidated VIEs in the form of short-term financing and guarantees of the debts of certain VIEs. In general, our maximum exposure to loss due to involvement with the consolidated VIEs is limited to the amount of capital investment in the VIE, if any, or the potential obligation to perform on the guarantee of debts.

The table below outlines the classification and carrying amounts of the assets and liabilities of the VIEs that are included in the Company’s consolidated balance sheets at December 31, 2018 and 2017.

​	2018			2017
Assets	​			​
Real estate investments, net	​	$	149,173,326	​	$	122,458,216
Cash	​	​	3,455,205	​	​	3,828,070
Restricted cash	​	​	4,866,835	​	​	6,620,240
Accounts receivable, net	​	​	1,224,528	​	​	982,867
Notes receivable – related parties	​	​	127,978	​	​	277,978
Due from related parties	​	​	420,244	​	​	420,583
Prepaid and other assets	​	​	2,688,321	​	​	2,520,623
Total Assets	​	$	161,956,437	​	$	137,108,577

F-21

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 3 — VIEs (continued)
 

​	2018			2017
Liabilities	​			​
Notes payable, net of deferred financing costs	​	$	115,035,544	​	$	92,088,579
Notes payable – related parties	​	​	5,114,413	​	​	254,978
Accounts payable	​	​	1,315,086	​	​	1,390,652
Accrued interest	​	​	568,858	​	​	664,322
Accrued expenses	​	​	2,976,816	​	​	2,932,359
Due to related parties	​	​	551,803	​	​	340,969
Advance key money, net	​	​	1,200,000	​	​	1,275,000
Above-market ground lease, net	​	​	3,887,665	​	​	4,013,072
Other liabilities	​	​	1,333,885	​	​	1,187,578
Total Liabilities	​	$	131,984,070	​	$	104,147,509

See Note 11 for additional information related to the commitments and contingencies of these VIEs.

Note 4 — Real Estate Investments

Asset Acquisitions

The Company acquired two hotel properties during the year ended December 31, 2018 for a purchase price of  $28,639,342, of which $929,342 of external acquisition-related expenses were capitalized. Included in the purchase price was $7,530,000 of acquisition deposits and $1,055,832 of cash sourced from the consolidation of VIEs (see Note 3). During the year ended December 31, 2017, the Company did not have any asset acquisitions. The fair values of the assets acquired consisted of the following for the year ended December 31, 2018:

​	2018
Real estate investments, at cost:	​	​	​
Land	​	$	4,559,776
Building	​	​	22,393,996
Furniture, Fixtures & Equipment	​	​	1,685,570
Total purchase price of assets acquired	​	$	28,639,342

Investments in Real Estate Assets

During the year ended December 31, 2018 and 2017, the Company had $5,753,587 and $17,848,534, respectively, of capital improvements to real estate investments.

Dispositions

The Company did not have any dispositions for the year ended December 31, 2018. During the year ended December 31, 2017, the Company sold one multi-family property for $3,015,000, resulting in a gain of  $1,478,865. At December 31, 2017, the proceeds remained in escrow and are included in restricted cash on the accompanying consolidated balance sheets.

F-22

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 4 — Real Estate Investments (continued)
 

Held for Sale

During the year ended December 31, 2018, the Company did not purchase any single-family homes. The Company purchased one single-family home for $630,000 during the year ended December 31, 2017. For the year ended December 31, 2018, the Company sold 26 residential properties for an aggregate gross sales price of  $6,289,200. For the year ended December 31, 2017, the Company sold 35 residential properties for an aggregate gross sales price of  $7,877,470.

At December 31, 2018 and 2017, the Company had $11,062,577 and $1,424,335, respectively, of assets classified as held for sale which included one hotel at December 31, 2018 and several single-family homes for both periods. The hotel is expected to be sold within the next 12 months as part of the Company’s management strategy. The single-family homes are actively being marketed for sale and are expected to be sold within the next 12 months. Proceeds from the sale of the single-family homes will be included in real estate sales on the accompanying consolidated financial statements and the residential segment.

Note 5 — Prepaid and Other Assets

Prepaid and other assets consisted of the following at December 31, 2018 and 2017:

​	2018			2017
Prepaid expenses	​	$	1,075,754	​	$	1,044,609
Deposits	​	​	779,705	​	​	716,150
Costs in excess of billings	​	​	3,236	​	​	46,034
Deferred franchise fees, net	​	​	557,066	​	​	427,952
Intangibles, net	​	​	263,061	​	​	286,802
Investments in unconsolidated entities	​	​	570,351	​	​	174,895
Inventory	​	​	201,443	​	​	178,239
Total prepaid and other assets	​	$	3,450,616	​	$	2,874,681

Note 6 — Other Liabilities

Other liabilities consisted of the following at December 31, 2018 and 2017:

​	2018			2017
Sales tax payable	​	$	545,387	​	$	599,868
Deposits	​	​	387,319	​	​	287,688
Deferred revenue	​	​	52,827	​	​	41,062
Tenant improvement allowance	​	​	32,047	​	​	—
Capital leases	​	​	315,104	​	​	—
Redemption/distribution payable	​	​	—	​	​	350,000
Deferred rent liability	​	​	338,521	​	​	—
Billings in excess of costs	​	​	89,790	​	​	137,292
Other	​	​	21,685	​	​	164,640
Total other liabilities	​	$	1,782,680	​	$	1,580,550

F-23

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 7 — Notes Payable

Notes payable consisted of the following as of December 31, 2018 and 2017:

​	2018			2017			Interest Rate	Original/​ Extended Maturity
Notes Payable	​	​	​	​	​	​	​	​
Real Estate Loans	​	​	​	​	​	​	​	​
Hampton Inn & Suites Hotel	​	$	6,692,868	​	$	6,868,347	4.50%	July 2025
Four Points by Marriott Hotel	​	​	11,000,000	​	​	—	Variable	December 2021
Holiday Inn Ocotillo Hotel	​	​	9,250,000	​	​	—	Variable	August 2020
Hilton Tucson East Hotel	​	​	—	​	​	12,730,000	10.00%	June 2018
Hilton Tucson East Hotel	​	​	14,000,000	​	​	—	8.50%	June 2020
Crowne Plaza Hotel	​	​	—	​	​	11,522,148	Variable	September 2018
Holiday Inn & Suites Hotel	​	​	—	​	​	15,375,000	Variable	July 2018
Hilton Phoenix Airport Hotel	​	​	—	​	​	29,000,000	9.00%	September 2019
Airport Hotel Portfolio	​	​	56,470,000	​	​	—	Variable	October 2021
GC Square Apartments	​	​	11,000,000	​	​	8,939,000	Variable	November 2020
Palms Apartment Portfolio	​	​	9,437,652	​	​	9,603,918	5.28%	September 2026
Single-family Home Loans	​	​	400,000	​	​	1,519,049	10.50%	On demand
Unsecured Borrowing	​	​	—	​	​	947,500	33.00%	Undefined
Total real estate loans	​	​	118,250,520	​	​	96,504,962	​	​
Corporate notes	​	​	5,928,273	​	​	6,383,273	10.13% – 12.00%	January 2019 –  December 2019
Convertible corporate notes	​	​	1,377,271	​	​	—	8.25%	January 2019 –  December 2019
Other	​	​	—	​	​	7,950	6.00%	November 2018
Total Notes Payable	​	​	125,556,064	​	​	102,896,185	​	​
Deferred financing costs, net	​	​	(2,814,976)	​	​	(1,949,834)	​	​
Total Notes Payable, Net	​	$	122,741,088	​	$	100,946,351	​	​

Real Estate Loans

Hampton Inn & Suites Hotel

In July 2015, the Company entered into a $7,250,000 loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Scottsdale, Arizona. The terms of the note require monthly principal and interest payments, with a balloon payment due at maturity. The loan has a fixed interest rate of 4.50%. The terms of the loan allow the Company to prepay the outstanding balance in part or in whole at any time prior to the maturity date, subject to a prepayment premium fee. The loan is guaranteed by an individual who is an affiliate of the Company. The loan matures in July 2025. The terms of the note include certain financial covenants and at December 31, 2018 and 2017, the Company was in compliance with all such covenants.

Four Points by Marriott Hotel

In June 2018, the Company entered into a $11,000,000 loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Phoenix, Arizona. Upon entering into the loan,

F-24

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 7 — Notes Payable (continued)
 

$750,000 of the loan proceeds were placed into a reserve account to be drawn against and pay for the conversion of hotel rooms (the “Conversion Reserve”), $350,000 of the loan proceeds were placed into a reserve account to be drawn against and pay for the property improvement plan required by the franchisor (the “PIP Reserve”), and $500,000 of the loan proceeds were placed into a reserve account to be drawn against and pay interest on the loan (the “Interest Reserve”). At December 31, 2018, the balance of the Conversion Reserve, PIP Reserve, and Interest Reserve were $750,000, $350,000, and $163,660, respectively, all of which are included in restricted cash on the accompanying consolidated balance sheets. The loan has a variable interest rate equal to the greater of 5.75% or Prime Rate plus 1.25%, resulting in a rate of 6.75% at December 31, 2018, and is paid from the Interest Reserve until the reserve is depleted. Once the Interest Reserve is depleted, the loan continues to require monthly interest-only payments. The interest rate changes to the greater of 5.75% or 360 LIBOR Rate plus 4.00% in June 2019 and the loan terms allow the Company to prepay the outstanding balance in part or in whole at any time prior to the maturity date. The loan is guaranteed by the Company and matures in December 2021. The terms of the loan include certain financial covenants and at December 31, 2018, the Company was in compliance with all such covenants.

Holiday Inn Ocotillo Hotel

In July 2018, the Company entered into a $9,250,000 loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Chandler, Arizona. Upon entering into the loan, $500,000 of the loan proceeds were placed into an operating reserve account (the “Operating Reserve”), $131,010 of the loan proceeds were placed into a reserve account to be drawn against and pay for the property improvement plan required by the franchisor (the “PIP Reserve”), and $300,000 of the loan proceeds were placed into a reserve account to be drawn against and pay interest on the loan (the “Interest Reserve”). The Interest Reserve and Operating Reserve have a floor of  $50,000 and $100,000, respectively, where if the balance falls below the floor, the Company is required to fund the reserves back to their original amounts. At December 31, 2018, the balance of the Operating Reserve, PIP Reserve, and Interest Reserve were $400,000, $80,978, and $107,627, respectively, all of which are included in restricted cash on the accompanying consolidated balance sheets. The loan requires monthly interest-only payments and matures in August 2020 with an option to extend the maturity date up to twelve months, subject to certain terms and conditions. The interest rate on the loan is equal to 1-month LIBOR plus 6.00%, resulting in a rate of 8.52% at December 31, 2018, with a floor rate of 8.00%. The loan is guaranteed by the Company. The terms of the note include certain financial covenants and at December 31, 2018, the Company was in compliance with all such covenants.

Hilton Tucson East Hotel

In June 2016, the Company entered into a $12,730,000 loan (“Original Loan”), which was secured by a deed of trust and assignment of leases and rents of a hotel property in Tucson, Arizona (“Hilton Tucson”). Upon entering into the loan, $4,330,000 of the loan proceeds were used to complete the purchase of the hotel property (the “Original Loan”), $8,000,000 of the loan proceeds were placed into a reserve account to be drawn against and pay for the renovation of the hotel property (the “Renovation Reserve”), and the remaining $400,000 of the loan proceeds were placed into a reserve account to be drawn against and pay interest on the loan (the “Interest Reserve”). At December 31, 2017, the balance of the Renovation Reserve was $246,754 and the balance of the Interest Reserve was $0, which are included in restricted cash on the accompanying consolidated balance sheets. Interest was charged on the Original Loan and funds that were disbursed from the Renovation Reserve at a rate of 8.85% per annum and were paid from the Interest Reserve until the reserve was depleted. Once the Interest Reserve was depleted, the loan continued to require monthly interest-only payments. The interest rate on the Original Loan and the funds disbursed from the Renovation Reserve increased to 10.00% in July 2017. Interest is charged on the undisbursed funds that remain in the Renovation Reserve at a rate of 4.43% per annum. The payment of the interest charged on the undisbursed funds was deferred until October 2017, at which time the loan began to require monthly

F-25

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 7 — Notes Payable (continued)
 

interest-only payments of the interest charged on the undisbursed funds. The interest rate on the undisbursed funds from the Renovation Reserve also increased to 10.00% in October 2017. The loan is guaranteed by CDIF, LLC (“CDIF”) and an individual who is an affiliate of the Company. The terms of the loan required the Company to pay an exit fee of  $330,980 at the time the loan is repaid in full. The exit fee of  $330,980 was accrued upon entering into the loan and recorded as a deferred financing cost and was amortized over the life of the loan. The loan matured in June 2018 and was refinanced in July 2018.

In July 2018, the Company entered into a $14,000,000 loan with a new lender (“New Loan”) to refinance its Original Loan. The New Loan is secured by a deed of trust and assignment of leases and rents of the Hilton Tucson. The interest rate on the New Loan has a fixed rate of 8.50%. The New Loan requires monthly interest-only payments and matures in June 2020. The New Loan has an option to extend the maturity date up to six months, subject to certain terms and conditions. The terms of the New Loan allow the Company to prepay the outstanding balance in whole or in part at any time prior to the maturity date, subject to a prepayment premium fee. The New Loan is guaranteed by individuals who are affiliates of the Company.

Crowne Plaza Hotel

In August 2014, the Company entered into a $12,000,000 loan, which was secured by a deed of trust and assignment of the leases and rents of a hotel property in Phoenix, Arizona. The loan had a variable interest rate which was equal to 1-month LIBOR plus 6.25%, with a required minimum rate of 6.50%, resulting in a rate of 7.50% at December 31, 2017. Contemporaneous with entering into the loan agreement the Company also entered into an interest rate cap agreement, which set a maximum interest rate of 9.13%. The terms of the loan required monthly principal plus interest payments, with a balloon payment due at maturity. The loan was guaranteed by an individual who is an affiliate of the Company. The terms of the loan agreement also required the Company to pay an exit fee equal to 1.00% of the principal amount of the loan at the time the loan is repaid in full. The exit fee of  $120,000 was accrued upon entering into the loan and recorded as a deferred financing cost and was amortized over the life of the loan. In September 2017, the Company executed a one-year extension of the loan agreement, extending the maturity date to September 2018. All other terms of the loan remained unchanged. In connection with the loan extension, the Company also entered into a new interest rate cap agreement, which sets a maximum interest rate of 9.13% and expires September 2018. The loan was refinanced in September 2018. See “Airport Hotel Portfolio” for additional information.

Holiday Inn & Suites Hotel

In June 2015, the Company entered into a $15,375,000 loan, which was secured by a deed of trust and assignment of leases and rents of a hotel property in Phoenix, Arizona. At the time of entering into the loan, $11,250,000 was used to acquire the hotel property with the remaining $4,125,000 held back to be used towards the renovation of the hotel property. At December 31, 2017, the full holdback amount of $4,125,000 had been released and used to fund the renovation of the hotel property. The loan required monthly interest-only payments until maturity. The interest rate on the loan was equal to 1-month LIBOR plus 5.30%, resulting in a rate of 6.54% at December 31, 2017. Contemporaneous with entering into the loan, the Company entered into an interest rate cap agreement, which sets a maximum interest rate of 7.30% until July 2017 and 7.80% for the period from August 2017 through the maturity of the loan. The loan was guaranteed by individuals who are affiliates of the Company. The terms of the loan agreement required the Company to pay an exit fee equal to 0.75% of the principal amount of the loan at the time the loan is repaid in full. The exit fee of  $115,313 was accrued upon entering into the loan and recorded as a deferred financing cost and was amortized over the life of the loan. The loan matured in July 2018 and the Company extended the loan 60 days before refinancing. See “Airport Hotel Portfolio” for additional information.

F-26

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 7 — Notes Payable (continued)
 

Hilton Phoenix Airport Hotel

In December 2017, the Company entered into a $29,000,000 loan, which is secured by a deed of trust and assignment of leases and rents of a hotel property in Phoenix, Arizona. At the closing of the loan, $300,000 of the loan proceeds were held back by the lender to finance future property improvements. The loan had a fixed interest rate of 9.00%, required monthly interest-only payments until maturity, and was to mature in June 2018. The Company extended the maturity date to September 2019 in March 2018. The loan was refinanced in September 2018. See “Airport Hotel Portfolio” for additional information.

Airport Hotel Portfolio

In September 2018, the Company repaid its existing Crowne Plaza Hotel, Holiday Inn & Suites Hotel, and Hilton Phoenix Airport Hotel loans in full (collectively the “Airport Hotel Portfolio”) and entered into a new $62,245,000 portfolio loan. Upon entering into the loan, the Company received initial funding of $56,470,000 with the option to receive the additional $5,775,000 once certain operating performance threshold are met. $150,000 of the initial loan proceeds were placed into a reserve account (the “Debt Service Reserve”). At December 31, 2018, the balance of the Debt Service Reserve was $150,000, which is included in restricted cash on the accompanying consolidated balance sheets. The loan is secured by the deed of trust and assignment of leases and rents of the Airport Hotel Portfolio. The new loan has a variable interest rate equal to one-month LIBOR plus 3.75%, resulting in a rate of 6.27% at December 31, 2018. The loan requires interest-only payments until maturity and matures in October 2021 with options to extend the maturity date up to two additional years, subject to certain terms and conditions and fees. The loan is guaranteed by the Company and individuals who are affiliates of the Company. The terms of the loan agreement require the Company to pay an exit fee equal to 0.25% of the original principal amount of the loan at the time the loan is repaid in full. The exit fee of  $155,613 was accrued upon entering into the loan and recorded as a deferred financing cost to be amortized over the life of the loan. The terms of the note include certain financial covenants and at December 31, 2018, the Company was in compliance with all such covenants.

GC Square Apartments

In October 2017, the Company entered into an $11,000,000 loan, which is secured by a deed of trust and assignment of rents of a multi-family property in Phoenix, Arizona. Upon entering into the loan agreement $2,061,000 of the loan proceeds were held back by the lender. These funds can be drawn on by the Company for future construction and development costs. The loan has a variable interest rate equal to LIBOR plus 5.25%, resulting in a rate of 7.75% and 6.49% at December 31, 2018 and 2017, respectively. The loan requires interest-only payments until maturity. The loan matures in November 2020 and has options to extend the maturity date up to two additional years, subject to certain terms and conditions. Contemporaneous with entering into the loan, the Company entered into an interest rate cap agreement, which set a maximum interest rate of 7.00% until November 2018, and 7.75% from November 2018 through maturity. The terms of the loan include certain financial covenants and, at December 31, 2018 the Company was in compliance with all such covenants.

Palms Apartment Portfolio

In August 2016, the Company entered into a $9,800,000 loan, which is secured by the deeds of trust and assignment of rents of a portfolio of three multi-family properties located in Phoenix, Arizona. The loan has a 5.28% fixed interest rate. The terms of the loan require monthly principal and interest payments, with a balloon payment due at maturity. The terms of the loan do not allow the Company to prepay the outstanding balance in whole at any time prior to the maturity date. The loan is guaranteed by an individual who is an affiliate of the Company. The loan matures in September 2026. The terms of the loan include certain financial covenants and at December 31, 2018, the Company was in compliance with all such covenants.

F-27

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 7 — Notes Payable (continued)
 

Single-family Home Loans

The Company owned multiple single-family homes which were held as rental properties or held with the intention of being renovated and resold. These single-family homes owned by the Company were subject to loans held by third parties. At December 31, 2018, there was 1 individual single-family home loan outstanding with an outstanding principal balance of  $400,000 and an interest rate of 10.50%. This loan requires monthly interest-only payments until maturity or the sale of the home. The loan has a 12-month term and may be extended upon the mutual agreement of the lender and the borrower. At December 31, 2018, the loan had reached its original stated maturity and is due to be repaid when the related home is sold.

At December 31, 2017, there were 10 individual single-family home loans outstanding with outstanding principal balances ranging from $31,100 to $368,900, and interest rates ranging from 9.95% to 12.13%. The loans generally require monthly or quarterly interest-only payments until maturity or the sale of the home. The loans generally have a 12-month term and may be extended upon the mutual agreement of the lender and the borrower. As of December 31, 2017, all of the loans had reached their original stated maturity and were due to be repaid when the related home is sold. During the year ended December 31, 2017, $123,077 of principal due in connection with a single-family home loan was converted to common stock and $76,923 of principal due in connection with a single-family home loan was converted to preferred stock.

Unsecured Borrowing

In July 2012, the Company entered into an arrangement with a third-party lender in which the lender advanced funds to the Company to facilitate the purchase and renovation of single-family homes. The advances generally accrued interest at rates ranging from 20.00% to 24.00%, and all amounts were due upon the sale of the home underlying each advance. In January 2016, all amounts outstanding under the arrangement were consolidated into a single loan, the interest rate was adjusted to 33.00% per annum, and the repayment terms were modified to require that the Company make monthly payments which are applied 50.00% to principal and 50.00% to interest. The loan was paid in full in November 2018.

Uptown Square Apartments

In April 2015, the Company entered into a $1,550,000 loan, which was secured by a deed of trust and assignment of rents of a multi-family property in Phoenix, Arizona. The loan had a 4.00% interest rate which was fixed through May 2022. The terms of the loan required monthly principal and interest payments, with a balloon payment due at maturity. The loan had a stated maturity of May 2027. The terms of the loan allowed the Company to prepay the outstanding balance in whole at any time prior to the maturity date, subject to a prepayment premium fee. The loan was guaranteed by certain individuals who are affiliates of the Company. The loan was repaid in full in December 2017, in connection with the sale of the property (see Note 4).

Corporate Notes and Convertible Corporate Notes

The Company has entered into multiple general corporate financing arrangements with third parties. The arrangements are generally evidenced in the form of a promissory note, which are secured by the otherwise unencumbered assets of the Company and require monthly or quarterly interest-only payments until maturity. The loans generally have a 12-month term and may be extended upon the mutual agreement of the lender and the borrower. The Company has issued corporate notes with a conversion feature. The conversion price is $4.50 per share of common stock. The holders of the convertible corporate notes can elect to convert all or any portion of the balance at any time. At December 31, 2018, the value of the conversion feature was zero.

F-28

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 7 — Notes Payable (continued)
 

At December 31, 2018, there were 66 individual corporate notes outstanding, with outstanding principal balances ranging from $9,272 to $1,050,000, interest rates ranging from 8.25% to 12.00%, a weighted average interest rate of 11.21%, and maturity dates ranging from January 2019 to December 2019. During the year ended December 31, 2018, $183,903 of principal due in connection with corporate promissory notes was converted to common stock and $14,230 of principal due in connection with corporate promissory notes was converted to preferred stock.

At December 31, 2017, there were 62 individual corporate notes outstanding, with outstanding principal balances ranging from $10,750 to $900,000, interest rates ranging from 10.13% to 18.00%, a weighted average interest rate of 11.57%, and maturity dates ranging from January 2018 to November 2018. During the year ended December 31, 2017, $1,561,041 of principal due in connection with corporate promissory notes was converted to common stock and $898,728 of principal due in connection with corporate promissory notes was converted to preferred stock.

Other

GoldenWest Management, Inc.

In January 2014, the Company acquired an existing property management company located in Tucson, Arizona for $300,000, and $150,000 of the purchase was financed through a seller-carryback loan. The loan had an interest rate of 6.00%, required monthly principal and interest payments, and a scheduled maturity of February 2018. The loan was repaid in full in March 2017.

Desert Sand Realty, LLC

In November 2014, the Company acquired a property management company located in Phoenix, Arizona for $55,000, and $35,000 of the purchase was financed through a seller-carryback loan. The loan had an interest rate of 6.00%, required monthly principal and interest payments, and matured in November 2018. The loan was repaid in full in November 2018.

Future Minimum Payments

At December 31, 2018, the future aggregate principal repayments due on the Company’s notes payable for each of the years ending December 31, are as follows:

2019	$	8,066,338
2020	​	34,626,834
2021	​	67,868,152
2022	​	418,310
2023	​	439,496
Thereafter	​	14,136,934
​	$	125,556,064

Deferred Financing Costs

During the years ended December 31, 2018 and 2017, amortization and write-offs of deferred financing costs totaled $1,991,663 and $2,305,174, respectively.

F-29

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 8 — Related Party Transactions

Notes Receivable — Related Parties

CDIF

In April 2016, the Company assumed an unsecured promissory note payable by CDIF, an affiliated entity which is managed by the Company, to a third-party in exchange for issuing 170,940 shares of common stock and 85,470 shares of preferred stock to the third party. At the time of the transaction the outstanding principal balance of the promissory note was $500,000. The note accrued interest at a rate of 18.00% for the first 90 days after origination and 15.00% thereafter. The note required monthly interest only payments until maturity. The original term of the note was 12 months and it matured in October 2016; however, the maturity date was extended to June 2017 upon mutual agreement between the parties. The note was paid in full in June 2017.

SF Alaska, LP

The Company, through one of its consolidated VIE’s, entered into an unsecured $50,250 promissory note with SF Alaska, LP in August 2016. The note was to mature in August 2018, but the Company extended the maturity date to August 2020. The note has an interest rate of 12.00% per annum and no payments are required prior to maturity. The note may be prepaid in whole, or in part, without penalty. During the years ended December 31, 2018 and 2017, the Company earned $3,919 and $5,583, respectively, of interest in connection with the note, which is included in interest income on the accompanying consolidated statements of operations. Interest due to the Company of  $4,480 and $561, was outstanding at December 31, 2018 and 2017, respectively, and is included in due from related parties on the accompanying consolidated balance sheets. At December 31, 2018 and 2017, the outstanding principal balance of the loan was $27,978, which is included in notes receivable — related parties on the accompanying consolidated balance sheets.

The Company, through one of its consolidated VIE’s, entered into an unsecured $100,000 promissory note with SF Alaska, LP in August 2018. The note matures in January 2020 and has an interest rate of 12.00% per annum. No payments are required prior to the maturity of the note. The note may be prepaid in whole or in part without penalty. During the year ended December 31, 2018 the Company earned $4,011 of interest in connection with the note which is included in interest income on the accompanying consolidated statements of operations. Interest due to the Company of  $4,011 was outstanding at December 31, 2018 and is included in due from related parties on the accompanying consolidated balance sheets. At December 31, 2018, the outstanding principal balance of the loan was $100,000 which is included in notes receivable — related parties on the accompanying consolidated balance sheets.

CDOF II

In June 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured $250,000 promissory note with Caliber Diversified Opportunity Fund II, LP (“CDOF II”), an affiliated entity, which is managed by the Company. The note was to mature in June 2019 and had an interest rate of 12.00% per annum. No payments were required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the years ended December 31, 2018 and 2017, the Company earned $25,249 and $15,205, respectively, of interest in connection with the note which is included in interest income on the accompanying consolidated statements of operations. The note was paid in full in November 2018.

F-30

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 8 — Related Party Transactions (continued)
 

Future Minimum Payments Receivable

At December 31, 2018, the future aggregate principal payments due to the Company related to the notes receivable — related parties for each of the years ending December 31, are as follows:

2019	$	—
2020	​	127,978
​	$	127,978

Fund Management

The Company manages multiple private equity real estate funds. We earn asset management and other fees for the services provided and enter into an agreement with each private equity real estate fund outlining the terms and fees to be earned. In general:

•

We charge an initial one-time fee related to the initial formation, administration, and set up of the fund (“Set Up Fees”). For the years ended December 31, 2018 and 2017, the Company earned $1,600,000 and $750,000, respectively, of Set Up Fees in connection with newly opened funds.

•

We are entitled to receive reimbursement for certain expenses incurred or paid on behalf of the fund, which may include an allocation of certain administrative and overhead costs. We also receive an annual asset management fee equal to 1.00% – 1.50% of the non-affiliate capital contributions related to the on-going management of the assets owned by the fund and the overall fund administration (collectively, “Asset Management Fees”). During the years ended December 31, 2018 and 2017, the Company earned $1,641,815 and $837,983, respectively, of Asset Management Fees.

•

We are entitled to 20.00% – 35.00% of all cash distributions from the operating cash flows of the fund, after the payment of all priority preferred returns, and the repayment of any preferred capital contributions. We are also entitled to 20.00% – 35.00% of all cash distributions from the cash flows resulting from the sale or refinance of the assets of the fund, after the payment of all priority preferred returns, and the repayment of all capital contributions (collectively, “Carried Interest”). During the years ended December 31, 2018 and 2017, the Company earned $68,257 and $73,843, respectively, of Carried Interest.

•

We receive fees for services primarily relating to the marketing, offering, registering, and selling of equity and debt instruments of the affiliates (collectively, “Capital Raise Fees”). During the years ended December 31, 2018 and 2017, the Company earned $1,106,781 and $428,567, respectively, of Capital Raise Fees from related parties, which is included in fund management on the accompanying consolidated statements of operations.

During the years ended December 31, 2018 and 2017, amounts due to the Company from related parties for fund management services totaled $1,302,125 and $815,048, respectively, and is included in due from related parties on the accompanying consolidated balance sheets.

Property Management

The Company provides property management services and oversees the day-to-day operations of multiple residential and commercial assets owned by the funds managed by the Company. In general, the initial terms of each property management agreement are 12 months, however, the agreement automatically renews every 12 months for an additional 12 months. Per the terms of each agreement, the Company generally earns a fixed monthly fee, plus additional variable fees related to leasing, marketing, maintenance, and administrative activities (collectively, “Property Management Fees”). During the years ended December 31, 2018 and 2017, the Company earned $320,566 and $149,556, respectively, of Property

F-31

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 8 — Related Party Transactions (continued)
 

Management Fees from related parties. At December 31, 2018 and 2017, amounts due to the Company from related parties for Property Management Fees totaled $1,992 and $6,312, respectively, and is included in due from related parties on the accompanying consolidated balance sheets.

Construction and Development

The Company regularly provides development, construction, and maintenance services to its affiliates, including the private equity real estate funds it manages. The fee arrangement with each affiliate entity varies; however, the arrangements are generally structured as cost incurred, plus a market rate of profit margin. For the years ended December 31, 2018 and 2017, the Company recognized $4,324,588 and $4,237,274, respectively, of construction and development revenue from related parties. At December 31, 2018 and 2017, amounts due to the Company from related parties for construction, development, and maintenance services totaled $731,188 and $833,292, respectively, and is included in due from related parties on the accompanying consolidated balance sheets.

Home Sales

Since 2016, the Company has sold multiple single-family homes to Caliber Residential Advantage Fund, LP and its subsidiary (“CRAF”), a private equity real estate fund managed by the Company. For the years ended December 31, 2018 and 2017, the Company recognized real estate sales revenue of $1,122,003 and $2,146,570, respectively, which is included in real estate sales revenue on the accompanying consolidated statements of operations. In connection with each sale, the loan on the property, which was held by Caliber Fixed Income Fund II, LLC, a separate affiliated entity, was repaid in full.

Real Estate Brokerage

The Company earns commissions in exchange for providing real estate brokerage services related to the purchase and sale of residential and commercial assets owned by the funds managed by the Company. The amount of commissions earned vary based on the size and complexity of each transaction, as well as other factors. For the years ended December 31, 2018 and 2017, the Company recognized $206,765 and $173,636, respectively, of brokerage commission revenue from related parties, which is included in brokerage revenues on the accompanying consolidated statements of operations.

Notes Payable — Related Parties

CFIF II

In July 2015, the Company entered into multiple unsecured promissory notes with Caliber Fixed Income Fund II, LLC (“CFIF II”), a related party, for the purpose of financing the purchase, development, and renovation of residential and commercial properties. The notes have an interest rate of 11.00% per annum and require monthly interest-only payments until maturity. The notes generally have a term of 12 months and are required to be repaid at the earlier of i) the sale of the related property, or ii) the stated maturity date. The notes can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the years ended December 31, 2018 and 2017, the Company incurred $689,124 and $1,151,123, respectively, of interest expense in connection with the notes. The interest payable at December 31, 2018 and 2017, was $1,110,650 and $1,163,166, respectively, which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2018 and 2017, the total outstanding principal balance of the notes was $4,830,000 and $8,687,000, respectively, which is included in notes payable — related parties on the accompanying consolidated balance sheets.

F-32

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 8 — Related Party Transactions (continued)
 

CDIF

In January 2016, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with CDIF, which allows the fund to borrow up to $2,000,000. The note was to mature in January 2018, but the Company extended the maturity date to October 2018. The note had an interest rate of 12.00% per annum and no payments were required prior to maturity. The note may be prepaid in whole, or in part, without penalty. In June 2016, $500,000 of the principal outstanding in connection with the note was converted to an equity investment in the fund. During the years ended December 31, 2018 and 2017, the Company incurred $7,261 and $23,421, respectively, of interest expense in connection with the note which is included in interest expense on the accompanying consolidated statements of operations. The interest payable at December 31, 2017, was $0. The note was paid in full in September 2018.

In April 2016, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with CDIF, which allowed the Company to borrow up to $3,000,000. The note had a stated maturity of April 2018 and had an interest rate of 12.00% per annum. No payments were required prior to the maturity of the note. In November 2016, $1,500,000 of the principal outstanding in connection with the note was converted to an equity investment in the Company. An additional $400,000 of outstanding principal was settled through the issuance of Class C member interest to an affiliate of CDIF. During the year ended December 31, 2017 the Company incurred $23,721 of interest expense in connection with the note which is included in interest expense on the accompanying consolidated statements of operations. The note was paid in full in September 2017.

In June 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with CDIF, which allowed the Company to borrow up to $800,000. The note matures in June 2019 and has an interest rate of 12.00% per annum. No payments are required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the year ended December 31, 2018, the Company incurred $47,447 of interest expense in connection with the note which is included in interest expense on the accompanying consolidated statements of operations. The interest payable at December 31, 2018 was $9,063 which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2018, the outstanding principal balance of the note was $306,301, which is included in notes payable — related parties on the accompanying consolidated balance sheets.

CDOF II

In August 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with Caliber Diversified Opportunity Fund II, LP, which allows the fund to borrow up to $165,000. The note was to mature in August 2018 and had an interest rate of 12.00% per annum. No payments were required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the years ended December 31, 2018 and 2017, the Company incurred $4,882 and $7,920, respectively, of interest expense in connection with the note which is included in interest expense on the accompanying consolidated statements of operations. The interest payable at December 31, 2017 was $7,920 which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2017, the outstanding principal balance of the note was $165,000 which is included in notes payable — related parties on the accompanying consolidated balance sheets. The note was paid in full in March 2018.

In June 2017, the Company, through one of its consolidated VIE’s, entered into an unsecured promissory note with Caliber Diversified Opportunity Fund II, LP, which allows the Company to borrow up to $250,000. The note matures in June 2019 and has an interest rate of 12.00% per annum. No payments are required prior to the maturity of the note. The note may be prepaid in whole, or in part, without penalty. During the year ended December 31, 2018, the Company incurred $17,873 of interest expense in

F-33

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 8 — Related Party Transactions (continued)
 

connection with the note, which is included in interest expense on the accompanying consolidated statements of operations. The interest payable at December 31, 2018 was $5,463 which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2018, the outstanding principal balance of the note was $151,250 which is included in notes payable — related parties on the accompanying consolidated balance sheets.

CFIF III

In December 2018, the Company entered into two unsecured promissory notes with Caliber Fixed Income Fund III, LP (“CFIF III”), which allows the Company to borrow up to $515,000. The notes have an interest rate of 12.00% per annum and require monthly interest-only payments until maturity. The notes mature in December 2019 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $7,275 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $132 which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2018, the total outstanding principal balance of the notes were $514,310 which is included in notes payable — related parties on the accompanying consolidated balance sheets.

In July 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $700,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note matures in September 2020 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $31,224 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $31,224 which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2018, the total outstanding principal balance of the notes was $610,041 which is included in notes payable — related parties on the accompanying consolidated balance sheets.

In May 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $4,000,000. The note has an interest rate of 10.00% per annum and requires monthly interest-only payments until maturity. The note matures in August 2020 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $174,086 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $174,086 which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2018, the total outstanding principal balance of the notes was $3,244,760 which is included in notes payable — related parties on the accompanying consolidated balance sheets.

In August 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $1,000,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note matures in February 2021 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $17,427 of interest expense in connection with the notes. The interest payable at December 31, 2018 was $17,427 which is included in due to related parties on the accompanying consolidated balance sheets. At December 31, 2018, the total outstanding principal balance of the notes was $802,061 which is included in notes payable — related parties on the accompanying consolidated balance sheets.

In July 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $900,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note had a stated maturity of September 2020 and can

F-34

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 8 — Related Party Transactions (continued)
 

be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $18,561 of interest expense in connection with the notes. The note was paid in full in December 2018.

In June 2018 the Company entered into an unsecured promissory note with CFIF III, which allows the Company to borrow up to $200,000. The note has an interest rate of 12.00% per annum and requires monthly interest-only payments until maturity. The note had a stated maturity of June 2020 and can be prepaid at any time prior to maturity without penalty and the maturity date can be extended upon the mutual agreement of the parties. During the year ended December 31, 2018, the Company incurred $1,414 of interest expense in connection with the notes. The note was paid in full in December 2018.

Management

In March 2013, the Company entered into a promissory note in the amount of  $185,000 with a former member of executive management. The unpaid principal balance accrues interest at a rate of 0.87% per annum. The note had an original maturity date of December 31, 2018. Per the terms of the note, no payment is due until maturity and the note may be prepaid at any time without penalty. At December 31, 2018 and 2017, the outstanding principal balance of the note was $185,000 which is included in notes payable — related parties on the accompanying consolidated balance sheets. During the years ended December 31, 2018 and 2017, the Company incurred $1,610 of interest expense in connection with the note, which is included in interest expense on the accompanying consolidated statements of operations. The interest outstanding at December 31, 2018 and 2017, was $9,340 and $7,730, respectively, and is included in due to related parties on the accompanying consolidated balance sheets.

In February 2015, the Company entered into an unsecured promissory note in the amount of  $75,000 with a member of executive management. The note had an interest rate of 15.00% per annum and required monthly interest-only payments until maturity. The note may be prepaid in whole, or in part, without penalty. During the year ended December 31, 2017, the Company incurred and paid $4,938 of interest expense in connection with the note, which is included in interest expense on the accompanying consolidated statements of operations. The note had an original maturity date of August 2015; however, the maturity was extended until April 2017 upon the mutual agreement of the parties. The note was paid in full in April 2017.

Future Minimum Payments

At December 31, 2018, the future aggregate principal payments due to related parties from the Company related to the notes payable — related parties for each of the years ending December 31, are as follows:

2019	$	5,136,861
2020	​	3,854,801
2021	​	802,061
2022	​	—
2023	​	—
Thereafter	​	850,000
​	$	10,643,723

Hotel Management

The Company has entered into multiple agreements with Heavlin Management Company, LLC (“HMC”), an affiliated entity through common ownership of certain of the Company’s consolidated subsidiaries, to operate each of the Company’s hotel properties. The term of the agreements is generally

F-35

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 8 — Related Party Transactions (continued)
 

10 years and may be extended for an additional 10 years upon mutual consent of the Company and HMC. HMC oversees the day-to-day operations and management responsibilities of each hotel property. Per the terms of the agreements, HMC receives a monthly fee equal to 3.00 – 4.00% of gross revenue, and may also receive an annual incentive fee, not to exceed 1.00% of gross operating revenues, by exceeding owner approved budgets for revenue and profits (collectively, “Hotel Management Fees”). Hotel Management Fees for the years ended December 31, 2018 and 2017, totaled $1,611,173 and $1,446,414, respectively, which are included in management fees on the accompanying consolidated statements of operations. During the years ended December 31, 2018 and 2017, the Company did not incur any incentive fees related to Hotel Management Fees. Pursuant to one of the hotel management arrangements, HMC also earns an annual fixed fee of  $100,000, which is included in management fees on the accompanying consolidated statements of operations. In addition to the Hotel Management Fees, HMC also charges the Company for certain shared services including sales and marketing, information technology, and human resources. Expenses for shared services for the years ended December 31, 2018 and 2017, totaled $1,158,855 and $892,191, respectively, which are included in general and administrative expenses and marketing and advertising expenses on the accompanying consolidated statements of operations, as applicable. The Company also reimburses HMC for expenses incurred or paid on its behalf. At December 31, 2018 and 2017, amounts due to HMC totaled $300,241 and $283,110, respectively, and are included in due to related parties on the accompanying consolidated balance sheets. HMC utilizes the Company’s payroll service provider and reimburses the Company for payroll and other costs paid on their behalf. At December 31, 2018 and 2017, $37,831 and $88,450 of reimbursement was due to the Company from HMC, respectively, and is included in due from related parties on the accompanying consolidated balance sheets.

Withdrawal Agreement

In November 2014, the Company entered into an agreement with a former co-manager and member of one of the Company’s consolidated subsidiaries which outlined the terms of his resignation as co-manager and assignment of his member interest. In consideration for his resignation as co-manager and assignment of his member interest, the Company agreed to issue 55,556 shares of its common stock to the individual or his designee, provide the individual with $35,000 of construction services at no cost to the individual, and pay the individual or his designee up to $540,000 in cash, as outlined in the agreement. At December 31, 2018 and 2017, $386,990 and $481,672, respectively, is included in due to related parties on the accompanying consolidated balance sheets related to this agreement.

Other

In the normal course of business, the Company has various amounts due from related parties, including affiliate entities and individuals, for various expenses paid for by the Company on their behalf and other charges. These amounts are generally unsecured, interest-free, and due on demand. At December 31, 2018 and 2017, other amounts due from related parties were $276,169 and $863,551, respectively.

In the normal course of business, the Company has various amounts due to related parties, including affiliate entities and individuals, for various expenses paid for by the affiliates on the Company’s behalf and other short-term payment advances. These amounts are generally unsecured, interest-free, and due on demand. At December 31, 2018 and 2017, other amounts due to related parties were $217,303 and $73,437, respectively.

F-36

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 9 — Income Taxes

In December 2017, the Tax Cut and Jobs Act was signed into law, which enacts significant changes to U.S. tax and related laws. Some of the provisions of the new tax law affecting corporations include but are not limited to a reduction of the federal corporate income tax rate from 35.00% to 21.00%, limiting the interest expense deduction, expensing of cost of acquired qualified property and elimination of the domestic production activities deduction. We have adjusted our net deferred federal income tax assets as of the year ended December 31, 2017, as a result of the income tax rate reduction.

The following table shows the components of the income tax (provision) benefit from total operations for the years ended December 31, 2018 and 2017:

​	2018			2017
Current income tax (provision) benefit	​	​	​	​	​	​
Federal	​	$	—	​	$	—
State	​	​	—	​	​	—
Total	​	​	—	​	​	—
Deferred income tax (provision) benefit	​	​	​	​	​	​
Federal	​	​	(122,282)	​	​	912,114
State	​	​	(18,530)	​	​	(220,823)
Total	​	​	(140,812)	​	​	691,291
Adjustment to valuation allowance	​	​	140,812	​	​	(691,291)
Total income tax (provision) benefit	​	$	—	​	$	—

The following table reconciles the U.S. Federal statutory tax rate to the effective income tax rate for the years ended December 31, 2018 and 2017:

​	2018		2017
U.S. federal statutory tax rate	​	21.0%	​	34.0%
Impact of U.S. Tax Reform	​	3.8%	​	-23.2%
Income passed through to noncontrolling interest, federal tax	​	-16.2%	​	-11.4%
Income passed through to noncontrolling interest, state tax	​	-2.9%	​	-1.1%
Permanent differences, VIEs	​	-1.3%	​	-9.6%
State taxes, net of federal benefit	​	0.0%	​	3.2%
Prior period tax return true-up in current year	​	-3.2%	​	0.1%
Nondeductible expenses	​	-0.1%	​	-0.1%
Change in valuation allowance	​	-1.1%	​	8.1%
Effective income tax rate	​	0.0%	​	0.0%

F-37

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 9 — Income Taxes (continued)
 

The following table summarizes the components of the Company’s deferred tax assets and liabilities as of December 31, 2018 and 2017:

​	2018			2017
Deferred tax assets:	​	​	​	​	​	​
Net Operating Loss Carryforwards	​	$	3,952,750	​	$	2,621,856
Sec 362 Basis Step-up	​	​	458,536	​	​	959,854
Deferred Compensation	​	​	503,301	​	​	343,599
Fixed Assets	​	​	380,549	​	​	201,377
Other	​	​	50,021	​	​	4,018
Total	​	​	5,345,157	​	​	4,130,704
Deferred tax liabilities:	​	​	​	​	​	​
Passthrough Income/Loss from Partnerships	​	​	(1,212,475)	​	​	(157,538)
Other	​	​	(18,704)	​	​	—
Total	​	​	(1,231,179)	​	​	(157,538)
Valuation Allowance	​	​	(4,113,978)	​	​	(3,973,166)
Net deferred tax assets	​	$	—	​	$	—

At December 31, 2018 and 2017, the Company had approximately $16.0 million and $10.5 million of federal and state net operating losses (“NOL”), respectively, available to offset future taxable income. The federal and state NOLs arising in 2017 and prior, if not utilized, begin expiring in the year 2035. NOLs arising in tax years ending after December 31, 2017 can be carried forward indefinitely and the NOL deduction is limited to 80 percent of taxable income. In accordance with Section 382 of the Internal Revenue Code, deductibility of the Company’s Federal NOL carryovers may be limited in the event of a change in control of ownership.

In assessing the need for a valuation allowance against its net deferred tax assets, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. In evaluating the need for a valuation allowance, the Company considered cumulative losses as a significant piece of negative evidence and established a full valuation allowance of  $4,077,504 and $3,973,166 against the Company’s net deferred tax assets as of December 31, 2018 and 2017, respectively.

The changes to the Company’s valuation allowance during the year ended December 31, 2018 and 2017 were as follows:

​	2018			2017
Valuation allowance at the beginning of the year	​	$	3,973,166	​	​	4,664,457
Changes in valuation allowance recorded during the year	​	​	140,812	​	​	(691,291)
Valuation allowance at the end of the year	​	$	4,113,978	​	$	3,973,166

The Company and its subsidiaries are subject to the following significant taxing jurisdictions: U.S., Arizona, Alaska, Utah, Colorado, and Nevada. The Company is currently not under income tax examination in any tax jurisdiction.

F-38

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 9 — Income Taxes (continued)
 

Although we believe our tax returns are correct, the final determination of tax examinations and any related litigation could be different from what was reported on the tax returns. We are currently open to audit under the statute of limitations by the IRS as well as state taxing authorities for the past four years.

We apply the generally accepted accounting principle related to accounting for uncertainty in income taxes, which prescribes a recognition threshold that a tax position is required to meet before recognition in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. We do not believe that there are any positions taken by the Company which would require recognition or disclosure in these financial statements for the years ended December 31, 2018 and 2017.

Note 10 — Supplemental Cash Flow Disclosures

Supplemental cash flow information consisted of the following for the years ended December 31, 2018 and 2017:

​	Year Ended December 31,
​	2018			2017
Supplemental Disclosure of Cash Flow Information	​	​	​	​	​	​
Cash paid for interest, net of capitalized interest of  $444,539 and $1,132,898 for the years ended December 31, 2018 and 2017, respectively	​	$	11,424,168	​	$	7,908,233
Cash paid for income taxes	​	$	—	​	$	—
Supplemental Disclosures of Non-cash Investing and Financing Activities	​	​	​	​	​	​
Investments in real estate assets included in accounts payable	​	$	303,038	​	$	2,541,913
Investments in real estate assets included in due to related parties	​	$	910,203	​	$	—
Real estate investments reclassified to held for sale	​	$	14,424,414	​	$	1,417,376
Deferred financing costs included in accrued expenses	​	$	220,000	​	$	510,000
Exchange of common stock for professional services included in accounts payable	​	$	28,014	​	$	—
Conversion of noncontrolling interests to common stock	​	$	55,941	​	$	—
Conversion of notes payable to preferred stock	​	$	14,230	​	$	975,651
Conversion of notes payable to common stock	​	$	183,903	​	$	1,561,041
Buyback obligation	​	$	13,577,152	​	$	—
Settlement of share-based payments	​	$	—	​	$	1,126,525
Accrued redemption of noncontrolling interest	​	$	—	​	$	250,000
Accrued noncontrolling interest distribution	​	$	—	​	$	100,000
Accretion of mezzanine equity value	​	$	51,327	​	$	15,858

F-39

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 11 — Commitments and Contingencies

Legal Matters

Periodically, the Company is contingently liable with respect to claims incidental to the ordinary course of its operations. There is no current litigation, claims or assessments outstanding and, accordingly, no provision has been made in the accompanying financial statements.

Construction Contracts

In connection with our development, redevelopment and capital improvement activities, we have entered into various construction related contracts and we have made commitments to complete certain projects, pursuant to financing or other arrangements. At December 31, 2018 and 2017, our commitments related to these activities totaled $2,864,007 and $9,772,255, respectively.

Franchise Agreements and Advance Key Money

Intercontinental Hotel Group

In August 2013, the Company entered into a 20-year franchise agreement with Holiday Hospitality Franchising, LLC (“InterContinental Hotels Group” or “IHG”). Pursuant to the terms of the franchise agreement, the Company pays the following fees on a monthly basis:

•

Royalty Fee of 5% of gross room revenue

•

Service Contribution Fee of 3% of gross room revenue

•

Technology Fee of  $12.75 per room

•

Marketing Fee of  $3.00 per room

As a part of the franchise agreement, Six Continents, Inc., an affiliate of IHG, advanced $1,500,000 (“advance key money”) to the Company to retain IHG as the franchisor on the Hotel property for 20 years. Based on the term of the franchise agreement, each year, beginning in August 2015, the Company recognizes $75,000 of the previously deferred advance key money, which is included as a reduction of franchise fees in the accompanying consolidated statements of operations for each of the years ended December 31, 2018 and 2017. The Company is not required to repay any part of the advance key money unless the franchise agreement is cancelled before the termination date of August 2033.

In June 2015, the Company entered into a separate 10-year franchise agreement with IHG, which expires in June 2025. The Company paid an initial fee of  $114,000 in connection with the franchise agreement, which is being amortized over the term of the agreement. The amortization of the initial franchise fee is included in franchise fees on the accompanying consolidated statements of operations and totaled $11,400 for the years ended December 31, 2018 and 2017. Per the terms of the agreement, the Company pays the following fees on a monthly basis:

•

Royalty Fee of 5% of gross room revenue

•

Service Contribution Fee of 3% of gross room revenue

•

Technology Fee of  $13.26 per room

•

All fees due for marketing

F-40

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 11 — Commitments and Contingencies (continued)
 

In July 2018, the Company entered into a separate 15-year franchise agreement with IHG, which expires in July 2033. The Company paid an initial fee of  $53,000 in connection with the franchise agreement, which is being amortized over the term of the agreement. The amortization of the initial franchise fee is included in franchise fees on the accompanying consolidated statements of operations and totaled $1,674 for the year ended December 31, 2018. Per the terms of the agreement, the Company pays the following fees on a monthly basis:

•

Royalty Fee of 5% of gross room revenue

•

Service Contribution Fee of 3% of gross room revenue

•

Technology Fee of  $14.08 per room

•

All fees due for marketing

Hampton Inns

In October 2014, the Company entered into a franchise agreement with Hampton Inns Franchise, LLC, which expires in November 2030. The Company paid an initial fee of  $150,000 in connection with the agreement, which is being amortized over the term of the agreement. The amortization of the initial franchise fee is included in franchise fees on the accompanying consolidated statements of operations and totaled $9,278 for the years ended December 31, 2018 and 2017. Per the terms of the franchise agreement, the Company pays the following fees on a monthly basis:

•

Program Fee of 4% of gross room revenue

•

Royalty Fee of 6% of gross room revenue

Hilton Worldwide

In June 2016 and November 2016, the Company entered into two 10-year franchise agreements with Hilton Franchise Holdings, LLC, an affiliate of Hilton Worldwide. The Company paid an initial fee of $125,000 in connection with each agreement, which is being amortized over the term of the agreements. The amortization of the initial franchise fees is included in franchise fees on the accompanying consolidated statements of operations and totaled $25,000 for the years ended December 31, 2018 and 2017. Per the terms of the franchise agreements, the Company pays the following fees on a monthly basis:

•

Program Fee of 4% of gross room revenue

•

Royalty Fee of 5% of gross room revenue

•

Food and Beverage Fee of 1 – 3% of gross food and beverage revenue

The food and beverage fee is equal to 1% of gross food and beverage revenue during the first year of the Franchise Agreement, 2% during the second year of the Franchise Agreement, and 3% thereafter.

Marriott International, Inc.

In June 2018, the Company entered into a 15-year franchise agreement with Marriott International, Inc. The Company paid an initial fee of  $125,000 in connection with each agreement, which is being amortized over the term of the agreements. The amortization of the initial franchise fee is included in franchise fees on the accompanying consolidated statements of operations and totaled $3,948 for the year ended December 31, 2018. Per the terms of the franchise agreements, the Company pays the following fees on a monthly basis:

•

Program Fee of 5.5% of gross room revenue

•

Marketing Fund Fee of 1% of gross room revenue

F-41

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 11 — Commitments and Contingencies (continued)
 

The Company recognized total aggregate franchise fees of  $3,563,149 and $3,032,198 for the years ended December 31, 2018 and 2017, respectively.

Insurance Claims

In July 2016, the Company experienced significant damage to one of our multi-family properties resulting from severe weather. The Company recognized a loss of  $1,871,336 in connection with the damage to the property. The Company submitted an initial insurance claim to its insurer, which was denied. We subsequently engaged legal counsel to pursue the claim and the Company collected proceeds related to damages in the amount of  $982,714 in March 2018, which is included in other (income) expenses, net on the accompanying consolidated statements of operations.

In July 2016, the Company experienced significant damage to one of our hotel properties resulting from severe weather. The Company’s insurance claim for the loss in the amount of  $827,646 was approved by the insurer and the full amount was recorded against the loss incurred during 2016. The Company received proceeds of  $314,202 in June 2017, $258,902 in August 2017, and $254,542 in October 2017.

Contractual Lease Obligations

Equipment and Office Lease

In December 2014, the Company entered into a lease agreement for certain telecommunication equipment. The lease has a 60-month term, requires monthly lease payments, and has a bargain purchase option at maturity. The recorded lease liability at December 31, 2018 and 2017, was $15,526 and $28,834, respectively, and is included in other liabilities on the accompanying consolidated balance sheets.

In November 2018, the Company entered into multiple lease agreements for equipment. The leases have a 48-month term, requires monthly lease payments, and have a bargain purchase option at maturity. The recorded lease liability at December 31, 2018 was $299,578 and is included in other liabilities on the accompanying consolidated balance sheets.

In July 2018, the Company entered into a new corporate office lease agreement. The lease is for a term of 7.6 years and includes a rent abatement period and tenant improvement allowance. The Company has a renewal option of up to two successive terms of five years each.

At December 31, 2018, the future required payments, for each of the years ending December 31, were as follows:

2019	$	190,400
2020	​	470,783
2021	​	520,886
2022	​	483,135
2023	​	449,446
Thereafter	​	1,098,960
​	$	3,213,610

Ground Leases

In November 2012, we acquired a hotel property in Phoenix, Arizona, which is subject to a ground lease and requires monthly lease payments of approximately $72,000, subject to annual adjustments through December 2049, at which time the ground lease expires. The ground lease required a deposit of $325,000, which is included in other assets on the accompanying consolidated balance sheets at

F-42

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 11 — Commitments and Contingencies (continued)
 

December 31, 2018 and 2017. At the time of acquisition, it was determined that the lease rate of the ground lease was at a rate which management estimated was above the fair market lease rate. Accordingly, we recorded a liability in the amount of the estimated fair value (level 3) of the above-market lease. The above-market lease is amortized as a reduction to lease expense over the term of the lease. Accumulated amortization of the above-market lease intangible at December 31, 2018 and 2017, was $773,351 and $647,944, respectively.

In October 2014, we acquired a hotel property residing on land which is subject to a ground lease and is subleased to the Company. The sublease requires monthly lease payments of approximately $14,000 which consist of base rent, taxes, and other charges, and are subject to annual adjustments.

The amount of the base rent increases over time. The original sublease expires in May 2056; however, the sublease includes two 5-year extension options and a third extension option for an additional 27 months.

At December 31, 2018, the estimated future minimum lease payments on the ground leases and the future amortization of the related above-market lease intangible were as follows:

​	Lease Payments			Intangible Amortization			Net Lease Expense
2019	​	$	1,028,672	​	$	(125,409)	​	$	903,263
2020	​	​	1,028,672	​	​	(125,409)	​	​	903,263
2021	​	​	1,028,672	​	​	(125,409)	​	​	903,263
2022	​	​	1,028,672	​	​	(125,409)	​	​	903,263
2023	​	​	1,028,672	​	​	(125,409)	​	​	903,263
Thereafter	​	​	29,487,016	​	​	(3,260,620)	​	​	26,226,396
​	​	$	34,630,376	​	$	(3,887,665)	​	$	30,742,711

Rent expense totaled $1,369,398 and $1,210,590 for the years ended December 31, 2018 and 2017, respectively, which includes rent expense related to operating leases for office space, equipment, and ground leases. In addition to the arrangements outlined above, the Company regularly enters into short-term equipment and other rentals. Rent expense is included within operating expenses or general and administrative expense in the accompanying consolidated statements of operations, depending on the nature of the individual rental arrangement.

Environmental Matters

In connection with the ownership and operation of real estate assets, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect on the results of operations.

Buyback Program

In September 2018, the Company agreed to repurchase all 6,239,846 shares (“Buyback Program”) owned by one of its non-participating founders for $2.70 per share of common stock in exchange for an amendment to such non-participating founder’s shareholder voting rights and other Company protections. Among other things, the Company’s obligation to reacquire the non-participating founder’s shares terminates when the Company completes an initial public offering and is listed on a national exchange. The shares are being reacquired at various amounts ranging from 6,000 to 10,000 units on a monthly basis until such time as the Company has satisfied the termination conditions or until all of the shares have been

F-43

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 11 — Commitments and Contingencies (continued)
 

reacquired, which could be in 2075. Due to the length of time of the liability, the Company recorded a liability of  $13,645,954 and a corresponding reduction to equity in treasury stock using the present value with a discount rate of 10.00%. During the year ended December 31, 2018, the Company repurchased 18,000 shares. At December 31, 2018, the balance of the liability was $13,577,152 which is included in buyback obligation on the accompanying consolidated balance sheets. The remaining number of shares to be repurchased at December 31, 2018 was 6,221,846.

At December 31, 2018, the future aggregate principal payments related to the Buyback Program for each of the years ending December 31, are as follows:

2019	$	260,412
2020	​	276,725
2021	​	316,793
2022	​	314,175
2023	​	311,578
Thereafter	​	12,097,469
​	$	13,577,152

Note 12 — Stockholders’ Equity and Share-Based Payments

CaliberCos, Inc. is authorized to issue 100,000,000 shares of stock, consisting of 90,000,000 shares of common stock and 10,000,000 shares of preferred stock.

Common Stock

Subject to the rights of holders of any preferred stock having preference as to dividends, the holders of common stock shall be entitled to receive dividends when, as, and if declared by the board of directors. The holders of the issued and outstanding shares of common stock shall be entitled to one vote for each share of common stock. No holder of shares of common stock shall have the right to cumulate votes. In the event of liquidation, subject to the prior rights of holders of preferred stock to share ratably in the Company’s assets, the holders of common stock and holders of any shares of preferred stock which are not entitled to any preference in liquidation shall share equally and ratably in the Company’s assets available for distribution after giving effect to any liquidation preference of shares of preferred stock. The holders of common stock shall not have any conversion, redemption, or other preemptive rights. The Company has sold shares of common stock in three tranches.

Tranche 1

From inception through March 2015 shares of common stock were sold in units equivalent to 5,882 shares of common stock per unit. Each unit also included a warrant to purchase up to an additional 1,177 shares of common stock at any time within 30 months from the date the unit was initially purchased, which was subsequently extended for an additional 12 months. The warrants have an exercise price of  $1.70 per share. The Company issued a total of 433 units, or 2,547,059 shares, of common stock under the terms of the Tranche 1 stock issuance.

At December 31, 2018, the total shares issued were 4,243,141, of which 400,161 were in connection with the exercise of warrants. At December 31, 2017, the total shares issued were 3,890,038, of which 17,655 were in connection with the exercise of warrants.

Tranche 2

During the period from March 2015 through December 2015, shares of common stock were sold in units equivalent to 2 shares of common stock per unit. Each unit also included a warrant to purchase an

F-44

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 12 — Stockholders’ Equity and Share-Based Payments (continued)
 

additional 1 share of common stock at any time within 24 months from the date the unit was initially purchased, which was subsequently extended for an additional 12 months. The warrants have an exercise price of  $2.00 per share. The Company issued a total of 689,644 units, or 1,366,928 shares, of common stock under the terms of the Tranche 2 stock issuance.

At December 31, 2018, the total shares issued were 1,661,187, of which 294,259 were in connection with the exercise of warrants. At December 31, 2017, the total shares issued were 1,379,890, of which 12,962 were in connection with the exercise of warrants.

Tranche 3

In January 2016, shares of common stock were sold in units equivalent to 2 shares of common stock and 1 share of Series A preferred stock per unit. At December 31, 2018 and 2017, the Company had issued a total of 1,657,396 units or 3,314,792 shares and 1,386,229 units or 2,803,074 shares of common stock under the terms of the Tranche 3 stock issuance, respectively.

Warrants

The table below summarizes the warrant activity for the years ended December 31, 2018 and 2017, and the number of potential shares of common stock to be issued in connection with outstanding warrants as of December 31, 2018 and 2017:

​	Shares
December 31, 2016	​	1,239,804
Warrants issued	​	—
Warrants exercised	​	(30,617)
December 31, 2017	​	1,209,187
Warrants issued	​	—
Warrants exercised	​	(663,803)
Warrants expired	​	(333,489)
December 31, 2018	​	211,895

At December 31, 2018 and 2017, the weighted average remaining term, in months, and the weighted average exercise price of the outstanding warrants was as follows:

​	2018			2017
Weighted-average remaining term (in months)	​	​	15.52	​	​	9.96
Weighted-average exercise price	​	$	1.93	​	$	1.87

Preferred Stock

Preferred stock may be issued in one or more series, and the voting powers, designations, preferences, limitations, or restrictions thereof, of each series of preferred stock shall be prescribed by resolution of the board of directors.

F-45

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 12 — Stockholders’ Equity and Share-Based Payments (continued)
 

Non-employee Grants

In August 2014, the Company entered into a consulting agreement with Mercadyne Advisors, LLC (“Mercadyne”) and 6831614 Manitoba Ltd. (collectively, the “Consultants”). Per the agreement, the services to be provided by the Consultants were business consulting related services primarily focused on assisting the Company in accessing capital markets and designing, implementing, and completing a public offering. In exchange for the services, the agreement outlined the Consultants compensation to include a $25,000 monthly fee paid in cash and a contingently exercisable warrant to purchase a 15.00% equity interest in the Company for an aggregate exercise price of  $1,000, exercisable upon the completion of a public offering. The agreement was amended in February 2015, for the purposes of amending the compensation to be a grant of equity rather than a warrant to purchase a 15.00% equity interest in the Company on a fully diluted basis as of the date of the amendment, for a price of  $1,000, and to memorialize that all services required to be provided in connection with the agreement had been provided, although a public offering had not been completed. The agreement does not include a stated number of shares of common stock to be issued in exchange for the services provided. In March 2017, the Company and Mercadyne entered into a stock subscription agreement which finalized the number of shares of common stock to be issued to Mercadyne in connection with the consulting agreement and related amendment. The final number of shares issued to Mercadyne in connection with the agreement was 1,325,324. At the time of the settlement our liability was reduced by $1,126,525, with a corresponding increase to stockholders’ equity. At December 31, 2018 and 2017, the Company and 6831614 Manitoba Ltd. were in the process of negotiating the number of shares of common stock to be issued to finalize the arrangement, and the Company had a remaining liability recorded in the amount of  $1,381,526.

2017 Incentive Stock Plan

The Company may award stock options to employees under the 2017 Plan. The 2017 Plan allows the Company to: i) grant stock awards; ii) grant stock options; and iii) offer restricted stock purchases to directors, executives and selected employees, consultants, and advisors. Options will vest if the recipient maintains constant employment through the end of the requisite service period. At the initial grant date of June 2018, approximately 1.36 million options vested immediately resulting in approximately $1.01 million of compensation expense recognized in the period. The following inputs and assumptions were used to calculate the weighted average fair values of the options granted for year ended December 31, 2018:

​	2018
Expected term (in years)	​	​	6.46
Volatility	​	​	30.00%
Dividend yield	​	​	0.00%
Risk-free rate	​	​	3.05%
Grant date fair value	​	$	0.73

Compensation expense is recognized on a straight-line basis over the service period. During the year ended December 31, 2018, the Company recorded $1,332,882 of expense related to the 2017 Plan. At December 31, 2018, there was $955,560 of unrecognized compensation expense related to the 2017 Plan with a weighted-average remaining term of 1.98 years. There was no activity of the 2017 Plan during the year ended December 31, 2017.

F-46

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 12 — Stockholders’ Equity and Share-Based Payments (continued)
 

The following table details the activity of the 2017 Plan during the year ended December 31, 2018:

​	Stock Options		Weighted- Average Exercise Price			Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, January 1, 2018	​	—	​	$	—	​	—	​	$	—
Granted	​	3,113,597	​	​	1.99	​	—	​	​	—
Forfeited	​	(108,773)	​	​	1.99	​	—	​	​	—
Outstanding, December 31, 2018	​	3,004,824	​	$	1.99	​	6.46	​	$	1,332,882

Note 13 — Redeemable Preferred Stock

Series A Preferred Stock

In January 2016, the Company designated 2,564,103 of the 10,000,000 authorized shares of preferred stock as Series A Preferred Stock (“Series A”). The powers, preferences, rights, and limitations of Series A are as follows:

•

Holders of Series A are entitled to receive non-cumulative dividends equal to 12.00% per annum prior to the payment of any dividends to holders of common stock.

•

In the event of the liquidation of the Company, holders of Series A are entitled to receive an amount equal to their original contribution plus any declared and accrued but unpaid dividends prior to any payment or distribution to common stock holders.

•

Shares of Series A are convertible into shares of common stock at a conversion ratio of 1.25 shares of common stock for each share of Series A, any time prior to a redemption by the Company or a mandatory conversion, at the holders’ option.

•

Upon the common stock of the Company publicly trading at a per share price on a weighted-average over 20 trading days at a market capitalization of at least $100,000,000, Series A will automatically be converted into shares of common stock at a conversion ratio of 1.25 shares of common stock for each share of Series A.

•

All outstanding shares of Series A shall be redeemed by the Company on the fourth anniversary of the issuance of such shares (the “Redemption Date”) at a price of  $2.25 per share, plus any declared and accrued but unpaid dividends. At any time during the one-year period immediately preceding the Redemption Date, the Company may redeem shares of Series A at a price equal to $2.3625 per share.

•

Holders of Series A and holders of common stock shall vote together and not as separate classes and shall be entitled to vote with common stockholders as if their shares were converted into shares of common stock.

In January 2016, the Company began selling shares of Series A preferred stock in units equivalent to 2 shares of common stock and 1 share of Series A preferred stock per unit, at a cost of  $5.85 per unit ($1.80 per share of common stock and $2.25 per share of Series A preferred stock). At December 31, 2018 and 2017, the Company had issued a total of 1,657,396 units or 1,657,396 shares and 1,386,229 units or 1,386,229 shares of preferred stock under the terms of the Tranche 3 stock issuance, respectively.

F-47

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 13 — Redeemable Preferred Stock (continued)
 

At December 31, 2018, the future mandatory redemptions for each year ended December 31, were as follows:

2019	$	—
2020	​	1,615,344
2021	​	1,565,136
2022	​	661,454
​	$	3,841,934

One year following the issuance of Series A Preferred Stock, the Company is required to establish, and contribute to a reserve of funds on a quarterly basis, an amount that shall cumulatively be sufficient to pay any amounts due for the redemption of Series A Preferred Stock. The quarterly contributions to the reserve are required to be at least one-twelfth (1/12) of the total amount needed to pay for the redemption of all of the Series A Preferred Stock then outstanding. At December 31, 2018 and 2017, the required reserve was $320,161 and $384,594, respectively.

During the years ended December 31, 2018 and 2017, the Company paid dividends to preferred stockholders in the amounts of  $390,508, or $0.24 per share and $197,825, or $0.25 per share, respectively. At December 31, 2018 and 2017, preferred dividends in arrears were $112,794, or $0.07 per share, and $61,467, or $0.04 per share, respectively.

Note 14 — Net Loss Per Share

Basic and diluted net loss per share attributable to common stockholders for the years ended December 31, 2018 and 2017, was calculated as follows:

​	2018			2017
Net loss attributable to CaliberCos Inc.	​	$	(2,992,701)	​	$	(2,703,463)
Preferred stock dividends	​	​	(390,508)	​	​	(197,825)
Accretion of mezzanine equity value	​	​	(51,327)	​	​	(15,868)
Net loss attributable to common shareholders of CaliberCos Inc.	​	$	(3,434,536)	​	$	(2,917,156)
Weighted-average common shares outstanding	​	​	27,405,332	​	​	25,299,392
Basic and diluted net loss per share attributable to common shareholders	​	$	(0.13)	​	$	(0.12)

The computation of diluted loss per share attributable to common stockholders assumes the potential dilutive effect of potential common shares, which includes the exercise of warrants and converted preferred shares. However, to the extent the inclusion of potential common shares is anti-dilutive, the potential common shares are excluded from the computation of diluted income (loss) per share attributable to common stockholders. For the years ended December 31, 2018 and 2017, the inclusion of the effect of any potential exercise of warrants or conversion of preferred shares to common shares is antidilutive, and therefore have been excluded from the computation of loss per share attributable to common stockholders. Additional potential common shares related to the outstanding warrants, stock options, and preferred shares at December 31, 2018 and 2017 were as follows:

​	2018		2017
Additional common shares, if warrants were exercised	​	211,895	​	1,209,187
Additional common shares, if preferred shares were converted	​	2,071,745	​	1,732,786
Additional common shares, if stock options were exercised	​	3,004,824	​	—
​	​	5,288,464	​	2,941,973

F-48

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 15 — Fair Value of Financial Instruments

The Company estimates fair values of financial instruments using available market information and established valuation methodologies. Accordingly, the estimates presented are not necessarily indicative of the amounts the Company could realize on disposition of the financial instruments. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair value amounts.

Financial instruments that approximate fair value due to the short-term nature of the instruments consist of cash, restricted cash, accounts receivable, and accounts payable. The fair values of long-term debt, advance key money, and interest rate caps have been estimated based on current rates available for similar instruments with similar terms, maturities, and collateral. The carrying values of the Company’s long-term debt, advance key money, and interest rate caps at December 31, 2018 and 2017, approximated fair value, except for the long-term debt instruments listed below, all of which were measured with Level 2 inputs. The estimated fair values for the instruments below were determined by management based on a discounted future cash-flow model.

​	December 31, 2018						December 31, 2017
​	Carrying Value			Fair Value			Carrying Value			Fair Value
Notes Payable	​	​	​	​	​	​	​	​	​	​	​	​
Hampton Inn & Suites Hotel	​	$	6,693,000	​	$	5,806,000	​	$	6,868,347	​	$	6,601,000
Four Points by Marriott Hotel	​	$	11,000,000	​	$	10,770,000	​	$	—	​	$	—
Hilton Tucson East Hotel	​	$	14,000,000	​	$	14,000,000	​	$	12,730,000	​	$	12,611,000
Palms Apartment Portfolio	​	$	9,438,000	​	$	8,413,000	​	$	9,603,918	​	$	9,012,000

Note 16 — Segment Reporting

The Company’s operations are organized into eight reportable segments for management and financial reporting purposes, which are broadly separated in two categories; real estate services (Fund Management, Construction & Development, Property Management, Real Estate Brokerage) and real estate operations (Hospitality, Residential, Commercial, and Diversified). Each segment is described below.

Real Estate Services

Fund Management

This segment includes all of our corporate operations, as well as the revenue generated by the fund/​asset management services and capital raising services provided to the private equity real estate funds which the Company is affiliated with.

Construction and Development

This segment includes our construction and development operations. The Company provides a variety of construction and development services to affiliated entities as well as third parties.

Property Management

This segment includes our property management operations. The Company provides a comprehensive range of services including tenant screening, lease-up, collections, repairs and maintenance, and eviction/​removal for affiliated entities as well as third parties.

Real Estate Brokerage

This segment includes our real estate brokerage operations. The Company generates commission revenue by acting as a broker for residential and commercial real estate owners and investors seeking to buy and/or sell properties, including investment properties, as well as primary residences. The Company provides brokerage services to affiliated entities as well as third parties.

F-49

CALIBERCOS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
 

Note 16 — Segment Reporting (continued)
 

Real Estate Operations

Hospitality

This segment includes all of the operating activity of the hotel properties which are affiliates of the Company.

Residential

This segment includes all of the operating activity of the single-family assets, which are owned by the Company, and multi-family assets, which are owned and/or managed by the Company. The Company is involved in both the sale and rental of residential real estate assets. This segment also includes residential property development projects in various stages of completion.

Commercial

This segment includes all of the operating activity of the commercial properties which are affiliates of the Company. The Company is involved in both the sale and rental of commercial real estate assets. This segment also includes commercial property development projects in various stages of completion.

Diversified

This segment includes the operating activities of certain entities which are involved in the financing of various affiliated real estate properties through both debt and equity investments.

Due to the diversity of our economic ownership interests across our properties, our chief executive officer, who is our chief operating decision maker (“CODM”), assesses the operating performance of our assets based on our proportionate share of net operating income (loss). The information below includes the operating results and measures of profitability for all operating entities which the Company and our CODM analyze on a regular basis, as the ultimate profitability of each entity, and value of its assets, will impact the ultimate profitability of the Company. The total assets and results of each segment are presented on a gross basis, prior to any necessary adjustments to: i) eliminate inter-segment transactions ii) eliminate the results of entities that are not included in our consolidated U.S. GAAP financial statements; iii) eliminate revenue activity presented gross when U.S. GAAP requires net, and iv) reclassify items to reflect U.S. GAAP consolidated presentation. The following tables present the revenues, operating income (loss), and net income (loss) of each of our reportable segments for the years ended December 31, 2018 and 2017, and total assets at December 31, 2018 and 2017:

F-50

CALIBERCOS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

​

Year Ended December 31, 2018

​

Real Estate Services

Real Estate Operations

Eliminations

CaliberCos Inc. & Subsidiaries

​

Fund  Management

Construction & Development

Property Management

Real Estate Brokerage

Total

Hospitality

Residential

Commercial

Diversified

Total

Non- consolidated

Intercompany

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Hospitality

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

50,866,351

​

$

—

​

$

—

​

$

—

​

$

50,866,351

​

$

(1,525,012)

​

$

—

​

$

49,341,339

Construction and development

​

​

—

​

​

9,425,377

​

​

—

​

​

—

​

​

9,425,377

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(4,795,034)

​

​

4,630,343

Real estate sales

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

6,289,200

​

​

—

​

​

—

​

​

6,289,200

​

​

—

​

​

—

​

​

6,289,200

Rental income

​

​

—

​

​

—

​

​

854

​

​

—

​

​

854

​

​

—

​

​

8,204,318

​

​

959,077

​

​

—

​

​

9,163,395

​

​

(4,196,239)

​

​

—

​

​

4,968,010

Fund management

​

​

8,381,850

​

​

—

​

​

—

​

​

—

​

​

8,381,850

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(3,714,997)

​

​

4,666,853

Property management

​

​

—

​

​

—

​

​

476,381

​

​

—

​

​

476,381

​

​

—

​

​

60,804

​

​

—

​

​

—

​

​

60,804

​

​

(23,442)

​

​

(188,630)

​

​

325,113

Brokerage

​

​

—

​

​

—

​

​

—

​

​

1,892,329

​

​

1,892,329

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,588,354)

​

​

303,975

Other

​

​

—

​

​

9,399

​

​

87,475

​

​

—

​

​

96,874

​

​

—

​

​

75,675

​

​

—

​

​

—

​

​

75,675

​

​

(25,242)

​

​

—

​

​

147,307

Total revenues

​

​

8,381,850

​

​

9,434,776

​

​

564,710

​

​

1,892,329

​

​

20,273,665

​

​

50,866,351

​

​

14,629,997

​

​

959,077

​

​

—

​

​

66,455,425

​

​

(5,769,935)

​

​

(10,287,015)

​

​

70,672,140

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of sales – hospitality

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

20,142,966

​

​

—

​

​

—

​

​

—

​

​

20,142,966

​

​

(1,221,009)

​

​

—

​

​

18,921,957

Cost of sales – construction and development

​

​

—

​

​

8,824,608

​

​

—

​

​

—

​

​

8,824,608

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(4,468,444)

​

​

4,356,164

Cost of sales – real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

5,435,336

​

​

—

​

​

—

​

​

5,435,336

​

​

—

​

​

(107,764)

​

​

5,327,572

Cost of sales – brokerage

​

​

—

​

​

—

​

​

—

​

​

1,033,162

​

​

1,033,162

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(926,590)

​

​

106,572

Operating costs

​

​

6,403,829

​

​

685,756

​

​

195,699

​

​

94,941

​

​

7,380,225

​

​

10,640,885

​

​

4,361,579

​

​

550,412

​

​

636,854

​

​

16,189,730

​

​

(3,472,544)

​

​

(470,900)

​

​

19,626,511

General and administrative

​

​

2,412,934

​

​

41,492

​

​

53,221

​

​

110,390

​

​

2,618,037

​

​

3,496,893

​

​

431,494

​

​

292,237

​

​

1,620,256

​

​

5,840,880

​

​

(2,429,284)

​

​

(521,460)

​

​

5,508,173

Marketing and advertising

​

​

487,814

​

​

2,275

​

​

31

​

​

715

​

​

490,835

​

​

3,897,823

​

​

263,180

​

​

40,726

​

​

76,658

​

​

4,278,387

​

​

(412,307)

​

​

—

​

​

4,356,915

Franchise fees

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

3,580,300

​

​

—

​

​

—

​

​

—

​

​

3,580,300

​

​

(17,151)

​

​

—

​

​

3,563,149

Management fees

​

​

—

​

​

—

​

​

1,075

​

​

—

​

​

1,075

​

​

3,919,837

​

​

1,072,093

​

​

234,518

​

​

1,039,150

​

​

6,265,598

​

​

(2,203,909)

​

​

(2,110,050)

​

​

1,952,714

Depreciation

​

​

85,783

​

​

—

​

​

—

​

​

—

​

​

85,783

​

​

6,662,663

​

​

2,560,219

​

​

270,841

​

​

—

​

​

9,493,723

​

​

(2,315,620)

​

​

(229,720)

​

​

7,034,166

Impairment

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

839,250

​

​

—

​

​

—

​

​

839,250

​

​

—

​

​

—

​

​

839,250

Total expenses

​

​

9,390,360

​

​

9,554,131

​

​

250,026

​

​

1,239,208

​

​

20,433,725

​

​

52,341,367

​

​

14,963,151

​

​

1,388,734

​

​

3,372,918

​

​

72,066,170

​

​

(12,071,824)

​

​

(8,834,928)

​

​

71,593,143

Operating Income (Loss)

​

​

(1,008,510)

​

​

(119,355)

​

​

314,684

​

​

653,121

​

​

(160,060)

​

​

(1,475,016)

​

​

(333,154)

​

​

(429,657)

​

​

(3,372,918)

​

​

(5,610,745)

​

​

6,301,889

​

​

(1,452,087)

​

​

(921,003)

Other (Income) Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other (income) expenses, net

​

​

(28,571)

​

​

—

​

​

—

​

​

160

​

​

(28,411)

​

​

726,910

​

​

(179,867)

​

​

94,119

​

​

—

​

​

641,162

​

​

(36,374)

​

​

(269,847)

​

​

306,530

Income from investments

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,383,746)

​

​

(2,383,746)

​

​

2,383,746

​

​

—

​

​

—

Interest income

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(35,301)

​

​

(33,801)

​

​

—

​

​

(1,212,541)

​

​

(1,281,643)

​

​

1,212,706

​

​

27,287

​

​

(41,650)

Gain on disposition of real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,608,061)

​

​

(699,222)

​

​

—

​

​

(3,307,283)

​

​

3,307,283

​

​

—

​

​

—

Interest expense

​

​

939,314

​

​

—

​

​

—

​

​

743

​

​

940,057

​

​

9,805,722

​

​

2,618,240

​

​

1,309,209

​

​

2,419,432

​

​

16,152,603

​

​

(5,088,708)

​

​

(116,210)

​

​

11,887,742

Total other expenses, net

​

​

910,743

​

​

—

​

​

—

​

​

903

​

​

911,646

​

​

10,497,331

​

​

(203,489)

​

​

704,106

​

​

(1,176,855)

​

​

9,821,093

​

​

1,778,653

​

​

(358,770)

​

​

12,152,622

Net Income (Loss)

​

$

(1,919,253)

​

$

(119,355)

​

$

314,684

​

$

652,218

​

$

(1,071,706)

​

$

(11,972,347)

​

$

(129,665)

​

$

(1,133,763)

​

$

(2,196,063)

​

$

(15,431,838)

​

$

4,523,236

​

$

(1,093,317)

​

$

(13,073,625)

​	December 31, 2018
Total real estate investments, at cost	​	$	402,130	$	—	$	—	$	—	$	402,130	$	154,462,298	$	68,002,488	$	23,966,138	$	71,205	$	246,502,129	$	71,925,499	$	(146,886,672)	$	171,943,086
Total Assets	​	$	6,235,856	$	2,235,829	$	39,161	$	380,220	$	8,891,066	$	155,924,741	$	65,489,911	$	25,485,971	$	74,962,350	$	321,862,973	$	(143,528,943)	$	(15,090,299)	$	172,134,797

F-51

CALIBERCOS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 

​

Year Ended December 31, 2017

​

Real Estate Services

Real Estate Operations

Eliminations

CaliberCos Inc. & Subsidiaries

​

Fund  Management

Construction & Development

Property Management

Real Estate Brokerage

Total

Hospitality

Residential

Commercial

Diversified

Total

Non- consolidated

Intercompany

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Hospitality

​

$

—

​

$

—

​

$

—

​

$

—

​

$

—

​

$

46,283,522

​

$

—

​

$

—

​

$

—

​

$

46,283,522

​

$

(2,221,415)

​

$

—

​

$

44,062,107

Construction and development

​

​

—

​

​

20,565,534

​

​

—

​

​

—

​

​

20,565,534

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(15,949,552)

​

​

4,615,982

Real estate sales

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

7,877,470

​

​

—

​

​

—

​

​

7,877,470

​

​

—

​

​

—

​

​

7,877,470

Rental income

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

7,613,774

​

​

964,115

​

​

—

​

​

8,577,889

​

​

(3,605,086)

​

​

—

​

​

4,972,803

Fund management

​

​

3,997,765

​

​

—

​

​

—

​

​

—

​

​

3,997,765

​

​

—

​

​

—

​

​

—

​

​

30,000

​

​

30,000

​

​

(30,000)

​

​

(1,907,368)

​

​

2,090,397

Property management

​

​

—

​

​

—

​

​

700,870

​

​

—

​

​

700,870

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(215,140)

​

​

485,730

Brokerage

​

​

—

​

​

—

​

​

—

​

​

1,860,411

​

​

1,860,411

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,545,764)

​

​

314,647

Total revenues

​

​

3,997,765

​

​

20,565,534

​

​

700,870

​

​

1,860,411

​

​

27,124,580

​

​

46,283,522

​

​

15,491,244

​

​

964,115

​

​

30,000

​

​

62,768,881

​

​

(5,856,501)

​

​

(19,617,824)

​

​

64,419,136

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cost of sales – hospitality

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

18,185,547

​

​

—

​

​

—

​

​

—

​

​

18,185,547

​

​

(1,458,059)

​

​

—

​

​

16,727,488

Cost of sales – construction and development

​

​

—

​

​

18,622,858

​

​

—

​

​

—

​

​

18,622,858

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(14,517,120)

​

​

4,105,738

Cost of sales – real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

7,085,829

​

​

—

​

​

—

​

​

7,085,829

​

​

—

​

​

(154,891)

​

​

6,930,938

Cost of sales – brokerage

​

​

—

​

​

—

​

​

—

​

​

1,445,458

​

​

1,445,458

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,390,873)

​

​

54,585

Operating costs

​

​

3,309,369

​

​

543,337

​

​

677,813

​

​

15,748

​

​

4,546,267

​

​

7,545,355

​

​

4,218,934

​

​

744,332

​

​

36,086

​

​

12,544,707

​

​

(2,632,789)

​

​

(26,136)

​

​

14,432,049

General and administrative

​

​

2,202,841

​

​

35,609

​

​

87,483

​

​

124,385

​

​

2,450,318

​

​

5,110,525

​

​

609,122

​

​

30,448

​

​

796,882

​

​

6,546,977

​

​

(1,645,146)

​

​

(480,998)

​

​

6,871,151

Marketing and advertising

​

​

272,402

​

​

8,904

​

​

—

​

​

60,003

​

​

341,309

​

​

3,398,913

​

​

158,075

​

​

60,895

​

​

70,006

​

​

3,687,889

​

​

(498,385)

​

​

—

​

​

3,530,813

Franchise fees

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

3,067,828

​

​

—

​

​

—

​

​

—

​

​

3,067,828

​

​

(35,630)

​

​

—

​

​

3,032,198

Management fees

​

​

—

​

​

—

​

​

880

​

​

—

​

​

880

​

​

2,498,623

​

​

728,129

​

​

264,604

​

​

771,718

​

​

4,263,074

​

​

(1,292,351)

​

​

(1,350,381)

​

​

1,621,222

Depreciation

​

​

98,365

​

​

—

​

​

—

​

​

—

​

​

98,365

​

​

5,518,624

​

​

2,157,223

​

​

440,375

​

​

—

​

​

8,116,222

​

​

(2,481,943)

​

​

(168,515)

​

​

5,564,129

Impairment

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

460,906

​

​

—

​

​

—

​

​

460,906

​

​

—

​

​

—

​

​

460,906

Total expenses

​

​

5,882,977

​

​

19,210,708

​

​

766,176

​

​

1,645,594

​

​

27,505,455

​

​

45,325,415

​

​

15,418,218

​

​

1,540,654

​

​

1,674,692

​

​

63,958,979

​

​

(10,044,303)

​

​

(18,088,914)

​

​

63,331,217

Operating Income (Loss)

​

​

(1,885,212)

​

​

1,354,826

​

​

(65,306)

​

​

214,817

​

​

(380,875)

​

​

958,107

​

​

73,026

​

​

(576,539)

​

​

(1,644,692)

​

​

(1,190,098)

​

​

4,187,802

​

​

(1,528,910)

​

​

1,087,919

Other (Income) Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Other (income) expenses, net

​

​

152,498

​

​

9,718

​

​

—

​

​

—

​

​

162,216

​

​

532,391

​

​

264,641

​

​

17,501

​

​

(1,217)

​

​

813,316

​

​

(315,784)

​

​

(21,541)

​

​

638,207

Income from investments

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(3,807,830)

​

​

(3,807,830)

​

​

3,807,830

​

​

—

​

​

—

Interest income

​

​

(856)

​

​

—

​

​

—

​

​

—

​

​

(856)

​

​

—

​

​

(23,571)

​

​

—

​

​

(1,414,847)

​

​

(1,438,418)

​

​

1,414,157

​

​

856

​

​

(24,261)

Gain on deposition of real estate

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,478,865)

​

​

(492,362)

​

​

—

​

​

(1,971,227)

​

​

492,362

​

​

—

​

​

(1,478,865)

Interest expense

​

​

1,463,763

​

​

—

​

​

—

​

​

3,478

​

​

1,467,241

​

​

7,786,175

​

​

2,598,563

​

​

640,343

​

​

2,649,432

​

​

13,674,513

​

​

(4,559,136)

​

​

(124,196)

​

​

10,458,422

Total other expenses, net

​

​

1,615,405

​

​

9,718

​

​

—

​

​

3,478

​

​

1,628,601

​

​

8,318,566

​

​

1,360,768

​

​

165,482

​

​

(2,574,462)

​

​

7,270,354

​

​

839,429

​

​

(144,881)

​

​

9,593,503

Net Income (Loss)

​

$

(3,500,617)

​

$

1,345,108

​

$

(65,306)

​

$

211,339

​

$

(2,009,476)

​

$

(7,360,459)

​

$

(1,287,742)

​

$

(742,021)

​

$

929,770

​

$

(8,460,452)

​

$

3,348,373

​

$

(1,384,029)

​

$

(8,505,584)

​	December 31, 2017
Total real estate investments, at cost	​	$	587,277	$	—	$	—	$	—	$	587,277	$	125,329,509	$	66,841,452	$	22,008,704	$	—	$	214,179,665	$	(65,674,328)	$	(2,618,266)	$	146,474,348
Total Assets	​	$	3,966,716	$	4,737,557	$	68,196	$	138,567	$	8,911,036	$	124,804,080	$	68,062,361	$	24,075,191	$	52,378,056	$	269,319,688	$	(118,603,267)	$	(6,848,249)	$	152,779,208

F-52

CALIBERCOS, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Note 17 — Subsequent Events

The Company has evaluated events from December 31, 2018 through April 9, 2019, the date these consolidated financial statements were issued. There have been no subsequent events after December 31, 2018, for which recognition or disclosure is required.

F-53

PART III

INDEX TO EXHIBITS

Exhibit Number	Exhibit Description (hyperlink)	Filed Herewith	Form	File No	Exhibit	Filing Date
2.1	CaliberCos Inc. Amended and Restated Certificate of Incorporation	X	​	​	​	​
2.2	CaliberCos Inc. Bylaws	X	​	​	​	​
3.1	Stockholders’ Agreement dated September 21, 2018, by and among the Company, John C. Loeffler, Jennifer Schrader and Donnie Schrader	X	​	​	​	​
3.2	Stock Purchase Agreement dated September 21, 2018, by and among the Company and Donnie Schrader	X	​	​	​	​
3.3	Form of Warrant, exercise price of $1.70 (Tranche 1)	X	​	​	​	​
3.4	Form of Warrant, exercise price of $2.00 (Tranche 2)	X	​	​	​	​
4.1	Form of Subscription Agreement	*	​	​	​	​
6.1	Amended and Restated 2017 Stock Incentive Plan	X	​	​	​	​
6.2	Mortgage Note ($14,000,000) dated June 29, 2018, payable to Cerco Capital Inc.	X	​	​	​	​
6.2.1	Guaranty of Recourse Obligations dated June 29, 2018, by Chris Loeffler and Jennifer Schrader, in favor of Cerco Capital Inc.	X	​	​	​	​
6.3	Promissory Note ($62,245,000) dated September 2018, payable to RCC Real Estate, Inc.	X	​	​	​	​
6.3.1	Guaranty of Recourse Obligations dated September 2018, by the Company, Jennifer Schrader, John C. Loeffler, II and Frank Heavlin, for the benefit of RCC Real Estate, Inc.	X	​	​	​	​
6.4	Office Lease Agreement, by and among Pollock Gateway II LLC and the Company, dated July 13, 2018	X	​	​	​	​
6.4.1	First Amendment to Office Lease Agreement, by and among Pollock Gateway II LLC and the Company, dated November 14, 2018	X	​	​	​	​
11.1	Consent of Marcum LLP	*	​	​	​	​
12.1	Opinion of Manatt, Phelps & Phillips, LLP	*	​	​	​	​
13.1	“Testing the Waters” Material	*	​	​	​	​

*

To be filed by amendment.

†

Previously filed.

III-1

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this draft offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Scottsdale, State of Arizona, on June 12, 2019.

CaliberCos Inc.

By:

/s/ John C. Loeffler, II

Name: John C. Loeffler, II
Title:   Chief Executive Officer

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

Name and Signature	Title	Date
/s/ John C. Loeffler, II John C. Loeffler, II	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	June 12, 2019
* Jennifer Schrader	Chief Operating Officer, Secretary and Director	June 12, 2019
* Jade Leung	Chief Financial Officer (Principal Financial and Accounting Officer)	June 12, 2019
* William J. Gerber	Director, Chairman of Governance Committee	June 12, 2019
* Christopher Pair Garza	Director, Chairman of Compensation Committee	June 12, 2019
* Michael Trzupek	Director, Chairman of Audit Committee	June 12, 2019

*By: 

/s/ John C. Loeffler

John C. Loeffler, Attorney-in-fact

III-2

EX1A-2B BYLAWS

Exhibit 2.1

STATE OF DELAWARE

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION
OF
CALIBERCOS INC.

CALIBERCOS INC., (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, does hereby certify that:

A.           The name of the Corporation is CALIBERCOS INC. The Corporation’s original Certificate of Incorporation was filed with the Secretary of State of Delaware on June 7, 2018.

B.           This Amended and Restated Certificate of Incorporation (this “Amended and Restated Certificate”) was duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”), and has been duly approved by the written consent of the stockholders of the Corporation in accordance with Section 228 of the DGCL, and restates, integrates and further amends the provisions of the Corporation’s Certificate of Incorporation.

C.           Immediately prior to the Effective Time (as defined below) of this Amended and Restated Certificate, the total number of shares of all classes of capital stock, which the Corporation was authorized to issue was one hundred million (100,000,000) shares (the "Authorized Shares"). The Authorized Shares consisted of ninety million (90,000,000) shares of common stock (the "Common Stock"), par value $0.001 per share, and ten million (10,000,000) shares of preferred stock ("Preferred Stock"), par value $0.001 per share, including two million five hundred sixty-four thousand one hundred three (2,564,103) shares designated "Series A Preferred Stock".

D.           The text of the Certificate of Incorporation of this Corporation is hereby amended and restated in its entirety to read as follows:

FIRST:             The name of the corporation shall be CaliberCos Inc. (the "Corporation").

SECOND:        The address of the Corporation's registered office in the State of Delaware is 1 1012 College Road, Suite 201, Dover, County of Kent, Delaware 19904. The name of its registered agent at such address is Telos Legal Corp.

THIRD:             The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.

FOURTH:

A.           Upon this Amended and Restated Certificate becoming effective pursuant to the DGCL (the “Effective Time”), the total number of shares of capital stock which the Corporation has authority to issue is one hundred twenty five million (125,000,000) shares consisting of:

1

(i)          One hundred million (100,000,000) shares of Class A Common Stock, par value $0.001 per share (the “Class A Common Stock”);

(ii)         Fifteen million (15,000,000) shares of Class B Common Stock, par value $0.001 per share (the “Class B Common Stock” and

(iii)        Ten million (10,000,000) shares of preferred stock ("Preferred Stock"), par value $0.001 per share, including two million five hundred sixty-four thousand one hundred three (2,564,103) shares designated "Series A Preferred Stock".

B.           The board of directors of the Corporation is authorized, subject to any limitations prescribed by law, to provide for the issuance of additional shares of Preferred Stock in one or more series, and by filing a certificate pursuant to the applicable law of the State of Delaware (such certificate being hereinafter referred to as a "Preferred Stock Designation"), to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences, and rights of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock Designation.

C.           At the Effective Time, each share of the Corporation’s Common Stock issued and outstanding immediately prior to the Effective Time that is then held of record by any holder other than the Founders, as that term is defined below, will automatically be reclassified into one share of Class A Common Stock and each share of Common Stock that is then held of record by any holder specified in the resolutions duly adopted by the Board of Directors on June 3, 2019 (the “Founders”) will automatically be reclassified into one share of Class B Common Stock. Each certificate or ledger record that theretofore represented shares of Common Stock shall thereafter represent such number of shares of Class A Common Stock represented by such certificate or ledger record have been reclassified, and each certificate or ledger record that theretofore represented shares of Common Stock of the Founders shall thereafter represent such number of shares of Class B Common Stock represented by such certificate or ledger record have been reclassified.

D.           Common Stock. A statement of the designations of each class of Common Stock and the powers, preferences and rights and qualifications, limitations or restrictions thereof is as follows:

1. Voting Rights.

(i)          Except as otherwise provided herein or by applicable law, the holders of shares of Class A Common Stock and Class B Common Stock shall at all times vote together as one class on all matters (including the election of directors) submitted to a vote or for the consent of the stockholders of the Corporation.

2

(ii)         Each holder of shares of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Corporation.

(iii)        Each holder of shares of Class B Common Stock shall be entitled to ten (10) votes for each share of Class B Common Stock held as of the applicable date on any matter that is submitted to a vote or for the consent of the stockholders of the Corporation.

Notwithstanding the foregoing, except as otherwise required by applicable law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Amended and Restated Certificate (including any certificate filed with the Secretary of State establishing the terms of a series of Preferred Stock in accordance with Article 4B above) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series of Preferred Stock are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to applicable law or this Amended and Restated Certificate (including any certificate filed with the Secretary of State establishing the terms of a series of Preferred Stock in accordance with Article 4B above).

2. Dividends. Subject to the preferences applicable to any series of Preferred Stock, if any, outstanding at any time, the holders of Class A Common Stock and the holders of Class B Common Stock shall be entitled to share equally, on a per share basis, in such dividends and other distributions of cash, property or shares of stock of the Corporation as may be declared by the Board of Directors from time to time with respect to the Common Stock out of assets or funds of the Corporation legally available therefor; provided, however, that in the event that such dividend is paid in the form of shares of Common Stock or rights to acquire Common Stock, the holders of Class A Common Stock shall receive Class A Common Stock or rights to acquire Class A Common Stock, as the case may be, and the holders of Class B Common Stock shall receive Class B Common Stock or rights to acquire Class B Common Stock, as the case may be.

3. Liquidation. Subject to the preferences applicable to any series of Preferred Stock, if any outstanding at any time, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, the holders of Class A Common Stock and the holders of Class B Common Stock shall be entitled to share equally, on a per share basis, all assets of the Corporation of whatever kind available for distribution to the holders of Common Stock.

4. Subdivision or Combinations. If the Corporation in any manner subdivides or combines the outstanding shares of one class of Common Stock, the outstanding shares of the other class of Common Stock will be subdivided or combined in the same manner.

3

5. Equal Status. Except as expressly provided in this Article 4D, Class A Common Stock and Class B Common Stock shall have the same rights and privileges and rank equally, share ratably and be identical in all respects as to all matters. Without limiting the generality of the foregoing, (i) in the event of a merger, consolidation or other business combination requiring the approval of the holders of the Corporation’s capital stock entitled to vote thereon (whether or not the Corporation is the surviving entity), the holders of the Class A Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration, if any, as the holders of the Class B Common Stock and the holders of the Class A Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration, if any, on a per share basis as the holders of the Class B Common Stock, and (ii) in the event of (x) any tender or exchange offer to acquire any shares of Common Stock by any third party pursuant to an agreement to which the Corporation is a party or (y) any tender or exchange offer by the Corporation to acquire any shares of Common Stock, pursuant to the terms of the applicable tender or exchange offer, the holders of the Class A Common Stock shall have the right to receive, or the right to elect to receive, the same form of consideration as the holders of the Class B Common Stock and the holders of the Class A Common Stock shall have the right to receive, or the right to elect to receive, at least the same amount of consideration on a per share basis as the holders of the Class B Common Stock; provided that, if the holders of the Class A Common Stock or the holders of the Class B Common Stock are granted the right to elect to receive one of two or more alternative forms of consideration, the foregoing provision shall be deemed satisfied if holders of the other class are granted identical election rights. Any consideration to be paid to or received by holders of Class A Common Stock or holders of Class B Common Stock pursuant to any employment, consulting, severance, non-competition or other similar arrangement approved by the Board of Directors, or any duly authorized committee thereof, shall not be considered to be "consideration received per share" for purposes of the foregoing provision, regardless of whether such consideration is paid in connection with, or conditioned upon the completion of, such merger, consolidation, reorganization or other business combination.

6. Conversion.

(i)          Defined Terms. As used in this Article 4D6, the following terms shall have the following meanings:

1.          “Affiliate” shall mean, as to any Person, (i) any other person that, directly or indirectly , is in control of, controlled by or is under common control with such Person, (ii) any corporation or organization (other than the Corporation or a majority owned subsidiary of the Corporation) of which such Person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of voting securities, or in which such Person has a substantial beneficial interest, (iii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as a trustee or in a similar fiduciary capacity, (iv) any relative or spouse of such Person who has the same home as such Person, or (v) an officer of the Corporation or any of its subsidiaries.

2.          “Class B Stockholder” shall mean John C. Loeffler and Jennifer Schrader, each as a natural living person, and “Class B Stockholders” shall mean both of them.

3.          “Permitted Entity” shall mean, with respect to any individual Class B Stockholder, any trust, account, plan, corporation, partnership, or limited liability company specified in Article 4D6(iii)(1) established by or for such individual Class B Stockholder , so long as such entity meets the requirements of the exception set forth in Article 4D6 (iii)(1) applicable to such entity.

4

4.          “Person” shall means any natural person, corporation, association, partnership, limited liability company, organization, business, government or political subdivision thereof or governmental agency.

5.          “Transfer” of a share of Class B Common Stock shall mean any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law. A “Transfer” shall also include, without limitation, a transfer of a share of Class B Common Stock to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership), or the transfer of, or entering into a binding agreement with respect to, Voting Control over a share of Class B Common Stock by proxy or otherwise; provided, however, that the following shall not be considered a “Transfer” within the meaning of this Article 4D6(i)(5):

a.           the granting of a proxy to officers or directors of the Corporation at the request of the Board of Directors of the Corporation in connection with actions to be taken at an annual or special meeting of stockholders;

b.           entering into a voting trust, agreement or arrangement (with or without granting a proxy) solely with stockholders who are Class B Stockholders, that (A) is disclosed either in a Schedule 13D filed with the Securities and Exchange Commission or in writing to the Secretary of the Corporation, (B) either has a term not exceeding one (1) year or is terminable by the Class B Stockholder at any time and (C) does not involve any payment of cash, securities, property or other consideration to the Class B Stockholder other than the mutual promise to vote shares in a designated manner; or

c.           the pledge of shares of Class B Common Stock by a Class B Stockholder that creates a mere security interest in such shares pursuant to a bona fide loan or indebtedness transaction so long as the Class B Stockholder continues to exercise Voting Control over such pledged shares; provided, however, that a foreclosure on such shares of Class B Common Stock or other similar action by the pledgee shall constitute a “Transfer.”

6.          “Voting Control” with respect to a share of Class B Common Stock shall mean the power (whether exclusive or shared) to vote or direct the voting of such share of Class B Common Stock by proxy, voting agreement or otherwise.

a.           Conversion Upon Notice. Each share of Class B Common Stock shall be convertible into one (1) fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof at any time upon written notice to the transfer agent of the Corporation.

b.           Automatic Conversion upon Transfer. Each share of Class B Common Stock shall automatically, without any further action, convert into one (1) fully paid and nonassessable share of Class A Common Stock upon a Transfer of such share, other than a Transfer:

1.          by a Class B Stockholder to the other Class B Stockholder or to any of the following Permitted Entities, and from any of the following Permitted Entities back to such Class B Stockholder and/or any other Permitted Entity established by or for such Class B Stockholder:

5

a.           a trust for the benefit of such Class B Stockholder and for the benefit of no other person, provided such Transfer does not involve any payment of cash, securities, property or other consideration (other than an interest in such trust) to the Class B Stockholder and, provided, further, that in the event such Class B Stockholder is no longer the exclusive beneficiary of such trust, each share of Class B Common Stock then held by such trust shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock;

b.           a trust for the benefit of persons other than the Class B Stockholder so long as the Class B Stockholder has, sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust, provided such Transfer does not involve any payment of cash, securities, property or other consideration (other than an interest in such trust) to the Class B Stockholder, and, provided, further, that in the event the Class B Stockholder no longer has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust, each share of Class B Common Stock then held by such trust shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock;

c.           a trust under the terms of which such Class B Stockholder has retained a “qualified interest” within the meaning of §2702(b)(1) of the Internal Revenue Code and/or a reversionary interest so long as the Class B Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust; provided, however, that in the event the Class B Stockholder no longer has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust, each share of Class B Common Stock then held by such trust shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock;

d.           an Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code, or a pension, profit sharing, stock bonus or other type of plan or trust of which such Class B Stockholder is a participant or beneficiary and which satisfies the requirements for qualification under Section 401 of the Internal Revenue Code; provided that in each case such Class B Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held in such account, plan or trust, and provided, further, that in the event the Class B Stockholder no longer has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such account, plan or trust, each share of Class B Common Stock then held by such trust shall automatically convert into one (1) fully paid and nonassessable share of Class B Common Stock;

6

e.           a corporation in which such Class B Stockholder directly, or indirectly through one or more Permitted Entities, owns shares with sufficient Voting Control in the corporation, or otherwise has legally enforceable rights, such that the Class B Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such corporation; provided that in the event the Class B Stockholder no longer owns sufficient shares or has sufficient legally enforceable rights to enable the Class B Stockholder to retain sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such corporation, each share of Class B Common Stock then held by such corporation shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock;

f.            a partnership in which such Class B Stockholder directly, or indirectly through one or more Permitted Entities, owns partnership interests with sufficient Voting Control in the partnership, or otherwise has legally enforceable rights, such that the Class B Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such partnership; provided that in the event the Class B Stockholder no longer owns sufficient partnership interests or has sufficient legally enforceable rights to enable the Class B Stockholder to retain sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such partnership, each share of Class B Common Stock then held by such partnership shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock; or

g.           a limited liability company in which such Class B Stockholder directly, or indirectly through one or more Permitted Entities, owns membership interests with sufficient Voting Control in the limited liability company, or otherwise has legally enforceable rights, such that the Class B Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such limited liability company; provided that in the event the Class B Stockholder no longer owns sufficient membership interests or has sufficient legally enforceable rights to enable the Class B Stockholder to retain sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such limited liability company, each share of Class B Common Stock then held by such limited liability company shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock.

2.          Notwithstanding the foregoing, if the shares of Class B Common Stock held by the Permitted Entity of a Class B Stockholder would constitute stock of a “controlled corporation” (as defined in Section 2036(b)(2) of the Internal Revenue Code) upon the death of such Class B Stockholder, and the Transfer of shares Class B Common Stock by such Class B Stockholder to the Permitted Entity did not involve a bona fide sale for an adequate and full consideration in money or money’s worth (as contemplated by Section 2036(a) of the Internal Revenue Code), then such shares will not automatically convert to Class A Common Stock if the Class B Stockholder does not directly or indirectly retain Voting Control over such shares until such time as the shares of Class B Common Stock would no longer constitute stock of a “controlled corporation” pursuant to the Internal Revenue Code upon the death of such Class B Stockholder (such time is referred to as the “Voting Shift”). If the Class B Stockholder does not, within five (5) business days following the mailing of the Corporation’s proxy statement for the first annual or special meeting of stockholders following the Voting Shift, directly or indirectly through one or more Permitted Entities assume sole dispositive power and exclusive Voting Control with respect to such shares of Class B Common Stock, each such share of Class B Common Stock shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock.

7

a.           Conversion upon Death. Each share of Class B Common Stock held of record by a Class B Stockholder, or by such Class B Stockholder’s Permitted Entities, shall automatically, without any further action, convert into one (1) fully paid and nonassessable share of Class A Common Stock upon the death of such Class B Stockholder; provided, however, that if the Class B Stockholder, or such Class B Stockholder’s Permitted Entity (in either case, the “Transferring Class B Stockholder”) Transfers exclusive Voting Control (but not ownership) of shares of Class B Common Stock to the other Class B Stockholder (the “Transferee Class B Stockholder”), which Transfer of Voting Control is contingent or effective upon the death of the Transferring Class B Stockholder, then each share of Class B Common Stock that is the subject of such Transfer shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock upon that date which is the earlier of: (a) nine (9) months after the date upon which the Transferring Class B Stockholder died, or (b) the date upon which the Transferee Class B Stockholder ceases to hold exclusive Voting Control over such shares of Class B Common Stock; provided, further, that if the Transferee Class B Stockholder shall die within nine (9) months following the death of the Transferring Class B Stockholder, then a trustee designated by the Transferee Class B Stockholder and approved by the Board of Directors may exercise Voting Control over: (x) the Transferring Class B Stockholders’ shares of Class B Common Stock and, in such instance, each such share of Class B Common Stock shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock upon that date which is the earlier of: (A) nine (9) months after the date upon which the Transferring Class B Stockholder died, or (B) the date upon which such trustee ceases to hold exclusive Voting Control over such shares of Class B Common Stock; and (y) the Transferee Class B Stockholders’ shares of Class B Common Stock (or shares held by Permitted Entity established by or for the Transferee Class B Stockholder) and, in such instance, each such share of Class B Common Stock shall automatically convert into one (1) fully paid and nonassessable share of Class A Common Stock upon that date which is the earlier of: (A) nine (9) months after the date upon which the Transferee Class B Stockholder died, or (B) the date upon which such trustee ceases to hold exclusive Voting Control over such shares of Class B Common Stock; and

b.           Sunset Conversion. Notwithstanding the foregoing, all outstanding shares of Class B Common Stock will convert automatically into shares of Class A Common Stock upon the date that is the earliest of: (1) the date specified by a vote of the holders of not less than a majority of the outstanding shares of Class B Common Stock, (2) five years from the Effective Time, and (3) the date that the total number of shares of Class B Common Stock outstanding cease to represent at least ten percent (10%) of all outstanding shares of the Corporation’s Common Stock.

8

c.           Conversion Policies. The Board of Directors, or any duly authorized committee thereof, may, from time to time, establish such policies and procedures relating to the conversion of a share or shares of Class B Common Stock into a share or shares of Class A Common Stock and the general administration of this dual-Class Common stock structure, including the issuance of stock certificates with respect thereto, as it may deem necessary or advisable, and may request or require that holders of a share or shares of Class B Common Stock furnish affidavits or other proof to the Corporation as it may deem necessary or advisable to verify the ownership of such share or shares of Class B Common Stock and to confirm that an automatic conversion into a share or shares of Class A Common Stock has not occurred. If the Board of Directors, or a duly authorized committee thereof, determines that a share or shares of Class B Common Stock have been inadvertently Transferred in a Transfer that is not a Permitted Transfer, or any other event shall have occurred, or any state of facts arisen or come into existence, that would inadvertently cause the automatic conversion of such shares into Class A Common Stock pursuant to Article 4D6(iii), and the transferor shall have cured or shall promptly cure such inadvertent Transfer or the event or state of facts that would inadvertently cause such automatic conversion, then the Board of Directors, or a duly authorized committee thereof, may determine that such share or shares of Class B Common Stock shall not have been automatically converted into Class A Common Stock pursuant to Section 4.4.6(iii).

d.           Record Date of Conversion. In the event of a conversion of shares of Class B Common Stock to shares of Class A Common Stock pursuant to this 4.4.6, such conversion shall be deemed to have been made at the time that the Transfer of such shares occurred. Upon any conversion of Class B Common Stock to Class A Common Stock, all rights of the holder of shares of Class B Common Stock shall cease and the person or persons in whose names or names the certificate or certificates representing the shares of Class A Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock. Shares of Class B Common Stock that are converted into shares of Class A Common Stock as provided in this Section shall be retired and may not be reissued.

e.           Reservation of Stock. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of effecting the conversion of the shares of Class B Common Stock, such number of its shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock into shares of Class A Common Stock.

E.           Series A Preferred Stock. The Series A Preferred Stock shall have the specific powers, preferences, rights, relative participating, optional and other special rights, and the qualifications, limitations and restrictions set forth below:

1.          Number; Rank. The Series A Preferred Stock consists of two million five hundred sixty-four thousand one hundred three (2,564,103) shares. Except as otherwise provided herein, the Series A Preferred Stock shall, with respect to dividend rights and rights on liquidation, winding up and dissolution, rank senior to the Common Stock and all classes and series of stock of the Corporation now authorized, issued or outstanding (collectively, "Junior Securities").

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2.          Dividends. The holders of shares of the Series A Preferred Stock (each, a "Holder" and collectively, the "Holders") shall be entitled to receive, when and if declared by the board of directors, out of the assets of the Corporation legally available therefore, dividends at the annual rate of twelve percent (12%) on the stated value thereof. Dividends shall be non-cumulative. No dividends or other distribution shall be paid on any Junior Securities unless and until the aforementioned twelve percent (12%) non-cumulative dividend is paid on each outstanding share of Series A Preferred Stock.

3.          Liquidation Preference.

(a)          In the event of any dissolution, liquidation or winding up of the Corporation (a "Liquidation"), whether voluntary or involuntary, the Holders of Series A Preferred Stock shall be entitled to receive out of the assets of the Corporation, before any payment or distribution shall be made in respect of any Junior Securities, cash in an amount equal to $2.25 (the "Stated Value") for each one (1) share of Series A Preferred Stock (as adjusted for stock splits, combinations, reorganizations and the like) plus an amount equal to all declared and accrued but unpaid dividends thereon to the date of such payment. If upon the Liquidation, the assets to be distributed among the holders of the Series A Preferred Stock are insufficient to permit the payment to such holders of the full liquidation preference for their shares, then the entire assets of the Corporation legally available for distribution shall be distributed pro rata among the holders of the Series A Preferred Stock.

(b)          A sale of all or substantially all of the Corporation's assets or an acquisition of the Corporation by another entity by means of any transaction or series of related transactions (including, without limitation, a reorganization, consolidated or merger) that results in the transfer of fifty percent (50%) or more of the outstanding voting power of the Corporation (a ''Change in Control Event"), shall be deemed to be a Liquidation.

(c)          If upon any Liquidation, whether voluntary or involuntary, payment shall have been made to the Holders of Series A Preferred Stock of the full preferential amount to which they shall be entitled pursuant to Section 3(a) hereof, the entire remaining assets, if any, of the Corporation available for distribution to stockholders shall be distributed to the holders of Common Stock pro rata.

(d)          The Corporation shall give each Holder of Series A Preferred Stock written notice of any Liquidation not later than thirty (30) days prior to any meeting of stockholders to approve such Liquidation or, if no meeting is to be held, not later than forty-five (45) days prior to the date of such Liquidation.

4.          Optional Conversion of Series A Preferred Stock. The Holders of Series A Preferred Stock shall have conversion rights as follows:

(a)          At any time prior to a redemption of the Series A Preferred Stock by the Corporation as provided for in Section 6 or a mandatory conversion of the Series A Preferred Stock as provided for in Section 5, at the option of a Holder, the issued and outstanding Series A Preferred Stock shall be convertible at any time and without the payment of additional consideration by the Holders thereof into shares of Common Stock on the Optional Conversion Date (as hereinafter defined) at a conversion rate of one and one-quarter (1 1/4) shares of Common Stock subject to adjustment as provided in Section 4 hereof, for every one (1) share of Series A Convertible Preferred Stock at the Stated Value (also as adjusted for stock splits, combinations, reorganizations and the like that affect the Stated Value) (the "Conversion Rate").

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(b)          To effect the optional conversion of shares of Series A Preferred Stock in accordance with Section 4(a) hereof, the Holder of record shall make a written demand for such conversion (a "Conversion Demand") upon the Corporation at its principal executive offices setting forth therein (i) the number of shares of conversion, (ii) the certificate or certificates representing such shares, and (iii) the proposed date of such conversion, which shall be a business day not less than fifteen (15) days nor more than thirty (30) days after the date of such Conversion Demand (the ''Optional Conversion Date"). Within five (5) days of receipt of the Conversion Demand, the Corporation shall give written notice (a "Conversion Notice") to the demanding Holder setting forth therein (i) the address of the place or places at which the certificate or certificates representing any shares not yet tendered are to be converted are to be surrendered; and (ii) whether the certificate or certificates to be surrendered are required to be endorsed for transfer or accompanied by a duly executed stock power or other appropriate instrument of assignment and, if so, the form of such endorsement or power or other instrument of assignment. The Conversion Notice shall be sent by first class mail, postage prepaid, to such Holder at such Holder's address as may be set forth in the Conversion Demand or, if not set forth therein, as it appears on the records of the stock transfer agent for the Series A Preferred Stock, if any, or, if none, of the Corporation. On or before the Optional Conversion Date, each Holder of the Series A Preferred Stock so to be converted shall surrender the certificate or certificates representing such shares, duly endorsed for transfer or accompanied by a duly executed stock power or other instrument of assignment, if the Conversion Notice so provides, to the Corporation at any place set forth in such notice or, if no such place is so set forth, at the principal executive offices of the Corporation. As soon as practicable after the Optional Conversion Date and the surrender of the certificate or certificates representing such shares, the Corporation shall issue and deliver to such Holder, or its nominee, at such Holder's address as it appears on the records of the stock transfer agent for the Series A Preferred Stock, if any, or, if none, of the Corporation, a certificate or certificates for the number of whole shares of Common Stock issuable upon such conversion in accordance with the provisions hereof.

(c)          No fractional shares of Common Stock or scrip shall be issued upon conversion of shares of Series A Preferred Stock. In lieu of any fractional share to which the Holder would be entitled but for the provisions of this Section 4(c) based on the number of shares of Series A Preferred Stock held by such Holder, the Corporation shall issue a number of shares to such Holder rounded up to the nearest whole number of shares of Common Stock. No cash shall be paid to any Holder of Series A Preferred Stock by the Corporation upon conversion of Series A Preferred Stock by such Holder.

(d)          The Corporation shall at all times when any shares of Series A Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued Common Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Series A Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized by unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

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(e)          All outstanding shares of Series A Preferred Stock to be converted pursuant to the Conversion Notice shall, on the Optional Conversion Date, be converted into Common Stock for all purposes, notwithstanding the failure of the Holder thereof to surrender any certificate representing such shares on or prior to such date. On and after the Optional Conversion Date, (i) no such share of Series A Preferred Stock to be converted pursuant to the Conversion Notice shall be deemed to be outstanding or be transferable on the books of the Corporation or the stock transfer agent, if any, for the Series A Preferred Stock, and (ii) the Holder of such shares, as such, shall not be entitled to receive any dividends or other distributions, to receive notices or to vote such shares or to exercise or to enjoy any other powers, preferences or rights thereof, other than the right, upon surrender of the certificate or certificates representing such shares, to receive a certificate or certificates for the number of shares of Common Stock into which such shares to be converted pursuant to the Conversion Notice have been converted. On the Optional Conversion Date, all such shares shall be retired and canceled and shall not be reissued.

(f)          In case the Corporation shall (i) effect a reorganization, (ii) undergo a Change in Control Event, or (iii) enter into any plan or arrangement contemplating the dissolution of the Corporation, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made whereby, subject to Section 3(a) hereof, each share of Series A Preferred Stock shall, after such transaction, be convertible into the kind and number of shares of stock or other securities or property of the Corporation or of the corporation resulting from such transaction, or to which assets shall have been sold in such transaction, to which the Holder of shares of Series A Preferred Stock would have been entitled if it had held the Common Stock issuable upon the conversion of such shares of Series A Preferred Stock on the record date, or, if none, immediately prior to such transaction, at the Conversion Rate in effect on such date. The provisions of this Section 4(f) shall similarly apply to successive transactions.

(g)          If the Corporation shall (i) declare a dividend or other distribution payable in securities, (ii) split its outstanding shares of Common Stock into a larger number, (iii) combine its outstanding shares of Common Stock into a smaller number, or (iv) increase or decrease the number of shares of its capital stock in a reclassification of the Common Stock including any such reclassification in connection with a merger, consolidation or other business combination in which the Corporation is the continuing entity (any such corporate event, an "Event''), then in each instance the Conversion Rate shall be adjusted such that the number of shares issued upon conversion of one share of Series A Preferred Stock will equal the number of shares of Common Stock that would otherwise be issued but for such Event.

(h)          Upon the occurrence of each adjustment or readjustment of the Conversion Rate pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and cause its principal financial officer to verify such computation and prepare and furnish to each Holder of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and setting forth in reasonable detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any Holder of Series A Preferred Stock, furnish or cause to be furnished to such Holder a like certificate setting forth (i) such adjustments and readjustments; (ii) the Conversion Rate in effect at such time for the Series A Preferred Stock; and (iii) the number of shares of Common Stock and the amount, if any, of other property that at such time would be received upon the conversion of the Series A Preferred Stock.

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(i)          In the event any record date is fixed for the purpose of (i) determining the holders of any class or series of stock or other securities who are entitled to receive any dividend or other distribution or (ii) to effect a Liquidation, the Corporation shall mail to each Holder of Series A Preferred Stock at least thirty (30) days prior to the record date set forth therein a notice setting forth (A) such record date and a description of such dividend or distribution; or (B) (1) the date on which any such recapitalization, reorganization, merger, consolidation, disposition, dissolution, liquidation or winding up is expected to become effective; and (2) the time, if any is to be fixed, as to when the Holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common appears on the records of the stock transfer agent for the Series A Preferred Stock, if any, or, if none, of the Corporation a certificate or certificates for the number of whole shares of Common Stock issuable upon such conversion in accordance with the provisions hereof.

(j)          All outstanding shares of Series A Preferred Stock shall, on the Forced Conversion Date, be converted into Common Stock for all purposes, notwithstanding the failure of any Holder or Holders thereof to surrender any certificate representing such shares on or prior to such date. On and after the Forced Conversion Date, (i) no share of Series A Preferred Stock shall be deemed to be outstanding or be transferable on the books of the Corporation or the stock transfer agent, if any, for the Series A Preferred Stock, and (ii) each Holder of Series A Preferred Stock, as such, shall not be entitled to receive any dividends or other distributions, to receive notices or to vote such shares or to exercise or to enjoy any other powers, preferences or rights in respect thereof, other than the right, upon surrender of the certificate or certificates representing such shares, to receive a certificate or certificates for the number of shares of Common Stock into which such shares shall have been converted. On the Forced Conversion Date, all such shares shall be retired and canceled and shall not be reissued.

5.          Redemption.

(a)          All outstanding shares of Series A Preferred Stock shall be redeemed by the Corporation on the fourth anniversary of the issuance of such shares (the "Redemption Date") at a price equal to $2.25 per share, plus any dividends declared and accrued but unpaid thereon (the "Redemption Price"), in one (1) installment payable not more than sixty (60) days after receipt by the Corporation of the shares of Series A Preferred Stock being redeemed. The Corporation shall apply all of its assets to any such redemption, and to no other corporate purpose, except to the extent prohibited by Nevada law governing distributions to stockholders. If on the Redemption Date the law governing distributions to stockholders prevents the Corporation from redeeming all shares of Series A Preferred Stock to be redeemed, the Corporation shall ratably redeem the maximum number of shares that it may redeem consistent with such law, and shall redeem the remaining shares as soon as it may lawfully do so under such law.

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(b)          At any time during the one (1) year period immediately preceding the Redemption Date, and at no time prior to such period, the Corporation may redeem shares of Series A Preferred Stock at a price equal to $2.3625 per share.

(c)          The Corporation shall send written notice of the optional or mandatory redemption (the "Redemption Notice") to each holder of record of Series A Preferred Stock not less than forty (40) days prior to each Redemption Date. Each Redemption Notice shall state:

(i)          the number of shares of Series A Preferred Stock held by the holder that the Corporation shall redeem on the Redemption Date specified in the Redemption Notice;

(ii)          the Redemption Date and the Redemption Price;

(iii)         the date upon which the holder's right to convert such shares terminates (as determined in accordance with Subsection 4(a)): and

(iv) stock (or other securities) for securities or other property deliverable upon such recapitalization, reorganization, merger, consolidation, disposition, dissolution, liquidation or winding up.

(d)          The converting Holder shall pay any and all issue and other non-income taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series A Preferred Stock.

(e)          The Corporation will not, by amendment of its certificate of incorporation, as amended from time to time, or through any reorganization, transfer of assets, consolidation, merger, 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 to be observed or performed under this Section 4 by the Corporation, but will at all times in good faith assist in carrying out of all the provision of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holders against impairment.

6.          Mandatory Conversion of Series A Preferred Stock.

(a)          Upon the Common Stock of the Corporation publicly trading at a per share price on a weighted average over twenty trading days at a market capitalization of at least $100 million, the Series A Preferred Stock will automatically be converted into the number of shares of Common Stock into which such shares of Series A Preferred Stock would be converted on the date of such occurrence (the ''Forced Conversion Date"), in accordance with Section 4 hereof.

(b)          No fractional shares of Common Stock or scrip shall be issued upon conversion of shares of Series A Preferred Stock. In lieu of any fractional share to which the Holder would otherwise be entitled but for the provisions of this Section 5(b), based on the number of shares of Series A Preferred Stock held by such Holder, the Corporation shall issue a number of shares to such Holder rounded up to the nearest whole number of shares of Common Stock. No cash shall be paid to any Holder of Series A Preferred Stock by the Corporation upon conversion of Series A Preferred Stock by such Holder.

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(c)          The Corporation shall give to each Holder of record of Series A Preferred Stock written notice of mandatory conversion at least ten (10) business days prior to the Forced Conversion Date, setting forth therein (i) the number of shares of Common Stock into which such Holder's shares of Series A Preferred Stock are to be converted based on such Conversion Rate; (ii) that the conversion is to be effective on the Forced Conversion Date; (iii) the address of the place or places at which the certificate or certificates representing such Holder's shares of Series A Preferred Stock are to be surrendered; and (iv) whether the certificate or certificates to be surrendered are required to be endorsed for transfer or accompanied by a duly executed stock power or other appropriate instrument of assignment and, if so, the form of such endorsement or power or other instrument of assignment. Such notice shall be sent by first class mail, postage prepaid, to each Holder of record of Series A Preferred Stock at such Holder's address as it appears on the records of the stock transfer agent for the Series A Preferred Stock, if any, or, if none, of the Corporation. On or before the Forced Conversion Date, each Holder of Series A Preferred Stock shall surrender the certificate or certificates representing all such Holder's shares, duly endorsed for transfer or accompanied by a duly executed stock power or other instrument of assignment, if the notice so provides, to the Corporation at any place set forth in such notice or, if no such place is so set forth, at the principal executive offices of the Corporation. As soon as practicable after the Forced Conversion Date and the surrender of the certificate or certificates representing shares of Series A Preferred Stock, the Corporation shall issue and deliver to each such Holder, or its nominee, at such Holder's address as it appears on the records of the stock transfer agent for the Series A Preferred Stock, if any, or , if none, of the Corporation a certificate or certificates for the number of whole shares of Common Stock issuable upon such conversion in accordance with the provisions hereof.

(d)          On or before the applicable Redemption Date, each holder of shares of Series A Preferred Stock to be redeemed on such Redemption Date, unless such holder has exercised his, her or its right to convert such shares as provided in Section 4, shall, if a holder of shares in certificated form, surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Series A Preferred Stock represented by a certificate are redeemed, a new certificate, instrument, or book entry representing the unredeemed shares of Series A Preferred Stock shall promptly be issued to such holder.

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(e)          If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon redemption of the shares of Series A Preferred Stock to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Series A Preferred Stock so called for redemption shall not have been surrendered, dividends with respect to such shares of Series A Preferred Stock shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of any such certificate or certificates therefor.

(f)          Any shares of Series A Preferred Stock that are redeemed or otherwise acquired by the Corporation or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred. Neither the Corporation nor any of its subsidiaries may exercise any voting or other rights granted to the holders of Series A Preferred Stock following redemption.

(g)          Any of the rights, powers, preferences and other terms of the Series A Preferred Stock set forth herein may be waived on behalf of all holders of Series A Preferred Stock by the affirmative written consent or vote of the holders of at least two-thirds of the shares of Series A Preferred Stock then outstanding.

(h)          Any notice required or permitted to be given to a holder of shares of Series A Preferred Stock shall be mailed, by first class mail, postage prepaid, to such Holder at such Holder's address as it appears on the records of the stock transfer agent for the Series A Preferred Stock, if any, or, if none, of the Corporation.

(i)          Commencing one year following the issuance of Series A Preferred Stock, the Corporation shall establish and contribute to a reserve of funds on not less than a quarterly basis an amount that shall cumulatively be sufficient to pay any amounts due for the redemption of Series A Preferred Stock required under this section 6. Quarterly contributions to the reserve shall not be less than one-twelfth (1/12) of the total amount needed to pay for the redemption of all of the Series A Preferred Stock then outstanding.

7.          Voting. Except as otherwise expressly provided herein or as required by the law, the Holders of Series A Preferred Stock and the holders of Common Stock shall vote together and not as separate classes. The Holders of Series A Preferred Stock shall be entitled to vote with the common stock as if their shares were converted into shares of Common Stock. The Holders of shares of the Series A Preferred shall be entitled to vote on all matters on which the Common Stock shall be entitled to vote. The Holders shall be entitled to notice of any stockholders' meeting in accordance with the bylaws of the Corporation.

8.          Amount of Noncash Dividends. Distributions or Consideration. Whenever a dividend or distribution provided for in Section 2 or 3 hereof (except as otherwise provided therein with respect to the payment of dividends in shares of Common Stock) is to be made in, or any consideration received or paid by the Corporation consists of securities or other property, other than cash, the amount of such dividend, distribution or consideration shall be the fair market value of such securities or other property as determined in good faith by the board of directors.

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FIFTH:            The business and affairs of the Corporation shall be managed by or under the direction of the board of directors, and the directors need not be elected by written ballot unless required by the bylaws of the Corporation.

SIXTH:            In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the board of directors is expressly empowered to adopt, amend or repeal the bylaws of the Corporation.

SEVENTH:      A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of this provision shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

EIGHTH:          This Corporation is authorized to indemnify the directors and officers of this Corporation to the fullest extent permissible under Delaware law.

NINTH:            The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware, and all rights conferred upon stockholders are granted subject to this reservation.

IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by the undersigned, the President and Secretary of the Corporation, as of May 30^th, 2019.

/s/ John C. Loeffler

John C. Loeffler, President

/s/ Jade Leung

Jade Leung, Secretary

17

EX1A-2B BYLAWS

Exhibit 2.2

BYLAWS

OF

CALIBERCOS INC.

Table of Contents

		Page
ARTICLE I.	OFFICES	1
Section 1.	Registered Office	1
Section 2.	Other Offices	1
ARTICLE II.	MEETINGS OF STOCKHOLDERS	1
Section 1.	Place of Meetings	1
Section 2.	Annual Meetings	1
Section 3.	Special Meetings	1
Section 4.	Notice of Meetings	1
Section 5.	Quorum; Adjournment	2
Section 6.	Proxies and Voting	2
Section 7.	Stock List	2
Section 8.	Actions by Stockholders	3
ARTICLE III.	BOARD OF DIRECTORS	3
Section 1.	Duties and Powers	3
Section 2.	Number and Term of Office	3
Section 3.	Vacancies	3
Section 4.	Meetings	3
Section 5.	Quorum	4
Section 6.	Actions of Board Without a Meeting	4
Section 7.	Meetings by Means of Conference Telephone	4
Section 8.	Committees	4
Section 9.	Compensation	4
Section 10.	Removal	5
ARTICLE IV.	OFFICERS	5
Section 1.	General	5
Section 2.	Election; Term of Office	5
Section 3.	Chairman of the Board	5
Section 4.	Chief Executive Officer	5
Section 5.	President	5
Section 6.	Vice President	6
Section 7.	Secretary	6

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Table of Contents

		Page
Section 8.	Assistant Secretaries	6
Section 9.	Treasurer or Chief Financial Officer	6
Section 10.	Assistant Treasurers	6
Section 11.	Other Officers	7
ARTICLE V.	STOCK	7
Section 1.	Form of Certificates	7
Section 2.	Signatures	7
Section 3.	Lost Certificates	7
Section 4.	Transfers	7
Section 5.	Record Date	7
Section 6.	Beneficial Owners	8
Section 7.	Voting Securities Owned by the Corporation	8
ARTICLE VI.	NOTICES	8
Section 1.	Notices	8
Section 2.	Waiver of Notice	8
ARTICLE VII.	GENERAL PROVISIONS	8
Section 1.	Dividends	8
Section 2.	Disbursements	9
Section 3.	Corporate Seal	9
Section 4.	Forum Selection	9
ARTICLE VIII.	DIRECTORS' LIABILITY AND INDEMNIFICATION	9
Section 1.	Directors' Liability	9
Section 2.	Right to Indemnification	9
Section 3.	Right of Claimant to Bring Suit	10
Section 4.	Non-Exclusivity of Rights	10
Section 5.	Insurance and Trust Fund	10
Section 6.	Indemnification of Employees and Agents of the Corporation	11
Section 7.	Amendment	11
ARTICLE IX.	AMENDMENTS	11

 ii

BYLAWS

OF

CaliberCos Inc.

=======================

ARTICLE I.

OFFICES

Section 1.          Registered Office. The registered office of Calibercos Inc. (the "Corporation") shall be located at 1300 S. Farmview Drive, #J-35, Dover, Count of Kent, Delaware 19904.

Section 2.          Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine.

ARTICLE II.

MEETINGS OF STOCKHOLDERS

Section 1.          Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the board of directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. The board of directors may, in its sole discretion, determine that the meeting may be held solely by means of remote communication as authorized by and pursuant to Delaware General Corporation Law.

Section 2.          Annual Meetings. The annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which meetings the stockholders shall (i) elect a board of directors by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors, and (ii) transact such other business as may properly be brought before the meeting.

Section 3.          Special Meetings. Special meetings of the stockholders may be called by the board of directors, the chairman of the board, the president or chief executive officer, or by the holders of shares entitled to cast not less than ten (10) percent of the votes at the meeting. Upon request in writing to the chairman of the board, the president or chief executive officer, any vice president or the secretary by any person (other than the board) entitled to call a special meeting of stockholders, the officer forthwith shall cause notice to be given to the stockholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, the persons entitled to call the meeting may give the notice.

Section 4.          Notice of Meetings. Written notice of the place, date, and hour of all stockholder meetings, and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or as required from time to time by the Delaware General Corporation Law or the certificate of incorporation. Without limiting the manner by which notice otherwise may be given effectively, any notice shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given, unless revoked in accordance with Delaware General Corporation Law

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Section 5.          Quorum; Adjournment. At any meeting of the stockholders, the holders of a majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law or the certificate of incorporation. If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, may adjourn the meeting to another place, date, or time without notice other than announcement at the meeting, until a quorum shall be present or represented.

When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date, and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

Section 6.          Proxies and Voting. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing filed in accordance with the procedure established for the meeting.

Each stockholder shall have one (1) vote for every share of stock entitled to vote which is registered in his name on the record date for the meeting, except as otherwise provided herein or required by law or the certificate of incorporation.

All elections of directors shall be by written ballot unless otherwise provided in the certificate of incorporation. Such requirement of a written ballot shall be satisfied by a ballot submitted by electronic submission, provided that any such electronic submission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder. Voting, other than the election of directors but excepting where otherwise provided herein or required by law or the certificate of incorporation, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or such stockholder's proxy, a stock vote shall be taken. Every stock vote shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting.

All elections shall be determined by a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election, and except as otherwise required by law or the certificate of incorporation, all other matters shall be determined by a majority of the shares entitled to vote.

Section 7.          Stock List. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in such stockholder's name, shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held.

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The stock list shall also be kept at the place of the meeting during the whole time thereof and shall be open to the examination of any such stockholder who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

Section 8.          Actions by Stockholders. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III.

BOARD OF DIRECTORS

Section 1.          Duties and Powers. The business of the Corporation shall be managed by or under the direction of the board of directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders.

Section 2.          Number and Term of Office. The board of directors shall consist of one (1) or more members. The number of directors shall be fixed and may be changed from time to time by resolution duly adopted by the board of directors or the stockholders, except as otherwise provided by law or the certificate of incorporation. Except as provided in Section 3 of this Article, directors shall be elected by the holders of record of a plurality of the votes of the shares present in person or represented by proxy and entitled to vote on the election of directors at annual meetings of stockholders, and each director so elected shall hold office until such director's successor is duly elected and qualified or until such director's earlier resignation or removal. Any director may resign at any time upon written notice to the Corporation. Directors need not be stockholders.

Section 3.          Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director or by the stockholders entitled to vote at any annual or special meeting held in accordance with Article II, and the directors so chosen shall hold office until the next annual or special meeting duly called for that purpose and until their successors are duly elected and qualified, or until their earlier resignation or removal.

Section 4.          Meetings. The board of directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. The first meeting of each newly elected board of directors shall be held immediately following the annual meeting of stockholders and no notice of such meeting shall be necessary to be given the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. Regular meetings of the board of directors may be held without notice at such time and at such place as may from time to time be determined by the board of directors. Special meetings of the board of directors may be called by the chairman of the board, the president or chief executive officer, or a majority of the directors then in office. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone or electronic means on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Meetings may be held at any time without notice if all the directors are present or if all those not present waive such notice in accordance with Section 2 of Article VI of these bylaws.

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Section 5.          Quorum. Except as may be otherwise specifically provided by law, the certificate of incorporation or these bylaws, at all meetings of the board of directors, a majority of the directors then in office shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 6.          Actions of Board Without a Meeting. Unless otherwise provided by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting if all members of the board of directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board of directors or committee.

Section 7.          Meetings by Means of Conference Telephone. Unless otherwise provided by the certificate of incorporation or these bylaws, members of the board of directors of the Corporation, or any committee designated by the board of directors, may participate in a meeting of the board of directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting.

Section 8.          Committees. The board of directors may, by resolution passed by a majority of the directors then in office, designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The board of directors may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the board of directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any committee, to the extent allowed by law and provided in the bylaw or resolution establishing such committee, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the Delaware General Corporation Law to be submitted to stockholders for approval or (ii) adopting, amending or repealing any bylaw of the Corporation. Each committee shall keep regular minutes and report to the board of directors when required.

Section 9.          Compensation. Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

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Section 10.         Removal. Unless otherwise restricted by the certificate of incorporation or bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote at an election of directors.

ARTICLE IV.

OFFICERS

Section 1.          General. The officers of the Corporation shall be appointed by the board of directors and shall consist of a president or a chief executive officer or both, a secretary, and a treasurer or a chief financial officer (or a position with the duties and responsibilities of a treasurer or chief financial officer). The board of directors may also appoint one (1) or more vice presidents, assistant secretaries or assistant treasurers, and such other officers as the board of directors, in its discretion, shall deem necessary or appropriate from time to time. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide.

Section 2.          Election; Term of Office. The board of directors at its first meeting held after each annual meeting of stockholders shall elect a chairman of the board, a president or a chief executive officer or both, a secretary, and a treasurer or a chief financial officer (or a position with the duties and responsibilities of a treasurer or chief financial officer), and may also elect at that meeting or any other meeting, such other officers and agents as it shall deem necessary or appropriate. Each officer of the Corporation shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors together with the powers and duties customarily exercised by such officer; and each officer of the Corporation shall hold office until such officer's successor is elected and qualified or until such officer's earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. The board of directors may at any time, with or without cause, by the affirmative vote of a majority of directors then in office, remove any officer.

Section 3.          Chairman of the Board. The chairman of the board shall preside at all meetings of the stockholders and the board of directors and shall have such other duties and powers as may be prescribed by the board of directors from time to time.

Section 4.          Chief Executive Officer. The chief executive officer of the Corporation shall have the general powers and duties of management usually vested in the office of chief executive officer of a corporation, including but not limited to, general and active management of the business of the Corporation and shall see that all orders and resolutions of the board of directors are carried into effect. The chief executive officer shall have and exercise such further powers and duties as may be specifically delegated to or vested in the chief executive officer from time to time by these bylaws or the board of directors. In the absence of the chairman of the board or in the event of his inability or refusal to act, or if the board has not designated a chairman, the chief executive officer shall perform the duties of the chairman of the board, and when so acting, shall have all of the powers and be subject to all of the restrictions upon the chairman of the board.

Section 5.          President. The president of the Corporation shall have the general power and duties of management usually vested in the office of president of a corporation, including but not limited to, general supervision, direction and control of officers of the Corporation. The president shall have and exercise such further powers and duties as may be specifically delegated to or vested in the president from time to time by these bylaws or the board of directors. In the absence of the chief executive officer or in the event of such officer's inability or refusal to act, or if the board has not designated a chief executive officer, the president shall perform the duties of the chief executive officer, and when so acting, shall have all of the powers and be subject to all of the restrictions upon the chief executive officer.

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Section 6.          Vice President. In the absence of the president or Chief Executive Officer, or in the event of his inability or refusal to act, the vice president (or in the event there be more than one (1) vice president, the vice presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president or Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president or Chief Executive Officer. The vice presidents shall perform such other duties and have such other powers as the board of directors or the president or Chief Executive Officer may from time to time prescribe.

Section 7.          Secretary. The secretary shall attend all meetings of the board of directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the secretary shall also perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or the president or chief executive officer. If the secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the board of directors, and if there be no assistant secretary, then either the board of directors or the president or chief executive officer may choose another officer to cause such notice to be given. The secretary shall have custody of the seal of the Corporation and the secretary or any assistant secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the secretary or by the signature of any such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his or her signature. The secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.

Section 8.          Assistant Secretaries. Except as may be otherwise provided in these bylaws, assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the board of directors, the president or chief executive officer, or the secretary, and shall have the authority to perform all functions of the secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the secretary.

Section 9.          Treasurer or Chief Financial Officer. The treasurer or chief financial officer shall have the custody of the corporate funds and securities, shall keep complete and accurate accounts of all receipts and disbursements of the Corporation, and shall deposit all monies and other valuable effects of the Corporation in its name and to its credit in such banks and other depositories as may be designated from time to time by the board of directors. The treasurer shall disburse the funds of the Corporation, taking proper vouchers and receipts for such disbursements, and shall render to the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his or her transactions as treasurer and of the financial condition of the Corporation. The treasurer shall, when and if required by the board of directors, give and file with the Corporation a bond, in such form and amount and with such surety or sureties as shall be satisfactory to the board of directors, for the faithful performance of his or her duties as treasurer. The treasurer shall have such other powers and perform such other duties as the board of directors or the president or chief executive officer shall from time to time prescribe.

Section 10.         Assistant Treasurers. Except as may be otherwise provided in these bylaws, assistant treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the board of directors, the president or chief executive officer, or the treasurer, and shall have the authority to perform all functions of the treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the treasurer.

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Section 11.         Other Officers. Such other officers as the board of directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the board of directors. The board of directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.

ARTICLE V.

STOCK

Section 1.          Form of Certificates. The shares of the corporation shall be represented by certificates when any of such shares are fully paid, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate or certificates for shares signed in the name of the corporation by the chairman of the board or the vice chairman of the board or the president or chief executive officer or a vice president and by the chief financial officer or an assistant treasurer or the secretary or an assistant secretary, certifying the number of shares and the class or series of shares owned by the shareholder.

Section 2.          Signatures. Any or all the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 3.          Lost Certificates. The board of directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or such owner's legal representative, to advertise the same in such manner as the board of directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

Section 4.          Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these bylaws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person's attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued.

Section 5.          Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

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Section 6.          Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

Section 7.          Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the chairman of the board, the president or Chief Executive Officer, any vice president or the secretary and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The board of directors may, by resolution, from time to time confer like powers upon any other person or persons.

ARTICLE VI.

NOTICES

Section 1.          Notices. Whenever written notice is required by law, the certificate of incorporation or these bylaws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person's address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, telex, facsimile or cable or other electronic means and such notice shall be deemed to be given at the time of receipt thereof if given personally or at the time of transmission thereof if given by telegram, telex, facsimile or cable or other electronic means.

Section 2.          Waiver of Notice. Whenever any notice is required by law, the certificate of incorporation or these bylaws to be given to any director, member or a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to notice.

ARTICLE VII.

GENERAL PROVISIONS

Section 1.          Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting or by any Committee of the board of directors having such authority at any meeting thereof, and may be paid in cash, in property, in shares of the capital stock or in any combination thereof. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the board of directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the board of directors may modify or abolish any such reserve.

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Section 2.          Disbursements. All notes, checks, drafts and orders for the payment of money issued by the Corporation shall be signed in the name of the Corporation by such officers or such other persons as the board of directors may from time to time designate.

Section 3.          Corporate Seal. The corporate seal, if the Corporation shall have a corporate seal, shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 4.          Forum Selection. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this bylaw.

ARTICLE VIII.

DIRECTORS' LIABILITY AND INDEMNIFICATION

Section 1.         Directors' Liability. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of this provision shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

This Section 1 is also contained in Article IX of the Corporation's certificate of incorporation, and accordingly, may be altered, amended or repealed only to the extent and at the time such certificate article is altered, amended or repealed.

Section 2.          Right to Indemnification. Each person who was or is made a party to or is threatened to be made a party to or is involuntarily involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that he or she is or was a director or officer of the Corporation, or is or was serving (during his or her tenure as director and/or officer) at the request of the Corporation as a director, officer, employee or agent of another Corporation or of a partnership, joint venture, trust or other enterprise, whether the basis of such Proceeding is an alleged action or inaction in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law (or other applicable law), as the same exists or may hereafter be amended, against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection with such Proceeding. Such director or officer shall have the right to be paid by the Corporation for expenses incurred in defending any such Proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law (or other applicable law) requires, the payment of such expenses in advance of the final disposition of any such Proceeding shall be made only upon receipt by the Corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it should be determined ultimately that he or she is not entitled to be indemnified under this Article or otherwise.

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Section 3.          Right of Claimant to Bring Suit. If a claim under Section 2 of this Article is not paid in full by the Corporation within ninety (90) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, together with interest thereon, and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim, including reasonable attorneys' fees incurred in connection therewith. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law (or other applicable law) for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (or of its full board of directors, its directors who are not parties to the Proceeding with respect to which indemnification is claimed, its stockholders, or independent legal counsel) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law (or other applicable law), nor an actual determination by any such person or persons that such claimant has not met such applicable standard of conduct, shall be a defense to such action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 4.          Non-Exclusivity of Rights. The rights conferred by this Article shall not be exclusive of any other right which any director, officer, representative, employee or other agent may have or hereafter acquire under the Delaware General Corporation Law or any other statute, or any provision contained in the Corporation's certificate of incorporation or bylaws, or any agreement, or pursuant to a vote of stockholders or disinterested directors, or otherwise.

Section 5.          Insurance and Trust Fund. In furtherance and not in limitation of the powers conferred by statute:

(1)         the Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of law; and

(2)         the Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the fullest extent permitted by law and including as part thereof provisions with respect to any or all of the foregoing, to ensure the payment of such amount as may become necessary to effect indemnification as provided therein, or elsewhere.

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Section 6.          Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification, including the right to be paid by the Corporation the expenses incurred in defending any Proceeding in advance of its final disposition, to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VIII or otherwise with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

Section 7.          Amendment. Any repeal or modification of this Article VIII shall not change the rights of an officer or director to indemnification with respect to any action or omission occurring prior to such repeal or modification.

ARTICLE IX.

AMENDMENTS

Except as otherwise specifically stated within an article to be altered, amended or repealed, these bylaws may be altered, amended or repealed and new bylaws may be adopted at any meeting of the board of directors or of the stockholders.

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EX1A-3 HLDRS RTS

Exhibit 3.1

STOCKHOLDERS’ AGREEMENT

THIS STOCKHOLDERS’ AGREEMENT (the "Agreement") is made this 21^st day of September , 2018 by and among the persons listed on Exhibit A and such other persons who in the future become parties pursuant to the terms hereof (collectively, the "Stockholders"; individually, a "Stockholder") and CaliberCos Inc., a Delaware corporation (the "Company"), with reference to the following facts:

A.          Stockholders are currently owners of shares of the common stock of the Company as set forth on Exhibit A.

B.           Stockholders and the Company desire for their mutual benefit and protection to enter into this Agreement governing the ownership, voting and transfer of Shares held by any Stockholder.

C.           Capitalized terms not defined in the text shall have the meanings given to them in Schedule I.

NOW, THEREFORE, in consideration of the mutual promises contained herein, Stockholders and the Company hereby agree as follows:

1.          General Restrictions on Transfer.

1.1.          Conditions to Transfer. No Stockholder may Transfer all or any part of its Shares (including to any Permitted Transferee) unless all of the following conditions have been met: (a) the Company shall have received written notice of the proposed Transfer, setting forth the circumstances and details thereof; (b) the Company shall (at its option) have received an attorney's written opinion, in a form reasonably satisfactory to the Company, specifying the nature and circumstances of the proposed Transfer, and based on such facts stating that the proposed Transfer will not be in violation of any of the registration provisions of the Securities Act of 1933, as amended, or any applicable state securities laws; (c) the Company shall have received from the Transferee (and any Transferee's spouse if such spouse will receive a community property interest in the Shares) a written consent to be bound by all of the terms and conditions of this Agreement in the form of Exhibit B hereto; (d) the Transfer will not result in the loss of any license or regulatory approval or exemption which has been obtained by the Company and is materially useful in the conduct of its business as then being conducted; (e) the Board has consented to the Transfer, which consent may be given or withheld in its sole discretion; (f) the Company is reimbursed upon request for its reasonable expenses in connection with the Transfer, and (g) the Transfer is made in compliance with the provisions of this Article 1. Notwithstanding the foregoing, no party hereto shall avoid the provisions of this Agreement by making one or more Transfers to one or more Permitted Transferees and then disposing of all or any portion of such party’s interest in any such Permitted Transferee. The provisions of this Section 1.1 shall not apply to any transfer of Shares by Donnie Ray Schrader (“Schrader”) to the Company pursuant to the Stock Purchase Agreement.

1.2.          Effect of Transfers. Any Shares Transferred in accordance with this Article 1 shall continue to be subject to this Agreement and any further Transfers shall be required to comply with all terms and provisions of this Agreement. The admission of a substitute Stockholder shall not result in the release of the Stockholder who Transferred the Shares from any liability that such Stockholder may have to the Company.

1.3.          Invalid Sales. Any purported Transfer of Shares made without fully complying with the provisions of this Agreement shall be null and void. The Company agrees not to record any Transfer of Shares on its books and records if it believes such Transfer is not being made in accordance with this Agreement without the consent of the Board.

2.          Right of First Refusal.

2.1.          Purchase Option. Neither Donnie Schrader or any of his Affiliates (specifically excluding Jennifer Schrader) shall voluntarily Transfer any Shares (other than to a Permitted Transferee) except pursuant to a bona fide arm’s length offer and unless he or it shall have first given written notice (the “Transfer Notice”) to the Board and the other Founding Stockholders of such Stockholder’s intent to do so and such Transfer is thereafter completed in accordance with this Article 2. The Transfer Notice shall include the name and address of the proposed Transferee, the number of Shares proposed to be sold (the “Offered Shares”), the cash price or other consideration for the proposed sale and the timing of the payments to be made. Within fifteen days following receipt of the Transfer Notice, the other Founding Stockholders may, by written notice (“Exercise Notice”) to such Transferring Stockholder, elect to purchase the Offered Shares on the terms outlined in the Transfer Notice (such right to be allocated among the other Founding Stockholders pro rata based on their Percentage Interests, except that a Founding Stockholder may purchase more than his/her/its pro rata share to the extent that any other Founding Stockholder does not purchase its/her/its full pro rata share). If the consideration is anything other than cash or payments of cash, then the consideration to be paid shall be converted into its fair value in cash as provided in Section 2.2. To the extent that one or any of the other Founding Stockholders do not elect to purchase all of the Offered Shares, the Company may, by giving an Exercise Notice to such Transferring Stockholder within fifteen days following the expiration of the other Founding Stockholders’ right of first refusal, elect to purchase the remainder of the Offered Shares on the terms outlined in the Transfer Notice. If such rights of first refusal expire without exercise or the right of first refusal is exercised only as to a portion of the Offered Shares, such Transferring Stockholder may Transfer the unpurchased portion of the Offered Shares within 30 days to the named Transferee, at the price and on the terms specified in the Transfer Notice. No Transfer of the Offered Shares shall be made after the expiration of said 30 day period, nor shall any change in the terms of Transfer be made, without a new notice and compliance with the provisions of this Section 2.1.

2.2.          Consideration Other than Cash. For purposes hereof, in the event any consideration offered for the Offered Shares consists of rights, interests or property other than money, the price allocable to such rights, interests or property shall be cash equal to the fair market value of the rights, interests or property on the date the Board receives the Transfer Notice, as agreed upon within seven days after receipt thereof by the Board and the aforementioned Transferring Stockholder or, if such parties are unable to agree, as determined within 30 calendar days thereafter by such nationally recognized investment banking firm as is mutually agreeable to both parties. In the event that the parties are unable to agree upon an investment banking firm for these purposes, each party shall name (and bear the costs and expenses) of its own investment banking firm, which firms, if they are unable to agree upon the fair value, shall select a third investment banking firm to determine the value pursuant to this Section 2.2, all in such manner as to insure that the final determination of fair value is made within 30 calendar days after the Board’s receipt of the Transfer Notice. All costs and expenses of the third investment banking firm shall be borne equally by the aforementioned Transferring Stockholder and the Company, and the time periods for the delivery of any Exercise Notices shall be extended for the period during which this fair value determination is being made. The fair value of such consideration in monetary terms, as so determined, shall be included in the purchase price payable by the other Founding Stockholders and/or the Company hereunder, but the other Founding Stockholders and/or the Company need not transfer to the aforementioned Transferring Stockholder the actual rights, interests or property offered in the offer, nor afford the aforementioned Transferring Stockholder the same tax treatment which would have been available to him/it under the offer, in order to exercise the rights of first refusal granted pursuant to this Article 2.

2.3.          Closing of Purchase Option. The closing of any purchase of the Offered Shares pursuant to the Purchase Option shall take place at the principal offices of the Company on the fifth business day following the delivery of the last Exercise Notice or, in the discretion of the purchasing Founding Stockholders and/or the Company, at such later date as specified in the Transfer Notice and as consented to by the aforementioned Transferring Stockholder (which consent shall not be unreasonably withheld). At the closing, the aforementioned Transferring Stockholder shall deliver to the purchasing Founding Stockholders and/or the Company certificates representing the Offered Shares, duly endorsed for transfer or accompanied by duly executed stock powers with the signature of the aforementioned Transferring Stockholder guaranteed by a commercial bank, trust company or registered broker dealer, and the other Founding Stockholders and/or the Company shall deliver to the aforementioned Transferring Stockholder the purchase price to be paid as herein provided. The transfer of title to the Offered Shares at the closing shall be made without representation or warranty by the aforementioned Transferring Stockholder, except as to his/its good and marketable title to the Offered Shares and the absence of any liens, security interests or adverse claims of any kind arising by, through or under him/it.

3.          Tag-Along Sales.

3.1         Pro Rata Determination and Mechanics. No Founding Stockholder (or his successors or transferees) shall Transfer any Shares (other than to a Permitted Transferee or another Founding Stockholder) unless each other Stockholder is offered a 15-day opportunity to sell a pro rata share (based on Percentage Interests) of his or her Shares to the Transferee on the same terms and conditions and at the same time. Such opportunity shall be provided by delivery of a written notice (the “Tag Along Notice”) to each other Stockholder setting forth the identity of the proposed Transferee, the number of Offered Shares, the proposed consideration therefor and the expected timing of the transaction. Such notice shall not bind the Transferring Stockholder to complete any transaction or be responsible for any breach by the Transferee. Within 15 days following the receipt of the Tag Along Notice, any Stockholder may deliver a written response committing to sell his or her Percentage Interest of the Offered Shares. Such response shall be a binding commitment to execute the sale documents with the Transferee and sell his or her Percentage Interest of the Offered Shares provided the Transfer is completed within 60 days. No Transfer may be made after the expiration of said 60-day period, nor shall any change in the terms of Transfer more favorable to the Transferring Stockholder be made, without a new notice to the other Stockholders and compliance with the provisions of this Section 3.

3.2           “True-up” With Respect to Stock Repurchases. Notwithstanding the provision of Section 3.1, the following shall apply with respect to said Founding Stockholders: the Founding Stockholders acknowledge that Donnie Schrader is afforded certain repurchase rights of his Shares by the Company further to Article II of the Stock Purchase Agreement. To the extent that a Tag-Along Sale is effected further to Section 3.1, each of Jennifer Schrader and John C. Leoffler shall each have the ability to participate in such sale to the exclusion of Donnie Schrader up to the amount of cash proceeds received by Donnie Schrader further to Article II of the Stock Purchase Agreement with any amounts thereafter to be split between all Founding Stockholders on a pro rata basis as set forth in Section 3.1. For the sake of example only, if on the date of such Tag-Along Sale Donnie Schrader has already received $100,000 further to Article II of the Stock Purchase Agreement, each of Jennifer Schrader and John Loeffler shall have the right to sell up to $100,000 apiece further to such Tag-Along Sale to the exclusion of Donnie Schrader and any amounts in excess of such “true up” amount will then be subject to the pro rata allocation described in Section 3.1; under such example, if $1.0 million of Tag-Along proceeds would be realized further to such sale, and each of Jennifer Schrader and John Loeffler chose to participate in such Tag-Along Sale, each of Jennifer Schrader and John Loeffler would be entitled to receive the first $100,000 of proceeds from such Tag-Along Sale and the ability to participate in the balance of the Tag –Along Sale ($800,000 in this example) would be subject to the pro rata allocation referenced in Section 3.1.

4.          Drag Along Sales. In the event of a Drag-Along Sale, each Stockholder will (i) if requested, consent to the Drag-Along Sale, (ii) waive and agree not to pursue any dissenter’s rights or any similar rights in connection with or related to such Drag-Along Sale, and (iii) if the Drag-Along Sale is structured as a sale of securities, agree to sell its Shares (or the applicable portion thereof) on the terms and conditions of such Drag-Along Sale.

5.          Repurchase of Shares

5.1.          Upon Death. In the event of a Stockholder’s death, his/her/its Shares shall be subject to repurchase by the Company, at its option, for the fair market value thereof however in the case of the death of John C. Loeffler, his heirs must agree to such repurchase and shall have the right to determine how many, if any, of such Shares may be repurchased by the Company. The exercise of such option, the determination of fair market value and the closing of the sale shall follow the procedures set forth in Sections 5.3 and 5.4.

5.2.          Bankruptcy. In the event of the institution of any proceedings under any federal or state law for the relief of debtors, including the filing by or against such Stockholder of a voluntary or involuntary petition under the federal bankruptcy law, which such proceedings, if involuntary, are not dismissed within sixty (60) days after the filing thereof or an adjudication of such Stockholder as insolvent or bankrupt or an assignment of the property of such Stockholder for the benefit of creditors, his/her/its Shares shall be subject to repurchase by the Company, at its option, for the fair market value thereof. The exercise of such option, the determination of fair market value and the closing of the sale shall follow the procedures set forth in Sections 4.3 and 4.4.

5.3.          Repurchase Procedures. The Company shall exercise the repurchase rights granted in Sections 5.1 and 5.2 by delivering notice (“Repurchase Notice”) to the Stockholder’s address within 90 days of Stockholder’s death or within 30 days of actual notice of the events described in Section 5.2. Such notice shall include the Company’s determination of the fair market value of the Transferring Stockholder’s Shares to be repurchased. In the case of John C. Loeffler’s heirs, said heirs shall have 30 days from the receipt of the Repurchase Notice to notify the Company in writing of the number of Shares, if any, said heirs wish to be repurchased by the Company; if no notice is received by the Company from Mr. Loeffler’s heirs within such 30 day period, then no Shares held by such heirs shall be subject to repurchase by the Company. If the Transferring Stockholder or the Stockholder’s heirs, as the case may be, do not agree with the Company’s determination as to the fair market value of the Shares within 30 calendar days following the delivery of the Repurchase Notice, they shall within the next 30 calendar days jointly appoint one nationally recognized investment banking firm to determine the fair market value of the Shares, and such nationally recognized investment banking firm shall conduct and complete an appraisal of the fair market value of the Shares within 30 calendar days after appointment. If the Company and the Transferring Stockholder or the Stockholder’s heirs, as the case may be, are unable to agree upon the identity of the nationally recognized investment banking firm to be so jointly appointed, the Company shall promptly choose one nationally recognized investment banking firm by notice to the Transferring Stockholder or the Stockholder’s heirs, as the case may be, and the Transferring Stockholder or the Stockholder’s heirs, as the case may be, shall promptly choose one nationally recognized investment banking firm by notice to the Company. The two nationally recognized investment banking firms so selected shall then promptly appoint a third nationally recognized investment banking firm, which shall determine the fair market value of the Shares within 30 calendar days after the selection. The determination of the fair market value of the Shares as described herein shall be conclusive for all purposes and upon all parties. If either the Company or the Transferring Stockholder or the Stockholder’s heirs, as the case may be, shall fail to appoint a nationally recognized investment banking firm within 30 calendar days after the lapse of the initial 30 calendar day period referred to above, then, the nationally recognized investment banking firm appointed by the party which does appoint a nationally recognized investment banking firm shall alone determine the fair market value of the Shares, and such appraisal shall be binding.

5.4.          Closing of Sale. The Company shall have the right and option for a period ending 30 business days following the determination of the purchase price of the Shares pursuant to Section 5.3, to purchase the Shares available for purchase for cash at the price provided in Section 5.3. Unless the parties involved mutually agree otherwise, delivery to the Company and/or the Transferring Stockholders or the Stockholder’s heirs, as the case may be, of the share certificates representing the Shares to be sold pursuant to this Article 4 and payment of the purchase price therefor shall take place at a closing to be held at the principal office of the Company at 10:00 a.m. within such 30 business day period. The transfer of title to the Shares to be sold at the closing shall be made without representation or warranty by the Transferring Stockholder or the Stockholder’s heirs, as the case may be, except as to his or her or its good and marketable title to the Shares and the absence of any liens, security interests or adverse claims of any kind arising by, through or under such Transferring Stockholder. The share certificates representing the Shares to be sold shall be duly endorsed for transfer or accompanied by duly endorsed stock transfer powers, with the signature of the Transferring Stockholder guaranteed by a commercial bank, trust company or registered broker dealer.

6.          Voting Provisions.

6.1           Voting Matters. Other than John C. Loeffler or Jennifer Schrader (or their assignees), each Stockholder (and any of their assignees) agrees to vote his/her/its shares as directed by the Voting LLC at every meeting of the Stockholders of the Company called, and at every postponement or adjournment thereof, and on every action or approval by written resolution or consent of the Stockholders of the Company, including but not limited to any modification or termination of this Agreement further to its terms, or in any other circumstance in which the vote, consent or other approval of the stockholders of the Company is sought with respect to each and every one of the foregoing matters:

(a) any sale, assignment, transfer, license, pledge, hypothecation, or granting of a security interest by the Company of/in all or substantially all of its assets;

(b) any merger of the Company with another entity (excluding a merger solely to change the Company’s state of incorporation);

(c) any repurchase of capital stock (other than the repurchase of Common Stock issued to or held by officers, directors or employees of, or consultants to, the Corporation or its subsidiaries upon termination of their employment or services pursuant to agreements, whether now existing or hereafter entered into, providing for the right of said repurchase between the Company and such persons);

(d) any amendment or modification to the Company’s Certificate of Incorporation or Bylaws; or

(e) any election of officers or directors.

6.2           Representations. Except as contemplated by this Agreement, each Stockholder referenced in Section 6.1 has not entered into, and shall not enter into at any time while this Agreement remains in effect, any voting agreement or voting trust with respect to its Shares that would prohibit, undermine, limit or otherwise adversely affect its compliance with its obligations pursuant to this Agreement, and (b) has not granted, and shall not grant at any time while this Agreement remains in effect, a proxy or power of attorney with respect to his/her/its Shares, in either case, which is inconsistent with its obligations pursuant to this Agreement.

6.3           Proxy. Within ten (10) days of the execution and delivery of this Agreement, each Stockholder referenced in Section 6.1 shall execute and deliver to the Voting LLC a proxy, irrevocable to the fullest extent permitted by law, in the form attached hereto as Exhibit A solely to vote his/her/its Shares in accordance with this Article 6; provided, however, that the prior written consent of Donnie Schrader to such vote shall be required if such vote (i) would and is intended to solely specifically target and materially adversely affect the rights of Donnie Schrader as a stockholder of the Company;(ii) would specifically adversely affect the Shares held by Mr. Schrader in a different manner than those Shares held by the other Founding Stockholders; or (iii) would specifically grant greater rights to the Shares held by the other Founding Shareholders in a different manner than those Shares held by Donnie Schrader. The Company agrees to use reasonable efforts to provide Donnie Schrader with a copy of the operating agreement for the Voting LLC no later than sixty (60) days form the date hereof.

6.4           Expiration. This Article 6 shall expire on the earlier of three (3) years from the date of the Agreement or upon such date as the Company has over $1.0 billion of assets under management. Shares sold in the public market at such time as the Company is listed or quoted on a national securities exchange or the OTC shares not be subject to the aforementioned voting provisions in the hands of the buyer of said Shares. In addition, as to Donnie Schrader, if (i) it is determined further to Section 9.7 hereof that a breach of this Agreement by the Company (or a breach of Article 3 by either John Loeffler or Jennifer Schrader has occurred) and remained uncured for a period of fifteen (15) days beyond the date of notice of such breach by Mr. Schrader to the Company (or to John Loeffler or Jennifer Schrader if a breach of Article 3) or (ii) it is determined further Section 4.4 of the Stock Purchase Agreement that the Company breached its repurchase obligations further to Article II thereof, then this Article 6 shall have no further force and effect with respect to Shares held by Donnie Schrader or his Affiliates (specifically excluding Jennifer Schrader).

7.          Confidentiality.

7.1           Confidential Information. Each Stockholder occupies a position of trust and confidence with respect to the Company’s affairs and business. Each Stockholder has had and will have access to Confidential Information, which the Stockholder acknowledges is proprietary to the Company and highly sensitive in nature. While a Stockholder and for five years after ceasing to be a Stockholder, each Stockholder agrees (a) to hold all Confidential Information in strict confidence and trust for the sole benefit of the Company and not, directly or indirectly, to disclose, use, copy, publish, summarize, or remove from Company’s premises any Confidential Information (or remove from the premises any other property of the Company), except to the extent necessary in good faith to carry out Stockholder’s responsibilities as an employee or director of the Company; and (b) not to sell, license or otherwise exploit any products or services which embody in whole or in part any Confidential Information. Specifically, Donnie Schrader represents and warrants to the Company that he has not previously disclosed any Confidential Information to any third party or given any third party access to any Confidential Information.

7.2           Company Property. At the end of Stockholder’s employment by the Company or when Stockholder ceases to be a Stockholder, or at the request of the Company, Stockholder shall deliver to the Company all tangible materials in any way embodying the Confidential Information, including (i) any documentation, records, listings, notes, data, sketches, drawings, memoranda, models, videos, accounts, reference materials, samples and machine-readable media and equipment, (ii) any access codes, passwords, user names, sign-on data or information, user privileges, access privileges, or any other information or rights which would, might or did at one time directly or indirectly allow Stockholder or any other person access to any electronically stored information of any type or nature and (iii) any electronically stored information received, maintained, generated or issued by the Company or any currently or formerly affiliated or related party of the Company other than information to which a Stockholder is entitled pursuant to Arizona law, or which is provided to other Stockholders who are not also officers of the Company;; specifically, Donnie Schrader shall comply with the delivery requirements of this Section 7.2 as of the date hereof and shall deliver all such Confidential Information to the Company as of the date hereof. No Stockholder shall retain any copies of any of the above materials. Stockholder will provide a certificate as to his/her/its compliance with this section upon request. In addition, upon request by the Company, each Stockholder agrees to provide information to it or as it directs concerning all of his/her/its knowledge, information and/or belief about Confidential Information in the possession, custody or control of any person entity other than the Company or an Affiliate or related party of or to the Company, and any information held by any such person or entity about the Company or any Affiliate or related person or executive thereof.

7.3           Intellectual Property. Donnie Schrader acknowledges that the Company is the sole owner of all the products and proceeds of Mr. Schrader’s prior services with the Company including, without limitation, all materials, ideas, concepts, formats, suggestions, developments, and other intellectual property that Mr. Schrader acquired, obtained, developed or created in whole or in part in connection with his services, free and clear of any claims by Mr. Schrader (or anyone claiming under him) of any kind or character whatsoever. Such intellectual property includes, but is not limited to: (i) the automated sales process utilizing Company’s database, including the timing, method, and content thereof; (ii) the format of Company media and methodology used to generate investor interest; (iii) the Company’s electronic subscription process for investments; (iv) the Company’s database, all contents thereof, and the custom formatting created by Company; (v) customer lists and investor lists of any kind generated and/or compiled by the Company or compiled using the Company’s database; (vi) the Company’s legal documents and templates such as those used in conjunction with the Company’s funds and private offerings; (vii) any written content regard the Company and/or it activities such as articles, blog posts, email blasts, etc.; and (viii) websites owned by the Company.

Donnie Schrader shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend the Company’s right, title and interest in and to any such intellectual property.

8.          Other Understandings.

8.1           Legend. In addition to any other legend which may be required by applicable law, each share certificate of the Company shall have endorsed upon its face the following words:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. SUCH SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SHARES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

SALE, TRANSFER OR HYPOTHECATION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY THE PROVISIONS OF AN AGREEMENT BETWEEN THE CORPORATION AND ITS STOCKHOLDERS, DATED EFFECTIVE SEPTEMBER 1 , 2018, A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE CORPORATION, AND ALL OF THE PROVISIONS OF WHICH ARE INCORPORATED HEREIN. THAT AGREEMENT ALSO REQUIRES THE HOLDER TO SELL THESE SHARES UNDER CERTAIN CONDITIONS."

8.2           Understanding with Respect to New Stockholders. The parties hereto understand that Shares may be acquired by persons not presently parties to this Agreement from either the Company or from Stockholders and agree that provided such persons agree in writing to receive and hold such stock subject to all the provisions of this Agreement, such persons shall be deemed to be Stockholders for all purposes under this Agreement. Upon any issuance of new Shares, the secretary of the Company may replace Exhibit A with an updated version.

8.3           Additional Agreements/Documents. Each party hereto agrees to execute any and all further documents and writings and to perform such other actions which may be or become necessary or expedient to effectuate and carry out this Agreement. Specifically, Donnie Schrader and his Affiliates (specifically excluding Jennifer Schrader) agrees to and John Loeffler will take all actions necessary to cause his spouse (if married at the time of execution) to cooperate with the Company and execute any and all documents reasonably requested by a lender to the Company relative to any non-recourse loan transaction, including but not limited to background and credit checks, to the extent that liability to either Mr. Schrader or the aforementioned spouse of Mr. Loeffler resulting from his/her signature is limited by customary “bad boy” language in the transaction documentation, and the language applicable to Mr. Schrader or the aforementioned spouse of Mr. Loeffler is identical to the language presented to the spouse of any “C-level” officer of the Company to execute relative to said transaction. The Company agrees to pay Donnie Schrader and/or the aforementioned spouse of Mr. Loeffler a fee in connection with any non-recourse loan transaction that he/her is required to sign off on due to the fact that his/her spouse is a personal guarantor further to such transaction; such fee shall be payable only if the Company collects a loan guarantee fee in connection with such transaction and shall be limited per transaction and per person to the lesser of $7,500 or one half of the loan guarantee fee collected by the Company in connection with such transaction. The Company will provide Donnie Schrader and/or the aforementioned spouse of Mr. Loeffler reasonable but limited access to the Company’s attorneys handling such matter solely for the purpose of discussing any personal liability either may have in connection with any such matter.

8.4           Litigation and Regulatory Cooperation. Donnie Schrader shall cooperate reasonably with requests from the Company, or the Company’s legal counsel, in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that transpired in whole or in part while Donnie Schrader was engaged by the Company. The Company will provide Donnie Schrader reasonable but limited access to the Company’s attorneys handling such matter solely to discuss any personal liability he may have in connection with any such matter. Mr. Schrader’s cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Company at mutually convenient times. Mr. Schrader also shall cooperate fully with the Company in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired in whole or in part while Mr. Schrader was engaged by the Company. The Company shall reimburse Mr. Schrader for any reasonable out-of-pocket expenses incurred in connection with Mr. Schrader’s performance of obligations pursuant to this Section 8.4 in accord with its indemnification obligations to Mr. Schrader provided for by Delaware law, and if Mr. Schrader spends more than five (5) hours in any calendar month in performance of these obligations, the Company shall pay Mr. Schrader $200 per hour for each part of an hour over five (5) hours in such calendar month.

8.5           Market Standoff Agreement. Each Stockholder agrees in connection with any registration of the Company’s securities under the Securities Act or other public offering that, upon the request of the Company or the underwriters managing any registered public offering of the Company’s securities, such Stockholder will not sell or otherwise dispose of any Shares without the prior written consent of the Company or such managing underwriters, as the case may be, for a period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such managing underwriters and subject to all restrictions as the Company or the managing underwriters may specify for employee-stockholders generally. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the shares subject to this Section 8.5 and to impose stop transfer instructions with respect to the Shares held by such Stockholder until the end of such period. Each Stockholder further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing and that such underwriters are express third party beneficiaries of this Section 8.5.

8.6           Non-Disparagement. Each Stockholder shall not, whether separately or in concert with one or more Persons, and whether in writing or orally) defame or disparage any other Stockholder, the Company, or any Company employee, officer, Director or any other key Company personnel, or any products or services provide by the Company.

8.7           Right of Offset. To the extent that it is determined (i) in a final, non-appealable decision pursuant to Section 9.7 hereof that a breach of this Agreement by Donnie Schrader has occurred (and remained uncured for a period of fifteen (15) days beyond the date of notice of such breach by the Company to Mr. Schrader, it being specifically understood that there shall be no cure period with respect to a breach of Article 2, Article 4, Article 6, or Sections 7.1, 7.2, 8.5 or 8.6 herein), or (ii) (i) in a final, non-appealable decision pursuant to Section 4.4 of the Stock Purchase Agreement that a breach of Section 3.1 therein by Donnie Schrader has occurred (it being specifically understood that there shall be no cure period with respect to a breach of said Section) and (iii) that the Company has in fact incurred monetary damages as a result of any such breach , the Company and Donnie Schrader specifically agree that the Company shall have the right to offset such damages by means of the immediate and automatic cancellation of shares of common stock of the Company held by Donnie Schrader (or his Affiliates, specifically excluding Jennifer Schrader) at the per share price of $2.70. Automatic cancellation pursuant to this Section 8.7 shall be effective without any further action on the part of either the Company or Donnie Schrader and shall be effective whether or not the certificates for such shares are surrendered to the Company and, as it relates to a breach of Sections 7.1 or 7.2 herein or Section 3.1 of the Stock Purchase Agreement, Donnie Schrader shall reasonably cooperate with the Company in connection with and remedial actions the Company may be required to take as a result of any such breach.

8.8           Injunction. Donnie Schrader agrees that it would be difficult to measure any damages caused to the Company which might result from any or threatened breach by him or any of his Affiliates (excluding Jennifer Schrader) of the promises and agreements set forth herein, and that in any event money damages may be an inadequate remedy for any such breach or threatened breach. Accordingly, Donnie Schrader agrees that if he or any of his Affiliates (excluding Jennifer Schrader) breaches, or proposes to breach, any portion of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach or threatened breach without showing or proving any actual damage to the Company and without the need to post a bond or other security.

8.9           Termination of Agreement. Except with respect to Article 5, Article 7, and Sections 8.3, 8.4, 8.5 and 8.6 which shall survive any termination of this Agreement, this Agreement shall terminate upon the earlier to occur of the following: (a) written agreement of 50 % or more of the Shares then outstanding (which shall consent must include that of Donnie Schrader) or (b) upon the effectiveness of a public offering on behalf of the Company, as defined in the Securities Act of 1933, or the Company (or its successor) becoming subject to the reporting requirements of Section 12 of the Securities Exchange Act of 1934 or (c) upon a sale by the Company’s stockholders, in one transaction or series of related transactions, of equity securities that represent, immediately prior to such transaction or transactions, at least a majority by voting power of the equity securities of the Company pursuant to an agreement approved by the Board and entered into by the Company where, immediately following the closing of such transaction, the Company’s stockholders do not own a majority of the outstanding common stock of the acquiring entity. As to any individual Stockholder, other than as expressly set forth herein, this Agreement shall terminate at such time as he/she/it has Transferred all Shares in accordance with the terms of this Agreement.

9.          Miscellaneous.

9.1           Entire Understanding. This Agreement, the schedules and definitions attached hereto, and the other agreements referred to herein or executed contemporaneously herewith set forth the entire agreement and understanding of the parties hereto in respect to the subject matter hereof, and supersede all prior and contemporaneous agreements, arrangements and understandings and is not intended to confer upon any other Person any rights or remedies hereunder. There have been no representations or statements, oral or written, that have been relied on by any party hereto, except those expressly set forth in this Agreement. Each Stockholder has full power and authority to make, enter into and carry out its obligations pursuant to the terms and conditions under this Agreement, and (B) the execution and delivery of this Agreement by the Stockholder do not, and the Stockholder’s performance of its obligations under this Agreement will not: (a) conflict with or violate any order, decree or judgment applicable to the Stockholder; or (b) result in any breach of or constitute a default (with notice or lapse of time, or both) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of any Lien on, any of its Shares pursuant to any agreement to which the Stockholder is a party or by which the Shareholder is bound or affected.

9.2           Modifications. This Agreement may not be amended, altered or modified except by a writing signed by the Company and Stockholders holding 50 % or more of the Shares then outstanding (which consent must also include that of Donnie Schrader).

9.3           Remedies Not Exclusive. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy, and each and every remedy will be cumulative and will be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise. The election of any one or more remedies will not constitute a waiver of the right to pursue other available remedies.

9.4           Notices. All notices under this Agreement will be in writing and will be delivered by personal service or telegram, telecopy or certified mail (if such service is not available, then by first class mail), postage prepaid, to such address as may be designated from time to time by the relevant party.. Any notice sent by certified mail will be deemed to have been given three (3) days after the date on which it is mailed. Any notice sent by telecopy will be deemed to have been given on that date if it is received between the hours of 8:00 a.m. to 4:00 p.m. on a business day; otherwise it will be deemed to be given on the following business day. All other notices will be deemed given when received. No objection may be made to the manner of delivery of any notice actually received in writing by an authorized agent of a party. Notices will be addressedto such address as the party to whom the same is directed will have specified in conformity with the foregoing.

9.5           Parties. Except as otherwise expressly provided herein, (i) none of the provisions of this Agreement will be for the benefit of, or enforceable by, any third party beneficiary; and (ii) this Agreement will be binding upon and inure to the benefit of the parties, their respective successors and permitted assigns, including, but not limited to, the understanding that the rights of the Company may be assigned to any successor to the Company’s business.

9.6           Governing Law. Arizona law, not including Arizona’s conflict of law laws, shall govern the interpretation and enforcement of this Agreement. Any request to any judicial authority in accord with the Parties’ arbitration agreement herein shall be made to a court of competent jurisdiction in Maricopa County, Arizona. This Agreement may be modified or amended only by a writing hand signed by the Parties. No action or inaction in enforcing any provision of this Agreement shall be deemed to constitute waiver, estoppel or laches.

9.7        Arbitration. The Parties to this Agreement agree that any controversy or claim arising out of or relating to or touching upon this Agreement or any of the matters addressed in either agreement, shall be settled by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitrator(s) shall award the successful party in any such arbitration its reasonable attorneys’ fees, costs of suit and forum fees. The locale of any such arbitration shall be Phoenix, Arizona. The foregoing shall not preclude the Company from also seeking relief further to Section 8.8.

9.8        Attorneys' Fees. In any dispute between the parties hereto or their representatives concerning any provision of this Agreement or the rights and duties of any Person hereunder, the party or parties substantially prevailing in such dispute will be entitled, in addition to such other relief as may be granted, to the attorneys' fees and court costs incurred by reason of such dispute.

9.9         Rules of Construction.

9.9.1         Headings. The headings in this Agreement are inserted only as a matter of convenience, and in no way define, limit, or extend or interpret the scope of this Agreement or of any particular section.

9.9.2         Tense and Case. Throughout this Agreement, as the context may require, references to any word used in one tense or case will include all other appropriate tenses or cases, and the term "including" means "including but not limited to.”

9.9.3          Severability. The validity, legality or enforceability of the remainder of this Agreement will not be affected even if one or more of the provisions of this Agreement will be held to be invalid, illegal or unenforceable in any respect.

9.9.4          Counterparts and Facsimile. This Agreement may be executed in two or more counterparts and by facsimile, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

*** [NEXT PAGE IS SIGNATURE PAGE] ***

Signature Page to Stockholders’ Agreement

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

CALIBERCOS INC.

By:

Name: John C. Loeffler

Title: Chief Executive Officer

The “Stockholders”

John C. Loeffler

Jennifer Schrader

Donnie Schrader

SCHEDULE I

Definitions

"Affiliate" means (i) any Person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with, a Stockholder; (ii) any Person in which any Stockholder has a material financial interest; or (iii) any family member of a Stockholder. The term "control," as used in the immediately preceding sentence, includes, with respect to a corporation or limited liability company, the right to exercise, directly or indirectly, more than ten percent (10%) of the voting rights or economic interest in attributable to the controlled corporation or limited liability company and, with respect to any individual, partnership, trust, other entity or association, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled entity.

“Board” means the Company’s board of directors, as duly elected and acting in accordance with the Company’s Bylaws.

“Business” means the origination or servicing of residential mortgages, trust services, asset management or small business lending and any other business as the Board shall determine from time to time.

"Confidential Information" means confidential or proprietary information related to the business, operations or finances of the Company, including, without limitation, information relating to processes, systems, methods, contract forms, prices, volume of sales, marketing methods and plans, promotional methods, and lists of names or classes of customers of the Company, and any other subsidiaries of the Company. Information shall for purposes of this Agreement be considered to be confidential unless known by the public generally, even though such information may have been disclosed to one or more third parties whether pursuant to consulting agreements, joint marketing agreements, or other agreements entered into by the Company or otherwise. Confidential Information includes information developed by Schrader in the course of Schrader’s engagement by the Company prior to the Effective Date of the Founder’s Transition Agreement. Confidential Information also includes the confidential information of others with which or whom the Company has a business relationship.

“Drag-Along Sale” means a single bona fide arm’s length transaction or a series of related bona fide arm’s length transactions: (i) pursuant to which one or more Persons (who are not Affiliates or Permitted Transferees of any Stockholder) acquire Shares representing a majority of the outstanding Stock on a fully diluted basis (whether by merger, consolidation, recapitalization, reorganization, purchase of the outstanding Stock or otherwise), or all or substantially all of the consolidated assets of the Company and its subsidiaries, (ii) that has been approved by the Board, and (iii) pursuant to which all Stockholders will receive the same form of consideration and the same portion of the aggregate net consideration (net of any adjustments or provision for indemnities and following the payment of the reasonable expenses incurred by the Company in connection with such Drag-Along Sale).

“Exercise Notice” is defined in Section 2.1.

“Founding Stockholder” shall mean each of John C. Loeffler, Jennifer Schrader and Donnie Schrader.

“Offered Shares” is defined in Section 2.1.

"Percentage Interest" means, with respect to each Stockholder, (a) the result obtained by dividing the number of such Stockholder’s Shares by the total outstanding Shares, (b) multiplied by 100.

“Permitted Transferee” means (i) in the case of any Stockholder that is not a natural person, any Affiliate of such Stockholder, and (ii) in the case of a Stockholder who is a natural person, such Stockholder’s parents, spouse and lineal descendants and the lineal descendants of such Stockholder’s spouse, or trusts for the benefit of, or corporations, limited liability companies or partnerships, the Stockholders, members or general and/or limited partners of which include only such Stockholder and/or such Stockholder’s parents, spouse or lineal descendants or the lineal descendants of such Stockholder’s spouse; provided that (i) the Stockholder shall deliver prior written notice to the other Stockholders of such transfer, such shares of Shares shall at all times remain subject to the terms and restrictions set forth in this Agreement and such transferee shall, as a condition to such issuance, deliver a counterpart signature page to this Agreement as confirmation that such transferee shall be bound by all the terms and conditions of this Agreement as a Stockholder (but only with respect to the securities so transferred to the transferee); and (ii) that such transfer is made pursuant to a transaction in which there is no consideration actually paid for such transfer.

"Person" means an individual, general partnership, limited partnership, limited liability company, corporation, trust, estate, real estate investment trust association or any other entity.

"Remaining Stockholder" means, with regard to any transaction, any Stockholder who is not a Transferring Stockholder.

“Repurchase Notice” is defined in Section 5.3.

“Shares” means shares of the capital stock of the Company held by any Stockholder treated on an as converted basis (with respect to any shares of convertible preferred stock of the Company so held by any Stockholder); provided however, that if the Company effects a merger or share exchange with an entity where upon the closing of such transaction the stockholders of the Company immediately prior to the closing of said transaction own a majority of the shares of common stock of the acquiring company, then the term “Shares” will mean shares of the common stock of the acquiring entity.

“Spousal Equivalent” means an individual who is registered with any state governmental entity as a domestic partner of the relevant person to whom such individual may be a Spousal Equivalent (a “Registered Domestic Partner”) or who (a) irrespective of whether or not the relevant person to whom such individual may be a Spousal Equivalent and the Spousal Equivalent are the same sex, they are the sole spousal equivalent of the other for the last twelve (12) months, (b) they intend to remain so indefinitely, (c) neither are married to anyone else nor a Registered Domestic Partner with anyone else, (d) both are at least 18 years of age and mentally competent to consent to contract, (e) they are not related by blood to a degree of closeness that which would prohibit legal marriage in the state in which they legally reside, (f) they are jointly responsible for each other’s common welfare and financial obligations, and (g) they reside together in the same residence for the last twelve (12) months and intend to do so indefinitely.

“Stock Purchase Agreement” means that Stock Purchase Agreement of even date hereof by and between Caliber and Donnie Schrader.

“Tag Along Notice” is defined in Section 3.

"Transfer" means any sale, transfer, assignment, hypothecation or pledge, encumbrance or other disposition, whether voluntary or involuntary, whether by gift, bequest or otherwise, of any interest in Shares. In the case of a hypothecation, the Transfer shall be deemed to occur both at the time of the initial pledge and at any pledgee's sale or a sale by any secured creditor.

“Transfer Notice” is defined in Section 2.1.

"Transferee” means any person to whom a Stockholder wishes to Transfer any Shares.

"Transferring Stockholder" means, with regard to any transaction, any Stockholder who attempts to Transfer his Shares or with regard to whose Shares an option is exercised pursuant to this Agreement.

“Voting LLC” means a to-be-formed Delaware limited liability company to be equally owned by John C. Loeffler and Jennifer Schrader.

Exhibit A

Stockholdings

NAME OF STOCKHOLDER	TOTAL SHARES HELD
Jennifer Schrader		6,239,846
Donnie Schrader		6,239,846
John C. Loeffler II		6,234,846

Exhibit B

CONSENT OF SPOUSE

I am a spouse of a Stockholder of CaliberCos Inc. and acknowledge and agree as follows:

1.          I have carefully read the foregoing Stockholders’ Agreement (the “Agreement”) and know its contents.

2.          I know that my spouse has agreed to sell all of his or her shares in the Company, including any community interest I may have, on the occurrence of certain events.

3.          I hereby consent to any such sale, approve the provisions of the Agreement and agree that the Shares and my interest in them, if any, are subject to the provisions of the Agreement.

4.          I understand that whatever rights I may have in the economic value of the Shares my spouse holds under contract or family law, I will not be able to hold the Shares my spouse holds in my own name or exercise any of the rights in such the Shares without the written consent of the Company and of the Remaining Stockholders.

5.          I will take no action at any time to hinder operation of the Agreement with regard to the Shares my spouse holds or my economic interest, if any, in it.

All capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Agreement.

Signature

Print Name

EX1A-3 HLDRS RTS

Exhibit 3.2

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is dated September 21 , 2018 and is by and between CaliberCos Inc., a Delaware corporation (the “Company” or “Caliber”), and Donnie Ray Schrader (“Schrader”). Caliber and Schrader are referred to herein from time to time, collectively, as the “Parties”.

WITNESSETH:

WHEREAS, Schrader currently owns 6,239,846 shares of record in Caliber (the “Schrader Shares”);

WHEREAS, Schrader desires to sell to Caliber and Caliber desires to purchase from Schrader the Shares upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the promises and mutual covenants and agreements contained herein, the parties hereto do hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1       Definitions. The following terms as used herein have the following meanings:

“Agreement” has the meaning set forth in the introductory paragraph hereto.

“Caliber” has the meaning set forth in the introductory paragraph hereto.

“Confidential Information” has the meaning set forth in the Stockholders’ Agreement.

“Founder’s Transition Agreement” means that Founder’s Transition Agreement dated effective as of February 19, 2016 by and between Schrader and Caliber.

“Initial Public Offering” means an underwritten public offering by the Caliber of its Shares pursuant to a registration statement (other than a registration statement relating solely to an employee benefit plan or transaction covered by Rule 145 of the Securities Act) that has been filed under the Securities Act and declared effective by the Securities Exchange Commission.

“Parties” has the meaning set forth in the introductory paragraph hereto.

“Schrader” has the meaning set forth in the introductory paragraph hereto.

“Schrader Shares” has the meaning set forth in the Recitals.

“Shares” means the shares of common stock of Caliber.

“Stockholders Agreement” means that Stockholders’ Agreement of even date herewith by and among Schrader, John C. Loeffler, Jennifer Schrader and the Company, a copy of which is attached hereto as Exhibit “A”.

ARTICLE II

SALE OF STOCK.

2.1       Incorporation of Recitals. The Parties each acknowledge the truth, accuracy, and materiality of the recitals set forth above and expressly incorporate them into and as part of this Agreement.

2.2       Share Buyback. Subject to the terms and conditions hereof, Schrader agrees to sell, assign, transfer and deliver or cause to be delivered to Caliber and Caliber agrees to buy from Schrader, that number of the Schrader Shares (the “Share Buyback”) each month, on the first of every month ( each a “Purchase Date”), at a price of $2.70 per Schrader Share (the “Purchase Price”) as follows: (i) from October 2018 through the earlier of any termination of the Share Buyback further to Section 2.6 or October 2019, 8,500 Shares, (ii) from November 2019 through the earlier of any termination of the Share Buyback further to Section 2.6 or March 2020, 6,000 Shares and (ii) April 2020 (if the Share Buyback is still in effect) through the termination of the Share Buyback further to Section 2.6, 6,000 Shares unless Section 2.3 is then in effect in which case it shall be 10,000 Shares.

2.3       Increase in Share Buyback. If the Company has not effected an Initial Public Offering or become subject to the reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, and have its common stock is listed for trading on a national securities exchange or the OTC on or before that date which is eighteen (18) months from the date hereof, beginning April 1, 2020, Caliber shall purchase from Schrader 10,000 Shares each month, on each Purchase Date . In addition, the Company reserves the right in its sole discretion at any time prior to the termination of the Share Buyback referenced in Section 2.6 to purchase more of the Schrader Shares than are subject to the Share Buyback at the Purchase Price up to a maximum of 750,000 additional Shares; any purchases over said 750,000 amount shall require the prior written consent of Schrader.

2.4        Possible Acceleration of Share Buyback. The parties acknowledge of the 8,500 Share amount referenced in Section 2.2 (i), 2,500 of Shares represents a monthly repurchase of an aggregate of 30,000 Shares over the referenced 12 month period (the “30,000 Shares”). Caliber agrees that to the extent that Caliber receives operating liquidity that would allow it to accelerate the purchase of the 30,000 Shares at a faster pace than described in Section 2.2(i), it will make best efforts to do so. The parties acknowledge and agree that at no time is Caliber obligated to accelerate the purchase of these 30,000 Shares, there are no audit rights to liquidity or cash balances, and the decision to accelerate this purchase shall be subject to the sole discretion of Caliber's executive management.

2.5       Delivery of Schrader Shares. Upon receipt of the Purchase Price, on each Purchase Date , Schrader shall deliver to Caliber an Assignment Separate from Certificate for the Schrader Shares so purchased, and hereby authorizes the appropriate officer(s) of Caliber to reflect the transfer of such Shares in the stock ledger of the Company.

2.6       Share Buyback Duration. The Share Buyback shall continue on a monthly basis indefinitely; provided, however, that the Parties obligations pursuant to this Agreement shall terminate immediately upon occurrence of any of the following events:

(a) written agreement of Schrader and Caliber;

(b) upon the effective date of an Initial Public Offering or at such time as Caliber (or its successor) becomes subject to the reporting requirements of Section 12 of the Securities Exchange Act of 1934, as amended, and its common stock is listed for trading on a national securities exchange or the OTC – provided however that if there is a Market Standoff Agreement in effect with respect to the Shares as further described in Section 8.5 of the Stockholders’ Agreement, the monthly Share Buyback shall continue for each month such Agreement is in effect and the monthly Share Buyback amount shall be an amount equal to the total dollar amount of the Share Buyback required for said month further to Section 2.2 or 2.3, as the case may be, less the gross dollar amount of Shares that the underwriter allows Schrader to sell in the open market, if any, further to the Market Standoff Agreement;

(c) upon a sale by the Caliber’s stockholders, in one transaction or series of related transactions, of equity securities that represent, immediately prior to such transaction or transactions, at least a majority by voting power of the equity securities of Caliber pursuant to an agreement approved by the Board and entered into by Caliber;

(d) at such time as Schrader (or any entity which holds shares of common stock of Caliber beneficially owned by Schrader) ceases to be the legal and beneficial holder of record of any Shares in Caliber; or

(e) at such time as it is determined further to Section 8.7 of the Stockholders’ Agreement that Caliber has the right to offset against the Schrader Shares.

ARTICLE III

REPRESENTATIONS/RELEASES/INDEMNITY.

3.1       Representations. Schrader represents and warrants to Caliber that he has not (i) previously disclosed any Confidential Information to any third party or (ii) given any third party access to any Confidential Information. or (iii) violated any provision of Sections 9 or 11 or Exhibit A to the Founder’s Transition Agreement.

3.2       Releases. Except specifically as it relates to the representations of Schrader set forth in Section 3.1, Caliber and Schrader hereby acknowledge and affirm that all terms and conditions set forth in the Founder’s Transition Agreement have been complied with and that such Agreement is without further force and effect. Caliber and Schrader hereby waive and release, to the maximum extent permitted by law, and covenant not to sue for, any and all Claims they may have against the other, including without limitation any such Claims arising out of any statements, actions or omissions occurring at any time prior to the date hereof; notwithstanding the foregoing; notwithstanding the forgoing, such waiver and release shall not apply with respect to any breach by Schrader of the provisions of Section 3.1 herein. This release is made on behalf of the Parties and any person claiming by, though or under them. The term “Claims” means all claims or rights that Schrader or Caliber have, had, or may have against either other, including but not limited to any and all claims, damages, demands, liabilities, obligations, causes, and causes of action of whatever kind or nature based on any cause, circumstance, fact, matter, thing, event, act, or failure to act whatsoever, arising at law or in equity, in whole or in part, whether known, unknown, foreseen or unforeseen, but does not mean any rights or claims that may arise after the date hereof or any of the Parties’ rights under this Agreement. This release includes a release of any Claim, as defined herein, of the Parties, their officers, directors, owners, agents, managers and employees to the extent that any such Claim arose out of, in whole or in part, the released party’s actions or omissions in the conduct of the business of Caliber.

3.3       Indemnity. Caliber agrees to indemnify Schrader to the fullest extent provided for by applicable law, Caliber’s articles of incorporation or bylaws for damages from any third party claim specifically resulting from any intentional and wrongful failure to act, intentional and wrongful omission, professional error, mistake, negligence, or gross misconduct of Caliber, John Loeffler or Jennifer Schrader arising out of violation of any laws or breach of any agreement relating to the business of Caliber prior to the date hereof only to the extent that Schrader took no action to cause or bring about or intentionally and wrongfully failed to act in connection with any such claim, which action includes, but is not limited to, any breach of Section 3.1 herein.

3.4       Access. Set forth on Exhibit 3.4 is a list of all third parties that Donnie Schrader has given unauthorized access to Confidential Information..

ARTICLE IV

GENERAL PROVISIONS.

4.1       Caliber Website. Within ten (10) business days of the date hereof and continuing for the duration of the Share Buyback, Caliber shall list Schrader on the Caliber website with the title “Founder” and include a biography of Schrader, which the contents of such biography shall be mutually agreed upon between the Parties. Caliber shall immediately remove Schrader from the Caliber website upon Schrader’s written request.

4.2       Stockholder Information. Caliber shall provide Schrader with all communications, documents, and information as Caliber provides any other stockholder. Until such time as Schrader (or any entity which holds shares of common stock of Caliber beneficially owned by Schrader) ceases to be the legal and beneficial holder of record of any Shares in Caliber, Caliber shall send Schrader notice of all stockholder meetings in accordance with the Caliber bylaws.

4.3       Governing Law. Arizona law, not including Arizona’s conflict of law laws, shall govern the interpretation and enforcement of this Agreement. Any request to any judicial authority in accord with the Parties’ arbitration agreement herein shall be made to a court of competent jurisdiction in Maricopa County, Arizona. This Agreement may be modified or amended only by a writing hand signed by the Parties. No action or inaction in enforcing any provision of this Agreement shall be deemed to constitute waiver, estoppel or laches

4.4       Arbitration. The Parties to this Agreement agree that any controversy or claim arising out of or relating to or touching upon this Agreement or any of the matters addressed in either agreement, shall be settled by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitrator(s) shall award the successful party in any such arbitration its reasonable attorneys’ fees, costs of suit and forum fees. The locale of any such arbitration shall be Phoenix, Arizona.

4.5       Attorneys' Fees. In any dispute between the parties hereto or their representatives concerning any provision of this Agreement or the rights and duties of any Person hereunder, the party or parties substantially prevailing in such dispute will be entitled, in addition to such other relief as may be granted, to the attorneys' fees and court costs incurred by reason of such dispute.

4.6       Successors and Assigns; Execution. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, representatives, successors and assigns. This Agreement may be executed in any number of counterparts and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one Agreement.

4.7       References and Titles. All references in this Agreement to Articles, Sections, Subsections and other subdivisions refer to corresponding Articles, Sections, Subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any subdivision are for convenience only and do not constitute any part of such subdivision and shall be disregarded in constructing the language contained in such subdivision. The words “this Agreement,” “this instrument,” “herein,” “hereof,” “hereby,” “hereunder,” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires.

[SIGNATURE PAGE TO FOLLOW]

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

CaliberCos Inc.	Donnie Ray Schrader
By:
Its:	Date:
Date:

EXHIBIT A

STOCKHOLDERS’ AGREEMENT

EXHIBIT 3.4

ACCESS

None

EX1A-3 HLDRS RTS

Exhibit 3.3

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN ACCORDANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

Warrant No.                         

No. of Shares of Common Stock:                             

WARRANT

to Purchase Common Stock of

CaliberCos Inc.
a Nevada Corporation

This Warrant certifies that ________________ (“Purchaser”), is entitled to purchase from CaliberCos Inc., a Nevada corporation (the “Company”), _______________ shares of Common Stock (or any portion thereof) at an exercise price of $1.70 per share of Common Stock, all on the terms and conditions hereinafter provided.

Section 1.  Certain Definitions. As used in this Warrant, unless the context otherwise requires:

“Articles” shall mean the Articles of Incorporation of the Company, as in effect from time to time.

“Common Stock” shall mean the Company’s authorized common stock, par value $0.001 per share.

“Exercise Price” shall mean the exercise price per share of Common Stock set forth above, as adjusted from time to time pursuant to Section 3 hereof.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Warrant” shall mean this Warrant and all additional or new warrants issued upon division or combination of, or in substitution for, this Warrant. All such additional or new warrants shall at all times be identical as to terms and conditions and date, except as to the number of shares of Common Stock for which they may be exercised.

“Warrant Stock” shall mean the shares of Common Stock purchasable by the holder of this Warrant upon the exercise of such Warrant.

“Warrantholder” shall mean the Purchaser, as the initial holder of this Warrant, and its nominees, successors or assigns, including any subsequent holder of this Warrant to whom it has been legally transferred.

Section 2.  Exercise of Warrant.

(a)  At any time after the date hereof through a date that is two and one-half years from the date hereof, the Purchaser may at any time and from time to time exercise this Warrant, in whole or in part.

(b)  (i) The Warrantholder shall exercise this Warrant by means of delivering to the Company at its office identified in Section 14 hereof (i) a written notice of exercise, including the number of shares of Warrant Stock to be delivered pursuant to such exercise (a “Subscription Form”), (ii) this Warrant and (iii) payment equal to the Exercise Price in accordance with Section 2(b)(ii). In the event that any exercise shall not be for all shares of Warrant Stock purchasable hereunder, the Company shall deliver to the Warrantholder a new Warrant registered in the name of the Warrantholder, of like tenor to this Warrant and for the remaining shares of Warrant Stock purchasable hereunder, within ten (10) days of any such exercise. Such notice of exercise shall be in the Subscription Form set out at the end of this Warrant.

(ii) The Warrantholder may elect to pay the Exercise Price to the Company either (1) by cash, certified check or wire transfer, (2) by converting the Warrant into Common Stock (“Warrant Conversion”) or (3) any combination of the foregoing, and specifying such election(s) in the Subscription Form. If the Warrantholder elects to pay the Exercise Price through Warrant Conversion, the Company shall deliver to the Warrantholder (without payment by the Warrantholder of any cash or other consideration) that number of shares of Common Stock equal to the difference of (I) the total number of shares of Common Stock issuable upon exercise of this Warrant minus (II) that number of Shares of Common Stock having an aggregate “Value” (as defined herein) equal to the aggregate Exercise Price. For purposes of this Section 2, “Value” per share of Common Stock shall be the difference, as of the date of exercise, between the Exercise Price and the Fair Market Value (as determined in good faith by the Company’s Board of Directors) of the Warrant Stock.

(c)  Upon exercise of this Warrant and delivery of the Subscription Form with proper payment relating thereto, the Company shall cause to be executed and delivered to the Warrantholder a certificate or certificates representing the aggregate number of fully-paid and nonassessable shares of Common Stock issuable upon such exercise.

(d)  The stock certificate or certificates for Warrant Stock to be delivered in accordance with this Section 2 shall be in such denominations as may be specified in said notice of exercise and shall be registered in the name of the Warrantholder or such other name or names as shall be designated in said notice. Such certificate or certificates shall be deemed to have been issued and the Warrantholder or any other person so designated to be named therein shall be deemed to have become the holder of record of such shares, including to the extent permitted by law the right to vote such shares or to consent or to receive notice as stockholders, as of the time said notice is delivered to the Company as aforesaid.

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(e)  The Company shall pay all expenses payable in connection with the preparation, issue and delivery of stock certificates under this Section 2, including any transfer taxes resulting from the exercise of the Warrant and the issuance of Warrant Stock hereunder.

(f)  All shares of Warrant Stock issuable upon the exercise of this Warrant in accordance with the terms hereof shall be validly issued, fully paid and nonassessable, and free from all liens and other encumbrances thereon, other than liens or other encumbrances created by the Warrantholder.

(g)  In no event shall any fractional share of Common Stock of the Company be issued upon any exercise of this Warrant. If, upon any exercise of this Warrant, the Warrantholder would, except as provided in this paragraph, be entitled to receive a fractional share of Common Stock, then the Company shall deliver in cash to such holder an amount equal to such fractional interest.

Section 3.  Adjustment of Exercise Price and Warrant Stock.

(a)  If, at any time prior to the Expiration Date, the number of outstanding shares of Common Stock is (i) increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, or (ii) decreased by a combination of shares of Common Stock, then, following the record date fixed for the determination of holders of Common Stock entitled to receive the benefits of such stock dividend, subdivision, split-up, or combination, the Exercise Price shall be adjusted to a new amount equal to the product of (I) the Exercise Price in effect on such record date and (II) the quotient obtained by dividing (x) the number of shares of Common Stock outstanding on such record date (without giving effect to the event referred to in the foregoing clause (i) or (ii)), by (y) the number of shares of Common Stock which would be outstanding immediately after the event referred to in the foregoing clause (i) or (ii), if such event had occurred immediately following such record date. In addition, the Exercise Price may be adjusted in other circumstances set forth in Article 5 of Exhibit A of the Articles.

(b)  Upon each adjustment of the Exercise Price as provided in Section 3 (a), the Warrantholder shall thereafter be entitled to subscribe for and purchase, at the Exercise Price resulting from such adjustment, the number of shares of Warrant Stock equal to the product of (i) the number of shares of Warrant Stock existing prior to such adjustment and (ii) the quotient obtained by dividing (I) the Exercise Price existing prior to such adjustment by (II) the new Exercise Price resulting from such adjustment.

(c)  If, at any time prior to the Expiration Date, there occurs an event which would cause the automatic conversion (“Automatic Conversion”) of the Warrant Stock into shares of the Company’s common stock (“Common Stock”) in accordance with the Articles, then any Warrant shall thereafter be exercisable, prior to the Expiration Date, into the number of shares of Common Stock into which the Warrant Stock would have been convertible pursuant to the Charter if the Automatic Conversion had not taken place.

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Section 4.  Division and Combination. This Warrant may be divided or combined with other Warrants upon presentation at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Warrantholder or its agent or attorney. The Company shall pay all expenses in connection with the preparation, issue and delivery of Warrants under this Section 4, including any transfer taxes resulting from the division or combination hereunder. The Company agrees to maintain at its aforesaid office books for the registration of the Warrants.

Section 5.  Reclassification, Etc. In case of any reclassification or change of the outstanding Common of the Company (other than as a result of a subdivision, combination or stock dividend), or in case of any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or change of the outstanding Common Stock of the Company) at any time prior to the Expiration Date, then, as a condition of such reclassification, reorganization, change, consolidation or merger, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Warrantholder, so that the Warrantholder shall have the right prior to the Expiration Date to purchase, at a total price not to exceed that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable upon such reclassification, reorganization, change, consolidation or merger by a holder of the number of shares of Common Stock of the Company which might have been purchased by the Warrantholder immediately prior to such reclassification, reorganization, change, consolidation or merger, in any such case appropriate provisions shall be made with respect to the rights and interest of the Warrantholder to the end that the provisions hereof (including provisions for the adjustment of the Exercise Price and of the number of shares purchasable upon exercise of this Warrant) shall thereafter be applicable in relation to any shares of stock and other securities and property thereafter deliverable upon exercise hereof.

Section 6.  Reservation and Authorization of Capital Stock. The Company shall at all times reserve and keep available for issuance such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants.

Section 7.  Stock and Warrant Books. The Company will not at any time, except upon dissolution, liquidation or winding up, close its stock books or Warrant books so as to result in preventing or delaying the exercise of any Warrant.

Section 8.  Limitation of Liability. No provisions hereof, in the absence of affirmative action by the Warrantholder to purchase Warrant Stock hereunder, shall give rise to any liability of the Warrantholder to pay the Exercise Price or as a stockholder of the Company (whether such liability is asserted by the Company or creditors of the Company).

Section 9.  Registration Rights. The Warrant Stock issuable upon exercise of this Warrant is subject to the provisions of a certain Investor Rights Agreement, dated same date herewith, by and among the Company and the Purchaser.

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Section 10. Transfer. Subject to compliance with the Securities Act and the applicable rules and regulations promulgated thereunder, this Warrant and all rights hereunder shall be transferable in whole or in part in compliance with the terms of the Investor Rights Agreement. Any such transfer shall be made at the office or agency of the Company at which this Warrant is exercisable, by the registered holder hereof in person or by its duly authorized attorney, upon surrender of this Warrant together with the assignment hereof properly endorsed, and promptly thereafter a new warrant shall be issued and delivered by the Company, registered in the name of the assignee. Until registration of transfer hereof on the books of the Company, the Company may treat the Purchaser as the owner hereof for all purposes.

Section 11. Investment Representations; Restrictions on Transfer of Warrant Stock. Unless a current registration statement under the Securities Act shall be in effect with respect to the Warrant Stock to be issued upon exercise of this Warrant, the Warrantholder, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, and at the time of any proposed transfer of Warrant Stock acquired upon exercise hereof, such Warrantholder will deliver to the Company a written statement that the securities acquired by the Warrantholder upon exercise hereof are for the account of the Warrantholder or are being held by the Warrantholder as trustee, investment manager, investment advisor or as any other fiduciary for the account of the beneficial owner or owners for investment and are not acquired with a view to, or for sale in connection with, any distribution thereof (or any portion thereof) and with no present intention (at any such time) of offering and distributing such securities (or any portion thereof).

Section 12. Loss, Destruction of Warrant Certificates. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity and/or security satisfactory to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of shares of Common Stock.

Section 13. Amendments. The terms of this Warrant may be amended, and the observance of any term herein may be waived, but only with the written consent of the Company and the Warrantholder.

Section 14. Notices Generally. Any notice, request, consent, other communication or delivery pursuant to the provisions hereof shall be in writing and shall be sent by one of the following means: (i) by registered or certified first class mail, postage prepaid, return receipt requested; (ii) by facsimile transmission with confirmation of receipt; (iii) by nationally recognized courier service guaranteeing overnight delivery; or (iv) by personal delivery, and shall be properly addressed to the Warrantholder at the last known address or facsimile number appearing on the books of the Company, or, except as herein otherwise expressly provided, to the Company at its principal executive office, or such other address or facsimile number as shall have been furnished to the party giving or making such notice, demand or delivery.

Section 15. Successors and Assigns. This Warrant shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective permitted successors and assigns.

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Section 16.  Governing Law. In all respects, including all matters of construction, validity and performance, this Warrant and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with the laws of the State of Nevada.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name by its Chief Executive Officer.

Dated:                                    [date of Warrant]

Expiration Date:                            [2 ½ years later]

CaliberCos Inc.,

a Nevada Corporation

By:

Name:

Title:

6

SUBSCRIPTION FORM

(to be executed only upon exercise of Warrant)

To: CaliberCos Inc.
16074 N. 78th Street, Ste B-104
Scottsdale, AZ 85260

[Choose one or both of the paragraphs, as applicable]

The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ), hereby irrevocably elects to purchase __________ shares of the Common Stock covered by such Warrant and herewith makes payment of $__________, representing the full purchase price for such shares at the price per share provided for in such Warrant.

The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby irrevocably elects to exercise the right of conversion represented by the attached Warrant for __________ shares of Common Stock, and as payment therefor hereby directs CaliberCos. Inc. to withhold __________ shares of Common Stock that the undersigned would otherwise be entitled thereunder.

Dated:	Name:
	Signature:
	Address:

EX1A-3 HLDRS RTS

Exhibit 3.4

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS SUCH SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS IN ACCORDANCE WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

Warrant No.

No. of Shares of Common Stock:                                

WARRANT
to Purchase Common Stock of

CaliberCos Inc.
a Nevada Corporation

This Warrant certifies that ____________________________ (“Purchaser”), is entitled to purchase from CaliberCos Inc., a Nevada corporation (the “Company”), ______________ shares of Common Stock (or any portion thereof) at an exercise price of $2.00 per share of Common Stock, all on the terms and conditions hereinafter provided.

Section 1.  Certain Definitions. As used in this Warrant, unless the context otherwise requires:

“Articles” shall mean the Articles of Incorporation of the Company, as in effect from time to time.

“Common Stock” shall mean the Company’s authorized common stock, par value $0.001 per share.

“Exercise Price” shall mean the exercise price per share of Common Stock set forth above, as adjusted from time to time pursuant to Section 3 hereof.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Warrant” shall mean this Warrant and all additional or new warrants issued upon division or combination of, or in substitution for, this Warrant. All such additional or new warrants shall at all times be identical as to terms and conditions and date, except as to the number of shares of Common Stock for which they may be exercised.

“Warrant Stock” shall mean the shares of Common Stock purchasable by the holder of this Warrant upon the exercise of such Warrant.

“Warrantholder” shall mean the Purchaser, as the initial holder of this Warrant, and its nominees, successors or assigns, including any subsequent holder of this Warrant to whom it has been legally transferred.

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Section 2.  Exercise of Warrant.

(a)  At any time after the date hereof through a date that is twenty four months from the date hereof, the Purchaser may at any time and from time to time exercise this Warrant, in whole or in part.

(b)  (i)  The Warrantholder shall exercise this Warrant by means of delivering to the Company at its office identified in Section 14 hereof (i) a written notice of exercise, including the number of shares of Warrant Stock to be delivered pursuant to such exercise (a “Subscription Form”), (ii) this Warrant and (iii) payment equal to the Exercise Price in accordance with Section 2(b)(ii). In the event that any exercise shall not be for all shares of Warrant Stock purchasable hereunder, the Company shall deliver to the Warrantholder a new Warrant registered in the name of the Warrantholder, of like tenor to this Warrant and for the remaining shares of Warrant Stock purchasable hereunder, within ten (10) days of any such exercise. Such notice of exercise shall be in the Subscription Form set out at the end of this Warrant.

(ii)  The Warrantholder may elect to pay the Exercise Price to the Company either (1) by cash, certified check or wire transfer, (2) by converting the Warrant into Common Stock (“Warrant Conversion”) or (3) any combination of the foregoing, and specifying such election(s) in the Subscription Form. If the Warrantholder elects to pay the Exercise Price through Warrant Conversion, the Company shall deliver to the Warrantholder (without payment by the Warrantholder of any cash or other consideration) that number of shares of Common Stock equal to the difference of (I) the total number of shares of Common Stock issuable upon exercise of this Warrant minus (II) that number of Shares of Common Stock having an aggregate “Value” (as defined herein) equal to the aggregate Exercise Price. For purposes of this Section 2, “Value” per share of Common Stock shall be the difference, as of the date of exercise, between the Exercise Price and the Fair Market Value (as determined in good faith by the Company’s Board of Directors) of the Warrant Stock.

(c)  Upon exercise of this Warrant and delivery of the Subscription Form with proper payment relating thereto, the Company shall cause to be executed and delivered to the Warrantholder a certificate or certificates representing the aggregate number of fully-paid and nonassessable shares of Common Stock issuable upon such exercise.

(d)  The stock certificate or certificates for Warrant Stock to be delivered in accordance with this Section 2 shall be in such denominations as may be specified in said notice of exercise and shall be registered in the name of the Warrantholder or such other name or names as shall be designated in said notice. Such certificate or certificates shall be deemed to have been issued and the Warrantholder or any other person so designated to be named therein shall be deemed to have become the holder of record of such shares, including to the extent permitted by law the right to vote such shares or to consent or to receive notice as stockholders, as of the time said notice is delivered to the Company as aforesaid.

(e)  The Company shall pay all expenses payable in connection with the preparation, issue and delivery of stock certificates under this Section 2, including any transfer taxes resulting from the exercise of the Warrant and the issuance of Warrant Stock hereunder.

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(f)  All shares of Warrant Stock issuable upon the exercise of this Warrant in accordance with the terms hereof shall be validly issued, fully paid and nonassessable, and free from all liens and other encumbrances thereon, other than liens or other encumbrances created by the Warrantholder.

(g)  In no event shall any fractional share of Common Stock of the Company be issued upon any exercise of this Warrant. If, upon any exercise of this Warrant, the Warrantholder would, except as provided in this paragraph, be entitled to receive a fractional share of Common Stock, then the Company shall deliver in cash to such holder an amount equal to such fractional interest.

Section 3.  Mandatory Exercise. In the event that (i) the Company’s common stock is quoted on the U.S. over-the-counter-markets or on a registered national securities exchange, and (ii) the volume-weighted average price (“VWAP”) of the Company’s Common Stock is in excess of $4.00 per share for 20 consecutive trading days, and (iii) the 90-day average daily trading volume of the Company’s Common Stock is above 40,000 shares, this Warrant shall be deemed automatically exercised in full and all shares then issuable upon full exercise of this Warrant shall be issued in accordance with the terms hereof.

Section 4.  Adjustment of Exercise Price and Warrant Stock.

(a)  If, at any time prior to the Expiration Date, the number of outstanding shares of Common Stock is (i) increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, or (ii) decreased by a combination of shares of Common Stock, then, following the record date fixed for the determination of holders of Common Stock entitled to receive the benefits of such stock dividend, subdivision, split-up, or combination, the Exercise Price shall be adjusted to a new amount equal to the product of (I) the Exercise Price in effect on such record date and (II) the quotient obtained by dividing (x) the number of shares of Common Stock outstanding on such record date (without giving effect to the event referred to in the foregoing clause (i) or (ii)), by (y) the number of shares of Common Stock which would be outstanding immediately after the event referred to in the foregoing clause (i) or (ii), if such event had occurred immediately following such record date. In addition, the Exercise Price may be adjusted in other circumstances set forth in Article 5 of Exhibit A of the Articles.

(b)  Upon each adjustment of the Exercise Price as provided in Section 3 (a), the Warrantholder shall thereafter be entitled to subscribe for and purchase, at the Exercise Price resulting from such adjustment, the number of shares of Warrant Stock equal to the product of (i) the number of shares of Warrant Stock existing prior to such adjustment and (ii) the quotient obtained by dividing (I) the Exercise Price existing prior to such adjustment by (II) the new Exercise Price resulting from such adjustment.

(c)  If, at any time prior to the Expiration Date, there occurs an event which would cause the automatic conversion (“Automatic Conversion”) of the Warrant Stock into shares of the Company’s common stock (“Common Stock”) in accordance with the Articles, then any Warrant shall thereafter be exercisable, prior to the Expiration Date, into the number of shares of Common Stock into which the Warrant Stock would have been convertible pursuant to the Charter if the Automatic Conversion had not taken place.

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Section 5.  Division and Combination. This Warrant may be divided or combined with other Warrants upon presentation at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Warrantholder or its agent or attorney. The Company shall pay all expenses in connection with the preparation, issue and delivery of Warrants under this Section 4, including any transfer taxes resulting from the division or combination hereunder. The Company agrees to maintain at its aforesaid office books for the registration of the Warrants.

Section 6.  Reclassification, Etc. In case of any reclassification or change of the outstanding Common of the Company (other than as a result of a subdivision, combination or stock dividend), or in case of any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or change of the outstanding Common Stock of the Company) at any time prior to the Expiration Date, then, as a condition of such reclassification, reorganization, change, consolidation or merger, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Warrantholder, so that the Warrantholder shall have the right prior to the Expiration Date to purchase, at a total price not to exceed that payable upon the exercise of this Warrant, the kind and amount of shares of stock and other securities and property receivable upon such reclassification, reorganization, change, consolidation or merger by a holder of the number of shares of Common Stock of the Company which might have been purchased by the Warrantholder immediately prior to such reclassification, reorganization, change, consolidation or merger, in any such case appropriate provisions shall be made with respect to the rights and interest of the Warrantholder to the end that the provisions hereof (including provisions for the adjustment of the Exercise Price and of the number of shares purchasable upon exercise of this Warrant) shall thereafter be applicable in relation to any shares of stock and other securities and property thereafter deliverable upon exercise hereof.

Section 7.  Reservation and Authorization of Capital Stock. The Company shall at all times reserve and keep available for issuance such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants.

Section 8.  Stock and Warrant Books. The Company will not at any time, except upon dissolution, liquidation or winding up, close its stock books or Warrant books so as to result in preventing or delaying the exercise of any Warrant.

Section 9.  Limitation of Liability. No provisions hereof, in the absence of affirmative action by the Warrantholder to purchase Warrant Stock hereunder, shall give rise to any liability of the Warrantholder to pay the Exercise Price or as a stockholder of the Company (whether such liability is asserted by the Company or creditors of the Company).

4

Section 10.  Registration Rights. The Warrant Stock issuable upon exercise of this Warrant is subject to the provisions of a certain Investor Rights Agreement, dated same date herewith, by and among the Company and the Purchaser.

Section 11.  Transfer. Subject to compliance with the Securities Act and the applicable rules and regulations promulgated thereunder, this Warrant and all rights hereunder shall be transferable in whole or in part in compliance with the terms of the Investor Rights Agreement. Any such transfer shall be made at the office or agency of the Company at which this Warrant is exercisable, by the registered holder hereof in person or by its duly authorized attorney, upon surrender of this Warrant together with the assignment hereof properly endorsed, and promptly thereafter a new warrant shall be issued and delivered by the Company, registered in the name of the assignee. Until registration of transfer hereof on the books of the Company, the Company may treat the Purchaser as the owner hereof for all purposes.

Section 12.  Investment Representations; Restrictions on Transfer of Warrant Stock. Unless a current registration statement under the Securities Act shall be in effect with respect to the Warrant Stock to be issued upon exercise of this Warrant, the Warrantholder, by accepting this Warrant, covenants and agrees that, at the time of exercise hereof, and at the time of any proposed transfer of Warrant Stock acquired upon exercise hereof, such Warrantholder will deliver to the Company a written statement that the securities acquired by the Warrantholder upon exercise hereof are for the account of the Warrantholder or are being held by the Warrantholder as trustee, investment manager, investment advisor or as any other fiduciary for the account of the beneficial owner or owners for investment and are not acquired with a view to, or for sale in connection with, any distribution thereof (or any portion thereof) and with no present intention (at any such time) of offering and distributing such securities (or any portion thereof).

Section 13.  Loss, Destruction of Warrant Certificates. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity and/or security satisfactory to the Company or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the Company will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and representing the right to purchase the same aggregate number of shares of Common Stock.

Section 14.  Amendments. The terms of this Warrant may be amended, and the observance of any term herein may be waived, but only with the written consent of the Company and the Warrantholder.

Section 15.  Notices Generally. Any notice, request, consent, other communication or delivery pursuant to the provisions hereof shall be in writing and shall be sent by one of the following means: (i) by registered or certified first class mail, postage prepaid, return receipt requested; (ii) by facsimile transmission with confirmation of receipt; (iii) by nationally recognized courier service guaranteeing overnight delivery; or (iv) by personal delivery, and shall be properly addressed to the Warrantholder at the last known address or facsimile number appearing on the books of the Company, or, except as herein otherwise expressly provided, to the Company at its principal executive office, or such other address or facsimile number as shall have been furnished to the party giving or making such notice, demand or delivery.

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Section 16.  Successors and Assigns. This Warrant shall bind and inure to the benefit of and be enforceable by the parties hereto and their respective permitted successors and assigns.

Section 17.  Governing Law. In all respects, including all matters of construction, validity and performance, this Warrant and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with the laws of the State of Nevada.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name by its Chief Executive Officer.

Dated:                                 [date of Warrant]

Expiration Date:                          [24 months later]

CaliberCos Inc.,
a Nevada Corporation
By:
Name:	Chris Loeffler
Title:	CEO

6

SUBSCRIPTION FORM

(to be executed only upon exercise of Warrant)

To: CaliberCos Inc.
16074 N. 78th Street, Ste B-104
Scottsdale, AZ 85260

[Choose one or both of the paragraphs, as applicable]

The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby irrevocably elects to purchase _______________ shares of the Common Stock covered by such Warrant and herewith makes payment of $_______________, representing the full purchase price for such shares at the price per share provided for in such Warrant.

The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby irrevocably elects to exercise the right of conversion represented by the attached Warrant for __________ shares of Common Stock, and as payment therefor hereby directs CaliberCos. Inc. to withhold __________shares of Common Stock that the undersigned would otherwise be entitled thereunder.

Dated:	Name:
	Signature:
	Address:

EX1A-6 MAT CTRCT

Exhibit 6.1

CALIBERCOS INC.

AMENDED AND RESTATED

2017 INCENTIVE STOCK PLAN

WHEREAS, there are currently 100,000,000 authorized shares of CALIBERCOS INC.

stock;

WHEREAS, on July 31, 2017, the Board of Directors through unanimous written consent as evidenced below, approved this 2017 Incentive Stock Plan;

WHEREAS, on July 31, 2017, the shareholders through unanimous written consent, ratified this 2017 Incentive Stock Plan;

WHEREAS, on July __, 2017, the Company reincorporated from Nevada to Delaware, which reincorporation has prompted the amendment and restatement of this Plan; and

NOW, THEREFORE, CaliberCos Inc. hereby amends and restates its Incentive Stock Plan in full as follows.

1.           Objectives. The CaliberCos Inc. 2017 Incentive Stock Plan (the "Plan") is designed to retain directors, executives and selected employees, consultants, and advisors and reward them for making major contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company.

2.           Definitions.

(a)          "Board" - The Board of Directors of the Company.

(b)         "Code" - The Internal Revenue Code of 1986, as amended from time to time.

(c)          "Committee" - The Executive Compensation Committee of the Company's Board, or such other committee of the Board that is designated by the Board to administer the Plan, composed of not less than two members of the Board all of whom are disinterested persons, as contemplated by Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

1

(d)          "Company" – CaliberCos Inc. and its subsidiaries including subsidiaries of subsidiaries.

(e)          "Exchange Act" - The Securities Exchange Act of 1934, as amended from time to

time.

(f)          "Fair Market Value" - The fair market value of the Company's issued and outstanding Stock as determined in good faith by the Board or Committee.

(g)          "Grant" - The grant of any form of stock option, stock award, or stock purchase offer, whether granted singly, in combination or in tandem, to a Participant pursuant to such terms, conditions and limitations as the Committee may establish in order to fulfill the objectives of the Plan.

(h)          "Grant Agreement" - An agreement between the Company and a Participant that sets forth the terms, conditions and limitations applicable to a Grant.

(i)          "Option" - Either an Incentive Stock Option, in accordance with Section 422 of Code, or a Nonstatutory Option, to purchase the Company's Stock that may be awarded to a Participant under the Plan. A Participant who receives an award of an Option will be referred to as an "Optionee."

(j)          "Participant" - A director, officer, employee of, or consultant or advisor to, the Company to whom an Award has been made under the Plan.

(k)          "Restricted Stock Purchase Offer" - A Grant of the right to purchase a specified number of shares of Stock pursuant to a written agreement issued under the Plan.

(l)          "Securities Act" - The Securities Act of 1933, as amended from time to time.

(m)          "Stock" - Authorized and issued or unissued shares of common stock of the Company.

(n)          "Stock Award" - A Grant made under the Plan in stock or denominated in units of stock for which the Participant is not obligated to pay additional consideration.

3.           Administration. The Plan will be administered by the Board, provided however, that the Board may delegate such administration to the Committee. Subject to the provisions of the Plan, the Board and/or the Committee will have authority to (a) grant, in its discretion, Incentive Stock Options in accordance with Section 422 of the Code, or Nonstatutory Options, Stock Awards or Restricted Stock Purchase Offers; (b) determine in good faith the fair market value of the Stock covered by any Grant; (c) determine which eligible persons will receive Grants and the number of shares, restrictions, terms and conditions to be included in such Grants; (d) construe and interpret the Plan; (e) promulgate, amend and rescind rules and regulations relating to its administration, and correct defects, omissions and inconsistencies in the Plan or any Grant; (f) consistent with the Plan and with the consent of the Participant, as appropriate, amend any outstanding Grant or amend the exercise date or dates thereof; (g) determine the duration and purpose of leaves of absence which may be granted to Participants without constituting termination of their employment for the purpose of the Plan or any Grant; and (h) make all other determinations necessary or advisable for the Plan's administration. The interpretation and construction by the Board of any provisions of the Plan or selection of Participants will be conclusive and final. No member of the Board or the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Grant made thereunder.

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4.           Eligibility.

(a)          General. The persons who will be eligible to receive Grants will be directors, officers, employees of, or consultants or advisors to, the Company. The term consultant will mean any person, other than an employee, who is engaged by the Company to render services and is compensated for such services. An Optionee may hold more than one Option. Any issuance of a Grant to an officer or director of the Company subsequent to the first registration of any of the securities of the Company under the Exchange Act will comply with the requirements of Rule 16b-3.

(b)          Incentive Stock Options. Incentive Stock Options may only be issued to employees of the Company. Incentive Stock Options may be granted to officers or directors, provided they are also employees of the Company. Payment of a director's fee will not be sufficient to constitute employment by the Company.

The Company will not grant an Incentive Stock Option under the Plan to any employee if such Grant would result in such employee holding the right to exercise for the first time in any one calendar year, under all Incentive Stock Options granted under the Plan or any other plan maintained by the Company, with respect to shares of Stock having an aggregate fair market value, determined as of the date of the Option is granted, in excess of $100,000. Should it be determined that an Incentive Stock Option granted under the Plan exceeds such maximum for any reason other than a failure in good faith to value the Stock subject to such option, the excess portion of such option will be considered a Nonstatutory Option. To the extent the employee holds two (2) or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such Option as Incentive Stock Options under the Federal tax laws will be applied on the basis of the order in which such Options are granted. If, for any reason, an entire Option does not qualify as an Incentive Stock Option by reason of exceeding such maximum, such Option will be considered a Nonstatutory Option.

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(c)          Nonstatutory Option. The provisions of the foregoing Section 4(b) will not apply to any Option designated as a "Nonstatutory Option" or which sets forth the intention of the parties that the Option be a Nonstatutory Option.

(d)          Stock Awards and Restricted Stock Purchase Offers. The provisions of this Section 4 will not apply to any Stock Award or Restricted Stock Purchase Offer under the Plan.

5.           Stock.

(a)          Authorized Stock. Stock subject to Grants may be either unissued or reacquired

Stock.

(b)          Number of Shares. Subject to adjustment as provided in Section 6(i) of the Plan, the total number of shares of Stock which may be purchased or granted directly by Options, Stock Awards or Restricted Stock Purchase Offers, or purchased indirectly through exercise of Options granted under the Plan will not exceed 4,000,000. If any Grant will for any reason terminate or expire, any shares allocated thereto but remaining unpurchased upon such expiration or termination will again be available for Grants with respect thereto under the Plan as though no Grant had previously occurred with respect to such shares. Any shares of Stock issued pursuant to a Grant and repurchased pursuant to the terms thereof will be available for future Grants as though not previously covered by a Grant.

(c)          Reservation of Shares. The Company will reserve and keep available at all times during the term of the Plan such number of shares as will be sufficient to satisfy the requirements of the Plan. If, after reasonable efforts, which efforts will not include the registration of the Plan or Grants under the Securities Act, the Company is unable to obtain authority from any applicable regulatory body, which authorization is deemed necessary by legal counsel for the Company for the lawful issuance of shares hereunder, the Company will be relieved of any liability with respect to its failure to issue and sell the shares for which such requisite authority was so deemed necessary unless and until such authority is obtained.

(d)          Application of Funds. The proceeds received by the Company from the sale of Stock pursuant to the exercise of Options or rights under Stock Purchase Agreements will be used for general corporate purposes.

(e)          No Obligation to Exercise. The issuance of a Grant will impose no obligation upon the Participant to exercise any rights under such Grant.

6.           Terms and Conditions of Options. Options granted hereunder will be evidenced by agreements between the Company and the respective Optionees, in such form and substance as the Board or Committee will from time to time approve. The form of Incentive Stock Option Agreement attached hereto as Exhibit "A" and the three forms of a Nonstatutory Stock Option Agreement for employees, for directors and for consultants, attached hereto as Exhibits "B-1," "B-2" and "B-3," respectively, will be deemed to be approved by the Board. Option agreements need not be identical, and in each case may include such provisions as the Board or Committee may determine, but all such agreements will be subject to and limited by the following terms and conditions:

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(a)          Number of Shares. Each Option will state the number of shares to which it pertains.

(b)          Exercise Price. Each Option will state the exercise price, which will be determined as follows:

(i)          Any Incentive Stock Option granted to a person who at the time the Option is granted owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power or value of all classes of stock of the Company ("Ten Percent Holder") will have an exercise price of no less than one hundred ten percent (110%) of the Fair Market Value of the Stock as of the date of grant; and

(ii)         Incentive Stock Options granted to a person who at the time the Option is granted is not a Ten Percent Holder will have an exercise price of no less than one hundred percent (100%) of the Fair Market Value of the Stock as of the date of grant.

For the purposes of this Section 6(b), the Fair Market Value will be as determined by the Board in good faith, which determination will be conclusive and binding; provided however, that if there is a public market for such Stock, the Fair Market Value per share will be the average of the bid and asked prices (or the closing price if such stock is listed on the NASDAQ National Market System or Small Cap Issue Market) on the date of grant of the Option, or if listed on a stock exchange, the closing price on such exchange on such date of grant.

(c)          Medium and Time of Payment. The exercise price will become immediately due upon exercise of the Option and will be paid in cash or check made payable to the Company. Should the Company's outstanding Stock be registered under Section 12(g) of the Exchange Act at the time the Option is exercised, then the exercise price may also be paid as follows:

(i)          in shares of Stock held by the Optionee for the requisite period necessary to avoid a charge to the Company's earnings for financial reporting purposes and valued at Fair Market Value on the exercise date, or

(ii)         through a special sale and remittance procedure pursuant to which the Optionee will concurrently provide irrevocable written instructions (a) to a Company designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Company by reason of such purchase and (b) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.

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At the discretion of the Board, exercisable either at the time of Option grant or of Option exercise, the exercise price may also be paid (i) by Optionee's delivery of a promissory note in form and substance satisfactory to the Company and bearing interest at a rate determined by the Board in its sole discretion, but in no event less than the minimum rate of interest required to avoid the imputation of compensation income to the Optionee under the Federal tax laws, or (ii) in such other form of consideration as may be acceptable to the Board.

(d)          Term and Exercise of Options. Any Option granted to an employee of the Company will become exercisable over a period of no longer than four (4) years, and no less than twenty percent (25%) of the shares covered thereby will become exercisable annually. No Option will be exercisable, in whole or in part, prior to one (1) year from the date it is granted unless the Board will specifically determine otherwise, as provided herein. To remain compliant with current regulations, in no event will any Option be exercisable after the expiration of ten (10) years from the date it is granted, and no Incentive Stock Option granted to a Ten Percent Holder will, by its terms, be exercisable after the expiration of five (5) years from the date of the Option. Unless otherwise specified by the Board or the Committee in the resolution authorizing such Option, the date of grant of an Option will be deemed to be the date upon which the Board or the Committee authorizes the granting of such Option.

Each Option will be exercisable to the nearest whole share, in installments or otherwise, as the respective Option agreements may provide. During the lifetime of an Optionee, the Option will be exercisable only by the Optionee and will not be assignable or transferable by the Optionee, and no other person will acquire any rights therein. To the extent not exercised, installments (if more than one) will accumulate, but will be exercisable, in whole or in part, only during the period for exercise as stated in the Option agreement, whether or not other installments are then exercisable.

(e)          Termination of Status as Employee, Consultant or Director. If Optionee's status as an employee will terminate for any reason other than Optionee's disability or death, then Optionee (or if the Optionee will die after such termination, but prior to exercise, Optionee's personal representative or the person entitled to succeed to the Option) will have the right to exercise the portions of any of Optionee's Incentive Stock Options which were exercisable as of the date of such termination, in whole or in part, not less than thirty (30) days nor more than three (3) months after such termination (or, in the event of "termination for cause" as that term is defined by case law related thereto of the state in which employees are employed by the Company or as defined by Delaware law with respect to consultants, or by the terms of the Plan or the Option Agreement or an employment agreement, the Option will automatically terminate as of the termination of employment as to all shares covered by the Option).

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With respect to Nonstatutory Options granted to employees, directors or consultants, the Board may specify such period for exercise, not less than thirty (30) days (except that in the case of "termination for cause" or removal of a director, the Option will automatically terminate as of the termination of employment or services as to shares covered by the Option) following termination of employment or services as the Board deems reasonable and appropriate. The Option may be exercised only with respect to installments that the Optionee could have exercised at the date of termination of employment or services. Nothing contained herein or in any Option granted pursuant hereto will be construed to affect or restrict in any way the right of the Company to terminate the employment or services of an Optionee with or without cause.

(f)          Disability of Optionee. If an Optionee is disabled (within the meaning of Section 22(e)(3) of the Code) at the time of termination, the three (3) month period in Section 6(e) will be a period, as determined by the Board and set forth in the Option, of not less than six (6) months nor more than one year after such termination.

(g)          Death of Optionee. If an Optionee dies while employed by, engaged as a consultant to, or serving as a Director of the Company, the portion of such Optionee's Option which was exercisable at the date of death may be exercised, in whole or in part, by the estate of the decedent or by a person succeeding to the right to exercise such Option at any time within

(i) a period, as determined by the Board and set forth in the Option, of not less than six (6) months nor more than one (1) year after Optionee's death, which period will not be more, in the case of a Nonstatutory Option, than the period for exercise following termination of employment or services, or (ii) during the remaining term of the Option, whichever is the lesser. The Option may be so exercised only with respect to installments exercisable at the time of Optionee's death and not previously exercised by the Optionee.

(h)          Nontransferability of Option. No Option will be transferable by the Optionee, except by will or by the laws of descent and distribution.

(i)          Recapitalization. Subject to any required action of shareholders, the number of shares of Stock covered by each outstanding Option, and the exercise price per share thereof set forth in each such Option, will be proportionately adjusted for any increase or decrease in the number of issued shares of Stock of the Company resulting from a stock split, stock dividend, combination, subdivision or reclassification of shares, or the payment of a stock dividend, or any other increase or decrease in the number of such shares affected without receipt of consideration by the Company; provided, however, the conversion of any convertible securities of the Company will not be deemed to have been "effected without receipt of consideration" by the Company.

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In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a "Reorganization"), unless otherwise provided by the Board, this Option will terminate immediately prior to such date as is determined by the Board, which date will be no later than the consummation of such Reorganization, and at the option of the Company any unvested shares may be deemed vested so long as consistently applied to all Optionees holding an option granted under this Plan. In such event, if the entity which will be the surviving entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised Option a stock option or capital stock of such surviving of such surviving entity, as applicable, which on an equitable basis will provide the Optionee with substantially the same economic benefit as such unexercised Option, then the Board may grant to such Optionee, in its sole and absolute discretion and without obligation, the right for a period commencing thirty (30) days prior to and ending immediately prior to the date determined by the Board pursuant hereto for termination of the Option or during the remaining term of the Option, whichever is the lesser, to exercise any unexpired Option or Options without regard to the installment provisions of Section 6(d) of the Plan; provided, that any such right granted will be granted to all Optionees not receiving an offer to receive substitute options on a consistent basis, and provided further, that any such exercise will be subject to the consummation of such Reorganization.

Subject to any required action of shareholders, if the Company will be the surviving entity in any merger or consolidation, each outstanding Option thereafter will pertain to and apply to the securities to which a holder of shares of Stock equal to the shares subject to the Option would have been entitled by reason of such merger or consolidation.

In the event of a change in the Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares without par value into the same number of shares with a par value, the shares resulting from any such change will be deemed to be the Stock within the meaning of the Plan.

To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments will be made by the Board, whose determination in that respect will be final, binding and conclusive. Except as expressly provided in this Section 6(i), the Optionee will have no rights by reason of any subdivision or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number or price of shares of Stock subject to any Option will not be affected by, and no adjustment will be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

The Grant of an Option pursuant to the Plan will not affect in any way the right or power of the Company to make any adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve, or liquidate or to sell or transfer all or any part of its business or assets.

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(j)          Rights as a Shareholder. An Optionee will have no rights as a shareholder with respect to any shares covered by an Option until the effective date of the issuance of the shares following exercise of such Option by Optionee. No adjustment will be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as expressly provided in Section 6(i) hereof.

(k)          Modification, Acceleration, Extension, and Renewal of Options. Subject to the terms and conditions and within the limitations of the Plan, the Board may modify an Option, or, once an Option is exercisable, accelerate the rate at which it may be exercised, and may extend or renew outstanding Options granted under the Plan or accept the surrender of outstanding Options (to the extent not theretofore exercised) and authorize the granting of new Options in substitution for such Options, provided such action is permissible under Section 422 of the Code. Notwithstanding the provisions of this Section 6(k), however, no modification of an Option will, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights or obligations under any Option theretofore granted under the Plan.

(l)          Exercise Before Exercise Date. At the discretion of the Board, the Option may, but need not, include a provision whereby the Optionee may elect to exercise all or any portion of the Option prior to the stated exercise date of the Option or any installment thereof. Any shares so purchased prior to the stated exercise date will be subject to repurchase by the Company upon termination of Optionee's employment as contemplated by Section 6(n) hereof prior to the exercise date stated in the Option and such other restrictions and conditions as the Board or Committee may deem advisable.

(m)          Other Provisions. The Option agreements authorized under the Plan will contain such other provisions, including, without limitation, restrictions upon the exercise of the Options, as the Board or the Committee will deem advisable. Shares will not be issued pursuant to the exercise of an Option, if the exercise of such Option or the issuance of shares thereunder would violate, in the opinion of legal counsel for the Company, the provisions of any applicable law or the rules or regulations of any applicable governmental or administrative agency or body, such as the Code, the Securities Act, the Exchange Act, Delaware corporation law, and the rules promulgated under the foregoing or the rules and regulations of any exchange upon which the shares of the Company are listed. Without limiting the generality of the foregoing, the exercise of each Option will be subject to the condition that if at any time the Company will determine that (i) the satisfaction of withholding tax or other similar liabilities, or (ii) the listing, registration or qualification of any shares covered by such exercise upon any securities exchange or under any state or federal law, or (iii) the consent or approval of any regulatory body, or (iv) the perfection of any exemption from any such withholding, listing, registration, qualification, consent or approval is necessary or desirable in connection with such exercise or the issuance of shares thereunder, then in any such event, such exercise will not be effective unless such withholding, listing registration, qualification, consent, approval or exemption will have been effected, obtained or perfected free of any conditions not acceptable to the Company.

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(n)          Repurchase Agreement. The Board may, in its discretion (and in the event of termination, no later than the later of ninety (90) days following such termination or the exercise date of any option made post termination), require as a condition to the Grant of an Option hereunder, that an Optionee execute an agreement with the Company, in form and substance satisfactory to the Board in its discretion ("Repurchase Agreement"), (i) restricting the Optionee's right to transfer shares purchased under such Option without first offering such shares to the Company or another shareholder of the Company upon the same terms and conditions as provided therein; and (ii) providing that upon termination of Optionee's employment with the Company, for any reason, the Company (or another shareholder of the Company, as provided in the Repurchase Agreement) will have the right at its discretion (or the discretion of such other shareholders) to purchase or redeem all such shares owned by the Optionee on the date of termination of his or her employment at a price equal to (A) the fair value of such shares as of such date of termination, or (B) at the original purchase price, provided that the right to repurchase shares at the original purchase price lapses at a rate of twenty (20%) of the number of shares per year over five (5) years following the grant date; provided that in the case of Options or Stock Awards granted to officers, directors, consultants or affiliates of the Company, such repurchase provisions may be subject to additional or greater restrictions as determined by the Board or Committee.

7.           Stock Awards and Restricted Stock Purchase Offers.

(a)         Types of Grants.

(i)          Stock Award. All or part of any Stock Award under the Plan may be subject to conditions established by the Board or the Committee, and set forth in the Stock Award Agreement, which may include, but are not limited to, continuous service with the Company, achievement of specific business objectives, increases in specified indices, attaining growth rates and other comparable measurements of Company performance. Such Awards may be based on Fair Market Value. All Stock Awards will be made pursuant to the execution of a Stock Award Agreement substantially in the form attached hereto as Exhibit "C".

(ii)         Restricted Stock Purchase Offer. A Grant of a Restricted Stock Purchase Offer under the Plan will be subject to such (i) vesting contingencies related to the Participant's continued association with the Company for a specified time and (ii) other specified conditions as the Board or Committee will determine, in their sole discretion, consistent with the provisions of the Plan. All Restricted Stock Purchase Offers will be made pursuant to a Restricted Stock Purchase Offer substantially in the form attached hereto as Exhibit "D".

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(b)          Conditions and Restrictions. Shares of Stock which Participants may receive as a Stock Award under a Stock Award Agreement or Restricted Stock Purchase Offer under a Restricted Stock Purchase Offer may include such restrictions as the Board or Committee, as applicable, will determine, including restrictions on transfer, repurchase rights, right of first refusal, and forfeiture provisions. When transfer of Stock is so restricted or subject to forfeiture provisions it is referred to as "Restricted Stock". Further, with Board or Committee approval, Stock Awards or Restricted Stock Purchase Offers may be deferred, either in the form of installments or a future lump sum distribution. The Board or Committee may permit selected Participants to elect to defer distributions of Stock Awards or Restricted Stock Purchase Offers in accordance with procedures established by the Board or Committee to assure that such deferrals comply with applicable requirements of the Code including, at the choice of Participants, the capability to make further deferrals for distribution after retirement. Any deferred distribution, whether elected by the Participant or specified by the Stock Award Agreement, Restricted Stock Purchase Offers or by the Board or Committee, may require the payment be forfeited in accordance with the provisions of Section 7(c) and must be made in compliance with Section 409A of the Code. Dividends or dividend equivalent rights may be extended to and made part of any Stock Award or Restricted Stock Purchase Offers denominated in Stock or units of Stock, subject to such terms, conditions and restrictions as the Board or Committee may establish.

(c)         Cancellation and Rescission of Grants. Unless the Stock Award Agreement or Restricted Stock Purchase Offer specifies otherwise, the Board or Committee, as applicable, may cancel any unexpired, unpaid, or deferred Grants at any time if the Participant is not in compliance with all other applicable provisions of the Stock Award Agreement or Restricted Stock Purchase Offer, the Plan and with the following conditions:

(i)          A Participant will not render services for any organization or engage directly or indirectly in any business which, in the judgment of the chief executive officer of the Company or other senior officer designated by the Board or Committee, is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company. For Participants whose employment has terminated, the judgment of the chief executive officer will be based on the Participant's position and responsibilities while employed by the Company, the Participant's post-employment responsibilities and position with the other organization or business, the extent of past, current and potential competition or conflict between the Company and the other organization or business, the effect on the Company's customers, suppliers and competitors and such other considerations as are deemed relevant given the applicable facts and circumstances. A Participant who has retired will be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to the Participant or a greater than ten percent (10%) equity interest in the organization or business.

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(ii)         A Participant will not, without prior written authorization from the Company, disclose to anyone outside the Company, or use in other than the Company's business, any confidential information or material, as defined in the Company's Proprietary Information and Invention Agreement or similar agreement regarding confidential information and intellectual property, relating to the business of the Company, acquired by the Participant either during or after employment with the Company.

(iii)        A Participant, pursuant to the Company's Proprietary Information and Invention Agreement, will disclose promptly and assign to the Company all right, title and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Company, relating in any manner to the actual or anticipated business, research or development work of the Company and will do anything reasonably necessary to enable the Company to secure a patent where appropriate in the United States and in foreign countries.

(iv)        Upon exercise, payment or delivery pursuant to a Grant, the Participant will certify on a form acceptable to the Committee that he or she is in compliance with the terms and conditions of the Plan. Failure to comply with all of the provisions of this Section 7(c) prior to, or during the six (6) months after, any exercise, payment or delivery pursuant to a Grant will cause such exercise, payment or delivery to be rescinded. The Company will notify the Participant in writing of any such rescission within two years after such exercise, payment or delivery. Within ten (10) days after receiving such a notice from the Company, the Participant will pay to the Company the amount of any gain realized or payment received as a result of the rescinded exercise, payment or delivery pursuant to a Grant. Such payment will be made either in cash or by returning to the Company the number of shares of Stock that the Participant received in connection with the rescinded exercise, payment or delivery.

(d)         Nonassignability.

(i)          Except pursuant to Section 7(e)(iii) and except as provided in Section 7(d)(ii), no Grant or any other benefit under the Plan will be assignable or transferable, or payable to or exercisable by, anyone other than the Participant to whom it was granted.

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(ii)         Where a Participant terminates employment and retains a Grant pursuant to Section 7(e)(ii) in order to assume a position with a governmental, charitable or educational institution, the Board or Committee, in its discretion and to the extent permitted by law, may authorize a third party (including but not limited to the trustee of a "blind" trust), acceptable to the applicable governmental or institutional authorities, the Participant and the Board or Committee, to act on behalf of the Participant with regard to such Awards.

(e)         Termination of Employment. If the employment or service to the Company of a Participant terminates, other than pursuant to any of the following provisions under this Section 7(e), all unexercised, deferred and unpaid Stock Awards or Restricted Stock Purchase Offers will be cancelled immediately, unless the Stock Award Agreement or Restricted Stock Purchase Offer provides otherwise:

(i)          When a Participant's employment terminates as a result of retirement in accordance with the terms of a Company retirement plan, the Board or Committee may permit Stock Awards or Restricted Stock Purchase Offers to continue in effect beyond the date of retirement in accordance with the applicable Grant Agreement and the exercisability and vesting of any such Grants may be accelerated.

(ii)         When a Participant resigns from the Company and, in the judgment of the Board or Committee, the acceleration and/or continuation of outstanding Stock Awards or Restricted Stock Purchase Offers would be in the best interests of the Company, the Board or Committee may (i) authorize, where appropriate, the acceleration and/or continuation of all or any part of Grants issued prior to such termination and (ii) permit the exercise, vesting and payment of such Grants for such period as may be set forth in the applicable Grant Agreement, subject to earlier cancellation pursuant to Section 10 or at such time as the Board or Committee will deem the continuation of all or any part of the Participant's Grants are not in the Company's best interest.

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(iii)         Death or Disability of a Participant:

(A)         In the event of a Participant's death, the Participant's estate or beneficiaries will have a period up to the expiration date specified in the Grant Agreement within which to receive or exercise any outstanding Grant held by the Participant under such terms as may be specified in the applicable Grant Agreement. Rights to any such outstanding Grants will pass by will or the laws of descent and distribution in the following order: first to beneficiaries so designated by the Participant; if none, then to a legal representative of the Participant; if none, then to the persons entitled thereto as determined by a court of competent jurisdiction. Grants so passing will be made at such times and in such manner as if the Participant were living.

(B)         In the event a Participant is deemed by the Board or Committee to be unable to perform his or her usual duties by reason of mental disorder or medical condition which does not result from facts which would be grounds for termination for cause, Grants and rights to any such Grants may be paid to or exercised by the Participant, if legally competent, or a committee or other legally designated guardian or representative if the Participant is legally incompetent by virtue of such disability.

(C)         After the death or disability of a Participant, the Board or Committee may in its sole discretion at any time (1) terminate restrictions in Grant Agreements; (2) accelerate any or all installments and rights; and (3) instruct the Company to pay the total of any accelerated payments in a lump sum to the Participant, the Participant's estate, beneficiaries or representative — notwithstanding that, in the absence of such termination of restrictions or acceleration of payments, any or all of the payments due under the Grant might ultimately have become payable to other beneficiaries.

(D)         In the event of uncertainty as to interpretation of or controversies concerning this Section 7, the determinations of the Board or Committee, as applicable, will be binding and conclusive.

8.          Investment Intent. All Grants under the Plan are intended to be exempt from registration under the Securities Act provided by Rule 701 thereunder. Unless and until the granting of Options or sale and issuance of Stock subject to the Plan are registered under the Securities Act or will be exempt pursuant to the rules promulgated thereunder, each Grant under the Plan will provide that the purchases or other acquisitions of Stock thereunder will be for investment purposes and not with a view to, or for resale in connection with, any distribution thereof. Further, unless the issuance and sale of the Stock have been registered under the Securities Act, each Grant will provide that no shares will be purchased upon the exercise of the rights under such Grant unless and until (i) all then applicable requirements of state and federal laws and regulatory agencies will have been fully complied with to the satisfaction of the Company and its counsel, and (ii) if requested to do so by the Company, the person exercising the rights under the Grant will (i) give written assurances as to knowledge and experience of such person (or a representative employed by such person) in financial and business matters and the ability of such person (or representative) to evaluate the merits and risks of exercising the Option, and (ii) execute and deliver to the Company a letter of investment intent and/or such other form related to applicable exemptions from registration, all in such form and substance as the Company may require. If shares are issued upon exercise of any rights under a Grant without registration under the Securities Act, subsequent registration of such shares will relieve the purchaser thereof of any investment restrictions or representations made upon the exercise of such rights.

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9.          Amendment, Modification, Suspension or Discontinuance of the Plan. The Board may, insofar as permitted by law, from time to time, with respect to any shares at the time not subject to outstanding Grants, suspend or terminate the Plan or revise or amend it in any respect whatsoever, except that without the approval of the shareholders of the Company, no such revision or amendment will (i) increase the number of shares subject to the Plan, (ii) decrease the price at which Grants may be granted, (iii) materially increase the benefits to Participants, or (i) change the class of persons eligible to receive Grants under the Plan; provided, however, no such action will alter or impair the rights and obligations under any Option, or Stock Award, or Restricted Stock Purchase Offer outstanding as of the date thereof without the written consent of the Participant thereunder. No Grant may be issued while the Plan is suspended or after it is terminated, but the rights and obligations under any Grant issued while the Plan is in effect will not be impaired by suspension or termination of the Plan.

In the event of any change in the outstanding Stock by reason of a stock split, stock dividend, combination or reclassification of shares, recapitalization, merger, or similar event, the Board or the Committee may adjust proportionally (a) the number of shares of Stock (i) reserved under the Plan, (ii) available for Incentive Stock Options and Nonstatutory Options and (iii) covered by outstanding Stock Awards or Restricted Stock Purchase Offers; (b) the Stock prices related to outstanding Grants; and (c) the appropriate Fair Market Value and other price determinations for such Grants. In the event of any other change affecting the Stock or any distribution (other than normal cash dividends) to holders of Stock, such adjustments as may be deemed equitable by the Board or the Committee, including adjustments to avoid fractional shares, will be made to give proper effect to such event. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board or the Committee will be authorized to issue or assume stock options, whether or not in a transaction to which Section 424(a) of the Code applies, and other Grants by means of substitution of new Grant Agreements for previously issued Grants or an assumption of previously issued Grants.

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10.         Tax Withholding. The Company will have the right to deduct applicable taxes from any Grant payment and withhold, at the time of delivery or exercise of Options, Stock Awards or Restricted Stock Purchase Offers or vesting of shares under such Grants, an appropriate number of shares for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. If Stock is used to satisfy tax withholding, such stock will be valued based on the Fair Market Value when the tax withholding is required to be made.

11.         Availability of Information. During the term of the Plan and any additional period during which a Grant granted pursuant to the Plan will be exercisable, the Company will make available, not later than one hundred and twenty (120) days following the close of each of its fiscal years, such financial and other information regarding the Company as is required by the bylaws of the Company and applicable law to be furnished in an annual report to the shareholders of the Company.

12.         Notice. Any written notice to the Company required by any of the provisions of the Plan will be addressed to the chief personnel officer or to the chief executive officer of the Company, and will become effective when it is received by the office of the chief personnel officer or the chief executive officer.

13.         Indemnification of Board. In addition to such other rights or indemnifications as they may have as directors or otherwise, and to the extent allowed by applicable law, the members of the Board and the Committee will be indemnified by the Company against the reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any claim, action, suit or proceeding, or in connection with any appeal thereof, to which they or any of them may be a party by reason of any action taken, or failure to act, under or in connection with the Plan or any Grant granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such claim, action, suit or proceeding, except in any case in relation to matters as to which it will be adjudged in such claim, action, suit or proceeding that such Board or Committee member is liable for negligence or misconduct in the performance of his or her duties; provided that within sixty (60) days after institution of any such action, suit or Board proceeding the member involved will offer the Company, in writing, the opportunity, at its own expense, to handle and defend the same.

14.         Governing Law. The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Code or the securities laws of the United States or applicable state employment laws, will be governed by the law of the State of Delaware and construed accordingly.

15.         Effective and Termination Dates. The Plan will become effective on the date it is approved by the holders of a majority of the shares of Stock then outstanding. The Plan will terminate ten years later, subject to earlier termination by the Board pursuant to Section 9.

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The foregoing amendment and restatement of the 2017 Incentive Stock Plan was duly adopted and approved by the Board of Directors on July 31, 2018.

CHRIS LOEFFLER	JENNIFER SCHRADER
Chris Loeffler, President	Jennifer Schrader, Secretary
JADE LEUNG
Jade Leung, Treasurer

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Exhibit A

Form of Incentive Stock Option Agreement

CALIBERCOS INC.
INCENTIVE STOCK OPTION AGREEMENT

THIS INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is made and entered into as of the date set forth below, by and between CALIBERCOS INC., a Delaware corporation ("Company"), and the employee of the Company named in Section 1(b) ("Optionee").

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1.           Option Information.

(a)          Date of Option: ______________

(b)          Optionee: ___________________

(c)          Number of Shares: _____________

(d)          Exercise Price: _________________

2.           Acknowledgements.

(a)          Optionee is an employee of the Company.

(b)          The Board of Directors ("Board" which term will include an authorized committee of the Board of Directors) and shareholders of the Company have heretofore adopted a 2017 Incentive Stock Plan ("Plan"), pursuant to which this Option is being granted.

(c)          The Board has authorized the granting to Optionee of an incentive stock option ("Option") as defined in Section 422 of the Internal Revenue Code of 1986, as amended, ("Code") to purchase shares of common stock of the Company ("Stock") upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under the Securities Act of 1933, as amended ("Securities Act") provided by Rule 701 thereunder.

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3.          Shares; Price. The Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated, the number of shares of Stock set forth in Section 1(c) above ("Shares") for cash (or other consideration as is authorized under the Plan and acceptable to the Board, in their sole and absolute discretion) at the price per Share set forth in Section 1(d) above ("Exercise Price"), such price being not less than the fair market value per share of the Shares covered by this Option as of the date hereof (unless Optionee is the owner of Stock possessing ten percent or more of the total voting power or value of all outstanding Stock of the Company, in which case the Exercise Price will be no less than one hundred ten percent (110%) of the fair market value of such Stock).

4.          Term of Option; Continuation of Employment. This Option will expire, and all rights hereunder to purchase the Shares will terminate, five (5) years from the date hereof. This Option will earlier terminate subject to Sections 7 and 8 hereof upon, and as of the date of, the termination of Optionee's employment if such termination occurs prior to the end of such five (5) year period. Nothing contained herein will confer upon Optionee the right to the continuation of his or her employment by the Company or to interfere with the right of the Company to terminate such employment or to increase or decrease the compensation of Optionee from the rate in existence at the date hereof.

5.          Vesting of Option. Subject to the provisions of Sections 7 and 8 hereof, this Option will become exercisable during the term of Optionee's employment as follows. Upon the first anniversary of this Agreement, the first installment of twenty-five percent (25%) will be exercisable. Thereafter an additional 1/36th of the grant will become exercisable each month for the then following thirty-six (36) months. The installments will be cumulative (i.e., this option may be exercised, as to any or all Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration or termination of this option).

6.          Exercise. This Option will be exercised by delivery to the Company of (a) written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the amount of the Exercise Price of the Shares covered by the notice (or such other consideration as has been approved by the Board consistent with the Plan) and (c) a written investment representation as provided for in Section 13 hereof. This Option will not be assignable or transferable, except by will or by the laws of descent and distribution, and will be exercisable only by Optionee during his or her lifetime, except as provided in Section 8 hereof.

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7.          Termination of Employment. If Optionee will cease to be employed by the Company for any reason, whether voluntarily or involuntarily, other than by his or her death, Optionee (or if the Optionee will die after such termination, but prior to such exercise date, Optionee's personal representative or the person entitled to succeed to the Option) will have the right at any time within three (3) months following such termination of employment or the remaining term of this Option, whichever is the lesser, to exercise in whole or in part this Option to the extent, but only to the extent, that this Option was exercisable as of the date of termination of employment and had not previously been exercised; provided, however: (a) if Optionee is permanently disabled (within the meaning of Section 22(e)(3) of the Code) at the time of termination, the foregoing three (3) month period will be extended to six (6) months; or (b) if Optionee is terminated "for cause" as that term is defined by case law related thereto of the state in which employees are employed by the Company, or by the terms of the Plan or this Option Agreement or by any employment agreement between the Optionee and the Company, this Option will automatically terminate as to all Shares covered by this Option not exercised prior to termination. Unless earlier terminated, all rights under this Option will terminate in any event on the expiration date of this Option as defined in Section 4 hereof.

8.          Death of Optionee. If the Optionee will die while in the employ of the Company, Optionee's personal representative or the person entitled to Optionee's rights hereunder may at any time within six (6) months after the date of Optionee's death, or during the remaining term of this Option, whichever is the lesser, exercise this Option and purchase Shares to the extent, but only to the extent, that Optionee could have exercised this Option as of the date of Optionee's death; provided, in any case, that this Option may be so exercised only to the extent that this Option has not previously been exercised by Optionee.

9.          No Rights as Shareholder. Optionee will have no rights as a shareholder with respect to the Shares covered by any installment of this Option until the effective date of issuance of Shares following exercise of this Option, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided in Section 10 hereof.

10.         Recapitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by this Option, and the Exercise Price thereof, will be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company will not be deemed having been "effected without receipt of consideration by the Company."

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In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a "Reorganization"), unless otherwise provided by the Board, this Option will terminate immediately prior to such date as is determined by the Board, which date will be no later than the consummation of such Reorganization. In such event, if the entity which will be the surviving entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised Option a stock option or capital stock of such surviving of such surviving entity, as applicable, which on an equitable basis will provide the Optionee with substantially the same economic benefit as such unexercised Option, then the Board may grant to such Optionee, in its sole and absolute discretion and without obligation, the right for a period commencing thirty (30) days prior to and ending immediately prior to the date determined by the Board pursuant hereto for termination of the Option or during the remaining term of the Option, whichever is the lesser, to exercise any unexpired Option or Options without regard to the installment provisions of Section 5; provided, however, that such exercise will be subject to the consummation of such Reorganization.

Subject to any required action by the shareholders of the Company, if the Company will be the surviving entity in any merger or consolidation, this Option thereafter will pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the installment provisions of Section 5 will continue to apply.

In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all of its authorized Stock without par value into the same number of shares of Stock with a par value, the shares resulting from any such change will be deemed to be the Shares within the meaning of this Option.

To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments will be made by the Board, whose determination in that respect will be final, binding and conclusive. Except as hereinbefore expressly provided, Optionee will have no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Shares subject to this Option will not be affected by, and no adjustments will be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

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The grant of this Option will not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

11.         Additional Consideration. Should the Internal Revenue Service determine that the Exercise Price established by the Board as the fair market value per Share is less than the fair market value per Share as of the date of Option grant, Optionee hereby agrees to tender such additional consideration, or agrees to tender upon exercise of all or a portion of this Option, such fair market value per Share as is determined by the Internal Revenue Service.

12.         Modification, Extension and Renewal of Options. The Board or Committee, as described in the Plan, may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Plan, and Section 422 of the Code. Notwithstanding the foregoing provisions of this Section 12, no modification will, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights of Optionee hereunder.

13.          Investment Intent; Restrictions on Transfer.

(a)          Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under the provisions of Sections 7 and 8 hereof) will furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities Act, either before or after the exercise of this Option in whole or in part, the Optionee will be relieved of the foregoing investment representation and agreement and will not be required to furnish the Company with the foregoing written statement.

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(b)            Optionee further represents that Optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information.

(c)            Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event will bear legends in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN 2017 INCENTIVE STOCK OPTION AGREEMENT DATED                          , 2017, BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed with the Company's transfer agent.

14.           Effects of Early Disposition. Optionee understands that if an Optionee disposes of shares acquired hereunder within two (2) years after the date of this Option or within one (1) year after the date of issuance of such shares to Optionee, such Optionee will be treated for income tax purposes as having received ordinary income at the time of such disposition of an amount generally measured by the difference between the purchase price and the fair market value of such stock on the date of exercise, subject to adjustment for any tax previously paid, in addition to any tax on the difference between the sales price and Optionee's adjusted cost basis in such shares. The foregoing amount may be measured differently if Optionee is an officer, director or ten percent holder of the Company. Optionee agrees to notify the Company within ten (10) working days of any such disposition.

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15.           Stand-off Agreement. Optionee agrees that in connection with any registration of the Company's securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Optionee will not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of at least one (1) year following the effective date of registration of such offering.

16.           Restriction upon Transfer. The Shares may not be sold, transferred or otherwise disposed of and will not be pledged or otherwise hypothecated by the Optionee except as hereinafter provided.

(a)            Repurchase Right on Termination Other Than for Cause. For the purposes of this Section, a "Repurchase Event" will mean an occurrence of one of (i) termination of Optionee's employment by the Company, voluntary or involuntary and with or without cause; (ii) retirement or death of Optionee; (iii) bankruptcy of Optionee, which will be deemed to have occurred as of the date on which a voluntary or involuntary petition in bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent that any of the Shares are allocated as the sole and separate property of Optionee's spouse pursuant thereto (in which case this Section 16 only applies to the Shares so affected); or (v) any attempted transfer by the Optionee of Shares, or any interest therein, in violation of this Agreement. Upon the occurrence of a Repurchase Event, the Company will have the right (but not an obligation) to repurchase all or any portion of the Shares of Optionee at a price equal to the fair value of the Shares as of the date of the Repurchase Event.

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(b)           Repurchase Right on Termination for Cause. In the event Optionee's employment is terminated by the Company "for cause," then the Company will have the right (but not an obligation) to repurchase Shares of Optionee at a price equal to the Exercise Price. Such right of the Company to repurchase Shares at the original price will apply to one hundred percent (100%) of the exercised or exercisable Shares for one (1) year from the date of this Agreement; and will thereafter lapse at the rate of twenty percent (20%) of the exercised or exercisable Shares on each following anniversary of the date of this Agreement. In addition, the Company will have the right, in the sole discretion of the Board and without obligation, to repurchase upon termination for cause all or any portion of the Shares of Optionee, at a price equal to the fair value of the Shares as of the date of termination, which right is not subject to the foregoing lapsing of rights. In the event the Company elects to repurchase the Shares, the stock certificates representing the same will forthwith be returned to the Company for cancellation.

(c)            Exercise of Repurchase Right. Any Repurchase Right under Sections 16(a) or 16(b) will be exercised by giving notice of exercise as provided herein to Optionee or the estate of Optionee, as applicable. Such right will be exercised, and the repurchase price thereunder will be paid, by the Company within a ninety (90) day period beginning on the date of notice to the Company of the occurrence of such Repurchase Event (except in the case of termination of employment or retirement, where such option period will begin upon the occurrence of the Repurchase Event). Such repurchase price will be payable only in the form of cash (including a check drafted on immediately available funds) or cancellation of purchase money indebtedness of the Optionee for the Shares. If the Company cannot purchase all such Shares because it is unable to meet the financial tests set forth in Delaware corporation law, the Company will have the right to purchase as many Shares as it is permitted to purchase under such sections. Any Shares not purchased by the Company hereunder will no longer be subject to the provisions of this Section 16.

(d)           Right of First Refusal. In the event Optionee desires to transfer any Shares during his or her lifetime, Optionee will first offer to sell such Shares to the Company. Optionee will deliver to the Company written notice of the intended sale, such notice to specify the number of Shares to be sold, the proposed purchase price and terms of payment, and grant the Company an option for a period of thirty (30) days following receipt of such notice to purchase the offered Shares upon the same terms and conditions. To exercise such option, the Company will give notice of that fact to Optionee within the thirty (30) day notice period and agree to pay the purchase price in the manner provided in the notice. If the Company does not purchase all of the Shares so offered during foregoing option period, Optionee will be under no obligation to sell any of the offered Shares to the Company, but may dispose of such Shares in any lawful manner during a period of one hundred and eighty (180) days following the end of such notice period, except that Optionee will not sell any such Shares to any other person at a lower price or upon more favorable terms than those offered to the Company.

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(e)            Acceptance of Restrictions. Acceptance of the Shares will constitute the Optionee's agreement to such restrictions and the legending of his certificates with respect thereto. Notwithstanding such restrictions, however, so long as the Optionee is the holder of the Shares, or any portion thereof, he or she will be entitled to receive all dividends declared on and to vote the Shares and to all other rights of a shareholder with respect thereto.

(f)            Permitted Transfers. Notwithstanding any provisions in this Section 16 to the contrary, the Optionee may transfer Shares subject to this Agreement to his or her parents, spouse, children, or grandchildren, or a trust for the benefit of the Optionee or any such transferee(s); provided, that such permitted transferee(s) will hold the Shares subject to all the provisions of this Agreement (all references to the Optionee herein will in such cases refer mutatis mutandis to the permitted transferee, except in the case of clause (iv) of Section 16(a) wherein the permitted transfer will be deemed to be rescinded); and provided further, that notwithstanding any other provisions in this Agreement, a permitted transferee may not, in turn, make permitted transfers without the written consent of the Optionee and the Company.

(g)            Release of Restrictions on Shares. All other restrictions under this Section 16 will terminate five (5) years following the date of this Agreement, or when the Company's securities are publicly traded, whichever occurs earlier.

17.          Notices. Any notice required to be given pursuant to this Option or the Plan will be in writing and will be deemed to be delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Optionee at the address last provided to the Company by Optionee for his or her employee records.

18.          Agreement Subject to Plan; Applicable Law. This Option is made pursuant to the Plan and will be interpreted to comply therewith. A copy of such Plan is available to Optionee, at no charge, at the principal office of the Company. Any provision of this Option inconsistent with the Plan will be considered void and replaced with the applicable provision of the Plan. The interpretation and enforcement of this Option is governed by Delaware State Laws and subject to the exclusive jurisdiction of the courts therein.

Remainder of page intentionally left blank.

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IN WITNESS WHEREOF, the parties hereto have executed this Option as of the date first above written.

CALIBERCOS INC.	OPTIONEE
By:	By:
Its:	Name:

(one of the following, as appropriate, will be signed)

I certify that as of the date hereof I am unmarried.	By his or her signature, the spouse of Optionee hereby agrees to be bound by the provisions of the foregoing INCENTIVE STOCK OPTION AGREEMENT.
Optionee	Spouse of Optionee

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Appendix A

NOTICE OF EXERCISE

CALIBERCOS. INC.

16074 N. 78^th Street, Suite B-104
Scottsdale, AZ 85260

[INSERT OPTIONEE NAME]

[INSERT OPTIONEE ADDRESS]

Re: Incentive Stock Option

Notice is hereby given pursuant to Section 6 of my Incentive Stock Option Agreement that I elect to purchase the number of shares set forth below at the exercise price set forth in my option agreement:

Incentive Stock Option Agreement dated: _________________

Number of shares being purchased: _________________

Exercise Price: _________________

A check in the amount of the aggregate price of the shares being purchased is attached.

I hereby confirm that such shares are being acquired by me for my own account for investment purposes, and not with a view to, or for resale in connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities Act of 1933, as amended, or any applicable federal or state securities laws. Further, I understand that the exemption from taxable income at the time of exercise is dependent upon my holding such stock for a period of at least one year from the date of exercise and two years from the date of grant of the Option.

I understand that the certificate representing the Option Shares will bear a restrictive legend within the contemplation of the Securities Act and as required by such other state or federal law or regulation applicable to the issuance or delivery of the Option Shares.

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I agree to provide to the Company such additional documents or information as may be required pursuant to the Company's 2017 Incentive Stock Plan.

(Signature)

(Print name of Optionee)

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Exhibit B-1

Form of Nonstatutory Stock Option Agreement (Employees)

CALIBERCOS INC.

NONSTATUTORY STOCK OPTION AGREEMENT

THIS NONSTATUTORY STOCK OPTION AGREEMENT ("Agreement") is made and entered into as of the date set forth below, by and between CALIBERCOS INC., a Delaware corporation ("Company"), and the following employee of the Company ("Optionee"):

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1.           Option Information.

(a)            Date of Option: ______________

(b)            Optionee: ___________________

(c)            Number of Shares: _____________

(d)            Exercise Price: _________________

2.           Acknowledgements.

(a)            Optionee is an employee of the Company.

(b)            The Board of Directors ("Board" which term will include an authorized committee of the Board of Directors) and shareholders of the Company have heretofore adopted a 2017 Incentive Stock Plan ("Plan"), pursuant to which this Option is being granted; and

(c)             The Board has authorized the granting to Optionee of a nonstatutory stock option ("Option") to purchase shares of common stock of the Company ("Stock") upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under the Securities Act of 1933, as amended ("Securities Act") provided by Rule 701 thereunder.

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3.            Shares; Price. Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated, the number of shares of Stock set forth in Section 1(c) above ("Shares") for cash (or other consideration as is authorized under the Plan and acceptable to the Board of Directors of the Company, in their sole and absolute discretion) at the price per Share set forth in Section 1(d) above ("Exercise Price"), such price being not less than the fair market value per share of the Shares covered by this Option as of the date hereof.

4.            Term of Option; Continuation of Service. This Option will expire, and all rights hereunder to purchase the Shares will terminate, five (5) years from the date hereof. This Option shall earlier terminate subject to Sections 7 and 8 hereof upon, and as of the date of, the termination of Optionee's employment if such termination occurs prior to the end of such five (5) year period. Nothing contained herein will confer upon Optionee the right to the continuation of his or her employment by the Company or to interfere with the right of the Company to terminate such employment or to increase or decrease the compensation of Optionee from the rate in existence at the date hereof.

5.            Vesting of Option. Subject to the provisions of Sections 7 and 8 hereof, this Option will become exercisable during the term of Optionee's employment as follows. Upon the first anniversary of this Agreement, the first installment of twenty-five percent (25%) will be exercisable. Thereafter an additional 1/36th of the grant will become exercisable each month for the then following thirty-six (36) months. The installments are cumulative (i.e., this option may be exercised, as to any or all shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration or termination of this option).

6.            Exercise. This Option will be deemed exercised by delivery to the Company of (a) written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the amount of the Exercise Price of the Shares covered by the notice (or such other consideration as has been approved by the Board of Directors consistent with the Plan) and (c) a written investment representation as provided for in Section 13. This Option is not assignable or transferable, except by will or by the laws of descent and distribution, and is exercisable only by Optionee during his or her lifetime, except as provided in Section 8.

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7.            Termination of Employment. If Optionee ceases to be employed by the Company for any reason, whether voluntarily or involuntarily, other than by his or her death, Optionee (or if the Optionee dies after such termination, but prior to such exercise date, Optionee's personal representative or the person entitled to succeed to the Option) will have the right at any time within three (3) months following such termination of employment or the remaining term of this Option, whichever is the lesser, to exercise in whole or in part this Option to the extent, but only to the extent, that this Option was exercisable as of the date of termination of employment and had not previously been exercised; provided, however: (i) if Optionee is permanently disabled (within the meaning of Section 22(e)(3) of the Code) at the time of termination, the foregoing three (3) month period will be extended to six (6) months; or (ii) if Optionee is terminated "for cause" as that term is defined under employment law of the state where Optionee is employed by the Company, or by the terms of the Plan or this Option Agreement or by any employment agreement between the Optionee and the Company, this Option will automatically terminate as to all Shares covered by this Option not exercised prior to termination. Unless earlier terminated, all rights under this Option must terminate in any event on the expiration date of this Option as defined in Section 4 hereof.

8.            Death of Optionee. If the Optionee dies while in the employ of the Company, Optionee's personal representative or the person entitled to Optionee's rights hereunder may at any time within six (6) months after the date of Optionee's death, or during the remaining term of this Option, whichever is the lesser, exercise this Option and purchase Shares to the extent, but only to the extent, that Optionee could have exercised this Option as of the date of Optionee's death; provided, in any case, that this Option may be so exercised only to the extent that this Option has not previously been exercised by Optionee.

9.            No Rights as Shareholder. Optionee will have no rights as a shareholder with respect to the Shares covered by any installment of this Option until the effective date of issuance of the Shares following exercise of this Option, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided in Section 10 hereof.

10.          Recapitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by this Option, and the Exercise Price thereof, will be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company will not be deemed having been "effected without receipt of consideration by the Company".

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In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a "Reorganization"), unless otherwise provided by the Board, this Option must terminate immediately prior to such date as is determined by the Board, which date must be no later than the consummation of such Reorganization. In such event, if the entity which is the surviving entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised Option a stock option or capital stock of such surviving of such surviving entity, as applicable, which on an equitable basis will provide the Optionee with substantially the same economic benefit as such unexercised Option, then the Board may grant to such Optionee, in its sole and absolute discretion and without obligation, the right for a period commencing thirty (30) days prior to and ending immediately prior to the date determined by the Board pursuant hereto for termination of the Option or during the remaining term of the Option, whichever is the lesser, to exercise any unexpired Option or Options without regard to the installment provisions of Section 5; provided, however, that such exercise is subject to the consummation of such Reorganization.

Subject to any required action by the shareholders of the Company, if the Company is the surviving entity in any merger or consolidation, this Option thereafter will pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the installment provisions of Section 5 must continue to apply.

In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all of its authorized Stock without par value into the same number of shares of Stock with a par value, the shares resulting from any such change will be deemed to be the Shares within the meaning of this Option.

To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments is made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided, Optionee has no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Shares subject to this Option will not be affected by, and no adjustments will be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class. The grant of this Option does not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

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11.          Taxation upon Exercise of Option. Optionee understands that, upon exercise of this Option, Optionee will recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, determined as of the date of exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee will constitute an agreement by Optionee to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes. Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Optionee's then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Optionee to make a cash payment to cover such liability as a condition of the exercise of this Option.

12.          Modification, Extension and Renewal of Options. The Board or Committee, as described in the Plan, may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Plan, the Code and Delaware corporate securities rules. Notwithstanding the foregoing provisions of this Section 12, no modification will, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights of Optionee hereunder.

13.          Investment Intent; Restrictions on Transfer.

(a)            Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under the provisions of Sections 7 and 8 hereof) must furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities Act, either before or after the exercise of this Option in whole or in part, the Optionee will be relieved of the foregoing investment representation and agreement and will not be required to furnish the Company with the foregoing written statement.

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(b)           Optionee further represents that Optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information.

(c)           Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution there for and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event will bear legends in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED                 , 2017 BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

and/or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed with the Company's transfer agent.

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14.           Stand-off Agreement. Optionee agrees that, in connection with any registration of the Company's securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Optionee will not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of at least one year following the effective date of registration of such offering.

15.          Restriction upon Transfer. The Shares may not be sold, transferred or otherwise disposed of and must not be pledged or otherwise hypothecated by the Optionee except as hereinafter provided.

(a)            Repurchase Right on Termination Other Than for Cause. For the purposes of this Section 15, a "Repurchase Event" means an occurrence of one of (i) termination of Optionee's employment by the Company, voluntary or involuntary and with or without cause; (ii) retirement or death of Optionee; (iii) bankruptcy of Optionee, which is deemed to have occurred as of the date on which a voluntary or involuntary petition in bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent that any of the Shares are allocated as the sole and separate property of Optionee's spouse pursuant thereto (in which case, this section only applies to the Shares so affected); or (v) any attempted transfer by the Optionee of Shares, or any interest therein, in violation of this Agreement. Upon the occurrence of a Repurchase Event, the Company has the right (but not an obligation) to repurchase all or any portion of the Shares of Optionee at a price equal to the fair value of the Shares as of the date of the Repurchase Event.

(b)            Repurchase Right on Termination for Cause. In the event Optionee's employment is terminated by the Company "for cause," then the Company has the right (but not an obligation) to repurchase Shares of Optionee at a price equal to the Exercise Price. Such right of the Company to repurchase Shares at the Exercise Price will apply to one hundred percent (100%) of the exercised or exercisable Shares for one (1) year from the date of this Agreement; and the right to purchase at the Exercise Price will thereafter lapse at the rate of twenty percent (20%) of the exercised or exercisable Shares on each anniversary of the date of this Agreement. In addition, the Company has the right, in the sole discretion of the Board and without obligation, to repurchase upon termination for cause all or any portion of the Shares of Optionee, at a price equal to the fair value of the Shares as of the date of termination, which right is not subject to the foregoing lapsing of rights. In the event the Company elects to repurchase the Shares, the stock certificates representing the same must promptly be returned to the Company for cancellation.

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(c)            Exercise of Repurchase Right. Any Repurchase Right under Sections 15(a) or 15(b) must exercised by giving notice of exercise as provided herein to Optionee or the estate of Optionee, as applicable. Such right must be exercised, and the repurchase price thereunder must be paid, by the Company within a ninety (90) day period beginning on the date of notice to the Company of the occurrence of such Repurchase Event (except in the case of termination of employment or retirement, where such option period begins upon the occurrence of the Repurchase Event). Such repurchase price is payable only in the form of cash (including a check drafted on immediately available funds) or cancellation of purchase money indebtedness of the Optionee for the Shares. If the Company cannot purchase all such Shares because it is unable to meet the financial tests set forth in the Delaware corporation law, the Company has the right to purchase as many Shares as it is permitted to purchase under such sections. Any Shares not purchased by the Company hereunder will no longer be subject to the provisions of this Section 15.

(d)            Right of First Refusal. In the event Optionee desires to transfer any Shares during his or her lifetime, Optionee must first offer to sell such Shares to the Company. Optionee must deliver to the Company written notice of the intended sale, such notice to specify the number of Shares to be sold, the proposed purchase price and terms of payment, and grant the Company an option for a period of thirty days following receipt of such notice to purchase the offered Shares upon the same terms and conditions. To exercise such option, the Company must give notice of that fact to Optionee within the thirty (30) day notice period and agree to pay the purchase price in the manner provided in the notice. If the Company does not purchase all of the Shares so offered during foregoing option period, Optionee is under no obligation to sell any of the offered Shares to the Company, but may dispose of such Shares in any lawful manner during a period of one hundred and eighty (180) days following the end of such notice period, except that Optionee must not sell any such Shares to any other person at a lower price or upon more favorable terms than those offered to the Company.

(e)            Acceptance of Restrictions. Acceptance of the Shares will constitute the Optionee's agreement to such restrictions and the legending of his certificates with respect thereto. Notwithstanding such restrictions, however, so long as the Optionee is the holder of the Shares, or any portion thereof, he or she is entitled to receive all dividends declared on and to vote the Shares and to all other rights of a shareholder with respect thereto.

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(f)             Permitted Transfers. Notwithstanding any provisions in this Section 15 to the contrary, the Optionee may transfer Shares subject to this Agreement to his or her parents, spouse, children, or grandchildren, or a trust for the benefit of the Optionee or any such transferee(s); provided, that such permitted transferee(s) must hold the Shares subject to all the provisions of this Agreement (all references to the Optionee herein will in such cases refer mutatis mutandis to the permitted transferee, except in the case of clause (iv) of Section 15(a) wherein the permitted transfer is deemed to be rescinded); and provided further, that notwithstanding any other provisions in this Agreement, a permitted transferee may not, in turn, make permitted transfers without the written consent of the Optionee and the Company.

(g)            Release of Restrictions on Shares. All other restrictions under this Section 15 will terminate five (5) years following the date of this Agreement, or when the Company's securities are publicly traded, whichever occurs earlier.

16.           Notices. Any notice required to be given pursuant to this Option or the Plan must be in writing and will be deemed to be delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Optionee at the address last provided by Optionee for his or her employee records.

17.           Agreement Subject to Plan; Applicable Law. This Option is made pursuant to the Plan and must be interpreted to comply therewith. A copy of such Plan is available to Optionee, at no charge, at the principal office of the Company. Any provision of this Option inconsistent with the Plan are considered void and replaced with the applicable provision of the Plan. This Option is governed by the laws of the State of Delaware and subject to the exclusive jurisdiction of the courts therein.

Remainder of page intentionally left blank.

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IN WITNESS WHEREOF, the parties hereto have executed this Option as of the date first above written.

CALIBERCOS INC.	OPTIONEE
By:
Its:	Print Name:

(one of the following, as appropriate, shall be signed)

I certify that as of the date hereof I am unmarried	By his or her signature, the spouse of Optionee hereby agrees to be bound by the provisions of the foregoing NONSTATUTORY STOCK OPTION AGREEMENT
Optionee	Spouse of Optionee

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Appendix A

NOTICE OF EXERCISE

CALIBERCOS. INC.

16074 N. 78^th Street, Suite B-104
Scottsdale, AZ 85260

[INSERT OPTIONEE NAME]

[INSERT OPTIONEE ADDRESS]

Re: Nonstatutory Stock Option

Notice is hereby given pursuant to Section 6 of my Nonstatutory Stock Option Agreement that I elect to purchase the number of shares set forth below at the exercise price set forth in my option agreement:

Nonstatutory Stock Option Agreement dated: __________

Number of shares being purchased: __________

Exercise Price: $ __________

A check in the amount of the aggregate price of the shares being purchased is attached.

I hereby confirm that such shares are being acquired by me for my own account for investment purposes, and not with a view to, or for resale in connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities Act of 1933, as amended, or any applicable federal or state securities laws.

I understand that the certificate representing the Option Shares will bear a restrictive legend within the contemplation of the Securities Act and as required by such other state or federal law or regulation applicable to the issuance or delivery of the Option Shares.

Further, I understand that, as a result of this exercise of rights, I will recognize income in an amount equal to the amount by which the fair market value of the Shares exceeds the exercise price. I agree to report such income in accordance with then applicable law and to cooperate with Company in establishing the withholding and corresponding deduction to the Company for its income tax purposes.

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I agree to provide to the Company such additional documents or information as may be required pursuant to the Company's 2017 Incentive Stock Plan.

(Signature)

(Name of Optionee)

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Exhibit B-2

Form of Nonstatutory Stock Option Agreement (Directors)

CALIBERCOS INC.

NONSTATUTORY STOCK OPTION AGREEMENT

THIS NONSTATUTORY STOCK OPTION AGREEMENT ("Agreement") is made and entered into as of the date set forth below, by and between CALIBERCOS INC., a Delaware corporation ("Company"), and the following Director of the Company ("Optionee"):

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1.            Option Information.

(e)          Date of Option: _______________

(f)          Optionee: ___________________

(g)          Number of Shares: ____________

(h)          Exercise Price: _______________

2.            Acknowledgements.

(a)          Optionee is a director of the Company.

(b)          The Board of Directors ("Board" which term includes an authorized committee of the Board of Directors) and shareholders of the Company have heretofore adopted a 2017 Incentive Stock Plan ("Plan"), pursuant to which this Option is being granted; and

(c)          The Board has authorized the granting to Optionee of a nonstatutory stock option ("Option") to purchase shares of common stock of the Company ("Stock") upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under the Securities Act of 1933, as amended ("Securities Act") provided by Rule 701 thereunder.

3.             Shares; Price. Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated, the number of shares of Stock set forth in Section 1(c) above ("Shares") for cash (or other consideration as is authorized under the Plan and acceptable to the Board, in their sole and absolute discretion) at the price per Share set forth in Section 1(d) above ("Exercise Price"), such price being not less than the fair market value per share of the Shares covered by this Option as of the date hereof.

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4.             Term of Option; Continuation of Service. This Option will expire, and all rights hereunder to purchase the Shares will terminate, ten (10) years from the date hereof. Nothing contained herein will be construed to interfere in any way with the right of the Company or its shareholders to remove or not elect Optionee as a Director of the Company, or to increase or decrease the compensation of Directors from the rate in effect at the date hereof.

5.             Vesting of Option. Subject to the provisions of Sections 7 and 8 hereof, this Option will be exercisable during the term that Optionee serves as a Director of the Company in three (3) equal annual installments of 33 1/3% of the Shares covered by this Option, the first installment to be exercisable on the first anniversary of the date of this Option, with an additional 33 1/3% of such Shares becoming exercisable on each of the two (2) successive anniversary dates. The installments arecumulative (i.e., this option may be exercised, as to any or all shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration or termination of this Option).

6.             Exercise. This Option will be exercised by delivery to the Company of (a) written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the amount of the Exercise Price of the Shares covered by the notice (or such other consideration as has been approved by the Board of Directors consistent with the Plan) and (c) a written investment representation as provided for in Section 13. This Option is not assignable or transferable, except by will or by the laws of descent and distribution, and is exercisable only by Optionee during his or her lifetime.

7.             Termination of Service. If Optionee ceases to serve as a Director of the Company for any reason, no further installments will vest pursuant to Section 5, and the maximum number of Shares that Optionee may purchase pursuant hereto will be limited to the number of Shares that were vested as of the date Optionee ceases to be a Director (to the nearest whole Share). Thereupon, Optionee has the right to exercise this Option, at any time during the remaining term hereof, to the extent, but only to the extent, that this Option was exercisable as of the date Optionee ceases to be a Director; provided, however, if Optionee is removed as a Director pursuant to the Delaware corporation law, the foregoing right to exercise will automatically terminate on the date Optionee ceases to be a Director as to all Shares covered by this Option not exercised prior to termination. Unless earlier terminated, all rights under this Option shall terminate in any event on the expiration date of this Option as defined in Section 4.

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8.             Death of Optionee. If the Optionee dies while a Director of the Company, Optionee's personal representative or the person entitled to Optionee's rights hereunder may at any time within six (6) months after the date of Optionee's death, or during the remaining term of this Option, whichever is the lesser, exercise this Option and purchase Shares to the extent, but only to the extent, that Optionee could have exercised this Option as of the date of Optionee's death; provided, in any case, that this Option may be so exercised only to the extent that this Option has not previously been exercised by Optionee.

9.             No Rights as Shareholder. Optionee has no rights as a shareholder with respect to the Shares covered by any installment of this Option until the effective date of issuance of the Shares following exercise of this Option, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided in Section 7.

10.           Recapitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by this Option, and the Exercise Price thereof, will be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company will not be deemed having been "effected without receipt of consideration by the Company."

In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a "Reorganization"), this Option shall terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board; provided, however, if Optionee is a Director at the time such Reorganization is approved by the stockholders, Optionee has the right to exercise this Option as to all or any part of the Shares, without regard to the installment provisions of Section 5, for a period beginning thirty (30) days prior to the consummation of such Reorganization and ending as of the Reorganization or the expiration of this Option, whichever is earlier, subject to the consummation of the Reorganization. In any event, the Company must notify Optionee, at least thirty (30) days prior to the consummation of such Reorganization, of his exercise rights, if any, and that the Option shall terminate upon the consummation of the Reorganization.

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Subject to any required action by the shareholders of the Company, if the Company is the surviving entity in any merger or consolidation, this Option thereafter will pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the installment provisions of Section 5 must continue to apply.

In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all of its authorized Stock without par value into the same number of shares of Stock with a par value, the shares resulting from any such change will be deemed to be the Shares within the meaning of this Option.

To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments are made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided, Optionee has no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Shares subject to this Option will not be affected by, and no adjustments will be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

The grant of this Option will not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

11.         Taxation upon Exercise of Option. Optionee understands that, upon exercise of this Option, Optionee will recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, determined as of the date of exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee constitutes an agreement by Optionee to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes. Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Optionee's then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Optionee to make a cash payment to cover such liability as a condition of the exercise of this Option.

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12.           Modification, Extension and Renewal of Options. The Board or Committee, as described in the Plan, may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Plan, the Code and applicable corporate securities rules. Notwithstanding the foregoing provisions of this Section 12, no modification will, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights of Optionee hereunder.

13.           Investment Intent; Restrictions on Transfer.

(a)         Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under the provisions of Sections 7 and 8 hereof) must furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities Act, either before or after the exercise of this Option in whole or in part, the Optionee will be relieved of the foregoing investment representation and agreement and will not be required to furnish the Company with the foregoing written statement.

(b)         Optionee further represents that Optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information.

(c)         Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event will bear legends in substantially the following form:

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THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED                             , 2017 BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

and/or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed with the Company's transfer agent.

14.          Stand-off Agreement. Optionee agrees that, in connection with any registration of the Company's securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Optionee must not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of up to one (1) year following the effective date of registration of such offering.

15.          Restriction upon Transfer. The Shares may not be sold, transferred or otherwise disposed of and must not be pledged or otherwise hypothecated by the Optionee except as hereinafter provided.

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(a)          Repurchase Right on Termination Other Than by Removal. For the purposes of this Section 15, a "Repurchase Event" means an occurrence of one of (i) termination of Optionee's service as a director; (ii) death of Optionee; (iii) bankruptcy of Optionee, which is deemed to have occurred as of the date on which a voluntary or involuntary petition in bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent that any of the Shares are allocated as the sole and separate property of Optionee's spouse pursuant thereto (in which case, this section only applies to the Shares so affected); or (v) any attempted transfer by the Optionee of Shares, or any interest therein, in violation of this Agreement. Upon the occurrence of a Repurchase Event, and upon mutual agreement of the Company and Optionee, the Company may repurchase all or any portion of the Shares of Optionee at a price equal to the fair value of the Shares as of the date of the Repurchase Event.

(b)          Repurchase Right on Removal. In the event Optionee is removed as a director pursuant to Delaware corporations law, or Optionee voluntarily resigns as a director prior to the date upon which the last installment of Shares becomes exercisable pursuant to Section 5, then the Company has the right (but not an obligation) to repurchase Shares of Optionee at a price equal to the Exercise Price. Such right of the Company to repurchase Shares at the Exercise Price applies to one hundred percent (100%) of the exercised or exercisable Shares for one (1) year from the date of this Agreement; and will thereafter lapse ratably in equal annual increments on each anniversary of the date of this Agreement over the term of this Option specified in Section 4. In addition, the Company has the right, in the sole discretion of the Board and without obligation, to repurchase upon removal or resignation all or any portion of the Shares of Optionee, at a price equal to the fair value of the Shares as of the date of such removal or resignation, which right is not subject to the foregoing lapsing of rights. In the event the Company elects to repurchase the Shares, the stock certificates representing the same must promptly be returned to the Company for cancellation.

(c)          Exercise of Repurchase Right. Any Repurchase Right under Sections 15(a) or 15(b) must be exercised by giving notice of exercise as provided herein to Optionee or the estate of Optionee, as applicable. Such right must be exercised, and the repurchase price thereunder must be paid, by the Company within a ninety (90) day period beginning on the date of notice to the Company of the occurrence of such Repurchase Event (except in the case of termination or cessation of services as director, where such option period begins upon the occurrence of the Repurchase Event). Such repurchase price is payable only in the form of cash (including a check drafted on immediately available funds) or cancellation of purchase money indebtedness of the Optionee for the Shares. If the Company cannot purchase all such Shares because it is unable to meet the financial tests set forth in the Delaware corporation law, the Company has the right to purchase as many Shares as it is permitted to purchase under such sections. Any Shares not purchased by the Company hereunder will no longer be subject to the provisions of this Section 15.

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(d)          Right of First Refusal. In the event Optionee desires to transfer any Shares during his or her lifetime, Optionee must first offer to sell such Shares to the Company. Optionee must deliver to the Company written notice of the intended sale, such notice to specify the number of Shares to be sold, the proposed purchase price and terms of payment, and grant the Company an option for a period of thirty (30) days following receipt of such notice to purchase the offered Shares upon the same terms and conditions. To exercise such option, the Company must give notice of that fact to Optionee within the thirty (30) day notice period and agree to pay the purchase price in the manner provided in the notice. If the Company does not purchase all of the Shares so offered during foregoing option period, Optionee is under no obligation to sell any of the offered Shares to the Company, but may dispose of such Shares in any lawful manner during a period of one hundred and eighty (180) days following the end of such notice period, except that Optionee must not sell any such Shares to any other person at a lower price or upon more favorable terms than those offered to the Company.

(e)          Acceptance of Restrictions. Acceptance of the Shares will constitute the Optionee's agreement to such restrictions and the legending of his certificates with respect thereto. Notwithstanding such restrictions, however, so long as the Optionee is the holder of the Shares, or any portion thereof, he or she is entitled to receive all dividends declared on and to vote the Shares and to all other rights of a shareholder with respect thereto.

(f)          Permitted Transfers. Notwithstanding any provisions in this Section 15 to the contrary, the Optionee may transfer Shares subject to this Agreement to his or her parents, spouse, children, or grandchildren, or a trust for the benefit of the Optionee or any such transferee(s); provided, that such permitted transferee(s) hold the Shares subject to all the provisions of this Agreement (all references to the Optionee herein will in such cases refer mutatis mutandis to the permitted transferee, except in the case of clause (iv) of Section 15(a) wherein the permitted transfer will be deemed to be rescinded); and provided further, that notwithstanding any other provisions in this Agreement, a permitted transferee may not, in turn, make permitted transfers without the written consent of the Optionee and the Company.

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(g)          Release of Restrictions on Shares. All other restrictions under this Section 15 terminate five (5) years following the date of this Agreement, or when the Company's securities are publicly traded, whichever occurs earlier.

16.          Notices. Any notice required to be given pursuant to this Option or the Plan must be in writing and will be deemed to be delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Optionee at the address last provided by Optionee for use in Company records related to Optionee.

17.          Agreement Subject to Plan; Applicable Law. This Option is made pursuant to the Plan and is interpreted to comply therewith. A copy of such Plan is available to Optionee, at no charge, at the principal office of the Company. Any provision of this Option inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. This Option is governed by the laws of the State of Delaware and subject to the exclusive jurisdiction of the courts therein.

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IN WITNESS WHEREOF, the parties hereto have executed this Option as of the date first above written.

CALIBERCOS INC.	OPTIONEE
By:
Its:	Print Name:

(one of the following, as appropriate, shall be signed)

I certify that as of the date hereof I am unmarried	By his or her signature, the spouse of Optionee hereby agrees to be bound by the provisions of the foregoing NONSTATUTORY STOCK OPTION AGREEMENT
Optionee	Spouse of Optionee

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Appendix A

NOTICE OF EXERCISE

CALIBERCOS. INC.

16074 N. 78^th Street, Suite B-104
Scottsdale, AZ 85260

[INSERT OPTIONEE NAME]

[INSERT OPTIONEE ADDRESS]

Re: Nonstatutory Stock Option

Notice is hereby given pursuant to Section 6 of my Nonstatutory Stock Option Agreement that I elect to purchase the number of shares set forth below at the exercise price set forth in my option agreement:

Nonstatutory Stock Option Agreement dated: __________

Number of shares being purchased:__________

Exercise Price: $__________

A check in the amount of the aggregate price of the shares being purchased is attached.

I hereby confirm that such shares are being acquired by me for my own account for investment purposes, and not with a view to, or for resale in connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities Act of 1933, as amended, or any applicable federal or state securities laws.

I understand that the certificate representing the Option Shares will bear a restrictive legend within the contemplation of the Securities Act and as required by such other state or federal law or regulation applicable to the issuance or delivery of the Option Shares.

Further, I understand that, as a result of this exercise of rights, I will recognize income in an amount equal to the amount by which the fair market value of the Shares exceeds the exercise price. I agree to report such income in accordance with then applicable law and to cooperate with Company in establishing the withholding and corresponding deduction to the Company for its income tax purposes.

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I agree to provide to the Company such additional documents or information as may be required pursuant to the Company's 2017 Incentive Stock Plan.

(Signature)

(Name of Optionee)

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Exhibit B-3

Form of Nonstatutory Stock Option Agreement (Consultants)

CALIBERCOS INC.

NONSTATUTORY STOCK OPTION AGREEMENT

THIS NONSTATUTORY STOCK OPTION AGREEMENT ("Agreement") is made and entered into as of the date set forth below, by and between CALIBERCOS INC., a Delaware corporation ("Company"), and the following consultant to the Company ("Optionee"):

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1.            Option Information.

(i)          Date of Option: _________________

(j)          Optionee: _____________________

(k)          Number of Shares: ______________

(l)          Exercise Price: __________________

2.            Acknowledgements.

(a)          Optionee is an independent consultant to the Company, not an

employee;

(b)          The Board of Directors ("Board" which term includes an authorized committee of the Board of Directors) and shareholders of the Company have heretofore adopted a 2017 Incentive Stock Plan ("Plan"), pursuant to which this Option is being granted; and

(c)          The Board has authorized the granting to Optionee of a nonstatutory stock option ("Option") to purchase shares of common stock of the Company ("Stock") upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under the Securities Act of 1933, as amended ("Securities Act") provided by Rule 701 thereunder.

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3.            Shares; Price. Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions herein stated, the number of shares of Stock set forth in Section 1(c) above ("Shares") for cash (or other consideration as is authorized under the Plan and acceptable to the Board, in their sole and absolute discretion) at the price per Share set forth in Section 1(d) above ("Exercise Price"), such price being not less than the fair market value per share of the Shares covered by this Option as of the date hereof (unless Optionee is the owner of Stock possessing ten percent or more of the total voting power or value of all outstanding Stock of the Company, in which case the Exercise Price will be no less than one hundred ten percent (110%) of the fair market value of such Stock).

4.            Term of Option. This Option will expire, and all rights hereunder to purchase the Shares will terminate, five (5) years from the date hereof. Nothing contained herein shall be construed to interfere in any way with the right of the Company to terminate Optionee as a consultant to the Company, or to increase or decrease the compensation paid to Optionee from the rate in effect as of the date hereof.

5.            Vesting of Option. Subject to the provisions of Sections 7 and 8 hereof, this Option will become exercisable during the period that Optionee serves as a consultant of the Company in equal annual installments, each installment covering a fraction of the Shares, the numerator of which is one (1) and the denominator of which is the number of years in the term of this Option (not to exceed five (5)). The first installment will become exercisable on the first anniversary of the date of this Option, and an additional installment will become exercisable on each successive anniversary date during the term of this Option, except the last such anniversary date. The final installment will become exercisable ninety days prior to the expiration of the term of this Option. The installments are cumulative (i.e., this option may be exercised, as to any or all shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration or termination of this option).

6.            Exercise. This Option will be exercised by delivery to the Company of (a) written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A, (b) a check or cash in the amount of the Exercise Price of the Shares covered by the notice (or such other consideration as has been approved by the Board of Directors consistent with the Plan) and (c) a written investment representation as provided for in Section 13 hereof. This Option is not assignable or transferable, except by will or by the laws of descent and distribution, and is exercisable only by Optionee during his or her lifetime.

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7.            Termination of Service. If Optionee's service as a consultant to the Company terminates for any reason, no further installments will vest pursuant to Section 5, and Optionee has the right at any time within thirty (30) days following such termination of services or the remaining term of this Option, whichever is the lesser, to exercise in whole or in part this Option to the extent, but only to the extent, that this Option was exercisable as of the date Optionee ceased to be a consultant to the Company; provided, however, if Optionee is terminated for reasons that would justify a termination of employment "for cause" as that term is defined under applicable state Labor Code and case law related thereto, the foregoing right to exercise must automatically terminate on the date Optionee ceases to be a consultant to the Company as to all Shares covered by this Option not exercised prior to termination. Unless earlier terminated, all rights under this Option shall terminate in any event on the expiration date of this Option as defined in Section 4.

8.            Death of Optionee. If the Optionee dies while serving as a consultant to the Company, Optionee's personal representative or the person entitled to Optionee's rights hereunder may at any time within ninety (90) days after the date of Optionee's death, or during the remaining term of this Option, whichever is the lesser, exercise this Option and purchase Shares to the extent, but only to the extent, that Optionee could have exercised this Option as of the date of Optionee's death; provided, in any case, that this Option may be so exercised only to the extent that this Option has not previously been exercised by Optionee.

9.            No Rights as Shareholder. Optionee has no rights as a shareholder with respect to the Shares covered by any installment of this Option until the effective date of the issuance of shares following exercise of this Option, and no adjustment will be made for dividends or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided in Section 10.

10.           Recapitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by this Option, and the Exercise Price thereof, will be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company will not be deemed having been "effected without receipt of consideration by the Company."

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In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a "Reorganization"), this Option shall terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board; provided, however, if Optionee must be a consultant at the time such Reorganization is approved by the stockholders, Optionee has the right to exercise this Option as to all or any part of the Shares, without regard to the installment provisions of Section 5, for a period beginning thirty (30) days prior to the consummation of such Reorganization and ending as of the Reorganization or the expiration of this Option, whichever is earlier, subject to the consummation of the Reorganization. In any event, the Company notifies Optionee, at least thirty (30) days prior to the consummation of such Reorganization, of his exercise rights, if any, and that the Option shall terminate upon the consummation of the Reorganization.

Subject to any required action by the shareholders of the Company, if the Company is the surviving entity in any merger or consolidation, this Option thereafter will pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the installment provisions of Section 5 must continue to apply.

In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all of its authorized Stock without par value into the same number of shares of Stock with a par value, the shares resulting from any such change are deemed to be the Shares within the meaning of this Option.

To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments are made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided, Optionee has no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Shares subject to this Option will not be affected by, and no adjustments will be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

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The grant of this Option will not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

11.          Taxation upon Exercise of Option. Optionee understands that, upon exercise of this Option, Optionee will recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, determined as of the date of exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee constitutes an agreement by Optionee to report such income in accordance with then applicable law and to cooperate with Company in establishing the amount of such income and corresponding deduction to the Company for its income tax purposes. Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Optionee's then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Optionee to make a cash payment to cover such liability as a condition of the exercise of this Option.

12.          Modification, Extension and Renewal of Options. The Board or Committee, as described in the Plan, may modify, extend or renew this Option or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution therefore (to the extent not theretofore exercised), subject at all times to the Plan, the Code and applicable corporate securities rules. Notwithstanding the foregoing provisions of this Section 12, no modification will, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights of Optionee hereunder.

13.          Investment Intent; Restrictions on Transfer.

(d)          Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under the provisions of Sections 7 and 8 hereof) will furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities Act, either before or after the exercise of this Option in whole or in part, the Optionee will be relieved of the foregoing investment representation and agreement and will not be required to furnish the Company with the foregoing written statement.

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(e)          Optionee further represents that Optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information.

(f)          Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event will bear legends in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED                           , 2017 BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed with the Company's transfer agent.

14.          Stand-off Agreement. Optionee agrees that, in connection with any registration of the Company's securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Optionee must not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of up to one year following the effective date of registration of such offering.

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15.          Restriction upon Transfer. The Shares may not be sold, transferred or otherwise disposed of and must not be pledged or otherwise hypothecated by the Optionee except as hereinafter provided.

(h)        Repurchase Right on Termination Other Than for Cause. For the purposes of this Section 15, a "Repurchase Event" means an occurrence of one of (i) termination of Optionee's service as a consultant, voluntary or involuntary and with or without cause; (ii) retirement or death of Optionee; (iii) bankruptcy of Optionee, which is deemed to have occurred as of the date on which a voluntary or involuntary petition in bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent that any of the Shares are allocated as the sole and separate property of Optionee's spouse pursuant thereto (in which case, this section only applies to the Shares so affected); or (v) any attempted transfer by the Optionee of Shares, or any interest therein, in violation of this Agreement. Upon the occurrence of a Repurchase Event, the Company has the right (but not an obligation) to repurchase all or any portion of the Shares of Optionee at a price equal to the fair value of the Shares as of the date of the Repurchase Event.

(i)          Repurchase Right on Termination for Cause. In the event Optionee's service as a consultant is terminated by the Company "for cause" (as contemplated by Section 7), then the Company has the right (but not an obligation) to repurchase Shares of Optionee at a price equal to the Exercise Price. Such right of the Company to repurchase Shares applies to one hundred percent (100%) of the Shares for one (1) year from the date of this Agreement; and will thereafter lapse ratably in equal annual increments on each anniversary of the date of this Agreement over the term of this Option specified in Section 4. In addition, the Company has the right, in the sole discretion of the Board and without obligation, to repurchase upon any such termination of service for cause all or any portion of the Shares of Optionee, at a price equal to the fair value of the Shares as of the date of termination, which right is not subject to the foregoing lapsing of rights. In the event the Company elects to repurchase the Shares, the stock certificates representing the same will promptly be returned to the Company for cancellation.

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(j)          Exercise of Repurchase Right. Any repurchase right under Sections 15(a) or 15(b) must be exercised by giving notice of exercise as provided herein to Optionee or the estate of Optionee, as applicable. Such right must be exercised, and the repurchase price thereunder must be paid, by the Company within a ninety (90) day period beginning on the date of notice to the Company of the occurrence of such Repurchase Event (except in the case of termination of employment or retirement, where such option period begins upon the occurrence of the Repurchase Event). Such repurchase price is payable only in the form of cash (including a check drafted on immediately available funds) or cancellation of purchase money indebtedness of the Optionee for the Shares. If the Company cannot purchase all such Shares because it is unable to meet the financial tests set forth in the Delaware corporation law, the Company has the right to purchase as many Shares as it is permitted to purchase under such sections. Any Shares not purchased by the Company hereunder will no longer be subject to the provisions of this Section 15.

(k)          Right of First Refusal. In the event Optionee desires to transfer any Shares during his or her lifetime, Optionee must first offer to sell such Shares to the Company. Optionee must deliver to the Company written notice of the intended sale, such notice to specify the number of Shares to be sold, the proposed purchase price and terms of payment, and grant the Company an option for a period of thirty days following receipt of such notice to purchase the offered Shares upon the same terms and conditions. To exercise such option, the Company must give notice of that fact to Optionee within the thirty (30) day notice period and agree to pay the purchase price in the manner provided in the notice. If the Company does not purchase all of the Shares so offered during foregoing option period, Optionee is under no obligation to sell any of the offered Shares to the Company, but may dispose of such Shares in any lawful manner during a period of one hundred and eighty (180) days following the end of such notice period, except that Optionee must not sell any such Shares to any other person at a lower price or upon more favorable terms than those offered to the Company.

(l)          Acceptance of Restrictions. Acceptance of the Shares will constitute the Optionee's agreement to such restrictions and the legending of his certificates with respect thereto. Notwithstanding such restrictions, however, so long as the Optionee is the holder of the Shares, or any portion thereof, he or she is entitled to receive all dividends declared on and to vote the Shares and to all other rights of a shareholder with respect thereto.

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(m)          Permitted Transfers. Notwithstanding any provisions in this Section 15 to the contrary, the Optionee may transfer Shares subject to this Agreement to his or her parents, spouse, children, or grandchildren, or a trust for the benefit of the Optionee or any such transferee(s); provided, that such permitted transferee(s) must hold the Shares subject to all the provisions of this Agreement (all references to the Optionee herein will in such cases refer mutatis mutandis to the permitted transferee, except in the case of clause (iv) of Section 15(a) wherein the permitted transfer will be deemed to be rescinded); and provided further, that notwithstanding any other provisions in this Agreement, a permitted transferee may not, in turn, make permitted transfers without the written consent of the Optionee and the Company.

(n)          Release of Restrictions on Shares. All rights and restrictions under this Section 15 terminate five (5) years following the date of this Agreement, or when the Company's securities are publicly traded, whichever occurs earlier.

16.         Notices. Any notice required to be given pursuant to this Option or the Plan must be in writing and will be deemed to be delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Optionee at the address last provided by Optionee for use in Company records related to Optionee.

17.         Agreement Subject to Plan; Applicable Law. This Option is made pursuant to the Plan and shall be interpreted to comply therewith. A copy of such Plan is available to Optionee, at no charge, at the principal office of the Company. Any provision of this Option inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. This Option is governed by the laws of the State of Delaware and subject to the exclusive jurisdiction of the courts therein.

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IN WITNESS WHEREOF, the parties hereto have executed this Option as of the date first above written.

CALIBERCOS INC.	OPTIONEE
By:
Its:	Print Name:

(one of the following, as appropriate, shall be signed)

I certify that as of the date hereof I am unmarried	By his or her signature, the spouse of Optionee hereby agrees to be bound by the provisions of the foregoing NONSTATUTORY STOCK OPTION AGREEMENT
Optionee	Spouse of Optionee

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Appendix A

NOTICE OF EXERCISE

CALIBERCOS. INC.

16074 N. 78th Street, Suite B-104

Scottsdale, AZ 85260

[INSERT OPTIONEE NAME]

[INSERT OPTIONEE ADDRESS]

Re: Nonstatutory Stock Option

Notice is hereby given pursuant to Section 6 of my Nonstatutory Stock Option Agreement that I elect to purchase the number of shares set forth below at the exercise price set forth in my option agreement:

Nonstatutory Stock Option Agreement dated: ___________

Number of shares being purchased: ___________

Exercise Price: $_________

A check in the amount of the aggregate price of the shares being purchased is attached.

I hereby confirm that such shares are being acquired by me for my own account for investment purposes, and not with a view to, or for resale in connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities Act of 1933, as amended, or any applicable federal or state securities laws.

I understand that the certificate representing the Option Shares will bear a restrictive legend within the contemplation of the Securities Act and as required by such other state or federal law or regulation applicable to the issuance or delivery of the Option Shares.

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Further, I understand that, as a result of this exercise of rights, I will recognize income in an amount equal to the amount by which the fair market value of the Shares exceeds the exercise price. I agree to report such income in accordance with then applicable law and to cooperate with Company in establishing the withholding and corresponding deduction to the Company for its income tax purposes.

I agree to provide to the Company such additional documents or information as may be required pursuant to the Company's 2017 Incentive Stock Plan.

(Signature)

(Name of Optionee)

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Exhibit C

Form of Stock Award Agreement

CALIBERCOS INC

STOCK AWARD AGREEMENT

THIS STOCK AWARD AGREEMENT ("Agreement") is made and entered into as of the date set forth below, by and between CALIBERCOS INC., a Delaware corporation ("Company"), and the employee, director or consultant of the Company named in Section 1(b) ("Grantee").

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1.          Stock Award Information.

(a)   Date of Award:

(b)   Grantee:

(c)   Number of Shares:

(d)   Original Value:

2.          Acknowledgements.

(a)   Grantee is a [PICK ONE: employee / director / consultant] of the Company.

(b)   The Company has adopted a 2017 Incentive Stock Plan ("Plan") under which the Company's common stock ("Stock") may be offered to directors, officers, employees and consultants pursuant to an exemption from registration under the Securities Act of 1933, as amended ("Securities Act") provided by Rule 701 thereunder.

3.          Shares; Value. The Company hereby grants to Grantee, upon and subject to the terms and conditions herein stated, the number of shares of Stock set forth in Section 1(c) (the "Shares"), which Shares have a fair value per share ("Original Value") equal to the amount in Section 1(d). For the purpose of this Agreement, the terms "Share" or "Shares" includeS the original Shares plus any shares derived therefrom, regardless of the fact that the number, attributes or par value of such Shares may have been altered by reason of any recapitalization, subdivision, consolidation, stock dividend or amendment of the corporate charter of the Company. The number of Shares covered by this Agreement and the Original Value thereof will be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a recapitalization, subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company.

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4.            Investment Intent. Grantee represents and agrees that Grantee is accepting the Shares for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that, if requested, Grantee must furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Shares are registered under the Securities Act, Grantee will be relieved of the foregoing investment representation and agreement and will not be required to furnish the Company with the foregoing written statement.

5.            Restriction upon Transfer. The Shares may not be sold, transferred or otherwise disposed of and must not be pledged or otherwise hypothecated by the Grantee except as hereinafter provided.

(a)          Repurchase Right on Termination Other Than for Cause. For the purposes of this Section, a "Repurchase Event" means an occurrence of one of (i) termination of Grantee's employment or service as a director/consultant, as applicable, by the Company, voluntary or involuntary and with or without cause; (ii) retirement or death of Grantee; (iii) bankruptcy of Grantee, which is deemed to have occurred as of the date on which a voluntary or involuntary petition in bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution of the marriage of Grantee, to the extent that any of the Shares are allocated as the sole and separate property of Grantee's spouse pursuant thereto (in which case, this section only applies to the Shares so affected); or (v) any attempted transfer by the Grantee of Shares, or any interest therein, in violation of this Agreement. Upon the occurrence of a Repurchase Event, the Company has the right (but not an obligation) to purchase all or any portion of the Shares of Grantee, at a price equal to the fair value of the Shares as of the date of the Repurchase Event.

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(b)          Repurchase Right on Termination for Cause. In the event Grantee's employment with the Company or services as a consultant or director, as applicable to the Grantee under this Agreement, is terminated by the Company "for cause" (as defined below), then the Company has the right (but not an obligation) to purchase Shares of Grantee at a price equal to the Original Value. Such right of the Company to purchase Shares at the Original Value applies to one hundred percent (100%) of the Shares for one (1) year from the date of this Agreement; and will thereafter lapse at the rate of twenty percent (20%) of the Shares on each anniversary of the date of this Agreement. In addition, the Company has the right, in the sole discretion of the Board and without obligation, to repurchase upon termination for cause all or any portion of the Shares of Grantee, at a price equal to the fair value of the Shares as of the date of termination, which right is not subject to the foregoing lapsing of rights. Termination of employment, or services as to directors and consultants as Grantee, "for cause" means (i) the term as defined in the state in which employees are employed by the Company or as defined by Delaware law with respect to consultants, or as defined in the Plan, this Agreement or in any employment or consulting agreement between the Company and Grantee, or (ii) as to directors, removal pursuant to the Delaware corporation law. In the event the Company elects to purchase the Shares, the stock certificates representing the same must promptly be returned to the Company for cancellation.

(c)          Exercise of Repurchase Right. Any Repurchase Right under Sections 4(a) or 4(b) must be exercised by giving notice of exercise as provided herein to Grantee or the estate of Grantee, as applicable. Such right must be exercised, and the repurchase price thereunder must be paid, by the Company within a ninety (90) day period beginning on the date of notice to the Company of the occurrence of such Repurchase Event (except in the case of termination or cessation of services as director, where such option period will begin upon the occurrence of the Repurchase Event). Such repurchase price is payable only in the form of cash (including a check drafted on immediately available funds) or cancellation of purchase money indebtedness of the Grantee for the Shares. If the Company can not purchase all such Shares because it is unable to meet the financial tests set forth in the Delaware corporation law, the Company has the right to purchase as many Shares as it is permitted to purchase under such sections. Any Shares not purchased by the Company hereunder will no longer be subject to the provisions of this Section 5.

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(d)          Right of First Refusal. In the event Grantee desires to transfer any Shares during his or her lifetime, Grantee must first offer to sell such Shares to the Company. Grantee must deliver to the Company written notice of the intended sale, such notice to specify the number of Shares to be sold, the proposed purchase price and terms of payment, and grant the Company an option for a period of thirty (30) days following receipt of such notice to purchase the offered Shares upon the same terms and conditions. To exercise such option, the Company must give notice of that fact to Grantee within the thirty (30) day notice period and agree to pay the purchase price in the manner provided in the notice. If the Company does not purchase all of the Shares so offered during foregoing option period, Grantee will be under no obligation to sell any of the offered Shares to the Company, but may dispose of such Shares in any lawful manner during a period of one hundred and eighty (180) days following the end of such notice period, except that Grantee must not sell any such Shares to any other person at a lower price or upon more favorable terms than those offered to the Company.

(e)          Acceptance of Restrictions. Acceptance of the Shares constitutes the Grantee's agreement to such restrictions and the legending of his certificates with respect thereto. Notwithstanding such restrictions, however, so long as the Grantee is the holder of the Shares, or any portion thereof, he is entitled to receive all dividends declared on and to vote the Shares and to all other rights of a shareholder with respect thereto.

(f)          Permitted Transfers. Notwithstanding any provisions in this Section 5 to the contrary, the Grantee may transfer Shares subject to this Agreement to his or her parents, spouse, children, or grandchildren, or a trust for the benefit of the Grantee or any such transferee(s); provided, that such permitted transferee(s) must hold the Shares subject to all the provisions of this Agreement (all references to the Grantee herein will in such cases refer mutatis mutandis to the permitted transferee, except in the case of clause (iv) of Section 5(a) wherein the permitted transfer are deemed to be rescinded); and provided further, that notwithstanding any other provisions in this Agreement, a permitted transferee may not, in turn, make permitted transfers without the written consent of the Grantee and the Company.

(g)          Release of Restrictions on Shares. All rights and restrictions under this Section 5 terminate five (5) years following the date of this Agreement, or when the Company's securities are publicly traded, whichever occurs earlier.

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6.            Representations and Warranties of the Grantee. This Agreement and the issuance and grant of the Shares hereunder are made by the Company in reliance upon the express representations and warranties of the Grantee, which by acceptance hereof the Grantee confirms that:

(a)          The Shares granted to him or her pursuant to this Agreement are being acquired by him or her for his or her own account, for investment purposes, and not with a view to, or for sale in connection with, any distribution of the Shares. It is understood that the Shares have not been registered under the Act by reason of a specific exemption from the registration provisions of the Act which depends, among other things, upon the bona fide nature of his or her representations as expressed herein;

(b)          The Shares must be held by him or her indefinitely unless they are subsequently registered under the Act and any applicable state securities laws, or an exemption from such registration is available. The Company is under no obligation to register the Shares or to make available any such exemption; and

(c)          Grantee further represents that Grantee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition and to obtain additional information reasonably necessary to verify the accuracy of such information,

(d)          Unless and until the Shares represented by this Grant are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event will bear legends in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN STOCK AWARD AGREEMENT DATED BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed with the Company's transfer agent.

(e)          Grantee understands that he or she will recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, as of the date of grant, exceeds the price paid by Grantee, if any. The acceptance of the Shares by Grantee constitutes an agreement by Grantee to report such income in accordance with then applicable law. Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Grantee's then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Grantee to make a cash payment to cover such liability.

7.            Stand-off Agreement. Grantee agrees that, in connection with any registration of the Company's securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Grantee must not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of at least one (1) year following the effective date of registration of such offering. This Section 8 must survive any termination of this Agreement.

8.            Termination of Agreement. This Agreement shall terminate on the occurrence of any one of the following events: (a) written agreement of all parties to that effect; (b) a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company; (c) the closing of any public offering of common stock of the Company pursuant to an effective registration statement under the Securities Act; or (d) dissolution, bankruptcy, or insolvency of the Company.

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9.            Agreement Subject to Plan; Applicable Law. This Grant is made pursuant to the Plan and is interpreted to comply therewith. A copy of such Plan is available to Grantee, at no charge, at the principal office of the Company. Any provision of this Agreement inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. This Grant is governed by the laws of the State of Delaware and subject to the exclusive jurisdiction of the courts therein.

10.           Miscellaneous.

(a)          Notices. Any notice required to be given pursuant to this Agreement or the Plan must be in writing and will be deemed to have been duly delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Grantee at the last address provided by Grantee for use in the Company's records.

(b)          Entire Agreement. This instrument constitutes the sole agreement of the parties hereto with respect to the Shares. Any prior agreements, promises or representations concerning the Shares not included or reference herein will be of no force or effect. This Agreement are binding on, and inures to the benefit of, the Parties hereto and their respective transferees, heirs, legal representatives, successors, and assigns.

(c)          Enforcement. This Agreement shall be construed in accordance with, and governed by, the laws of the State of Delaware and subject to the exclusive jurisdiction of the courts located in Delaware. If Grantee attempts to transfer any of the Shares subject to this Agreement, or any interest in them in violation of the terms of this Agreement, the Company may apply to any court for an injunctive order prohibiting such proposed transaction, and the Company may institute and maintain proceedings against Grantee to compel specific performance of this Agreement without the necessity of proving the existence or extent of any damages to the Company. Any such attempted transaction shares in violation of this Agreement is null and void.

(d)          Validity of Agreement. The provisions of this Agreement may be waived, altered, amended, or repealed, in whole or in part, only on the written consent of all parties hereto. It is intended that each section of this Agreement shall be viewed as separate and divisible, and in the event that any section is held to be invalid, the remaining Sections must continue to be in full force and effect.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

CALIBERCOS INC.	GRANTEE
By:
Its:	Print Name:

(one of the following, as appropriate, must be signed)

I certify that as of the date hereof I am unmarried	By his or her signature, the spouse of Grantee hereby agrees to be bound by the provisions of the foregoing STOCK AWARD AGREEMENT
Grantee	Spouse of Grantee

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Exhibit D

Form of Restricted Stock Purchase Offer

CALIBERCOS INC.

RESTRICTED STOCK PURCHASE AGREEMENT

THIS RESTRICTED STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as of the date set forth below, by and between CALIBERCOS INC., a Delaware corporation ("Company"), and the employee, director or consultant of the Company named in Section 1(b) ("Grantee").

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1. Stock Purchase Information.

(a) Date of Agreement: _________________

(b) Grantee: _________________

(c) Number of Shares: _________________

(d) Price per Share: _________________

2. Acknowledgements.

(a)          Grantee is a [PICK ONE: employee / director / consultant] of the Company.

(b)          The Company has adopted a 2017 Incentive Stock Plan ("Plan") under which the Company's common stock ("Stock") may be offered to officers, employees, directors and consultants pursuant to an exemption from registration under the Securities Act of 1933, as amended ("Securities Act") provided by Rule 701 thereunder.

(c)          The Grantee desires to purchase shares of the Company's common stock on the terms and conditions set forth herein.

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3.            Purchase of Shares. The Company hereby agrees to sell and Grantee hereby agrees to purchase, upon and subject to the terms and conditions herein stated, the number of shares of Stock set forth in Section 1(c) (the "Shares"), at the price per Share set forth in Section 1(d) (the "Price"). For the purpose of this Agreement, the terms "Share" or "Shares" includes the original Shares plus any shares derived therefrom, regardless of the fact that the number, attributes or par value of such Shares may have been altered by reason of any recapitalization, subdivision, consolidation, stock dividend or amendment of the corporate charter of the Company. The number of Shares covered by this Agreement will be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a recapitalization, subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company.

4.            Investment Intent. Grantee represents and agrees that Grantee is accepting the Shares for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; and that, if requested, Grantee must furnish to the Company a written statement to such effect, satisfactory to the Company in form and substance. If the Shares are registered under the Securities Act, Grantee will be relieved of the foregoing investment representation and agreement and is not required to furnish the Company with the foregoing written statement.

5.            Restriction upon Transfer. The Shares may not be sold, transferred or otherwise disposed of and must not be pledged or otherwise hypothecated by the Grantee except as hereinafter provided.

(a)          Repurchase Right on Termination Other Than for Cause. For the purposes of this Section, a "Repurchase Event" means an occurrence of one of (i) termination of Grantee's employment or service as a director or as a consultant, as applicable to the Grantee under this Agreement by the Company, voluntary or involuntary and with or without cause; (ii) retirement or death of Grantee; (iii) bankruptcy of Grantee, which is deemed to have occurred as of the date on which a voluntary or involuntary petition in bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution of the marriage of Grantee, to the extent that any of the Shares are allocated as the sole and separate property of Grantee's spouse pursuant thereto (in which case, this section only applies to the Shares so affected); or (v) any attempted transfer by the Grantee of Shares, or any interest therein, in violation of this Agreement. Upon the occurrence of a Repurchase Event, the Company has the right (but not an obligation) to repurchase all or any portion of the Shares of Grantee at a price equal to the fair value of the Shares as of the date of the Repurchase Event.

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(b)          Repurchase Right on Termination for Cause. In the event Grantee's employment with the Company or services as a consultant or director, as applicable to the Grantee under this Agreement, is terminated by the Company "for cause" (as defined below), then the Company has the right (but not an obligation) to repurchase Shares of Grantee at a price equal to the Price. Such right of the Company to repurchase Shares must apply to one hundred percent (100%) of the Shares at the original Price for one (1) year from the date of this Agreement; and such right to purchase at the original Price will thereafter lapse at the rate of twenty percent (20%) of the Shares on each anniversary of the date of this Agreement. In addition, the Company has the right, in the sole discretion of the Board and without obligation, to repurchase upon termination for cause all or any portion of the Shares of Grantee, at a price equal to the fair value of the Shares as of the date of termination, which right is not subject to the foregoing lapsing of rights. Termination of employment or services "for cause" means (i) as to employees and consultants, termination for cause as defined by case law in the state of Delaware or by an agreement between the Company and Grantee, or (ii) as to directors, removal pursuant to the Delaware corporation law. In the event the Company elects to repurchase the Shares, the stock certificates representing the same must promptly be returned to the Company for cancellation.

(c)          Exercise of Repurchase Right. Any Repurchase Right under Sections 4(a) or 4(b) must be exercised by giving notice of exercise as provided herein to Grantee or the estate of Grantee, as applicable. Such right must be exercised, and the repurchase price thereunder must be paid, by the Company within a ninety (90) day period beginning on the date of notice to the Company of the occurrence of such Repurchase Event (except in the case of termination of employment or retirement, where such option period begins upon the occurrence of the Repurchase Event). Such repurchase price is payable only in the form of cash (including a check drafted on immediately available funds) or cancellation of purchase money indebtedness of the Grantee for the Shares. If the Company cannot purchase all such Shares because it is unable to meet the financial tests set forth in the Delaware corporation law, the Company has the right to purchase as many Shares as it is permitted to purchase under such sections. Any Shares not purchased by the Company hereunder will no longer be subject to the provisions of this Section 5.

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(d)          Right of First Refusal. In the event Grantee desires to transfer any Shares during his or her lifetime, Grantee must first offer to sell such Shares to the Company. Grantee must deliver to the Company written notice of the intended sale, such notice to specify the number of Shares to be sold, the proposed purchase price and terms of payment, and grant the Company an option for a period of thirty (30) days following receipt of such notice to purchase the offered Shares upon the same terms and conditions. To exercise such option, the Company must give notice of that fact to Grantee within the thirty (30) day notice period and agree to pay the purchase price in the manner provided in the notice. If the Company does not purchase all of the Shares so offered during foregoing option period, Grantee will be under no obligation to sell any of the offered Shares to the Company, but may dispose of such Shares in any lawful manner during a period of one hundred and eighty (180) days following the end of such notice period, except that Grantee must not sell any such Shares to any other person at a lower price or upon more favorable terms than those offered to the Company.

(e)          Acceptance of Restrictions. Acceptance of the Shares constitutes the Grantee's agreement to such restrictions and the legending of his or her certificates with respect thereto. Notwithstanding such restrictions, however, so long as the Grantee is the holder of the Shares, or any portion thereof, he or she is entitled to receive all dividends declared on and to vote the Shares and to all other rights of a shareholder with respect thereto.

(f)          Permitted Transfers. Notwithstanding any provisions in this Section 5 to the contrary, the Grantee may transfer Shares subject to this Agreement to his or her parents, spouse, children, or grandchildren, or a trust for the benefit of the Grantee or any such transferee(s); provided, that such permitted transferee(s) must hold the Shares subject to all the provisions of this Agreement (all references to the Grantee herein will in such cases refer mutatis mutandis to the permitted transferee, except in the case of Section 5(a)(iv) wherein the permitted transfer will be deemed to be rescinded); and provided further, that notwithstanding any other provisions in this Agreement, a permitted transferee may not, in turn, make permitted transfers without the written consent of the Grantee and the Company.

(g)          Release of Restrictions on Shares. All rights and restrictions under this Section 5 terminate five (5) years following the date upon which the Company receives the full Price as set forth in Section 3, or when the Company's securities are publicly traded, whichever occurs earlier.

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5.            Representations and Warranties of the Grantee. This Agreement and the issuance and grant of the Shares hereunder are made by the Company in reliance upon the express representations and warranties of the Grantee, which by acceptance hereof the Grantee confirms that:

(a)          The Shares granted to him or her pursuant to this Agreement are being acquired by him or her for his or her own account, for investment purposes, and not with a view to, or for sale in connection with, any distribution of the Shares. It is understood that the Shares have not been registered under the Act by reason of a specific exemption from the registration provisions of the Act which depends, among other things, upon the bona fide nature of his or her representations as expressed herein;

(b)          The Shares must be held Grantee indefinitely unless they are subsequently registered under the Act and any applicable state securities laws, or an exemption from such registration is available. The Company is under no obligation to register the Shares or to make available any such exemption; and

(c)          Grantee further represents that Grantee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition and to obtain additional information reasonably necessary to verify the accuracy of such information,

(d)          Unless and until the Shares represented by this Grant are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event must bear legends in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (“SECURITIES ACT”) OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT DATED BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

or such other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed with the Company's transfer agent.

(e)          Grantee understands that he or she will recognize income, for Federal and state income tax purposes, in an amount equal to the amount by which the fair market value of the Shares, as of the date of Grant, exceeds the price paid by Grantee. The acceptance of the Shares by Grantee constitutes an agreement by Grantee to report such income in accordance with then applicable law. Withholding for federal or state income and employment tax purposes will be made, if and as required by law, from Grantee's then current compensation, or, if such current compensation is insufficient to satisfy withholding tax liability, the Company may require Grantee to make a cash payment to cover such liability.

7.            Stand-off Agreement. Grantee agrees that, in connection with any registration of the Company's securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Grantee must not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of at least one (1) year following the effective date of registration of such offering. This Section 8 will survive any termination of this Agreement.

8.            Termination of Agreement. This Agreement shall terminate on the occurrence of any one of the following events: (a) written agreement of all parties to that effect; (b) a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets of the Company; (c) the closing of any public offering of common stock of the Company pursuant to an effective registration statement under the Act; or (d) dissolution, bankruptcy, or insolvency of the Company.

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9.            Agreement Subject to Plan; Applicable Law. This Grant is made pursuant to the Plan and is interpreted to comply therewith. A copy of such Plan is available to Grantee, at no charge, at the principal office of the Company. Any provision of this Agreement inconsistent with the Plan will be considered void and replaced with the applicable provision of the Plan. This Grant is governed by the laws of the State of Delaware and subject to the exclusive jurisdiction of the courts therein.

10.           Miscellaneous.

(a)          Notices. Any notice required to be given pursuant to this Agreement or the Plan must be in writing and will be deemed to have been duly delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Grantee at the last address provided by Grantee for use in the Company's records.

(b)          Entire Agreement. This instrument constitutes the sole agreement of the parties hereto with respect to the Shares. Any prior agreements, promises or representations concerning the Shares not included or reference herein will be of no force or effect. This Agreement is binding on, and inures to the benefit of, the parties hereto and their respective transferees, heirs, legal representatives, successors, and assigns.

(c)          Enforcement. This Agreement must be construed in accordance with, and governed by, the laws of the State of Delaware and subject to the exclusive jurisdiction of the courts located in Delaware. If Grantee attempts to transfer any of the Shares subject to this Agreement, or any interest in them in violation of the terms of this Agreement, the Company may apply to any court for an injunctive order prohibiting such proposed transaction, and the Company may institute and maintain proceedings against Grantee to compel specific performance of this Agreement without the necessity of proving the existence or extent of any damages to the Company. Any such attempted transaction shares in violation of this Agreement is null and void.

(d)          Validity of Agreement. The provisions of this Agreement may be waived, altered, amended, or repealed, in whole or in part, only on the written consent of all parties hereto. It is intended that each section of this Agreement is viewed as separate and divisible, and in the event that any section is held to be invalid, the remaining sections must continue to be in full force and effect.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

CALIBERCOS INC.	GRANTEE
By:
Its:	Print Name:

(one of the following, as appropriate, must be signed)

I certify that as of the date hereof I am unmarried	By his or her signature, the spouse of Grantee hereby agrees to be bound by the provisions of the foregoing RESTRICTED STOCK PURCHASE AGREEMENT
Grantee	Spouse of Grantee

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EX1A-6 MAT CTRCT

Exhibit 6.2

MORTGAGE NOTE

$14,000,000.00 June 29, 2018

FOR VALUE RECEIVED, TUCSON EAST HOLDING, LLC, a Delaware limited liability company having an address of 16704 North 78^th Street, Scottsdale, AZ 85260 (“Maker”) promises to pay to CERCO CAPITAL INC, a Delaware corporation (“Payee”) at its office located at 251 Little Falls Drive, Wilmington, DE 19808 or at such other place as may be designated in writing by the holder of this Promissory Note (this “Note”), the principal sum of Fourteen Million and 00/100 Dollars ($14,000,000.00) (the “Loan”), in lawful money of the United States of America, together with interest thereon to be computed from the date hereof at the Applicable Interest Rate, and to be paid in accordance with the terms of this Note.

1.           INTEREST. The term “Applicable Interest Rate”, as used herein shall mean an interest rate equal to eight and one-half percent (8.5%) per annum. Interest for any month or fractional part thereof shall be calculated on the basis of a 360-day year and the daily amount so determined shall be multiplied by the actual number of days for which interest is being paid.

2.           PAYMENT TERMS

2.1          Maker agrees to pay sums under this Note in installments as follows:

(a)           Maker shall pay to Payee consecutive equal, monthly installments of accrued interest only, in arrears, commencing on August 1, 2018 and on the first day of each month thereafter (such date, the “Payment Date”) through and until the date on which this Note is indefeasibly paid in full.

(b)          All accrued and unpaid interest and the then unpaid principal balance hereon shall be due and payable on the earlier to occur of (i) June 30, 2020 (the “Maturity Date”), or (ii) the date on which the indebtedness otherwise becomes immediately due and payable hereunder.

2.2          In the event that the Loan is not repaid in full on or before the Maturity Date, then, from that point forward, the unpaid principal balance shall continue to bear interest after the Maturity Date at the Default Rate set forth in this Note until and including the date on which it is paid in full.

2.3          All parties hereto, whether Maker, principal, surety, guarantor or endorser, hereby waive demand, notice of demand, presentment for payment, notice of dishonor, protest and notice of protest.

3.           EXTENSION OPTION. Borrower has the right to renew this Loan for one additional six (6) month period (the “Extension Period”), provided there no defaults under the Loan at the date of such Extension. In order to exercise an extension option, Borrower must (i) deliver to Lender a request in writing at least sixty (60) days prior to original Maturity Date of the first Extension Period, as the case may be, (ii) pay a fee equivalent to three-quarters of one percent (0.75%) of the then outstanding principal balance of the Loan; and (iii) deliver any information reasonably requested by Lender in order to update its underwriting and (iv) other customary extension conditions set forth in the Loan Documents are satisfied.

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4.             SECURITY INSTRUMENTS. This Note is secured by (a) a first lien securing a loan in the principal sum of $14,000,000.00 evidenced by that certain Deed of Trust and Assignment of Rents of even date herewith between Maker as Grantor and Payee as Lender therein, and those certain UCC Financing Statements to be filed in the Office of the Secretary of State of the State of Arizona and in the office of the Clerk and Recorder of Pima County, Arizona, (the “Security Instruments”) encumbering real properties located in State of Arizona, as more particularly described in the Security Instruments (the “Premises”) and (b) certain other instruments and agreements dated of even date herewith from Maker (or affiliates of Maker) to Payee or between Maker (or affiliates of Maker) and Payee (collectively such documents and agreements may be referred to herein as the “Loan Documents”). All of the terms, covenants, conditions and agreements contained in the Security Instruments and/or Loan Documents are hereby incorporated herein and made a part hereof.

5.           APPLICATION OF PAYMENTS: ESTABLISHMENT OF INTEREST RESERVE

5.1          On the date hereof Maker shall pay to Payee the sum of Three Hundred Four Thousand One Hundred Eleven and 52/100 Dollars ($304,111.52) (the “Initial Seasonality Interest Deposit”) which Initial Seasonality Interest Deposit shall be withheld from the proceeds of the Loan. The Deposit shall be held, subject to the terms hereof, by Payee in an account at a financial institution of Payee’s choosing, controlled by Payee and in Payee’s name for the benefit of Maker as an interest reserve and applied to the interest payable described in Section 2.1(b) above for the interest payments due on August 1, 2018, September 1, 2018 and October 1, 2018. Maker and Payee acknowledge that the interest payments due for the months of June, July and August of each year total Three Hundred Four Thousand One Hundred Eleven and 52/100 Dollars ($304,111.52) and that Maker shall deposit with Payee on or before March 31, 2019 and each March 31^st thereafter while this Loan is outstanding, the sum of Three Hundred Four Thousand One Hundred Eleven and 52/100 Dollars ($304,11 1.52) (the “Seasonality Interest Reserve Deposit” and collectively with the Initial Seasonality Reserve Interest Deposit, the “Deposit”) in order to fund the interest payments due on July 1, August 1 and September 1 of each year of the term of this Loan.

5.2          Monthly installments of interest on the Loan shall be paid on each Payment Date and/or the Maturity Date, from the Deposit for the months of June, July and August until the same is exhausted, and for all other months directly by Maker. All payments received by Payee pursuant to this Note or the Loan Documents shall be applied first to late charges due under this Note or the Loan Documents, second to accrued interest at the rate then in effect under the terms hereof, and third to principal.

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5.3          Following any Event of Default (as defined below), and unless and until such Event of Default is cured to Payee’s satisfaction (in Payee’s reasonable discretion), including but not limited to the payment of any advances, charges, costs or fees (including reasonable attorneys’ fees) incurred by Payee with regard thereto, each monthly installment hereunder shall be applied to the Indebtedness (as hereinafter defined) in such order and in such manner as Payee shall elect in Payee’s sole and absolute discretion. Payee may allocate any and all such payments to interest, principal and other fees and charges due hereunder or to any one or more of them, in such amount, priorities and proportions as the Payee may determine in its sole and absolute discretion in accordance with the terms hereof. It shall be a condition precedent to the disbursement of any portion of the Deposit that there shall be no Event of Default by Maker under the terms and conditions of the Note, the Security Instruments and/or any other document executed in connection with the Loan. Upon the occurrence of an Event of Default by Maker hereunder or under the terms and conditions of the Note, the Security Instruments or any other document executed in connection with the Loan, the Payee shall be entitled to apply the remaining portion of the Deposit to amounts then due and owing under the terms of the Note, the Security Instruments and/or any other document executed in connection with the Loan in such order as the Payee shall elect.

5.4          The Payee hereby acknowledges receipt of the Deposit from the Maker as of the date hereof and agrees to hold and disburse the same in accordance with the terms and conditions of this Note.

5.5          No interest shall be required to accrue or be payable by Payee to Maker on the Deposit. Maker hereby grants to Payee a first priority security interest in the Deposit.

5.6          The Payee shall be deemed to have exercised reasonable care in the custody and preservation of the Deposit by accounting for all money and things of value received by it upon or in respect thereof.

6.           DEFAULT AND ACCELERATION

6.1           It is hereby expressly agreed that (a) the whole of the principal sum of this Note, (b) interest, default interest, late charges, fees and other sums, as provided in this Note, (c) all other monies agreed or provided to be paid by Maker in this Note, the Security Instruments and/or any Loan Document, (d) all sums advanced pursuant to the Security Instruments and/or any Loan Document, and (e) all sums advanced and costs and expenses reasonably incurred by Payee in connection with the Indebtedness (as hereinafter defined) or any part thereof, any renewal, extension, or change of or substitution for the Indebtedness or any part thereof, or the acquisition or perfection of the security granted pursuant to the Security Instruments and/or any Loan Document, whether made or incurred at the request of Maker or Payee (the sums referred to in (a) through (e) above shall collectively be referred to as the “Indebtedness”) shall, WITHOUT NOTICE, become immediately due and payable at the option of the Payee or other holder hereof upon the happening of any of the following events (each, an “Event of Default”):

(a)           Maker fails to pay the monthly interest payment due to Payee within five (5) business days of the date due under Section 2.1(a) of this Note, or any other amount due under this Note where no due date is provided for, within five (5) business days after written demand therefor is made (however, no late payment of interest paid by Payee pursuant to the terms of Section 4 herein shall constitute an Event of Default under the terms of this Note, unless such late payment was caused by Maker and/or any of its principals or members with a managing interest);

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(b)          Maker fails to pay any amount due and payable to Payee under the Security Instruments or any Loan Document within five (5) business days after written demand therefor is made;

(c)          Maker fails to keep, observe or perform any other promise, condition or agreement contained in this Note, the Security Instruments, any Loan Document or any other documents described herein or delivered in connection herewith or is otherwise in default under the terms, covenants and conditions of this Note, the Security Instruments, any Loan Document or any other documents described herein or delivered in connection herewith, and such failure or default is not remedied within thirty (30) days after written notice to Maker thereof, provided, however, that if such failure or default is not capable of being cured or remedied within said thirty (30) day period, then if Maker fails to promptly commence to cure the same and thereafter diligently prosecute such cure to completion in good faith, but in any event within ninety (90) days after written notice thereof;

(d)         There is a material misstatement in any certificate and/or certification delivered in connection with this Note, the Security Instruments or the Loan Documents, or any representation, disclosure, warranty, statement, financial information, application and/or other instrument, record, documentation or paper made or furnished by or on behalf of Maker in connection with this Note shall be materially misleading, untrue or incorrect;

(e)          A receiver, liquidator or trustee shall be appointed for Maker (or its sole member) or for any of such parties’ property, an assignment shall be made for the benefit of creditors of Maker (or its sole member), Maker (or its sole member) shall be adjudicated a bankrupt or insolvent, or any petition for bankruptcy, reorganization or arrangement pursuant to the Federal Bankruptcy Code, or any similar federal or state statute, shall be filed by or against Maker (or its sole member), unless such appointment, assignment, adjudication or petition was involuntary, in which event only if the same is not discharged, stayed or dismissed within ninety (90) days;

(f)          A final judgment for the payment of money which could materially adversely affect Maker’s ability to make payments under this Note shall be rendered against Maker (or its sole member) and such party shall not discharge the same or cause it to be discharged within sixty (60) days from the entry thereof, or shall not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, within twenty (20) days, and thereafter to secure a stay of execution pending such appeal;

(g)          Maker (or its sole member) shall have concealed, removed and/or knowingly permitted to be concealed or removed any substantial part of its property and/or assets with the intent to hinder, delay or defraud Payee of any of its property and/or assets which may be fraudulent under any federal or state bankruptcy, fraudulent conveyance or similar law now or hereafter enacted, or if Maker (or its sole member) shall have made any transfer of any of its property and/or assets to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid, or if Maker (or its sole member) shall have suffered or knowingly permitted to be suffered, while insolvent, any creditor to obtain a lien upon any of its property and/or assets through legal proceedings or distraint which is not vacated within sixty (60) days from the date of entry thereof;

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(h)          Any Guarantor of the obligations of Maker hereunder defaults under or attempts to withdraw, cancel or disclaim liability under any pledge, pledges, guaranty or guaranties given to Payee; or

(i)         Maker or any Guarantor defaults beyond any applicable notice and cure period under any other note, instrument, agreement, contract, pledge, mortgage or encumbrance evidencing and/or securing the Indebtedness or any other indebtedness of Maker or to Payee.

6.2          After the occurrence of an Event of Default, the Payee may accept any payments from the Maker without prejudice to the rights and remedies of the Payee provided herein or in the Security Instruments or the Loan Documents.

7.           FINANCIAL STATEMENTS AND RECORDS. Maker shall keep adequate books and records of account in accordance with generally accepted accounting practices consistently applied. Within ten (10) business days of Payee’s request and in any event not prior to 21 days after the end of each calendar month. Maker shall deliver or cause to be delivered to Payee unaudited Maker-prepared financial statements of Maker and any other Maker-prepared financial statement, report or other information Payee may reasonably require from time to time regarding Maker, and/or the Premises each certified by Maker to be true, correct and complete in all material respects. Without limitation, Payee acknowledges that Maker’s financial statements are typically available on or after the 21^st day of the immediately succeeding calendar month. Maker authorizes Payee, at any time, prior to payment in full of the Indebtedness, or within one year following foreclosure of the Premises, to obtain any information that Payee may reasonably require, including credit information from other sources (such as credit reporting agencies), concerning Maker, the Premises, and any Guarantor, provided however, if Payee incurs costs in obtaining such information and no Event of Default has occurred. Payee shall bear such costs without reimbursement from Maker. In addition, Maker shall keep and maintain at all times complete and accurate books of account and records adequate to reflect correctly the results of the operation of the Premises and copies of all written contracts, leases (if applicable), and other documents which affect the Premises. Such books, records, contracts, lease and other documents shall be subject to examination, inspection and copying on reasonable notice at any reasonable time by Payee. All books, records, accounts and financial statements required hereunder shall be accurate and complete in all material respects, shall represent fairly the financial position of the Maker and/or the operation of the Premises. Unless waived in writing by Payee, Maker’s financial statements shall be prepared in accordance with generally accepted accounting principles consistently applied.

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8.           DEFAULT INTEREST/LATE CHARGES

8.1          Upon the occurrence of an Event of Default, then, from and after the date of the Event of Default, interest shall accrue on the unpaid principal sum and any other Indebtedness due and owing at a rate (the “Default Rate”) equal to the lesser of (a) twenty-four percent (24%) per annum computed from the date of the Event of Default until the date of actual repayment (including any post-judgment period), or (b) the highest rate permitted by law, computed from the date of the Event of Default until the date of actual repayment (including any post-judgment period). The Default Rate shall be computed from the date of the Event of Default until the earlier of the date upon which the Event of Default is cured or the date upon which the Indebtedness is paid in full. Interest calculated at the Default Rate shall be added to the Indebtedness, and shall be deemed secured by the Security Instruments. This clause, however, shall not be construed as an agreement or privilege to extend the date of the payment of the Indebtedness, nor as a waiver of any other right or remedy accruing to Payee by reason of the occurrence of any Event of Default.

8.2          If any payment (or part thereof, but excluding any maturity payment) provided for herein shall be made after ten (10) days from the applicable date due, a late charge of live percent (5%) of any payment not received on the 10^th day of each month so overdue shall become immediately due and payable to the Payee and/or other holder of this Note as liquidated damages for failure to make prompt payment and the same shall be secured by the Security Instruments. Maker agrees that such late charge is to compensate the Payee for costs incurred in connection with the administration of such default, and does not constitute a penalty. Maker further acknowledges that such late charge is a reasonable amount in light of the anticipated harm caused by the default, the difficulties of proof of loss, and the inconvenience and difficulty of otherwise obtaining an adequate remedy. Such charge shall be payable in any event no later than the due date of the next subsequent installment or at the option of Payee, may be deducted from any deposits, including but not limited to the Deposit, held by Payee as additional security for this Note. Nothing herein is intended to or shall extend the due dates set forth for payments under this Note. Such late fee may be charged repeatedly, however, said late fee shall not be compounded on prior late fees, but rather, only on the amount outstanding exclusive of prior late fees. Notwithstanding anything to the contrary contained in this Section 8.2, no late charge shall be imposed: (a) as a result of Payee’s failure to timely apply all or portions of the Deposit as contemplated in this Note; and (b) on the first (1^st) delinquent payment made by Maker during any consecutive twelve (12) month period, provided that such payment shall be received by Payee within ten (10) days following the applicable due date.

8.3          Should the Indebtedness or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any collected at law or in equity, or in bankruptcy, receivership or any other court proceeding (whether at the trial or appellate level), or should this Note be placed in the hands of attorneys for collection under default. Maker agrees to pay, in addition to the principal, any late payment charge and interest due and payable hereunder, all reasonable and actual costs of collecting or attempting to collect the Indebtedness, including reasonable attorneys’ fees and expenses and court costs, regardless of whether any legal proceeding is commenced hereunder, together with interest thereon at the Default Rate from the date paid or incurred by Payee until such expenses are paid by Maker.

8.4          After the entry of a judgment and/or a foreclosure judgment, Payee shall have the right to continue to charge Maker and to increase the amount of the judgment for post-judgment reasonable attorneys’ fees and costs, post-judgment interest at the Default Rate provided for herein, real estate taxes, utilities, maintenance, security and other charges that may be incurred by Payee.

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8.5          Notwithstanding anything heretofore set forth to the contrary, in no event shall any interest payable under this Note exceed the maximum interest rate permitted under law or the rate that could subject Payee to either civil or criminal liability as a result of being in excess of the maximum interest rate that Maker is permitted by applicable law to contract or agree to pay. If by the terms of this Note, Maker is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the interest rate hereinabove set forth or the Default Rate, as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Payee for the use, forbearance, or detention of the Indebtedness, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of this Note until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Indebtedness for so long as the Indebtedness is outstanding. Maker agrees to an effective rate of interest that is the rate stated herein plus any additional rate of interest resulting from any other charges in the nature of interest paid or to be paid by or on behalf of Maker, or any benefit received or to be received by Payee, in connection with this Note.

9.           WAIVERS

9.1          Maker and all parties who may become eligible for the payment of all or any part of the Indebtedness, whether principal, surety, guarantor, pledgor, or endorser, hereby waive demand, notice of demand, presentment for payment, notice of intent to accelerate maturity, notice of acceleration of maturity, notice of dishonor, protest, notice of protest and non-payment and all other notices of any kind, except for notices expressly provided for in this Note or the other Loan Documents.

9.2          The liability of any Maker, guarantor, pledgor or endorser shall be unconditional and shall not be in any manner affected by any indulgence whatsoever granted or consented to by the holder hereof, including, but not limited to any extension of time, renewal, waiver or other modification. No release of any security for the Indebtedness or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of this Note, the Security Instruments, or any other Loan Document shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Maker, and any other person or entity who may become liable for the payment of all or any part of the Indebtedness under this Note.

9.3          No notice to or demand on Maker shall be deemed to be a waiver of the obligation of Maker or of the right of Payee to take further action without further notice or demand on Maker as provided for in this Note. Any failure of the holder of this Note to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other right at any time and from time to time thereafter. The Payee or any holder may accept late payment, or partial payment, even though marked “payment in full” or containing words of similar import or other conditions, without waiving any of its rights. No amendment, modification or waiver of any provision of this Note nor consent to any departure by the Maker therefrom shall be effective, irrespective of any course of dealing, unless the same shall be in writing and signed by the Payee, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

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9.4          THE MAKER AND EACH ENDORSER AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN THE COUNTY AND STATE IN WHICH THE PREMISES, OR ANY OF THEM, ARE LOCATED. THE MAKER AND EACH ENDORSER CONSENT TO AND SUBMIT TO THE EXERCISE OF JURISDICTION OVER THE SUBJECT MATTER, WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE MAKER OR SUCH ENDORSER AT ITS ADDRESS SET FORTH ABOVE OR TO ANY OTHER ADDRESS AS MAY APPEAR IN THE PAYEE’S RECORDS AS THE ADDRESS OF THE MAKER OR SUCH ENDORSER.

9.5           IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM IN RESPECT OF OR ARISING OUT OF THIS NOTE, THE MAKER AND EACH ENDORSER WAIVE TRIAL BY JURY, WHETHER SUCH ACTION, SUIT, PROCEEDING OR COUNTERCLAIM SHALL BE IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE OR ANY OTHER LOAN DOCUMENT, OR ANY ACTS OR OMISSIONS OF PAYEE, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY MAKER AND EACH ENDORSER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.

9.6          THE MAKER AND EACH ENDORSER ALSO WAIVE, ABSOLUTELY, UNCONDITIONALLY AND IRREVOCABLY (I) THE RIGHT TO INTERPOSE ANY CREDIT, DEFENSE, RIGHT OF RECOUPMENT, CROSSCLAIM, SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, WITH RESPECT TO THE INDEBTEDNESS OR ANY OF THE LOAN DOCUMENTS OR THE OBLIGATIONS OF THE MAKER UNDER ANY OF THE LOAN DOCUMENTS, OR THE OBLIGATIONS OF ANY OTHER PERSON OR ENTITY RELATING TO ANY OF • THE LOAN DOCUMENTS OR OTHERWISE WITH RESPECT TO THE INDEBTEDNESS, IN ANY ACTION OR PROCEEDING BROUGHT BY THE PAYEE TO COLLECT THE INDEBTEDNESS, OR ANY PORTION THEREOF, OR TO ENFORCE, FORECLOSE AND/OR REALIZE UPON THE LIENS AND SECURITY INTERESTS OF THE PAYEE IN ANY SECURITY FOR THIS NOTE, EXCEPT FOR MANDATORY OR COMPULSORY COUNTERCLAIMS.

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10.          PREPAYMENT

10.1        Maker acknowledges that it is the intent of Payee that this Note not be paid prior to its maturity in order to afford Payee the benefit of the interest payments throughout the term.

10.2        Notwithstanding the foregoing, if Maker seeks the right to prepay this Note, and therefore, to induce Payee to accept the prepayment of this Note prior to maturity, Maker agrees to pay separate and additional consideration for the right to so pre-pay the Note in an amount equal to all accrued but unpaid interest hereunder through the date of such prepayment plus such additional amount as shall yield to Payee an amount equal to at least three (3) months of interest under this Note, taking into account interest payments previously made.

Notwithstanding anything in this Section 9 to the contrary, in the event that Payee has paid a minimum of three (3) months of interest payments on the Note, Maker may pay the Note in full or in part prior to the Maturity Date with no additional prepayment premium due.

11.          NOTICES. All notices to be given pursuant to this Note shall be in writing and sufficient if given by personal service, by guaranteed overnight delivery service, or by being mailed postage prepaid, by registered or certified mail, to the address of the parties first hereinabove set forth or to such other address as either party may request in writing from time to time. Any time period provided in the giving of any notice hereunder shall commence upon the date of personal service, the next business day after delivery to the guaranteed overnight delivery service, or three (3) days after any notices are deposited, postage prepaid, in the United States mail, certified or registered mail. Notices may be given by a party’s attorneys or agents with the same force and effect as though given by such party.

12.           USURY. Maker hereby represents that this loan is for commercial use and not for personal, family or household purposes. It is the specific intent of the Maker and Payee that this Note bear a lawful rate of interest, and if any court of competent jurisdiction should determine that the rate herein provided for exceeds that which is statutorily permitted for the type of transaction evidenced hereby, the interest rate shall be reduced to the highest rate permitted by applicable law, with any excess interest theretofore collected being applied against principal or, if such principal has been fully repaid, returned to Maker upon written demand.

13.          ALL DUE ON SALE, TRANSFER OR ENCUMBRANCE. In the event of a sale, transfer, assignment of Maker’s interest in or an unpermitted encumbrance upon the real property under the Deed of Trust, this Note shall immediately become all due and payable. A transfer shall include any unpermitted change of ownership in Maker.

14.          MISCELLANEOUS

14.1        Time shall be of the essence with respect to all provisions of this Note.

14.2        Maker represents that Maker has full power, authority and legal right to execute and deliver this Note, and that this Note constitutes the valid and binding obligations of Maker.

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14.3        Wherever pursuant to this Note it is provided that Maker pay any costs and expenses, such costs and expenses shall include, without limitation, Payee’s reasonable legal fees and disbursements. Maker shall pay to Payee on demand any and all reasonable expenses, including reasonable attorneys’ fees, incurred or paid by Payee in enforcing this Note and/or related to the repayment of this Note either on the Maturity Date or otherwise.

14.4        This Note cannot be changed, modified, amended, waived, extended, discharged or terminated orally or by estoppel or waiver, regardless of any claimed partial performance referable thereto, or by any alleged oral modification or by any act or failure to act on the part of Maker or Payee.

14.5        The agreements contained herein shall remain in full force and effect, notwithstanding any changes in the individuals or entities comprising Maker, and the term “Maker,” as used herein, shall include any alternate or successor entity, but any predecessor entity, and its partners or members, as the case may be, shall not thereby be released from any liability. Nothing in the foregoing shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in Maker which may be set forth in this Note, the Security Instruments or the Loan Documents.

14.6        Titles of articles and sections are for convenience only and in no way define, limit, amplify or describe the scope or intent of any provision hereof.

14.7        If any paragraph, clause or provision of this Note is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such voidness, invalidity or unenforceability will not affect the remaining paragraphs, clauses and provisions of this Note, which shall nevertheless be binding upon the parties hereto with the same effect as though the void or unenforceable part had been severed and deleted.

14.8        If more than one person is named in this Note as “Maker”, each obligation of Maker shall be the “joint and several” obligation of such party or entity.

14.9        Payee may by written instrument assign all or any portion of its rights and obligations under this Note (an “Assignment”) to one or more persons (each such assignee, as well as Payee prior to assignment of all of its rights and obligations hereunder, a “Lender”). Such assignment may be made without the consent of Maker provided that Payee provides a copy of such Assignment to Maker. Maker shall maintain at its office a copy of each Assignment delivered to it and a register for the recordation of the names and addresses of the Lenders, and the commitments of, and principal amounts (and stated interest) of the loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and Maker and the Lenders shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Payee hereunder for all purposes of this Agreement. The Register shall be available for inspection by any Lender at any reasonable time and from time to time upon reasonable prior notice. Subject to the foregoing, the terms and provision of this Note shall be binding upon and inure to the benefit of Maker and Payee and their respective heirs, executors, legal representatives, successors, successors-in-title, and assigns, whether by voluntary action of the parties or by operation of law. As used herein, the terms “Maker” and “Payee” shall be deemed to include their respective heirs, executors, legal representative, successors, successors-in-title, and assigns, whether by voluntary action of the parties or by operation of law.

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14.10       All the terms and words used in this Note, regardless of the number and gender in which they are used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the context or sense of this Note or any paragraph or clause herein may require, the same as if such work had been fully and properly written in the correct number and gender.

14.11       This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of laws principles.

14.12       This Note may be executed in counterparts, each of which shall be deemed to be an original, but all of which, taken together, shall constitute one and the same agreement.

14.13       The provisions of Section 6.7 of the Security Instruments are hereby incorporated by reference into this Note to the same extent and with the same force as if fully set forth herein.

IN WITNESS WHEREOF, the undersigned has executed and delivered this Promissory Note as of the date set forth above.

MAKER:

TUCSON EAST HOLDING, LLC

By: TUCSON EAST MANAGER, LLC, Sole Manager
By: Caliber Hospitality, LLC, Sole Manager
By: Caliber Services, LLC, Sole Member Manager
By: Caliber Companies, LLC, Sole Member Manager
By: CaliberCos Inc, Sole Member Manager

By: /s/ Jennifer Schrader

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SCHEDULE A

Description of Collateral

This financing statement covers the following types (or items) of property:

All of Debtor’s buildings, structures, improvements, fixtures, chattels and articles of personal property now owned or hereafter acquired and/or now or hereafter attached to or used in connection on the real property described in Exhibit A (the “Premises”), including but not limited to furnaces, boilers, oil burners, radiators and piping, coal stokers, plumbing and bathroom fixtures, refrigeration, heating, ventilating and air conditioning systems, sprinkler systems, power systems, washtubs, sinks, gas and electric fixtures, stoves, ranges, awnings, screens, window shades, elevators, motors, dynamos, refrigerators, kitchen cabinets, incinerators, cisterns, generators, plants and shrubbery and all other equipment and machinery, building materials and components, appliances, fittings, and fixtures of every kind in or used in the operation of the buildings standing or hereafter erected on any of the Premises, together with any and all replacements thereof and additions thereto, proceeds or products thereof (collectively, the “Equipment”), together with any and all right, title and interest of Mortgagor in and to any Equipment which may be subject to any security agreements, as defined in the Uniform Commercial Code (the “Code”) in effect in the State of Arizona (hereinafter, sometimes referred to as “Security Agreements”), superior in lien to the lien of this Mortgage, all of which are covered by this Mortgage, which shall also constitute a security agreement. The term “fixtures”, as used herein, means all items that are physically attached to buildings, including, without limitation, items such as equipment used to supply air conditioning, heat, gas, water, light, laundry, drying, dishwashing, garbage disposal and other services;

TOGETHER with all easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Premises and the improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Premises, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Mortgagor of, in and to the Premises and the improvements and every part and parcel thereof, with the appurtenances thereto;

TOGETHER with all awards heretofore and hereafter made to Mortgagor for taking by eminent domain the whole or any part of the Land or any easement therein, including any awards for changes of grade of streets, which said awards are hereby assigned to Mortgagee, who is hereby authorized to collect and receive the proceeds of such awards and give proper receipts and acquittances therefor, and to apply the same toward the payment of the mortgage debt, notwithstanding the fact that the amount owing thereon may not then be due and payable; and Mortgagor hereby agrees, upon request, to make, execute, and deliver any and all assignments and other instruments sufficient for the purpose of assigning said awards to Mortgagee, free, clear and discharged of any encumbrances of any kind or nature whatsoever;

TOGETHER with the rents, income, issues and profits of all property covered by this Mortgage which are assigned to Mortgagee in accordance with the terms of this Mortgage. The term “rents, income, issues and profits” refer to any monies that Mortgagor may receive by using the Land for income producing purposes;

TOGETHER with all accounts, escrows, impounds, reserves, documents, instruments, chattel paper (whether tangible or electronic), claims, deposits and general intangibles, as the foregoing terms are defined in the Code, all promissory notes, and all franchises, trade names, trademarks, copyrights, symbols, service marks, books, records, recorded data of any kind or nature (regardless of the medium), plans, specifications, schematics, designs, drawings, permits, consents, licenses (including liquor licenses, to the extent assignable), license agreements, operating contracts, contract rights (including, without limitation, any contract with any architect or engineer or with any other provider of goods or services for or in connection with any construction, repair, or other work upon the Premises, improvements or Equipment) and all management, franchise, service, supply and maintenance contracts and agreements, and any other agreements, permits or contracts of any nature whatsoever now or hereafter obtained or entered into by or on behalf of Mortgagor with respect to the operation or ownership of the Premises, Improvements or Equipment, and all approvals, actions, refunds, rebates or reductions of real estate taxes and assessments (and any other governmental impositions related to the Premises, improvements or Equipment) resulting as a result of tax certiorari or any applications or proceeding for reduction; and all causes of action that now or hereafter relate to, are derived from or are used in connection with the Premises, Improvements or Equipment, or the use, operation, maintenance, occupancy or enjoyment thereof or the conduct of any business or activities thereon (hereinafter all of the items referred to collectively referred to as the “Intangibles”):

TOGETHER with all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including without limitation, proceeds of insurance and condemnation awards and all rights of Mortgagor to refunds of real estate taxes and assessments.

EXHIBIT A

Legal Description of Premises

Land is located in City of Tucson, County of Pima, State of AZ, and described as follows:

Parcel 1:

Lot 1, of the RESUBDIVISION OF BROADWAY PROPER, according to the plat of record in the office of the County Recorder of Pima County, Arizona, recorded in Book 39 of Maps, page 87.

Parcel 2:

A Reciprocal Easement, according to the terms and conditions contained within that certain Reciprocal Easement Agreement recorded September 13, 1985 in Docket 7618, page 886.

Parcel 3:

A Reciprocal Easement, according to the terms and conditions contained within that certain Reciprocal Access and Parking Easement Agreement recorded January 23, 1986 in Docket 7707 at page 1098.

Parcel 4:

An easement for Access over Common Area A, as set forth in the Dedication on the plat of RESUBDIVISION OF BROADWAY PROPER, according to the plat of record in the office of the County Recorder of Pima County, Arizona, recorded July 3, 1985 in Book 39 of Maps, page 87.

Commonly known as: 7600 E. Broadway Blvd., Tucson, AZ 85710

EX1A-6 MAT CTRCT

Exhibit 6.2.1

GUARANTY OF RECOURSE OBLIGATIONS

This GUARANTY OF RECOURSE OBLIGATIONS (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “Guaranty”) dated as of June 29, 2018, is made by CHRIS LOEFFLER and JENNIFER SCHRADER, each an individual, having an address at 16704 North 78^th Street, Scottsdale, AZ 852 (collectively, jointly and severally as “Guarantors”), in favor of CERCO CAPITAL INC, a Delaware corporation (“Payee”) at its office located at 251 Little Falls Drive, Wilmington, DE 19808 (the “Lender”).

WITNESSETH:

Pursuant to that certain Deed of Trust and Assignment of Rents and those UCC Financing Statements to be filed in the Office of the Secretary of State of the State of Delaware and in the office of the Clerk and Recorder of Pima County, Arizona, dated as of the date hereof (as the same may be amended, modified, supplemented or replaced from time to time, the “Security Instruments”) between TUCSON EAST HOLDING, LLC an Arizona limited liability company (“Borrower”) and Lender, and that certain Mortgage Note dated as of the date hereof (as the same may be amended, modified, supplemented or replaced from time to time, the “Note”) executed by Borrower in favor of Lender, Lender has agreed to make a loan to Borrower in the original principal amount of Fourteen Million and 00/100 Dollars ($14,000,000.00) (the “Loan”) subject to the terms and conditions of the Security Instruments;

As a condition to Lender’s making the Loan, Lender is requiring that Guarantors execute and deliver to Lender this Guaranty; and

Guarantors hereby acknowledge that Guarantors will materially benefit from Lender’s agreement to make the Loan.

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower and to extend such additional credit as Lender may from time to time agree to extend under the Loan Documents, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties do hereby agree as follows:

Article 1
NATURE AND SCOPE OF GUARANTY

Section 1.1           Guaranty of Obligations. Guarantors hereby irrevocably and unconditionally guarantee to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise, subject to and in accordance with the limitations set forth in this Guaranty. Guarantors hereby irrevocably and unconditionally covenant and agree that it is liable for the Guaranteed Obligations as a primary obligor.

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Section 1.2           Definition of Guaranteed Obligations.

(a)          Guarantors hereby assume liability as a primary obligor for, hereby unconditionally guarantee payment to Lender of, hereby agree to pay, protect, defend and save Lender harmless from and against, and hereby indemnify Lender from and against, any and all actual liabilities, obligations, losses, damages (excluding punitive or exemplary damages or diminution in value of the Property), costs and expenses (including, without limitation, reasonable attorneys’ fees and costs), causes of action, suits, claims, demands and judgments, of any nature or description whatsoever, which may at any time be imposed upon, incurred by or awarded against Lender as a result of any of the following:

(i)          Any affirmative acts by Borrower or Guarantors resulting in the violation of any environmental laws;

(ii)         material physical waste resulting from Borrower or Guarantors’ gross negligence or willful misconduct except to the extent that: (a) the Property failed to generate sufficient cash flow after debt service, or Lender did not make such cash flow available to Borrower to remedy or avoid such waste; or (b) following a casualty or condemnation event, the insurance proceeds or condemnation awards are not sufficient or are not made available to Borrower to remedy or avoid such waste or, after the occurrence and during the continuance of an Event of Default, the removal or disposal of any portion of the Property by Borrower or Guarantors in violation of the terms and conditions set forth in the Loan Documents;

(iii)         the misapplication, misappropriation or conversion by Borrower of (A) any insurance proceeds paid by reason of any loss, damage or destruction to the Property, (B) any awards or other amounts received in connection with the Condemnation of all or a portion of the Property, or (C) any security deposits, advance deposits or any other deposits collected with respect to the Property (including the failure to deliver any such deposits to Lender upon a foreclosure of the Property or an action in lieu thereof, except to the extent any such deposits were applied in accordance with the terms and conditions of the applicable lease (any lease affecting the Property being defined herein as a “Lease”) prior to the occurrence of the Event of Default giving rise to such foreclosure or action in lieu thereof));

(iv)         [Intentionally Omitted];

(v)          the commission of a criminal act relating to the Property by Borrower, any Guarantor or, to the extent pursuant to the affirmative direction of Borrower and/or Guarantors, any of their respective agents;

(vi)         the amendment, modification, termination, or cancellation or acceptance of a surrender of any commercial lease in effect as of the date of this Guaranty (other than: (a) unilateral terminations or cancellation by the tenant thereunder in accordance with the express terms thereof as of the date hereof; and (b) amendments or modifications that: (1) do not diminish any material benefit accruing to the Borrower as landlord under the leases and do not reduce either the term, the rental or the size of the premises; (2) are made in the ordinary course of business; or (3) are made in conformance with commercially reasonable, prudent and sound business practice), or the waiver of any material terms or provisions of any lease, in each case without Lender’s prior written consent (not to be unreasonably withheld, conditioned or delayed);

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(vii)        Borrower enters into any without the consent of Lender or, after having entered into same with Lender’s consent any amendment, modification, termination, cancellation or acceptance of a surrender of any Lease, or the waiver of any of the terms or provisions of any Lease, in each case without Lender’s prior written consent other than: (a) unilateral terminations or cancellation by the tenant thereunder in accordance with the express terms thereof as of the date hereof; and (b) amendments or modifications that: (1) do not diminish any material benefit accruing to the Borrower as landlord under the leases and do not reduce either the term, the rental or the size of the premises; (2) are made in the ordinary course of business; or (3) are made in conformance with commercially reasonable, prudent and sound business practice;

(viii)       Borrower incurs new indebtedness without the prior written consent offender, except as and to the extent permitted by the Security Instruments; or

(ix)         in connection with the Loan or the Property (including, without limitation, any Lease), any Guarantor, any Affiliate of Guarantor or any of their respective agents or representatives, engages in any action constituting fraud, willful and material misrepresentation, gross negligence or willful misconduct.

(b)           In addition to, and without limiting the generality of, the foregoing clause (a), and notwithstanding anything to the contrary set forth in this Guaranty or in any of the other Loan Documents, Guarantors hereby acknowledge and agree that the Obligations shall be fully recourse to Guarantors in the event that:

(i)           Borrower files a voluntary petition under the Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency law;

(ii)          an Affiliate, officer, director or representative, but only to the extent any of the foregoing controls, directly or indirectly, Borrower or Guarantor, files, or joins in the filing of, an involuntary petition against any Borrower under the Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition against any Borrower from any Person;

(iii)         Borrower or any Guarantor files an answer consenting to, or otherwise acquiescing in, or joining in, any involuntary petition filed against Borrower, by any other Person under the Bankruptcy Code or any other federal, state, local or foreign bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition from any Person;

(iv)         any Affiliate, officer, director or representative, but only to the extent any of the foregoing controls any Borrower, consents to, or acquiesces in, or joins in, an application for the appointment of a custodian, receiver, trustee or examiner for Borrower or any portion of the Property (other than any action brought by Lender);

(v)          Borrower makes an assignment for the benefit of creditors; or

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(vi)        Borrower, any Guarantor (or any Person comprising any Borrower or any Guarantor), or any Affiliate of any of the foregoing, in connection with any enforcement action or exercise or assertion of any right or remedy by or on behalf of Lender under or in connection with the Note, the Security Instruments, this Guaranty or any other Loan Document, seeks a defense, judicial intervention or injunctive or other equitable relief of any kind or asserts in a pleading filed in connection with a judicial proceeding any defense against Lender or any right in connection with any security for the Loan, which is frivolous and brought in bad faith as finally determined by a court of competent jurisdiction. For avoidance of doubt, nothing contained herein is intended to prevent any of the parties identified in this section above from raising, in good faith, any defense to Lender’s exercise of its rights under the documents evidencing and securing the Loan and the Note (the “Loan Documents”) provided that in no event shall any of such parties seek to challenge the validity of the lien of any of the Security Instruments, the enforceability under applicable law of the Loan Documents taken as a whole or any action in violation of the provisions of the Borrower’s Certificate of Formation and Operating Agreement with respect to the preservation of its status as a single purpose entity and provisions forbidding its filing for or consenting or acquiescing to relief under federal or state bankruptcy or insolvency laws..

As used in this Section 1.2. the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.

(c)          The obligations of Guarantors set forth in clauses (a) and (b) of this Section 1.2. as and to the extent set forth in said clauses (a) and (b) of this Section 1.2. are hereinafter collectively referred to as the “Guaranteed Obligations”.

(d)          Notwithstanding anything to the contrary in this Guaranty or in any of the other Loan Documents, Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Guaranteed Obligations or to require that all collateral shall continue to secure all of the Guaranteed Obligations owing to Lender in accordance with the Loan Documents.

Section 1.3           Nature of Guaranty. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection. This Guaranty may not be revoked by Guarantors and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by Guarantors and after (if Guarantor is a natural person) any Guarantor’s death (in which event this Guaranty shall be binding upon Guarantor’s estate and Guarantor’s legal representatives and heirs). The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced, pursuant to the Loan Documents, shall not release or discharge the obligation of Guarantors to Lender with respect to the Guaranteed Obligations. This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment, sale, pledge, transfer, participation or negotiation of all or part of the Note.

Section 1.4           Guaranteed Obligations Not Reduced by Offset. The Guaranteed Obligations and the liabilities and obligations of Guarantors to Lender hereunder shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower or any other party against Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

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Section 1.5            Payment By Guarantor. If all or any part of the Guaranteed Obligations shall not be paid when due, whether at demand, maturity, acceleration or otherwise, Guarantor shall, within five (5) business days following demand by Lender and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity or any other notice whatsoever, all such notices being hereby waived by Guarantors, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to Lender at Lender’s address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof.

Section 1.6            No Duty To Pursue Others. It shall not be necessary for Lender (and Guarantors hereby waive any rights which Guarantors may have to require Lender), in order to enforce the obligations of Guarantors hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other Person, (ii) enforce Lender’s rights against any collateral which shall ever have been given to secure the Loan, (iii) enforce Lender’s rights against any other guarantors of the Guaranteed Obligations, (iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining payment of the Guaranteed Obligations. Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

Section 1.7            Waivers. To the extent permitted pursuant to applicable law. Guarantors agree to the provisions of the Loan Documents and hereby waive notice of (i) any advances made by Lender to Borrower under the Loan Documents, (ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Security Instruments, or any other Loan Document, (iv) the execution and delivery by Borrower and Lender of any other loan or credit agreement or of Borrower’s execution and delivery of any promissory note or other document arising under the Loan Documents or in connection with the Property, (v) the occurrence of (A) any breach by Borrower of any of the terms or conditions of the Security Instruments or any of the other Loan Documents, or (B) an Event of Default, (vi) Lender’s transfer, sale, assignment, pledge, participation or disposition of the Guaranteed Obligations, or any part thereof, (vii) the sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations, (viii) protest, proof of non-payment or default by Borrower, or (ix) any other action at any time taken or omitted by Lender and, generally, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and/or the obligations hereby guaranteed.

Section 1.8            Payment of Expenses. In the event that Guarantors should breach or fail to timely perform any provisions of this Guaranty, Guarantors shall, immediately upon demand by Lender, pay Lender all actual and reasonable costs and expenses (including court costs and reasonable attorneys’ fees) incurred by Lender in the enforcement hereof or the preservation of Lender’s rights hereunder, together with interest thereon at the Default Rate from the date requested by Lender until the date of payment to Lender. The covenant contained in this Section shall survive the payment and performance of the Guaranteed Obligations.

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Section 1.9            Effect of Bankruptcy. In the event that pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law or any judgment, order or decision thereunder, Lender must rescind or restore any payment or any part thereof received by Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to Guarantors by Lender shall be without effect and this Guaranty shall remain (or shall be reinstated to be) in full force and effect. It is the intention of Borrower and Guarantors that Guarantors’ obligations hereunder shall not be discharged except by Guarantors’ performance of such obligations and then only to the extent of such performance.

Section 1.10         Waiver of Subrogation. Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty, until such time as the Loan has been paid in full and satisfied, Guarantors hereby unconditionally and irrevocably waive, release and abrogate any and all rights they may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating the Guarantors to the rights of Lender), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by Guarantors under or in connection with this Guaranty or otherwise.

Section 1.11         Borrower. The term “Borrower” as used herein shall include any new or successor corporation, association, partnership (general or limited), limited liability company joint venture, trust or other individual or organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of Borrower or any interest in any of the Borrower, as permitted under the Security Instruments.

Section 1.12         Payment of the Loan. Subject to any obligations that survive under this Guaranty or the Loan Documents, including, without limitation Section 6.14 hereunder, this Guaranty shall terminate upon payment of the Loan.

Article 2
EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING GUARANTORS’ OBLIGATIONS

Guarantors hereby consent and agree to each of the following and agrees that Guarantors’ obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following and waives any common law, equitable, statutory or other rights (including without limitation rights to notice) which Guarantors might otherwise have as a result of or in connection with any of the following:

Section 2.1            Modifications/Sales. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Note, the Security Instruments, the other Loan Documents or any other document, instrument, contract or understanding between Borrower and Lender or any other parties pertaining to the Guaranteed Obligations, or any sale, assignment or foreclosure of the Note, the Security Instruments, or any other Loan Documents or any sale or transfer of the Property, or any failure of Lender to notify Guarantors of any such action.

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Section 2.2            Adjustment. Any adjustment, indulgence, forbearance or compromise that might be granted or given by Lender to Borrower or any Guarantor.

Section 2.3            Condition of Borrower or Guarantors. The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of any Borrower, any Guarantor or any other Person at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of any Borrower or any Guarantor or any sale, lease or transfer of any or all of the assets of any Borrower or any Guarantor or any changes in the shareholders, partners or members, as applicable, of any Borrower or any Guarantor; or any reorganization of Borrower or Guarantor.

Section 2.4            Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations or any document or agreement executed in connection with the Guaranteed Obligations for any reason whatsoever, including without limitation the fact that (i) the Guaranteed Obligations or any part thereof exceeds the amount permitted by Legal Requirements, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note, the Security Instruments, or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) the Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the Security Instruments, or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that Guarantors shall remain liable hereon regardless of whether Borrower or any other Person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

Section 2.5           Release of Obligors. Any full or partial release of the liability of Borrower for the Guaranteed Obligations or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by Guarantors that Guarantors may be required to pay the Guaranteed Obligations in full without assistance or support from any other Person, and Guarantors have not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other Persons (including Borrower) will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other Persons (including Borrower) to pay or perform the Guaranteed Obligations.

Section 2.6           Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

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Section 2.7          Release of Collateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including, without limitation, negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations.

Section 2.8           Care and Diligence. The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including, but not limited to, any neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations, or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

Section 2.9           Unenforceability. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by Guarantors that Guarantors are not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectibility or value of any of the collateral for the Guaranteed Obligations.

Section 2.10         Representation. The accuracy or inaccuracy of the representations and warranties made by Guarantors herein or by Borrower in any of the Loan Documents.

Section 2.11          Offset. The Note, the Guaranteed Obligations and the liabilities and obligations of the Guarantors to Lender hereunder shall not be reduced, discharged or released because of or by reason of any existing or future right of offset, claim or defense of Borrower against Lender, or any other party, or against payment of the Guaranteed Obligations, whether such right of offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

Section 2.12          Merger. The reorganization, merger or consolidation of any Borrower or any Guarantor into or with any other Person.

Section 2.13         Preference. Any payment by Borrower to Lender is held to constitute a preference under bankruptcy laws or for any reason Lender is required to refund such payment or pay such amount to Borrower or to any other Person.

Section 2.14         Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not such action or omission prejudices Guarantors or increases the likelihood that Guarantors will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of Guarantors that Guarantors shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

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Article 3
REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into the Loan Documents and to extend credit to Borrower, Guarantors jointly and severally represent and warrant to Lender as follows:

Section 3.1            Benefit. Guarantors are the owners of an indirect interest in Borrower, and have received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

Section 3.2            Familiarity and Reliance. Guarantors are familiar with, and have independently reviewed books and records regarding, the financial condition of the Borrower and are familiar with the value of any and all collateral intended to be created as security for the payment of the Note or Guaranteed Obligations; however. Guarantors are not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

Section 3.3            No Representation By Lender. Neither Lender nor any other party has made any representation, warranty or statement to Guarantor in order to induce the Guarantor to execute this Guaranty.

Section 3.4           Legality. The execution, delivery and performance by Guarantors of this Guaranty and the consummation of the transactions contemplated hereunder do not and will not contravene or conflict with any law, statute or regulation whatsoever to which Guarantors are subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, charge, lien, or any contract, agreement or other instrument to which Guarantors are a party or which may be applicable to Guarantors. This Guaranty is a legal and binding obligation of Guarantors and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

Section 3.5            Survival. All representations and warranties made by Guarantors herein shall survive the execution hereof.

Article 4
SUBORDINATION OF CERTAIN INDEBTEDNESS

Section 4.1           Subordination of All Guarantors’ Claims. As used herein, the term “Guarantors’ Claims” shall mean all debts and liabilities of Borrower to Guarantors, whether such debts and liabilities now exist or are hereafter incurred or arise, and whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the Person or Persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantors. The Guarantors’ Claims shall include, without limitation, all rights and claims of Guarantors against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantors’ payment of all or a portion of the Guaranteed Obligations. So long as any portion of the Obligations or the Guaranteed Obligations remain outstanding, Guarantors shall not receive or collect, directly or indirectly, from Borrower or any other Person any amount upon the Guarantor Claims.

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Section 4.2            Claims in Bankruptcy. In the event of any receivership, bankruptcy, reorganization, arrangement, debtor’s relief, or other insolvency proceeding involving Guarantors as debtors, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantors’ Claims. Guarantors hereby assign such dividends and payments to Lender. Should Lender receive, for application against the Guaranteed Obligations, any dividend or payment which is otherwise payable to Guarantors and which, as between Borrower and Guarantors, shall constitute a credit against the Guarantors’ Claims, then, upon payment to Lender in full of the Guaranteed Obligations, Guarantors shall become subrogated to the rights of Lender to the extent that such payments to Lender on the Guarantors’ Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon the Guarantors’ Claims.

Section 4.3            Payments Held in Trust. Notwithstanding anything to the contrary in this Guaranty, in the event that Guarantors should receive any funds, payments, claims or distributions which are prohibited by this Guaranty, Guarantors agree to hold in trust for Lender an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims and/or distributions so received except to pay them promptly to Lender, and Guarantors covenant promptly to pay the same to Lender.

Section 4.4            Liens Subordinate. Guarantors agree that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guarantors’ Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantors or Lender presently exist or are hereafter created or attach. Without the prior written consent of Lender, Guarantors shall not (i) exercise or enforce any creditor’s rights it may have against Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or the joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of Borrower held by Guarantors. The foregoing shall in no manner vitiate or amend, nor be deemed to vitiate or amend, any prohibition in the Loan Documents against Borrower or Guarantors transferring any of their assets to any Person other than Lender.

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Article 5
COVENANTS

Section 5.1           Covenants. Until all of the Obligations and the Guaranteed Obligations have been paid in full, Guarantors shall not sell, pledge, mortgage, encumber or otherwise transfer any material portion of its assets or any interest therein, on terms materially less favorable than would be obtained in an arms-length transaction.

Section 5.2           Prohibited Transactions. Guarantors shall not, at any time while a default in the payment of the Guaranteed Obligations has occurred and is continuing, enter into or effectuate any transaction with any Affiliate which would materially reduce the Net Worth of Guarantors, including sell, pledge, mortgage or otherwise transfer to any Person any of Guarantors’ material assets, or any interest therein. For purposes of this section, “Net Worth” shall mean, as of a give date, (X) the total assets of Guarantors as of such date less (y) Guarantors’ total liabilities as of such date.

Article 6
MISCELLANEOUS

Section 6.1           Waiver. No failure to exercise, and no delay in exercising, on the part of Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right. The rights of Lender hereunder shall be in addition to all other rights provided by law. No modification or waiver of any provision of this Guaranty, nor any consent to any departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

Section 6.2           Notices. All notices, demands, requests, consents, approvals or other communications (any of the foregoing, a “Notice”) required, permitted or desired to be given hereunder shall be in writing and shall be sent by registered or certified mail, postage prepaid, return receipt requested, or delivered by hand or by reputable overnight courier, addressed to the party to be so notified at its address hereinafter set forth, or to such other addresses as such party may hereafter specify in accordance with the provisions of this Section 6.2. Any Notice shall be deemed to have been received: (a) three (3) days after the date such Notice is mailed, (b) on the date of delivery by hand if delivered during business hours on a Business Day (otherwise on the next Business Day), and (c) on the next Business Day if sent by an overnight commercial courier, in each case addressed to the parties as follows:

If to Lender:	Cerco Capital Inc.
	251 Little Falls Drive
	Wilmington, Delaware
With a copy to:	Fox Rothschild LLP
	997 Lenox Drive, Building 3
	Lawrenceville, New Jersey 08648
	Attention: Matthew H. Lubart, Esq.

11

If to Guarantors:	Chris Loeffler
	Jennifer Schrader
	16704 North 78th Street
	Scottsdale, Arizona 85260
With a copy to:	Roxanne Veliz, Esq.
	Snell & Wilmer L.L.P.
	One South Church Street, Ste. 1500
	Tucson, Arizona 85701

Any party may change the address to which any such Notice is to be delivered by furnishing ten (10) days’ written notice of such change to the other parties in accordance with the provisions of this Section 6.2. Notices shall be deemed to have been given on the date set forth above, even if there is an inability to actually deliver any Notice because of a changed address of which no Notice was given or there is a rejection or refusal to accept any Notice offered for delivery. Notice for any party may be given by its respective counsel.

Section 6.3            Governing Law; Submission to Jurisdiction.

(a)           THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPALS AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, INDEMNITORS HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTORS ARISING OUT OF OR RELATING TO THIS GUARANTY MAY, AT LENDER’S OPTION, BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE STATE OF ARIZONA AND GUARANTORS WAIVE ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTORS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING, GUARANTORS DOES HEREBY DESIGNATE AND APPOINT CALIBERCOS INC. AS AGENT FOR SERVICE OF PROCESS AT: 16704 N. 78™ STREET, SCOTTSDALE, AZ 85260

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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON THEIR BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT, AND AGREE THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO IN ANY SUCH SUIT, ACTION OR PROCEEDING. GUARANTORS (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN ARIZONA (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN ARIZONA OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTIONS.

Section 6.4            Invalid Provisions. If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

Section 6.5           Amendments. This Guaranty may be amended only by an instrument in writing executed by the party against whom such amendment is sought to be enforced.

Section 6.6           Parties Bound; Assignment; Joint and Several. This Guaranty shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors, permitted assigns, heirs and legal representatives. Lender may sell, assign, pledge, participate, transfer or delegate, as applicable to one or more Persons all or a portion of its rights and obligations under this Guaranty in connection with any assignment, sale, pledge, participation or transfer of the Loan and the Loan Documents. Any assignee or transferee of Lender shall be entitled to all the benefits afforded to Lender under this Guaranty. Guarantors shall not have the right to delegate, assign or transfer its rights or obligations under this Assignment without the prior written consent of Lender, and any attempted assignment, delegation or transfer without such consent shall be null and void. If Guarantors consist of more than one Person or party, the obligations of each such Person or party shall be joint and several.

Section 6.7           Headings. Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty.

Section 6.8           Recitals. The recitals and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

Section 6.9           Counterparts. To facilitate execution, this Guaranty may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Guaranty to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

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Section 6.10          Rights and Remedies. If Guarantors become liable for any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may ever have against Guarantors. The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

Section 6.11          Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTORS AND LENDER WITH RESPECT TO GUARANTORS’ GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTORS AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTORS AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTORS AND LENDER.

Section 6.12          Waiver of Right To Trial By Jury. GUARANTORS HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE SECURITY INSTRUMENTS OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GUARANTORS, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY GUARANTOR.

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Section 6.13           Cooperation. Guarantors acknowledge that Lender and its successors and assigns may (i) sell this Guaranty, the Note and the other Loan Documents to one or more investors as a whole loan, (ii) participate the Loan secured by this Guaranty to one or more investors, (iii) deposit this Guaranty, the Note and the other Loan Documents with a trust, which trust may sell certificates to investors evidencing an ownership interest in the trust assets, or (iv) otherwise sell the Loan or one or more interests therein to investors (the transactions referred to in clauses (i) through (iv) are hereinafter each referred to as “Secondary Market Transaction”). Guarantors shall reasonably cooperate with Lender in effecting any such Secondary Market Transaction; provided that such persons are bound by written confidentiality agreements protecting Guarantors’ financial information. Guarantors shall provide such information and documents relating to Guarantors, Borrower, the Property and any tenants of the Property as Lender may reasonably request in connection with such Secondary Market Transaction. In addition, Guarantors shall make available to Lender all information concerning its business and operations that Lender may reasonably request. Lender shall be permitted to share all such information with the investment banking firms, accounting firms, law firms and other third-party advisory firms involved with the Loan and the Loan Documents or the applicable Secondary Market Transaction provided that such parties sign a commercially reasonable confidentiality and non-disclosure agreement. Lender and all of the aforesaid third- party advisors and professional firms shall be entitled to rely on the information supplied by, or on behalf of. Guarantors in the form as provided by Guarantors. Lender may publicize the existence of the Loan in connection with its marketing for a Secondary Market Transaction or otherwise as part of its business development.

Section 6.14           Reinstatement in Certain Circumstances. If at any time any payment of the principal of or interest under the Note or any other amount payable by the Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Guarantors’ obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time.

Section 6.15          Gender; Number; General Definitions. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, (a) words used in this Guaranty may be used interchangeably in the singular or plural form, (b) any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, (c) the word “Borrower” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or interest therein (but only so long as Lender has a mortgage interest in such portion of the Property”, (d) the word “Lender” shall mean “Lender and any subsequent holder of the Note”, (e) the word “Note” shall mean “the Note and any other evidence of indebtedness secured by the Security Instruments, as amended, restated or otherwise modified”, (f) the word “Property” shall include any portion of the Property and any interest therein, and (g) the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all reasonable attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels, incurred or paid by Lender in protecting its interest in the Property, the Leases and/or the Rents and/or in enforcing its rights hereunder.

[NO FURTHER TEXT ON THIS PAGE]

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IN WITNESS WHEREOF, Guarantors have executed this Guaranty of Recourse Obligations as of the day and year first above written.

GUARANTORS:

/s/ Chris Loeffler

CHRIS LOEFFLER, Individually

/s/ Jennifer Schrader

JENNIFER SCHRADER, Individually

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EX1A-6 MAT CTRCT

Exhibit 6.3

PROMISSORY NOTE

by

44TH AND MCDOWELL HOLDING, LLC
47TH STREET PHOENIX AIRPORT, LLC
CHPH HOLDING, LLC
(Individually and collectively, Borrower)

in favor of

RCC REAL ESTATE, INC.

(Lender)

TABLE OF CONTENTS

		Page
ARTICLE 1.	DEFINED TERMS	1
ARTICLE 2.	PAYMENT TERMS	10
ARTICLE 3.	ADDITIONAL PAYMENT PROVISIONS	12
ARTICLE 4.	DEFAULT AND ACCELERATION	15
ARTICLE 5.	DEFAULT INTEREST	15
ARTICLE 6.	PREPAYMENT	15
ARTICLE 7.	SECURITY	17
ARTICLE 8.	SAVINGS CLAUSE	17
ARTICLE 9.	LATE CHARGE	17
ARTICLE 10.	NO ORAL CHANGE	18
ARTICLE 11.	JOINT AND SEVERAL LIABILITY	18
ARTICLE 12.	WAIVERS	18
ARTICLE 13.	SECONDARY MARKET	18
ARTICLE 14.	WAIVER OF TRIAL BY JURY	19
ARTICLE 15.	EXCULPATION	19
ARTICLE 16.	AUTHORITY	23
ARTICLE 17.	APPLICABLE LAW	23
ARTICLE 18.	SERVICE OF PROCESS	24
ARTICLE 19.	COUNSEL FEES	25
ARTICLE 20.	NOTICES	25
ARTICLE 21.	MISCELLANEOUS	25
ARTICLE 22.	INTEREST RATE CAP AGREEMENT	26
ARTICLE 23.	EXTENSION OF MATURITY DATE	28
ARTICLE 24.	ADVANCES GENERALLY	29
ARTICLE 25.	EARN OUT ADVANCES	30
ARTICLE 26.	PARTIAL RELEASES OF INDIVIDUAL PROPERTIES	31
ARTICLE 27.	CONTRIBUTIONS AND WAIVERS	34

EXHIBITS

EXHIBIT A - FORM OF REQUEST

i 

PROMISSORY NOTE

$62,245,000.00	New York, New York
	September ___, 2018

FOR VALUE RECEIVED, 44^TH AND MCDOWELL HOLDING, LLC, a Delaware limited liability company, 47^TH STREET PHOENIX AIRPORT, LLC, a Delaware limited liability company, and CHPH HOLDING, LLC, a Delaware limited liability company, as makers, having their collective principal place of business at 8901 East Mountain View Road, Suite 150, Scottsdale, Arizona 85258 (individually and collectively, the “Borrower”), hereby unconditionally promises to pay to the order of RCC REAL ESTATE, INC., a Delaware corporation, as payee, having an address at 717 Fifth Avenue, 12^th Floor, New York, New York 10022, and its successors and assigns (collectively, “Lender”), or at such other place as the holder of this Promissory Note (as the same may be amended, restated, supplemented, or otherwise modified from time to time, this “Note”) may from time to time designate in writing, the principal sum of SIXTY TWO MILLION TWO HUNDRED FORTY FIVE THOUSAND AND 00/100 DOLLARS ($62,245,000.00), in lawful money of the United States of America with interest thereon to be computed from the date of this Note at the Applicable Interest Rate (as defined below), and to be paid in accordance with the terms of this Note.

ARTICLE 1. DEFINED TERMS

For all purposes of this Note, except as otherwise expressly provided herein or unless the context clearly indicates a contrary intent:

“Acceptable Counterparty” shall mean a counterparty to the Interest Rate Cap Agreement that (a) has and shall maintain, until the expiration of the applicable Interest Rate Cap Agreement, a long-term unsecured debt rating of not less than “A-” by S&P and “A3” from Moody’s, which rating shall not include a “t” or otherwise reflect a termination risk, or (b) is otherwise acceptable to all Rating Agencies rating any Secondary Market Transaction as evidenced by written confirmation from all such Rating Agencies that such counterparty shall not cause a downgrade, withdrawal or qualification of the ratings assigned, or to be assigned, to the Securities or any class thereof in any Secondary Market Transaction.

“Adjusted Alternative Rate” shall mean the Substitute Index as such Substitute Index may change from time to time plus the Spread; provided, however, in no event shall the Substitute Index be deemed to be less than 1.92%.

“Adjusted LIBOR Rate” shall mean, with respect to any Interest Period, an interest rate per annum equal to the one-month LIBOR plus the Spread; provided, however, in no event shall LIBOR be deemed to be less than 1.92%.

“Allocated Loan Amount” shall mean, with respect to each Individual Property, the portion of the principal allocated to such Individual Property as set forth on Schedule A attached hereto and made a part hereof, as such amount shall increase by any applicable Earn Out Advance until the Loan is fully funded and the portion of the principal allocated to each Individual Property to such Individual Property is the Maximum Allocated Loan Amount.

“Annual Debt Service” shall mean (a) annualized interest based on the Applicable Interest Rate in effect at the time of calculation of Annual Debt Service and the unpaid principal at the date of calculation of Annual Debt Service, plus (b) principal amortization payments, if any, scheduled to become due on the twelve (12) consecutive Payment Dates (excluding the Maturity Date) following the date of calculation (or if fewer than twelve (12) Payment Dates remain (excluding the Maturity Date) the product of (i) twelve (12) and (ii) the principal amortization payment, if any, next due.

“Applicable Interest Rate” shall mean (a) from and including the date of this Note through the day immediately preceding the first Determination Date an interest rate per annum equal to 5.91%; and (b) from and including the first Determination Date and for each successive Interest Period through and including the Maturity Date, an interest rate per annum equal to (i) the Adjusted LIBOR Rate or (ii) the Adjusted Alternative Rate, if the Loan begins bearing interest at the Adjusted Alternative Rate in accordance with the provisions of Paragraph (b) of Article 3.

“Approved Appraisal” shall mean an M.A.I. appraisal acceptable to Lender prepared by a professional appraiser who is a member in good standing of the Appraisal Institute, which appraisal shall value the Property on an “as is” basis as of the date of such appraisal.

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy”, as amended from time to time, and any successor statute or statutes and all rules and regulations from time to time promulgated thereunder, and any comparable foreign laws relating to bankruptcy, insolvency or creditors’ rights.

“Breakage Costs” shall mean any loss or expense which Lender sustains or incurs as a consequence of (a) any default by Borrower in payment of the principal of or interest on the Loan while bearing interest at the Adjusted LIBOR Rate, including, without limitation, any such loss or expense arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Adjusted LIBOR Rate, (b) any prepayment (whether voluntary or mandatory) of the Loan on a day that (i) is not a Payment Date, or (ii) is a Payment Date if Borrower did not give the prior written notice of such prepayment required pursuant to the terms of this Note, including, without limitation, such loss or expense arising from interest or fees payable by Lender to lenders of funds obtained by it in order to maintain the Adjusted LIBOR Rate hereunder and (c) the conversion (for any reason whatsoever, whether voluntary or involuntary) of the Applicable Interest Rate from the Adjusted LIBOR Rate to the Adjusted Alternative Rate on a date other than the Determination Date immediately following the last day of an Interest Period, including, without limitation, such loss or expenses arising from interest or fees payable or which would be payable by Lender to lenders of funds obtained by it in order to maintain the Adjusted LIBOR Rate hereunder.

“Business Day” shall mean any day other than Saturday, Sunday or any other day on which banks are authorized to close in the New York, New York.

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“Cash Management Agreement” shall mean that certain Cash Management Agreement, dated as of the date hereof, by and among, Borrower, Lender, Wells Fargo Bank, National Association and Manager, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“Closing Date” shall mean the date hereof.

“Code” shall mean the U.S. Internal Revenue Code of 1986, as amended.

“Crowne Plaza Borrower” shall mean CHPH HOLDING, LLC, a Delaware limited liability company.

“Crowne Plaza Franchise Agreement” shall mean that certain License Agreement dated as of or around the date hereof by and between Holiday Hospitality Franchising, LLC and Crowne Plaza Borrower.

“Debt” shall have the meaning set forth in Article 4 hereof.

“Debt Service” shall mean, with respect to any particular period of time, scheduled interest payments due under this Note.

“Debt Service Coverage Ratio” shall mean a ratio for the applicable period in which: (a) the numerator is the Net Operating Income, without deduction for amounts paid to any reserves held by Lender, less reserve payments equal to the greater of (1) assumed reserve contributions in the aggregate equal to four percent (4%) of the gross revenue generated by the Property and (2) the actual FF&E Reserve contributions, as determined by Lender, and (b) the denominator is Annual Debt Service.

“Debt Yield” shall mean, as of any date of calculation, the ratio (expressed as a percentage) obtained by dividing the Net Operating Income during the twelve (12) month period ending one month prior to the date on which the Debt Yield is to be calculated by the outstanding principal balance of the Loan.

“Default” shall mean any event or circumstance which, with the passage of time or the giving of notice, shall constitute an Event of Default.

“Default Rate” shall have the meaning set forth in Article 5 hereof.

“Determination Date” shall mean the first day of the Interest Period for which the Applicable Interest Rate is being determined.

“Earn Out Advances” shall mean advance of the Loan as set forth in Article 24 herein.

“Earn Out Portion” shall have the meaning set forth in Article 24 herein.

“Event of Default” shall have the meaning set forth in the Security Instrument.

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“Excluded Taxes” shall mean any of the following Income Taxes imposed on or with respect to a Lender or required to be withheld or deducted from a payment to a Lender, (a) Income Taxes imposed on or measured by net income (however denominated), including franchise taxes and branch profits taxes, in each case, (i) imposed as a result of such Lender being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Income Tax (or any political subdivision thereof) or (ii) that are Income Taxes imposed as a result of a present or former connection between such Lender and the jurisdiction imposing such Income Tax (other than connections arising from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document), (b) U.S. federal withholding Income Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan (other than pursuant to an assignment request by the Borrower) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 3(d), amounts with respect to such Income Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Income Taxes attributable to such Lender’s failure to comply with Section 21(c), and (d) any U.S. federal withholding Income Taxes imposed under FATCA.

“Exit Fee” shall mean an amount equal to one quarter of one percent (0.25%) of the original principal amount of this Note, determined as of the date such amount is due and payable under this Note.

“Extended Maturity Date” shall mean the First Extended Maturity Date if the First Extension Option is effectuated in accordance with Article 23 hereof, or the Second Extended Maturity Date if the Second Extension Option is effectuated in accordance with Article 23 hereof.

“Extension Fee” shall mean (a) in connection with Borrower’s exercise of the First Extension Option, an amount equal to one quarter of one percent (0.25%) of the outstanding principal amount of this Note, determined as of the Initial Maturity Date, or (b) in connection with Borrower’s exercise of the Second Extension Option, an amount equal to one half of one percent (0.50%) of the outstanding principal amount of this Note, determined as of the First Extended Maturity Date.

“Extension Option” shall have the meaning set forth in Article 23 hereof.

“Extension Term” shall mean the period from the Initial Maturity Date to and including the First Extended Maturity Date (hereinafter defined) if the First Extension Option is effectuated in accordance with Article 23 hereof, and the period from the First Extended Maturity Date to and including the Second Extended Maturity Date (hereinafter defined) if the Second Extension Option is effectuated in accordance with Article 23 hereof.

4

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Note (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations promulgated thereunder or official administrative interpretations thereof, any applicable agreement entered into pursuant to Section 1471(b)(1) of the Code, and any applicable intergovernmental agreement with respect thereto.

“FF&E Reserve” shall have the meaning set forth in the Reserve and Security Agreement.

“First Extension Monthly Amortization Payment” shall mean the required payment on a Payment Date to Lender of principal in an amount determined by Lender based upon (i) a thirty (30) year amortization schedule, (ii) an interest rate equal to the Applicable Interest Rate in effect for the Interest Period ending on the day preceding such Payment Date, and (iii) the outstanding principal balance of the Loan in effect on the immediately preceding Payment Date.

“First Extension Option” shall have the meaning set forth in Article 23 hereof.

“First Extension Term” shall mean the period from the Initial Maturity Date to and including the First Extended Maturity Date if the First Extension Option is effectuated in accordance with Article 23 hereof.

“Fitch” shall mean Fitch, Inc.

“Franchise Agreement” shall mean, collectively, (i) the Crowne Plaza Franchise Agreement, (ii) the Hilton Franchise Agreement, and (iii) the Holiday Inn Franchise Agreement.

“Governmental Authority” shall mean any court, board, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence.

“Guarantor” shall mean CaliberCos, Inc., a Delaware corporation, Jennifer Schrader, John C. Loeffler, II, Frank Heavlin, and Replacement Guarantor, and any replacement guarantor approved by Lender.

“Hilton Borrower” shall mean 47TH STREET PHOENIX AIRPORT, LLC, a Delaware limited liability company.

“Hilton Franchise Agreement” shall mean that certain Franchise Agreement dated as of or around the date hereof by Hilton Franchise LLC, a Delaware limited liability company and Hilton Borrower.

“Holiday Inn Borrower” shall mean 44TH AND MCDOWELL HOLDING, LLC, a Delaware limited liability company.

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“Holiday Inn Franchise Agreement” shall mean that certain License Agreement dated June 30, 2015 by Holiday Hospitality Franchising, LLC (formerly known as Holiday Hospitality Franchising, Inc.) and Holiday Inn Borrower.

“Income Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, imposed on or with respect to any payment made by or on account of any obligation of Borrower with respect to any Loan or under any Loan Document, including any interest, additions to tax or penalties applicable thereto.

“Indemnified Taxes” shall mean Income Taxes, other than Excluded Taxes.

“Individual Property” shall mean each discrete portion of the Property referenced on Schedule A attached hereto and made a part hereof, and the term “Individual Borrower” as used herein shall mean each discrete entity which together are collectively defined as “Borrower” herein.

“Initial Advance” shall mean the advance of the Loan made on the Closing Date, in the amount of FIFTY SIX MILLION FOUR HUNDRED SEVENTY THOUSAND AND 00/100 DOLLARS ($56,470,000.00).

“Initial Maturity Date” shall mean October 5, 2021.

“Interest Period” shall mean, in connection with the calculation of interest accrued with respect to any specified Payment Date, one month periods commencing on the Payment Date occurring in the immediately preceding calendar month and ending on the day immediately preceding the subject Payment Date; provided, however, the Interest Period for the payment to be made in accordance with Section 2(a)(i) hereof shall be the period commencing on the Closing Date, and ending on the calendar day preceding the first Payment Date.

“Interest Rate Cap Agreement” shall mean, collectively, one or more interest rate protection agreements (together with the confirmation and schedules relating thereto) acceptable to Lender, between an Acceptable Counterparty and Borrower obtained by Borrower as and when required pursuant to Article 22 hereof, as the same may be amended, restated, supplemented, or otherwise modified from time to time. After delivery of a Replacement Interest Rate Cap Agreement to Lender, the term “Interest Rate Cap Agreement” shall be deemed to mean such Replacement Interest Rate Cap Agreement and such Replacement Interest Rate Cap Agreement shall be subject to all requirements applicable to the Interest Rate Cap Agreement.

“IRS” shall mean the U.S. Internal Revenue Service.

“Last Advance Date” shall mean April 5, 2021.

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“LIBOR” shall mean, with respect to each Interest Period, the rate determined by Lender to be (i) the per annum rate for deposits in U.S. dollars for a period equal to the applicable Interest Period, which appears on the Reuters Screen LIBOR01 (or any successor thereto) as the London Interbank Offering Rate as of 11:00 a.m., London time, on the day that is two (2) London Business Days prior to that respective Interest Period’s Determination Date (rounded upwards, if necessary, to the nearest 1/100 of 1%); (ii) if such rate does not appear on said Reuters Screen LIBOR01, the arithmetic mean (rounded as aforesaid) of the offered quotations of rates obtained by Lender from the Reference Banks for deposits in U.S. dollars for a period equal to the applicable Interest Period to prime banks in the London interbank market as of approximately 11:00 a.m., London time, on the day that is two (2) London Business Days prior to that Determination Date and in an amount that is representative for a single transaction in the relevant market at the relevant time; or (iii) if fewer than two (2) Reference Banks provide Lender with such quotations, the rate per annum which Lender determines to be the arithmetic mean (rounded as aforesaid) of the offered quotations of rates which major banks in New York, New York selected by Lender are quoting at approximately 11:00 a.m., New York City time, on the Determination Date for loans in U.S. dollars to leading European banks for a period equal to the applicable Interest Period in amounts of not less than U.S. $1,000,000.00. Lender’s determination of LIBOR shall be binding and conclusive on Borrower absent manifest error. LIBOR may or may not be the lowest rate based upon the market for U.S. Dollar deposits in the London Interbank Eurodollar Market at which Lender prices loans on the date which LIBOR is determined by Lender as set forth above.

“Loan” shall mean the loan made by Lender to Borrower in the original principal amount set forth in, and evidenced by, this Note.

“Loan Documents” shall have the meaning set forth in Article 7 hereof.

“Loan to Value Ratio” shall mean, as of any date of determination, the ratio of the then outstanding principal balance of the Loan to the then current value of the Individual Properties that are not being released and have not previously been released, as determined by Lender or, in Lender’s discretion as determined by a new Approved Appraisal.

“London Business Day” shall mean any day other than a Saturday, Sunday or any other day on which commercial banks in London, England are not open for business.

“Manager” shall mean Heavlin Management Company, LLC, an Arizona limited liability company or such other property manager with respect to the Property approved by Lender.

“Maturity Date” shall mean the Initial Maturity Date, the First Extended Maturity Date if the First Extension Option is effectuated in accordance with the terms of Article 23 hereof, the Second Extended Maturity Date if the Second Extension Option is effectuated in accordance with the terms of Article 23 hereof, or such other date on which the outstanding principal balance of this Note, accrued interest and all other sums payable under this Note and the other Loan Documents becomes due and payable, as herein or therein provided, whether at such stated maturity date, by acceleration or otherwise.

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“Maximum Allocated Loan Amount” shall mean, with respect to each Individual Property, the portion of the principal allocated to such Individual Property as set forth on Schedule A attached hereto and made a part hereof.

“Moody’s” shall mean Moody’s Investors Service, Inc.

“Net Operating Income” means (A) all receipts, revenues, income and proceeds of sales or services of every kind received by Borrower or Manager (on behalf of Borrower), directly or indirectly, from operating the Property for the twelve (12) full calendar months immediately prior to the month of the date of determination, calculated on an accrual basis in accordance with GAAP and the Uniform System, whether in cash or on credit, including but not limited to (i) all Rent, expense pass-throughs, fees and service charges to tenants, subtenants, licensees or other occupants of commercial or retail space in the Property including lease termination fees, revenues from the use or rental of guest rooms and suites and conference and banquet rooms, revenues from food and beverage service and facilities, including off-site catering, telephone services, guest laundry services, vending, including mini-bars, television, recreational and health club facilities and parking in the Property and other fees and charges resulting from the operations of the Property by Borrower or Manager in the ordinary course of business, and (ii) deposits forfeited and not refunded (“Gross Income”), less (B) all Operating Expenses (as defined in the Cash Management Agreement) for the twelve (12) month period immediately prior to the date of determination and any Extraordinary Expenses approved by Lender and applicable to such twelve (12) month period.

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower which is signed by an authorized officer of the general partner or managing member of Borrower.

“Partial Prepayment Exit Fee” shall mean an amount equal to one quarter of one percent (0.25%) of the principal amount being prepaid.

“Payment Date” shall mean the fifth (5th) day of the second full calendar month following the date hereof, and the fifth (5th) day of each and every month thereafter until and including the Maturity Date, or if such day is not a Business Day, the immediately preceding Business Day.

“Person” shall mean any individual, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any Federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

“Prepayment Consideration” shall have the meaning set forth in Article 6 hereof.

“Property” shall have the meaning set forth in Article 7 hereof.

“Property Refinance” shall have the meaning set for in Article 26 hereof.

“Property Sale” shall have the meaning set forth in Article 26 hereof.

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“Rating Agencies” shall mean each of S&P, Moody’s and Fitch, or any other nationally recognized statistical rating agency which has been approved by Lender.

“Reference Banks” shall mean four major banks in the London interbank market selected by Lender.

“Refinance Request” shall mean a written request submitted to Lender for the release relating to a Property Refinance.

“Release Price” shall mean, with respect to each Individual Property (A) identified in a Sale Request, an amount equal to the greater of (i) one hundred twenty-five percent (125%) of the Allocated Loan Amount applicable to such Individual Property or (ii) ninety percent (90%) of proceeds from the sale, or (B) identified in a Refinance Request, an amount equal to the greater of (i) one hundred percent (100%) of the refinancing proceeds or (ii) one hundred twenty-five percent (125%) of the Allocated Loan Amount applicable to such Individual Property.

“Replacement Guarantor” shall have the meaning set forth in the Guaranty.

“Replacement Interest Rate Cap Agreement” shall mean, collectively, one or more interest rate protection agreements, acceptable to Lender, from an Acceptable Counterparty, with terms identical to the Interest Rate Cap Agreement except that the same shall be effective as of the date required in Article 22 hereof; provided that to the extent any such interest rate protection agreements do not meet the foregoing requirements, a “Replacement Interest Rate Cap Agreement” shall be such interest rate protection agreements approved in writing by Lender, in each case, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“Request” shall mean Borrower’s written request for an Earn Out Advance, substantially in a form specified or otherwise approved by Lender.

“Reserve Agreement” shall mean that certain Reserve and Security Agreement, dated as of the date hereof, by and between Borrower and Lender, as the same may be amended, restated, supplemented, or otherwise modified from time to time.

“Reuters Screen LIBOR01 Page” shall mean the display designated as "Reuters Screen LIBOR01 Page" on the Reuters service (or such other page as may replace LIBOR01 Page on that service or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for U.S. Dollar deposits).

“S&P” shall mean Standard & Poor’s Ratings Group, a division of the McGraw-Hill Companies.

“Second Extended Maturity Date” shall have the meaning set forth in Article 23 hereof.

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“Second Extension Monthly Amortization Payment” shall mean a required payment on a Payment Date to Lender of principal in an amount determined by Lender based upon (i) a twenty-five (25) year amortization schedule, (ii) an interest rate equal to the Applicable Interest Rate in effect for the Interest Period ending on the day preceding such Payment Date, and (iii) the outstanding principal balance of the Loan in effect on the immediately preceding Payment Date.

“Second Extension Option” shall have the meaning set forth in Article 23 hereof.

“Second Extension Term” shall mean the period from the First Extended Maturity Date to and including the Second Extended Maturity Date if the Second Extension Option is effectuated in accordance with Article 23 hereof.

“Security Instrument” shall have the meaning set forth in Article 7 hereof.

“Spread” shall mean 3.75%.

“Strike Price” shall mean 4.00%.

“Substitute Index” shall mean any verifiable rate index selected by Lender from time to time that is beyond the control of Lender that in Lender’s sole judgment adequately reflects Lender’s cost of funds to fund or maintain the Loan. At Lender’s sole election the Substitute Index may consist of the highest rate actually paid by Lender to any financial institution with whom Lender has entered into a repurchase agreement or other contractual arrangement to provide funds in order to enable Lender to fund or maintain the Loan.

“Uniform System” shall mean the Uniform System of Accounts for the Lodging Industry (Eleventh Revised Edition).

“U.S. Person” shall mean a “United States person” under Section 7701(a)(30) of the Code.

“Working Day” shall mean any day on which dealings in foreign currencies and exchange are carried on in London, England and in New York, New York.

All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Security Instrument. Whenever used, the singular number shall include the plural, the plural number shall include the singular, and the words “Lender” and “Borrower” shall include their respective successors, assigns, heirs, executors and administrators.

ARTICLE 2. PAYMENT TERMS

(a)           Borrower agrees to pay sums under this Note in installments as follows:

(i)           A payment on the date hereof of all interest that will accrue on the Initial Advance from and after the date hereof through and including the fourth (4^th) calendar day of the first full calendar month following the date hereof;

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(ii)          A monthly payment of interest only on each Payment Date; plus

(iii)         in addition to each monthly payment of interest, in the event the First Extension Option is effectuated in accordance with Article 23 hereof, a monthly payment of principal in the amount of the First Extension Monthly Amortization Payment on each Payment Date during the First Extension Term; plus

(iv)         in addition to each monthly payment of interest, in the event the Second Extension Option is effectuated in accordance with Article 23 hereof, a monthly payment principal in the amount of Second Extension Monthly Amortization Payment on each Payment Date during the Second Extension Term; and

(v)          The outstanding principal balance of this Note, all interest accrued thereon, and all other sums due and payable under this Note and the Loan Documents, together with the Exit Fee shall be due and payable on the Maturity Date.

(b)           Except as otherwise specifically provided herein, all payments and prepayments under this Note shall be made to Lender not later than 2:00 P.M., New York City time, on the date when due and shall be made in lawful money of the United States of America in immediately available funds at Lender’s office or as otherwise directed by Lender, and any funds received by Lender after such time shall, for all purposes hereof, be deemed to have been paid on the next succeeding Business Day. Interest on the principal sum of this Note shall be calculated at the Applicable Interest Rate on the basis of a three hundred sixty (360) day year based on the actual number of days elapsed. In computing the number of days during which interest accrues, the day on which funds are initially advanced shall be included regardless of the time of day such advance is made, and the day on which funds are repaid shall be included unless repayment is credited prior to close of business. All payments required to be made by Borrower hereunder or under the Security Instrument or the other Loan Documents shall be made irrespective of, and without deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense thereto.

(c)           For purposes of this Note, if the Payment Date in a given month shall not be a Business Day, then, for purposes of determining the date on which Borrower is required to make any payment due hereunder and the date on which Lender is required to make any Advance hereunder, but not the accrual of interest, the Payment Date for such month shall be the immediately preceding Business Day.

(d)           In the event that at any time any payment received by Lender hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief law, then the obligation to make such payment shall survive any cancellation or satisfaction of this Note or return thereof to Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand.

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ARTICLE 3. ADDITIONAL PAYMENT PROVISIONS

(a)           Interest shall be charged and payable on the outstanding principal amount of the Loan at a rate per annum equal to the Applicable Interest Rate, but in no event shall such rate exceed the maximum rate permitted under applicable law. Subject to the terms and conditions of Section 3(b) below, Borrower shall pay interest on the outstanding principal amount of the Loan at the Applicable Interest Rate for the applicable Interest Period. Any change in the Applicable Interest Rate due to a change in the Alternative Adjusted Rate shall become effective as of the opening of business on the first day on which such change in the Alternative Adjusted Rate shall become effective. Each determination by Lender of the Applicable Interest Rate shall be conclusive and binding for all purposes, absent manifest error.

(b)           In the event that Lender shall have reasonably determined (which determination shall be conclusive and binding upon Borrower absent manifest error) that by reason of circumstances affecting the interbank eurodollar market, U.S. dollar deposits, in an amount approximately equal to the outstanding principal balance of the Loan, are not generally available at such time in the interbank eurodollar market or that adequate and reasonable means do not exist for ascertaining LIBOR, then Lender shall forthwith give notice by telephone of such determination, confirmed in writing, to Borrower at least one (1) day prior to the last day of the then current Interest Period. If such notice is given, the Loan shall bear interest at the Adjusted Alternative Rate beginning on the first day of the next succeeding Interest Period.

(c)           If, pursuant to the terms of this Note, the Loan is bearing interest at the Adjusted Alternative Rate and Lender shall reasonably determine (which determination shall be conclusive and binding upon Borrower absent manifest error) that the event(s) or circumstance(s) which resulted in such conversion shall no longer be applicable, Lender shall give notice thereof to Borrower by telephone of such determination, confirmed in writing, to Borrower at least one (1) day prior to the last day of the then current Interest Period. If such notice is given, the Loan shall bear interest at the Adjusted LIBOR Rate beginning on the first day of the next succeeding Interest Period. Notwithstanding any provision of this Note to the contrary, in no event shall Borrower have the right to elect to have the Loan bear interest at either the Adjusted LIBOR Rate or the Adjusted Alternative Rate.

(d)           All payments made by Borrower hereunder shall be made free and clear of, and without any deduction or withholding for or on account of any Income Taxes, except as required by applicable law. If any Income Taxes are required to be withheld by Borrower from any amounts payable to Lender hereunder, the Borrower shall withhold such amounts and timely pay over the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and to the extent such Income Taxes are Indemnified Taxes, then the sum payable by Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 3(d)) Lender receives an amount equal to the sum it would have received had no such deduction or withholding been made. Whenever any Income Tax is payable pursuant to applicable law by Borrower, as promptly as possible thereafter, Borrower shall send to Lender an original official receipt, if available, or certified copy thereof, or such other evidence of payment reasonably acceptable to Lender, showing timely payment in full of such Income Tax. Borrower shall indemnify Lender, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.2(d)) payable or paid by Lender or required to be withheld or deducted from a payment to Lender and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by Lender shall be conclusive absent manifest error.

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(e)           If any requirement of law or any change therein, or in the interpretation or application thereof, shall hereafter make it unlawful for Lender in good faith to make or maintain the Loan bearing interest at the Adjusted LIBOR Rate, (i) any obligation of Lender hereunder to make the Loan bearing interest at the Adjusted LIBOR Rate shall be canceled forthwith and (ii) the Loan shall automatically bear interest at the Adjusted Alternative Rate on the next succeeding Interest Period or within such earlier period as required by law. Borrower hereby agrees promptly to pay Lender, upon demand, any additional amounts necessary to compensate Lender for any costs incurred by Lender in making any conversion in accordance with this Note, including, without limitation, any interest or fees payable by Lender to lenders of funds obtained by it in order to make or maintain the Loan hereunder. Upon written demand from Borrower, Lender shall demonstrate in reasonable detail the circumstances giving rise to Lender’s determination and the calculation substantiating the Adjusted Alternative Rate and any additional costs incurred by Lender in making the conversion, which, upon written notice thereof from Lender, as certified to Borrower, shall be conclusive absent manifest error. In the event Lender shall determine in its good faith (which determination shall be conclusive and binding upon Borrower) that the aforesaid circumstances no longer exist, the Applicable Interest Rate shall be converted to the Adjusted LIBOR Rate effective as of the first Determination Date which occurs at least ten (10) Working Days after such determination by Lender.

(f)            In the event that any change in any requirement of law or in the interpretation or application thereof, or compliance in good faith by Lender with any request or directive (whether or not having the force of law) hereafter issued by any central bank or other Governmental Authority:

(i)           shall hereafter impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of Lender which is not otherwise included in the determination of LIBOR hereunder;

(ii)          shall hereafter have the effect of reducing the rate of return on Lender’s capital as a consequence of its obligations hereunder to a level below that which Lender could have achieved but for such adoption, change or compliance (taking into consideration Lender’s policies with respect to capital adequacy) by any amount deemed by Lender to be material; or

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(iii)         shall hereafter impose on Lender any other condition and the result of any of the foregoing is to increase the cost (including costs attributable to taxes other than Indemnified Taxes and Excluded Taxes) to Lender of making, renewing or maintaining loans or extensions of credit or to reduce any amount receivable hereunder;

then, in any such case, Borrower shall promptly pay Lender, upon demand, any additional amounts necessary to compensate Lender for such additional cost or reduced amount receivable which Lender deems to be material, as determined by Lender. If Lender becomes entitled to claim any additional amounts pursuant to this Section 3(f), Lender shall provide Borrower with not less than ten (10) days’ prior written notice specifying in reasonable detail the event or circumstance by reason of which it has become so entitled and the additional amount required to fully compensate Lender for such additional cost or reduced amount. A certificate as to any additional costs or amounts payable pursuant to the foregoing sentence submitted by Lender to Borrower shall be conclusive in the absence of manifest error. This provision shall survive payment of this Note and the satisfaction of all other obligations of Borrower under this Note and the other Loan Documents.

(g)           Borrower agrees to indemnify Lender and to hold Lender harmless from any Breakage Costs. This provision shall survive payment of this Note and the satisfaction of all other obligations of Borrower under the Loan Documents.

(h)           Lender shall not be entitled to claim compensation pursuant to this Article 3 for any Indemnified Taxes, increased cost or reduction in amounts received or receivable hereunder, or any reduced rate of return, which was incurred or which accrued more than the earlier of (i) ninety (90) days before the date Lender notified Borrower of the change in law or other circumstance on which such claim of compensation is based and delivered to Borrower a written statement setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Article 3, which statement shall be conclusive and binding upon all parties hereto absent manifest error, or (ii) any earlier date provided that Lender notified Borrower of such change in law or circumstance and delivered the written statement referenced in clause (i) within one hundred eighty (180) days after Lender received written notice of such change in law or circumstance.

(i)            Lender will use reasonable efforts (consistent with legal and regulatory restrictions) to maintain the availability of the Adjusted LIBOR Rate and to avoid or reduce any increased or additional costs payable by Borrower under this Article 3, including, if requested by Borrower, a transfer or assignment of the Loan to a branch or office of Lender in another jurisdiction, or a re-designation of its lending office with respect to the Loan, in order to maintain the availability of the Adjusted LIBOR Rate or to avoid or reduce such increased or additional costs, provided that the transfer or assignment or re-designation (i) would not result in any additional costs, expenses or risk to Lender that are not reimbursed by Borrower and (ii) would not be disadvantageous in any other respect to Lender as determined by Lender in its sole discretion.

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ARTICLE 4. DEFAULT AND ACCELERATION

(a)           The whole of (a) the principal sum of this Note, (b) interest, default interest, late charges, the Exit Fee and other sums, as provided in this Note or the other Loan Documents, (c) all other monies agreed or provided to be paid by Borrower in this Note or the other Loan Documents, (d) all sums advanced pursuant to the Security Instrument to protect and preserve the Property (defined below) and the lien and the security interest created thereby, and (e) all sums advanced and costs and expenses incurred by Lender in connection with the Debt (defined below) or any part thereof, any renewal, extension, or change of or substitution for the Debt or any part thereof, or the acquisition or perfection of the security therefor, whether made or incurred at the request of Borrower or Lender (all the sums referred to in (a) through (e) above shall collectively be referred to as the “Debt”) shall without notice become immediately due and payable at the option of Lender upon the occurrence of an Event of Default.

ARTICLE 5. DEFAULT INTEREST

Borrower does hereby agree that upon the occurrence of an Event of Default, Lender shall be entitled to receive and Borrower shall pay interest on the entire unpaid principal sum at a rate equal to the lesser of (a) five percent (5%) plus the Applicable Interest Rate and (b) the maximum interest rate which Borrower may by law pay (the “Default Rate”). The Default Rate shall be computed from the occurrence of an Event of Default until the earlier of the date upon which the Event of Default is cured or the date upon which the Debt is paid in full. Interest calculated at the Default Rate shall be added to the Debt and shall be deemed secured by the Security Instrument. Nothing in this Article 5 shall be construed as an agreement or privilege to extend the date of the payment of the Debt nor as a waiver of any other right or remedy accruing to Lender by reason of the occurrence of an Event of Default.

ARTICLE 6. PREPAYMENT

(a)           Borrower may prepay the Loan in whole but not in part; provided, however, with respect to any prepayment, (i) no Default or Event of Default exists; (ii) Borrower gives Lender not less than thirty (30) and not more than ninety (90) days’ prior written notice specifying the date of prepayment and the amount of the Loan that Borrower intends to prepay; and (iii) Borrower pays to Lender, in addition to the outstanding principal amount of the Loan to be prepaid, (A) if the prepayment is not made on a Payment Date, all interest which would have accrued on the amount of such prepayment through and including the Payment Date next occurring following the date of such prepayment; (B) all other sums then due and payable under this Note and the other Loan Documents, including, but not limited to, the Breakage Costs and all of Lender’s costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Lender in connection with such prepayment, (C) if the prepayment of the Loan occurs prior to the eighteenth (18^th) Payment Date, an amount (together with the amount described in clause (B) above, the “Prepayment Consideration”) equal to all then-scheduled monthly payments through and including the eighteenth (18^th) Payment Date (with such payments computed, solely for purposes of computing the Prepayment Consideration, utilizing the Applicable Interest Rate in effect for the Interest Period during which the date of prepayment occurs); and (iv) Borrower pays to Lender the Exit Fee. If a notice of prepayment is given by Borrower to Lender pursuant to this Article 6, the amount designated for prepayment and the other sums required under this Article 6 shall be due and payable on the prepayment date specified in such notice. No tender of a prepayment with respect to which the Prepayment Consideration is due shall be effective unless such prepayment is accompanied by the Prepayment Consideration.

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(b)           Full or partial prepayments of this Note shall be permitted in order to apply insurance or condemnation proceeds in accordance with the terms of the Security Instrument, in which event no prepayment fee or premium shall be due, provided that payment of the Exit Fee applicable to such prepayment shall be required. Any such prepayment of principal shall be applied on the next succeeding Payment Date following Lender’s receipt of such insurance or condemnation proceeds and determination to apply such sums against the outstanding principal balance of this Note in accordance with the terms of the Security Instrument. No notice of prepayment shall be required under the circumstances specified in this Section 6(b).

(c)           Following an Event of Default and acceleration of this Note, if Borrower or anyone on Borrower’s behalf makes a tender of payment of the amount necessary to satisfy the indebtedness evidenced by this Note and secured by the Security Instrument at any time prior to foreclosure sale (including, but not limited to, sale under power of sale under the Security Instrument), or during any redemption period after foreclosure, the tender of payment shall constitute an evasion of Borrower’s obligation to pay any Prepayment Consideration due under this Note and such payment shall, therefore, to the maximum extent permitted by law, include a premium equal to the Prepayment Consideration that would have been payable on the date of such tender had this Note not been so accelerated.

(d)           The Exit Fee shall be due and payable on the earlier of (i) the date when the outstanding principal balance of this Note is paid in full, (ii) the Maturity Date, and (iii) the date on which the Debt shall have become immediately due and payable at the option of Lender pursuant to the terms and provisions of the Loan Documents after the occurrence of an Event of Default. The Partial Prepayment Exit Fee is due and payable on the date when a portion of the unpaid principal balance of this Note is pad to Lender. The Exit Fee and the Partial Prepayment Exit Fee, as applicable, are deemed earned in full on the date hereof notwithstanding the timing of its required payment as herein provided above. No tender of a prepayment of this Note with respect to which an Exit Fee is due shall be effective unless such prepayment is accompanied by the Exit Fee. If the Debt shall have been declared due and payable by Lender pursuant to Article 4 hereof, then any tender of payment of the Debt must include the Exit Fee. Borrower’s obligation to pay the Exit Fee shall be reduced by any Partial Prepayment Exit Fee previously paid by Borrower to Lender pursuant to this Note, such that the maximum total amount payable to Lender shall equal 0.25% of the original principal amount of the Note.

(e)           Notwithstanding the foregoing, Borrower may prepay the Loan in part in connection with a Release or an Extension Option provided that (i) Borrower pay to Lender the Partial Prepayment Exit Fee, (ii) Borrower pay to Lender the Prepayment Consideration, (iii) all other terms and conditions required herein in connection with such Release or Extension Option are satisfied.

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ARTICLE 7. SECURITY

This Note is secured by the Security Instrument and the other Loan Documents. The term “Security Instrument” means the Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of the date hereof (as the same may be amended, restated, supplemented, or otherwise modified from time to time) in the principal sum of SIXTY TWO MILLION TWO HUNDRED FORTY FIVE THOUSAND AND 00/100 DOLLARS ($62,245,000.00) given by Borrower to (or for the benefit of) Lender, as security for the Debt and other obligations covering the leasehold estate of Crowne Plaza Borrower in the Crowne Plaza Property (as defined in the Security Instrument), and the fee simple estate of Holiday Inn Borrower and Hilton Borrower in the Holiday Inn Property (as defined in the Security Instrument) and Hilton Property (as defined in the Security Instrument), respectively and intended to be duly recorded in Maricopa County, Arizona. The term “Loan Documents” as used in this Note shall mean all and any of the documents including this Note or the Security Instrument now or hereafter executed and/or delivered by Borrower and/or others and by or in favor of Lender, in connection with the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time. All of the terms, covenants and conditions contained in the Security Instrument and the other Loan Documents are hereby made part of this Note to the same extent and with the same force as if they were fully set forth herein.

ARTICLE 8. SAVINGS CLAUSE

This Note is subject to the express condition that at no time shall Borrower be obligated or required to pay interest on the principal balance due hereunder at a rate which could subject Lender to either civil or criminal liability as a result of being in excess of the maximum interest rate which Borrower is permitted by applicable law to contract or agree to pay. If by the terms of this Note, Borrower is at any time required or obligated to pay interest on the principal balance due hereunder at a rate in excess of such maximum rate, the Applicable Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of the Debt, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term of this Note until payment in full so that the rate or amount of interest on account of the Debt does not exceed the maximum lawful rate of interest from time to time in effect and applicable to the Debt for so long as the Debt is outstanding.

ARTICLE 9. LATE CHARGE

If any sum payable under this Note or any of the Loan Documents is not paid on or before the fifth (5th) day after the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the lesser of five percent (5%) of the unpaid sum or the maximum amount permitted by applicable law to defray the expenses incurred by Lender in handling and processing the delinquent payment and to compensate Lender for the loss of the use of the delinquent payment and the amount shall be secured by the Security Instrument and the other Loan Documents. Notwithstanding the foregoing to the contrary, in no event will the late charge provided herein apply to the balloon payment of principal and interest due upon the Maturity Date.

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ARTICLE 10. NO ORAL CHANGE

This Note may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

ARTICLE 11. JOINT AND SEVERAL LIABILITY

If Borrower consists of more than one person or party, the obligations and liabilities of each person or party shall be joint and several.

ARTICLE 12. WAIVERS

Borrower and all others who may become liable for the payment of all or any part of the Debt do hereby severally waive presentment and demand for payment, notice of dishonor, protest and notice of protest and nonpayment and all other notices of any kind. No release of any security for the Debt or extension of time for payment of this Note or any installment hereof, and no alteration, amendment or waiver of any provision of the Loan Documents made by agreement between Lender or any other person or party shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Borrower, and any other person or entity who may become liable for the payment of all or any part of the Debt, under this Note or the other Loan Documents. No notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of the right of Lender to take further action without further notice or demand as provided for in the Loan Documents. If Borrower is a partnership, the agreements herein contained shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership. If Borrower is a corporation, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the shareholders comprising, or the officers and directors relating to, the corporation. If Borrower is a limited liability company, the agreements contained herein shall remain in full force and applicable notwithstanding any changes in the members comprising, or the managers, officers or agents relating to, the limited liability company. The term “Borrower”, as used herein, shall include any alternate or successor partnership, corporation, limited liability company or other entity or person to the Borrower named herein, but any predecessor partnership (and their partners), corporation, limited liability company, other entity or person shall not thereby be released from any liability. Nothing in this Article 12 shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership, corporation or limited liability company which may be set forth in the Security Instrument or any other Loan Document.

ARTICLE 13. SECONDARY MARKET

The provisions of Article 19 of the Security Instrument are incorporated herein by reference with the same force as if fully set forth herein.

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ARTICLE 14. WAIVER OF TRIAL BY JURY

BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.

ARTICLE 15. EXCULPATION

(a)           Except as otherwise provided herein, in the Security Instrument or in the other Loan Documents, Lender shall not enforce the liability and obligation of Borrower, to perform and observe the obligations contained in the Loan Documents by any action or proceeding wherein a money judgment shall be sought against Borrower or any partner or member of Borrower, except that Lender may bring a foreclosure action, an action for specific performance or any other appropriate action or proceeding to enable Lender to enforce and realize upon the Loan Documents, and the interests in the Property; and any other collateral given to Lender pursuant to the Security Instrument and other Loan Documents; provided, however, that, except as specifically provided herein, any judgment in any such action or proceeding shall be enforceable against Borrower or any partner or member of Borrower only to the extent of Borrower’s interest in the Property and in any other collateral given to Lender, and Lender, by accepting this Note, the Security Instrument and the other Loan Documents, agrees that it shall not sue for, seek or demand any deficiency judgment against Borrower or any partner or member of Borrower, in any such action or proceeding, under or by reason of or in connection with the Loan Documents. The provisions of this paragraph shall not, however, (A) constitute a waiver, release or impairment of any obligation evidenced or secured by the Loan Documents; (B) impair the right of Lender to name Borrower as a party defendant in any action or suit for foreclosure and sale under the Security Instrument; (C) affect the validity or enforceability of any guaranty or environmental indemnity made in connection with the Loan Documents; (D) impair the right of Lender to obtain the appointment of a receiver; (E) impair the enforcement of any assignment; or (F) constitute a waiver of the right of Lender to enforce the liability and obligation of Borrower, by money judgment or otherwise, to the extent of any loss, damage, cost, expense, liability, claim or other obligation incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out of or in connection with the following:

(i)           fraud or intentional misrepresentation by any or on behalf of any Borrower Related Party (as defined below) in connection with the Loan, made in order to induce Lender to make the Loan;

(ii)          the gross negligence or willful misconduct of any Borrower Related Party in connection with the Loan or the Property;

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(iii)         the removal or disposal by a Borrower Related Party of any portion of the Property (other than normal replacement of Personal Property) or any other collateral given to secure the Loan after the occurrence of an Event of Default;

(iv)         the misapplication or conversion by any Borrower Related Party of (A) any insurance proceeds paid by reason of any loss, damage or destruction to the Property, (B) any awards or other amounts received in connection with the condemnation of all or a portion of the Property, (C) any monies disbursed to Borrower or Manager under the Cash Management Agreement, (D) any Rents or other receipts, revenues, income and proceeds for the sales or services of every kind received by Borrower or Manager (on behalf of Borrower) following an Event of Default, or (E) any Rents paid more than one month in advance by Tenants under Leases;

(v)          failure to pay Taxes (provided that the liability of Borrower shall be only for amounts in excess of the amount held by Lender in escrow for the payment of Taxes), assessments, charges for labor or materials or other charges that can create liens on any portion of the Property, unless the income generated by the Property for the applicable period is insufficient to pay all of Borrower’s current liabilities (including such amounts for Taxes, assessments or charges on the Property);

(vi)         any security deposits, advance deposits or any other deposits collected with respect to the Property which are not delivered to Lender prior to or upon a foreclosure of the Property or action in lieu thereof, except to the extent any such security deposits were applied in accordance with the terms and conditions of any of the Leases or booking agreements prior to the occurrence of the Event of Default that gave rise to such foreclosure or action in lieu thereof;

(vii)        any intentional physical waste of the Property or other collateral securing the Loan resulting from the action or inaction of any Borrower Related Party which materially adversely affects the value of the Property, except that if (a) the Property failed to generate sufficient cash flow after payment of current liabilities, or Lender did not make such cash flow available to Borrower, to remedy or avoid such waste during the period in question, or (b) following a casualty or condemnation, the insurance proceeds of the condemnation awards are not made available to Borrower to remedy such waste;

(viii)       failure of any Borrower Related Party or Manager (acting at the direction of any Borrower Related Party) to direct the payment of, or pay any Rents or other receipts, revenues, income and proceeds for the sales or services of every kind received by Borrower or Manager (on behalf of Borrower) to, the Clearing Account (as defined in the Cash Management Agreement) as required by the Loan Documents;

(ix)         the failure of any Borrower Related Party or Manager (acting at the direction of any Borrower Related Party) to apply monies disbursed to it as loan proceeds or from the Cash Management Account (as defined in the Cash Management Agreement) (or any sub-account thereof) for the purpose which such disbursement is made;

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(x)          a breach of the covenants set forth in Section 4.3 of the Security Instrument;

(xi)         Borrower’s failure to obtain and/or maintain the Interest Rate Cap Agreement or Replacement Interest Rate Cap Agreement, as applicable, as required herein;

(xii)        any termination (other than at the direction of Lender) of the Management Agreement, or the failure of Borrower to appoint a new Manager upon the request of Lender as permitted under and in accordance with the terms of the Loan Documents;

(xiii)       any comfort letter, side letter, promissory note or any other liability associated with any key money, liquidated damages, termination fee or other indebtedness or obligation (other than for services provided for the benefit of Lender) to any manager or franchisor (whether debt or equity) under any franchise agreement, management agreement, key money agreement or any other agreement related thereto, including, without limitation, the Management Agreement, the Franchise Agreement and the Conditional Assignment of Management Agreement between Borrower, Lender and Manager, dated as of the date hereof;

(xiv)       any failure by Borrower or Manager to reasonably cooperate with Lender in the transfer of the liquor license for the Property, if any, to Lender, or its designee, in connection with a foreclosure or deed in lieu of foreclosure of the Property;

(xv)        the failure of Borrower to appoint a new manager of the Property upon the written request of Lender as permitted under and in accordance with the terms of the Loan Documents;

(xvi)       the failure of Borrower to deposit with Lender or to otherwise pay any Seasonality Reserve Deficiency in the Seasonality Reserve (as such terms are defined in the Reserve Agreement); or

(xvii)      the forfeiture by Borrower of the Property as a result of any criminal acts of any Borrower Related Party.

(b)           Notwithstanding anything to the contrary in the Loan Documents (A) the Debt shall be fully recourse to Borrower; and (B) Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents, in the event that:

(i)          Any Borrower files a voluntary petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;

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(ii)         An involuntary petition is filed against any Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law by any Borrower Related Party, or any Borrower Related Party arranges, induces, finances, solicits, colludes with others for, or solicits or causes to be solicited petitioning creditors for the filing by any Person(s) of any involuntary petition against Borrower under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;

(iii)         any Borrower Related Party files an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;

(iv)         any Borrower Related Party consents to or acquiesces in or joins in an application for the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of the Property or colludes with or otherwise assists any Person in filing such application;

(v)          any Borrower makes an assignment for the benefit of creditors, or admits, in writing or in any legal proceeding, its insolvency or inability to pay its debts as they become due;

(vi)         a breach of the covenants set forth in Section 4.3 of the Security Instrument (other than Section 4.3(h) or (r)), provided, however, with respect to a breach of any of the covenants by Borrower described in Sections 4.3(d), (f), (i), (j), (l), (o), (p), or (q), the foregoing recourse shall only be triggered if in connection with a pending bankruptcy or insolvency proceeding a court of competent jurisdiction has ordered the substantive consolidation of the assets and liabilities of Borrower with any other Person;

(vii)        any Borrower fails to obtain Lender’s prior written consent to any indebtedness or voluntary lien encumbering the Property, other than any mechanics’ or materialmen’s liens which are being properly contested in accordance with the provisions of the Security Instrument or have been removed;

(viii)       any Borrower fails to obtain Lender’s prior written consent to any Transfer, as required by (and in accordance with) the Security Instrument; or

(ix)         any Borrower Related Party in connection with any enforcement action or exercise or assertion of any right or remedy in accordance with applicable law (each, an “Action”) by or on behalf of Lender under or in connection with this Note or any other Loan Document resulting from an Event of Default, acts in a manner so as to impede or delay Lender’s rights in connection with any Action, or seeks to raise or raises an affirmative defense or other defense, non-compulsory counterclaim, offset, judicial intervention or injunctive or other equitable relief of any kind, or asserts in a pleading filed in connection with a judicial proceeding arising from such Event of Default any defense against Lender or any right in connection with any security for the Loan (each an “Interference Event”); provided, however, that notwithstanding the foregoing, the filing by Borrower or Guarantor of a legal action or defense to Lender’s exercise of its remedies shall not be deemed to be an Interference Event if it is filed in good faith to assert a material defense to such exercise which has a reasonable basis in fact and in law (including, without limitation, defenses arising from good faith disputes as to the existence or non-existence of any Event of Default), and if it does not seek to challenge the validity of the liens of any of the Loan Documents or the enforceability under applicable law of the Loan Documents taken as a whole;

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(x)          the Ground Lease (as defined in the Security Instrument) is terminated, cancelled or otherwise ceases to exist or the Renewal Deadline (as hereinafter defined) occurs and Lender has not received evidence acceptable to Lender of the renewal of the Ground Lease in accordance with its terms. or

(xi)         the Franchise Agreement (as defined in the Security Instrument) (or the right to operate the Property thereunder) shall expire, or be cancelled, surrendered or terminated.

For purposes of this Article 15, “Borrower Related Party” shall mean Borrower, Guarantor, any Affiliate of Borrower or Guarantor, or Heavlin Management Company, LLC, an Arizona limited liability company (“Heavlin”), or any Affiliate of Heavlin, and “Affiliate” shall mean, with respect to a Person, another Person, directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with the Person in question. The term “control” as used in the preceding sentence means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled Person, whether through the ownership of voting securities, by contract or otherwise.

ARTICLE 16. AUTHORITY

Borrower (and the undersigned representative of Borrower, if any) represents that Borrower has full power, authority and legal right to execute and deliver the Loan Documents and that the Loan Documents constitute valid and binding obligations of Borrower.

ARTICLE 17. APPLICABLE LAW

THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THIS NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE LOAN DOCUMENTS WITH RESPECT TO THE PROPERTY AND THE DETERMINATION OF DEFICIENCY JUDGMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, TO THE FULLEST EXTENT PERMITTED BY LAW, EXCEPT AS EXPRESSLY SET FORTH HEREIN, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE, AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

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ARTICLE 18. SERVICE OF PROCESS

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS NOTE MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

CT CORPORATION SYSTEM
111 EIGHTH AVENUE
NEW YORK, NEW YORK 10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

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ARTICLE 19. COUNSEL FEES

In the event that it should become necessary to employ counsel to collect the Debt or to protect or foreclose the security therefor, Borrower also agrees to pay all reasonable fees and expenses of Lender, including, without limitation, reasonable attorney’s fees for the services of such counsel whether or not suit be brought.

ARTICLE 20. NOTICES

All notices required or permitted hereunder shall be given and shall become effective as provided in Article 16 of the Security Instrument.

ARTICLE 21. MISCELLANEOUS

(a)           Wherever pursuant to this Note (i) Lender exercises any right given to it to approve or disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other decision or determination is to be made by Lender, the decision of Lender to approve or disapprove, all decisions that arrangements or terms are satisfactory or not satisfactory and all other decisions and determinations made by Lender, shall be in the sole and absolute discretion of Lender and shall be final and conclusive, except as may be otherwise expressly and specifically provided herein.

(b)           Wherever pursuant to this Note it is provided that Borrower pay any costs and expenses, such costs and expenses shall include, but not be limited to, reasonable legal fees and disbursements of Lender, whether retained firms, the reimbursement for the expenses of in-house staff, or otherwise.

(c)           Each Lender, including each person that becomes a Lender and any participant in the Note, that is a U.S. Person shall deliver to Borrower on or prior to the date on which such person becomes Lender or acquires an interest in the Note (and from time to time thereafter upon the reasonable request of Borrower), executed originals of IRS Form W-9 certifying that such Lender is not subject to U.S. federal backup withholding tax. Each Lender, including each person that becomes a Lender and any participant in the Note, that is not a U.S. Person shall, to the extent it is legally entitled to do so, deliver to Borrower (in such number of copies as shall be requested by Borrower) on or prior to the date on which such person becomes Lender or acquires an interest in the Note (and from time to time thereafter upon the reasonable request of Borrower), whichever of the following is applicable: (i) in the case of a person claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Income Tax pursuant to the “business profits” or “other income” article of such tax treaty; (ii) executed originals of IRS Form W-8ECI; (iii) in the case of a person claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such person is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (“U.S. Tax Compliance Certificate”), and (y) executed originals of IRS Form W-8BEN or W-8BEN-E; or (iv) to the extent a person is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable.

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(d)           If a payment made to a Lender, including each person that becomes a Lender and any participant in the Note, under any Loan Document would be subject to U.S. federal withholding Income Tax imposed by FATCA if such person were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such person shall deliver to Borrower at the time or times prescribed by law and at such time or times reasonably requested by Borrower such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower as may be necessary for Borrower to comply with their obligations under FATCA, to determine that such Lender or participant, has complied with its obligations under FATCA, and to determine the amount to deduct and withhold from such payment pursuant to FATCA, if any. Solely for purposes of this Section 21(d), “FATCA” shall include any amendments made to FATCA after the date of this Note.

(e)           Any documentation required to be provided by a participant under Section 21(c) or (d) may be provided to the participating Lender instead of Borrower.

ARTICLE 22. INTEREST RATE CAP AGREEMENT

(a)           Prior to or contemporaneously with Borrower’s execution and delivery of this Note and the commencement of any Extension Term, Borrower shall enter into an Interest Rate Cap Agreement with a LIBOR strike price equal to the Strike Price. The initial term for the Interest Rate Cap Agreement shall be for two (2) years scheduled to mature on October 5, 2020. Not later than five (5) Business Days prior to the maturity of the Interest Rate Cap Agreement, Borrower shall purchase a Replacement Interest Rate Cap Agreement from an Acceptable Counterparty which Replacement Interest Rate Cap Agreement shall be effective commencing on October 5, 2020 and shall have a maturity date not earlier than the Initial Maturity Date, and on such terms and conditions as set forth in Article 22 herein. The Interest Rate Cap Agreement (i) shall at all times be in a form and substance reasonably acceptable to Lender, (ii) shall at all times be with an Acceptable Counterparty, (iii) shall direct such Acceptable Counterparty to deposit directly to Lender pursuant to its instructions any amounts due Borrower under such Interest Rate Cap Agreement so long as any portion of the Debt exists, provided that the Debt shall be deemed to exist if the Property is transferred by judicial or non-judicial foreclosure or deed-in-lieu thereof, (iv) shall be for a period equal to the term of the Loan, except as otherwise set forth herein, and (v) shall at all times have a notional amount equal to or greater than the principal balance of the Loan and shall at all times provide for the applicable Strike Price. Borrower’s failure to timely provide such Replacement Interest Rate Cap Agreement(s) in accordance with this Section 22(a) shall be an immediate Event of Default hereunder. Borrower shall collaterally assign to Lender, pursuant to the Collateral Assignment of Interest Rate Cap Agreement (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Assignment of Interest Rate Cap Agreement”), all of its right, title and interest to receive any and all payments under the Interest Rate Cap Agreement, and shall deliver to Lender an executed counterpart of such Interest Rate Cap Agreement (which shall, by its terms, authorize the assignment to Lender and require that payments be deposited directly to Lender pursuant to its instructions and shall notify the Acceptable Counterparty of such assignment).

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(b)           Borrower shall comply with all of its obligations under the terms and provisions of the Interest Rate Cap Agreement. All amounts paid by the Acceptable Counterparty under the Interest Rate Cap Agreement to Borrower or Lender shall be deposited immediately into such account as specified by Lender. Borrower shall take all actions reasonably requested by Lender to enforce Lender’s rights under the Interest Rate Cap Agreement in the event of a default by the Acceptable Counterparty and shall not waive, amend or otherwise modify any of its rights thereunder.

(c)           In the event of any downgrade or withdrawal of the rating of the Acceptable Counterparty by any Rating Agency, Borrower shall cause the Acceptable Counterparty to either (i) replace the Interest Rate Cap Agreement with a Replacement Interest Rate Cap Agreement, (ii) provide a guaranty of Counterparty’s obligations under the Interest Rate Cap Agreement from an entity that meets the requirements of an Acceptable Counterparty, or (iii) post sufficient collateral to secure its obligations under the Interest Rate Cap Agreement, in each case not later than thirty (30) Business Days following receipt of notice from Lender of such downgrade or withdrawal.

(d)           In the event that Borrower fails to purchase and deliver to Lender the Interest Rate Cap Agreement or fails to maintain the Interest Rate Cap Agreement in accordance with the terms and provisions of this Note, Lender may purchase the Interest Rate Cap Agreement and the cost incurred by Lender in purchasing such Interest Rate Cap Agreement shall be paid by Borrower to Lender with interest thereon at the Default Rate from the date such cost was incurred by Lender until such cost is reimbursed by Borrower to Lender.

(e)           In connection with the Interest Rate Cap Agreement, Borrower shall obtain and deliver to Lender an opinion from counsel (which counsel may be in house counsel for the Acceptable Counterparty) for the Acceptable Counterparty (upon which Lender and its successors and assigns may rely) which shall provide, in relevant part, that:

(i)           the Acceptable Counterparty is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation or formation and has the organizational power and authority to execute and deliver, and to perform its obligations under, the Interest Rate Cap Agreement;

(ii)          the execution and delivery of the Interest Rate Cap Agreement by the Acceptable Counterparty, and any other agreement which the Acceptable Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been and remain duly authorized by all necessary action and do not contravene any provision of its certificate of incorporation or by laws (or equivalent organizational documents) or any law, regulation or contractual restriction binding on or affecting it or its property;

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(iii)         all consents, authorizations and approvals required for the execution and delivery by the Acceptable Counterparty of the Interest Rate Cap Agreement, and any other agreement which the Acceptable Counterparty has executed and delivered pursuant thereto, and the performance of its obligations thereunder have been obtained and remain in full force and effect, all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with any governmental authority or regulatory body is required for such execution, delivery or performance; and

(iv)         the Interest Rate Cap Agreement, and any other agreement which the Acceptable Counterparty has executed and delivered pursuant thereto, has been duly executed and delivered by the Acceptable Counterparty and constitutes the legal, valid and binding obligation of the Acceptable Counterparty, enforceable against the Acceptable Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

ARTICLE 23. EXTENSION OF MATURITY DATE

(a)           Borrower shall have two (2) options (“First Extension Option” and “Second Extension Option”, respectively, and each, an “Extension Option”) to extend the Initial Maturity Date to October 5, 2022 (the “First Extended Maturity Date”), and to extend the First Extended Maturity Date to October 5, 2023 (the “Second Extended Maturity Date”), respectively, upon satisfaction of the following terms and conditions:

(i)           no Default or Event of Default shall have occurred and be continuing on the date that the applicable Extension Option is exercised and on the date that the applicable Extension Term commences;

(ii)          Borrower shall have provided Lender with written notice of its election to extend the Maturity Date, as aforesaid, not later than thirty (30) days and not earlier than one hundred twenty (120) days prior to the date of the then current Maturity Date. Once given, such notice shall be irrevocable;

(iii)         if the Interest Rate Cap Agreement is scheduled to mature prior to the Initial Maturity Date, with respect to the First Extension Option, or the First Extended Maturity Date, with respect to the Second Extension Option, Borrower shall have obtained and delivered to Lender not later than five (5) Business Days prior to the first day of applicable Extension Term, one or more Replacement Interest Rate Cap Agreements from an Acceptable Counterparty which Replacement Interest Rate Cap Agreement shall be effective commencing on the first date of such Extension Term and shall have a termination date not earlier than the First Extended Maturity Date with respect to the exercise of the First Extension Option, and the Second Extended Maturity Date with respect to the exercise of the Second Extension Option;

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(iv)         Borrower shall have delivered to Lender, together with its notice pursuant to Section 23(a)(ii), and at Lender’s reasonable request on the first day of the applicable Extension Term, an Officer’s Certificate, in form and substance acceptable to Lender, executed by an authorized officer of Borrower, certifying that each of the representations and warranties of Borrower contained in this Note and the other Loan Documents is true, complete and correct as of the date of such Officer’s Certificate to the extent such representations and warranties are not matters which by their nature can no longer be true and correct as a result of the passage of time;

(v)          Borrower shall have paid the applicable Extension Fee to Lender in connection with the exercise of each Extension Option, which Extension Fee shall be deemed earned by Lender and non-refundable upon receipt;

(vi)         the Debt Service Coverage Ratio for the Property for the twelve (12) full calendar months ending on the last day of the month preceding the month in which the applicable Extension Term commences shall be equal to or greater than 1.30 to 1.0;

(vii)        the Loan to Value Ratio of the Property shall be equal to or less than seventy percent (70%);

(viii)       the Debt Yield of the Property shall be equal to or greater than eleven and one quarter percent (11.25%).

(ix)         in addition to the monthly Debt Service payable on each Payment Date, during any Extension Term, Borrower shall make monthly principal amortization payments on the Loan on each Payment Date as set forth in Sections 2(a)(iii) and (iv) above.

(b)           Notwithstanding the foregoing, in the event (vi), (vii), and (viii) hereof, are not satisfied, Borrower may prepay a portion of the Loan, subject to Article 6 herein, in such amount necessary so that the conditions hereof are satisfied (an “Extension Prepayment”).

ARTICLE 24. ADVANCES GENERALLY

(a)           Subject to and upon the terms and conditions set forth herein, the Loan shall be made in a series of Advances and shall consist of (i) the Initial Advance being made on the Closing Date, and (ii) the Earn Out Advances in an aggregate amount of up to FIVE MILLION SEVEN HUNDRED SEVENTY FIVE THOUSAND AND 00/100 DOLLARS ($5,775,000.00) (the “Earn Out Portion”). Lender’s obligation to make Earn Out Advances after the date hereof is subject to Borrower’s request and the applicable terms, conditions and limitations set forth in this Note. Lender hereby agrees to make and Borrower hereby agrees to accept the Loan on the Closing Date.

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(b)           Any amount borrowed and repaid hereunder in respect of the Loan may not be re borrowed.

ARTICLE 25. EARN OUT ADVANCES

(a)           Subject to the provisions hereof, following the receipt of a Request, which Request must be delivered to Lender at least fifteen (15) days prior to the Payment Date on which a proposed Earn Out Advance is requested to be made, Lender shall make Earn Out Advances from time to time (but not more often than once per calendar month and only on a Payment Date) provided, however, in no event shall the aggregate amount of Earn Out Advances exceed the Earn Out Portion.

(b)           Lender’s obligation to make any Earn Out Advance shall be subject to the satisfaction of each of the following conditions precedent to such Earn Out Advance:

(i)           Both immediately prior to the making of such Earn Out Advance and also after giving effect thereto, no Default or Event of Default shall have occurred and be continuing;

(ii)          The representations and warranties made by Borrower and Guarantor in the Loan Documents and in any guaranty or indemnity shall be true and correct on and as of the date of the making of such Earn Out Advance with the same force and effect as if made on and as of such date;

(iii)         Lender shall have received (i) a notice of title continuation or title endorsement, as appropriate, showing that since the making of any prior Advance there has been no change in the state of title to the Property and no survey exceptions with respect to the Property not theretofore approved by Lender, provided, Borrower shall not be required to obtain a survey or update any existing survey in connection with any Earn Out Advance, and that no mechanic’s Liens or other Liens have been filed and remain filed with respect to the Property other than Permitted Encumbrances, and (ii) an endorsement to the title insurance policy issued to Lender, which endorsement shall have the effect of (A) updating the date of such title insurance policy to the date of the making of such Earn Out Advance, and (B) increasing the coverage of such title insurance policy by an amount equal to the amount of the Earn Out Advance then being made;

(iv)        All fees and expenses payable to Lender, to the extent then due and payable, shall have been (or contemporaneously are being) paid in full and all title premiums and other title and survey charges shall have been (or contemporaneously are being) paid in full; and

(v)         Lender shall have received, together with the Request submitted by Borrower with respect to such Earn Out Advance, the financial statements, certificates, reports and/or information required to Section 3.11 of the Security Instrument, and such other documents relating to such Earn Out Advance as Lender may reasonably request.

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(c)           Lender will promptly disburse the Earn Out Advance after satisfaction by Borrower of the requirements in Section 25(b) above.

(d)           Notwithstanding Lender’s receipt of a Request, in no event shall Lender have any obligation to make the Earn Out Advance requested therein to the extent such Earn Out Advance is in an amount less than $100,000.00, except with respect to an Earn Out Advance requested to be made on the Last Advance Date.

(e)           Notwithstanding anything to the contrary herein, each Earn Out Advance shall be further limited as follows:

(i)           the Earn Out Portion shall be limited by reference to an Earn Out Allocation (as defined on Schedule A) for each Individual Property that has not been the subject of a Release. For avoidance of doubt, Earn Out Portion is secured by the Security Instrument, and the Earn Out Allocations are used solely for the purposes of determining the amount of each Earn Out Advance.

(ii)          Each Earn Out Advance constituting all or a portion of the Earn Out Allocation, when advanced, shall (x) not cause the Debt Yield (determined for the purposes of this clause (x) clause only, solely with reference to the Allocated Loan Amount (to the extent advanced) and Net Operating Income allocated to the Individual Property to which an Earn Out Allocation applies) to be less than 11.50%, and (y) not to cause the Loan to Value Ratio (determined for the purposes of this clause (y) only, solely with reference to the Allocated Loan Amount allocated to the Individual Property to which an Earn Out Allocation applies and the value of such Individual Property) to be greater than 70%, and

(iii)         Each Earn Out Advance constituting all or a portion of an Earn Out Allocation, when advanced (x) shall not cause the Debt Yield to be less than 11.5% (determined with reference to the then outstanding principal balance of the Note and all Individual Properties that have not been the subject of a Release), and (y) shall not cause the Debt Yield (determined for the purposes of this clause (y) only, solely with referenced to the Allocated Loan Amount of each Individual Property and the Net Operating Income for each such Individual Property) to be less than 10.75% for any Individual Property.

ARTICLE 26. PARTIAL RELEASES OF INDIVIDUAL PROPERTIES

(a)           Release of Individual Properties. Except as set forth in this Article 26, no repayment or prepayment of all or any portion of this Note shall cause, give rise to a right to require, or otherwise result in, the release of the lien of any Security Instrument.

(b)           Partial Releases. Notwithstanding anything to the contrary set forth in this Note or the other Loan Documents, in the event that any Individual Borrower desires to refinance one or more of the Individual Properties (each such refinance, a “Property Refinance”) or sell one or more of the Individual Properties to a bona fide third party purchaser who is not an Affiliate of Borrower or any Individual Borrower (each such sale or Property Refinance, a “Property Sale”), Individual Borrowers shall have the right without violating the Loan Documents, to refinance or sell such Individual Property or Individual Properties and obtain a release of such Individual Property or Individual Properties from the lien of the applicable Security Instrument and the other Loan Documents encumbering such Individual Property or Individual Properties (a “Release”), provided that all of the following conditions shall be satisfied with respect to such Property Sale:

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(i)           The Individual Borrowers shall have submitted to Lender a written request for release relating to such Property Sale (each, a “Sale Request”) at least thirty (30) days prior to the proposed Property Sale, which Sale Request (i) shall specify the Individual Property or Individual Properties that the Individual Borrowers intend to sell or refinance (collectively, the “Sale Request Properties”) and state the anticipated closing date of such Property Sale or Property Refinance, and (ii) shall include an Officer’s Certificate providing a certification that as of the date of the Sale Request, no Default or Event of Default has occurred and is continuing;

(ii)          The Individual Borrowers shall have paid, or shall have arranged to be paid contemporaneously with the closing of the Property Sale, to Lender, and Lender shall have received by wire transfer of immediately available federal funds, in addition to the Release Price, the applicable Prepayment Consideration, based on the Release Price to be paid to Lender as determined by Article 26;

(iii)         In addition to the amount set forth in the preceding clause (ii), Borrowers shall have paid, or shall have arranged to be paid, contemporaneously with the closing of the Property Sale, to Lender, and Lender shall have received by wire transfer of immediately available federal funds, an amount equal to the sum of (i) the Release Price for the Sale Request Properties, the proceeds of which Release Price, shall be applied to prepay the Debt in accordance with Article 26; plus (ii) all accrued and unpaid interest on said amounts prepaid in accordance with the terms of this Note, plus (iii) if such prepayment occurs on a day other than a Payment Date, interest under the Loan on the amount so prepaid to, but not including, the next succeeding Payment Date, plus (iv) the Partial Prepayment Exit Fee for the portion of the principal being prepaid in accordance with Article 26;

(iv)         The Individual Borrowers shall have paid, in connection with the Sale Request Properties, all of the actual out of pocket reasonable third party legal fees and actual out of pocket reasonable third party expenses incurred by Lender in connection with reviewing and processing each such Sale Request, whether or not any Property Sale which is the subject of a Sale Request actually closes;

(v)          No Default or Event of Default shall have occurred and be continuing at the time of the submission by Individual Borrowers of the Sale Request or at the time of the closing of any Property Sale;

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(vi)         Those Individual Properties which are not the subject of a Property Sale shall continue to comply with all applicable Legal Requirements, including, without limitation, zoning and/or parking requirements to the extent such compliance is required elsewhere in this Note or other Loan Documents;

(vii)        Either (A) The Holiday Inn Borrower shall have renewed the Holiday Inn Franchise Agreement for a term of no less than five (5) years, or Borrower shall have identified a substitute franchisor acceptable to Lender and shall obtained a fully executed franchise agreement acceptable to Lender with such franchisor, or (B) the Holiday Inn shall be subject to a Property Sale;

(viii)       Reserved.

(ix)         After giving effect to the Property Sale, the Loan to Value Ratio based on the values applicable to the remaining Individual Properties (i.e., excluding the Individual Properties subject to such Property Sale or any prior Property Sale) shall not be greater than the seventy percent (70%).

(x)          After giving effect to the Property Sale, the Debt Yield for the annual period immediately prior to the anticipated Property Sale, based on the annual Net Operating Income applicable to the remaining Individual Properties (i.e., excluding the Individual Properties subject to such Property Sale or any prior Property Sale) shall not be less than 11.5%.

(xi)         Notwithstanding the foregoing set forth in (viii), (ix) and (x) hereof, after giving effect to the Property Sale, the Loan to Value Ratio shall not be higher, and the Debt Yield shall not be lower than, in each case, the applicable determination immediately prior to the anticipated Property Sale.

(xii)        If, after giving effect to the Property Sale, (viii), (ix), (x) and (xi) hereof, are not satisfied, Borrower may prepay a portion of the Loan, subject to Article 6 herein, in such amount necessary so that the conditions hereof are satisfied.

(xiii)       Except as set forth in (vii) above, after giving effect to the Property Sale, the remaining Individual Properties shall be that Individual Property known as the Hilton and that Individual Property known as the Holiday Inn (i.e., only that Individual Property known as Crowne Plaza may be the subject of a Release except as set forth in (vii) above).

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(c)           Release of Property. With respect to any Property Sale, on or prior to the closing of such Property Sale if all of the conditions set forth in Article 25(b) with respect to such Property Sale have been satisfied, Lender, at the sole cost and expense of Borrowers, shall execute and deliver to Borrowers the releases, satisfactions, discharges and/or assignments, as applicable and as reasonably requested by Borrowers, of the Security Instrument and the other Loan Documents which solely relate to the Individual Property or Individual Properties to be released. Upon the closing of any Property Sale, all references herein or in any of the other Loan Documents to the term “Individual Properties” shall be deemed to exclude the Individual Property or Individual Properties sold pursuant to such Property Sale, as provided for in Article 26. Furthermore, if all Individual Properties owned by any Individual Borrower have been the subject of one or more completed Property Sales, upon the closing of the last completed Property Sale in accordance with this Agreement relating to the Individual Properties owned by such Individual Borrower, such Individual Borrower shall be released from this Note, and any other Loan Document to which such Individual Borrower is a party and shall cease to be a “Borrower” under this Note or any other Loan Document and all references in this Note or any other Loan Document to the term “Borrower” or “Borrowers” shall be deemed to exclude such Individual Borrower.

(d)           Definition of Property. Upon giving effect to any completed Property Sale and Borrowers’ satisfaction of the terms and provisions of Article 26 hereof, all references herein or in any of the other Loan Documents to the term “Properties” shall be deemed to exclude the Individual Property covered under such Property Sale.

ARTICLE 27. CONTRIBUTIONS AND WAIVERS

(a)           As a result of the transactions contemplated by this Note and the other Loan Documents, each Borrower will benefit, directly and indirectly, from each Borrower’s obligation to pay the Debt and perform its obligations hereunder and under the other Loan Documents (collectively, the “Obligations”) and in consideration therefore each Borrower desires to enter into an allocation and contribution agreement among themselves as set forth in this Section to allocate such benefits among themselves and to provide a fair and equitable agreement to make contributions among each of Borrowers in the event any payment is made by any individual Borrower hereunder to Lender (such payment being referred to herein as a “Contribution,” and for purposes of this Section, includes any exercise of recourse by Lender against any Property of a Borrower and application of proceeds of such Property in satisfaction of such Borrower’s obligation, to Lender under the Loan Documents).

(b)           Each Borrower shall be liable hereunder with respect to the Obligations only for such total maximum amount (if any) that would not render its Obligations hereunder or under any of the Loan Documents subject to avoidance under Section 548 of the Bankruptcy Code or any comparable provisions of applicable legal requirements.

(c)           In order to provide for a fair and equitable contribution among Borrowers in the event that any Contribution is made by an individual Borrower (a “Funding Borrower”), such Funding Borrower shall be entitled to a reimbursement Contribution (“Reimbursement Contribution”) from the other Borrower for all payments, damages and expenses incurred by that Funding Borrower in discharging any of the Obligations, in the manner and to the extent set forth in this Section.

(d)           For purposes hereof, the “Benefit Amount” of any individual Borrower as of any date of determination shall be the net value of the benefits to such Borrower and its Affiliates from extensions of credit made by Lender to (i) such Borrower and (ii) to the other Borrower hereunder and the Loan Documents to the extent such other Borrower has guaranteed or mortgaged their property to secure the Obligations of such Borrower to Lender.

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(e)           Each Borrower shall be liable to a Funding Borrower in an amount equal to the greater of (i) the (A) ratio of the Benefit Amount of such Borrower to the total amount of Obligations, multiplied by (B) the amount of Obligations paid by such Funding Borrower, or (ii) ninety five percent (95%) of the excess of the fair saleable value of the property of such Borrower over the total liabilities of such Borrower (including the maximum amount reasonably expected to become due in respect of contingent liabilities) determined as of the date on which the payment made by a Funding Borrower is deemed made for purposes hereof (giving effect to all payments made by other Funding Borrowers as of such date in a manner to maximize the amount of such Contributions).

(f)            In the event that at any time there exists more than one Funding Borrower with respect to any Contribution (in any such case, the “Applicable Contribution”), then Reimbursement Contributions from the other Borrower pursuant hereto shall be allocated among such Funding Borrowers in proportion to the total amount of the Contribution made for or on account of the other Borrower by each such Funding Borrower pursuant to the Applicable Contribution. In the event that at any time any Borrower pays an amount hereunder in excess of the amount calculated pursuant to this Section above, that Borrower shall be deemed to be a Funding Borrower to the extent of such excess and shall be entitled to a Reimbursement Contribution from the other Borrowers in accordance with the provisions of this Section.

(g)           Each Borrower acknowledges that the right to Reimbursement Contribution hereunder shall constitute an asset in favor of Borrower to which such Reimbursement Contribution is owing.

(h)           No Reimbursement Contribution payments payable by a Borrower pursuant to the terms of this Section shall be paid until all amounts then due and payable by all of Borrowers to Lender, pursuant to the terms of the Loan Documents, are paid in full in cash. Nothing contained in this Section shall limit or affect in any way the Obligations of any Borrower to Lender under the Loan Documents.

(i)           To the extent permitted by applicable legal requirements, each Borrower waives:

(i)           any right to require Lender to proceed against any other Borrower or any other Person or to proceed against or exhaust any security held by Lender at any time or to pursue any other remedy in Lender’s power before proceeding against Borrower;

(ii)          any defense based upon any legal disability or other defense of any other Borrower, any guarantor of any other Person or by reason of the cessation or limitation of the liability of any other Borrower or any guarantor from any cause other than full payment of all sums payable under the Loan Documents;

(iii)         any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of any other Borrower or any principal of any other Borrower or any defect in the formation of any other Borrower or any principal of any other Borrower;

(iv)         any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal;

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(v)          any defense based upon any failure by Lender to obtain collateral for the indebtedness or failure by Lender to perfect a lien on any collateral;

(vi)         presentment, demand, protest and notice of any kind;

(vii)        any defense based upon any failure of Lender to give notice of sale or other disposition of any collateral to any other Borrower or to any other Person or any defect in any notice that may be given in connection with any sale or disposition of any collateral;

(viii)       any defense based upon any failure of Lender to comply with applicable laws in connection with the sale or other disposition of any collateral, including any failure of Lender to conduct a commercially reasonable sale or other disposition of any collateral;

(ix)         any defense based upon any use of cash collateral under Section 363 of the Bankruptcy Code;

(x)          any defense based upon any agreement or stipulation entered into by Lender with respect to the provision of adequate protection in any bankruptcy proceeding;

(xi)         any defense based upon any borrowing or any grant of a security interest under Section 364 of the Bankruptcy Code;

(xii)        any defense based upon the avoidance of any security interest in favor of Lender for any reason;

(xiii)       any defense based upon any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding, including any discharge of, or bar or stay against collecting, all or any of the obligations evidenced by this Note or owing under any of the Loan Documents;

(xiv)       any defense or benefit based upon Borrower’s, or any other party’s, resignation of the portion of any obligation secured by the Security Instrument to be satisfied by any payment from any other Borrower or any such party;

(xv)        all rights and defenses arising out of an election of remedies by Lender even though the election of remedies, such as non judicial foreclosure with respect to security for the Loan or any other amounts owing under the Loan Documents, has destroyed Borrower’s rights of subrogation and reimbursement against any other Borrower; and

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(xvi)       all rights and defenses that Borrower may have because any of the Debt is secured by real property. This means, among other things (subject to the other terms and conditions of the Loan Documents): (1) Lender may collect from Borrower without first foreclosing on any real or personal property collateral pledged by any other Borrower, and (2) if Lender forecloses on any real property collateral pledged by any other Borrower, (I) the amount of the Debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price and (II) Lender may collect from Borrower even if any other Borrower, by foreclosing on the real property collateral, has destroyed any right Borrower may have to collect from any other Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Borrower may have because any of the Debt is secured by real property; and except as may be expressly and specifically permitted herein, any claim or other right which Borrower might now have or hereafter acquire against any other Borrower or any other Person that arises from the existence or performance of any obligations under the Loan Documents, including any of the following: (i) any right of subrogation, reimbursement, exoneration, contribution, or indemnification; or (ii) any right to participate in any claim or remedy of Lender against any other Borrower or any collateral security therefor, whether or not such claim, remedy or right arises in equity or under contract, statute or common law.

(j)            Each Borrower hereby restates and makes the waivers made by Guarantor in the Guaranty of Recourse Obligations for the benefit of Lender. Such waivers are hereby incorporated by reference as if fully set forth herein (and as if applicable to each Borrower) and shall be effective for all purposes under the Loan (including, without limitation, in the event that any Borrower is deemed to be a surety or guarantor of the Debt (by virtue of each Borrower being co obligors and jointly and severally liable hereunder, by virtue of each Borrower encumbering its interest in the Property for the benefit or debts of the other Borrower in connection herewith or otherwise)).

[Remainder of page intentionally left blank; signature page follows]

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SCHEDULE A

INDIVIDUAL PROPERTIES AND ALLOCATED LOAN AMOUNTS

Address of Individual Property	Allocated Loan Amount		Earn Out Allocation		Maximum Allocated Loan Amount
Crowne Plaza 4300 E. Washington Street Phoenix, Arizona	$	13,250,000.00	$	1,490,000.00	$	14,740,000.00
Holiday Inn 1515 N. 44th Street Phoenix, Arizona	$	11,630,000.00	$	3,780,000.00	$	15,410,000.00
Hilton  2435 S. 47th Street Phoenix, Arizona	$	31,590,000.00	$	505,000.00	$	32,095,000.00

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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day and year first above written.

BORROWER:
44TH AND MCDOWELL HOLDING, LLC, a Delaware limited liability company
By:	/s/ Jennifer Schrader
Name:	Jennifer Schrader
Title:	Authorized Signatory
47TH STREET PHOENIX AIRPORT, LLC, a Delaware limited liability company
By:	/s/ Jennifer Schrader
Name:	Jennifer Schrader
Title:	Authorized Signatory
CHPH HOLDING, LLC, a Delaware limited liability company
By:	/s/ Jennifer Schrader
Name:	Jennifer Schrader
Title:	Authorized Signatory

PROMISSORY NOTE

EX1A-6 MAT CTRCT

Exhibit 6.3.1

GUARANTY OF RECOURSE OBLIGATIONS

THIS GUARANTY OF RECOURSE OBLIGATIONS (this “Guaranty”) is executed as of September ___, 2018, by CALIBERCOS INC., a Delaware corporation, having an office at 8901 East Mountain View Road, Suite 150, Scottsdale, Arizona 85258, JENNIFER SCHRADER, an individual, having an address at 8901 East Mountain View Road, Suite 150, Scottsdale, Arizona 85258, JOHN C. LOEFFLER, II, an individual, having an address at 8901 East Mountain View Road, Suite 150, Scottsdale, Arizona 85258, and FRANK HEAVLIN, an individual, having an address as 2147 E Baseline Rd, Tempe, Arizona 85283 (individually and collectively, “Guarantor”), for the benefit of RCC REAL ESTATE, INC., a Delaware corporation having an address at 717 Fifth Avenue, 12^th Floor, New York, New York 10022, and its successors and assigns (collectively, “Lender”).

WITNESSETH:

WHEREAS, pursuant to that certain Promissory Note, dated of even date herewith, executed by 44TH AND MCDOWELL HOLDING, LLC, a Delaware limited liability company, 47TH STREET PHOENIX AIRPORT, LLC, a Delaware limited liability company, and CHPH HOLDING, LLC, a Delaware limited liability company (individually and collectively, “Borrower”), payable to the order of Lender in the maximum principal amount of SIXTY TWO MILLION TWO HUNDRED FORTY FIVE THOUSAND AND 00/100 DOLLARS ($62,245,000.00) (as the same may hereafter be amended, restated, renewed, supplemented, replaced, extended or otherwise modified from time to time, the “Note”), Borrower has become indebted, and may from time to time be further indebted, to Lender with respect to a loan (“Loan”) which is secured by the lien and security interest of that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of the date hereof, made by Borrower for the benefit of Lender (as the same may hereafter be amended, restated, renewed, supplemented, replaced, extended or otherwise modified from time to time, the “Security Instrument”), which grants Lender a first lien on the properties encumbered thereby (collectively, the “Property”). All and any of the documents including the Note, the Security Instrument and this Guaranty now or hereafter executed by Borrower and/or others and by or in favor of Lender in connection with the Loan, as the same may be amended, restated, supplemented, or otherwise modified from time to time, are collectively referred to herein as the “Loan Documents.” Capitalized terms used herein shall have the meanings provided in the Note or the Security Instrument, as applicable, unless otherwise provided herein; and

WHEREAS, Lender is not willing to make the Loan, or otherwise extend credit, to Borrower unless Guarantor unconditionally guarantees payment and performance to Lender of the Guaranteed Obligations (as herein defined); and

WHEREAS, Guarantor is the owner of a direct or indirect interest in Borrower, and Guarantor will directly benefit from Lender’s making the Loan to Borrower.

NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower, and to extend such additional credit as Lender may from time to time agree to extend under the Loan Documents, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties do hereby agree as follows:

ARTICLE I

NATURE AND SCOPE OF GUARANTY

1.1         Guaranty of Obligation. Guarantor hereby irrevocably and unconditionally guarantees to Lender and its successors and assigns the payment and performance of the Guaranteed Obligations as and when the same shall be due and payable, whether by lapse of time, by acceleration of maturity or otherwise. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.

1.2         Guaranteed Obligations. (a) The term “Guaranteed Obligations” as used in this Guaranty shall mean all obligations and liabilities of Borrower for which Borrower shall be personally liable pursuant to Article 15 of the Note.

(b)          Notwithstanding anything to the contrary in this Guaranty, the Note or any of the other Loan Documents, Lender shall not be deemed to have waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for the full amount of the Debt or to require that all collateral shall continue to secure all of the Debt owing to Lender in accordance with the Loan Documents

1.3         Nature of Guaranty. This Guaranty is an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection. This Guaranty may not be revoked by Guarantor and shall continue to be effective with respect to any Guaranteed Obligations arising or created after any attempted revocation by Guarantor and after (if Guarantor is a natural person) Guarantor’s death (in which event this Guaranty shall be binding upon Guarantor’s estate and Guarantor’s legal representatives and heirs). The fact that at any time or from time to time the Guaranteed Obligations may be increased or reduced shall not release or discharge the obligation of Guarantor to Lender with respect to the Guaranteed Obligations. This Guaranty may be enforced by Lender and any subsequent holder of the Note and shall not be discharged by the assignment or negotiation of all or part of the Note.

1.4         Guaranteed Obligations Not Reduced by Offset. The Guaranteed Obligations and the liabilities and obligations of Guarantor to Lender hereunder, shall not be reduced, discharged or released because or by reason of any existing or future offset, claim or defense of Borrower, or any other party, against Lender or against payment of the Guaranteed Obligations, whether such offset, claim or defense arises in connection with the Guaranteed Obligations (or the transactions creating the Guaranteed Obligations) or otherwise.

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1.5         Payment By Guarantor. If all or any part of the Guaranteed Obligations shall not be punctually paid when due, whether at demand, maturity, acceleration or otherwise, Guarantor shall, immediately upon demand by Lender, and without presentment, protest, notice of protest, notice of non-payment, notice of intention to accelerate the maturity, notice of acceleration of the maturity, or any other notice whatsoever, pay in lawful money of the United States of America, the amount due on the Guaranteed Obligations to Lender at Lender’s address as set forth herein. Such demand(s) may be made at any time coincident with or after the time for payment of all or part of the Guaranteed Obligations, and may be made from time to time with respect to the same or different items of Guaranteed Obligations. Such demand shall be deemed made, given and received in accordance with the notice provisions hereof. If Guarantor fails to make when due any payment required to be made by it under this Guaranty (a “Guaranty Payment”), then such Guaranty Payment shall bear interest from such due date until paid at the Default Rate from time to time in effect. Interest accrued hereunder with respect to any Guaranty Payment shall be payable on demand and shall be calculated on the basis of the actual number of days elapsed on a 360-day year.

1.6         No Duty To Pursue Others. It shall not be necessary for Lender (and Guarantor hereby waives any rights which Guarantor may have to require Lender), in order to enforce the obligations of Guarantor hereunder, first to (i) institute suit or exhaust its remedies against Borrower or others liable on the Loan or the Guaranteed Obligations or any other person, (ii) enforce Lender’s rights against any collateral which shall ever have been given to secure the Loan, (iii) enforce Lender’s rights against any other guarantors of the Guaranteed Obligations, (iv) join Borrower or any others liable on the Guaranteed Obligations in any action seeking to enforce this Guaranty, (v) exhaust any remedies available to Lender against any collateral which shall ever have been given to secure the Loan, or (vi) resort to any other means of obtaining payment of the Guaranteed Obligations. Lender shall not be required to mitigate damages or take any other action to reduce, collect or enforce the Guaranteed Obligations.

1.7         Waivers. To the extent permitted by applicable law, Guarantor agrees to the provisions of the Loan Documents, and hereby waives notice of (i) any loans or advances made by Lender to Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or extension of the Note, the Security Instrument, or of any other Loan Documents, (iv) the execution and delivery by Borrower and Lender of any other loan or credit agreement or of Borrower’s execution and delivery of any promissory notes or other documents arising under the Loan Documents or in connection with the Property, (v) the occurrence of any breach by Borrower or an Event of Default, (vi) Lender’s transfer or disposition of the Guaranteed Obligations, or any part thereof, (vii) sale or foreclosure (or posting or advertising for sale or foreclosure) of any collateral for the Guaranteed Obligations, (viii) protest, proof of non-payment or default by Borrower, or (ix) any other action at any time taken or omitted by Lender, and, generally, all demands and notices of every kind in connection with this Guaranty, the Loan Documents, any documents or agreements evidencing, securing or relating to any of the Guaranteed Obligations and the obligations hereby guaranteed.

1.8         Payment of Expenses. In the event that Guarantor should breach or fail to timely perform any provisions of this Guaranty, Guarantor shall, immediately upon demand by Lender, pay Lender all costs and expenses (including court costs and reasonable attorneys’ fees) incurred by Lender in the enforcement hereof or the preservation of Lender’s rights hereunder. The covenant contained in this Section shall survive the payment and performance of the Guaranteed Obligations.

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1.9         Effect of Bankruptcy. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, Lender must rescind or restore any payment, or any part thereof, received by Lender in satisfaction of the Guaranteed Obligations, as set forth herein, any prior release or discharge from the terms of this Guaranty given to Guarantor by Lender shall be without effect, and this Guaranty shall remain in full force and effect. It is the intention of Borrower and Guarantor that Guarantor’s obligations hereunder shall not be discharged except by Guarantor’s performance of such obligations and then only to the extent of such performance.

1.10       Waiver of Subrogation, Reimbursement and Contribution. Notwithstanding anything to the contrary contained in this Guaranty, for as long as the Loan remains outstanding, Guarantor hereby unconditionally and irrevocably waives, releases and abrogates any and all rights it may now or hereafter have under any agreement, at law or in equity (including, without limitation, any law subrogating the Guarantor to the rights of Lender), to assert any claim against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for payment of any or all of the Guaranteed Obligations for any payment made by Guarantor under or in connection with this Guaranty or otherwise.

1.11       Borrower. The term “Borrower” as used herein shall include any new or successor corporation, association, partnership (general or limited), limited liability company, joint venture, trust or other individual or organization formed as a result of any merger, reorganization, sale, transfer, devise, gift or bequest of Borrower or any interest in Borrower.

ARTICLE II

EVENTS AND CIRCUMSTANCES NOT REDUCING OR DISCHARGING GUARANTOR’S OBLIGATIONS

Guarantor hereby consents and agrees to each of the following, and agrees that Guarantor’s obligations under this Guaranty shall not be released, diminished, impaired, reduced or adversely affected by any of the following, and waives (to the extent permitted under applicable law) any common law, equitable, statutory or other rights (including without limitation rights to notice) which Guarantor might otherwise have as a result of or in connection with any of the following:

2.1         Modifications. Any renewal, extension, increase, modification, alteration or rearrangement of all or any part of the Guaranteed Obligations, the Note, the Security Instrument, the other Loan Documents, or any other document, instrument, contract or understanding between Borrower and Lender, or any other parties, pertaining to the Guaranteed Obligations or any failure of Lender to notify Guarantor of any such action.

2.2         Adjustment. Any adjustment, indulgence, forbearance or compromise that might be granted or given by Lender to Borrower or any Guarantor.

2.3         Condition of Borrower or Guarantor. The insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Borrower, Guarantor or any other party at any time liable for the payment of all or part of the Guaranteed Obligations; or any dissolution of Borrower or Guarantor, or any sale, lease or transfer of any or all of the assets of Borrower or Guarantor, or any changes in the shareholders, partners or members of Borrower or Guarantor; or any reorganization of Borrower or Guarantor.

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2.4         Invalidity of Guaranteed Obligations. The invalidity, illegality or unenforceability of all or any part of the Guaranteed Obligations, or any document or agreement executed in connection with the Guaranteed Obligations, for any reason whatsoever, including without limitation the fact that (i) the Guaranteed Obligations, or any part thereof, exceeds the amount permitted by law, (ii) the act of creating the Guaranteed Obligations or any part thereof is ultra vires, (iii) the officers or representatives executing the Note, the Security Instrument, or the other Loan Documents or otherwise creating the Guaranteed Obligations acted in excess of their authority, (iv) the Guaranteed Obligations violate applicable usury laws, (v) the Borrower has valid defenses, claims or offsets (whether at law, in equity or by agreement) which render the Guaranteed Obligations wholly or partially uncollectible from Borrower, (vi) the creation, performance or repayment of the Guaranteed Obligations (or the execution, delivery and performance of any document or instrument representing part of the Guaranteed Obligations or executed in connection with the Guaranteed Obligations, or given to secure the repayment of the Guaranteed Obligations) is illegal, uncollectible or unenforceable, or (vii) the Note, the Security Instrument, or any of the other Loan Documents have been forged or otherwise are irregular or not genuine or authentic, it being agreed that Guarantor shall remain liable hereon regardless of whether Borrower or any other person be found not liable on the Guaranteed Obligations or any part thereof for any reason.

2.5         Release of Obligors. Any full or partial release of the liability of Borrower on the Guaranteed Obligations, or any part thereof, or of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay, perform, guarantee or assure the payment of the Guaranteed Obligations, or any part thereof, it being recognized, acknowledged and agreed by Guarantor that Guarantor may be required to pay the Guaranteed Obligations in full without assistance or support of any other party, and Guarantor has not been induced to enter into this Guaranty on the basis of a contemplation, belief, understanding or agreement that other parties will be liable to pay or perform the Guaranteed Obligations, or that Lender will look to other parties to pay or perform the Guaranteed Obligations.

2.6         Other Collateral. The taking or accepting of any other security, collateral or guaranty, or other assurance of payment, for all or any part of the Guaranteed Obligations.

2.7         Release of Collateral. Any release, surrender, exchange, subordination, deterioration, waste, loss or impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security at any time existing in connection with, or assuring or securing payment of, all or any part of the Guaranteed Obligations.

2.8         Care and Diligence. The failure of Lender or any other party to exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of any collateral, property or security, including but not limited to any neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute any action for the collection of any of the Guaranteed Obligations or (ii) to foreclose, or initiate any action to foreclose, or, once commenced, prosecute to completion any action to foreclose upon any security therefor, or (iii) to take or prosecute any action in connection with any instrument or agreement evidencing or securing all or any part of the Guaranteed Obligations.

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2.9        Unenforceability. The fact that any collateral, security, security interest or lien contemplated or intended to be given, created or granted as security for the repayment of the Guaranteed Obligations, or any part thereof, shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other security interest or lien, it being recognized and agreed by Guarantor that Guarantor is not entering into this Guaranty in reliance on, or in contemplation of the benefits of, the validity, enforceability, collectability or value of any of the collateral for the Guaranteed Obligations.

2.10      Intentionally Omitted.

2.11      Merger. The reorganization, merger or consolidation of Borrower into or with any other Person.

2.12      Preference. Any payment by Borrower to Lender is held to constitute a preference under bankruptcy laws, or for any reason Lender is required to refund such payment or pay such amount to Borrower or someone else.

2.13      Other Actions Taken or Omitted. Any other action taken or omitted to be taken with respect to the Loan Documents, the Guaranteed Obligations, or the security and collateral therefor, whether or not such action or omission prejudices Guarantor or increases the likelihood that Guarantor will be required to pay the Guaranteed Obligations pursuant to the terms hereof, it is the unambiguous and unequivocal intention of Guarantor that Guarantor shall be obligated to pay the Guaranteed Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not otherwise or particularly described herein, which obligation shall be deemed satisfied only upon the full and final payment and satisfaction of the Guaranteed Obligations.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into the Loan Documents and extend credit to Borrower, Guarantor represents and warrants to Lender as follows:

3.1         Benefit. Guarantor is an affiliate of Borrower, is the owner of a direct or indirect interest in Borrower, and has received, or will receive, direct or indirect benefit from the making of this Guaranty with respect to the Guaranteed Obligations.

3.2         Familiarity and Reliance. Guarantor is familiar with, and has independently reviewed books and records regarding, the financial condition of the Borrower and is familiar with the value of any and all collateral intended to be created as security for the payment of the Note or Guaranteed Obligations; however, Guarantor is not relying on such financial condition or the collateral as an inducement to enter into this Guaranty.

3.3         No Representation By Lender. Neither Lender nor any other party has made any representation, warranty or statement to Guarantor in order to induce the Guarantor to execute this Guaranty.

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3.4         Guarantor’s Financial Condition. (a) As of the date hereof, and after giving effect to this Guaranty and the contingent obligation evidenced hereby, Guarantor is, and will be, solvent, and has and will have assets which, fairly valued, exceed its obligations, liabilities (including contingent liabilities) and debts, and has and will have property and assets sufficient to satisfy and repay its obligations and liabilities.

(b)          Net Worth Covenant. At all times prior to the payment of all obligations of Borrower under the Note and the other Loan Documents and of all of the Guaranteed Obligations under this Guaranty, Guarantor shall collectively maintain (i) a book net worth (net of capital events which shall be acceptable to Lender), as determined by Lender in its reasonable discretion based on financial documentation provided by Guarantor to Lender pursuant to Section 3.5, that equals or exceeds Forty Million and 00/100 Dollars ($40,000,000.00) (the “Net Worth Requirement”), and (ii) cash and marketable securities in an amount equal to or greater than Ten Million and 00/100 Dollars ($10,000,000.00) (the “Liquidity Requirement”). In the event either Guarantor fails to comply with any of the foregoing covenants in accordance with this Section 3.4(b), Guarantor shall cure such failure within thirty (30) days after the occurrence thereof. Notwithstanding the foregoing, if Guarantor fails to meet the foregoing, Guarantor shall promptly notify Lender in writing of the same and no default shall occur hereunder so long as an additional guarantor (“Replacement Guarantor”) approved by Lender, which approval shall be granted or denied pursuant to Lender’s customary underwriting procedures, enters into and delivers to Lender, within fifteen (15) Business Days, a guaranty in substantially the same form and content as this Guaranty.

(c)          Each Guarantor shall furnish Lender with current financial statements (certified by a duly authorized corporate officer of Guarantor) or other information evidencing the foregoing each calendar quarter and at the end of each calendar year, and as may, from time to time (but not more than once per calendar quarter), be reasonably requested by Lender in form and substance satisfactory to Lender.

3.5         Guarantor’s Financial Reports. Guarantor shall to furnish to Lender annually, within one hundred twenty (120) days following the end of each calendar year of Guarantor, a complete copy of Guarantor’s annual financial statements (including, without limitation, statements of financial condition, income and cash flows, net worth and a list of all contingent liabilities) audited by a “Big Four” accounting firm, Marcum Accountants & Advisors, or other independent certified public accountant acceptable to Lender (in Lender’s reasonable discretion) prepared in accordance with GAAP. Guarantor’s annual financial statements shall be accompanied by (i) a certificate from Guarantor acceptable to Lender stating that each such annual financial statement presents fairly the financial condition of Guarantor being reported upon and has been prepared in accordance with GAAP and (ii) an unqualified opinion of a “Big Four” accounting firm or other independent certified public accountant reasonably acceptable to Lender.

3.6         Legality. The execution, delivery and performance by Guarantor of this Guaranty and the consummation of the transactions contemplated hereunder do not, and will not, contravene or conflict with any law, statute or regulation whatsoever to which Guarantor is subject or constitute a default (or an event which with notice or lapse of time or both would constitute a default) under, or result in the breach of, any indenture, mortgage, deed of trust, charge, lien, or any contract, agreement or other instrument to which Guarantor is a party or which may be applicable to Guarantor. This Guaranty is a legal and binding obligation of Guarantor and is enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights.

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3.7         Litigation. There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority or other agency now pending or threatened against or affecting Guarantor.

3.8         Survival. All representations and warranties made by Guarantor herein shall survive the execution hereof.

ARTICLE IV

SUBORDINATION OF CERTAIN INDEBTEDNESS

4.1         Subordination of All Guarantor Claims. As used herein, the term “Guarantor Claims” shall mean all debts and liabilities of Borrower to Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor. The Guarantor Claims shall include without limitation all rights and claims of Guarantor against Borrower (arising as a result of subrogation or otherwise) as a result of Guarantor’s payment of all or a portion of the Guaranteed Obligations. Upon and during the continuance of an Event of Default or Default, Guarantor shall not receive or collect, directly or indirectly, from Borrower or any other party any amount upon the Guarantor Claims.

4.2         Claims in Bankruptcy. In the event of receivership, bankruptcy, reorganization, arrangement, debtor’s relief, or other insolvency proceedings involving Guarantor as debtor, Lender shall have the right to prove its claim in any such proceeding so as to establish its rights hereunder and receive directly from the receiver, trustee or other court custodian dividends and payments which would otherwise be payable upon Guarantor Claims. Guarantor hereby assigns such dividends and payments to Lender. Should Lender receive, for application against the Guaranteed Obligations, any such dividend or payment which is otherwise payable to Guarantor, and which, as between Borrower and Guarantor, shall constitute a credit against the Guarantor Claims, then upon payment to Lender in full of the Guaranteed Obligations, Guarantor shall become subrogated to the rights of Lender to the extent that such payments to Lender on the Guarantor Claims have contributed toward the liquidation of the Guaranteed Obligations, and such subrogation shall be with respect to that proportion of the Guaranteed Obligations which would have been unpaid if Lender had not received dividends or payments upon the Guarantor Claims.

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4.3         Payments Held in Trust. In the event that, notwithstanding anything to the contrary in this Guaranty, Guarantor should receive any funds, payment, claim or distribution which is prohibited by this Guaranty, Guarantor agrees to hold in trust for Lender an amount equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions so received except to pay them promptly to Lender, and Guarantor covenants promptly to pay the same to Lender.

4.4         Liens Subordinate. Guarantor agrees that any liens, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon Borrower’s assets securing payment of the Guaranteed Obligations, regardless of whether such encumbrances in favor of Guarantor or Lender presently exist or are hereafter created or attach. Without the prior written consent of Lender, Guarantor shall not (i) exercise or enforce any creditor’s right it may have against Borrower, or (ii) foreclose, repossess, sequester or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, mortgages, deeds of trust, security interests, collateral rights, judgments or other encumbrances on assets of Borrower held by Guarantor.

ARTICLE V

MISCELLANEOUS

5.1         Waiver. No failure to exercise, and no delay in exercising, on the part of Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right. The rights of Lender hereunder shall be in addition to all other rights provided by law. No modification or waiver of any provision of this Guaranty, nor consent to departure therefrom, shall be effective unless in writing and no such consent or waiver shall extend beyond the particular case and purpose involved. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

5.2         Notices. All notices required or permitted hereunder shall be given and shall become effective as provided in Article 16 of the Security Instrument. All notices to Guarantor shall be addressed as follows:

Guarantor:	CaliberCos Inc.
	8901 East Mountain View Road, Suite 150 Scottsdale, Arizona 85258 Attention:  Jennifer Schrader

with a copy to:	Snell & Wilmer
	1 S. Church Avenue, #1500
	Tucson, Arizona 85701-1630
	Attention:  M. Roxanne Veliz, Esq.

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5.3         Governing Law/Service of Process.

(a)          THIS GUARANTY WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY GUARANTOR AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY, AND THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK , PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND GUARANTOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. GUARANTOR DOES HEREBY DESIGNATE AND APPOINT:

CT CORPORATION SYSTEM
111 EIGHTH AVENUE
NEW YORK, NEW YORK 10011

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. GUARANTOR (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

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5.4         Invalid Provisions. If any provision of this Guaranty is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Guaranty, such provision shall be fully severable and this Guaranty shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Guaranty, and the remaining provisions of this Guaranty shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Guaranty, unless such continued effectiveness of this Guaranty, as modified, would be contrary to the basic understandings and intentions of the parties as expressed herein.

5.5         Amendments. This Guaranty may be amended only by an instrument in writing executed by the party or an authorized representative of the party against whom such amendment is sought to be enforced.

5.6         Parties Bound; Assignment; Joint and Several. This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and legal representatives; provided, however, that Guarantor may not, without the prior written consent of Lender, assign any of its rights, powers, duties or obligations hereunder. If Guarantor consists of more than one person or party, the obligations and liabilities of each such person or party shall be joint and several.

5.7         Headings. Section headings are for convenience of reference only and shall in no way affect the interpretation of this Guaranty.

5.8         Recitals. The recital and introductory paragraphs hereof are a part hereof, form a basis for this Guaranty and shall be considered prima facie evidence of the facts and documents referred to therein.

5.9         Counterparts. To facilitate execution, this Guaranty may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single instrument. It shall not be necessary in making proof of this Guaranty to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages.

5.10       Rights and Remedies. If Guarantor becomes liable for any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other than under this Guaranty, such liability shall not be in any manner impaired or affected hereby and the rights of Lender hereunder shall be cumulative of any and all other rights that Lender may ever have against Guarantor. The exercise by Lender of any right or remedy hereunder or under any other instrument, or at law or in equity, shall not preclude the concurrent or subsequent exercise of any other right or remedy.

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5.11       Fully Recourse. All of the terms and provisions of this Guaranty are recourse obligations of Guarantor and not restricted by any limitation on personal liability set forth in any of the Loan Documents..

5.12       Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR’S GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

5.13       Waiver of Right To Trial By Jury. GUARANTOR, AND BY ITS ACCEPTANCE HEREOF, LENDER, EACH HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE NOTE, THE SECURITY INSTRUMENT, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY HERETO, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY HERETO IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

5.14       Secondary Market. The provisions of Article 19 of the Security Instrument are incorporated herein by reference with the same force as if fully set forth herein. Guarantor hereby agrees to reasonably cooperate in fulfilling any obligation of Borrower under Article 19 of the Security Instrument.

5.15       Reinstatement in Certain Circumstances. If at any time any payment of the principal of or interest under the Note or any other amount payable by the Borrower under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, the Guarantor’s obligations hereunder with respect to such payment shall be reinstated as though such payment has been due but not made at such time.

[NO FURTHER TEXT ON THIS PAGE]

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EXECUTED as of the day and year first above written.

GUARANTOR:
CALIBERCOS INC., a Delaware corporation
By:	/s/ Jennifer Schrader
	Name: Jennifer Schrader
	Title: Authorized Signatory

[Signatures continue on following page]

GUARANTY

GUARANTOR:

/s/ Jennifer Schrader

Jennifer Schrader, individually

GUARANTOR:

/s/ John C. Loeffler, II

John C. Loeffler, II, individually

[Signatures continue on following page]

GUARANTY

GUARANTOR:

/s/ Frank Heavlin

Frank Heavlin, individually

GUARANTY

EX1A-6 MAT CTRCT

Exhibit 6.4

OFFICE LEASE AGREEMENT

POLLOCK GATEWAY II LLC, as Landlord

and

CALIBERCOS INC., as Tenant

Scottsdale Gateway II

Scottsdale, Arizona

Table of Contents

		Page
Article 1	LEASE OF PREMISES, LEASE TERM	5
1.1	Premises	5
1.2	Lease Term, Delivery and Commencement	5
	1.2.1   Commencement and Expiration of Term	5
	1.2.2   Tender of Possession	5
	1.2.3   Commencement Date Memorandum	5
	1.2.4   [Intentionally Deleted]	6
1.3	Right to Extend	6
	1.3.1   Exercise of Right to Extend	6
	1.3.2   Personal to Tenant	6
	1.3.3   Determination of Base Rent	6
	1.3.4   Amendment to Lease	7
1.4	Right of First Offer	8
Article 2	RENTAL AND OTHER PAYMENTS	9
2.1	Base Rent	9
2.2	Additional Rent	9
2.3	Delinquent Rental Payments	10
2.4	Independent Obligations	10
Article 3	OPERATING EXPENSES AND PROPERTY TAXES	10
3.1	Payment of Excess Expenses	10
3.2	Estimation of Tenant’s Share of Excess Expenses	10
3.3	Payment of Estimated Tenant’s Share of Excess Expenses	11
3.4	Confirmation of Tenant’s Share of Excess Expenses	11
3.5	Tenant’s Inspection and Review Rights	11
3.6	Personal Property Taxes	12
3.7	Landlord’s Right to Contest Property Taxes	12
3.8	Adjustment for Variable Operating Expenses	12
3.9	Rent Tax	12
Article 4	USE	13
4.1	Permitted Use	13
4.2	Acceptance of Premises	13
4.3	Increased Insurance	13
4.4	Laws/Building Rules	14
4.5	Common Area	14
4.6	Signs	15
Article 5	HAZARDOUS MATERIALS	16
5.1	Compliance with Hazardous Materials Laws	16

i

Table of Contents

(continued)

		Page
5.2	Notice of Actions	17
5.3	Disclosure and Warning Obligations	17
5.4	Intentionally Deleted	17
5.5	Indemnification	17
Article 6	SERVICES	18
6.1	Landlord’s Obligations	18
	6.1.1   Building Access	18
	6.1.2   Janitorial Service	18
	6.1.3   Electrical Energy	18
	6.1.4   Heating, Ventilation and Air Conditioning	18
	6.1.5   Water	19
	6.1.6   Building Security	19
6.2	Tenant’s Obligations	19
6.3	Other Provisions Relating to Services	19
6.4	Tenant Devices	19
Article 7	MAINTENANCE AND REPAIR	20
7.1	Landlord’s Obligations	20
7.2	Tenant’s Obligations	20
	7.2.1 Maintenance of Premises	20
	7.2.2 Alterations Required by Laws	20
Article 8	CHANGES AND ALTERATIONS	21
8.1	Landlord’s Approval	21
8.2	Tenant’s Responsibility for Costs and Insurance	21
8.3	Construction Obligations and Ownership	22
8.4	Liens	22
Article 9	RIGHTS RESERVED BY LANDLORD	23
9.1	Landlord’s Entry	23
9.2	Control of Property	23
9.3	Right to Cure	24
Article 10	INSURANCE	24
10.1	Tenant’s Insurance Obligations	24
	10.1.1 Liability Insurance	24
	10.1.2 Property Insurance	24
	10.1.3 Other Insurance	24
	10.1.4 Miscellaneous Insurance Provisions	24
	10.1.5 Tenant’s Waiver and Release of Claims and Subrogation	25
	10.1.6 No Limitation	25

ii

Table of Contents

(continued)

		Page
10.2	Landlord’s Insurance Obligations	25
	10.2.1 Property Insurance	25
	10.2.2 Liability Insurance	26
	10.2.3 Landlord’s Waiver and Release of Claims and Subrogation	26
10.3	Indemnification of the Parties	26
10.4	Tenant’s Failure to Insure	26
Article 11	DAMAGE OR DESTRUCTION	27
11.1	Tenantable Within 135 Days	27
11.2	Not Tenantable Within 135 Days	27
11.3	Building Substantially Damaged	27
11.4	Insufficient Proceeds	28
11.5	Landlord’s Repair; Rent Abatement	28
11.6	Rent Apportionment Upon Termination	28
Article 12	EMINENT DOMAIN	28
12.1	Termination of Lease	28
12.2	Landlord’s Repair Obligations	29
12.3	Tenant’s Participation	29
12.4	Exclusive Taking Remedy	29
Article 13	TRANSFERS	30
13.1	Restriction on Transfers	30
13.2	Costs	31
13.3	Assignment/Sublet to Affiliates	31
13.4	Non-Release of Tenant Upon Assignment/Sublet	31
Article 14	DEFAULTS; REMEDIES	32
14.1	Events of Default	32
	14.1.1 Failure to Pay Rent	32
	14.1.2 Failure to Perform	32
	14.1.3 Misrepresentation	32
	14.1.4 Intentionally Deleted	32
	14.1.5 Intentionally Deleted	32
	14.1.6 Other Defaults	32
14.2	Remedies	33
	14.2.1 Termination of Tenant’s Possession/Re-entry and Reletting Right	33
	14.2.2 Termination of Lease	33
	14.2.3 Present Worth of Rent	34
	14.2.4 Other Remedies	34
14.3	Costs	34

iii

Table of Contents

(continued)

		Page
14.4	Waiver and Release by Tenant	35
14.5	Landlord’s Default	35
14.6	No Waiver	35
Article 15	CREDITORS; ESTOPPEL CERTIFICATES	35
15.1	Subordination and Non-Disturbance	35
15.2	Attornment	36
15.3	Mortgagee Protection Clause	36
15.4	Estoppel Certificates	36
	15.4.1 Contents	36
	15.4.2 Failure to Deliver	37
Article 16	EXPIRATION OF THE LEASE TERM	37
16.1	Surrender of Premises	37
16.2	Holding Over	38
Article 17	ADDITIONAL PROVISIONS	38
17.1	Improvements to the Premises	38
	17.1.1 Tenant Improvements	38
	17.1.2 Construction	38
	17.1.3 Space Plan	39
	17.1.4 Substantial Completion	39
	17.1.5 Punch List	39
	17.1.6 Construction Warranty	39
17.2	Parking	39
Article 18	MISCELLANEOUS PROVISIONS	39
18.1	Notices	39
18.2	Transfer of Landlord’s Interest	40
18.3	Successors	40
18.4	Captions and Interpretation	40
18.5	Relationship of Parties	40
18.6	Entire Agreement; Amendment	40
18.7	Severability	40
18.8	Landlord’s Limited Liability	40
18.9	Survival	41
18.10	Attorneys’ Fees	41
18.11	Brokers	41
18.12	Governing Law	41
18.13	Intentionally Deleted	41
18.14	Tenant’s Organization Documents; Authority	41
18.15	Provisions are Covenants and Conditions	42

iv

Table of Contents

(continued)

		Page
18.16	Force Majeure	42
18.17	Management	42
18.18	Financial Statements	42
18.19	Quiet Enjoyment	42
18.20	No Recording	42
18.21	Nondisclosure of Lease Terms	43
18.22	Construction of Lease and Terms	43
18.23	Right to Purchase Building	43
Article 19	SECURITY	44
19.1	Security Deposit	44
19.2	Lien and Security Interest	44

EXHIBIT “A”	Definitions	A-1
EXHIBIT “B”	Legal Description of the Land	B-1
EXHIBIT “C”	Space Plan	C-1
EXHIBIT “D”	Commencement Date Memorandum	D-1
EXHIBIT “E”	Building Rules	E-1
EXHIBIT “F”	Work Letter Agreement	F-1
EXHIBIT “G”	Placement of Exterior Signage	G-1
EXHIBIT “H”	Parking Map	H-1

v

OFFICE LEASE AGREEMENT

This Office Lease Agreement is made and entered into as of the Effective Date by and between POLLOCK GATEWAY II LLC, a California limited liability company, as Landlord, and CALIBERCOS INC. a Delaware corporation, as Tenant.

DEFINITIONS

Capitalized terms used in this Lease have the meanings ascribed to them on the attached EXHIBIT “A”.

BASIC TERMS

The following Basic Terms are applied under and governed by the particular section(s) in this Lease pertaining to the following information:

1.	Building/Location:	8901 East Mountain View Road, Scottsdale, Arizona. The Building contains 107,885 rentable square feet.
2.	Premises/Area:	A portion of the first (1st) floor of the Building, containing approximately 18,316 rentable square feet (RSF) and commonly known as Suite 150. The Premises are depicted on EXHIBIT “C”. The Building contains 107,885 rentable square feet.
3.	Common Area/Load Factor:	Thirteen and one-half percent (13.5%).
4.	Commencement Date:	Same as the Effective Date
5.	Initial Lease Term:	Approximately ninety-one (91) calendar months, commencing on the Rent Commencement Date and expiring on the last day of the 91st full calendar month thereafter.
6.	Delivery Date:	Same as the Effective Date
7.	Rent Commencement Date:	July 23, 2018
8.	Early Access:	N/A

9.	Base Rent:	Period	Annual Base Rent Per Rentable Square Foot of the Premises* (Full Service Gross)
		Months 1-16:	$25.00 per RSF
		Months 17-29:	$25.50 per RSF
		Months 30-42:	$26.00 per RSF
		Months 43-55:	$26.50 per RSF
		Months 56-67:	$27.00 per RSF
		Months 68-79:	$27.50 per RSF
		Months 80-91:	$28.00 per RSF

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		Provided that no Event of Default exists at the time of the abatement provided below, Tenant’s monthly installment of Base Rent (in full) shall be abated for the first (1st), second (2nd), third (3rd), sixteenth (16th), twenty-ninth (29th), forty-second (42nd), fifty-fifth (55th) full calendar months of the Term of this Lease (the “Abatement Period” and the Base Rent therein abated, the “Abated Base Rent”). The principal amount of the Abated Base Rent shall be amortized evenly over the Term. So long as no uncured Event of Default, occurs under this Lease that results in Landlord exercising its remedies under Section 16, below, then upon Landlord’s receipt of the final monthly installment of Rent, Tenant shall have no liability to Landlord for the repayment of any portion of the Abated Base Rent. In the event of an uncured Event of Default that results in Landlord exercising its remedies under Section 16, below, then in addition to all of Landlord’s other remedies available under Section 16, below, Tenant shall also become immediately liable to Landlord for the unamortized portion of the Abated Base Rent existing as of the date that Landlord first exercises its remedies under Section 16, below. Provided, however, that if Landlord elects to exercise its rights under Section 16 of this Lease to accelerate the entire amount of all Rent and other charges due from Tenant for the balance of the Term (in accordance with the terms of such Section), and Landlord obtains a judgment for, or is paid by Tenant, the entire amount of such accelerated sum, then such judgment for or payment of such accelerated sum shall preclude a separate recovery by Landlord under the foregoing terms of this Section of such unamortized portion of the Abated Rent.
10.	Full Service:	This Lease is a full service Lease with a 2018 Base Year, including real estate taxes, utilities, and common area maintenance.
11.	Use:	Tenant shall have the right to use and occupy the Premises for general office use.
12.	Operating Expenses:	2018 Base Year, grossed up to 95% occupancy. Landlord will cap all Controllable Expenses at 5% per annum.

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13.	Parking:	Landlord will provide nineteen (19) covered, reserved spaces at $25.00 per space, per month, plus applicable sales and transaction privilege taxes, and sixty-three (63) uncovered, reserved parking spaces at $0.00 per space, per month, plus applicable sales and transaction privilege taxes. The location of such covered, reserved spaces and such uncovered, reserved spaces are shown on the parking map attached hereto as EXHIBIT “H”. All surface uncovered parking spaces are free of charge based on a first-come, first-serve basis.
		Provided that no Event of Default under any term, condition or obligation of this Lease exists at the time of the abatement provided herein, Tenant’s monthly rental fees for the covered, reserved spaces shall be abated for the first (1st) through twelfth (12th) full calendar months of the Term.
14.	Tenant Improvements:	Tenant Improvements will be performed by Tenant based upon a mutually agreeable space plan, subject to a Tenant Improvement Allowance not to exceed Fifteen and 00/100 Dollars ($15.00) per rentable square foot. Notwithstanding anything set forth herein to the contrary, the entire amount of the Tenant Improvement Allowance can be used to pay the cost of Tenant’s data cabling and wiring and personal property, such as, furniture, fixtures, signage, and equipment, and moving costs. Tenant may also elect to apply any remaining balance of the Tenant Improvement Allowance towards future Base Rent.
15.	Right to Extend:	Provided that no default by Tenant under Lease is then uncured, Tenant shall have the Right to Extend the Term of the Lease for two (2) periods of five (5) years each, as more particularly set forth in Section 1.3 below.

16.	Building Services:	Access. The Building is open to the public during the following hours:
		Monday – Friday	7:00 am – 6:00pm
		Saturday	8:00 am – Noon
		Sunday	Closed
		Access is available 24 hours per day, 7 days per week for Tenant and its employees, agents, and invitees. Tenant may utilize after hours HVAC services pursuant to Section 6.1.4.
17.	Signage:	Landlord will pay for standard suite signage and standard directory signage as provided in Section 4.6. Tenant shall have such ether signage rights set forth in Section 4.6.

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18.	Tenant’s Share of Excess Expenses Percentage:	16.98%
19.	Base Year for Determining Excess Expenses:	2018
20.	Guarantors:	N/A
21.	Security Deposit:	$42,737.33
22.	Property Management/Rent Payment Address:	Pollock Realty Corporation 150 Portola Road Portola Valley, California 94028 Telephone: (650) 529-0500 Facsimile: (650) 529-2131
23.	Address of Landlord for Notices:	Pollock Realty Corporation 150 Portola Road Portola Valley, California 94028 Attention: James M. Pollock, Manager Telephone: (650) 529-0500 Facsimile: (650) 529-2131
24.	Address of Landlord’s Lender	Goldman Sachs c/o Wells Fargo Commercial Mortgage Servicing Post Office Box 60253 Charlotte, North Carolina 28206-2053
25.	With copies to:	Paul M. Weiser, Esq. Buchalter Nemer 16435 N. Scottsdale Road, Suite 440 Scottsdale, Arizona 85254 Telephone: (480)483-1800 Facsimile: (480) 483-9400
26.	Landlord’s Broker:	Cushman & Wakefield Attn: Scott Isacksen/Gordon Raguse 2555 East Camelback Road, Suite 400 Phoenix, Arizona 85016
27.	Tenant’s Broker:	Keyser Attn: Rick Osselaer 4141 North Scottsdale Road, Suite 150 Scottsdale, Arizona 85251

4

Article 1

LEASE OF PREMISES, LEASE TERM

1.1         Premises. In consideration of the covenants and agreements set forth in this Lease and other good and valuable consideration, Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord, upon and subject to the terms, covenants and conditions set forth in this Lease. Landlord and Tenant stipulate and agree that the actual number of rentable square feet of the Premises shall be specified in a Landlord and Tenant approved final space plan.

1.2         Lease Term, Delivery and Commencement.

1.2.1       Commencement and Expiration of Term. The Term of this Lease is the period stated in the Basic Terms. The Term shall commence on the Rent Commencement Date and shall expire on the expiration date specified in Paragraph 5 of the Basic Terms, unless extended or sooner terminated pursuant to the provisions of this Lease. In the event that the Rent Commencement Date is not on the first day of a calendar month, then the partial month in which the Rent Commencement Date occurs shall be part of the Term and Tenant shall pay rent for such partial month based on a base rental rate of $25.00 per square foot per year, which charges are payable within ten (10) days after Tenant’s receipt of an invoice from Landlord.

Landlord and Tenant acknowledge that there are certain furniture, fixtures and equipment located at the Premises (the “Existing FF&E”) that were utilized in the operation of a prior tenant’s business at the Premises. On the Commencement Date, Landlord shall sell, convey, transfer and assign to Tenant the Existing FF&E in exchange for One Dollar ($1.00) and Landlord shall execute and deliver to Tenant a bill of sale related to the Existing FF&E reasonably acceptable to Tenant. Tenant hereby acknowledges that it has inspected the Existing FF&E and knows the condition thereof and that it is accepting the Existing FF&E in its present “As Is” condition with all defects and faults, Tenant further acknowledges that neither Landlord nor any agent, employee or representative of Landlord or any other person purporting to represent Landlord has made, and Tenant has not been induced by nor relied upon, any statement, warranty or representation, whether express or implied, as to the condition of the Existing FF&E. Landlord makes no representation as to the fitness of the Existing FF&E for any particular purposes. Tenant acknowledges that in making its decision to accept the Existing FF&E, it has relied on its own investigation of the Existing FF&E. In no event shall Landlord be obligated to maintain, replace, restore, and/or remove any of the Existing FF&E.

1.2.2       Tender of Possession. Landlord shall tender possession of the Premises to Tenant on the Effective Date.

1.2.3       Commencement Date Memorandum. Promptly after the Commencement Date, Landlord shall deliver to Tenant the Commencement Date Memorandum in the form attached hereto as Exhibit “D” with all blanks properly completed. Tenant shall, within ten (10) Business Days after receiving it, execute and deliver to Landlord the Commencement Date Memorandum. Tenant’s failure to execute and deliver to Landlord the Commencement Date Memorandum shall not affect any obligation of Tenant under this Lease. If Tenant does not timely execute and deliver the Commencement Date Memorandum to Landlord, Landlord and any prospective purchaser or encumbrancer may conclusively rely on the information contained in the unexecuted Commencement Date Memorandum which Landlord delivered to Tenant, provided that Landlord shall have sent Tenant a request in writing for the Commencement Date Memorandum at least one (1) time following the expiration of said period of ten (10) Business Days.

5

1.2.4       [Intentionally Deleted]

1.3         Right to Extend.

1.3.1       Exercise of Right to Extend. Landlord hereby grants to Tenant the right to extend the Term of the Lease (the “Right to Extend”) for two (2) additional periods of five (5) years each (each an “Extension Period”) immediately following the expiration of the Initial Lease Term or the first Extension Period, as applicable. Tenant may exercise the foregoing Right to Extend by giving written notice of such exercise to Landlord not more than twelve (12) months nor less than six (6) months prior to the expiration of the Initial Lease Term or the first Extension Period, as applicable (the “Right to Extend Period”), time being of the essence; provided that if there exists an uncured Event of Default by Tenant (as specified in Section 14.1) under this Lease at the time of exercise of the Right to Extend, such notice shall be void and of no force or effect. If the Right to Extend is timely exercised by Tenant and no Event of Default by Tenant exists at the time of the exercise of the Right to Extend, the monthly Base Rent shall be determined as set forth in Section 1.3.3 below. If Tenant does not exercise the first Right to Extend in a timely manner, both it and the second Right to Extend shall lapse and be of no further force or effect, time being of the essence. If Tenant exercises the first Right to Extend in a timely manner, but does not timely exercise the second Right to Extend, then the second Right to Extend shall lapse and be of no further force or effect, time being of the essence. Neither Landlord nor Tenant shall be required to perform any tenant improvement work in the Premises with respect to either Extension Period.

1.3.2       Personal to Tenant. The Right to Renew the Lease to Tenant by Section 1.3.1 is granted for the personal benefit of the Tenant named hereinabove only, and shall be exercisable only by said Tenant or by an Affiliate of Tenant referred to in Section 13.3. Said option may not be assigned or transferred by Tenant to, or exercised by, any assignee or subtenant, except as provided in Section 13.3.

1.3.3       Determination of Base Rent. The monthly Base Rent for the Premises during an Extension Period shall be determined on a full service gross basis. The monthly Base Rent shall be adjusted annually pursuant to the provisions of this Section 1.3.3. The monthly Base Rent for the first twelve (12) months of the Extension Period shall be an amount equal to ninety-five (95%) of the “fair market Monthly Base Rent’, as said term is defined and determined below, and thereafter the monthly Base Rent shall increase annually by three percent (3%).

Upon the written request by Tenant to Landlord received by Landlord no earlier one (1) month prior to the first day on which Tenant can exercise its Right to Extend, Landlord shall give Tenant written notice of Landlord’s good faith opinion of the fair market Monthly Base Rent for the Premises for the Extension Period. Thereafter, upon the written request of Tenant, Landlord and Tenant shall enter into good faith negotiations for thirty (30) days in an effort to reach agreement on the fair market monthly Base Rent for the Premises on a full service basis as of the commencement date of Extension Period, and the annual adjustments to the monthly Base Rent for the Premises after the first year of the Extension Period.

6

If Tenant timely exercises its Right to Extend and the parties did not reach agreement as to the fair market Monthly Base Rent in the manner set forth in the preceding paragraph, then the fair market Monthly Base Rent will be determined as follows:

Each party shall within ten (10) days after Tenant’s exercise of its Right to Extend select an Appraiser (as defined below) and the two (2) Appraisers shall promptly select a third Appraiser to review and consider each party’s position concerning the Extended Term Rental. Within ten (10) days after the selection of the third Appraiser, such Appraiser shall render its decision concerning the fair market Monthly Base Rent. Such Appraiser shall select either Landlord’s or Tenant’s position in its entirety without averaging or otherwise adjusting such value in any manner. The third Appraiser’s decision shall be binding upon the parties. Each party shall be responsible for the fees and costs of its Appraiser. The non-prevailing party shall be responsible for the fees and costs of the third Appraiser. Should either party fail to select an Appraiser within said ten (10) day period, the Appraiser selected by the other party shall determine the fair market Monthly Base Rent. The term “Appraiser” shall mean an impartial M.A.I. appraiser or commercial real estate broker licensed in the State of Arizona having at least ten (10) years of recent experience in acting as an appraiser or broker for office properties in the vicinity of the Premises. The third Appraiser shall have the added qualification that he or she shall not have represented either party or any of its affiliates in any capacity during the five (5) years prior to his/her selection as the third Appraiser. The “fair market Monthly Base Rent” for the Premises shall be what a willing new tenant would pay and a willing landlord would accept at arm’s length for premises comparable to the Premises determined with reference to comparable office space in the vicinity of the Premises of similar age, size, quality of construction, and specifications (excluding the value of any improvements to the Premises made at Tenant’s expense) for a term of similar duration to the Extension Period and taking into consideration that there will be no rent abatement, no improvement allowance, or other concessions, and considering the amount of the Operating Expenses and Taxes payable by Tenant.

1.3.4       Amendment to Lease. Prior to the commencement date of any applicable Extension Period, Landlord will prepare and forward to Tenant for execution an amendment to this Lease stating the fair market Monthly Base Rent applicable thereto, along with such other terms and conditions as may be pertinent and reasonably acceptable to Tenant.

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1.4         Right of First Offer.

(a)           Tenant shall have a one-time right of first offer to lease space immediately adjacent to the Premises (sharing one common wall) in the Building (“First Offer Space”), if such First Offer Space shall become “available for lease” and delivery to Tenant during the Term. Space shall not be deemed “available for lease” if the tenant under an expiring lease of such First Offer Space desires to renew or extend its lease (whether pursuant to a right or option or pursuant to new arrangements entered into with Landlord) or if any tenant of the Building exercises an option or right of first offer or refusal or other right to lease such space, which option has been granted (i) prior to the date of this Lease or (ii) in an Initial Lease (as defined below) as originally executed. The First Offer Space is vacant and un-leased as of the date of this Lease and shall not be deemed “available for lease” until the initial lease of such space (the “Initial Lease”) entered into after the date of this Lease expires and such space shall otherwise become “available for lease” within the meaning described above. Upon First Offer Space becoming available for lease, Landlord shall notify Tenant in writing of such availability prior to leasing the space to any other party, which notice shall mention the actual or estimated availability date of the available First Offer Space; provided, however, that Landlord shall have no obligation to deliver any such availability notice prior to the Commencement Date (and Tenant shall have no rights under this Section prior to the Commencement Date). For a period often (10) business days after receipt of such availability notice from Landlord, Tenant shall have a right to elect to lease such First Offer Space by delivery of written notice to Landlord within such 10-business day period (the “ROFO Exercise Notice”). If Tenant does not elect to lease the available First Offer Space by its timely delivery of the ROFO Exercise Notice, Landlord shall have the right to lease the First Offer Space or any portion thereof to any third party for a term and on such other conditions as Landlord may determine in Landlord’s sole discretion, and all rights of Tenant under this Section with respect to the First Offer Space or any portion thereof shall thereafter cease and forever terminate.

(b)           If Tenant timely exercises its right of first offer, Landlord and Tenant shall seek in good faith to agree on the term of the First Offer Space and the fair market rent for such First Offer Space on or before the thirtieth (30th) day following Tenant’s delivery of the ROFO Exercise Notice (the “ROFO Outside Agreement Date”). If Landlord and Tenant agree on the term of the First Offer Space and/or the fair market rent for the First Offer Space on or before the ROFO Outside Agreement Date, they shall promptly execute an amendment to this Lease confirming the term and the rent as so agreed for such First Offer Space, in accordance with subsection (c) below. If Landlord and Tenant are unable to agree on the term and fair market rent for the First Offer Space on or before the ROFO Outside Agreement Date, Landlord shall have the right to lease the First Offer Space or any portion thereof to any third party for a term and on such other conditions as Landlord may determine in Landlord’s sole discretion.

(c)           Upon Tenant’s election to lease any First Offer Space and the determination of the term and the fair market rent for such First Offer Space: (i) Landlord and Tenant shall promptly enter into an amendment of this Lease, adding such First Offer Space to the Premises on the terms and conditions set forth in this Lease as to the original Premises, except that: (1) the term with respect to the First Offer Space shall commence upon the date on which the First Offer Space is delivered to Tenant and shall be for the length of the term as determined in accordance with Section 1.4(b); (2) the Base Rent for the First Offer Space shall be the fair market rent as determined in accordance with Section 1.4(b); (3) Tenant’s Share with respect to the First Offer Space shall be determined by dividing the rentable square footage of such First Offer Space, as set forth in Landlord’s availability notice, by the rentable square footage of the Building; and, (4) all rights of Tenant under this Section with respect to any other portion of the First Offer Space shall thereafter cease and forever terminate.

8

(d)           Notwithstanding the foregoing, if at the time of Tenant’s exercise of the right of first offer there is an Event of Default by Tenant under this Lease or Tenant or an Affiliate of Tenant is not in occupancy of the entire Premises then, at Landlord’s election, Tenant shall have no right to lease the First Offer Space and the exercise of the right of first offer shall be null, void and of no effect. The rights contained in this Section shall be personal to CaliberCos Inc. and any Affiliate in occupancy of the Premises, and may only be exercised by CaliberCos Inc. or such Affiliate (and not any other assignee, sublessee or other transferee).

Article 2

RENTAL AND OTHER PAYMENTS

2.1         Base Rent. An amount equal to the Base Rent for the fourth (4^th) full calendar month of the Term, including the applicable rental tax, shall be, at Tenant’s option, either (i) paid to Landlord by Tenant upon the execution and delivery of this Lease by Landlord and Tenant or (ii) deducted from the Tenant Improvement Allowance, to be applied by Landlord against the first installment of Base Rent payable by Tenant when due. Thereafter, Base Rent shall be payable by Tenant to Landlord in monthly installments in advance on or before the first (1^st) day of each calendar month in lawful money of the United States, without offset or deduction in the amounts specified in the Base Rent schedule, including the applicable rental tax, except as otherwise expressly provided for in this Lease. Tenant shall make all Base Rent payments to the Property Manager at the address specified in Paragraph 22 of the Basic Terms or at such other place or in such other manner as Landlord may from time to time designate in writing. Tenant shall make all Base Rent payments, including the applicable rental tax, without Landlord’s previous demand, invoice or notice for payment. Base Rent for any partial calendar month at the commencement or expiration or termination of the Term shall be prorated based on the number of days in said calendar month.

2.2         Additional Rent. Article 3 of this Lease requires Tenant to pay certain Additional Rent pursuant to estimates Landlord delivers to Tenant. Tenant shall make all payments of estimated Additional Rent in accordance with Sections 3.3 and 3.4 without deduction or offset, except as expressly provided for in this Lease, and without Landlord’s previous demand, invoice, or notice of payment due. Commencing as of the Rent Commencement Date and continuing during the Term, Tenant shall pay to Landlord the Additional Rent, in monthly installments, together with the monthly installments of Base Rent. Landlord’s invoice for Additional Rent described in this Lease that is not estimated pursuant to Sections 3.3 and 3.4 shall be paid by Tenant within ten (10) days after receipt. Tenant shall make all Additional Rent payments to the same location and, except as described in the previous sentence, in the same manner as Tenant’s Base Rent payments. If applicable to the beginning or end of the Term, Tenant’s Share of Excess Expenses shall be apportioned on a per diem basis and Tenant shall pay to Landlord Tenant’s Share of Excess Expenses beginning as of the Rent Commencement Date, to and including the date of expiration or earlier termination of this Lease, within ten (10) days after receipt of an invoice.

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2.3         Delinquent Rental Payments. Subject to the provisions of Section 14.1, if Tenant does not pay any installment of Base Rent or any Additional Rent within five (5) Business Days after the date the payment is due, Tenant shall pay Landlord a late payment charge equal to five percent (5%) of the amount of the delinquent payment plus applicable rental taxes; provided, however, on the first occasion in any twelve-month period, the late payment charge shall accrue only after Landlord provides written notice to Tenant of such delinquent payment and Tenant fails to pay such delinquent payment within five (5) days after receipt of such written notice. Further, if Tenant does not pay any installment of Base Rent or any Additional Rent within thirty (30) days after the date the payment is due, Tenant shall pay Landlord interest on the delinquent payment calculated at the Interest Rate from the date when the payment was due to the date the payment is made. Landlord’s right to such compensation for the delinquency is in addition to all of Landlord’s rights and remedies under this Lease, at law or in equity.

2.4         Independent Obligations. Except as otherwise expressly provided in this Lease, Tenant’s covenant and obligation to pay Rent is independent from any of Landlord’s covenants, obligations, warranties, or representations in this Lease. Tenant shall pay Rent without any right of offset or deduction, except as expressly provided for in this Lease.

Article 3

OPERATING EXPENSES AND PROPERTY TAXES

3.1         Payment of Excess Expenses. It is the intent of Landlord and Tenant that this Lease shall be a Full Service Gross Lease with Tenant liable for payment to Landlord of the Base Rent specified in Item 9 of the Basic Terms, plus the increase in Excess Expenses (as defined in Exhibit “A” hereto) above and beyond the Operating Expenses for 2018. Tenant’s Share of said increase shall be as specified in Item 19 of the Basic Terms. Tenant shall pay, as Additional Rent and in the manner described in this Article 3, Tenant’s Share of Excess Expenses due and payable during any calendar year of the Term after the 2018 Base Year. Operating Expenses for the Base Year 2018 shall be “grossed up,” or adjusted, as if the Property were ninety-five percent (95%) occupied. If the Building falls below ninety-five percent (95%) occupancy, Landlord shall gross up Operating Expenses as if the Property were ninety-five percent (95%) occupied. Landlord shall prorate Tenant’s Share of Excess Expenses due and payable during the calendar year in which the Lease terminates on a per diem basis based on the number of days of the Term in such calendar year. Notwithstanding anything to the contrary in this Lease, in no event shall the actual Operating Expenses attributable to Controllable Expenses in any year after the Base Year exceed five percent (5.00%) of the prior year’s actual Controllable Expenses calculated on a cumulative and compounding basis for the purposes of calculating Tenant’s Share of Excess Expenses. As used herein the term “Controllable Expenses” means those items included within Operating Expenses, the cost of which are within Landlord’s reasonable control including, by way of example only, janitorial and landscaping services but excluding Uncontrollable Expenses. “Uncontrollable Expenses” include taxes and assessments (including Property Taxes), insurance costs, energy and utility costs (including, without limitation, electricity, sewer and water), trash removal costs, security costs, costs subject to increase by governmental requirements, assessments, fees and charges due under any CC&R’s, costs of compliance with laws or regulations, and extraordinary repairs and other items beyond Landlord’s reasonable control. There shall be no cap on Uncontrollable Expenses.

3.2         Estimation of Tenant’s Share of Excess Expenses. Landlord shall deliver to Tenant a written estimate of the following for each calendar year of the Term after the Base Year: (a) Operating Expenses, (b) Property Taxes, (c) Excess Expenses, (d) Tenant’s Share of Excess Expenses, and (e) the annual and monthly Additional Rent attributable to Tenant’s Share of Excess Expenses.

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3.3         Payment of Estimated Tenant’s Share of Excess Expenses. Tenant shall pay the amount Landlord estimates as Tenant’s Share of Excess Expenses under Section 3.2 for each calendar year of the Term after the Base Year in equal monthly installments (plus applicable rental taxes) together with monthly installments of Base Rent. If Landlord has not delivered the estimates to Tenant by the first day of January of the applicable calendar year, Tenant shall continue paying Tenant’s Share of Excess Expenses based on Landlord’s estimates for the previous calendar year. When Tenant receives Landlord’s estimates for the current calendar year, Tenant shall pay the estimated amount (less amounts Tenant paid to Landlord in accordance with the immediately preceding sentence) in equal monthly installments over the balance of such calendar year, with the number of installments being equal to the number of full calendar months remaining in such calendar year.

3.4         Confirmation of Tenant’s Share of Excess Expenses. Within one hundred twenty (120) days after the end of each calendar year in the Term after the Base Year, Landlord shall determine the actual amount of Excess Expenses and Tenant’s Share of Excess Expenses for the expired calendar year and shall deliver to Tenant a written statement of such amounts. If Tenant paid less than the amount of Tenant’s Share of Excess Expenses specified in the statement, Tenant shall pay the difference to Landlord as Additional Rent in the manner described in Section 2.2. If Tenant paid more than the amount of Tenant’s Share of Excess Expenses specified in the statement, Landlord shall, at Landlord’s option, either (a) refund the excess amount to Tenant, (b) credit the excess amount against Tenant’s next due monthly installment or installments of estimated Additional Rent, or (c) if during the last year of the Term, pay the excess amount to Tenant within ten (10) days after the expiration or termination date of the Term. No delay by Landlord in delivering any statements to Tenant of Tenant’s Share of Excess Expenses for any period during the Term shall constitute a waiver by Landlord of any of Landlord’s rights or Tenant’s obligations under this Section 3.4, or release Tenant from the obligation to pay to Landlord Tenant’s Share of Excess Expenses for any period during the Term.

3.5         Tenant’s Inspection and Review Rights. If Tenant disputes Landlord’s determination of the actual amount of Excess Expenses or Tenant’s Share of Excess Expenses for any calendar year, and provided that Tenant delivers to Landlord written notice of the dispute within ninety (90) days after Landlord’s delivery of the statement of such amount under Section 3.4, then Tenant (but not any subtenant or assignee) may at its sole cost and expense, upon prior written notice and during regular business hours at a time and place reasonably acceptable to Landlord (which may be the location where Landlord or the Property Manager maintains the applicable records) cause a representative of Tenant to review Landlord’s records relating to the disputed amounts. No less often than once each calendar year under the Lease, Landlord shall provide a statement reflecting estimated payments made by Tenant and actual Operating Expenses. Tenant shall have the right for ninety (90) days after receipt of such statement to cause the statement to be reviewed by a certified public accountant selected by Tenant at Tenant’s expense to review the statement. Landlord shall cooperate with such review and provide additional documents as Tenant may request. In the event the review shows (and Landlord, in good faith, agrees) that the amount paid by Tenant exceeded the actual payments required to be made by Tenant on account of Operating Expenses in the preceding calendar year, Landlord shall promptly pay to Tenant the overage. In addition, if the amount of overpayment is in excess of one hundred five (105%) of the Tenant’s Share of Operating Expenses payable pursuant to the Lease during the preceding calendar year, Landlord shall reimburse Tenant for the reasonable cost of the review.

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3.6         Personal Property Taxes. Tenant shall pay, prior to delinquency, all taxes charged against Tenant’s trade fixtures and other personal property in the Premises. Tenant shall use all reasonable efforts to have such trade fixtures and other personal property taxed separately from the Property. If any of Tenant’s trade fixtures or other personal property is taxed with the Property, Tenant shall pay to Landlord upon demand as Additional Rent, the taxes attributable to Tenant’s trade fixtures and other personal property.

3.7         Landlord’s Right to Contest Property Taxes. Landlord may, but shall not be obligated to, contest the amount or validity, in whole or in part, of any Property Taxes levied against the Property. Landlord shall exercise its commercially reasonable judgment in deciding whether or not to contest any Property Taxes. Landlord’s contest shall be at Landlord’s sole cost and expense except that if Property Taxes are reduced (or if a proposed increase is avoided or reduced) because of Landlord’s contest, Landlord may include in its computation of Property Taxes the actual and reasonable out-of-pocket costs and expenses Landlord incurred in connection with contesting the Property Taxes, including without limitation reasonable attorney’s fees, up to the amount of any Property Tax reduction Landlord realized from the contest or any Property Tax increase avoided or reduced in connection with the contest, as the case may be. Tenant shall not contest Property Taxes.

3.8         Adjustment for Variable Operating Expenses. Notwithstanding any language in this Article 3 to the contrary, if ninety-five percent (95%) or more of the rentable area of the Building is not occupied at all times during any calendar year after the Base Year pursuant to leases under which the terms have commenced for such calendar year, Landlord shall reasonably and equitably adjust its computation of Operating Expenses for that calendar year to obligate Tenant to pay all components of Operating Expenses that vary based on occupancy in an amount equal to the amount Tenant would have paid for such components of Operating Expenses if ninety-five percent of the rentable area of the Building had been occupied at all times during such calendar year pursuant to leases under which the terms have commenced for such calendar year. Landlord shall also equitably adjust Operating Expenses to account for any Operating Expense any tenant of the Building pays directly to a service provider.

3.9         Rent Tax. Tenant shall pay to Landlord all transaction privilege or sales taxes (“Rent Tax”) due in connection with this Lease or the payment of Rent hereunder. Such Rent Tax shall be paid by Tenant to Landlord in addition to and concurrently with the payment of any Rent paid by Tenant to Landlord under this Lease.

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Article 4

USE

4.1         Permitted Use. Tenant shall use and occupy the Premises for general office use in conducting Tenant’s business and for all uses related thereto. Tenant shall not use the Property or knowingly permit the Premises to be used in violation of any Laws or in any manner that would (a) violate any certificate of occupancy affecting the Property; (b) make void or voidable any insurance coverage for the Property in force on the Commencement Date or at any time thereafter during the Term; (c) cause injury or damage to the Property or to the person or property of any other tenant or person on the Property; (d) cause substantial diminution in the value or usefulness of all or any part of the Property (reasonable wear and tear and casualty excepted); or (e) constitute a public or private nuisance or waste. Tenant shall obtain and maintain in effect, at Tenant’s sole cost and expense, all permits and approvals required under the Laws for Tenant’s use of the Premises.

Subject to the terms of this Section, Tenant shall have the right to vacate or abandon all or a portion of the Premises prior to the expiration of the Term without Landlord’s prior written consent, so long as Tenant continues to pay Rent pursuant to this Lease. Notwithstanding the foregoing, if Tenant discontinues its business operations in the Premises for ninety (90) consecutive days (other than for closures which are necessitated (i) due to damage caused to the Premises by a casualty or a taking and/or (ii) by events of Force Majeure or (iii) any reconstruction, redevelopment or remodeling of the Premises for a period not to exceed sixty (60) consecutive calendar days (the “Go Dark Period”), Landlord shall have the option to terminate this Lease and recapture the Premises, upon giving the Tenant not less than thirty (30) days’ prior written notice of its decision to do so (“Go Dark Termination Notice”). If Landlord exercises its right to terminate this Lease as provided in this Section, then (a) this Lease shall terminate on the date (the “Termination Date”) that is thirty (30) days after the date of receipt by Tenant of the Go Dark Termination Notice, (b) Tenant’s obligation to pay Rent and perform any other obligations under this Lease shall continue until the Termination Date, (c) Tenant agrees it shall surrender the Premises to Landlord in the same condition that Tenant would have been required to if this Lease had terminated on the original Expiration Date of the Term, and (d) on the Termination Date, the parties hereto shall be released from any further liability and obligations under this Lease, excepting any liability or obligations accruing prior to the Termination Date.

4.2         Acceptance of Premises. Except as expressly provided in this Lease and except for the Warranty Terms, Tenant acknowledges that neither Landlord nor any agent, contractor or employee of Landlord has made any representation or warranty of any kind with respect to the Premises, the Building, or the Property, specifically including, but not limited to, any representation or warranty of suitability or fitness of the Premises, Building or the Property for Tenant’s use referred to in Section 4.1, or for any other particular purpose. Subject to the Warranty Terms and the other provisions of this Lease, Tenant shall accept the Premises, the Building and the Property in an “AS IS - WHERE IS” condition as of the Commencement Date of the Term.

4.3         Increased Insurance. Tenant shall not do or permit to be done on the Property or the Premises anything that will (a) increase the premium for any insurance policy Landlord carries covering the Property; (b) cause a cancellation of or be in conflict with any such insurance policy maintained by Landlord; (c) result in any insurance company’s refusal to issue or continue any such insurance maintained by Landlord in amounts satisfactory to Landlord; or (d) subject Landlord to any liability or responsibility for injury to any person or property by reason of Tenant’s business conducted on the Premises or any other use of the Property. Tenant shall, at Tenant’s sole cost and expense, comply with all rules, orders, regulations and requirements of insurers and of the American Insurance Association or any other organization performing a similar function arising out of Tenant’s use of the Premises. Tenant shall reimburse Landlord, as Additional Rent, for any additional premium charges for such policy or policies maintained by Landlord resulting directly from Tenant’s failure to comply with the provisions of this Section 4.3.

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4.4         Laws/Building Rules. This Lease is subject and subordinate to all applicable Laws. A copy of the current Building Rules is attached to this Lease as EXHIBIT “E” Landlord may amend the Building Rules from time to time, in Landlord’s reasonable discretion, by giving Tenant written notice thereof.

4.5         Common Area. Landlord grants Tenant the non-exclusive right, together with all other occupants of the Building and their agents, employees and invitees, to use the Common Area during the Term, subject to all Laws. Landlord may, at Landlord’s reasonable discretion, make changes to the Common Area. Landlord’s rights regarding the Common Area include, but are not limited to, the right (a) to restrain unauthorized persons from using the Common Area; (b) to place permanent or temporary kiosks, displays, carts or stands in the Common Area and to lease the same to tenants; (c) to temporarily close any portion of the Common Area (i) for repairs, improvements or Alterations, (ii) to discourage unauthorized use, (iii) to prevent dedication or prescriptive rights, or (iv) for any other reason Landlord deems appropriate in Landlord’s judgment; (d) to change the shape and size of the Common Area; (e) to add, eliminate or change the location of any improvements located in the Common Area and construct buildings or other structures in the Common Area; and (f) to impose and revise Building Rules concerning use of the Common Area, including any parking facilities comprising a portion of the Common Area. Landlord shall use commercially reasonable efforts to minimize any material adverse impact on Tenant’s use and enjoyment of the Premises by Landlord’s exercise of any of the foregoing rights.

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4.6         Signs. Landlord shall initially provide to Tenant at Landlord’s expense (a) one building standard tenant identification sign adjacent to the entry door of the Premises and (b) one standard listing on the lobby building directory that reads “CALIBER COMPANIES”. Tenant’s signs shall conform to Landlord’s sign criteria set forth on Exhibit “G”. Tenant shall be entitled to a building facade sign on west side of Building and on the east side of the Building in the locations circled on Exhibit “G” attached to this Lease (“Exterior Signage”) [still pending confirmation], said signage shall be subject to Landlord’s review and approval, and compliance with the City of Scottsdale signage regulations and the following terms and conditions: (i) Tenant shall be permitted to place only its trade name on the Exterior Signage. The cost of acquiring and installing the foregoing Exterior Signage panel shall be at Tenant’s sole cost and expense; (ii) notwithstanding anything to the contrary in this Lease, the right to place the Exterior Signage on the Building as herein provided shall constitute a revocable license to Tenant only, and such revocable license shall automatically terminate (a) upon the termination of this Lease pursuant to this Lease, or (b) if any portion of the Premises is not occupied and used by Tenant for its business operations for a period of sixty (60) days or more (other than as a result of Force Majeure events, casualty, or condemnation), (iii) when installing the Exterior Signage, absolutely no roof penetration shall be allowed and the method of attachment to the face of the Building shall be reasonably approved by Landlord and the Exterior Signage shall be installed in a manner that minimizes damage to the Building and in a way that minimizes interference with the Building’s existing engineering, window washing, or other maintenance functions, and must be in any event properly secured and installed so as not to be affected by high winds or other elements. The Exterior Signage shall be remain tit during evening hours, (iv) in no event shall the Exterior Signage adversely affect any of the mechanical, electrical, life-safety, structural, or other systems of the Building, (v) to the extent applicable, Tenant’s right of access to the roof of the Building for the installation and maintenance of the Exterior Signage is expressly subject to Tenant first providing written notice to Landlord, and Landlord reserves the right to require any persons accessing the roof to be accompanied by an engineer for the Building. Absent an emergency, any such access shall be limited to the normal business hours of the Building, (vi) Tenant, its agents, employees, and contractors, shall comply with all Building rules and regulations reasonably adopted from time to time by Landlord with respect to access to the roof or use of the areas of the Property outside of the Building, subject to the terms and conditions herein contained, (vii) any lighting and utility lines utilized by Tenant must first be reasonably approved by Landlord, provided that Tenant shall pay the reasonable cost thereof, and shall install a sub-meter at Tenant’s panel box in the Premises and pay the utility charges for the Exterior Signage, (viii) Tenant acknowledges that the Exterior Signage will be visible from the surrounding area and it is critical that the same be maintained in first-class condition and repair at all times. Accordingly, Tenant, at its sole cost and expense, shall maintain the Exterior Signage in good and safe, well-maintained condition and repair at all times, and shall promptly repair any damage to the roof, roof membrane, Building surface, or structural elements of the Building caused by Tenant or any employee, contractor, or agent of Tenant in the installation, replacement, repair, or maintenance by Tenant, or its employees, contractors, or agents, of the Exterior Signage. If Landlord reasonably determines that the Exterior Signage is not being properly maintained as required herein and Tenant fails to perform such maintenance sufficiently within ten (10) business days after written notice from Landlord (as same shall be extended so long as Tenant commences to cure within said ten (10) business day period and diligently prosecutes such cure to completion), then Landlord, without any further notice, shall have the right to take such actions as Landlord deems reasonably necessary to place the Exterior Signage (including, without limitation, lighting features) In first-class condition and repair, and Tenant shall pay Landlord, as Additional Rent, Landlord’s actual and reasonable out-of-pocket costs and expenses incurred pursuant to this subsection within thirty (30) days after a request from Landlord, (ix) Tenant shall immediately remove the Exterior Signage and all related improvements and mounting facilities upon termination of this Lease for any reason, or upon termination of Tenants license to place and maintain the Exterior Signage on the Building as provided in this Section, and shall promptly repair any damage to the Building or the Property resulting therefrom at Tenant’s expense. If Tenant fails to comply with its obligations hereunder after due notice and time to cure as required herein, Landlord will have the right to take such actions as Landlord deems necessary to remove the Exterior Signage and/or repair any damage to the Building or the Property resulting from the removal thereof, and Tenant shall pay Landlord, as Additional Rent, Landlord’s actual and reasonable out-of-pocket costs and expenses incurred in connection therewith within thirty (30) days after a request from Landlord, (x) Landlord shall have the right at all times to monitor any activities of Tenant, its employees, agents, or contractors, in replacing, maintaining, and repairing the Exterior Signage, and Tenant shall comply with all conditions and requirements reasonably imposed by Landlord with respect thereto. Notwithstanding any other provision in this Lease, Tenant agrees that the installation, replacement, maintenance, and repair of the Exterior Signage, and any equipment, facilities and utilities related thereto, shall be strictly at Tenant’s sole cost and risk. Tenant hereby waives and releases Landlord and its members, and the respective past or present employees, directors, and officers thereof for, from and against all claims for damage to, or loss of, any property, or injury, illness or death of or to any person, in, upon, or about the Building or the Property arising from the installation, replacement, maintenance, and repair and/or existence of the Exterior Signage. Tenant shall assume all risk of loss with respect to the Exterior Signage and shall be responsible for insuring the same. In addition, Landlord’s approval of any plans or specifications with respect to the Exterior Signage will not constitute a representation or warranty of any kind by Landlord, and the same must nevertheless comply with applicable laws and regulations and conform to sound engineering practices, and (xi) Tenant’s obligations hereunder shall survive termination of this Lease (collectively, the “Signage Conditions”). In addition to the Exterior Signage, Tenant shall have the right, at its sole cost and expense, to install vinyl signage on the interior door near break room. Except as otherwise set forth in this Section 4.6, Tenant shall not install or permit to be installed in the Premises or elsewhere in the interior of the Building, any other sign, decoration, or advertising material of any kind that is visible from the exterior of the Premises or from the exterior of the Building without Landlord’s prior written approval. Landlord may immediately remove, at Tenant’s sole cost and expense, any sign, decoration or advertising material that violates this Section 4.6. Upon the expiration or termination of this Lease, Tenant shall, at Tenant’s expense, promptly remove all signage on the exterior of the Building installed by Tenant. Tenant shall promptly repair any damage to the Building caused by such removal.

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Article 5

HAZARDOUS MATERIALS

5.1         Compliance with Hazardous Materials Laws. Tenant shall not cause any Hazardous Materials to be brought upon, kept, or used in the Premises or on the Property in a manner or for a purpose prohibited by, or that could result in liability under, any Hazardous Materials Law. Tenant, at its sole cost and expense, shall comply with all Hazardous Materials Laws relating to the presence, treatment, storage, transportation, disposal, release, or management of Hazardous Materials by Tenant, or by any employee, agent, consultant, or other person acting for or on behalf of Tenant (“Tenant Parties”) in, on, under or about the Property. Tenant shall promptly notify Landlord in writing of any and all Hazardous Materials Tenant (or any Tenant Party) brings upon, keeps, or uses in the Premises or on the Property (other than small quantities of office cleaning supplies or other office supplies that are customarily used by a tenant in the ordinary course of occupying a general office building). On or before the expiration or earlier termination of this Lease, Tenant, at its sole cost and expense, shall completely remove from the Property (regardless whether any Hazardous Materials Law requires removal), in compliance with all Hazardous Materials Laws, all Hazardous Materials that Tenant or any Tenant Party caused to be present in, on, under or about the Property. Tenant shall not take any remedial action in response to the presence of any Hazardous Materials in, on, under, or about the Property, nor enter into any settlement agreement, consent decree or other compromise with respect to any Claims relating to or in any way connected with Hazardous Materials present in, on, under, or about the Property as the result of any act or omission by Tenant or any Tenant Party, without first notifying Landlord of Tenant’s intention to do so and affording Landlord a reasonable opportunity to investigate, appear, intervene in, and otherwise assert and protect Landlord’s interest in the Property.

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5.2         Notice of Actions. Tenant shall notify Landlord immediately after receiving notice of any of the following actions affecting Landlord, Tenant or the Property that result from or in any way relate to use by Tenant or any Tenant Party of the Property: (a) any enforcement, clean-up, removal, or other governmental or regulatory action instituted, completed, or threatened under any Hazardous Materials Law; (b) any Claim made or threatened by any person relating to damage, contribution, liability, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; and (c) any report made by any person, including Tenant, to any environmental agency relating to any Hazardous Materials, including any complaints, notices, warnings or asserted violations. Tenant shall also deliver to Landlord, as promptly as possible, and in any event within five (5) Business Days, after Tenant first receives or sends the same, copies of all Claims, reports, complaints, notices, warnings or asserted violations relating in any way to the Premises or the use of the Premises by Tenant or any Tenant Party. Upon Landlord’s written request, and if Tenant is determined to be the responsible party, Tenant shall promptly deliver to Landlord documentation acceptable to Landlord reflecting the legal and proper disposal of all Hazardous Materials removed or to be removed from the Premises or the Property by Tenant or by any Tenant Party, or other person acting for or on behalf of Tenant. If applicable, all such documentation shall list Tenant or its agent as a responsible party and shall not attribute responsibility for any such Hazardous Materials to Landlord or to the Property Manager.

5.3         Disclosure and Warning Obligations. Tenant acknowledges and agrees that all reporting and warning obligations required under Hazardous Materials Laws resulting from or in any way relating to Tenant’s use of the Premises or the Property are Tenant’s sole responsibility, regardless whether the Hazardous Materials Laws permit or require Landlord to report or warn others regarding the presence of such Hazardous Materials.

5.4         Intentionally Deleted.

5.5         Indemnification. Tenant hereby releases all Landlord Parties from, and agrees to indemnify, defend (with local counsel reasonably acceptable to Landlord), protect and hold harmless Landlord and the Landlord Parties from and against, any and all Claims whatsoever arising from or resulting, directly or indirectly, from the presence, treatment, storage, transportation, disposal, release or management of Hazardous Materials in, on, under, upon or from the Premises or the Property resulting from Tenant’s use of the Premises or the Property after the Commencement Date. Tenant’s obligations under this Section 5.4 shall include, without limitation and whether foreseeable or unforeseeable, (a) the cost of any required or necessary repair, clean-up, detoxification or decontamination of the Property; (b) the cost of implementing any closure, remediation or other required action in connection therewith as stated above; (c) the value of any loss of use and any diminution in value of the Property resulting directly or indirectly from the presence, treatment, storage, use, transportation, disposal, release, or management of Hazardous Materials on the Property or the Premises by Tenant (or Tenant Parties); and (d) reasonable attorneys’ fees, consultants’ fees, experts’ fees and response costs incurred by Landlord as a result of Hazardous Materials on the Property or the Premises due to actions by Tenant or any Tenant Party. The obligations of Tenant under this Article 5 shall survive the expiration or earlier termination of this Lease.

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Landlord shall indemnify, defend, and hold Tenant harmless from all damages arising out of any damage or injury to any person or property occurring in, on or about the Premises, the Building the Common Areas or the Property arising from any acts or omissions of Landlord, its agents, employees, or invitees, including, but without limitation, any breach or default in the performance of any obligation on Landlord’s part to be performed under the terms of this Lease. Tenant shall indemnify, defend, and hold Landlord harmless from all damages arising out of any damage or injury to any person or property occurring in, on or about the Premises, the Building, the Common Areas, or the Property arising from any acts or omissions of Tenant, its agents, contractors, employees, or invitees, including, but without limitation, any breach or default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease. A party’s obligation under this paragraph to indemnify and hold the other party harmless shall be limited to the sum that exceeds the amount of insurance proceeds, if any, received by the party being indemnified.

Article 6

SERVICES

6.1         Landlord’s Obligations. Landlord will provide the following services, the costs of which are Operating Expenses:

6.1.1       Building Access. The Building shall be open to the public during Business Hours (as defined on EXHIBIT “A”).

6.1.2       Janitorial Service. Landlord shall provide janitorial service to the Premises as an Operating Expense as part of the janitorial service contracted for by Landlord for the rest of the Building.

6.1.3       Electrical Energy. Landlord shall supply electrical energy to the Premises for lighting and for operating office machines for general office use. Electrical energy will be sufficient for Tenant to operate its business and operate personal computers and other equipment of similar low electrical consumption, but will not be sufficient for lighting in excess of 3.5 watts per square foot installed or for electrical convenience outlets in excess of 4.0 watts per square foot installed. Tenant will not use any equipment requiring electrical energy in excess of the above standards without receiving Landlord’s prior written consent, which consent Landlord shall not unreasonably withhold, but Landlord may condition its consent on Tenant paying all costs of installing the equipment and Facilities necessary to furnish such excess energy and an amount equal to the average cost per unit of electricity for the Building applied to the excess use as reasonably determined either by an engineer selected by Landlord or by submeter installed at Tenant’s expense. Landlord shall replace all lighting bulbs, tubes, ballasts and starters within the Premises which will be included in Operating Expenses.

6.1.4       Heating, Ventilation and Air Conditioning. During Business Hours (excluding Sundays) heating, ventilation and air conditioning to the Premises sufficient to maintain, in Landlord’s reasonable judgment, comfortable temperatures in the Premises for a first class office building. During Sundays and other times, Landlord shall provide heat and air conditioning upon Tenant’s reasonable advance notice (not less than 24 hours). Tenant shall pay Landlord, as Additional Rent, for such extended service on an hourly basis at Landlord’s actual cost. Landlord shall provide air conditioning to the Premises based on standard lighting and general office use only.

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6.1.5       Water. Hot and cold water from standard building outlets for lavatory, restroom and drinking purposes.

6.1.6       Building Security. A nighttime security guard who will walk the Property three (3) times per night and drive the Property three (3) times per night.

6.2         Tenant’s Obligations. Tenant is solely responsible for paying directly to the applicable utility companies, prior to delinquency, all separately metered or separately charged utilities, if any, to the Premises or to Tenant. Such separately metered or charged amounts are not Operating Expenses. Except as provided in Section 6.1 and Section 17.1, Tenant shall also obtain and pay for all other utilities and services Tenant requires with respect to the Premises (including, but not limited to, hook-up and connection charges). Tenant shall select its own telephone/data service and shall be responsible for the costs of this service as well as any installation costs.

6.3         Other Provisions Relating to Services. No interruption in, or temporary stoppage of, any of the services described in this Article 6 shall be deemed to be an eviction or disturbance of Tenant’s use and possession of the Premises, nor shall any interruption or stoppage of any such services relieve Tenant from any obligation described in this Lease, render Landlord liable for damages, or entitle Tenant to any Rent abatement except as otherwise provided in this Section 6.3. Except as otherwise expressly provided in this Article 6, Landlord shall not be required to provide any heat, air conditioning, electricity, or other service in excess of that permitted by voluntary or involuntary governmental guidelines or other Laws. Landlord shall have the exclusive right and discretion to select the provider of any utility or service to the Property and to determine whether the Premises or any other portion of the Property may or will be separately metered or separately supplied. Landlord reserves the right, from time to time, to make reasonable and non-discriminatory modifications to the above standards for utilities and services. In the event that an interruption in services described in this Section 6 is caused by Landlord, its employees or the Property Manager and renders the use of the Premises by Tenant impracticable and such condition continues for a period of five (5) business days or more, all Base Rent (but not Operating Expenses) shall be abated on a per diem basis for the period in excess of five (5) business days that the use of the Premises by Tenant is impracticable. In all events of interruption in, or temporary stoppage of, any of the services described in this Article 6, Landlord shall use good faith commercially reasonable efforts to restore such affected service(s) as soon as practicable.

6.4         Tenant Devices. Tenant shall not, without Landlord’s prior written consent, use any apparatus or device in or about the Premises that causes substantial noise, odor or vibration. Tenant shall not connect any apparatus or device to electrical current or water except through the electrical and water outlets Landlord installs in the Premises.

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Article 7

MAINTENANCE AND REPAIR

7.1         Landlord’s Obligations. Except as otherwise provided in this Lease, Landlord shall repair and maintain the following in good order, condition and repair: (a) the foundations, exterior walls and roof of the Building; and (b) the electrical, mechanical, plumbing, heating and air conditioning systems, facilities and components located in the Building serving all tenants of the Building. Landlord shall also maintain and repair the Common Area and the windows, doors, plate glass and the exterior surfaces of walls that are adjacent to the Common Area. Landlord’s repair and maintenance costs incurred pursuant to this Section 7.1 shall be Operating Expenses. Except as expressly provided in this Lease, neither Base Rent nor Additional Rent shall be reduced, nor shall Landlord be liable, for loss or injury to or interference with Tenant’s property, profits or business arising from or in connection with Landlord’s performance or nonperformance of its obligations under this Section 7.1.

7.2         Tenant’s Obligations.

7.2.1       Maintenance of Premises. Except as otherwise expressly provided in this Lease, Landlord shall not be required to furnish any services or facilities, or to make any repairs or Alterations, in, about or to the Premises or the Property. Except as described in Section 7.1, Tenant, at Tenant’s sole cost and expense, shall keep and maintain the Premises in good order, condition, and repair, reasonable wear and tear and damage from insured casualties excepted. Tenant shall keep the Premises in a clean and sanitary condition and shall not commit any nuisance or waste in, on, or about the Premises or the Property. If Tenant damages or injures the Common Area or any part of the Building or the Property other than the Premises, Landlord shall repair the damage and Tenant shall reimburse Landlord in full upon demand for all actual reasonable and uninsured out-of-pocket costs and expenses incurred by Landlord in connection with the repair as Additional Rent. Tenant’s repairs shall be substantially similar in quality and workmanship to the original work and Tenant shall make the repairs in accordance with all Laws.

7.2.2       Alterations Required by Laws. If any governmental authority requires any Alteration to the Building or the Premises as a result of Tenant’s specific use of the Premises or as a result of any Alteration to the Premises made by or on behalf of Tenant, or if Tenant’s specific use of the Premises subjects Landlord or the Property to any obligation under any Laws, Tenant shall pay upon demand the reasonable cost of all such Alterations or the reasonable cost of compliance, as the case may be. If any such Alterations are Structural Alterations, Landlord shall make the Structural Alterations, provided that Landlord may first require Tenant to deposit with Landlord an amount sufficient to pay the cost of the Structural Alterations (including, without limitation, reasonable overhead, permit fees, engineers’ fees and administrative costs). If the Alterations are not Structural Alterations, Tenant shall make the Alterations at Tenant’s sole cost and expense in accordance with Article 8.

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Article 8

CHANGES AND ALTERATIONS

8.1         Landlord’s Approval. Tenant shall not make any Structural Alterations to the Premises or any other Alterations without Landlord’s prior written consent, which consent shall not be unreasonably withheld or delayed except in the event that the cost of any such Alterations equals or exceeds $15,000, in which event such consent may be conditioned or withheld in Landlord’s sole discretion. Together with any request for Landlord’s consent, Tenant shall deliver to Landlord plans and specifications for the Alterations and the names and addresses of all prospective contractors for the Alterations. At the time Tenant requests Landlord’s consent to Tenant’s Alterations, Tenant shall be responsible for obtaining Landlord’s decision whether or not Landlord’s consent to the Alterations is conditioned upon Tenant removing such Alterations at Tenant’s expense upon the expiration or sooner termination of this Lease. Landlord reserves the right to require Tenant to remove such Alterations at Tenant’s expense upon the expiration or termination of this Lease if Tenant does not obtain Landlord’s written determination regarding the removal of the Alterations at the time Landlord consents to the Alterations. If Landlord approves the proposed Alterations, before commencing the Alterations and before the delivery (or the acceptance of delivery) of any materials to be used in connection with the Alterations, Tenant shall deliver to Landlord copies of all contracts, proof of insurance required by Section 8.2, copies of any contractor safety programs, copies of all necessary permits and licenses and such other information relating to the Alterations as Landlord reasonably requests. Tenant shall not commence the Alterations until Landlord has delivered to Tenant Landlord’s written approval of the foregoing deliveries. Tenant shall construct all approved Alterations, or shall cause all approved Alterations to be constructed (a) promptly by a contractor Landlord has approved in writing in Landlord’s reasonable discretion, (b) in a good and workmanlike manner, (c) in compliance with all Laws, (d) in accordance with all orders, rules and regulations of the Board of Fire Underwriters having jurisdiction over the Premises and any other body exercising similar functions, and (e) in full compliance with all of Landlord’s rules and regulations applicable to third party contractors, subcontractors and suppliers performing work at the Property. Notwithstanding anything contained in this Section 8.1 to the contrary, Landlord’s prior written consent shall not be required for decorative Alterations, painting, carpeting, and installation of modular office units; provided, however, Landlord reserves the right to require that Tenant restore the Premises and the Property to substantially the same condition prior to the work at Tenant’s expense.

8.2         Tenant’s Responsibility for Costs and Insurance. Tenant shall pay all costs and expenses incurred in making all Alterations, including, without limitation, a reasonable charge for Landlord’s review, inspection and engineering time, and for any painting, restoring or repairing the Premises or the Building that is necessary as a result of the Alterations. Prior to commencing the Alterations, Tenant shall deliver the following to Landlord in form and amount reasonably satisfactory to Landlord: (a) demolition (if applicable) and payment and performance bonds unless other arrangements acceptable to Landlord have been approved in writing by Landlord in Landlord’s sole discretion, (b) a builder’s “all risk” insurance policy in an amount at least equal to the full replacement value of the Building (excluding the Land, foundation, grading costs and excavation costs), and (c) evidence that Tenant and each of Tenant’s contractors have in force liability insurance insuring against construction related risks in at least the form, amounts and coverages required of Tenant under Article 10. The insurance policies described in clauses (b) and (c) of this Section 8.2 shall name Landlord, Landlord’s lender (if any) and Property Manager as additional insureds.

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8.3         Construction Obligations and Ownership. Landlord may inspect the construction of the Alterations. After completing the Alterations, Tenant shall furnish Landlord with full, final and unconditional lien waivers and receipted bills covering all labor and materials expended and used in constructing the Alterations. Tenant shall remove at Tenant’s expense any Alterations Tenant constructs or causes to be constructed in violation of this Article 8 within ten (10) days after Landlord’s written request and in any event prior to the expiration or earlier termination of this Lease. All Alterations Tenant makes or installs in the Premises (including all telephone, computer and other wiring and cabling located within the walls or ceiling of and outside the Premises, but excluding Tenant’s movable trade fixtures, furniture and equipment) shall become the property of Landlord upon installation, subject to Tenant’s obligation to remove the cabling installed in or about the Premises by Tenant if such removal is required pursuant to this Section 8.3. Unless Landlord conditions Landlord’s consent to the construction of the Alterations to the removal thereof by Tenant upon the expiration or termination of the Term, Tenant shall surrender the Alterations to Landlord upon the expiration or earlier termination of this Lease at no cost to Landlord. Landlord agrees that Tenant shall not be required to remove any of the Tenant Improvements installed as of the Commencement Date, except that if required by the ordinances or regulations of the Scottsdale Fire Department, the City of Scottsdale or other Applicable Laws. Tenant shall, at Tenant’s expense, remove all above grid electronic, fiber, phone and data cabling and related equipment, including any “open air” cabling, that has been installed in the Building by or for the benefit of Tenant, or by any prior Tenant or occupant (collectively, the “Cabling”), at any time when such removal is required by the Scottsdale Fire Department, by the ordinances or regulations of the City of Scottsdale, or by the National Electric Code, or other Applicable Laws. In any event, such removal shall be completed by Tenant within five (5) business days after the expiration or earlier termination of this Lease, regardless of whether or not such removal has previously been required by the foregoing Applicable Laws; provided, however, that, except for the “open air Cabling,” Tenant shall not remove the Cabling if Tenant receives a written notice from Landlord at least fifteen (15) days prior to the expiration or earlier termination of the Lease authorizing the Cabling to remain in place, in which event the Cabling (except the “open air Cabling”) shall be surrendered by Tenant with the Building and the Property and shall become the property of Landlord upon the expiration or earlier termination of the Lease.

8.4         Liens. Tenant shall keep the Property free from any mechanics’, materialmens’, designers’ or other liens arising out of any work performed, materials furnished or obligations incurred by or for Tenant or any person or entity claiming by, through or under Tenant. Tenant shall notify Landlord in writing twenty (20) days prior to commencing any Alterations that require Landlord’s prior approval in order to provide Landlord the opportunity to record and post notices of non-responsibility or such other protective notices available to Landlord under the Laws. If any such liens are filed and Tenant does not release the same of record or provide Landlord with a bond or other surety satisfactory to Landlord within fifteen (15) days after such filing, protecting Landlord and the Properly against such liens, Landlord may, without waiving its rights and remedies based upon such breach by Tenant and without releasing Tenant from any obligation under this Lease, cause such liens to be released by any lawful means Landlord deems proper, including, but not limited to, paying the claim giving rise to the lien or posting security to cause the discharge of the lien, provided Landlord has informed Tenant of its intent to release such lien and to coordinate efforts with the Tenant. In such event, Tenant shall reimburse Landlord upon demand, as Additional Rent, for all actual and reasonable amounts Landlord pays, including, without limitation, reasonable attorneys’ fees and costs, in removing any such liens.

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Article 9

RIGHTS RESERVED BY LANDLORD

9.1         Landlord’s Entry. Landlord and its authorized representatives may at all reasonable times and upon reasonable prior written notice to Tenant, no less than 24 hours, enter the Premises: (a) to inspect the Premises; (b) to show the Premises to prospective purchasers, mortgagees and tenants; (c) to post notices of non-responsibility or other protective notices available under the Laws; or (d) to exercise and perform Landlord’s rights and obligations under this Lease. Landlord may in the event of an emergency enter the Premises without prior notice to Tenant. Landlord’s entry into the Premises shall not be construed as a forcible or unlawful entry into, or detainer of, the Premises or as an eviction of Tenant from all or any part of the Premises. Tenant shall also permit Landlord (or its designees) to erect, install, use, maintain, replace and repair pipes, cables, conduits, plumbing and vents, and telephone, electric and other wires or other items, in, to and through the Premises if Landlord reasonably determines that such activities are necessary or appropriate to properly operate and maintain the Building. With respect to the foregoing sentence, Landlord shall use commercially reasonable efforts to minimize any adverse impact on Tenant’s use and enjoyment of the Premises from the exercise by Landlord of any such rights.

9.2         Control of Property. Landlord reserves all rights respecting the Property, the Building, and the Premises not specifically granted to Tenant by this Lease, including, without limitation, the right: (a) to change the name or street address of the Building; (b) to designate and approve all types of signs, window coverings, internal lighting and other aspects of the Premises and its contents that may be visible from the exterior of the Premises; (c) to grant any party the exclusive right to conduct any business or render any service in the Building, provided such exclusive right to conduct any business or render any service in the Building does not prohibit Tenant from continuing any permitted use which Tenant is then conducting on the Premises; (d) to prohibit Tenant from installing vending or dispensing machines of any kind in or about the Premises other than those Tenant installs in the Premises solely for use by Tenant’s employees; (e) to close the Building after Business Hours, except that Tenant and its employees and invitees may have access to the Premises after Business Hours in accordance with such rules and regulations as Landlord may prescribe from time to time for security purposes; (f) to install, operate and maintain security systems that monitor, by closed circuit television or otherwise, all persons entering or leaving the Building; (g) to install and maintain pipes, ducts, conduits, wires and structural elements in the Premises that serve other parts or other tenants of the Building in accordance with Section 9.1; and (h) to retain and receive master keys or pass keys to the Premises and all doors in the Premises, except for secured areas and vaults. Notwithstanding the foregoing, or the provision of security services by Landlord pursuant to Section 6.1.6, or any other security-related services by Landlord, Landlord shall not be responsible for the security of persons or property on the Property and Landlord is not and shall not be liable in any way whatsoever for any breach of security that is not solely and directly caused by the intentional misconduct of Landlord, its agents or employees.

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9.3         Right to Cure. If Tenant defaults in the performance of any obligation of Tenant under this Lease, Landlord may, but is not obligated to, perform any such obligation on Tenant’s part without waiving any rights based upon such default and without releasing Tenant from any obligations hereunder. Tenant shall pay to Landlord, within twenty (20) days after delivery by Landlord to Tenant of statements therefore, an amount equal to all expenditures reasonably made and obligations incurred by Landlord in remedying any defaults by Tenant. Any such amount not paid by Tenant within such period shall bear interest at the Interest Rate until paid. Said obligations of Tenant shall survive the termination or expiration of this Lease.

Article 10

INSURANCE

10.1       Tenant’s Insurance Obligations. Tenant shall at all times during the Term, at Tenant’s sole cost and expense, maintain the insurance described in this Section 10.1.

10.1.1     Liability Insurance. Commercial general liability insurance (providing coverage at least as broad as the current ISO form) with respect to the Premises and Tenant’s activities in the Premises and upon and about the Property, on an “occurrence” basis, having a combined single limit for both bodily injury and property damage in an amount not less than $2,000,000. Such insurance shall include specific coverage provisions or endorsements (a) for broad form contractual liability insurance insuring Tenant’s obligations under this Lease, including, but not limited to, Tenant’s contractual liability referred to in Section 10.3; (b) naming Landlord and the Property Manager as additional insureds by an “Additional Insured - Managers or Lessors of Premises” endorsement (or equivalent coverage or endorsement); (c) waiving the insurer’s subrogation rights against all Landlord Parties; (d) providing Landlord with at least thirty (30) days prior written notice of modification, cancellation or expiration of such insurance; and (e) expressly stating that Tenant’s insurance shall be provided on a primary basis and will not contribute with any insurance Landlord maintains.

10.1.2     Property Insurance. Property insurance providing coverage at least as broad as the current ISO Special Form (“all-risks”) policy in an amount not less than the full insurable replacement cost of all of Tenant’s furniture, trade fixtures, equipment, and other personal property within the Premises and including business income insurance covering at least twelve (12) months loss of income from Tenant’s business in the Premises.

10.1.3     Other Insurance. Tenant shall obtain and maintain in effect any other insurance reasonably required by a lender having or acquiring a mortgage on the Property or by any Laws from time to time in effect, provided that such insurance coverage is generally required of tenants in similar space in similar office buildings in the area in which the Premises are located.

10.1.4     Miscellaneous Insurance Provisions. Subject to the provisions of Section 10.1.3, all of Tenant’s insurance shall be written by companies rated at least “Best A-VIN” and otherwise reasonably satisfactory to Landlord. Tenant shall deliver a certificate of insurance, (a) on or before the Commencement Date, (b) not later than thirty (30) days prior to the expiration of any current policy or certificate, and (c) at such other times as Landlord may reasonably request. Tenant shall deliver an ACORD Form 27 certificate and will attach or cause to be attached to the certificate copies of the endorsements this Section 10.1 requires (including specifically, but without limitation, the Loss Payable endorsement). Tenant’s insurance shall permit releases of liability and provide for waiver of subrogation as provided in Section 10.1.5.

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10.1.5     Tenant’s Waiver and Release of Claims and Subrogation. To the extent not prohibited by the Laws, Tenant, on behalf of itself and its insurers, hereby waives, releases and discharges the Landlord Parties from all Claims arising out of damage to or destruction of the Property, the Premises, or Tenant’s trade fixtures, other personal property or business, and any loss of use or business interruption, occasioned by any fire or other casualty or occurrence whatsoever (whether similar or dissimilar), regardless whether any such Claim results from the negligence or fault of any Landlord Party or otherwise, to the extent covered by Tenant’s insurance coverage or self-insurance by Tenant in the event of any such Claim. Tenant’s trade fixtures, other personal property and all other property in Tenant’s care, custody or control, shall be located at the Property at Tenant’s sole risk. Landlord shall not be liable for any loss or damage to any such property of Tenant, or for any theft, misappropriation or loss of such property of Tenant, except for damage, theft, misrepresentations, or loss resulting solely from the gross negligence or intentional misconduct of Landlord or any other Landlord Parties. Tenant is solely responsible for obtaining and maintaining in effect all such insurance that may be necessary to protect Tenant, its employees and invitees against any injury, loss, or damage to persons or property occurring in or about the Premises or at the Property, including, without limitation, any loss of business or income from any casualty or other occurrence at the Property.

10.1.6     No Limitation. Landlord’s establishment of minimum insurance requirements is not a representation by Landlord that such limits are sufficient and such minimum requirements shall not limit Tenant’s liability under this Lease in any manner.

10.2       Landlord’s Insurance Obligations. Except for optional coverages and endorsements referred to in Section 10.2.1, Landlord shall at all times during the Term maintain the insurance described in this Section 10.2. All premiums and other costs and expenses Landlord incurs in connection with maintaining such insurance shall be Operating Expenses.

10.2.1     Property Insurance. Direct physical loss special form property insurance on the Building and the improvements thereto in an amount not less than the full insurable replacement cost of the Building and the improvements thereto (less foundation, grading and excavation costs). Landlord may, at its option, obtain such additional property insurance coverages or endorsements that Landlord deems appropriate or necessary, or that may be required by any mortgage lender, including, without limitation, insurance covering foundation, grading, excavation and debris removal costs; loss of business income and rents insurance for a period of one year; earthquake insurance; flood insurance; terrorism insurance; and other coverages that Landlord deems necessary or that may be required by a mortgage lender. Landlord may maintain such insurance in whole or in part under blanket policies. Such insurance shall not cover or be applicable to any property of Tenant within the Premises or otherwise located at the Property. The proceeds of any property insurance maintained by Landlord shall be payable solely to Landlord and Tenant shall have no right or interest therein.

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10.2.2     Liability Insurance. Commercial general liability insurance against claims for bodily injury, personal injury, and property damage occurring at the Property in such amounts as Landlord deems necessary or appropriate. Such liability insurance shall protect only Landlord and, at Landlord’s option, Landlord’s lender and some or all of the Landlord Parties, and shall not replace or supplement the public liability insurance this Lease obligates Tenant to carry.

10.2.3     Landlord’s Waiver and Release of Claims and Subrogation. To the extent not expressly prohibited by the Laws, Landlord, on its own behalf and on behalf of its insurers, waives, releases and discharges Tenant from all claims or demands whatsoever arising out of damage to or destruction of the Property, or loss of use of the Property, occasioned by fire or other casualty, regardless whether any such claim or demand results from the negligence or fault of Tenant, but only to the extent the damage, destruction or loss is covered by Landlord’s property insurance. Landlord’s policy or policies of property insurance shall permit releases of liability and shall provide for waiver of subrogation as provided in this Section 10.2.3.

10.3       Indemnification of the Parties. Subject to the provisions of Sections 6.4 and 7.1 hereof, in addition to the other waivers by Tenant described in this Lease and to the extent not expressly prohibited by Law, Landlord and the other Landlord Parties shall not be liable to Tenant, and Tenant hereby waives the liability of Landlord, provided the same are not caused by the gross negligence or willful misconduct of the Landlord, or Landlord’s agents or business invitees, any and all Claims against Landlord and the other Landlord Parties for any damage to Tenant’s trade fixtures, other personal property or business, and any loss of use or income or business interruption, resulting directly or indirectly from (a) any existing or future condition, defect, matter or thing in the Premises or on the Property, (b) any equipment or appurtenance becoming out of repair, (c) any occurrence, act or omission of Landlord, or any Landlord Party, Tenant, any Tenant Party, or any other tenant or occupant of the Building or any other person. Subject to the provisions of Sections 6.4 and 7.2 hereof, in addition to the other waivers of Landlord described in this Lease and to the extent not expressly prohibited by Law, Tenant and the other Tenant Parties shall not be liable for any occurrence, act, or omission, and Landlord hereby waives such liability, any and all Claims against Tenant and the other Tenant Parties for any damage to Landlord’s trade fixtures, other personal property or business, and any loss of use or income or business interruption, resulting directly or indirectly from (a) any existing or future condition, defect, matter or thing in the Premises or on the Property, (b) any equipment or appurtenance becoming out of repair, (c) any occurrence, act or omission of any Tenant Party, any other tenant or occupant of the Building or any other person. This Section 10.3 applies especially, but not exclusively, to damage caused by the flooding of the Building or the Premises by refrigerators, sprinkling devices, air conditioning apparatus, water, snow, frost, steam, excessive heat or cold, falling plaster, broken glass, sewage, gas, odors, noise or the bursting or leaking of pipes or plumbing fixtures. The waivers described in this Section 10.3 apply regardless whether any such damage results from an act of God, an act or omission of other tenants or occupants of the Building or an act or omission of any Landlord Parties or any other person.

10.4       Tenant’s Failure to Insure. Notwithstanding any contrary language in this Lease and any notice and cure rights this Lease provides Tenant, if Tenant fails to provide Landlord with evidence of insurance as required under Section 10.1.4, Landlord may assume that Tenant is not maintaining the insurance Section 10.1 requires Tenant to maintain and Landlord may, but shall not be obligated to, after providing written notice to Tenant and giving Tenant one (1) business day to obtain and/or provide proof of insurance, obtain such insurance for Landlord’s benefit. In such event, Tenant shall pay to Landlord, as Additional Rent, all actual and reasonable out-of-pocket costs and expenses Landlord incurs in obtaining such insurance. Landlord’s exercise of its rights under this Section 10.4 shall not relieve Tenant from any default under this Lease.

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Article 11

DAMAGE OR DESTRUCTION

11.1       Tenantable Within 135 Days. Except as provided in Section 11.3, if fire or other casualty renders the whole or any material part of the Building or the Premises untenantable and Landlord determines (in Landlord’s reasonable judgment) that Landlord can make the Building and the Premises tenantable within one hundred thirty-five (135) days after the date of the casualty, then Landlord shall notify Tenant in writing that Landlord will repair and restore the Building and the Premises to as near its condition prior to the casualty as is reasonably possible within the period of one hundred thirty-five (135) days (subject to Tenant Delay and Force Majeure). Landlord shall deliver such notice to Tenant within thirty (30) days after the date of the casualty.

11.2       Not Tenantable Within 135 Days. If fire or other casualty renders the whole or any material part of the Building or the Premises un-tenantable and Landlord determines (in Landlord’s reasonable judgment) that Landlord cannot make the Building and the Premises tenantable within one hundred thirty-five (135) days after the date of the casualty, then Landlord shall so notify Tenant in writing within thirty (30) days after the date of the casualty and Landlord may, in such notice, terminate this Lease effective on the date that is thirty (30) days after the date of Landlord’s notice. If the Building or the Premises are untenantable and Landlord determines in its reasonable judgment that Landlord cannot make the Building and the Premises tenantable within one hundred thirty-five (135) days after the date of the casualty, and Landlord does not terminate this Lease as provided in this Section 11.2, Tenant may terminate this Lease by giving written notice of termination to Landlord within thirty (30) days after the date of Landlord’s notice, which termination shall be effective thirty (30) days after the date of Tenant’s notice.

11.3       Building Substantially Damaged. If the Building is damaged or destroyed by fire or other casualty (regardless whether the Premises is affected) and either (a) less than fifteen (15) months remain in the Term; or (b) the damage reduces the value of the improvements on the Property by more than fifty percent (50%) (as Landlord reasonably determines value before and after the casualty), then regardless whether Landlord determines (in Landlord’s reasonable judgment) that Landlord can make the Building tenantable within one hundred thirty-five (135) days after the date of the casualty, either Landlord or Tenant may, at their individual option, by giving written notice to the other party within thirty (30) days after the casualty, terminate this Lease effective on the date thirty (30) days after the date of the termination notice by Landlord or Tenant whichever is later.

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11.4       Insufficient Proceeds. Notwithstanding any contrary language in this Article 11, if Landlord does not receive sufficient insurance proceeds (excluding the amount of any policy deductible) to repair all damage to the Premises or the Building caused by fire or other casualty, or if Landlord’s lender does not allow Landlord to use sufficient insurance proceeds to repair all such damage, then Landlord may, at Landlord’s option, by giving Tenant written notice within thirty (30) days after the casualty, terminate this Lease effective on the date thirty (30) days after the date of Landlord’s notice.

11.5       Landlord’s Repair; Rent Abatement. If this Lease is not terminated under Sections 11.1 through 11.4 following a fire or other casualty, then Landlord shall repair and restore the Premises and the Building to as near their condition prior to the fire or other casualty as is reasonably possible within 180 days from the date of the casualty (subject to Tenant Delay and Force Majeure) and Base Rent and Tenant’s Share of Excess Expenses and all other Additional Rent (if applicable) for the period during which the Building or the Premises are un-tenantable shall abate pro rata (based upon the rentable area of the un-tenantable portion of the Premises as compared with the rentable area of the entire Premises). In no event shall Landlord be obligated to repair or restore any Alterations or Tenant Improvements that are not covered by Landlord’s insurance, any special equipment or improvements installed by Tenant, any personal property or other property of Tenant. Landlord shall, if necessary, equitably adjust Tenant’s Share of Excess Expenses Percentage to account for any reduction in the rentable area of the Premises or Building resulting from a casualty. Notwithstanding the foregoing or any contrary language in Section 11.6, Tenant shall continue paying Rent without any right of abatement if Tenant’s gross negligence or intentional misconduct causes or contributes to any damage to the Premises or the Property.

11.6       Rent Apportionment Upon Termination. If either Landlord or Tenant terminates this Lease pursuant to this Article 11, Landlord shall apportion Base Rent and Tenant’s Share of Excess Expenses on a per diem basis and Tenant shall pay the Base Rent and Tenant’s Share of Excess Expenses (a) to the date of the fire or other casualty if the casualty renders the Premises completely untenantable or (b) if the event does not render the Premises completely un-tenantable, to the effective date of such termination (provided that if a portion of the Premises is rendered un-tenantable, but the remaining portion is tenantable, then, except as provided in Section 11.5, Tenant’s obligation to pay Base Rent and Tenant’s Share of Excess Expenses shall be abated pro rata based upon the rentable area of the un-tenantable portion of the Premises divided by the rentable area of the entire Premises from the date of the casualty and Tenant shall pay the unabated portion of the Rent to the date of such termination on the portion terminated).

Article 12

EMINENT DOMAIN

12.1       Termination of Lease. If a Condemning Authority desires to effect a Taking of all or any material part of the Property, Landlord shall notify Tenant and Landlord and Tenant shall reasonably determine whether the Taking will render the Premises unsuitable for Tenant’s intended purposes. If Landlord and Tenant conclude that the Taking will render the Premises unsuitable for Tenant’s Intended purposes, Landlord and Tenant shall document such determination and this Lease shall terminate as of the date the Condemning Authority takes possession of the portion of the Property taken. Tenant shall pay Rent to the date of termination. If a Condemning Authority takes all or any material part of the Building or if a Taking reduces the value of the Property by fifty percent (50%) or more (as reasonably determined by Landlord), regardless whether the Premises is affected, then Landlord, at Landlord’s option, by giving Tenant written notice prior to the date the Condemning Authority takes possession of the portion of the Property taken, may terminate this Lease effective on the date the Condemning Authority takes possession of the portion of the Property taken.

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12.2       Landlord’s Repair Obligations. If this Lease is not terminated with respect to the entire Premises under Section 12.1 and the Taking includes a portion of the Premises, this Lease shall automatically terminate as to the portion of the Premises taken as of the date the Condemning Authority takes possession of the portion taken and Landlord shall, at its sole cost and expense, restore the remaining portion of the Premises to a complete architectural unit with all commercially reasonable diligence and speed, and Landlord shall reduce the Base Rent for the period after the date the Condemning Authority takes possession of the portion of the Premises taken to a sum equal to the product of the Base Rent provided for in this Lease multiplied by a fraction, the numerator of which is the rentable area of the Premises after the Taking and after Landlord restores the Premises to a complete architectural unit, and the denominator of which is the rentable square feet of the Premises prior to the Taking. Landlord shall also equitably adjust Tenant’s Share of Excess Expenses Percentage for the same period to account for the reduction in the number of rentable square feet of the Premises or the Building resulting from the Taking. Tenant’s obligation to pay Base Rent and Tenant’s Share of Excess Expenses shall abate on a proportionate basis with respect to that portion of the Premises remaining after the Taking that Tenant is unable to use during Landlord’s restoration for the period of time that Tenant is unable to use such portion of the Premises.

12.3       Tenant’s Participation. Landlord shall receive and keep all damages, awards or payments resulting from or paid on account of a Taking. Accordingly, Tenant waives and assigns to Landlord any interest of Tenant in any such damages, awards or payments. Tenant may prove in any condemnation proceedings and may receive any separate award for damages to or condemnation of Tenant’s movable trade fixtures and equipment and for reasonable moving expenses; provided however, that Tenant has no right to receive any award for its interest in this Lease or for loss of the leasehold and Tenant hereby waives any such right that Tenant may otherwise have by Laws.

12.4       Exclusive Taking Remedy. The provisions of this Article 12 are Tenant’s sole and exclusive rights and remedies in the event of a Taking. To the extent permitted by the Laws, Tenant waives the benefits of any Law that provides Tenant any abatement or termination rights or any right to receive any payment or award (by virtue of a Taking) not specifically described in this Article 12.

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Article 13

TRANSFERS

13.1       Restriction on Transfers. Tenant shall not make or suffer a Transfer (as defined in EXHIBIT “A”) without obtaining Landlord’s prior written consent, which consent shall not be unreasonably delayed or withheld. Notwithstanding the foregoing, provided no Event of Default by Tenant remains uncured, Landlord’s prior written consent shall not be required if the Transfer involves the sale of all or any portion of the capital stock of Tenant or ownership interests in Tenant to any person or entity that continues to operate Tenant’s business in the Premises and continues to maintain Tenant as an entity in substantially the same manner as operated and maintained prior to such Transfer, provided that if the tangible net worth of the successor-owner after such Transfer at any time is reduced below the greater of (i) the tangible net worth of Tenant at the time of execution of this Lease, or (ii) the tangible net worth of Tenant at the time of such Transfer, then such successor-owner shall deliver a guarantee or other credit enhancement of this Lease reasonably satisfactory to Landlord. If Tenant proposes to assign this Lease or to sublease all or any portion of the Premises, or to make any other Transfer, other than to one or more Affiliates pursuant to Section 13.3, Tenant shall so notify Landlord in writing specifying the proposed effective date of the proposed assignment or sublease and the other information referred to hereafter in this Section 13.1. Within twenty (20) days after the receipt of such notice and information from Tenant, Landlord may, at Landlord’s option, notify Tenant in writing that Landlord elects to terminate this Lease, effective as of the proposed assignment or sublease effective date specified in Tenant’s notice (“Landlord’s Recapture Right”); provided, however, if Landlord elects to terminate this Lease, Tenant shall have ten (10) days after receipt of such written notice of termination to rescind the proposed assignment or sublease by delivering written notice to Landlord, whereupon Landlord’s election to recapture the Premises and terminate the Lease shall be deemed null and void. If Landlord elects to terminate this Lease pursuant to the foregoing provision and Tenant does not rescind the proposed assignment or sublease, upon the effective date of termination, Landlord and Tenant shall each be released and discharged from any liability or obligation under this Lease that accrues thereafter with respect to the Premises, except for any obligations then outstanding and except for any indemnity obligations of Tenant hereunder or other obligations of Tenant which shall survive the expiration or termination of this Lease by the express terms hereof, and Tenant agrees that Landlord may enter into a direct lease with the proposed assignee or sublessee without any obligation or liability to Tenant, Tenant’s request for consent to a Transfer shall describe in detail the parties, terms, portion of the Premises, and other circumstances involved in the proposed Transfer. Landlord shall notify Tenant of Landlord’s election to consent, or withhold consent to the Transfer, within twenty (20) days after Landlord’s receipt of such a written request from Tenant for Landlord’s consent to the Transfer. Tenant shall promptly provide Landlord with any additional information Landlord reasonably requests regarding the proposed Transfer and the proposed Transferee.

In deciding whether to consent to any proposed Transfer, Landlord may take into account whether or not reasonable conditions have been satisfied including, but not limited to, the following:

(1)            In Landlord’s reasonable judgment, the proposed assignee or sublessee is engaged in such a business that the Premises, or the relevant part thereof, will be used in such a manner that complies with Article 4 hereof entitled “Use” and Tenant or the proposed assignee or sublessee shall submit to Landlord documentary evidence reasonably satisfactory to Landlord that such proposed use constitutes a permitted use of the Premises pursuant to the ordinances and regulations of the City of Scottsdale;

(2)            The proposed assignee, sublessee, or other transferee shall be a person or entity with sufficient financial net worth to indicate that it will be able to meet its obligations under this Lease or the sublease in a timely manner;

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(3)            The proposed Transfer shall be subject to approval by Landlord’s mortgage lender, but only if Landlord’s mortgage lender so requires under the express terms of the loan documents signed by Landlord; and Landlord shall use its good faith efforts to obtain such approval promptly following Tenant’s request;

(4)            The Transfer document shall prohibit further assignment, subletting, or Transfer by the assignee, sublessee, or other transferee; and

(5)            Landlord’s consent to the Transfer shall be in a separate instrument signed by Tenant, the assignee, sublessee, or other transferee, and Landlord containing the relevant provisions of this Article 13 and otherwise in form reasonably acceptable to Landlord and its counsel.

No Transfer shall release Tenant from any liability or obligation under this Lease. Tenant shall remain liable to Landlord after a Transfer as a principal and not as a surety. If Landlord consents to any Transfer, Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of any net amount Tenant receives as Base Rent in excess of the Base Rent payable by Tenant pursuant to Item 7, Base Rent, of the Basic Terms. In no event shall Tenant cause or permit a Transfer to another tenant of the Building. Any attempted Transfer in violation of this Lease shall be null and void and shall constitute a breach of this Lease by Tenant.

13.2      Costs. Tenant shall pay to Landlord, as Additional Rent, all actual and reasonable out- of-pocket costs and expenses Landlord incurs in connection with any Transfer, including, without limitation, the reasonable attorneys’ fees and costs incurred by Landlord, regardless of whether or not Landlord consents to the Transfer and whether or not the Transfer is consummated.

13.3      Assignment/Sublet to Affiliates. Notwithstanding anything to the contrary herein, and subject to Section 13.4, Tenant may, without the prior consent of Landlord, assign this Lease or sublet the Premises (i) an Affiliate of Tenant, or (ii) to any entity into which Tenant is merged or with which Tenant is consolidated or which acquires all or substantially all of the assets or stock of Tenant or ownership interests in Tenant. Landlord’s Recapture Right will not apply to an assignment or sublet to an Affiliate.

13.4      Non-Release of Tenant Upon Assignment/Sublet. Any subletting or assignment hereunder shall not release or discharge Tenant of or from any liability, whether past, present or future, under this Lease. Tenant shall continue fully liable hereunder as a principal and not as a surety. The subtenant or subtenants or assignee shall agree in a form satisfactory to Landlord to comply with and be bound by all of the terms, covenants, conditions, provisions and agreements of this Lease to the extent of the space sublet or assigned, and Tenant shall deliver to Landlord promptly after execution a fully executed copy of each such sublease or assignment and an agreement of compliance by each such subtenant or assignee. Consent by Landlord to any assignment of this Lease or to any subletting of all or any portion of the Premises shall not constitute a waiver of Landlord’s rights under this Article as to any subsequent assignment or subletting.

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Article 14

DEFAULTS; REMEDIES

14.1       Events of Default. The occurrence of any of the following shall constitute an “Event of Default” by Tenant under this Lease. Landlord and Tenant agree that the notices required by this Section 14.1 are intended to satisfy any and all notice requirements imposed by the Laws and are not in addition to any such requirements.

14.1.1    Failure to Pay Rent. Tenant fails to pay Base Rent, any monthly installment of Tenant’s Share of Excess Expenses or any other Additional Rent amount as and when due and such failure continues for five (5) Business Days after Landlord gives written notice thereof to Tenant.

14.1.2    Failure to Perform. Tenant breaches or fails to perform any of Tenant’s nonmonetary obligations under this Lease and such breach or failure continues for a period of thirty (30) days after Landlord gives written notice to Tenant of Tenant’s breach or failure; provided that if Tenant cannot cure such breach or failure within thirty (30) days after receipt of Landlord’s notice, Tenant’s breach or failure shall not constitute an Event of Default if Tenant commences to cure such breach or failure within such thirty (30) day period and thereafter diligently pursues the cure and effects the cure within a period that does not exceed an additional thirty (30) days after the expiration of the initial thirty (30) day period.

14.1.3    Misrepresentation. The existence of any intentional material misrepresentation or omission when made or given in any financial statements, correspondence or other information provided to Landlord by or on behalf of Tenant in connection with (a) Tenant’s negotiation or execution of this Lease; (b) Landlord’s evaluation of Tenant as a prospective tenant at the Property; (c) any proposed or attempted Transfer; or (d) any consent or approval Tenant requests under this Lease.

14.1.4    Intentionally Deleted.

14.1.5    Intentionally Deleted.

14.1.6    Other Defaults. (a) Tenant makes a general assignment or general arrangement for the benefit of creditors; (b) a petition for adjudication of bankruptcy or for reorganization or rearrangement is filed by Tenant; (c) a petition for adjudication of bankruptcy or for reorganization or rearrangement is filed against Tenant and is not dismissed within thirty (30) days; (d) a trustee or receiver is appointed to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease and possession is not restored to Tenant within thirty (30) days; (e) substantially all of Tenant’s assets located at the Premises, or Tenant’s interest in this Lease is subjected to attachment, execution or other judicial seizure that is not discharged within thirty (30) days; or (f) or if this Lease is rejected (1) by a bankruptcy trustee for Tenant, (2) by Tenant as debtor in possession, or (3) by failure of Tenant as a bankrupt debtor to act timely in assuming or rejecting this Lease. If a court of competent jurisdiction determines that any act described in this Section 14.1.4 does not constitute an Event of Default, and the court appoints a trustee to take possession of the Premises (or if Tenant remains a debtor in possession of the Premises) and such trustee or Tenant transfers Tenant’s interest hereunder, then Landlord shall be entitled to receive, as Additional Rent, the amount by which the Rent (or any other consideration) paid in connection with the Transfer exceeds the Rent otherwise payable by Tenant under this Lease.

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14.2       Remedies. Upon the occurrence of any Event of Default by Tenant, Landlord may at any time and from time to time, without further notice and without preventing Landlord from exercising any other right or remedy available at law or in equity, exercise any one or more of the following remedies;

14.2.1    Termination of Tenant’s Possession/Re-entry and Reletting Right. Terminate Tenant’s right to possess the Premises by any lawful means with or without terminating this Lease, in which event Landlord may (but is not obligated to) lawfully re-enter the Premises and remove all persons and property from the Premises or, following demand, Tenant shall immediately surrender possession of the Premises to Landlord. If Landlord retakes possession of the Property but does not terminate this Lease, this Lease shall continue in full force and effect (excluding Tenant’s right to possession of the Premises) and Tenant shall continue to be obligated for and shall pay all Rent as and when due under this Lease. Unless Landlord specifically states that Landlord has terminated this Lease, Landlord’s termination of Tenant’s right to possession of the Premises shall not be construed as an election by Landlord to terminate this Lease or to terminate Tenant’s obligations and liabilities under this Lease. Landlord may store any property Landlord removes from the Premises in a public warehouse or elsewhere at the expense and for the account of Tenant. Upon such re-entry, Landlord shall not be obligated to, but may, relet all or any part of the Premises to a third party or parties for Tenant’s account. Tenant shall be immediately liable to Landlord for all Re-entry Costs and shall reimburse Landlord for all such costs within fifteen (15) days after Landlord’s notice to Tenant. Landlord may relet the Premises for a period shorter or longer than the remaining Term. If Landlord relets all or any part of the Premises, Tenant shall continue to pay to Landlord Rent when due under this Lease. Landlord shall refund to Tenant the Net Rent that Landlord actually receives from the reletting up to a maximum amount equal to the Rent Tenant paid that came due after Landlord’s reletting. If the Net Rent Landlord actually receives from reletting exceeds such Rent, Landlord shall apply the excess sum to future Rent due under this Lease.

14.2.2     Termination of Lease. Terminate this Lease effective on the date Landlord specifies in Landlord’s notice to Tenant. Upon termination, Tenant shall immediately surrender possession of the Premises to Landlord. If Landlord terminates this Lease, Landlord may recover from Tenant and Tenant shall pay to Landlord, within twenty (20) days after Tenant receives Landlord’s statement, all damages Landlord incurs by reason of Tenant’s default, including, without limitation, (a) all Rent due and payable under this Lease as of the effective date of the termination; (b) any amount necessary to compensate Landlord for any detriment proximately caused Landlord by Tenant’s failure to perform its obligations hereunder or which in the ordinary course would likely result from Tenant’s failure to perform its obligations hereunder, including, but not limited to, any Re-entry Costs (as the same may be reasonably estimated by Landlord, if necessary); (c) an amount equal to the positive difference, if any, between the present worth, as of the effective date of the termination, of the Base Rent for the balance of the Term remaining after the effective date of the termination (assuming no termination) and the present worth, as of the effective date of the termination, of a fair market Rent for the Premises for the same period (as Landlord reasonably determines the fair market Rent); and (d) Tenant’s Share of Excess Expenses not paid by Tenant to the extent Landlord is not otherwise reimbursed for such Excess Expenses. For purposes of this Section 14.2.2, Landlord shall compute present worth by utilizing a discount rate of eight percent (8%) per annum. Nothing in this Section 14.2.2 shall limit or prejudice Landlord’s right to prove and obtain damages in an amount equal to the maximum amount allowed by the Laws, regardless whether such damages are greater than the amounts set forth in this Section 14.2.2.

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14.2.3     Present Worth of Rent. Recover from Tenant, and Tenant shall pay to Landlord on demand, an amount equal to the then present worth, as of the effective date of termination, of the aggregate of the Rent and any other charges payable by Tenant under this Lease for the unexpired portion of the Term. Landlord shall employ a discount rate of eight percent (8%) per annum to compute present worth.

14.2.4    Other Remedies. Exercise any other right or remedy available to Landlord under this Lease, or otherwise at law or in equity. Landlord shall use commercially reasonable efforts to mitigate damages following an Event of Default by Tenant.

14.3        Costs. Tenant shall reimburse and compensate Landlord on demand and as Additional Rent for any actual and reasonable out-of-pocket loss Landlord incurs in connection with, resulting from or related to, any breach or default of Tenant under this Lease, regardless whether the breach or default constitutes an Event of Default, and regardless whether suit is commenced or judgment is entered with respect thereto. Except as provided in Section 14.2, Section 16.1, or Section 16.2, in no event shall Tenant be liable to Landlord or to any other person for consequential, special or punitive damages, including, without limitation, lost profits. Such loss shall include all reasonable legal fees, costs and expenses (including paralegal fees and other professional fees and expenses) that Landlord incurs investigating, negotiating, settling or enforcing any of Landlord’s rights or remedies or otherwise protecting Landlord’s interests under this Lease. Tenant shall also indemnify, defend (with local counsel reasonably acceptable to Landlord), protect and hold the Landlord Parties harmless from and against all Claims Landlord or any of the other Landlord Parties incur if Landlord or any of the other Landlord Parties becomes or is made a party to any claim or action (a) instituted by Tenant or by or against any person holding any interest in the Premises by, under or through Tenant; (b) for foreclosure of any lien for labor or material furnished to or for Tenant or such other person; or (c) otherwise arising out of or resulting from any act or omission of Tenant or such other person. In addition to the foregoing, Tenant shall reimburse Landlord for all of the actual and reasonable out-of-pocket fees, expenses and damages including, but not limited to, reasonable attorneys’ fees and paralegal and other professional fees and expenses, incurred by Landlord in protecting Landlord’s interests in any bankruptcy or insolvency proceeding involving Tenant including, without limitation, any proceeding under any chapter of the Bankruptcy Code; by exercising and advocating rights under Section 365 of the Bankruptcy Code; by proposing a plan of reorganization and objecting to competing plans; and by filing motions for relief from stay. Such fees and expenses shall be payable on demand or, in any event, upon assumption or rejection of this Lease in bankruptcy.

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14.4      Waiver and Release by Tenant. Tenant hereby releases Landlord from and waives all Claims Tenant may have against Landlord resulting from Landlord’s re-entry and taking possession of the Premises following an Event of Default by any lawful means and removing and storing Tenant’s property as permitted under this Lease, regardless whether this Lease is terminated and, to the fullest extent allowable under Law, Tenant hereby releases Landlord and Tenant shall indemnify, defend (with local counsel reasonably acceptable to Landlord), protect and hold Landlord and the Landlord Parties harmless from and against any and all Claims occasioned thereby. No such reentry shall be considered or construed as a forcible entry by Landlord.

14.5      Landlord’s Default. If Landlord breaches or fails to perform any of Landlord’s obligations under this Lease and such breach or failure continues for a period of thirty (30) days after Tenant gives written notice to Landlord of Landlord’s breach or failure; provided that if Landlord cannot cure such breach or failure within thirty (30) days after receipt of Tenant’s notice, Landlord’s breach or failure shall not constitute an Event of Default if Landlord commences to cure such breach or failure within such thirty (30) day period and thereafter diligently pursues the cure and effects the cure to completion.

14.6      No Waiver. No failure by Landlord to insist upon the performance by Tenant of any provision of this Lease or to exercise any right or remedy upon a breach or default by Tenant hereunder, and no acceptance by Landlord of full or partial Rent during the continuance of any such breach or default, shall constitute a waiver by Landlord of any such breach or default. No waiver by Landlord of any breach or default by Tenant shall be implied from any omission by Landlord to take any action on account of such breach or default. None of the terms of this Lease to be kept, observed or performed by Tenant, and no breach of default thereof by Tenant, shall be waived, altered or modified except by a written instrument signed by Landlord. One or more waivers by Landlord shall not be construed as a waiver of a subsequent breach or default by Tenant of the same provision. No statement on a payment check from Tenant or in a letter accompanying a payment check shall be binding on Landlord. Landlord may, with or without notice to Tenant, negotiate such check without being bound to the conditions of any such statement. If Tenant pays any amount other than the actual amount due Landlord, receipt or collection of such partial payment shall not constitute an accord and satisfaction. Landlord may retain any such partial payment, whether restrictively endorsed or otherwise, without prejudice to Landlord’s right to collect the balance properly due. If all or any portion of any payment is dishonored for any reason, payment shall not be deemed made until the entire amount due is actually received by Landlord. The foregoing provisions apply in kind to the receipt or collection of any amount by a lock box agent or other person acting on Landlord’s behalf.

Article 15

CREDITORS; ESTOPPEL CERTIFICATES

15.1      Subordination and Non-Disturbance. This Lease, all rights of Tenant in this Lease, and all interest or estate of Tenant in the Property, are expressly subject and subordinate to the lien of any Mortgage. Tenant shall, within ten (10) days after receipt of Landlord’s request, execute and deliver to Landlord and to any other person Landlord designates any instruments, releases or other documents reasonably required to confirm the subordination of this Lease as provided in this Section 15.1 to the lien of any Mortgage. The subordination to any future Mortgage provided for in this Section 15.1 shall be expressly conditioned upon the mortgagee’s agreement that so long as Tenant is not in default in the payment of Rent or the performance and observance of any covenant, condition, provision, term or agreement to be performed and observed by Tenant under this Lease, beyond any applicable grace or cure period that this Lease provides to Tenant, the holder of the Mortgage shall not disturb Tenant’s possession of the Premises or Tenant’s other rights under this Lease. The lien of any existing or future Mortgage shall not encumber Tenant’s moveable trade fixtures or other personal property of Tenant located in or on the Premises.

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Landlord shall use its commercially reasonable efforts to cause any holder of a Mortgage on the Property to provide Tenant with a non-disturbance agreement indicating that so long as no Event of Default by Tenant exists hereunder, Tenant’s possession of the Premises shall not be disturbed in the event such mortgagee takes control of the Property. Failure of Landlord to provide such non-disturbance agreement to Tenant shall not constitute a default by Landlord hereunder or excuse the performance by Tenant of any of Tenant’s obligations under this Lease

15.2      Attornment. If the holder of any Mortgage at a foreclosure sale or any other transferee acquires Landlord’s interest in this Lease, the Premises or the Property, Tenant shall attorn to the transferee of or successor to Landlord’s interest in this Lease, the Premises or the Property (as the case may be) and recognize such transferee or successor as Landlord under this Lease. Such Attornment shall be self-executing and effective upon the acquisition of title to the Property by any purchaser at a foreclosure sale or by any transferee that acquires title by a transfer in lieu of foreclosure. Tenant waives the provisions of any statute or rule of law that gives or purports to give Tenant any right to terminate this Lease or to surrender possession of the Premises upon any transfer of Landlord’s interest in the Property.

15.3      Mortgagee Protection Clause. Tenant shall give Landlord’s current mortgage lender, Goldman Sachs Commercial Mortgage Capital, L.P., 600 East Las Colinas Boulevard, Suite 450, Irving, Texas 75039, and any future holder of any Mortgage on the Premises, by registered mail, a copy of any notice of default that Tenant serves on Landlord, provided that Landlord or the holder of the Mortgage has previously notified Tenant (by way of notice of assignment of rents and leases or otherwise) of the address of such holder. Tenant further agrees that if Landlord fails to cure such default within the time provided for in this Lease, then Tenant shall provide written notice of such failure to such holder and such holder shall have an additional thirty (30) days after receipt of Tenant’s notice within which to cure the default. If the default cannot be cured within the additional thirty (30) day period, then the holder shall have such additional time as may be reasonably necessary to effect the cure.

15.4       Estoppel Certificates.

15.4.1    Contents. Upon receipt by Tenant of Landlord’s written request, Tenant shall execute, acknowledge and deliver to Landlord a written statement in form satisfactory to Landlord certifying to such facts regarding this Lease as Landlord may reasonably require including, but not limited to, attesting (a) that this Lease (and all guaranties, if any) is unmodified and in full force and effect (or, if there have been any modifications, that the Lease is in full force and effect, as modified, and stating the modifications); (b) that this Lease has not been canceled or terminated; (c) the last date of payment of Rent and the time period covered by such payment; (d) whether there are then existing any breaches or defaults by Landlord or Tenant under this Lease known to Tenant and, if so, specifying the same; (e) that no Rent has been paid more than one month in advance, except as security; (f) that Tenant claims no defense or offset against the full and timely performance of its obligations under this Lease, or of any guaranties (or if such a claim exists, a detailed description of the same); and (g) such other factual statements that Landlord, any lender, prospective lender, investor or purchaser may reasonably request. Tenant shall deliver to Landlord the statement signed by Tenant within ten (10) Business Days after receipt by Tenant of Landlord’s request. Landlord may give any such statement by Tenant to any lender, or to any prospective lender, investor or purchaser of all or any part of the Property and any such party may conclusively rely upon such statement as true and correct.

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15.4.2    Failure to Deliver. If Tenant fails to deliver to Landlord the statement referred to in Section 15.4.1 within the time period specified in said Section 15.4.1 and Landlord has requested the certificate a second time and Tenant has not responded to that request within ten (10) days, such failure shall constitute an Event of Default by Tenant under this Lease.

Article 16

EXPIRATION OF THE LEASE TERM

16.1       Surrender of Premises. Tenant shall surrender possession of the Premises to Landlord at the expiration or earlier termination of this Lease in good order, condition and repair, reasonable wear and tear, permitted Alterations and damage by insured casualty or condemnation excepted, and will surrender all keys to the Building and the Premises to Property Manager or to Landlord at the place then fixed for Tenant’s payment of Base Rent, or as Landlord or Property Manager otherwise direct. Tenant shall also inform Landlord of all combinations on locks, safes and vaults, if any, in the Premises or on the Property. Prior to surrendering possession of the Premises Tenant shall remove all of its property from the Premises and repair any damage to the Premises or the Building caused by such removal. If Landlord’s consent to any Alterations to the Premises by Tenant was conditioned upon Tenant’s removal of such Alterations and restoration of the Premises to its condition prior to such Alterations, or if Tenant did not obtain Landlord’s determination at the time Landlord consented to such Alterations of whether or not such Alternations must be removed and the Premises restored to its prior condition upon the expiration or termination of the Lease, or if Tenant made any Alterations without Landlord’s prior written consent, Tenant shall upon receipt by Tenant of written request by Landlord promptly restore the Premises to its condition prior to such Alterations at Tenant’s expense. Tenant hereby releases the Landlord Parties and shall indemnify, defend (with counsel reasonably acceptable to Landlord), protect and hold harmless the Landlord Parties from and against any Claim resulting from Tenant’s failure or delay in surrendering the Premises in accordance with this Section 16.1 including, without limitation, any Claim made by any succeeding occupant founded on such delay including, but not limited to, consequential damages incurred by Landlord based on any such Claim. All property of Tenant not removed on or before the last day of the Term shall be deemed abandoned, and can be disposed of by Landlord as, in its sole and absolute discretion, it deems appropriate without any credit or payment to Tenant. Tenant appoints Landlord as Tenant’s agent to remove, at Tenant’s sole cost and expense, all of Tenant’s property from the Premises upon the expiration or earlier termination of this Lease. Landlord shall not be liable for disposal, damage, theft, misappropriation or loss of Tenant’s property resulting from the removal or storage of any of Tenant’s property or in any manner in respect thereto.

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16.2       Holding Over. If Tenant remains in possession of the Premises after the Term expires or is otherwise terminated without executing a new lease, Tenant shall be deemed to be occupying the Premises as a tenant from month-to-month, subject to all provisions, conditions and obligations of this Lease applicable to a month-to-month tenancy, except that (a) Tenant shall pay to Landlord Base Rent equal to one hundred twenty-five percent (125%) of the greater of Base Rent payable by Tenant in the last Lease Year of the Term or Landlord’s then current base rent for the Premises according to Landlord’s rental rate schedule for prospective tenants, and (b) either Landlord or Tenant may terminate the month- to-month tenancy at any time upon thirty (30) days prior written notice to the other party.

Notwithstanding anything to the contrary contained in this Section 16.2, Tenant shall have the option (the “Holdover Option”) to holdover in the Premises for a period of ninety (90) calendar days beyond the then scheduled expiration of the Term (such period, the “Permitted Holdover Period”), subject to the following conditions: (i) Tenant shall deliver written notice (the “Holdover Notice”) to Landlord of such election no later than ninety (90) days prior to the expiration of the then Term; (ii) during the Permitted Holdover Period, Tenant shall be required to pay Landlord the same Rent payable under this Lease for the last full calendar month of the Term; (ill) Tenant shall not have the right to exercise the Holdover Option (or remain in the Premises during the Permitted Holdover Period) if at the time of delivery of the Holdover Notice or any time between the date of delivery of the Holdover Notice and the end of the Holdover Period, Tenant is in default under the Lease beyond any applicable notice and grace period; and (iv) during the Permitted Holdover Period, all of the terms and conditions of this Lease shall apply to Tenant’s occupancy of the Premises. Should the Tenant remain in the Premises beyond such ninety (90) day period Tenant shall be deemed a month-to-month tenant and the holdover rate to be paid provided herein shall apply. This holdover rental amount will be Landlord’s exclusive right and remedy against Tenant and will be deemed to cover all liabilities, obligation or charges which may be incurred by Landlord because of a holdover by Tenant. In the event Tenant holds over following the Permitted Holdover Period, Tenant shall be liable for all of Landlord’s direct and consequential damages, including costs, fees, expenses, damages and attorneys’ fees incurred by Landlord as a result of Tenant’s holding over, including but not limited to, damages and expenses incurred by Landlord for its inability to deliver possession of the Premises to a new tenant (“Holdover Indemnity Obligations”).

Article 17
ADDITIONAL PROVISIONS

17.1       Improvements to the Premises.

17.1.1           Tenant Improvements. The improvements to the Premises shall be constructed pursuant to the Work Letter Agreement attached hereto as Exhibit “F” and incorporated by reference herein pursuant to a mutually acceptable space plan using Building standard materials. The cost of the Tenant Improvements shall include, without limitation, the costs incurred in obtaining permits for the Tenant Improvements, inspection costs, and the Fee.

17.1.2           Construction. Landlord shall receive a fee (the “Fee”) equal to three percent (3%) of the Construction Costs for Landlord’s participation and monitoring of the construction of the Tenant Improvements. The Fee will be deducted by Landlord from the Tenant Improvement Allowance.

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17.1.3           Space Plan. Tenant shall deliver to Landlord a hand drawn space plan (the “space plan”) for the Tenant Improvements. Tenant shall use the space plan for the preparation of any working drawings that may be necessary for the construction of the Tenant Improvements.

17.1.4           Substantial Completion. Tenant shall use commercially reasonable efforts to achieve Substantial Completion of the Tenant Improvements as soon as is reasonably practicable, subject to Force Majeure.

17.1.5           Punch List. Within ten (10) days after Substantial Completion of the Tenant Improvements, Landlord and Tenant shall inspect the Premises and prepare a Punch List. Tenant shall cause to be completed (or repaired, as the case may be) the items listed on the Punch List with commercially reasonable diligence, subject to Force Majeure.

17.1.6           Construction Warranty. The Contractor who constructs the Tenant Improvements shall warrant the Tenant Improvements against defects in workmanship or materials for a period of one (1) year after the date of Substantial Completion.

17.2       Parking. Landlord shall provide to Tenant Tenant’s pro rata share of the vehicular parking spaces on the Property, which shall include the grant of a license to Tenant to use nineteen (19) covered reserved parking spaces and sixty-three (63) uncovered, reserved parking spaces on the Property, so long as this Lease remains in effect. The location of such covered, reserved parking spaces and such uncovered, reserved parking spaces are shown on the parking map attached hereto as EXHIBIT “H”. Tenant may use the uncovered, unreserved parking spaces on the Property without additional charge on a first come, first served basis. Parking at the Property by Tenant and Tenant’s employees and business invitees shall be subject to the other provisions of this Lease, including without limitation, the Building Rules. In no event shall Landlord be liable to Tenant or to any employee, agent, patient, or other invitee of Tenant, for any personal injury, property damage, loss, or theft that occurs on or about the Property resulting from the use of the Parking Area on the Property, and Tenant shall indemnify, defend and hold harmless the Landlord Parties against any claim therefore.

Article 18
MISCELLANEOUS PROVISIONS

18.1       Notices. All Notices shall be in writing and shall be personally delivered, or sent by United States registered or certified mail (postage prepaid), or delivered by an Independent overnight courier service, addressed to the addresses specified in the Basic Terms or at such other place as either party may designate to the other party by written notice given in accordance with this Section 18.1. Notices given by mail shall be deemed delivered within three (3) Business Days after the party sending the Notice deposits the Notice in the United States Mail. Notices delivered by courier shall be deemed delivered on the next Business Day after the day the party delivering the Notice timely deposits the Notice with the courier for overnight (next day) delivery. Notices personally delivered shall be deemed delivered on the date of delivery to the addressee.

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18.2       Transfer of Landlord’s Interest. If Landlord Transfers (other than for collateral security purposes) Landlord’s ownership interest in the Property, Landlord shall automatically be relieved of all of Landlord’s obligations accruing under this Lease from and after the date of the Transfer, provided that Landlord shall deliver to the transferee any funds that Landlord holds in which Tenant has an interest (such as a security deposit). Landlord’s covenants and obligations in this Lease shall be binding upon each successive Landlord only during and with respect to the period of its ownership. However, notwithstanding any such Transfer, Landlord shall continue to be entitled to the benefits of Tenant’s releases, indemnities, and insurance obligations (and similar obligations) under this Lease with respect to matters arising or accruing during the period of the original Landlord’s ownership of the Property.

18.3       Successors. The covenants and agreements contained in this Lease shall bind and inure to the benefit of Landlord, its successors and assigns, shall bind Tenant and its successors and assigns, and shall inure to the benefit of Tenant and its permitted successors and assigns.

18.4       Captions and Interpretation. The captions of the Articles and Sections of this Lease are to assist the parties in reading this Lease and are not a part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular includes the plural and the plural includes the singular.

18.5       Relationship of Parties. This Lease does not create the relationship of principal and agent, or of partnership, joint venture, or of any association or relationship between Landlord and Tenant other than that of Landlord and Tenant.

18.6       Entire Agreement; Amendment. The Basic Terms and all exhibits, addenda and schedules attached to this Lease are incorporated into this Lease as though fully set forth in this Lease and together with this Lease contain the entire agreement between the parties with respect to the improvement and leasing of the Premises. All preliminary and contemporaneous negotiations including, without limitation, any lease proposal letter or other correspondence, and any drafts and related communications, are merged into and superseded by this Lease. No subsequent alteration, amendment, change or addition to this Lease (other than to the Building Rules) shall be binding on Landlord or Tenant unless it is in writing and signed by the party to be charged with performance.

18.7       Severability. If any covenant, condition, provision, term or agreement of this Lease is to any extent held invalid or unenforceable, the remaining portion thereof and all other covenants, conditions, provisions, terms and agreements of this Lease shall not be affected by such holding, and will remain valid and in effect to the fullest extent permitted by law.

18.8       Landlord’s Limited Liability. Tenant shall look solely to Landlord’s interest in the Property for recovering any judgment or collecting any obligation from Landlord or any other Landlord Parties. Tenant agrees that neither Landlord nor any of the other Landlord Parties shall be personally liable for any claim or judgment against Landlord.

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18.9      Survival. All of Tenant’s and Landlord’s obligations under this Lease (together with interest on payment obligations at the Interest Rate) arising prior to the expiration or sooner termination of this Lease shall survive the expiration or sooner termination of this Lease. Further, all of Tenant’s and Landlord’s releases and indemnity obligations under this Lease shall survive the expiration or sooner termination of this Lease, without limitation.

18.10     Attorneys’ Fees. If either Landlord or Tenant commences any litigation or other legal proceeding to determine or enforce any of the provisions of this Lease, the prevailing party in any such litigation or proceeding shall be entitled to recover all of its actual and reasonable out-of-pocket costs and expenses (including, but not limited to, reasonable attorneys’ fees, costs and expenses) from the non-prevailing party. In addition, Tenant shall reimburse Landlord upon demand for the actual and reasonable out-of-pocket attorneys’ fees, costs, and expenses incurred by Landlord in the preparation and service of notices of default by Tenant, whether or not a legal action is subsequently commenced by Landlord or by any other person in connection therewith.

18.11     Brokers. Landlord and Tenant each represents and warrants to the other that it has not had any dealings with any realtor, broker, agent or finder in connection with this Lease (except for the Brokers named in the Basic Terms) and Landlord and Tenant each releases and agrees to indemnify, defend and hold the other party harmless from and against any Claims based on the failure or alleged failure to pay any commission or other compensation due to any realtor, broker, agent or finder (other than the Brokers named in the Basic Terms) and from any cost, expense or liability for any commission or compensation claimed by any realtor, broker, agent or finder (other than the Brokers named in the Basic Terms) claiming by, through or on behalf of either of the Brokers named in the Basic Terms with respect to this Lease or the negotiation of this Lease. Landlord shall pay the leasing commission to the Broker named in the Basic Terms who has represented Landlord exclusively and such Broker shall pay the leasing commission to the Broker named in the Basic Terms who has represented Tenant exclusively. Such commissions shall be paid by Landlord and Landlord’s Broker, respectively, in accordance with the commission agreements between Landlord and Landlord’s Broker and between Landlord’s Broker and Tenant’s Broker.

18.12     Governing Law. This Lease shall be governed by, and shall be interpreted under, the internal laws of the State of Arizona without reference to its choice of law rules. Any suit arising from or relating to this Lease must be brought in Maricopa County, Arizona. Landlord and Tenant waive the right to bring suit elsewhere.

18.13     Intentionally Deleted.

18.14     Tenant’s Organization Documents; Authority. If Tenant is not a natural person or persons, Tenant shall, within ten (10) days after Landlord’s written request (such request to be made no more than once per calendar year except in connection with a sale or finance/refinance transaction), deliver to Landlord: (a) a certificate by the Secretary of State, Corporation Commission or other governmental entity having jurisdiction thereof from the state of Tenant’s domicile, confirming that Tenant is in good standing under the laws governing Tenant’s formation, and a certificate confirming Tenant’s qualification to transact business in the state of Arizona (if Tenant was formed under the laws of a state other than Arizona); and (b) a copy of Tenant’s organizational documents and any amendments thereto, certified as true and correct by an appropriate official of Tenant. Tenant and each individual signing this Lease on behalf of Tenant represents and warrants that he or she is duly authorized to sign on behalf of and to bind Tenant and that this Lease is a duly authorized, binding and enforceable obligation of Tenant.

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18.15     Provisions are Covenants and Conditions. All provisions of this Lease, whether covenants or conditions, are deemed both covenants and conditions.

18.16     Force Majeure. If a party is delayed or prevented from performing any of its obligations under this Lease (excluding, however, the payment of money) by reason of Force Majeure, such party’s performance of such obligation shall be excused for a period equal to (a) the duration of the Force Majeure event, or (b) if longer, the period of delay actually caused by the Force Majeure event. This Section shall not operate to excuse Tenant for the prompt payment of Base Rent, Additional Rent, and all other sums payable by Tenant hereunder.

18.17     Management. Property Manager is authorized by Landlord to manage the Property. Landlord has appointed Property Manager to act as Landlord’s agent for leasing, managing and operating the Property. The Property Manager then serving is authorized to receive and give notices and demands on Landlord’s behalf.

18.18     Financial Statements. Prior to the execution of this Lease, Tenant shall deliver to Landlord complete, accurate and up-to-date income statements and balance sheets of tenant (“financial statements”), which shall be (a) prepared according to generally accepted accounting principles consistently applied, and (b) certified by an independent certified public accountant or by Tenant’s chief financial officer, that such financial statements are a true, complete and correct statement of Tenant’s financial condition as of the date of such financial statements. Tenant shall also deliver to Landlord current financial statements of Tenant within ten (10) Business Days after Landlord’s request in writing therefor (such request to be made no more than once per calendar year except in connection with a sale or finance/refinance transaction). Landlord shall use commercially reasonable efforts to preserve the confidentiality of contents of the financial statements, provided, however, Landlord shall be permitted to divulge the contents of any such statement to its employees, attorneys and accountants in connection with Landlord’s day to day operation of the Property, in connection with any financing arrangements, sales or assignments of Landlord’s interest in the Premises or in connection with any administrative or judicial proceedings in which Landlord is involved where Landlord may be required to divulge such information.

18.19     Quiet Enjoyment. Landlord covenants and agrees that so long as no Event of Default by Tenant hereunder remains uncured, Tenant will quietly hold, occupy and enjoy the Premises during the Term, subject to the terms and conditions of this Lease, free from interference by Landlord or by any person claiming by, through or under Landlord.

18.20     No Recording. Tenant shall not record this Lease or a Memorandum of this Lease without Landlord’s prior written consent, which consent Landlord may grant or withhold in Landlord’s sole and absolute discretion.

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18.21     Nondisclosure of Lease Terms. The terms and conditions of this Lease constitute proprietary information of Landlord. Tenant shall preserve the confidentiality of the terms and conditions of this Lease. Tenant’s disclosure of the terms and conditions of this Lease could adversely affect Landlord’s ability to negotiate other leases and could impair Landlord’s relationships with other tenants. Accordingly, Tenant and Tenant’s employees and agents shall not, directly or indirectly, disclose any of the terms or conditions of this Lease to any other tenant or prospective tenant of the Building, or to any other person or entity, other than Tenant’s employees and agents who have a legitimate need to know such information, without Landlord’s prior written consent (which consent Landlord may grant or withhold in Landlord’s sole and absolute discretion). The limitation concerning the nondisclosure of the terms of this Lease shall not apply in the event of any litigation between Landlord and Tenant, or in the event Landlord defaults under the terms of this Lease and Landlord fails to cure such default within thirty (30) days after Tenant gives written notice to Landlord specifying the nature of the alleged default by Landlord,

18.22     Construction of Lease and Terms. The terms and provisions of this Lease represent the results of negotiations between Landlord and Tenant, each of which are sophisticated parties and each of which has been represented by, or has been given the opportunity to be represented by, counsel of its own choice. Neither the Landlord nor Tenant has acted under any duress or compulsion, whether legal, economic or otherwise. Consequently, the terms and provisions of this Lease shall be interpreted and construed in accordance with their usual and customary meanings, and Landlord and Tenant each waive the application of any rule of law that ambiguous or conflicting terms or provisions contained in this Lease are to be interpreted or construed against the party who prepared this Lease or any of the provisions hereof. Landlord’s submission of this Lease to Tenant for examination or signature by Tenant does not constitute a reservation of or an option to lease the Premises and shall not be effective as a lease or otherwise until both Landlord and Tenant have signed and delivered this Lease. The parties agree that, regardless of which party provided the initial form of this Lease, drafted or modified one or more provisions of this Lease, or compiled, printed or copied this Lease, this Lease shall be construed solely as an offer by Tenant to lease the Premises, when signed by Tenant and delivered to Landlord for acceptance on the terms set forth in this Lease, which acceptance and the existence of a binding agreement between Tenant and Landlord shall exist only upon Landlord’s signature hereon and the delivery by Landlord of a fully executed counterpart of this Lease to Tenant.

18.23     Right to Purchase Building. Tenant shall be granted a right of first offer to negotiate for the purchase of the Building. Landlord agrees to provide Tenant with written notice (“Landlord’s Notice”) of the availability of the Building for sale and offer the Building in its entirety to Tenant on such terms and conditions as Landlord would offer to third parties, as determined by Landlord in its sole and absolute discretion, prior to marketing said space to third parties. Tenant shall have fourteen (14) days from the date of Landlord’s Notice to respond in writing to the same (“Tenant’s Acceptance Notice”). If Landlord has not received a written response by the end of said 14-day period or if Tenant declines to accept Landlord’s offer or makes a counteroffer which Landlord shall reject, in writing, as unacceptable in Landlord’s sole and absolute discretion, Landlord shall thereafter be free to market the Building and sell the Building on any terms determined by Landlord in its sole and absolute discretion. In no event shall Landlord be required to pay Tenant and/or Tenant’s broker or agent a commission with respect to the sale of the Building to Tenant. If Landlord and Tenant agree on terms for the sale of the Building, Landlord and Tenant shall use good faith efforts to consummate a purchase and sale agreement setting for the terms of the sale of the Building within fifteen (15) days following Landlord’s receipt of Tenant’s Acceptance Notice. If Landlord and Tenant agree on terms for the sale of the Building, but are subsequently unable, in good faith, to consummate such purchase agreement with respect thereto acceptable to both Landlord and Tenant, Landlord shall thereafter be free to market the Building and sell the Building on such terms and conditions as Landlord shall determine, in its sole and absolute discretion, without any further obligation to offer said Building again to Tenant, and thereafter this right shall be null and void and the Landlord will be released from any further obligation to offer the Building to the Tenant. Notwithstanding the foregoing, if at the time of Tenant’s exercise of the right of first offer there is an Event of Default by Tenant under this Lease or Tenant or an Affiliate of Tenant is not in occupancy of the entire Premises then, at Landlord’s election, Tenant shall have no right to purchase the Building and the exercise of the right of first offer shall be null, void and of no effect. The rights contained in this Section 18.24 shall be personal to CaliberCos Inc. and any Affiliate of Tenant in occupancy of the Premises, and may only be exercised by CaliberCos Inc. or such Affiliate of Tenant.

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Article 19
SECURITY

19.1       Security Deposit. Tenant shall deposit with Landlord upon execution hereof the Security Deposit set forth in Paragraph 21 of the Basic Terms as security for Tenant’s faithful performance of Tenant’s obligations hereunder. If Tenant fails to pay Rent, Additional Rent or any other charges payable by Tenant hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may at its option use, apply or retain all or any portion of the Security Deposit (i) to remedy Tenant’s defaults in the payment of Rent, Additional Rent or any other sums payable by Tenant pursuant to the terms hereof, (ii) to repair any damage to the Premises, (Hi) to clean and otherwise maintain the Premises, or (iv) to compensate Landlord for any other loss or damage which Landlord may suffer thereby. If Landlord so uses or applies all or any portion of the Security Deposit, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to the full amount hereinabove stated and Tenant’s failure to do so shall be a breach of and a default under this Lease. Landlord shall not be required to keep the Security Deposit separate from its general accounts. If Tenant performs all of Tenant’s obligations hereunder, the Security Deposit, or so much thereof as has not theretofore been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or, at Landlord’s option, to the last assignee, if any, of Tenant’s interest hereunder) on or before sixty (60) days after the later of the expiration of the Term hereof or the date Tenant vacates the Premises.

19.2       Lien and Security Interest. Tenant hereby grants to Landlord a lien and security interest upon all property of Tenant now or hereafter placed in or about the Premises to secure payment of all Rent and other sums payable to Landlord hereunder and the payment of any damages or losses suffered by Landlord by reason of Tenant’s breach of this Lease. Landlord, as secured party, shall be entitled to all rights and remedies afforded a secured party under the Arizona Uniform Commercial Code, as the same may be amended from time to time, such rights and remedies to be in addition to and cumulative of any landlord’s lien granted by law or elsewhere in this Lease. Tenant hereby authorizes Landlord to execute and file such notices, forms and financing statements as may be appropriate to perfect and/or to give notice to third parties of the lien and security interest herein granted to Landlord, including but not limited to initial financing statements, amendments thereto, continuation statements and forms commonly referred to as UCC-1s. Tenant shall execute any appropriate UCC forms upon request by Landlord.

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	LANDLORD:
	POLLOCK GATEWAY II LLC,
	a California limited company
Dated and executed by Landlord
July 13, 2018	By:	/s/ James M. Pollock
		Name: James M. Pollock
		Title:   Manager
Dated and executed by Landlord
July 13, 2018	By:	/s/ Jeffrey O. Pollock
		Name: Jeffrey O. Pollock
		Title:   Manager
	TENANT:
	CALIBERCOS INC.,
	a Delaware
Dated and executed by Tenant
July 11, 2018	By:	/s/ Jennifer Schrader
	Name:	Jennifer Schrader
	Title:	President & COO

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EXHIBIT “A”

DEFINITIONS

“Additional Rent” means any charge, fee or expense (other than Base Rent) payable by Tenant under this Lease, however denoted.

“Affiliate” means any person or corporation that, directly or indirectly, controls, is controlled by, or is under common control with, Tenant. For purposes of this definition, “control” means possessing the power to direct or cause the direction of the management and policies of the entity by the ownership of a majority of the voting securities or membership interests of the entity.

“Alteration” means any change, alteration, addition or improvement to the Premises or the Property.

“Bankruptcy Code” means the United States Bankruptcy Code as the same now exists and as the same may be amended, including any and all rules and regulations issued pursuant to or in connection with the United States Bankruptcy Code now in force or in effect after the Effective Date.

“Base Rent” means the Base Rent payable by Tenant under this Lease in the amounts specified in the Basic Terms, and as provided in Section 1.3 during any Extension Period.

“Basic Terms” means the terms of this Lease identified as the “Basic Terms” before Article 1 of the Lease.

“Building” means that certain office building commonly known as 8901 E. Mountain View Road, Scottsdale, Arizona 85258.

“Building Rules” means those certain rules attached to this Lease as EXHIBIT “E”, as Landlord may amend the same from time to time.

“Business Days” means any day other than Saturday, Sunday or a legal holiday in the State of Arizona.

“Business Hours” means Monday through Friday from 7:00 a.m. to 6:00 p.m., Saturday from 8:00 A.M. to Noon, excluding holidays. The Building shall be closed on Sunday.

“Certificate of Occupancy” means a certificate of occupancy or similar document or permit (whether conditional, unconditional, temporary or permanent) which must be obtained from the appropriate governmental authority as a condition to the lawful occupancy by a tenant of space in the Building.

“City” means Scottsdale, Arizona.

A-1

“Claims” means all claims, actions, demands, liabilities, damages, costs, penalties, forfeitures, losses or expenses, including, without limitation, reasonable attorneys’ fees and the costs and expenses of enforcing any indemnification, defense or hold harmless obligation under the Lease.

“Commencement Date” means the date of commencement of the Term specified in Article 4 of the Basic Terms.

“Commencement Date Memorandum” means the memorandum attached to the Lease as EXHIBIT “D”.

“Common Area” means the parking area, driveways, sidewalks, walkways, landscaping, lobby areas, elevators and other areas of the Property Landlord may designate from time to time as common area available to all tenants.

“Condemning Authority” means any governmental body or entity with a statutory or other power of eminent domain.

“Construction Documents” means the final construction drawings and specifications prepared for construction of the Tenant Improvements.

“Contractor” means the general contractor chosen by Tenant to construct the Tenant Improvements.

“County” means Maricopa County.

“Effective Date” means the date which is the later of the date Landlord and Tenant execute this Lease, as indicated on the signature page.

“Event of Default” means the occurrence of any of the events specified in Section 14.1 of the Lease, or the occurrence of any other event which this Lease expressly labels as an “Event of Default.”

“Excess Expenses” means the total amount of Operating Expenses and Property Taxes due and payable with respect to the Property during any calendar year of the Term after the Base Year specified in the Basic Terms in excess of the total Operating Expenses and Property Taxes payable with respect to the Property during the Base Year.

“Floor Plan” means the floor plan attached to the Lease as EXHIBIT “C”.

“Force Majeure” means acts of God; strikes; lockouts; labor troubles; inability to procure materials; newly enacted governmental laws or regulations; casualty orders or directives of any legislative, administrative, or judicial body or any governmental department; inability to obtain any governmental licenses, permissions or authorities (despite commercially reasonable pursuit of such licenses, permissions or authorities); and other similar causes beyond Landlord’s or Tenant’s, as applicable, reasonable control.

A-2

“Hazardous Materials” means any of the following, in any amount: (a) any petroleum or petroleum product, asbestos in any form, urea formaldehyde and polychlorinated biphenyls; (b) any radioactive substance; (c) any toxic, infectious, reactive, corrosive, ignitable or flammable chemical or chemical compound; and (d) any chemicals, materials or substances, whether solid, liquid or gas, defined as or included in the definitions of “hazardous substances,” “hazardous wastes,” “Hazardous Materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “solid waste,” or words of similar import in any federal, state or local statute, law, ordinance or regulation now existing or existing on or after the Effective Date as the same may be interpreted by government offices and agencies.

“Hazardous Materials Laws” means any federal, state or local statutes, laws, ordinances or regulations now existing or existing after the Effective Date that control, classify, regulate, list or define Hazardous Materials.

“Improvements” means the Tenant Improvements.

“Term” means the initial term of this Lease specified in the Basic Terms, in addition to any Extension Period, if applicable.

“Interest Rate” means interest at the rate of ten percent (10%) per annum.

“Land” means that certain parcel of Land legally described on the attached EXHIBIT “B”.

“Landlord” means only the owner or owners of the Property at the time in question.

“Landlord Parties” means Landlord and Property Manager and their respective officers, directors, partners, shareholders, managers, members and employees.

“Laws” or “Applicable Laws” means any law, regulation, rule, order, statute or ordinance of any governmental or private entity in effect on or after the Effective Date and applicable to the Property or the use or occupancy of the Property, including, without limitation, Hazardous Materials Laws, Building Rules and Permitted Encumbrances.

“Lease” means this Office Lease Agreement, as the same may be amended or modified after the Effective Date.

“Lease Year” means each consecutive 12 month period during the Term, commencing on the Rent Commencement Date, except that if the Rent Commencement Date is not the first day of a calendar month, then the first Lease Year is a period beginning on the Rent Commencement Date and ending on the last day of the calendar month in which the Rent Commencement Date occurs plus the following 12 consecutive calendar months.

“Mortgage” means any mortgage, deed of trust, security interest or other security document of like nature that at any time may encumber all or any part of the Property and any replacements, renewals, amendments, modifications, extensions or refinancings thereof, and each advance (including future advances) made under any such instrument.

A-3

“Net Rent” means all rental Landlord actually receives from any reletting of all or any part of the Premises, less any indebtedness of Tenant to Landlord other than Rent (which indebtedness is paid first to Landlord) and less the Re-entry Costs as defined below (which costs are paid second to Landlord).

“Notices” means all notices, demands or requests that may be or are required to be given, demanded or requested by either party to the other as provided in the Lease.

“Operating Expenses” means all expenses Landlord incurs in connection with maintaining, repairing and operating the Property, as determined by Landlord’s accountant in accordance with generally accepted accounting principles consistently followed, including, but not limited to, the following: insurance premiums and deductible amounts under any insurance policy; costs of repairing, servicing, and maintaining the mechanical systems of the Building (HVAC, electrical, plumbing, and life safety systems); the parking area and parking lot lighting on the Property; landscaping, and exterior walkways; steam, electricity, water, sewer, gas and other utility charges; fuel; lighting; window washing; janitorial services; trash and rubbish removal; property association fees and dues and all payments under any Permitted Encumbrance (except Mortgages) affecting the Property; wages payable to persons at the level of manager and below whose duties are connected with maintaining and operating the Property (but only for the portion of such persons’ time allocable to the Property), together with all payroll taxes; amounts paid to contractors or subcontractors for work or services performed in connection with maintaining and operating the Property; all costs of uniforms, supplies and materials used in connection with maintaining, repairing and operating the Property; any expense imposed upon Landlord, its contractors or subcontractors pursuant to law or pursuant to any collective bargaining agreement covering such employees; all services, supplies, repairs, replacements or other expenses for maintaining and operating the Property, including costs of complying with Laws; reasonable management fees and the costs (including rental) of maintaining a building or management office in the Building; and such other expenses as may ordinarily be incurred in connection with maintaining and operating an office complex similar to the Property. Landlord shall include within its operating expenses the replacement of all lighting bulbs, tubes, ballasts and starters within the Premises. The term “Operating Expenses” also includes expenses Landlord incurs in connection with public sidewalks adjacent to the Property, any pedestrian walkway system (either above or below ground) and any other public facility to which Landlord or the Property is from time to time subject in connection with operating the Property. The term “Operating Expenses” does not include the cost of any capital improvement to the Property other than replacements required for normal maintenance and repair; the cost of repairs, restoration or other work occasioned by fire, windstorm or other insured casualty other than the amount of any deductible under any insurance policy (regardless whether the deductible is payable by Landlord in connection with a capita] expenditure); expenses Landlord incurs in connection with leasing or procuring tenants or renovating space for new or existing tenants; legal expenses incident to Landlord’s enforcement of any lease; interest or principal payments on any mortgage or other indebtedness of Landlord; allowance or expense for depreciation or amortization; Landlord’s executive salaries and overhead costs; expenses relating to services provided exclusively to other tenants; charitable or political contributions; costs for which (and to the extent of which) Landlord is actually reimbursed; amounts paid to affiliates of Landlord at rates in excess of fair market value. In addition, if the useful life of any repair or replacement whose cost is an Operating Expense is beyond the term remaining on the Lease, Tenant’s share of said cost will be prorated based upon the percentage that the remaining term of the Lease bears to the useful life of the repair or replacement.

A-4

“Permitted Encumbrances” means all Mortgages, liens, easements, declarations, encumbrances, covenants, conditions, reservations, restrictions and other matters now or after the Effective Date affecting title to the Property.

“Premises” means that certain space situated in the Building shown and designated on the Floor Plan and described in the Basic Terms.

“Property” means, collectively, the Land, Building, and all other improvements on the Land.

“Property Manager” means the property manager named in the Basic Terms or any other agent Landlord may appoint from time to time to manage the Property.

“Property Taxes” means any general real property tax, improvement tax, assessment, special assessment, reassessment, in lieu tax, levy, charge, penalty or similar imposition imposed by any authority having the direct or indirect power to tax, including but not limited to, (a) any city, county, state or federal entity, (b) any school, agricultural, lighting, drainage or other improvement or special assessment district, (c) any governmental agency, or (d) any private entity having the authority to assess the Property under any of the Permitted Encumbrances. The term “Property Taxes” includes all charges or burdens of every kind and nature Landlord incurs in connection with using, occupying, owning, operating, leasing or possessing the Property, without particularizing by any known name and whether any of the foregoing are general, special, ordinary, extraordinary, foreseen or unforeseen; any tax or charge for fire protection, street lighting, streets, sidewalks, road maintenance, refuse, sewer, water or other services provided to the Property. The term “Property Taxes” does not include Landlord’s state or federal income, franchise, estate or inheritance taxes. If Landlord is entitled to pay, and elects to pay, any of the above listed assessments or charges in installments over a period of two or more calendar years, then only such installments of the assessments or charges (including interest thereon) as are actually paid in a calendar year will be included within the term “Property Taxes” for such calendar year.

“Punch List” means a list of the Tenant Improvements items which were either not properly completed or are in need of repair, which list will be prepared and agreed upon by Landlord and Tenant as provided in Section 17.1.5.

“Re-entry Costs” means all reasonable costs and expenses Landlord incurs re-entering or reletting all or any part of the Premises, including, without limitation, all costs and expenses Landlord incurs (a) maintaining or preserving the Premises after an Event of Default; (b) recovering possession of the Premises, removing property from the Premises and storing such property (including court costs and reasonable attorneys’ fees); (c) reletting, renovating or altering the Premises; and (d) real estate commissions, advertising expenses and similar expenses paid or payable in connection with reletting all or any part of the Premises. “Re-entry Costs” also includes the value of free rent and other concessions Landlord gives in connection with re-entering or reletting all or any part of the Premises after an Event of Default.

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“Rent” means, collectively, Base Rent, Additional Rent and any other charges due from Tenant under the Lease.

“Rent Commencement Date” means the date that monthly installments of Base Rent begin to be due and payable as specified in the Basic Terms.

“Rent Tax” means any tax or excise on rents, all other sums and charges required to be paid by Tenant under this Lease, and gross receipts tax, transaction privilege tax or other tax, however described, which is levied or assessed by the United States of America, the State of Arizona, County of Maricopa, City of Scottsdale, or any other governmental body or political subdivision thereof, against Landlord in respect to the Base Rent, Additional Rent or other charges payable under this Lease or as a result of Landlord’s receipt of such rents or other charges accruing under this Lease, but does not include Landlord’s state or federal income, franchise, estate or inheritance taxes on such rents or other sums and charges.

“Reserved Spaces” means vehicular parking spaces located in the parking facilities provided for the Building which are designated for the exclusive use of a specific tenant, as the same may be relocated or redesignated from time to time by Landlord.

“State” means the State of Arizona.

“Structural Alterations” means any Alterations involving the structural, mechanical, electrical, plumbing, fire/life safety or heating, ventilating and air conditioning systems of the Building.

“Substantial Completion” means the date when a Certificate of Occupancy for the Premises has been issued and the only work remaining to be completed in connection with the Tenant Improvements, or other work of construction in the Premises, is work that can be completed without materially interfering with Tenant’s business.

“Taking” means the exercise by a Condemning Authority of its power of eminent domain on ail or any part of the Property, either by accepting a deed in lieu of condemnation or by any other manner.

“Tenant” means the tenant identified in this Lease.

“Tenant Delay” means any delay caused or contributed to by Tenant, including, without limitation, with respect to the Tenant Improvements, the selection by Tenant of any long lead time items as fixtures, furnishings, or finishes for the Premises, including, but not limited to, selection by Tenant of flooring material or carpet that is not obtainable within two (2) weeks after the same is ordered. A Tenant Delay excuses Landlord’s performance of any obligation related thereto for a period equal to (a) the duration of the act, occurrence or omission which constitutes the Tenant Delay, or (b) if longer, the period of delay actually caused by such Tenant Delay.

“Tenant Improvements” means the improvements to the Premises which are designed and installed pursuant to in Section 17.1.1.

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“Tenant’s Share of Excess Expenses” means the product obtained by multiplying the amount of Excess Expenses for the period in question by the Tenant’s Share of Excess Expenses Percentage.

“Tenant’s Share of Excess Expenses Percentage” means the percentage specified in the Basic Terms, as such percentage may be adjusted in accordance with the terms and conditions of this Lease.

“Term” means the Term of this Lease.

“Transfer” means an assignment, mortgage, pledge, transfer, sublease or other encumbrance or conveyance (voluntarily, by operation of law or otherwise) of this Lease or the Premises or any right, title or interest in or created by this Lease or the Premises. The term “Transfer” also- includes any assignment, mortgage, pledge, transfer or other encumbering or disposal (voluntarily, by operation of law or otherwise) of any ownership interest in Tenant that results or could result in a change of control of Tenant.

“Unreserved Spaces” mean vehicular parking spaces located in the parking facilities provided for the Building which are not designated for the exclusive use of a specific tenant or for use by visitors to the Property, as the same may be relocated or redesignated from time to time by Landlord.

“Warranty Terms” means the construction warranty provision of Section 17.1.6 of the Lease.

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EXHIBIT “B”

LEGAL DESCRIPTION OF THE LAND

That part of Section 30, Township 3 North, Range 5 East of the Gila and Salt River Base and Meridian, Maricopa County, Arizona, commonly known as 8901 E. Mountain View Road, Scottsdale, Arizona, and more particularly described as follows:

Commencing at the Southwest corner of said Section 30;

Thence South 89 degrees 46 minutes 51 seconds East along the South line of the Southwest quarter of said Section 30 for a distance of 1.32 feet to a point on the centerline of Pima Road as recorded in Docket 13359, Page 178, records of Maricopa County, Arizona, said point beginning a curve to the right the center of which bears South 87 degrees 39 minutes 54 seconds East for a distance of 2000.00 feet;

Thence Northerly along the arc of said curve and along said centerline through a central angle of 20 degrees 48 minutes 58 seconds and a distance of 726.62 feet;

Thence North 23 degrees 09 minutes 04 seconds East along said centerline for a distance of 928.03 feet;

Thence South 66 degrees 50 minutes 56 seconds East for a distance of 95.00 feet to a point on the East right of way line of Pima Road, said point beginning a curve to the left the center of which bears North 66 degrees 50 minutes 56 seconds West for a distance of 2095.00 feet;

Thence Northerly along the arc of said curve and said East right of way through a central angle of 01 degrees 53 minutes 14 seconds and a distance of 69.01 feet;

Thence continuing Northerly along the arc of said curve and along said East right of way through a central angle of 21 degrees 33 minutes 11 seconds and a distance of 788.08 feet;

Thence North 86 degrees 21 minutes 01 seconds East 100.16 feet to the Easterly line of a drainage and flood control easement as recorded in Docket 14593, Page 1398, records of said County, last point also being the TRUE POINT OF BEGINNING;

Thence continuing North 86 degrees 21 minutes 01 seconds East for a distance of 200.86 feet;

Thence North 03 degrees 38 minutes 32 seconds West 231.92 feet to a point on the South right of way line of Mountain View Road as set forth on Plat of Dedication recorded in Book 219 of Maps, Page 10 and Affidavit recorded in Docket 15046, Page 325, records of Maricopa County, Arizona, being the beginning of a curve to the right the center of which bears South 03 degrees 07 minutes 03 seconds East for a distance of 1945.00 feet;

Thence Easterly along the arc of said curve and along said Southerly right of way line of Mountain View Road through a central angle of 06 degrees 21 minutes 41 seconds and a distance of 215.95 feet;

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Thence South 11 degrees 44 minutes 09 seconds West for a distance of 223.53 feet;

Thence South 78 degrees 17 minutes 26 seconds East for a distance of 286.00 feet;

Thence South 11 degrees 44 minutes 09 seconds West for a distance of 479.64 feet;

Thence North 82 degrees 18 minutes 40 seconds West for a distance of 82.59 feet to the beginning of a curve to the left having a radius of 750 feet;

Thence Southwesterly along the arc of said curve through a central angle of 44 degrees 37 minutes 46 seconds for a distance of 584.20 feet to a point on said Easterly line of a drainage and flood control easement last said point being the beginning of a non-tangent curve to the left the center of which bears North 72 degrees 35 minutes 48 seconds West for a distance of 2095.00 feet;

Thence Northerly along said Easterly line of a drainage and flood control easement through a central angle of 18 degrees 16 minutes 54 seconds and a distance of 668.15 feet to the TRUE POINT OF BEGINNING.

EXCEPT all minerals as reserved unto the United States of America in the Patent to said land, recorded in Book 432 of Deeds, Page 554.

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EXHIBIT “C”

SPACE PLAN

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EXHIBIT “D”

COMMENCEMENT DATE MEMORANDUM

THIS COMMENCEMENT DATE MEMORANDUM is made and entered into by and between POLLOCK GATEWAY II LLC, a California limited liability company (“Landlord”), and CALIBERCOS INC., a Delaware corporation (“Tenant”).

RECITALS:

1.    Landlord and Tenant are parties to that certain Office Lease Agreement dated as of July 11, 2018 (“Lease”), relating to certain premises on the first (1^st) floor of the Building commonly known as Suite 150 and consisting of approximately 18,316 rentable square feet (“Premises”) located in the building commonly known as “Scottsdale Gateway II,” located at 8901 E. Mountain View Road, Scottsdale, Arizona 85258 (“Building”).

2.    Landlord and Tenant desire to confirm the Commencement Date and Rent Commencement Date (as such terms are defined in the Lease) and the date the Term of the Lease expires.

ACKNOWLEDGMENTS:

Pursuant to Section 1.2.3 of the Lease and in consideration of the facts set forth in the above Recitals, Landlord and Tenant acknowledge and agree as follows:

1.    All capitalized terms not otherwise defined in this Commencement Date Memorandum have the meanings ascribed to them in the Lease.

2.    The Commencement Date of the Lease is July 11, 2018.

3.    The Rent Commencement Date of the Lease is July 23, 2018.

4.    The Premises has 18,316 rentable square feet.

5.    The Term of the Lease expires on ___________, unless the Lease is sooner terminated in accordance with the terms and conditions of the Lease, or unless Tenant exercises its Right to Extend the term of the Lease as provided in Section 1.3 of the Lease.

Landlord and Tenant have caused this Memorandum to be executed by their duly authorized representatives as of the dates shown opposite their names below. This Memorandum may be executed in counterparts, each of which is an original and all of which constitute one instrument.

[Signatures appear on the following page]

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	LANDLORD:
	POLLOCK GATEWAY II LLC,
	a California limited company
Dated and executed by Landlord
July 13, 2018	By:	/s/ James M. Pollock
		Name: Jeffrey O. Pollock
		Title:   Manager
Dated and executed by Landlord
July 13, 2018	By:	/s/ Jeffrey O. Pollock
		Name: Jeffrey O. Pollock
		Title:   Manager
	TENANT:
	CALIBERCOS INC.,
	a Delaware
Dated and executed by Tenant
July 11, 2018	By:	/s/ Jennifer Schrader
	Name:	Jennifer Schrader
	Title:	President & COO

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EXHIBIT “E”

BUILDING RULES

1. Any sign, lettering, picture, notice or advertisement installed on or in any part of the Premises and visible from the exterior of the Building, or visible from the exterior of the Premises, shall be installed at Tenant’s sole cost and expense, and in such manner, character and style as Landlord may approve in writing, In the event of a violation of the foregoing by Tenant, Landlord may remove any such item without any liability and may charge the expense incurred in such removal to Tenant.

2. No awning or other projection shall be attached to the outside walls of the Building. No curtains, blinds, shades or screens visible from the exterior of the Building or visible from the exterior of the Premises shall be attached to or hung in, or used in connection with, any window or door of the Premises without the prior written consent of Landlord. Such curtains, blinds, shades, screens or other fixtures must be of a quality, type, design and color, and attached in the manner, approved by Landlord.

3. Tenant and its employees, agents, customers, invitees and guests shall not obstruct sidewalks, entrances, passages, corridors, vestibules, halls, elevators or stairways in and about the Building which are used in common with other tenants and their employees, agents, customers, invitees, and guests, and which are not a part of the Premises of Tenant. Tenant shall not place objects against glass partitions or doors or windows which would be unsightly from the Building corridors or from the exterior of the Building. Tenant shall promptly remove any such objects upon notice from Landlord.

4. Tenant shall not make excessive noises, cause disturbances or vibrations or use or operate any electrical or mechanical devises that emit excessive sound or other waves or disturbances. Tenant shall not create obnoxious odors (including cigarette, cigar and pipe smoke), any of which may be offensive to the other tenants and occupants of the Building, or that may interfere with the operation of any device, equipment, radio, television broadcasting or reception from or within the Building or elsewhere, Tenant shall not place or install any projections, antennas, aerials or similar devices inside or outside of the Premises or on the exterior of the Building or on the roof of the Building.

5. Tenant shall reasonably cooperate with Landlord to insure the most effective operation of the heating and air conditioning systems of the Building. Tenant shall refrain from attempting to adjust any temperature controls other than unlocked room thermostats, if any, installed for Tenant’s use. Tenant shall keep corridor doors closed.

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6. Tenant assumes full responsibility for protecting its space from theft, robbery and pilferage, and shall keep doors locked and other means of entry to the Premises closed and secured after normal business hours.

7. No person or contractor not employed by Landlord shall be used to perform janitorial work, window washing, cleaning, maintenance, repair or similar work in the Premises or elsewhere in the Building without the prior written consent of Landlord.

8. In no event shall Tenant bring into the Building inflammables, such as gasoline, kerosene, naphtha and benzine, or explosives or any other article of intrinsically dangerous nature. If, by reason of the failure of Tenant to comply with the provisions of this subparagraph, any insurance premium for all or any part of the Building shall at any time be increased, Tenant shall make immediate payment of the whole of the increased insurance premium, without waiver of any of Landlord’s other rights at law or in equity for Tenant’s breach of this Lease.

9. Tenant shall comply with all applicable federal, state and municipal laws, ordinances and regulations and building rules and shall not directly or indirectly make any use of the Premises which may be prohibited by any of the foregoing or which may be dangerous to persons or property or may increase the cost of insurance or require additional insurance coverage.

10. Landlord shall have the right to prohibit any advertising by Tenant which in Landlord’s reasonable opinion may adversely affect the reputation of the Building or its desirability as an office complex for office use. Tenant shall refrain from or discontinue such advertising upon receipt of written notice from Landlord.

11. The Premises shall not be used for cooking (except that Tenant may prepare coffee, tea and operate a microwave oven for the use of its employees and visitors), lodging, sleeping or for any illegal purpose.

12. Tenant and Tenant’s employees, agents, visitors and licensees shall observe faithfully and comply strictly with the Building Rules and such other and further appropriate rules and regulations as Landlord or Landlord’s agent may from time to time adopt. Reasonable notice of any additional rules and regulations shall be given in such manner as Landlord may reasonably elect.

13. Unless expressly permitted by Landlord, no additional locks or similar devices shall be attached to any door or window and no keys other than those provided by Landlord shall be made for any door. If more than two keys for one lock are desired by Tenant, Landlord may provide the same upon payment by Tenant of the cost thereof. Upon termination of this Lease or termination of Tenant’s right to possession of the Premises, Tenant shall immediately surrender to the Property Manager all keys to the Building and the Premises and shall explain to Landlord all combination locks on safes, cabinets and vaults in the Premises.

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14. Any carpeting cemented down by Tenant shall be installed with a releasable adhesive. In the event of a violation of this Rule by Tenant, Landlord may charge the expense incurred in such removal to Tenant.

15. Toilets, wash basins, drinking fountains and other plumbing fixtures shall not be used for any purpose other than those for which they were intended, and no sweepings, rubbish, rags, coffee grounds or other substances shall be disposed of therein. All damages resulting from any misuse of the fixtures shall be borne by the Tenant who, or whose employees, agents, visitors or licensees, have caused the same. No person shall waste water by interfering or tampering with the faucets or otherwise.

16. No electrical circuit shall be installed or used in the Premises for any purpose without Landlord’s prior written consent, which consent may specify reasonable conditions required by Landlord.

17. No bicycle or other vehicle, and no dog or other animal, shall be allowed in offices, halls, corridors or elsewhere in the Building.

18. Tenant shall not throw any article out of the doors or windows or down any passageways or elevator shaft.

19. All loading, unloading, receiving or delivery of goods, supplies or disposal of garbage or refuse shall be made only through entryways and freight elevators provided for such purposes and indicated by Landlord. Tenant shall be responsible for any damage to the Building or the property of its employees or others and injuries sustained by any person resulting from the use or moving of such articles in or out of the Premises or the Building. Tenant shall reimburse Landlord upon demand for the cost of any repairs and improvements required by Landlord or by governmental authorities in connection with the use of such articles.

20. All safes, equipment or other heavy articles shall be carried in or out of the Premises only at such time and in such manner as shall be prescribed in writing by Landlord or by Landlord’s property manager. The location in the Premises of any safe, equipment, or other heavy article shall be specified on the Working Drawings for the Tenant Improvements approved In writing by Landlord and Tenant. Tenant shall reimburse Landlord for the cost of repairing any damage to the Premises or to the Building, or to the premises of other tenants or occupants of the Building caused by any safe, equipment or other heavy article brought to the Premises by Tenant, and Tenant shall be responsible for any damage to the property of Landlord or Landlord’s employees or others, and injuries sustained by any person whomsoever resulting from the use of any such articles by Tenant or from the or moving of any such articles in or out of the Premises, and Tenant shall make all repairs and improvements required by Landlord or governmental authorities in connection with the use or moving of such articles.

21. Canvassing, soliciting and peddling in the Building is prohibited and all tenants of the Building shall cooperate in preventing any such activity.

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22. Vending machines shall not be installed without permission of Landlord; provided, however, Landlord consents to the installation of vending machines in the pantry or kitchen area of the Premises for the dispensing of soda and other similar beverages to Tenant’s employees and guests.

23. Wherever in these Building Rules the word “Tenant” occurs, it is understood and agreed that it shall mean Tenant and Tenant’s employees, contractors, agents, servants and visitors. Wherever the word “Landlord” occurs, it is understood and agreed that it shall mean Landlord and Landlord’s employees, assigns, agents, servants and visitors.

24. Subject to the terms of the Lease, Landlord shall have the right to enter the Premises during normal business hours for the purpose of inspecting the same.

25. Subject to the terms of the Lease, Landlord shall have the right to enter the Premises at hours convenient to Tenant for the purpose of exhibiting the same to prospective tenants within the sixty (60) day period prior to the expiration of this Lease, and Landlord may place signs advertising the Premises for rent on the windows and doors of said Premises at any time within said sixty (60) day period.

26. Tenant and its employees, customers, invitees and guests shall, when using the common parking facilities, if any, in and around the Building, observe and obey all signs regarding fire lanes and no parking zones, and when parking, shall always park between the designated lines. Landlord reserves the right to tow away, at the expense of the owner, any vehicle which is improperly parked or parked in a no parking zone. All vehicles shall be parked at the sole risk of the owner, and Landlord assumes no responsibility for any damage to or loss of vehicles. No vehicles shall be parked overnight.

27. Access to and entry of the Building shall be under the supervision and control of Landlord’s Property Manager, (a) Persons may enter the Building only in accordance with Landlord’s regulations, (b) persons entering or departing from the Building may be questioned as to their business in the Building. Landlord reserves the right to require the use of an identification card or other access device and the registering of such persons as to the hour of entry and departure, nature of visit, and other information deemed necessary for the protection of the Building and its occupants, and (c) all entries into and departures from the Building shall take place through one or more entrances as Landlord shall from time to time designate; provided, however, anything herein to the contrary notwithstanding, Landlord shall not be liable for any lack of security in or about the Building or the parking area on the Property. Landlord normally will not enforce clauses (a), (b) and (c) above from 7:00 a.m. to 6:00 p.m., Monday through Friday, and from 8:00 a.m. to 1:00 p.m. on Saturdays, but Landlord reserves the right to do so or not to do so at any time at its sole discretion. In case of invasion, mob, riot, public disturbance or other commotion, Landlord reserves the right to prevent access to the Building during the continuance of such condition by closing the doors or otherwise, for the safety of the tenants or the protection of the Building and the property therein. Landlord shall in no event be liable for damages for any error or other action taken with regard to the admission to or exclusion from the Building of any person under any such circumstances.

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28. All entrance doors to the Premises shall be locked when the Premises are not occupied. All corridor doors shall also be closed when the air conditioning equipment in the Building is operating in order not to dissipate the effectiveness of the system or overload the system.

29. Smoking shall be permitted only in the smoking areas located outside of the Building, as designated and re-designated from time to time by Landlord. Tenant and its employees, agents, customers, invitees and guests shall not smoke anywhere inside of the Building, including, without limitation, Tenant’s Premises, or on the sidewalks, entrances, passages, corridors, halls, elevators, and stairways of the Building, or anywhere near the entrances to the Building (other than the exterior smoking areas designated by Landlord).

30. Only vehicles designated by Tenant to Landlord may be parked in the Reserved Spaces and Unreserved Spaces on the parking area; provided, however, the Tenant may change its automobile designations upon written notice to Landlord.

31. Tenant shall observe and obey all signs regarding fire lanes and no parking zones in the parking area, and when parking Tenant shall only park within the lines designating the parking spaces. Landlord reserves the right to tow away or otherwise impound any improperly parked vehicle, at the expense of the owner or operator of the vehicle.

32. In the event a key or other access device is supplied to Tenant for accessing the parking area serving the Building, Tenant shall surrender such key or access device to Landlord upon termination of this Lease.

33. Landlord reserves the right at any time and from time to time to rescind, alter or waive, in whole or in part, any of these Building Rules when Landlord deems it necessary, desirable or proper, in Landlord’s judgment to do so in the interests of the tenants of the Building and in the interest of Landlord as the owner of the Building.

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EXHIBIT “F”

WORK LETTER AGREEMENT

This Work Letter Agreement (“Agreement”) is made and entered into as of July 11, 2018, by and between POLLOCK GATEWAY II, LLC, a California limited liability company, as Landlord (“Landlord”), and CALIBERCOS INC., a Delaware corporation, as Tenant (“Tenant”), pertaining to certain premises consisting of approximately 18,316 rentable square feet of space (“Premises”), commonly known as Suite 150 of that certain office building commonly known as 8901 E. Mountain View Road, Scottsdale, Arizona 85258 (the “Building”).

This Agreement is entered into in connection with. the Office Lease Agreement of the Premises (“Lease”) between Landlord and Tenant dated as of July 11, 2018.

Landlord and Tenant agree as follows:

1.           DEFINITIONS. Capitalized terms defined in the Lease and used in this Agreement shall have the meanings ascribed to them in the Lease, except as otherwise specified herein.

2.           GENERAL PROVISIONS.

2.1           Landlord shall deliver possession of the Premises, in their “as is” condition as of the Effective Date of the Lease.

Landlord shall provide Tenant with a Tenant Improvement Allowance (the “Tenant Improvement Allowance”) of Fifteen and 00/100 Dollars ($15.00) per rentable square foot (a total of $274,740.00) for work in preparing the Premises for Tenant’s use (“Tenant Improvements”). To be performed as a part of the Tenant Improvements, Tenant shall have the right to request that an exterior glass door be installed providing access from the Premises to the grass area in the rear of the Building subject to approval and compliance with the City of Scottsdale regulations. The Tenant Improvement Allowance shall be available for the hard and soft construction costs of leasehold improvements to the Premises (the “Construction Costs”). Notwithstanding anything set forth herein to the contrary, the entire amount of the Tenant Improvement Allowance can be used to pay the cost of Tenant’s data cabling and wiring and personal property, such as, furniture, fixtures, signage, and equipment, and moving costs. Tenant may also elect to apply any portion of the Tenant Improvement Allowance towards Base Rent, including the Base Rent owed upon execution of the Lease. Notwithstanding anything herein to the contrary, Landlord makes no representation or warranty that the Tenant Improvement Allowance is sufficient to pay the full amount of the Construction Costs.

2.2           If the Construction Costs of the Tenant improvements exceeds the Tenant Improvement Allowance, Tenant shall be solely liable for the excess amount (the “Excess”), except as otherwise provided herein. Tenant shall pay the Excess for tender to the contactors) and subcontractors) as and when due.

2.3           All design, construction and installation of Tenant Improvements shall conform to the requirements of applicable building, plumbing, electrical and fire codes and the requirements of any authority having jurisdiction over or with respect to such work, as such codes and requirements may from time to time be amended or supplemented.

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2.4           Landlord shall act as the Construction Manager for the Tenant Improvements. Tenant shall enter into a construction contract with all contractors) or subcontractors) who have been approved in writing by Landlord to complete the Tenant Improvements, such approval not to be unreasonably withheld or delayed. Each contractor and subcontractors) performing work at the Premises shall be licensed, insured, and bonded in the State of Arizona to perform the Tenant Improvements. Landlord shall be named as an additional insured on all applicable insurance policies maintained by each of the contractors and subcontractors. Upon receipt of all necessary permits and pursuant to the conditions set forth in Section 3, Tenant shall cause the contractors) and all subcontractors) to commence and diligently proceed with the installation and construction of the Tenant Improvements. Tenant shall use commercially reasonable efforts to cause the Tenant Improvements to be completed on or about December 1, 2018, subject to Force Majeure delays as defined in the Lease. Upon Substantial Completion of the Tenant Improvements, each contractor and subcontractor shall deliver to Landlord and Tenant a construction warranty as provided herein,

2.5           Landlord acknowledges that Tenant has entered into this Lease in reliance on the diligent and good faith cooperation of Landlord in the timely completion of Tenant Improvements, so as to ensure that the Premises are ready for Tenant’s use when anticipated by Tenant. Landlord and Tenant hereby covenant and agree that they will cooperate with each other, diligently and in good faith, to complete the Tenant Improvements in a timely manner.

2.6           Tenant understands dimensions to be shown in the plans and specifications for the Building, and in any leasing brochure, are approximate and may change due to field conditions.

2.7           Under no circumstances will Tenant or Tenant’s authorized representatives alter or modify, or in any manner disturb, any Building system, except as shown on and in strict compliance with the Construction Documents. Only with Landlord’s prior written consent (which may be withheld in Landlord’s discretion) and under direct supervision of Landlord shall Tenant or Tenant’s authorized representative alter, add to or modify, or in any manner disturb any branch system or installation of the Building which is located within the Premises (for the purposes of this Section “branch” shall be defined as that portion of any Building system or component of a Building system which serves to connect or extend Building systems into the Premises).

3.           PREPARATION OF CONSTRUCTION DOCUMENTS.

3.1           Landlord shall cooperate with Tenant in developing plans and specifications for Tenant Improvements, which plans and specifications shall be prepared by an architect chosen by Tenant but subject to Landlord’s reasonable approval. Tenant and Landlord agree to make and communicate design decisions in a timely fashion. The plans and specifications for Tenant Improvements shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably delayed or withheld. The cost of the design shall be paid out of the Tenant Improvement Allowance.

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3.2           Within 21 days following the Effective Date, Landlord and Tenant shall approve Construction Documents. Tenant shall supervise the necessary revisions of the Construction Documents and obtain Landlord’s written approval of the Construction Documents, such approval not to be unreasonably withheld or delayed. Once the Construction Documents are approved in writing by the parties, the contractor selected by Tenant shall proceed with the installation and construction of the Tenant Improvements in accordance with this Agreement.

3.3           The Construction Documents shall set forth in detail the requirements for construction of the Tenant Improvements and shall include drawings and specifications that establish in detail the quality of materials and systems required for the Premises. The Construction Documents shall include an estimate of the schedule for the construction of the Tenant Improvements from the Effective Date of the Lease through the completion of Punch List items. The Construction Documents shall comply with local building codes, regulations and laws and include, without limitation, architectural, structural (if required), mechanical (heating, ventilating and air conditioning), fire protection, plumbing and electrical drawings and specifications. Neither review nor approval by Landlord of the Construction Documents shall constitute a representation or warranty by Landlord that such Construction Documents either (i) are complete or suitable for their intended purpose or (ii) comply with applicable laws, it being expressly agreed by Tenant that Landlord assumes no responsibility or liability whatsoever to Tenant or to any other person or entity for such completeness, suitability, or compliance. Tenant shall not, without Landlord’s prior written approval, make any changes to the Construction Documents approved by Landlord. If Tenant desires to change the Construction Documents, Tenant shall, at its expense, provide to Landlord plans and specifications for such change(s). The Construction Documents shall be provided to the parties in the following formats: two sets of drawings and one CD-ROM disk containing the drawings in the CAD format.

4.           COMPLETION OF PREMISES.

4.1           Tenant Improvements shall be constructed by contractor chosen by Tenant. The Parties shall cooperate with each other and the contractors) and subcontractors) to promote the efficient and expeditious completion of such work.

4.2           During the construction work process, if there are substantial changes in the Tenant Improvements requested by or on behalf of Tenant from the work as reflected in the Construction Documents, each such change must receive the prior written approval of Landlord and, if the cost thereof increases the cost of construction to more than the Tenant Improvement Allowance, Tenant shall agree in writing to pay such Excess amount as and when due.

4.3           Within ten (10) days after Substantial Completion of the Tenant Improvements, Landlord and Tenant shall inspect the Premises and prepare a Punch List. Tenant shall cause to be completed (or repaired, as the case may be) the items listed on the Punch List with commercially reasonable diligence, except as otherwise provided herein.

4.4           All work on the Tenant Improvements shall be performed by contractors licensed in the State of Arizona. All such work shall be performed in a good, workmanlike, and professional manner and consistent with all applicable laws and regulations.

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5.           MISCELLANEOUS

5.1           The descriptive headings used and inserted in this Agreement are for convenience only and shall not be deemed to affect the meaning or construction of any of the terms or provisions contained herein.

5.2           Each contractor and subcontractor who performs work at the Premises relating to the Tenant Improvements shall warrant the Tenant Improvements against defects in workmanship or materials for a period of one (1) year after the date of Substantial Completion. Tenant shall use commercially reasonable efforts to cause the contractor or subcontractor to repair or replace, as necessary, any defects in workmanship or materials if Landlord notifies Tenant in writing of the defective item prior to the expiration of the one year warranty period. Neither party shall have the obligation to repair or replace any item after the warranty period expires. THE WARRANTY TERMS PROVIDE THE SOLE AND EXCLUSIVE RIGHT AND REMEDY OF THE PARTIES FOR DEFECTIVE WORKMANSHIP OR MATERIALS IN THE PREMISES IN LIEU OF ANY CONTRACT, WARRANTY OR OTHER RIGHTS, WHETHER EXPRESS OR IMPLIED, THAT MIGHT OTHERWISE BE AVAILABLE UNDER APPLICABLE LAW.

6.           ALLOWANCE

6.1           Landlord shall reimburse Tenant for Tenant’s Construction Costs incurred in connection with the construction of the Tenant Improvements up to, but not exceeding, the amount of the Tenant Improvement Allowance, less the amount of the Fee, in accordance with the terms of this Section. In no event shall Landlord be obligated to expend more than the Improvement Allowance.

6.2           Landlord shall reimburse Tenant for Tenant’s Construction Costs incurred in designing and constructing the Tenant Improvements, in an amount up to but not exceeding the Tenant Improvement Allowance less the amount of the Fee ; provided, however, that such costs may be paid by Landlord directly to the Architect, the Contractor or any other party if so directed by Tenant. Unless waived by Landlord in writing, no final reimbursement of Tenant’s Construction Costs will be made until the following documents have been received by Landlord:

i.            a copy of the final Certificate of Occupancy for the Premises, or such other certificate of occupancy as will permit Tenant to occupy and use the Premises;

ii.         an AIA-approved completion certificate executed by Contractor, and an AIA-approved application for payment executed by the Architect, both in form and substance reasonably satisfactory to Landlord, or substitutes for such documents that are reasonably acceptable to Landlord;

iii.         an affidavit or certificate executed by the Architect, the Contractor and Tenant that the Tenant Improvements are complete and constructed in accordance with the Construction Documents;

iv.         unconditional or conditional (as applicable, see below) contractor’s affidavit from Contractor, in a form reasonably satisfactory to Landlord, satisfying the requirements of the laws of the state in which the Building is located in order to extinguish all lien rights in connection with the design and construction of the Tenant Improvements;

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v.           unconditional or conditional (as applicable, see below) lien waivers from the Architect and all subcontractors, materialmen, and engineers providing goods or services in connection with the design and construction of the Tenant Improvements;

vi.         written warranties and maintenance specifications for all components of the Tenant Improvements; and

vii.         such other documents as may be reasonably requested by Landlord in order to demonstrate that the Tenant Improvements are complete; they have been constructed in accordance with the Construction Documents and all applicable laws; and any liens or potential liens that could be filed against the Building or any interest therein have been extinguished.

Landlord shall reimburse Tenant the Tenant Improvement Allowance in installments (each disbursement of the Tenant Improvement Allowance shall be hereinafter referred to as an “Allowance Installment”). Tenant may draw against the Tenant Improvement Allowance as improvements are needed. Tenant shall only be entitled to payment by Landlord of an Allowance Installment if and when each and every one of the foregoing conditions (clauses (i) through (vii) being collectively referred to herein as the “Allowance Conditions”) are fully satisfied with respect to those Tenant Improvements that Tenant is seeking reimbursement, subject to the following: with respect to clauses (iv) and (v), above, (a) Tenant must provide a conditional contractor’s affidavit and conditional lien waivers in connection with Tenant’s Construction Costs that are covered by the applicable disbursement request; and (b) Tenant must provide an unconditional contractor’s affidavit and unconditional lien waivers in connection with Tenant’s Construction Costs covered by the prior disbursement request (for the previously disbursed Allowance Installment). If and when each and every one of the Allowance Conditions has been fully satisfied, Landlord will disburse to Tenant the requested Allowance Installment within thirty (30) days thereafter.

After the Tenant Improvement Allowance has been expended by Landlord, the principal amount of the Tenant Improvement Allowance, shall be amortized evenly over the Term, and so long as no uncured Event of Default exists under the Lease that results in Landlord exercising its remedies under Section 14.2 of the Lease, then upon Landlord’s receipt of the final payment of Rent due during the initial Lease Term of this Lease, Tenant shall have no liability to Landlord for the repayment of any portion of the Tenant Improvement Allowance. If an Event of Default occurs under the Lease that results in Landlord exercising its remedies under Section 14.2 of the Lease, then in addition to all of Landlord’s other remedies available under this Lease, Tenant shall also be immediately liable to Landlord for the unamortized portion of the Tenant Improvement Allowance existing as of the date that Landlord first exercises its remedies under Section 14.2 of the Lease.

[Signatures appear on the following page]

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IN WITNESS WHEREOF, the undersigned Landlord and Tenant have executed this Work Letter Agreement as of the date set forth above.

	LANDLORD:
	POLLOCK GATEWAY II LLC,
	a California limited company
Dated and executed by Landlord
July 13, 2018	By:	/s/ James M. Pollock
		Name:	James M. Pollock
		Title:	Manager
Dated and executed by Landlord
July 13, 2018	By:	/s/ Jeffrey O. Pollock
		Name:	Jeffrey O. Pollock
		Title:	Manager

	TENANT:
	CALIBERCOS INC.,
	a Delaware
Dated and executed by Tenant
July 11, 2018	By:	/s/ Jennifer Schrader
	Name:	Jennifer Schrader
	Title:	President & COO

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EXHIBIT “G”

PLACEMENT OF EXTERIOR SIGNAGE

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G-2

G-3

G-4

G-5

G-6

G-7

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EXHIBIT “H”

PARKING MAP

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EX1A-6 MAT CTRCT

Exhibit 6.4.1

FIRST AMENDMENT TO OFFICE LEASE AGREEMENT

THIS FIRST AMENDMENT TO OFFICE LEASE AGREEMENT (the “First Amendment”), dated this 14^th day of November, 2018 (for reference purposes only), is entered into by and between POLLOCK GATEWAY II LLC, a Delaware limited liability company (“Landlord”) and CALIBERCOS INC., a Delaware corporation (“Tenant”).

RECITALS

WHEREAS, Landlord, as landlord, and Tenant, as tenant, entered into that certain Office Lease Agreement dated July 13, 2018 (the “Lease”), whereby Tenant leases from Landlord 18,316 rentable square feet of space located on the first floor of the building commonly known as Suite 150, 8901 East Mountain View Road, Scottsdale, Arizona 85258 (the “Premises”); and

WHEREAS, Landlord and Tenant wish to modify the Lease in accordance with the terms and conditions set forth in this First Amendment.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, Landlord and Tenant agree as follows:

1.          Incorporation of Recitals; Capitalized Terms; Effective Date. The Recitals set forth above are deemed to be true and accurate in all respects and are hereby incorporated into this First Amendment by this reference. Capitalized terms used in this First Amendment shall have the same meanings as ascribed to them as in the Lease unless otherwise expressly defined in this First Amendment. In the event of any conflict between the terms of the Lease and the terms of this First Amendment, the terms of this First Amendment shall govern and control. This First Amendment is binding on the parties as of the date a fully executed copy hereof is delivered by Landlord to Tenant.

2.          Reserved Parking Spaces. Exhibit “H” to the Lease is hereby deleted in its entirety and the form of Exhibit “H” attached to this First Amendment as Exhibit “A” shall be substituted in lieu thereof. The location of the covered, reserved parking spaces and the uncovered, reserved parking spaces are identified as parking spaces 80 - 83, 105 - 108, 139-145, 154 -157 and are shown on Exhibit “H” (as amended).

3.          Non-Standard Equipment. The Lease is hereby amended to add the following new paragraph under Section 7,2 of the Lease:

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Non-Standard Equipment. Notwithstanding anything to the contrary contained in this Lease, Tenant shall be solely responsible for the maintenance, repair and replacement of any non-standard equipment and systems used at the Premises (“Non-Standard Equipment”), including, without limitation, separate dedicated air conditioning units and equipment serving computer, telecommunication and other intellectual or information technology items. In no event shall Landlord or its property management company be responsible for the maintenance, repair or replacement of any Non-Standard Equipment or for any damages arising out of the malfunction, failure or break down thereof for any reason whatsoever. In addition, Tenant shall pay, on a monthly basis, any electrical costs attributable to above standard or after-hours usage of its Non-Standard Equipment. As of the Commencement Date, the Non-Standard Equipment servicing Tenant’s IT room is a 1.5 ton mini-split that is being utilized by Tenant 24 hours a day/7 days a week. Tenant agrees to pay for the above-standard or after-hours usage of such Non-Standard Equipment as reasonably estimated by Landlord which, as of the Commencement Date, is $50.00 per month/per ton or a total of $75.00 per month (plus any related sales tax thereon).

4.          Brokers. Each party represents and warrants to the other that no broker, agent or finder negotiated or was instrumental in negotiating or consummating this First Amendment. Each party agrees to defend, indemnify and hold harmless the other party from and against any claim for commission or finder’s fee by any person or entity who claims or alleges that they were retained or engaged by the indemnifying party or at the request of such party in connection with this First Amendment.

5.          Existing Claims. Tenant acknowledges that there are no existing claims or causes of action against Landlord arising out of the Lease, either currently or which would exist with the giving of notice or with the passage of time, nor are there any existing defenses which Tenant has against the enforcement of the Lease by Landlord.

6.          Incorporation of Prior Agreements. This First Amendment contains the entire understanding of the parties hereto with respect to the subject matter hereof, and no prior or other written or oral agreement or undertaking pertaining to any such matter shall be effective for any purpose.

7.          Modification of Amendment. This First Amendment may not be amended or modified, nor may any right or obligation hereunder be waived orally, and no such amendment or modification shall be effective for any purpose unless it is in writing and signed by the party against whom enforcement thereof is sought.

8.          Interpretation. This First Amendment shall be construed reasonably to carry out its intent without presumption against or in favor of either party. The parties acknowledge that both parties have caused this First Amendment to be reviewed by legal counsel of their choice. No negotiations concerning or modifications made to prior drafts of this First Amendment shall be construed in any manner to limit, reduce or impair the rights, remedies or obligations of the parties under this First Amendment or to restrict or expand the meaning of any provisions of this First Amendment. If any provision hereof shall be declared invalid by any court or in any administrative proceedings, then the provisions of this First Amendment shall be construed in such manner so as to preserve the validity hereof and the substance of the transactions herein contemplated to the extent possible. The Section headings are provided for purposes of convenience of reference only and are not intended to limit, define the scope of or aid in interpretation of any of the provisions hereof.

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9.          Full Force and Effect; Counterparts. The Lease shall remain in full force and effect in accordance with its original terms and provisions, except as expressly modified by the terms of this First Amendment. This First Amendment shall be governed by Arizona law and shall be binding on the parties hereto and their respective successors and assigns. This First Amendment may be executed by the parties hereto in one or more counterparts. All counterparts shall be valid and binding on the party or parties executing them and all counterparts shall constitute one and the same document for all purposes. If this First Amendment is executed by Landlord or Tenant and delivered to the other party in pdf, facsimile or similar electronic format, the same shall be binding on the party delivering the executed First Amendment with the same force and effect as the delivery of a printed copy of this First Amendment with an original ink signature. At any time upon Landlord’s written request, Tenant shall provide Landlord with a printed copy of this First Amendment with an original ink signature. Each party hereto represents and warrants to the other that this First Amendment has been duly authorized, executed and delivered by or on behalf of such party.

10.         Tenant’s Authority. If Tenant signs as a limited liability company, corporation, partnership, trust or other legal entity, each of the persons executing this First Amendment on behalf of Tenant represents and warrants that Tenant has been and is qualified to do business in the state in which the Building is located, that the entity has full right and authority to enter into this First Amendment, and that all persons signing on behalf of the entity were authorized to do so by appropriate actions.

IN WITNESS WHEREOF, the parties have executed this First Amendment to Office Lease Agreement to be effective as of the date set forth above.

“LANDLORD”		“TENANT”
POLLOCK GATEWAY II LLC, a California limited liability company		CALIBERCOS INC., a Delaware corporation
By:	/s/ James M. Pollock	By:	/s/ Roy Bade
	James M. Pollock	Name:	Roy Bade
Title:	Manager	Title:	Exec. V.P.
Date:	11/16/2018	Date:	11/15/2018
By:	/s/ Jeffrey O. Pollock
	Jeffrey O. Pollock
Title:	Manager
Date:	11/16/2018

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Exhibit “A”

NEW FORM OF EXHIBIT “H”

[See Attached]

EXHIBIT “H”

PARKING MAP