Document:

EXHIBIT 4.1 Stock Plan

  
 Exhibit 4.1
 Massive Dynamics, Inc.
 

 2013 Stock Plan for Directors, Officers and Consultants
 

 

 SECTION 1.  PURPOSE OF THE PLAN.  
 

 The purpose of the 2013 Stock Plan for Directors, Officers and Consultants (the "Plan") is to enhance the ability of Massive Dynamics, Inc., a Nevada corporation (the "Company"), to attract and retain highly qualified and experienced directors, employees and consultants and to give such directors, employees and consultants a continued proprietary interest in the success of the Company.  In addition, the Plan is intended to encourage ownership of common stock of the Company by the directors, employees and consultants of the Company and its Affiliates (as defined below) and to provide increased incentive for such persons to render services and to exert maximum effort for the success of the Company's business.  
 

 The Plan provides eligible employees and consultants the opportunity to participate in the enhancement of shareholder value by the grants of warrants, options, restricted common or convertible preferred stock if, as and when preferred stock is authorized by the Company and its shareholders, unrestricted common or convertible preferred stock and other awards under this Plan and to have their bonuses and/or consulting fees payable in warrants, restricted common or convertible preferred stock, unrestricted common or convertible preferred stock and other awards, or any combination thereof.  
 

 In addition, the Company expects that the Plan will further strengthen the identification of the directors, employees and consultants with the stockholders.  Certain options and warrants to be granted under this Plan are intended to qualify as Incentive Stock Options ("ISOs") pursuant to Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), while other options and warrants and preferred stock granted under this Plan will be nonqualified options or warrants which are not intended to qualify as ISOs ("Nonqualified Options"), either or both as provided in the agreements evidencing the options or warrants described in Section 5 hereof and shares of preferred stock, as provided in the designation described in Section 7.  Employees, consultants and directors who participate or become eligible to participate in this Plan from time to time are referred to collectively herein as "Participants".  As used in this Plan, the term "Affiliates" means any "parent corporation" of the Company and any "subsidiary corporation" of the Company within the meaning of Code Sections 424(e) and (f), respectively.
 

 SECTION 2.  ADMINISTRATION OF THE PLAN.
 

 (a) Composition of Committee.  The Plan shall be administered by the Board of Directors of the Company (the "Board") or to a committee of the Board to which responsibility for the administration of this Plan has been assigned on behalf of the Board.  When acting in such capacity, the Board is herein referred to as the "Committee," and in such case, the Board shall also designate the Chairman of the Committee.  
 

 (b) Committee Action.  The Committee shall hold its meetings at such times and places as it may determine.  A majority of its members shall constitute a quorum, and all determinations of the 
 

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 Committee shall be made by not less than a majority of its members.  Any decision or determination reduced to writing and signed by a majority of the members shall be fully effective as if it had been made by a majority vote of its members at a meeting duly called and held.  The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute award agreements or other documents on behalf of the Committee and the Company.  Any duly constituted committee of the Board satisfying the qualifications of this Section 2 may be appointed as the Committee.
 

 (c) Committee Expenses.  All expenses and liabilities incurred by the Committee in the administration of the Plan shall be borne by the Company.  The Committee may employ attorneys, consultants, accountants or other persons.
 

 SECTION 3.  STOCK RESERVED FOR THE PLAN.  
 

 Subject to adjustment as provided in Section 5(d)(xiii) hereof, the aggregate number of shares that may be optioned, subject to conversion or issued under the Plan is 5,000,000 shares of common stock, warrants, options, preferred stock or any combination thereof.  The shares subject to the Plan shall consist of authorized but unissued shares of common stock and such number of shares shall be and is hereby reserved for sale for such purpose.  Any of such shares which may remain unsold and which are not subject to issuance upon exercise of outstanding options or warrants or conversion of outstanding shares of preferred stock at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan or the termination of the last of the options or warrants granted under the Plan, whichever last occurs, the Company shall at all times reserve a sufficient number of shares to meet the requirements of the Plan.  Should any option or warrant expire or be cancelled prior to its exercise in full, the shares theretofore subject to such option or warrant may again be made subject to an option, warrant or shares of convertible preferred stock under the Plan.
 

 SECTION 4.  ELIGIBILITY.  
 

 The Participants shall include directors, employees, including officers, of the Company and its divisions and subsidiaries, and consultants and attorneys who provide bona fide services to the Company.  Participants are eligible to be granted warrants, options, restricted common or convertible preferred stock, unrestricted common or convertible preferred stock and other awards under this Plan and to have their bonuses and/or consulting fees payable in warrants, restricted common or convertible preferred stock, unrestricted common or convertible preferred stock and other awards.  A Participant who has been granted an option, warrant or preferred stock hereunder may be granted an additional option, warrant options, warrants or preferred stock, if the Committee shall so determine.
 

 SECTION 5.  GRANT OF OPTIONS OR WARRANTS.
 

 (a) Committee Discretion.  The Committee shall have sole and absolute discretionary authority (i) to determine, authorize, and designate those persons pursuant to this Plan who are to receive warrants, options, restricted common or convertible preferred stock, or unrestricted common or convertible preferred stock under the Plan, (ii) to determine the number of shares of common stock to be covered by such grant or such options or warrants and the terms thereof, (iii) to determine the type of common stock granted: restricted common or convertible preferred stock, unrestricted common 
 

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 or convertible preferred stock or a combination of restricted and unrestricted common or convertible preferred stock, and (iv) to determine the type of option or warrant granted: ISO, Nonqualified Option or a combination of ISO and Nonqualified Options.  The Committee shall thereupon grant options or warrants in accordance with such determinations as evidenced by a written option or warrant agreement.  Subject to the express provisions of the Plan, the Committee shall have discretionary authority to prescribe, amend and rescind rules and regulations relating to the Plan, to interpret the Plan, to prescribe and amend the terms of the option or warrant agreements (which need not be identical) and to make all other determinations deemed necessary or advisable for the administration of the Plan.
 

 (b) Stockholder Approval.  All ISOs granted under this Plan are subject to, and may not be exercised before, the approval of this Plan by the stockholders prior to the first anniversary date of the Board meeting held to approve the Plan, by the affirmative vote of the holders of a majority of the outstanding shares of the Company present, or represented by proxy, and entitled to vote at the meeting, or by written consent in accordance with the laws of the State of Nevada, provided that if such approval by the stockholders of the Company is not forthcoming, all options or warrants and stock awards previously granted under this Plan other than ISOs shall be valid in all respects.
 

 (c) Limitation on Incentive Stock Options and Warrants.  The aggregate fair market value (determined in accordance with Section 5(d)(ii) of this Plan at the time the option or warrant is granted) of the common stock with respect to which ISOs may be exercisable for the first time by any Participant during any calendar year under all such plans of the Company and its Affiliates shall not exceed $25,000,000.
 

 (d) Terms and Conditions.  Each option or warrant granted under the Plan shall be evidenced by an agreement, in a form approved by the Committee, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Committee may deem appropriate:
 

    (i) Option or Warrant Period.  The Committee shall promptly notify the Participant of the option or warrant grant and a written agreement shall promptly be executed and delivered by and on behalf of the Company and the Participant, provided that the option or warrant grant shall expire if a written agreement is not signed by said Participant (or his agent) and returned to the Company within 60 days from date of receipt by the Participant of such agreement.  The date of grant shall be the date the option or warrant is actually granted by the Committee, even though the written agreement may be executed and delivered by the Company and the Participant after that date. Each option or warrant agreement shall specify the period for which the option or warrant thereunder is granted (which in no event shall exceed ten years from the date of grant) and shall provide that the option or warrant shall expire at the end of such period. If the original term of an option or warrant is less than ten years from the date of grant, the option or warrant may be amended prior to its expiration, with the approval of the Committee and the Participant, to extend the term so that the term as amended is not more than ten years from the date of the original grant. However, in the case of an ISO granted to an individual who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or its Affiliate ("Ten Percent Stockholder"), such period shall not exceed five years from the date of grant.
 

    (ii) Option or Warrant Price.  The purchase price of each share of common stock subject to each option or warrant granted pursuant to the Plan shall be determined by the Committee at the time 
 

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 the option or warrant is granted and, in the case of ISOs, shall not be less than 100% of the fair market value of a share of common stock on the date the option or warrant is granted, as determined by the Committee.  In the case of an ISO granted to a Ten Percent Stockholder, the option or warrant price shall not be less than 110% of the fair market value of a share of common stock on the date the option or warrant is granted.  The purchase price of each share of common stock subject to a Nonqualified Option or Warrant under this Plan shall be determined by the Committee prior to granting the option or warrant.  The Committee shall set the purchase price for each share subject to a Nonqualified Option or Warrant at either the fair market value of each share on the date the option or warrant is granted, or at such other price as the Committee in its sole discretion shall determine.
 

 At the time a determination of the fair market value of a share of common stock is required to be made hereunder, the determination of its fair market value shall be made by the Committee in such manner as it deems appropriate.
 

    (iii) Exercise Period.  The Committee may provide in the option or warrant agreement that an option or warrant may be exercised in whole, immediately, or is to be exercisable in increments.  In addition, the Committee may provide that the exercise of all or part of an option or warrant is subject to specified performance by the Participant.
 

    (iv) Procedure for Exercise.  Options or warrants shall be exercised in the manner specified in the option or warrant agreement. The notice of exercise shall specify the address to which the certificates for such shares are to be mailed.  A Participant shall be deemed to be a stockholder with respect to shares covered by an option or warrant on the date specified in the option or warrant agreement.  As promptly as practicable, the Company shall deliver to the Participant or other holder of the warrant, certificates for the number of shares with respect to which such option or warrant has been so exercised, issued in the holder's name or such other name as the holder directs; provided, however, that such delivery shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited such certificates with a carrier for overnight delivery, addressed to the holder at the address specified pursuant to this Section 6(d). The proceeds from any such exercise shall be added to the general funds of the Company and shall be used for general corporate purposes.
 

    (v) Termination of Employment.  If an executive officer to whom an option or warrant is granted ceases to be employed by the Company for any reason other than death or disability, any option or warrant which is exercisable on the date of such termination of employment may be exercised during a period beginning on such date and ending at the time set forth in the option or warrant agreement; provided, however, that if a Participant's employment is terminated because of the Participant's theft or embezzlement from the Company, disclosure of trade secrets of the Company or the commission of a willful, felonious act while in the employment of the Company (such reasons shall hereinafter be collectively referred to as "for cause"), then any option or warrant or unexercised portion thereof granted to said Participant shall expire upon such termination of employment.  Notwithstanding the foregoing, no ISO may be exercised later than three months after an employee's termination of employment for any reason other than death or disability.
 

    (vi) Disability or Death of Participant.  In the event of the determination of disability or death of a Participant under the Plan while he or she is employed by the Company, the options or warrants previously granted to him may be exercised (to the extent he or she would have been entitled to do 
 

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 so at the date of the determination of disability or death) at any time and from time to time, within a period beginning on the date of such determination of disability or death and ending at the time set forth in the option or warrant agreement, by the former employee, the guardian of his estate, the executor or administrator of his estate or by the person or persons to whom his rights under the option or warrant shall pass by will or the laws of descent and distribution, but in no event may the option or warrant be exercised after its expiration under the terms of the option or warrant agreement.  Notwithstanding the foregoing, no ISO may be exercised later than one year after the determination of disability or death.  A Participant shall be deemed to be disabled if, in the opinion of a physician selected by the Committee, he or she is incapable of performing services for the Company of the kind he or she was performing at the time the disability occurred by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long, continued and indefinite duration. The date of determination of disability for purposes hereof shall be the date of such determination by such physician.
 

    (vii) Assignability.  An option or warrant shall be assignable or otherwise transferable, in whole or in part, by a Participant as provided in the option, warrant or designation of the series of preferred stock.
 

    (viii) Incentive Stock Options.  Each option or warrant agreement may contain such terms and provisions as the Committee may determine to be necessary or desirable in order to qualify an option or warrant designated as an incentive stock option.
 

    (ix) Restricted Stock Awards.  Awards of restricted stock under this Plan shall be subject to all the applicable provisions of this Plan, including the following terms and conditions, and to such other terms and conditions not inconsistent therewith, as the Committee shall determine:
 

       (A) Awards of restricted stock may be in addition to or in lieu of option or warrant grants.  Awards may be conditioned on the attainment of particular performance goals based on criteria established by the Committee at the time of each award of restricted stock. During a period set forth in the agreement (the "Restriction Period"), the recipient shall not be permitted to sell, transfer, pledge, or otherwise encumber the shares of restricted stock; except that such shares may be used, if the agreement permits, to pay the option or warrant price pursuant to any option or warrant granted under this Plan, provided an equal number of shares delivered to the Participant shall carry the same restrictions as the shares so used.  Shares of restricted stock shall become free of all restrictions if during the Restriction Period, (i) the recipient dies, (ii) the recipient's directorship, employment, or consultancy terminates by reason of permanent disability, as determined by the Committee, (iii) the recipient retires after attaining both 59 1/2 years of age and five years of continuous service with the Company and/or a division or subsidiary, or (iv) if provided in the agreement, there is a "change in control" of the Company (as defined in such agreement). The Committee may require medical evidence of permanent disability, including medical examinations by physicians selected by it.  Unless and to the extent otherwise provided in the agreement, shares of restricted stock shall be forfeited and revert to the Company upon the recipient's termination of directorship, employment or consultancy during the Restriction Period for any reason other than death, permanent disability, as determined by the Committee, retirement after attaining both 59 1/2 years of age and five years of continuous service with the Company and/or a subsidiary or division, or, to the extent provided in the agreement, a "change in control" of the Company (as defined in such agreement), except to the extent the Committee, in its sole discretion, finds that such forfeiture might not be in the best interests of the Company and, therefore, waives all or part of the application of this provision to the 
 

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 restricted stock held by such recipient. Certificates for restricted stock shall be registered in the name of the recipient but shall be imprinted with the appropriate legend and returned to the Company by the recipient, together with a stock power endorsed in blank by the recipient.  The recipient shall be entitled to vote shares of restricted stock and shall be entitled to all dividends paid thereon, except that dividends paid in common stock or other property shall also be subject to the same restrictions.
 

       (B) Restricted Stock shall become free of the foregoing restrictions upon expiration of the applicable Restriction Period and the Company shall then deliver to the recipient common stock certificates evidencing such unrestricted stock. 
 

 Restricted stock and any common stock received upon the expiration of the restriction period shall be subject to such other transfer restrictions and/or legend requirements as are specified in the applicable agreement.
 

    (x) Bonuses and Past Salaries and Fees Payable in Unrestricted Stock.
 

       (A) In lieu of cash bonuses otherwise payable under the Company's or applicable division's or subsidiary's compensation practices to employees and consultants eligible to participate in this Plan, the Committee, in its sole discretion, may determine that such bonuses shall be payable in unrestricted common stock or partly in unrestricted common stock and partly in cash.  Such bonuses shall be in consideration of services previously performed and as an incentive toward future services and shall consist of shares of unrestricted common stock subject to such terms as the Committee may determine in its sole discretion. The number of shares of unrestricted common stock payable in lieu of a bonus otherwise payable shall be determined by dividing such bonus amount by the fair market value of one share of common stock on the date the bonus is payable, with fair market value determined as of such date in  accordance with Section 5(d)(ii).
 

       (B) In lieu of salaries and fees otherwise payable by the Company to employees, attorneys and consultants eligible to participate in this Plan that were incurred for services rendered, the Committee, in its sole discretion, may determine that such unpaid salaries and fees shall be payable in unrestricted common stock or partly in unrestricted common stock and partly in cash.  Such awards shall be in consideration of services previously performed and as an incentive toward future services and shall consist of shares of unrestricted common stock subject to such terms as the Committee may determine in its sole discretion.  The number of shares of unrestricted common stock payable in lieu of salaries and fees otherwise payable shall be determined by dividing each calendar month's of unpaid salary or fee amount by the average trading value of the common stock for the calendar month during which the subject services were provided.
 

    (xi) No Rights as Stockholder.  No Participant shall have any rights as a stockholder with respect to shares covered by an option or warrant until the option or warrant is exercised as provided in clause (d) above.
 

    (xii) Extraordinary Corporate Transactions.  The existence of outstanding options or warrants shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges, or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issuance of common stock or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the common stock or 
 

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 the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.  If the Company recapitalizes or otherwise changes its capital structure, or merges, consolidates, sells all of its assets or dissolves (each of the foregoing a "Fundamental Change"), then thereafter upon any exercise of an option or warrant theretofore granted the Participant shall be entitled to purchase under such option or warrant, in lieu of the number of shares of common stock as to which option or warrant shall then be exercisable, the number and class of shares of stock and securities to which the Participant would have been entitled pursuant to the terms of the Fundamental Change if, immediately prior to such Fundamental Change, the Participant had been the holder of record of the number of shares of common stock as to which such option or warrant is then exercisable.  If (i) the Company shall not be the surviving entity in any merger or consolidation (or survives only as a subsidiary of another entity), (ii) the Company sells all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary), (iii) any person or entity (including a "group" as contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains ownership or control of (including, without limitation, power to vote) more than 50% of the outstanding shares of common stock, (iv) the Company is to be dissolved and liquidated, or (v) as a result of or in connection with a contested election of directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board (each such event in clauses (i) through (v) above is referred to herein as a "Corporate Change"), the Committee, in its sole discretion, may accelerate the time at which all or a portion of a Participant's option or warrants may be exercised for a limited period of time before or after a specified date.
 

    (xiii) Changes in Company's Capital Structure.  If the outstanding shares of common stock or other securities of the Company, or both, for which the option or warrant is then exercisable at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, recapitalization, or reorganization, the number and kind of shares of common stock or other securities which are subject to the Plan or subject to any options or warrants theretofore granted, and the option or warrant prices, shall be adjusted proportionally unless otherwise provided in the option or warrant.
 

    (xiv) Acceleration of Options and Warrants.  Except as hereinbefore expressly provided, (i) the issuance by the Company of shares of stock or any class of securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, (ii) the payment of a dividend in property other than common stock or (iii) the occurrence of any similar transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of common stock subject to options or warrants theretofore granted or the purchase price per share, unless the Committee shall determine, in its sole discretion, that an adjustment is necessary to provide equitable treatment to a Participant.  Notwithstanding anything to the contrary contained in this Plan, the Committee may, in its sole discretion, accelerate the time at which any option or warrant may be exercised, including, but not limited to, upon the occurrence of the events specified in this Section 5, and is authorized at any time (with the consent of the Participant) to purchase options or warrants pursuant to Section 6.
 

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 SECTION 6.  RELINQUISHMENT OF OPTIONS OR WARRANTS.
 

 (a) The Committee, in granting options or warrants hereunder, shall have discretion to determine whether or not options or warrants shall include a right of relinquishment as hereinafter provided by this Section 6.  The Committee shall also have discretion to determine whether an option or warrant agreement evidencing an option or warrant initially granted by the Committee without a right of relinquishment shall be amended or supplemented to include such a right of relinquishment. Neither the Committee nor the Company shall be under any obligation or incur any liability to any person by reason of the Committee's refusal to grant or include a right of relinquishment in any option or warrant granted hereunder or in any option or warrant agreement evidencing the same. Subject to the Committee's determination in any case that the grant by it of a right of relinquishment is consistent with Section 1 hereof, any option or warrant granted under this Plan, and the option or warrant agreement evidencing such option or warrant, may provide:
 

    (i) That the Participant, or his or her heirs or other legal representatives to the extent entitled to exercise the option or warrant under the terms thereof, in lieu of purchasing the entire number of shares subject to purchase thereunder, shall have the right to relinquish all or any part of the then unexercised portion of the option or warrant (to the extent then exercisable) for a number of shares of common stock to be determined in accordance with the following provisions of this clause (i):
 

       (A) The written notice of exercise of such right of relinquishment shall state the percentage of the total number of shares of common stock issuable pursuant to such relinquishment (as defined below) that the Participant elects to receive;
 

       (B) The number of shares of common stock, if any, issuable pursuant to such relinquishment shall be the number of such shares, rounded to the next greater number of full shares, as shall be equal to the quotient obtained by dividing (i) the Appreciated Value by (ii) the purchase price for each of such shares specified in such option or warrant;
 

       (C) For the purpose of this clause (C), "Appreciated Value" means the excess, if any, of (x) the total current market value of the shares of common stock covered by the option or warrant or the portion thereof to be relinquished over (y) the total purchase price for such shares specified in such option or warrant;
 

    (ii) That such right of relinquishment may be exercised only upon receipt by the Company of a written notice of such relinquishment which shall be dated the date of election to make such relinquishment; and that, for the purposes of this Plan, such date of election shall be deemed to be the date when such notice is sent by registered or certified mail, or when receipt is acknowledged by the Company, if mailed by other than registered or certified mail or if delivered by hand or by any telegraphic communications equipment of the sender or otherwise delivered; provided, that, in the event the method just described for determining such date of election shall not be or remain consistent with the provisions of Section 16(b) of the Exchange Act or the rules and regulations adopted by the Commission thereunder, as presently existing or as may be hereafter amended, which regulations exempt from the operation of Section 16(b) of the Exchange Act in whole or in part any such relinquishment transaction, then such date of election shall be determined by such other 
 

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 method consistent with Section 16(b) of the Exchange Act or the rules and regulations thereunder as the Committee shall in its discretion select and apply;
 

    (iii) That the "current market value" of a share of common stock on a particular date shall be deemed to be its fair market value on that date as determined in accordance with Paragraph 5(d)(ii); and
 

    (iv) That the option or warrant, or any portion thereof, may be relinquished only to the extent that (A) it is exercisable on the date written notice of relinquishment is received by the Company, and (B) the holder of such option or warrant pays, or makes provision satisfactory to the Company for the payment of, any taxes which the Company is obligated to collect with respect to such relinquishment.
 

 (b) The Committee shall have sole discretion to consent to or disapprove, and neither the Committee nor the Company shall be under any liability by reason of the Committee's disapproval of, any election by a holder of preferred stock to relinquish such preferred stock in whole or in part as provided in Paragraph 7(a), except that no such consent to or approval of a relinquishment shall be required under the following circumstances.  Each Participant who is subject to the short-swing profits recapture provisions of Section 16(b) of the Exchange Act ("Covered Participant") shall not be entitled to receive shares of common stock when options or warrants are relinquished during any window period commencing on the third business day following the Company's release of a quarterly or annual summary statement of sales and earnings and ending on the twelfth business day following such release ("Window Period"). A Covered Participant shall be entitled to receive shares of common stock upon the relinquishment of options or warrants outside a Window Period. 
 

 (c) The Committee, in granting options or warrants hereunder, shall have discretion to determine the terms upon which such options or warrants shall be relinquishable, subject to the applicable provisions of this Plan, and including such provisions as are deemed advisable to permit the exemption from the operation from Section 16(b) of the Exchange Act of any such relinquishment transaction, and options or warrants outstanding, and option agreements evidencing such options, may be amended, if necessary, to permit such exemption.  If options or warrants are relinquished, such option or warrant shall be deemed to have been exercised to the extent of the number of shares of common stock covered by the option or warrant or part thereof which is relinquished, and no further options or warrants may be granted covering such shares of common stock.
 

 (d) Any options or warrants or any right to relinquish the same to the Company as contemplated by this Paragraph 6 shall be assignable by the Participant, provided the transaction complies with any applicable securities laws.
 

 (e) Except as provided in Section 6(f) below, no right of relinquishment may be exercised within the first six months after the initial award of any option or warrant containing, or the amendment or supplementation of any existing option or warrant agreement adding, the right of relinquishment.
 

 (f) No right of relinquishment may be exercised after the initial award of any option or warrant containing, or the amendment or supplementation of any existing option or warrant agreement adding the right of relinquishment, unless such right of relinquishment is effective upon the Participant's death, disability or termination of his relationship with the Company for a reason other than "for cause."
 

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 SECTION 7.  GRANT OF CONVERTIBLE PREFERRED STOCK.
 

 (a) Committee Discretion.  The Committee shall have sole and absolute discretionary authority (i) to determine, authorize, and designate those persons pursuant to this Plan who are to receive restricted preferred stock, or unrestricted preferred stock under the Plan, and (ii) to determine the number of shares of common stock to be issued upon conversion of such shares of preferred stock and the terms thereof.  The Committee shall thereupon grant shares of preferred stock in accordance with such determinations as evidenced by a written preferred stock designation.  Subject to the express provisions of the Plan, the Committee shall have discretionary authority to prescribe, amend and rescind rules and regulations relating to the Plan, to interpret the Plan, to prescribe and amend the terms of the preferred stock designation (which need not be identical) and to make all other determinations deemed necessary or advisable for the administration of the Plan.
 

 (b) Terms and Conditions.  Each series of preferred stock granted under the Plan shall be evidenced by a designation in the form for filing with the Secretary of State of the state of incorporation of the Company, containing such terms as approved by the Committee, which shall be subject to the following express terms and conditions and to such other terms and conditions as the Committee may deem appropriate:
 

    (i) Conversion Ratio.  The number of shares of common stock issuable upon conversion of each share of preferred stock granted pursuant to the Plan shall be determined by the Committee at the time the preferred stock is granted.  The conversion ratio may be determined by reference to the fair market value of each share of common stock on the date the preferred stock is granted, or at such other price as the Committee in its sole discretion shall determine.
 

 At the time a determination of the fair market value of a share of common stock is required to be made hereunder, the determination of its fair market value shall be made in accordance with Paragraph 5(d)(ii).
 

    (ii) Conversion Period.  The Committee may provide in the preferred stock agreement that the preferred stock may be converted in whole immediately or is to be convertible in increments.  In addition, the Committee may provide that the conversion of all or part of the preferred stock is subject to specified performance by the Participant.
 

    (iii) Procedure for Conversion.  Shares of preferred stock shall be converted in the manner specified in the preferred stock designation.  The notice of conversion shall specify the address to which the certificates for such shares are to be mailed.  A Participant shall be deemed to be a stockholder with respect to shares covered by preferred stock on the date specified in the preferred stock agreement.  As promptly as practicable, the Company shall deliver to the Participant or other holder of the warrant, certificates for the number of shares with respect to which such preferred stock has been so converted, issued in the holder's name or such other name as holder directs; provided, however, that such delivery shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited such certificates with a carrier for overnight delivery, addressed to the holder at the address specified pursuant to this Section 6(d).
 

    (iv) Termination of Employment.  If an executive officer to whom preferred stock is granted ceases to be employed by the Company for any reason other than death or disability, any preferred 
 

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 stock which is convertible on the date of such termination of employment may be converted during a period beginning on such date and ending at the time set forth in the preferred stock agreement; provided, however, that if a Participant's employment is terminated because of the Participant's theft or embezzlement from the Company, disclosure of trade secrets of the Company or the commission of a willful, felonious act while in the employment of the Company (such reasons shall hereinafter be collectively referred to as "for cause"), then any preferred stock or unconverted portion thereof granted to said Participant shall expire upon such termination of employment.  Notwithstanding the foregoing, no ISO may be converted later than three months after an employee's termination of employment for any reason other than death or disability.
 

    (v) Disability or Death of Participant.  In the event of the determination of disability or death of a Participant under the Plan while he or she is employed by the Company, the preferred stock previously granted to him may be converted (to the extent he or she would have been entitled to do so at the date of the determination of disability or death) at any time and from time to time, within a period beginning on the date of such determination of disability or death and ending at the time set forth in the preferred stock agreement, by the former employee, the guardian of his estate, the executor or administrator of his estate or by the person or persons to whom his rights under the preferred stock shall pass by will or the laws of descent and distribution, but in no event may the preferred stock be converted after its expiration under the terms of the preferred stock agreement.  Notwithstanding the foregoing, no ISO may be converted later than one year after the determination of disability or death.  A Participant shall be deemed to be disabled if, in the opinion of a physician selected by the Committee, he or she is incapable of performing services for the Company of the kind he or she was performing at the time the disability occurred by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long, continued and indefinite duration.  The date of determination of disability for purposes hereof shall be the date of such determination by such physician.
 

    (vi) Assignability.  Preferred stock shall be assignable or otherwise transferable, in whole or in part, by a Participant.
 

    (vii) Restricted Stock Awards.  Awards of restricted preferred stock under this Plan shall be subject to all the applicable provisions of this Plan, including the following terms and conditions, and to such other terms and conditions not inconsistent therewith, as the Committee shall determine:
 

       (A) Awards of restricted preferred stock may be in addition to or in lieu of preferred stock grants.  Awards may be conditioned on the attainment of particular performance goals based on criteria established by the Committee at the time of each award of restricted preferred stock. During a period set forth in the agreement (the "Restriction Period"), the recipient shall not be permitted to sell, transfer, pledge, or otherwise encumber the shares of restricted preferred stock.  Shares of restricted preferred stock shall become free of all restrictions if during the Restriction Period, (i) the recipient dies, (ii) the recipient's directorship, employment, or consultancy terminates by reason of permanent disability, as determined by the Committee, (iii) the recipient retires after attaining both 59 1/2 years of age and five years of continuous service with the Company and/or a division or subsidiary, or (iv) if provided in the agreement, there is a "change in control" of the Company (as defined in such agreement). 
 

 The Committee may require medical evidence of permanent disability, including medical examinations by physicians selected by it.  Unless and to the extent otherwise provided in the 
 

 11
 

 

 
 agreement, shares of restricted preferred stock shall be forfeited and revert to the Company upon the recipient's termination of directorship, employment or consultancy during the Restriction Period for any reason other than death, permanent disability, as determined by the Committee, retirement after attaining both 59 1/2 years of age and five years of continuous service with the Company and/or a subsidiary or division, or, to the extent provided in the agreement, a "change in control" of the Company (as defined in such agreement), except to the extent the Committee, in its sole discretion, finds that such forfeiture might not be in the best interests of the Company and, therefore, waives all or part of the application of this provision to the restricted preferred stock held by such recipient.  Certificates for restricted preferred stock shall be registered in the name of the recipient but shall be imprinted with the appropriate legend and returned to the Company by the recipient, together with a preferred stock power endorsed in blank by the recipient.  The recipient shall be entitled to vote shares of restricted preferred stock and shall be entitled to all dividends paid thereon, except that dividends paid in common stock or other property shall also be subject to the same restrictions.
 

       (B) Restricted preferred stock shall become free of the foregoing restrictions upon expiration of the applicable Restriction Period and the Company shall then deliver to the recipient common stock certificates evidencing such stock. Restricted preferred stock and any common stock received upon the expiration of the restriction period shall be subject to such other transfer restrictions and/or legend requirements as are specified in the applicable agreement. 
 

    (x) Bonuses and Past Salaries and Fees Payable in Unrestricted Preferred Stock.
 

       (A) In lieu of cash bonuses otherwise payable under the Company's or applicable division's or subsidiary's compensation practices to employees and consultants eligible to participate in this Plan, the Committee, in its sole discretion, may determine that such bonuses shall be payable in unrestricted preferred stock or partly in unrestricted preferred stock and partly in cash.  Such bonuses shall be in consideration of services previously performed and as an incentive toward future services and shall consist of shares of unrestricted preferred stock subject to such terms as the Committee may determine in its sole discretion.  The number of shares of unrestricted preferred stock payable in lieu of a bonus otherwise payable shall be determined by dividing such bonus amount by a conversion price to be determined by the Committee in its sole discretion.
 

       (B) In lieu of salaries and fees otherwise payable by the Company to employees, attorneys and consultants eligible to participate in this Plan that were incurred for services rendered, the Committee, in its sole discretion, may determine that such unpaid salaries and fees shall be payable in unrestricted preferred stock or partly in unrestricted preferred stock and partly in cash.  Such awards shall be in consideration of services previously performed and as an incentive toward future services and shall consist of shares of unrestricted preferred stock subject to such terms as the Committee may determine in its sole discretion.  The number of shares of unrestricted preferred stock payable in lieu of salaries and fees otherwise payable shall be determined by dividing each calendar month's of unpaid salary or fee amount by a conversion price to be determined by the Committee in its sole discretion.
 

    (xi) No Rights as Stockholder.  No Participant shall have any rights as a stockholder with respect to shares covered by a preferred stock until the preferred stock is converted as provided in clause (b)(iii) above.
 

 

 12
 

 

 
    (xii) Extraordinary Corporate Transactions.  The existence of outstanding preferred stock shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges, or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issuance of common stock or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the common stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.  If the Company recapitalizes or otherwise changes its capital structure, or merges, consolidates, sells all of its assets or dissolves (each of the foregoing a "Fundamental Change"), then thereafter, upon any conversion of preferred stock theretofore granted, the Participant shall be entitled to the number of shares of common stock upon conversion of such preferred stock, in lieu of the number of shares of common stock as to which preferred stock shall then be convertible, the number and class of shares of stock and securities to which the Participant would have been entitled pursuant to the terms of the Fundamental Change if, immediately prior to such Fundamental Change, the Participant had been the holder of record of the number of shares of common stock as to which such preferred stock is then convertible.  If (i) the Company shall not be the surviving entity in any merger or consolidation (or survives only as a subsidiary of another entity), (ii) the Company sells all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary), (iii) any person or entity (including a "group" as contemplated by Section 13(d)(3) of the Exchange Act) acquires or gains ownership or control of (including, without limitation, power to vote) more than 50% of the outstanding shares of common stock, (iv) the Company is to be dissolved and liquidated, or (v) as a result of or in connection with a contested election of directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board (each such event in clauses (i) through (v) above is referred to herein as a "Corporate Change"), the Committee, in its sole discretion, may accelerate the time at which all or a portion of a Participant's shares of preferred stock may be converted for a limited period of time before or after a specified date.
 

    (xiii) Changes in Company's Capital Structure.  If the outstanding shares of common stock or other securities of the Company, or both, for which the preferred stock is then convertible at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares,
 recapitalization, or reorganization, the number and kind of shares of common stock or other securities which are subject to the Plan or subject to any preferred stock theretofore granted, and the conversion ratio, shall be adjusted only as provided in the designation of the preferred stock.
 

    (xiv) Acceleration of Conversion of Preferred Stock.  Except as hereinbefore expressly provided, (i) the issuance by the Company of shares of stock or any class of securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the conversion of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, (ii) the payment of a dividend in property other than common stock or (iii) the occurrence of any similar transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of common stock subject to preferred stock theretofore granted, unless the Committee shall determine, in its sole discretion, that an adjustment is necessary to provide equitable treatment to Participant. Notwithstanding anything to the contrary contained in this Plan, the Committee may, in its sole discretion, accelerate the time at which any preferred stock may be 
 

 13
 

 

 
 converted, including, but not limited to, upon the occurrence of the events specified in this Section 7(xiv).
 

 SECTION 8.  AMENDMENTS OR TERMINATION.  
 

 The Board may amend, increase, alter or discontinue the Plan, but no amendment or alteration shall be made which would impair the rights of any Participant, without his consent, under any option, warrant or preferred stock theretofore granted.
 

 SECTION 9.  COMPLIANCE WITH OTHER LAWS AND REGULATIONS.  
 

 The Plan, the grant and exercise of options or warrants and grant and conversion of preferred stock thereunder, and the obligation of the Company to sell and deliver shares under such options, warrants or preferred stock, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of common stock prior to the completion of any registration or qualification of such shares under any federal or state law or issuance of any ruling or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. Any adjustments provided for in subparagraphs 5(d)(xii), (xiii) and (xiv) shall be subject to any shareholder action required by the corporate law of the state of incorporation of the Company.
 

 SECTION 10.  PURCHASE FOR INVESTMENT.  
 

 Unless the options, warrants, shares of convertible preferred stock and shares of common stock covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person acquiring or exercising an option or warrant under this Plan or converting shares of preferred stock may be required by the Company to give a representation in writing that he or she is acquiring such option or warrant or such shares for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.
 

 SECTION 11.  TAXES.
 

       (a) The Company may make such provisions as it may deem appropriate for the withholding of any taxes which it determines is required in connection with any options, warrants or preferred stock granted under this Plan.
 

       (b) Notwithstanding the terms of Paragraph 11 (a), any Participant may pay all or any portion of the taxes required to be withheld by the Company or paid by him or her in connection with the exercise of a nonqualified option or warrant or conversion of preferred stock by electing to have the Company withhold shares of common stock, or by delivering previously owned shares of common stock, having a fair market value, determined in accordance with paragraph 5(d)(ii), equal to the amount required to be withheld or paid.  A Participant must make the foregoing election on or before the date that the amount of tax to be withheld is determined ("Tax Date").  All such elections are irrevocable and subject to disapproval by the Committee.  Elections by Covered Participants are subject to the following additional restrictions: (i) such election may not be made within six months of the grant of an option or warrant, provided that this limitation shall not apply in the event of 
 

 14
 

 

 
 death or disability, and (ii) such election must be made either six months or more prior to the Tax Date or in a Window Period. Where the Tax Date in respect of an option or warrant is deferred until six months after exercise and the Covered Participant elects share withholding, the full amount of shares of common stock will be issued or transferred to him upon exercise of the option or warrant, but he or she shall be unconditionally obligated to tender back to the Company the number of shares necessary to discharge the Company's withholding obligation or his estimated tax obligation on the Tax Date.
 

 SECTION 12.  REPLACEMENT OF OPTIONS, WARRANTS AND PREFERRED STOCK.  
 

 The Committee from time to time may permit a Participant under the Plan to surrender for cancellation any unexercised outstanding option or warrant or unconverted Preferred stock and receive from the Company in exchange an option, warrant or preferred stock for such number of shares of common stock as may be designated by the Committee.  The Committee may, with the consent of the holder of any outstanding option, warrant or preferred stock, amend such option, warrant or preferred stock, including reducing the exercise price of any option or warrant to not less than the fair market value of the common stock at the time of the amendment, increasing the conversion ratio of any preferred stock and extending the exercise or conversion term of and warrant, option or preferred stock.
 

 SECTION 13.  NO RIGHT TO COMPANY EMPLOYMENT.  
 

 Nothing in this Plan or as a result of any option or warrant granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual's employment at any time.  The option, warrant or preferred stock agreements may contain such provisions as the Committee may approve with reference to the effect of approved leaves of absence.
 

 SECTION 14.  LIABILITY OF COMPANY.  
 

 The Company and any Affiliate, which is in existence or hereafter comes into existence shall not be liable to a Participant or other persons as to:
 

       (a) The Non-Issuance of Shares.  The non-issuance or sale of shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares hereunder; and
 

       (b) Tax Consequences.  Any tax consequence expected, but not realized, by any Participant or other person due to the exercise of any option or warrant or the conversion of any preferred stock granted hereunder.
 

 

 15
 

 

 
 

 SECTION 15.  EFFECTIVENESS AND EXPIRATION OF PLAN.  
 

 The Plan shall be effective on the date the Board adopts the Plan.  The Plan shall expire ten years after the date the Board approves the Plan and thereafter no option, warrant or preferred stock shall be granted pursuant to the Plan.
 

 SECTION 16.  NON-EXCLUSIVITY OF THE PLAN.  
 

 Neither the adoption by the Board nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of restricted stock or stock options, warrants or preferred stock otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
 

 SECTION 17.  GOVERNING LAW.  
 

 This Plan and any agreements hereunder shall be interpreted and construed in accordance with the laws of the state of incorporation of the Company and applicable federal law.
 

 SECTION 18.  CASHLESS EXERCISE.  
 

 The Committee also may allow cashless exercises subject to applicable securities law restrictions or by any other means that the Committee determines to be consistent with the Plan's purpose and applicable law.  
 

 Approved by the Board of Directors on June 12, 2013.
 

 

 16sart_ex101.htm

EXHIBIT 10.1

 

 

FORM OF

ADVISORY AGREEMENT

BETWEEN

SHEARSON AMERICAN REIT, INC.

AND

SHEARSON AMERICAN ADVISORS, LLC

 

TABLE OF CONTENTS

 

	 	  	
Page

	ARTICLE 1 DEFINITIONS	
1

	 	  	 
	ARTICLE 2 APPOINTMENT	
6

	 	  	 
	ARTICLE 3 DUTIES OF THE ADVISOR	
6

	 	
3.1 Offering Services

	
6

	 	
3.2 Acquisition Services

	
7

	 	
3.3 Asset Management Services

	
7

	 	
3.4 Accounting and Other Administrative Services

	
8

	 	
3.5 Stockholder Services

	
9

	 	
3.6 Financing Services

	
9

	 	
3.7 Disposition Services

	
9

	 	  	 
	ARTICLE 4 AUTHORITY OF ADVISOR	
10

	 	
4.1 Powers of the Advisor

	
10

	 	
4.2 Approval by the Board

	
10

	 	
4.3 Modification or Revocation of Authority of Advisor

	
10

	 	  	 
	ARTICLE 5 BANK ACCOUNTS	
10

	 	  	 
	ARTICLE 6 RECORDS AND ACCESS	
11

	 	  	 
	ARTICLE 7 LIMITATION ON ACTIVITIES	
11

	 	  	 
	ARTICLE 8 FEES AND CONVERTIBLE STOCK ISSUANCE	
11

	 	
8.1 Acquisition Fees

	
11

	 	
8.2 Asset Management Fees

	
12

	 	
8.3 Debt Financing Fees

	
12

	 	
8.4 Disposition Fees

	
12

	 	
8.5 Issuance of Convertible Stock

	
13

	 	  	 
	ARTICLE 9 EXPENSES	
14

	 	
9.1 General

	
14

	 	
9.2 Timing of and Additional Limitations on Reimbursements

	
15

	 	  	 
	ARTICLE 10 OTHER SERVICES	
15

	 	  	 
	ARTICLE 11 VOTING AGREEMENT	
16

	 	  	 
	ARTICLE 12 RELATIONSHIP OF ADVISOR AND COMPANY;	
16

	 	
12.1 Relationship

	
16

	 	
12.2 Time Commitment

	
16

	 	
12.3 Investment Opportunities and Allocation

	
16

 

  

-i-

  

 

TABLE OF CONTENTS

(continued)

 

	 	  	
Page

	ARTICLE 13 TERM AND TERMINATION OF THE AGREEMENT	
17

	 	
13.1 Term

	
17

	 	
13.2 Termination by the Parties

	
17

	 	
13.3 Payments on Termination and Survival of Certain Rights and Obligations

	
17

	 	  	  
	ARTICLE 14 ASSIGNMENT	
18

	 	  	  
	ARTICLE 15 LIMITATION OF LIABILITY AND INDEMNIFICATION	
18

	 	
15.1 Limitation of Liability

	
18

	 	
15.2 Indemnification by the Company

	
18

	 	
15.3 Limitation on Indemnification

	
19

	 	
15.4 Limitation on Payment of Expenses

	
19

	 	
15.5 Indemnification by Advisor

	
19

	 	  	  
	ARTICLE 16 FIDUCIARY DUTY	
20

	 	  	  
	ARTICLE 17 MISCELLANEOUS	
20

	 	
17.1 Notices

	
20

	 	
17.2 Modification

	
20

	 	
17.3 Severability

	
20

	 	
17.4 Choice of Law; Venue

	
20

	 	
17.5 Entire Agreement

	
21

	 	
17.6 Waiver

	
21

	 	
17.7 Gender

	
21

	 	
17.8 Titles Not to Affect Interpretation

	
21

	 	
17.9 Counterparts

	
21

 

  

-ii-

  

 

ADVISORY AGREEMENT

 

THIS ADVISORY AGREEMENT (this “Agreement”), dated as of the 4Th day of February , 2013 (the “Effective Date”), is entered into by and between Shearson American REIT, Inc., a Nevada corporation (the “Company”) and Shearson American Advisors, LLC, a Delaware limited liability company (the “Advisor”). Capitalized terms used herein shall have the meanings ascribed to them in Section 1 below.

 

WITNESSETH

 

WHEREAS, the Company intends to qualify as a REIT, and to invest its funds in investments in accordance with the investment guidelines set forth in the Form 10;

 

WHEREAS, the Company desires to avail themselves of the knowledge, experience, sources of information, advice, assistance and certain facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the Board, all as provided herein; and

 

WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board, on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings specified below:

 

Acquisition Expenses means any and all expenses incurred by the Company, the Advisor, or any of their Affiliates in connection with the selection, evaluation, acquisition or development of any Asset, whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on Assets not acquired, accounting fees and expenses, title insurance premiums, the costs of performing due diligence and miscellaneous expenses related to selection and acquisition of Assets, whether or not acquired.

 

Acquisition Fees means the fee payable to the Advisor pursuant to Section 8.1 plus any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person to any other Person (including any fees or commissions paid by or to any Affiliate of the Company or the Advisor) in connection with acquiring or investing in Loans, the purchase, development or construction of Properties or the acquisition of or investment in any other Assets, including real estate commissions, selection fees, development fees, construction fees, nonrecurring management fees, loan fees, points or any other fees of a similar nature; provided, however, that Acquisition Fees shall not include any development fees and construction fees paid to any Person not affiliated with the Sponsor in connection with the actual development and construction of a project.

 

Advisor means (i) Shearson American Advisors, LLC, a Delaware, limited liability Company, or (ii) any successor advisor to the Company.

 

  

-1-

  

 

Affiliate or Affiliated means, with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

 

Asset means any Property, Loan or other investment (other than investments in bank accounts, money market accounts, money market funds or other current assets) owned by the Company, directly or indirectly.

 

Asset Management Fee means the fees payable to the Advisor pursuant to Section 8.2.

 

Average Invested Assets means, for a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Assets before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period.

 

Board means the board of directors of the Company, as of any particular time.

 

Bylaws means the bylaws of the Company, as amended from time to time.

 

Cause means with respect to the termination of this Agreement, fraud, criminal conduct, intentional misconduct or breach of fiduciary duty by the Advisor, or a material breach of this Agreement by the Advisor which remains uncured 20 days after receipt of notice of such breach from the Company’s Board of Directors.

 

Charter means the charter of the Company, as amended from time to time.

 

Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

 

Company means Shearson American REIT, Inc., a corporation organized under the laws of the State of Nevada, and its subsidiaries.

 

Contract Sales Price means the total consideration received by the Company for the Sale of an Asset.

 

Convertible Stock has the meaning set forth in Section 8.5.

 

Cost of Assets means the sum of (i) with respect to the acquisition of an Asset to be wholly owned, directly or indirectly, by the Company, the amount actually paid or allocated to fund the acquisition, development, construction or improvement of the Asset, inclusive of expenses associated with the acquisition of such Asset and the amount of any debt associated with, or used to fund the investment in, such Asset and (ii) with respect to the acquisition of an Asset through any Joint Venture, the portion of the amount actually paid or allocated to fund the acquisition, development, construction or improvement of the Asset, inclusive of expenses associated with the acquisition of such Asset, plus the amount of any debt associated with, or used to fund the investment in, such Asset that is attributable to the Company’s investment in such Joint Venture. Any fees paid to an Affiliate of the Advisor shall be excluded in calculating the “Cost of Assets” with respect to the acquisition of any Asset under this Agreement.

 

  

-2-

  

 

Disposition Fee means the fee payable to the Advisor pursuant to Section 8.4.

 

Distribution means any distributions of money or other property by the Company to Stockholders, including a distribution that may constitute a return of capital for federal income tax purposes.

 

DRIP means the Distribution Reinvestment Plan of the Company in the form attached as Appendix B to the prospectus included in the Registration Statement.

 

Excess Amount has the meaning set forth in Section 9.2.

 

Expense Year has the meaning set forth in Section 9.2.

 

Fair Market Value, with respect to the Company’s Assets, means the fair market value of all Assets then held by the Company as of the date of determination, or the Company’s proportionate share of such Assets in the case of an investment made through a Joint Venture or other co-ownership arrangement, excluding any debt financing obtained by the Company or made available to the Company. For purposes of this Agreement, (i) the Fair Market Value of any Property shall be based upon “AS-IS” “WHERE-IS” appraisals conducted on such Property on at least an annual basis; and (ii) the Fair Market Value of any Loans shall be equal to the face value of such Loan, unless it is Non-Performing, in which case, the Fair Market Value shall be equal to the book value of such Loan, but never more than the appraised value of the underlying real estate collateral securing such Loan.

 

FINRA means the Financial Industry Regulatory Authority, Inc.

 

GAAP means generally accepted accounting principles as in effect in the United States of America from time to time.

 

Good Reason means either (i) any failure by the Company to obtain a satisfactory agreement from any successor to the Company to assume and agree to perform the Company’s obligations under this Agreement; or (ii) any material breach of this Agreement by the Company.

 

Gross Proceeds means the aggregate purchase price of all Shares sold for the account of the Company through an Offering, without deduction for selling commissions, volume discounts, any marketing support and due diligence expense reimbursement or Organization and Offering Expenses. For the purpose of computing Gross Proceeds, the purchase price of any Share for which reduced selling commissions or other fees are paid to the Selling Agent or a soliciting dealer (where net proceeds to the Corporation are not reduced) shall be deemed to be the full amount of the offering price per Share pursuant to the prospectus for such Offering without reduction.

 

Independent Director has the meaning set forth in the Charter.

 

Initial Public Offering means the first Offering pursuant to an effective registration statement filed under the Securities Act.

 

  

-3-

  

 

Joint Venture means any joint venture, limited liability company, partnership or other entity pursuant to which the Company is a co-venturer or partner with respect to the ownership of any Assets.

 

Listing means the listing of the Shares on a national securities exchange. Upon such Listing, the Shares shall be deemed “Listed.”

 

Loans means investments in mortgages, notes, deeds of trust, bonds, debentures, security interests or other evidence of indebtedness, which are secured or collateralized by real property owned by the borrowers or obligors under such mortgages, notes, deeds of trust, security interests or other evidence of indebtedness (including without limitation, any first and second mortgage loans, mezzanine loans, subordinated mortgage loans, bridge loans, real estate secured loans where a portion of the return is dependent upon performance-based metrics and other loans secured by real estate) made by the Company, either directly or indirectly, including through ownership interests in a Joint Venture.

 

NASAA REIT Guidelines means the Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association as in effect on the Effective Date.

 

Net Income means, for any period, the Company’s total revenues applicable to such period, less the total expenses applicable to such period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, Net Income for purposes of calculating total allowable Operating Expenses (as defined herein) shall exclude the gain from the sale of the Company’s assets.

 

Non-Performing means, with respect to any Loan, (i) a determination by the Advisor, based on current information and events, that it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the Loan or (ii) when payment of interest on such Loan is 90 days or more past due.

 

Offering means any offering and sale of Shares.

 

Operating Expenses means all costs and expenses paid or incurred by the Company, as determined under GAAP, that are in any way related to the operation of the Company or to Company business, including advisory expenses, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) incentive fees paid in compliance with the NASAA REIT Guidelines, (vi) Acquisition Fees and Acquisition Expenses and (vii) all other fees and expenses associated or paid in connection with the acquisition, disposition, management and ownership of real estate interests, Loans or other Assets (such as real estate commissions, disposition fees, financing fees and the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of Property).

 

Organization and Offering Expenses means any and all costs and expenses incurred by or on behalf of the Company and to be paid from the assets of the Company in connection with the formation of the Company and the qualification and registration of an Offering, and the marketing and distribution of Shares, including, without limitation, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys), expenses for printing, engraving and amending registration statements or supplementing prospectuses, mailing and distributing costs, salaries of employees while engaged in sales activity, telephone and other telecommunications costs, all advertising and marketing expenses, charges of transfer agents, registrars, trustees, escrow holders, depositories and experts and fees, expenses and taxes related to the filing, registration and qualification of the sale of the Shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees.

 

  

-4-

  

 

Person means an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c) (17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government or any agency or political subdivision thereof, and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

 

Property means any real property.

 

Property Manager means an entity that has been retained to perform and carry out property management services at one or more of the Properties, excluding persons, entities or independent contractors retained or hired to perform facility management or other services or tasks at a particular Property, the costs for which are passed through to and ultimately paid by the tenant at such Property.

 

Registration Statement means the registration statement filed by the Company with the SEC on Form S-11 (Reg. No. 333- 180741), as amended from time to time, in connection with the Initial Public Offering.

 

REIT means a “real estate investment trust” under Sections 856 through 860 of the Code.

 

Sale means (i) any transaction or series of transactions whereby: (A) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Asset or portion thereof, including the lease of any Property consisting of a building only, and including any event with respect to any Asset which gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture in which the Company is a co-venturer or partner directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Asset or portion thereof, including any event with respect to any Asset which gives rise to insurance claims or condemnation awards; (D) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, conveys or relinquishes its interest in any Loan or portion thereof (including with respect to any Loan, all payments thereunder or in satisfaction thereof other than regularly scheduled interest payments) of amounts owed pursuant to such Loan and any event which gives rise to a significant amount of insurance proceeds or similar awards; or (E) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other Asset not previously described in this definition or any portion thereof, but (ii) not including any transaction or series of transactions specified in clause (i) (A) through (E) above in which the proceeds of such transaction or series of transactions are reinvested by the Company in one or more Assets within 180 days thereafter.

 

SEC means the United States Securities and Exchange Commission.

 

Securities means Shares, any other stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.

 

  

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Selling Agent means a Broker/Dealer.

 

Shares means shares of common stock of the Company, par value $0.001 per share.

 

Stockholders means the registered holders of the Shares.

 

Termination Date means the date of termination of the Agreement, determined in accordance with Article 13 hereof.

 

2%/25% Guidelines means the requirement pursuant to the NASAA REIT Guidelines that, in any period of four consecutive fiscal quarters, total Operating Expenses not exceed the greater of 2.0% of the Company’s Average Invested Assets during such 12-month period or 25.0% of the Company’s Net Income over the same 12-month period.

 

ARTICLE 2

 

APPOINTMENT

 

The Company hereby appoints the Advisor to serve as its advisor and asset manager on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

 

ARTICLE 3

 

DUTIES OF THE ADVISOR

 

The Advisor is responsible for managing, operating, directing and supervising the operations and administration of the Company and its Assets. The Advisor undertakes to use its commercially reasonable efforts to present to the Company potential investment opportunities, to make investment decisions on behalf of the Company subject to the limitations in the Charter, the direction and oversight of the Board and Section 4.3 hereof, and to provide the Company with a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. Subject to the limitations set forth in this Agreement, including Article 4 hereof, and the continuing and exclusive authority of the Board over the management of the Company, the Advisor shall, either directly or by engaging an Affiliate or third party, perform the following duties:

 

3.1 Offering Services. The Advisor shall manage and supervise:

 

(i) the development of the Initial Public Offering and any subsequent Offering approved by the Board, including the determination of the specific terms of the securities to be offered by the Company, preparation of all offering and related documents, and obtaining all required regulatory approvals of such documents;

 

(ii) along with the Selling Agent, the approval of the participating broker-dealers and negotiation of the related selling agreements;

 

(iii) coordination of the due diligence process relating to participating broker-dealers and their review of the Registration Statement and other Offering and Company documents;

 

  

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(iv) preparation and approval of marketing materials contemplated to be used by the Selling Agent or others relating to the Initial Public Offering or other Offerings;

 

(v) along with the Selling Agent, negotiation and coordination with the transfer agent for the receipt, collection, processing and acceptance of subscription agreements, commissions, and other administrative support functions;

 

(vi) creation and implementation of various technology and electronic communications related to the Initial Public Offering or other Offerings;

 

(vii) the offer and sale of the Shares through the DRIP; and

 

(viii) all other services related to the Initial Public Offering or other Offerings, other than services that (a) are to be performed by the Selling Agent, (b) the Company elects to perform directly or (c) would require the Advisor to register as a broker-dealer with the SEC, FINRA or any state.

 

3.2 Acquisition Services. The Advisor shall:

 

(i) serve as the Company’s investment and financial advisor and obtain market research and economic and statistical data in connection with the Company’s Assets and investment objectives and policies;

 

(ii) subject to Article 4 hereof and the investment objectives and policies of the Company: (a) locate, analyze and select potential Assets; (b) structure and negotiate the terms and conditions of transactions pursuant to which the Assets will be acquired; and (c) acquire Assets on behalf of the Company;

 

(iii) Oversee the due diligence process related to prospective Assets;

 

(iv) prepare reports regarding prospective investments that require the Board’s approval, which reports shall include recommendations and supporting documentation necessary for the Board to evaluate the prospective investments;

 

(v) obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of prospective Assets of the Company; and

 

(vi) negotiate and execute investments in prospective Assets of the Company and other transactions.

 

3.3 Asset Management Services. The Advisor shall:

 

(i) monitor applicable markets and obtain reports (which may be prepared by the Advisor or its Affiliates) where appropriate, concerning the value of Assets of the Company;

 

(iii) monitor and evaluate the performance of Assets of the Company, provide daily management services to the Company and perform and supervise the various management and operational functions related to the Company’s Assets;

 

(iv) formulate and oversee the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of Assets on an overall portfolio basis;

 

  

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(v) oversee the performance by the Property Managers of their duties, including collection and proper deposits of rental payments and payment of Property expenses and maintenance;

 

(vi) conduct periodic on-site property visits to some or all (as the Advisor deems reasonably necessary) of the Properties to inspect the physical condition of the Properties and to evaluate the performance of the Property Managers;

 

(vii) review, analyze and comment upon the operating budgets, capital budgets and leasing plans prepared and submitted by each Property Manager and aggregate these property budgets into the Company’s overall budget; and

 

(viii) coordinate and manage relationships between the Company and any Joint Venture partners.

 

3.4 Accounting and Other Administrative Services. The Advisor shall:

 

(i) manage and perform the various administrative functions necessary for the management of the day-to-day operations of the Company;

 

(ii) investigate, select, and, on behalf of the Company, engage and conduct business with such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies, Property Managers and any and all Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services;

 

(iii) from time-to-time, or at any time reasonably requested by the Board, make reports to the Board on the Advisor’s performance of services to the Company under this Agreement;

 

(iv) coordinate with the Company’s independent accountants and auditors to prepare and deliver to the Company’s audit committee an annual report covering the Advisor’s compliance in all material respects with this Agreement;

 

(v) provide or arrange for administrative, legal and other support services, office space, office furnishings, personnel and other overhead items necessary and incidental to the Company’s business and operations;

 

(v) provide financial and operational planning services and portfolio management functions;

 

(vi) maintain accounting data and any other information concerning the activities of the Company as shall be needed to prepare and file on a timely basis all periodic financial reports and returns required to be filed with the SEC and any other regulatory agency, including annual and quarterly financial statements that conform with applicable SEC requirements;

 

(vii) maintain all appropriate books and records of the Company and maintain appropriate systems of internal control with respect to financial reporting;

 

  

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(viii) oversee tax and compliance services and risk management services and coordinate with appropriate third parties, including independent accountants and other consultants, on related tax matters;

 

(ix) supervise the performance of such ministerial and administrative functions as may be necessary in connection with the daily operations of the Company;

 

(x) provide the Company with all necessary cash management services;

 

(xi) manage and coordinate with the transfer agent the distribution process and payments to Stockholders;

 

(xii) consult with the officers of the Company and the Board and assist in evaluating and obtaining adequate insurance coverage based upon risk management determinations;

 

(xiii) provide the officers of the Company and the Board with timely updates related to the overall regulatory environment affecting the Company, as well as managing compliance with such matters;

 

(xiv) consult with the officers of the Company and the Board relating to the corporate governance structure and appropriate policies and procedures related thereto; and

 

(xv) oversee all reporting, record keeping, internal controls and similar matters in a manner to allow the Company to comply with applicable law.

 

3.5 Stockholder Services. The Advisor shall:

 

(i) manage communications with Stockholders, including answering phone calls, preparing and sending written and electronic reports and other communications; and

 

(ii) establish technology infrastructure to assist in providing Stockholder support and service.

 

3.6 Financing Services. The Advisor shall:

 

(i) identify and evaluate potential financing and refinancing sources, engaging a third-party broker if necessary;

 

(ii) negotiate terms of, arrange and execute financing agreements;

 

(iii) manage relationships between the Company and its lenders; and

 

(iv) monitor and oversee the service of the Company’s debt facilities and other financings.

 

3.7 Disposition Services. The Advisor shall:

 

(i) consult with the Board and provide assistance with the evaluation and approval of potential asset dispositions, sales or other liquidity events; and

 

(ii) structure and negotiate the terms and conditions of transactions pursuant to which Assets may be sold.

 

  

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ARTICLE 4

AUTHORITY OF ADVISOR

 

4.1 Powers of the Advisor. Subject to the express limitations set forth in this Agreement and the continuing and exclusive authority of the Board over the management of the Company, the power to direct the management, operation and policies of the Company, including making, financing and disposing of Assets, and the performance of those services described in Article 3 hereof, shall be vested in the Advisor, which shall have the power by itself and shall be authorized and empowered on behalf and in the name of the Company to carry out any and all of the objectives and purposes of the Company and to perform all acts and enter into and perform all contracts and other undertakings that it may in its sole discretion deem necessary, advisable or incidental thereto to perform its obligations under this Agreement. The Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company to such officers, employees, Affiliates, agents and representatives of the Advisor or the Company as it may deem appropriate, subject to the Advisor’s continuing obligation to oversee the performance of such services. Any authority delegated by the Advisor to any other Person shall be subject to the limitations on the rights and powers of the Advisor specifically set forth in this Agreement or the Charter.

 

4.2 Approval by the Board. Notwithstanding the foregoing, the Advisor may not take any action on behalf of the Company without the prior approval of the Board or duly authorized committees thereof if the Charter or Delaware General Corporation Law require the prior approval of the Board. In addition, the Advisor shall comply with all directives and policies adopted by the Board, including without limitation, any requirements set forth in policies adopted by the Board for Board review and approval of proposed actions. If the Board or a committee of the Board must approve a proposed investment, financing or disposition or chooses to do so, the Advisor will deliver to the Board or committee, as applicable, all documents required by it to evaluate such investment, financing or disposition.

 

4.3 Modification or Revocation of Authority of Advisor. The Board may, from time to time, with the consent of the Advisor, modify or revoke the authority or approvals set forth in Article 3 and this Article 4; provided, however, that the Board may act immediately to modify or revoke such authority or approvals upon notice to the Advisor and without the Advisor’s consent if the Board concludes such immediate action is necessary to protect the Company’s stockholders. Any modification or revocation shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the effective date of receipt by the Advisor of such notification.

 

ARTICLE 5

BANK ACCOUNTS

 

The Advisor may establish and maintain one or more bank accounts in its own name for the account of the Company or in the name of the Company and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company, under such terms and conditions as the Board may approve, provided that no funds of the Company shall be commingled with the funds of the Advisor. The Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and the independent auditors of the Company.

 

  

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ARTICLE 6

RECORDS AND ACCESS

 

The Advisor, in the conduct of its responsibilities to the Company, shall maintain adequate and separate books and records for the Company’s operations in accordance with GAAP, which shall be supported by sufficient documentation to ascertain that such books and records are properly and accurately recorded. Such books and records shall be the property of the Company and shall be available for inspection by the Board and by counsel, auditors and other authorized agents of the Company, at any time or from time to time during normal business hours. The Advisor shall at all reasonable times have access to the books and records of the Company.

 

ARTICLE 7

LIMITATION ON ACTIVITIES

 

Notwithstanding any provision in this Agreement to the contrary, the Advisor shall not take any action that, in its good faith judgment, would (i) adversely affect the ability of the Company to qualify or continue to qualify as a REIT under the Code unless the Board has determined that the Company will not seek or maintain REIT qualification for the Company, (ii) subject the Company to regulation under the Investment Company Act of 1940, as amended, (iii) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, its Shares or its other securities, (iv) require the Advisor to register as a broker-dealer with the SEC or any state, or (v) violate the Charter or Bylaws. In the event an action that would violate (i) through (v) of the preceding sentence but such action has been ordered by the Board, the Advisor shall notify the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given.

 

ARTICLE 8

FEES AND CONVERTIBLE STOCK ISSUANCE

 

8.1 Acquisition Fees.

 

8.1.1 As compensation for the investigation, selection, sourcing and acquisition or origination (by purchase, investment or exchange) of Assets, the Company shall pay an Acquisition Fee to the Advisor for each such investment (whether an acquisition or origination) in an amount equal 3.0% of the sum of the amount actually paid or allocated to fund the acquisition, origination, development, construction or improvement of the investment, inclusive of the Acquisition Expenses associated with such investment and the amount of any debt associated with, or used to fund the investment in, such Asset.

 

8.1.2 Notwithstanding anything herein to the contrary, (i) no Acquisition Fee shall be payable for any Loans acquired from an Affiliate of the Advisor; and (ii) the payment of Acquisition Fees by the Company or a borrower shall otherwise be subject to the limitations on acquisition fees contained in (and defined in) the Charter.

 

  

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8.1.3 The Advisor shall submit an invoice to the Company following the closing or closings of each acquisition or origination, accompanied by a computation of the Acquisition Fee. Generally, the Acquisition Fee payable to the Advisor shall be paid at the closing of the transaction upon receipt of the invoice by the Company; provided, however, that such Acquisition Fee shall be paid to an Affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable laws or regulations prohibit such payment to be made to a Person that is not a FINRA member broker-dealer. However, payment of the Acquisition Fee may be deferred, in whole or in part, as to any transaction in the sole discretion of the Advisor. Any such deferred Acquisition Fees shall be paid to the Advisor without interest at such subsequent date as the Advisor shall request.

 

8.2 Asset Management Fees.

 

8.2.1 The Company shall pay the Advisor as compensation for the services described in Section 3.3 hereof a monthly fee (the “Asset Management Fee”) in an amount equal to one-twelfth of 0.85% of the Fair Market Value of the Company’s Assets, as of the end of the preceding month.

 

8.2.2 The Asset Management Fee will be reduced to one-twelfth of 0.75% of the Fair Market Value of the Company’s Assets, effective as of the beginning of the month immediately following the date on which the Shares are listed on a national securities exchange.

 

8.2.3 The Advisor shall submit a monthly invoice to the Company, accompanied by a computation of the Asset Management Fee for the applicable period. Generally, the Asset Management Fee payable to the Advisor shall be paid on the last day of such month, or the first business day following the last day of such month. However, payment of the Asset Management Fee may be deferred, in whole or in part, in the sole discretion of the Advisor. Any such deferred Asset Management Fees shall be paid to the Advisor without interest at such subsequent date as the Advisor shall request.

 

8.3 Debt Financing Fees.

 

8.3.1 The Company shall pay the Advisor as compensation for the services described in Section 3.6 hereof a monthly fee (the “Debt Financing Fee”) in an amount equal to one-twelfth of 0.25% of the aggregate debt financing (including, but not limited to, any mortgage debt, lines of credit, and other term indebtedness (including refinancing)) obtained by the Company or made available to the Company.

 

8.3.2 In the case of a Joint Venture or other co-ownership arrangement with the Company, the Debt Financing Fee shall be paid only with respect the portion of the debt financing directed allocated to the Company.

 

8.3.3 The Advisor shall submit a monthly invoice to the Company, accompanied by a computation of the Debt Financing Fee for the applicable period. Generally, the Debt Financing Fee payable to the Advisor shall be paid on the last day of such month, or the first business day following the last day of such month. However, payment of the Debt Financing Fees may be deferred, in whole or in part, in the sole discretion of the Advisor. Any such deferred Debt Financing Fees shall be paid to the Advisor without interest at such subsequent date as the Advisor shall request.

 

8.4 Disposition Fees.

 

8.4.1 If the Advisor or any of its Affiliates provide substantial services (as determined by the Independent Directors) in connection with a Sale (except for the Sale of any Securities that are traded on a national securities exchange), the Advisor or such Affiliate shall receive a Disposition Fee equal to the lesser of (i) 3.0% of the Contract Sales Price of each Asset sold or (ii) 50% of the customary commission which would be paid to a third-party broker for the sale of a comparable property. Notwithstanding anything to the contrary, the Disposition Fee payable by the Company in connection with any Sale, when added to the sums paid to Persons not Affiliated with the Advisor, may not exceed the lesser of (i) 6.0% of the Contract Sales Price of each Asset sold or (ii) the customary commission which would be paid to a third-party broker for the sale of a comparable property.

 

  

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8.4.2 The Advisor shall also receive a Disposition Fee upon the maturity, prepayment, workout, modification or extension of a Loan or other debt-related investment only if there is a corresponding fee paid by the borrower to the Company, in which event the Advisor shall receive the lesser of (i) 1.0% of the principal amount of the loan or debt-related investment prior to such transaction or (ii) the amount of the fee paid by the borrower to the Company in connection with such transaction.

 

8.4.3 If the Company acquires ownership of a Property as a result of a foreclosure or workout of a Loan, the Company will pay a Disposition Fee to the Advisor upon the sale of such Property in an amount equal to 3.0% of the Contract Sales Price of such Property.

 

8.4.4 With respect to any Asset held in a Joint Venture or other co-ownership arrangement with the Company, each of the Disposition Fees payable under this Section 8.4 will be reduced to a percentage of such amount reflecting the Company’s economic interest in the Joint Venture or other co-ownership arrangement.

 

8.4.5 The payment of any Disposition Fees by the Company shall be subject to the limitations contained in the Charter. The Advisor shall submit an invoice to the Company following the closing or closings of each disposition, accompanied by a computation of the Disposition Fee. Generally, the Disposition Fee payable to the Advisor shall be paid at the closing of the transaction upon receipt of the invoice by the Company; provided, however, that such Disposition Fee shall be paid to an Affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable laws or regulations prohibit such payment to be made to a Person that is not a FINRA member broker-dealer. However, payment of the Disposition Fee may be deferred, in whole or in part, in the sole discretion of the Advisor. Any such deferred Disposition Fees shall be paid to the Advisor without interest at such subsequent date as the Advisor shall request.

 

8.5 Issuance of Convertible Stock. The Company and the Advisor acknowledge that the Company has issued 1,000 shares of its non-participating, non-voting convertible stock, $0.001 par value per share (the “Convertible Shares”), to the Advisor, for which the Advisor contributed $1,000 to the Company. In accordance with, and subject to the terms of, the Charter, the Convertible Shares will convert into a number of shares of common stock equal to three and one-half percent (3.50%) of the outstanding shares of the Company’s common stock immediately preceding the conversion if and when: (i) the Company has made total Distributions on the then outstanding shares of its common stock equal to the invested capital attributable to those shares plus a 6.00% cumulative, non-compounded, annual pre-tax return on such invested capital; (ii) the Company lists its common stock for trading on a national securities exchange; or (iii) if this Agreement is terminated or not renewed by the Company (other than for “Cause” as defined in this Agreement). The Charter further provides that, the event of a termination or non-renewal of this Agreement for Cause, the Convertible Shares will be redeemed by the Company for $1.00 per share.

 

  

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ARTICLE 9

EXPENSES

 

9.1 General. In addition to the compensation paid to the Advisor pursuant to Article 8 hereof, the Company shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor or its Affiliates on behalf of the Company or in connection with the services provided to the Company pursuant to this Agreement, including, but not limited to:

 

(i) All Organization and Offering Expenses; provided, however, that after the Company has reimbursed the Advisor $100,000 of Organization and Offering Expenses, no additional reimbursements will be made by the Company unless the aggregate amount of all such reimbursements does not exceed 0.75% of the Gross Proceeds raised as of the date of the reimbursement;

 

(ii) Acquisition Fees and Acquisition Expenses incurred in connection with the selection and acquisition of Assets, including such expenses incurred related to assets pursued or considered but not ultimately acquired by the Company, provided that, notwithstanding anything herein to the contrary, the payment of Acquisition Fees and Acquisition Expenses by the Company shall be subject to the limitations contained in the Charter;

 

(iii) The actual out-of-pocket cost of goods and services used by the Company and obtained from third parties;

 

(iv) Rent, utilities and other third party costs for office space;

 

(v) Interest and other costs for borrowed money or securitization transactions, including discounts, points and other similar fees;

 

(vi) Taxes and assessments on income or Assets, taxes as an expense of doing business and any other taxes otherwise imposed on the Company and its business, assets or income;

 

(vii) Out-of-pocket costs associated with insurance required in connection with the business of the Company or by its officers and the Board;

 

(viii) Expenses of managing, improving, developing, operating and selling Assets owned, directly or indirectly, by the Company, as well as expenses of other transactions relating to such Assets, including but not limited to prepayments, maturities, workouts and other settlements of Loans and other Assets;

 

(ix) All out-of-pocket expenses in connection with payments to the Board and meetings of the Board and Stockholders;

 

(x) Personnel and related employment direct costs incurred by the Advisor or its Affiliates (a) in performing the services described in Article 3 hereof or (b) as otherwise approved by the Independent Directors, including but not limited to salary, benefits, burdens and overhead of all employees directly involved in the performance of such services, plus all out-of-pocket costs incurred; provided that no reimbursement shall be made for costs of such employees of the Advisor or its Affiliates to the extent that such employees (A) perform services for which the Advisor receives Acquisition Fees or Disposition Fees or (B) serve as executive officers of the Company;

 

  

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(xi) Out-of-pocket expenses of providing services for and maintaining communications with Stockholders, including the cost of preparation, printing, and mailing annual reports and other Stockholder reports, proxy statements and other reports required by governmental entities;

 

(xii) Audit, accounting and legal fees, and other fees for professional services relating to the operations of the Company and all such fees incurred at the request, or on behalf of, the Board or any committee of the Board;

 

(xiii) Out-of-pocket costs for the Company to comply with all applicable laws, regulations and ordinances;

 

(xiv) Expenses connected with payments of Distributions in any form (including in connection with the DRIP) made or caused to be made by the Company to the Stockholders;

 

(xv) Expenses of organizing, redomesticating, merging, liquidating or dissolving the Company or of amending the Charter or the Bylaws; and

 

(xvi) All other out-of-pocket costs incurred by the Advisor in performing its duties hereunder.

 

9.2 Timing of and Additional Limitations on Reimbursements.

 

9.2.1 Expenses incurred by the Advisor on behalf of the Company and reimbursable pursuant to this Article 9 shall be reimbursed no less than monthly to the Advisor, subject to receipt by the Company from the Advisor of a statement documenting the monthly expenses incurred by the Advisor on behalf of the Company pursuant to this Agreement.

 

9.2.2 Commencing upon the fourth fiscal quarter after the commencement of the Initial Public Offering, the following limitation on Operating Expenses shall apply: The Company shall not reimburse the Advisor at the end of any fiscal quarter for Operating Expenses that in the four consecutive fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of Average Invested Assets or 25% of Net Income (the “2%/25% Guidelines”) for such year unless the Board determines that such excess was justified, based on unusual and nonrecurring factors that the Board deems sufficient. If the Board does not approve such excess as being so justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company. If the Board determines such excess was justified, then, within 60 days after the end of any fiscal quarter of the Company for which total reimbursed Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the Board, shall cause such fact to be disclosed to the Stockholders in writing (or the Company shall disclose such fact to the Stockholders in the next quarterly report of the Company or by filing a Current Report on Form 8-K with the SEC within 60 days of such quarter end), together with an explanation of the factors the Board considered in determining that such excess expenses were justified. The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board.

 

  

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ARTICLE 10

OTHER SERVICES

 

Should (i) the Company request that the Advisor or any manager, officer or employee thereof render services for the Company other than as set forth in this Agreement or (ii) there are changes to the regulatory environment in which the Advisor or Company operates that would increase significantly the level of services performed such that the costs and expenses borne by the Advisor for which the Advisor is not entitled to separate reimbursement for personnel and related employment direct costs and overhead under Article 9 of this Agreement would increase significantly, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Independent Directors, subject to the limitations contained in the Charter, and shall not be deemed to be services pursuant to the terms of this Agreement.

 

ARTICLE 11

VOTING AGREEMENT

 

Shearson American Advisors, LLC agrees that, with respect to any Shares now or hereinafter owned by it, it will not vote or consent on matters submitted to the Stockholders of the Company regarding (i) the removal of Shearson American Advisors, LLC  or any of its Affiliates as the Advisor or (ii) any transaction between the Company and Shearson American Advisors, LLC or any of its Affiliates. This voting restriction shall survive until such time that Shearson American Advisors, LLC or any of its Affiliates is no longer serving as the Advisor.

 

ARTICLE 12

RELATIONSHIP OF ADVISOR AND COMPANY;

OTHER ACTIVITIES OF THE ADVISOR

 

12.1 Relationship. The Company and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers. Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates. Nor shall this Agreement limit or restrict the right of any manager, director, officer, employee or equityholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other Person. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall promptly disclose to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge that creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other Person.

 

12.2 Time Commitment. The Advisor shall, and shall cause its Affiliates and their respective employees, officers and agents to, devote to the Company such time as shall be reasonably necessary to conduct the business and affairs of the Company in an appropriate manner consistent with the terms of this Agreement. The Company acknowledges that the Advisor and its Affiliates and their respective managers, employees, officers and agents may also engage in activities unrelated to the Company and may provide services to Persons other than the Company or any of its Affiliates.

 

  

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12.3 Investment Opportunities and Allocation. The Advisor shall be required to use commercially reasonable efforts to present a continuing and suitable investment program to the Company that is consistent with the investment policies and objectives of the Company, but neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Company even if the opportunity is of character that, if presented to the Company, could be taken by the Company; unless such investment opportunity is offered to an Affiliate of the Advisor in his or her capacity as an officer or director of the Company and the Company does not renounce any interest or expectancy in such investment opportunity. In conducting the allocation procedure, the Advisor will consider (i) the investment objectives and criteria of other entities managed by the Advisor or its Affiliates; (ii) the cash requirements of other entities managed by the Advisor or its Affiliates; (iii) the effect of the investment on diversification of the other entities managed by the Advisor or its Affiliates by type of investment and risk of investment; (iv) the policy on leverage of the other entities managed by the Advisor or its Affiliates; (v) the anticipated cash flow of the asset to be acquired; (vi) the federal income tax effects of the purchase on the other entities managed by the Advisor or its Affiliates; (vi) the size of the investment program; and (vii) the amount of funds available to the other entities managed by the Advisor or its Affiliates and the length of time such funds have been available for investment.

 

ARTICLE 13

TERM AND TERMINATION OF THE AGREEMENT

 

13.1 Term. This Agreement shall have an initial term of one year from the Effective Date and may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties. The Company (acting through the Independent Directors) will evaluate the performance of the Advisor annually before renewing this Agreement, and each such renewal shall be for a term of no more than one year. Any such renewal must be approved by the Independent Directors.

 

13.2 Termination by the Parties. This Agreement may be terminated

 

(i) immediately by the Company for Cause or upon the bankruptcy of the Advisor;

 

(ii) upon 60 days written notice without Cause by a majority of the Independent Directors of the Company; or

 

(iii) upon 60 days written notice with Good Reason by the Advisor.

 

The provisions of Articles 13, 15, 16 and 17 of this Agreement shall survive termination of this Agreement.

 

  

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13.3 Payments on Termination and Survival of Certain Rights and Obligations.

 

13.3.1 After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement, subject to the 2%/25% Guidelines to the extent applicable.

 

13.3.2 If this Agreement is terminated or not renewed by the Company (other than for “Cause” as defined in this Agreement), then the Conversion Shares shall convert into shares of common stock in accordance with the provisions of the Charter, as further described in Section 8.5 above. If this Agreement is terminated or not renewed by the Company for Cause, then the Conversion Shares shall be redeemed by the Company for $1.00 per share in accordance with the provisions of the Charter.

 

13.3.3 The Advisor shall promptly upon termination:

 

(a) pay over to the Company all money collected and held for the account of the Company pursuant to this Agreement, if any, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;

 

(b) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board;

 

(c) deliver to the Board all assets and documents of the Company then in the custody of the Advisor; and

 

(d) cooperate with the Company and take all reasonable steps to assist the Company in making an orderly transition of advisory functions.

 

ARTICLE 14

ASSIGNMENT

 

This Agreement may not be assigned by the Advisor without the prior approval of a majority of the Board (including a majority of the Independent Directors). The Advisor may assign any rights to receive fees or other payments under this Agreement to an Affiliate without obtaining the approval of the Board. This Agreement shall not be assigned by the Company without the prior consent of the Advisor, except in the case of a merger, acquisition, sale of substantially all of the Company’s assets or similar reorganization, provided that, the surviving entity in any such reorganization agrees in writing to be bound hereunder in the same manner as the Company is bound by this Agreement. Nothing herein shall be deemed to prohibit or otherwise restrict any transfers or additional issuances of equity interests in the Advisor nor shall any such transfer or issuance be deemed an assignment for purposes of this Article 14.

 

ARTICLE 15

LIMITATION OF LIABILITY AND INDEMNIFICATION

 

15.1 Limitation of Liability. The Advisor assumes no responsibility under this Agreement other than to render the services specifically called for under this Agreement and shall not be responsible for any action of the Board in following or declining to follow any advice or recommendations of the Advisor. The Advisor and its directors, officers, members and employees will not be liable to the Company, any subsidiary of the Company, its stockholders or any of its subsidiary’s stockholders or the Independent Directors for any acts or omissions, errors of judgment or mistakes of law by the Advisor or its directors, officers, members or employees under or in connection with this Agreement, except by reason of acts or omissions, errors of judgment or mistakes of law constituting bad faith, willful misconduct, negligence or disregard of their duties under this Agreement.

 

  

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15.2 Indemnification by the Company. Except as prohibited by the restrictions provided in Section 15.3 and Section 15.4, the Company shall indemnify, defend and hold harmless the Advisor and its Affiliates, including their respective managers, officers, directors, equity holders, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance. Any indemnification of the Advisor may be made only out of the net assets of the Company and not from Stockholders.

 

15.3 Limitation on Indemnification.

 

15.3.1 Notwithstanding the provisions of Section 15.2 or anything else to the contrary set forth herein, the Company shall not provide for indemnification of the Advisor or its Affiliates for any liability or loss suffered by any of them, nor shall any of them be held harmless for any loss or liability suffered by the Company, unless all of the following conditions are met:

 

(A) A majority of the Independent Directors have determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company;

 

(B) The Advisor or its Affiliates were acting on behalf of or performing services for the Company;

 

(C) Such liability or loss was not the result of negligence or misconduct by the Advisor or its Affiliates; and

 

(D) Such indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from the Stockholders.

 

15.3.2 In addition, the Company shall not indemnify the Advisor or its Affiliates for any loss, liability or expense arising from or out of an alleged violation of federal or state securities laws by such party unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged material securities law violations as to the particular indemnitee; (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.

 

15.4 Limitation on Payment of Expenses. The Company shall pay or reimburse reasonable legal expenses and other costs incurred by the Advisor or its Affiliates in advance of the final disposition of a proceeding only if all of the following are satisfied: (a) the proceeding relates to acts or omissions with respect to the performance of duties or services on behalf of the Company, (b) the Advisor or its Affiliates provide the Company with written affirmation of the particular indemnitee’s good faith belief that it has met the standard of conduct necessary for indemnification by the Company as authorized by Section 15.2 hereof; (c) the legal proceeding was initiated by a third party who is not a Stockholder or, if by a Stockholder acting in his or her capacity as such, a court of competent jurisdiction approves such advancement; and (d) the Advisor or its Affiliates undertake to repay the amount paid or reimbursed by the Company, together with the applicable legal rate of interest thereon, if it is ultimately determined that the particular indemnitee did not comply with the requisite standard of conduct and is not entitled to indemnification.

 

15.5 Indemnification by Advisor. The Advisor shall indemnify and hold harmless the Company from contract or other liability, claims, damages, taxes or losses and related expenses including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s bad faith, fraud, misfeasance, intentional misconduct, negligence or reckless disregard of its duties; provided, however, that the Advisor shall not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Advisor.

 

  

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ARTICLE 16

FIDUCIARY DUTY

 

During the term of this Agreement, the Adviser shall be deemed to be in a fiduciary relationship to the Company and its stockholders. The disclosures of conflicts of interest affecting the Advisor set forth in the Registration Statement, in any SEC filing made by the Company or in any written communication delivered by the Advisor to all of the Independent Directors, shall be deemed disclosures to the Company and its stockholders with respect to such conflicts of interest. The Independent Directors shall have sole authority to consent to any such conflict of interest.

 

ARTICLE 17

MISCELLANEOUS

 

17.1 Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Charter or the Bylaws or is accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

 

	
To the Board or the Company:

	
SHEARSON AMERICAN REIT, INC.

	  	
1959 Redondo Blvd.

	  	
Los Angeles, CA. 90019

	  	  
	
To the Advisor:

	
Shearson American Advisors, LLC

1959 Redondo Blvd.

Los Angeles, CA, 90019

 

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Section 17.1.

 

17.2 Modification. This Agreement shall not be changed, modified, terminated or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or permitted assigns.

 

17.3 Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

 

17.4 Choice of Law; Venue. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware. The parties hereto each hereby irrevocably submits to the exclusive jurisdiction of the state courts of the State of Delaware and the federal courts of the United States of America located in Delaware, in respect of the interpretation and enforcement of the terms of this Agreement, and in respect of the transactions contemplated hereby, and each hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties hereto each hereby irrevocably agrees that all claims with respect to such action or proceeding shall be heard and determined in such a Delaware state or federal court.

 

  

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17.5 Entire Agreement. This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

 

17.6 Waiver. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

 

17.7 Gender. Words used herein regardless of the number and gender specifically 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 requires.

 

17.8 Titles Not to Affect Interpretation. The titles of Articles and Sections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

 

17.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

[The remainder of this page is intentionally left blank. Signature page follows.]

 

  

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

 

	 	
Shearson American REIT, Inc.

	 	  	  	  
	 	 	By:	/s/ John Williams
	 	  	
Name:

	John Williams
	 	  	
Title:

	Chief Executive Officer
	 	  
	 	
Shearson American Advisors, LLC

	 	  	  	  
	 	 	
By:

	/s/ Richard Orcutt
	 	  	
Name:

	Richard Orcutt  
	 	  	
Title:

	Chief Executive Officer

 

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