Document:

Since 1842

 

KUHNS BROTHERS

 

The Farm House

558 Lime Rock Road

Lime Rock, Connecticut 06039

 

May 26, 2011

 

Mr. Zhigang (Harry) Gao

Mr. Lin (Michael) Han

Master Silicon Carbide Industries, Inc.

558 Lime Rock Road

Lakeville, Connecticut 06039

 

ENGAGEMENT AGREEMENT PROVIDING FOR
INVESTMENT BANKING SERVICES

 

Dear Mr. Gao and Mr. Lin:

 

This letter agreement
(the “Agreement”) is written to set forth the understanding and agreement between Kuhns Brothers, Inc. and its related
subsidiaries (altogether, “Kuhns Brothers”) and Master Silicon Carbide Industries, Inc., a Nevada corporation, and
its related subsidiaries, including Yili Carborundum USA, Inc., C3 Capital, Limited and Yili Master Carborundum Production Co.,
Ltd. (altogether, the “Company”).

 

The Company hereby
engages Kuhns Brothers on an exclusive basis, initially for a one (1) year period commencing the date hereof, to provide it with
investment banking services and Kuhns Brothers hereby accepts such engagement. In the event that as a result of this initial engagement
Kuhns Brothers successfully arranges and closes any financing and related merger acquisition as described below (the “Closing”),
this Agreement will remain in force for a period of two (2) years following the closing of such financing and related transaction.

 

    	 

    	 

    

 

I.   INVESTMENT BANKING
SERVICES

 

		1.	Financial Advisory Services

 

Kuhns Brothers, through
its subsidiary Kuhns Bros. & Co., Inc. (the “Advisor”) and its subsidiary Kuhns Brothers Securities Corporation
(the “Placement Agent”), will assist the Company with its current investment banking requirements of a capital raise
of approximately $10,000,000 to $35,000,000 of gross proceeds which may be either debt or equity (common stock, preferred stock,
convertible securities, warrants or similar instruments) or a combination of both (the “Financing”) invested in it
or its controlled subsidiaries or affiliates. Advisor may market to institutional and high-net-worth individual financial investors
(“Financial Investors”) or, at the option of the Company, to strategic investors (“Strategic Investors”);
collectively with Financial Investors, the (“Investors”). All assistance provided hereunder with respect to the Financing
shall be on a best efforts basis.

 

With respect to Financial
Investors, Kuhns Brothers will provide the following financial advisory and placement agency services:

 

(i)       provide
advice regarding the financial structure of the Company or its subsidiaries or any projects or programs undertaken by any of the
foregoing; (ii) assist in structuring the Financing with respect to what is usual and standard practice on terms and conditions
equivalent for organizations in similar financings; (iii) assist in preparing and documenting of the Company’s offering documents
relating to the Financing, including the Company’s executive summary (the “Executive Summary”) and investor PowerPoint
presentation (the “Investor PowerPoint Presentation”), as well as any other related materials relating to the Offering
and the Financing; (iv) when the structuring of the Financing has reached an appropriate stage, assist in the process to obtain
and execute such Financing; and (v) assist in obtaining and executing such Financing on the most favorable terms and conditions
consistent with current market conditions and the nature of and risks inherent in the Company.

 

With respect to Strategic
Investors, Kuhns Brothers will provide the following financial advisory and placement agency services:

 

    	 

    	 

    

 

(i) assist in the evaluation
of a Strategic Investor from a financial point of view; (ii) provide advice and assistance with respect to the form and structure
of any Transaction involving a Strategic Investor; and, when the structuring of the strategic relationship has reached an appropriate
stage, (iii) act as the Company’s agent to assist the Company in locating and obtaining, on the most favorable terms and
conditions, such Strategic Investor(s) in the form of Company clients, customers or vendors, and assist the parties to enter into
sales, vendor, licensing or related strategic agreements. (Such agreements with Strategic Investors, whether they result in a financial
investment and or license arrangement, sales or vendor agreement or otherwise, shall also be considered Financing for purposes
of this Agreement.)

 

Kuhns Brothers shall
not be required to undertake duties not reasonably within the scope of the financial advisory services in which it is generally
engaged. In performance of its duties, Kuhns Brothers shall provide the Company with the benefits of its best judgment and efforts,
but it is understood and acknowledged by the parties that the value of Kuhns Brothers’ advice may not be measurable in a
quantitative manner. Kuhns Brothers does not guarantee that the Company will receive the valuation for its securities that it desires.

 

The Company acknowledges
that Kuhns Brothers and its affiliates are in the business of providing financial advisory services of all types contemplated by
this Agreement to others. Nothing herein contained shall be construed to limit or restrict Kuhns Brothers or its affiliates in
conducting such business with respect to others or rendering such advice to others.

 

The Company recognizes
and confirms that Kuhns Brothers, in acting pursuant to this Agreement, will be using information in reports and other information
provided by third parties, including information provided by or on behalf of the Company. Kuhns Brothers does not assume responsibility
for and may rely on, without independent verification, the accuracy and completeness of any such reports and information. The Company
hereby warrants that any information relating to the Company that is furnished to Kuhns Brothers by or on behalf of the Company
will be accurate and will not contain any material misstatements of fact or omissions. The Company agrees that any information
or advice rendered by Kuhns Brothers or its representatives in connection with this Agreement is for confidential use of the Company’s
Board of Directors, management and employees, as well as attorneys, accountants and other agents of the Company on a need-to-know
basis and, except as otherwise required by law, the Company will not, and will not permit any third party to, disclose or otherwise
refer to such advice or information in any manner without Kuhns Brothers’ prior written consent.

 

    	 

    	 

    

 

2.   Merger
and Acquisition Services

 

Relating to its assistance
with respect to the Financing, Kuhns Brothers shall provide the Company with services related to merger and acquisition transactions
in the event that at any time during which this Agreement is in place, the Company or any of its affiliates shall enter into any
"merger and acquisition transaction" as described below with any party introduced to the Company by Kuhns Brothers, directly
or indirectly.

 

For purposes of this
Agreement, the term "merger and acquisition transaction" means: (i) any merger, consolidation, reorganization or other
business combination including strategic partnerships or joint ventures pursuant to which the business or businesses of a third
party, including projects, stand-alone assets or technologies, are combined with that of the Company in either a direct ownership,
joint venture or strategic alliance fashion; (ii) the acquisition, directly or indirectly, by the Company of all or a substantial
portion of the assets or equity of a third party by way of negotiated purchase or otherwise; or (iii) the acquisition, directly
or indirectly, by a third party of all or a substantial portion of the assets or equity of the Company by way of negotiated purchase
or otherwise (the “Transaction(s)”).

 

Kuhns Brothers' merger
and acquisition services may include, but will not necessarily be limited to:

 

(i) Assistance in the identification
of businesses, organizations, assets or technologies that may constitute potential Transactions; (ii) assistance in the evaluation
of such third parties from a financial point of view; (iii) assistance with respect to the form and structure of the Transaction;
(iv) conducting discussions and negotiations regarding a Transaction; and (v) providing other related advice and assistance as
the Company may reasonably request in connection with a Transaction.

 

The Company acknowledges
that Kuhns Brothers and its affiliates are in the business of providing merger and acquisition services (of all types contemplated
by this agreement) to others. Nothing herein contained shall be construed to limit or restrict Kuhns Brothers or its affiliates
in conducting such business with respect to others or in rendering such advice to others.

 

		3.	Strategic Planning Services

 

Relating to its assistance
with respect to the Financing, Kuhns Brothers shall provide the Company with strategic planning services. Kuhns Brothers strategic
planning services shall include, but not be limited to, the following:

 

    	 

    	 

    

 

		(i)	advice regarding the Company’s business plan; (ii) advice regarding formation of the Company’s
corporate goals and their implementation; (iii) advice regarding corporate organization, personnel and the related selection of
needed specialty skills; (iv) general corporate documentation preparation and assistance, including services relating to assisting
the Company in preparation of its business plan and related materials, including regulatory and filing documentation; (v) assistance
regarding preparation and organization of the Company’s corporate paperwork.

 

II.  COMPENSATION

 

In consideration of
rendering such services, the Company agrees to pay Kuhns Brothers on the following basis:

 

(i) for financial advisory services—

 

(a) a financing fee, payable
upon closing(s) of the Financing (the “Closing”), equal to the following percentages of the total Financing value:

 

	CORPORATE
FINANCING		FEE
	Equity (including either common stock, preferred stock, convertible securities, warrants or similar instruments) 	 	7.00%, plus warrants
	Debt (including notes, bond, mezzanine, debentures, credit facilities or lines)	 	3.00%
	Exercise of Warrants or Subscription Rights	 	7.00%

 

(b) Please note that the total
Financing includes the exercise of any warrants or subscription rights, whenever exercised, and the financing fee includes a 7%
charge at such time.

 

With respect to warrants
provided as compensation as indicated in the table above, the warrant “coverage”, that is the percent of the dollar
amount of securities issued for which Kuhns Brothers shall receive warrants to purchase the Company’s equity securities,
shall be 7%. For example, if the Company or its subsidiaries issues $1 million of common stock with warrants attached, Kuhns Brothers
shall receive a warrant to buy $70,000 of common stock with warrants attached of the Company or its subsidiaries. Such warrant
will have a strike price that is 100% of the price of the equity securities, or underlying equity securities, offered in the Financing,
or in the case of compensation not involving a Financing shall be at a strike price that is 100% of the price of the Company’s
common stock as set by the most recent third party sale, and shall be outstanding for a period of ten (10) years.
The Warrants shall provide for cashless exercise (even if the Investors do not have such right).

 

    	 

    	 

    

 

In connection with
our financial advisory services, you agree that if during the period Kuhns Brothers is retained by you a Financing is consummated
with a third party, acting either as a Financial Investor or as a Strategic Investor, who was introduced directly or indirectly
by Kuhns Brothers (“Introduced Investors”), or if the Company enters into a definitive agreement with Introduced Investors
which at any time thereafter results in a Financing, you will pay Kuhns Brothers a financing fee equal to the fees indicated above
with respect to such Financing. It is understood that for purposes of this Agreement, Kuhns Brothers shall be deemed to have introduced
such Introduced Investors to the Company not only by physical introductions and meetings, but also by arranging or facilitating
telephonic or correspondence meetings between the parties, whether or not Kuhns Brothers participated in such meetings, telephone
calls or correspondence.

 

Additionally, if during
two (2) years from the execution of this contract a Financing is consummated with a third party not introduced to the Company by
Kuhns Brothers, Kuhns Brothers will be paid a fee equal to 50% of its compensation due pursuant to the language above.

 

Notwithstanding anything
contained herein, Kuhns Brothers’ fees payable in connection with a Financing shall be paid at the level of the compensation
table above at any time as there is a closing of the Financing or Transaction, or tranche of the Financing or Transaction, or finalization
of related documentation or purchase of a Public Shell (the “Closings”), and at the option of Kuhns Brothers, shall
be paid in cash or in the securities of the Company being offered in the Financing.

 

In the event that Kuhns
Brothers is successful in raising the Financing, but the Company declines to accept the Financing, Kuhns Brothers will be paid
a fee equal to 50% of its compensation due pursuant to the language above.

 

(ii) for merger and acquisition
services—

 

(a)        For
any merger or acquisition, a merger and acquisition fee equal to the “Lehman Formula” based on $5 million increments,
that is, 5% of the first $5 million, 4% of the second $5 million, etc., of the consideration paid in the Transaction, or the Lehman
Formula of the equity value of the organization being acquired, at the option of Kuhns Brothers.

 

In the event that Kuhns
Brothers is involved in both merger and acquisition services and financial advisory services with respect to a Transaction, Kuhns
Brothers shall be paid for each service.

 

For purpose of this
Agreement, "consideration" means the aggregate value, whether in cash, securities, assumption (or purchase subject to)
of debt or liabilities (including, without limitation, indebtedness for borrowed money, pension liabilities or guarantees) or other
property, obligations or services, paid or payable directly or indirectly (in escrow or otherwise) or otherwise assumed in connection
with a Transaction, or the net present value of the estimated benefits to the Company of any joint venture, licensing or marketing
agreement (“Consideration”). The value of Consideration shall be determined as follows:

 

    	 

    	 

    

 

		(a)	the value of securities, liabilities, obligations, property and services shall be the fair market
value as shall mutually be agreed upon at the date of the closing of the Transaction;

		(b)	the value of indebtedness, including indebtedness assumed, shall be the face amount; and/or

		(c)	the net present value of the estimated benefits to the Company of any joint venture, licensing
or marketing agreement, as mutually determined by the parties. If the parties cannot come to such mutual determination, the net
present value described above shall be determined by arbitration.

 

If the Consideration
payable in a Transaction includes contingent payments to be calculated by reference to uncertain future occurrences, such as future
financial or business performance, then any fees of Kuhns Brothers relating to such Consideration shall be payable at the time
of the receipt of such Consideration. 

 

The Company acknowledges
that Kuhns Brothers and its affiliates are in the business of providing merger and acquisition services (of all types contemplated
by this Agreement) to others. Nothing herein contained shall be construed to limit or restrict Kuhns Brothers or its affiliates
in conducting such business with respect to others or in rendering such advice to others.

 

The Company also acknowledges
that Kuhns Brothers and its affiliates have or may have ownership interests in businesses, assets or technologies identified by
them or others to the Company as potential Transactions. Nothing herein contained shall be construed to limit or restrict the ability
of Kuhns Brothers or its affiliates to be compensated for its ownership interest in such a Transaction on a basis separate and
apart from the compensation described herein.

 

In connection with
our merger and acquisition services, you agree that if during the period Kuhns Brothers is retained by you, a Transaction is consummated
with a third party introduced by Kuhns Brothers or the Company enters into a definitive agreement with a third party introduced
by Kuhns Brothers which at any time thereafter results in a Transaction (“Third Parties”), you will pay Kuhns Brothers
a transaction fee equal to the Lehman Formula times the Consideration.

 

It is understood that
for purposes of this Agreement, Kuhns Brothers shall be deemed to have introduced such Third Parties to the Company not only by
physical introductions and meetings, but also by arranging or facilitating telephonic or correspondence meetings between the parties,
whether or not Kuhns Brothers participated in such meetings, telephone calls or correspondence.

 

Additionally, if during
the period Kuhns Brothers is retained by you, a Transaction is consummated with a third party not introduced to the Company by
Kuhns Brothers, Kuhns will be paid a fee equal to 50% of its compensation due pursuant to the language above.

 

    	 

    	 

    

 

(iv) for expenses—

 

(a)       in
the event of a Financing or Transaction the Company shall pay an amount equal to 2% of the total Financing, on a non-accountable
basis, to compensate Kuhns Brothers for the expenses incurred by it in relation to the Transaction, including expenses related
to Kuhns Brothers’ due diligence, and shall reimburse Kuhns Brothers for any expenses reasonably incurred by it related to
the Financing, subject to such expenses being authorized in advance by the Company (including, without limitation, reasonable professional
and reasonable legal fees and disbursements incurred by Kuhns Brothers in connection with its engagement hereunder with respect
to services to be rendered by it, as well as any such fees or expenses reasonably incurred directly by personnel of Kuhns Brothers
or its agents or representatives in connection with work on behalf of the Company);

(b)       in
the event the Financing does not close due to a material misrepresentation by the Company that is discovered during the due diligence
process, the Company will reimburse Kuhns Brothers for its out of pocket expenses, plus a breakage fee of $100,000;

(c)       with
regards to Strategic Planning Services, the Company shall reimburse Kuhns Brothers for any expenses reasonably incurred (including,
without limitation, reasonable professional and reasonable legal fees and disbursements incurred by Kuhns Brothers in connection
with its engagement hereunder with respect to services to be rendered by it, as well as any such fees or expenses reasonably incurred
directly by personnel of Kuhns Brothers or its agents or representatives in connection with work on behalf of the Company).

 

All compensation and
expenses will be reimbursed to Kuhns Brothers via wire transfer. The Firm’s wiring instructions are attached as Schedule
A.

 

III.         RIGHT
TO BOARD PARTICIPATION OR OBSERVER STATUS

 

Kuhns Brothers has
the right, in its sole discretion,to name a representative to the Company’s board of directors during the time of this
Agreement and for such period of time after the termination of this Agreement as any Financial or Strategic Investor introduced
by Kuhns Brothers owns 5% or more of the Company’s common stock. In its sole discretion, Kuhns Brothers may not exercise
its board participation right, but shall instead choose to be named an Observer to the Company’s board of directors. Observer
status, if exercised, shall entitle Kuhns Brothers to be present at all board meetings, including physical and telephonic sessions,
as well as to receive all information provided to the Company’s board members for such meetings; Observer status shall not
enable Kuhns Brothers to vote or otherwise participate at such board meetings.

 

    	 

    	 

    

 

IV.         RIGHT
TO SUB-CONTRACT OR SYNDICATE

 

Kuhns Brothers has
the right, in its sole discretion, to sub-contract any of its rights to provide services hereunder to qualified third parties in
its sole discretion, so long as Kuhns Brothers remains the prime contractor of such services to the Company. Kuhns Brothers rights
to subcontract hereunder include the syndication of any underwriting performed for the Company pursuant to this Agreement, or the
formation of a selling group for the sale of any placement performed for the same purpose. Kuhns Brothers has the right to enter
into any finder, inter dealer or syndication agreements with qualified parties with respect to placing and arranging the Financing.

 

V.           ADDITIONAL
INVESTMENT BANKING SERVICES

 

The Company agrees
that Kuhns Brothers shall have the right, but not the obligation, which right is exercisable in Kuhns Brothers’ sole discretion,
to provide investment banking services to the Company on an irrevocable preferential right of refusal basis to provide such services
in relation to the Company’s financing for the term this Agreement and such additional period of time as may be necessary
to complete any project or Transaction already commenced pursuant to the Company’s written request or engagement of Kuhns
Brothers prior to the expiration of such 2 year period. Such services may include underwriting and acting as a placement agent
for the Company’s securities on a lead-managed or co-managed basis, assisting in merger or acquisition transactions and providing
other financial advisory services. Such right shall terminate with respect to any financing, transaction or service if the Company
shall request in writing by certified mail Kuhns Brothers to lead such financing or transaction or to provide such service and
Kuhns Brothers shall fail to notify the Company within fifteen (15) days thereafter that Kuhns Brothers will accept the engagement.
In the event that Kuhns Brothers agrees to provide such investment banking services, Kuhns Brothers shall be paid as described
in paragraph II above. The remaining terms of such engagement shall be contained in specific engagement agreements relating to
the specific financing or transaction. Notwithstanding the above or any oral representations or assurances previously or subsequently
made by the parties, this Agreement does not constitute a commitment by or obligation of Kuhns Brothers to act as underwriter or
placement agent in connection with any future offering of the Company’s securities. Such a commitment on the part of Kuhns
Brothers would exist only upon the execution of a final, written engagement agreement and then only in accordance with the terms
and conditions thereof. In any event, Kuhns Brothers may determine in its sole discretion, for any reason (including, without limitation,
the results of its due diligence investigation, a material change in the Company’s financial condition; business or prospects,
the lack of appropriate internal Kuhns Brothers committee approvals or then current market conditions) not to participate in such
an offering of the Company’s securities. In the event that Kuhns Brothers, with respect to any particular financing or transaction,
elects not to provide investment banking or financial advisory services to the Company, nothing contained herein shall be deemed
to prevent the Company from utilizing the services of another investment banking firm for such financing or transaction, but such
retention of another investment banking firm shall be without prejudice to Kuhns Brothers’ rights hereunder with respect
to other transactions.

 

    	 

    	 

    

 

Upon the successful
execution of the Financing, Transaction or any publicly traded equity or debt capital markets financing lead or co-managed by Kuhns
Brothers, Kuhns Brothers, in accordance with its customary practices, will provide market making and research services to investors
in the securities of the Company (subject, however, to the Company’s continuation of its engagement of Kuhns Brothers as
a financial advisor pursuant to the terms of this Agreement) for a period of two years following the closing of such financing,
and subject to the Firm’s customary right not to make a market in such securities at any time or to suspend research coverage).

 

For the purpose of
this Agreement, “cause” means the failure by Kuhns Brothers to perform in a material respect its obligations hereunder
in accordance with the skill and diligence normally provided by recognized investment banking companies; provided, however,
that the Company shall first give Kuhns Brothers reasonable prior written notice (a minimum of fifteen days notice) of the Company’s
intent to terminate the engagement (such notice to specify in reasonable detail the facts alleged to give rise to the Company’s
right to terminate for cause) and shall have provided Kuhns Brothers a reasonable opportunity to cure by performing such obligations
(the reasonableness of such opportunity to be measured not only by Kuhns Brothers’ ability to perform during such period
but also by the adverse effect on the Company resulting from providing such additional period to enable Kuhns Brothers to perform).

 

VI.          INDEMNIFICATION

 

The Company shall indemnify
Kuhns Brothers and hold it harmless against any and all losses, claims, damages or liabilities to which Kuhns Brothers may become
subject arising in any manner out of or in connection with the rendering of service by Kuhns Brothers hereunder, unless it is finally
judicially determined that such losses, claims, damages or liabilities resulted from the gross negligence, bad faith and willful
misconduct of Kuhns Brothers. Such indemnification shall extend to any sub-contracted party selected by Kuhns Brothers pursuant
to the provision of its services to the Company pursuant to this Agreement, including the members of any syndicate or selling group
organized by Kuhns Brothers for the purpose of underwriting or placing the Company’s securities.

 

The Company shall reimburse
Kuhns Brothers promptly for any legal or other expenses reasonably incurred by it in connection with investigating, preparing to
defend or defending, or providing evidence in or preparing to serve or serving as a witness with respect to, or otherwise relating
to, any lawsuits, investigations, claims or other proceedings arising in any manner out of or in connection with the rendering
of services by Kuhns Brothers hereunder (including without limitation, in connection with the enforcement of this Agreement and
the indemnification obligations set forth herein); provided, however, that in the event of a final judicial determination is made
to the effect specified above, Kuhns Brothers will remit to the Company any amounts reimbursed under such paragraph.

 

    	 

    	 

    

 

The Company agrees
that the indemnification and reimbursement commitments set forth in this paragraph shall apply if either the Company or Kuhns Brothers
is a formal party to any such lawsuits, claims or other proceedings and that such commitments shall extend upon the terms set forth
in this paragraph to any controlling person, affiliate, director, officer, employee, or agent of Kuhns Brothers (each, with Kuhns
Brothers, an “Indemnified Person”). The Company further agrees that, without Kuhns Brothers’ prior written consent,
which consent will not be unreasonably withheld, it will not enter into any settlement of a lawsuit, claim or any other proceeding
arising out of the financings or transactions contemplated by this Agreement unless such settlement includes an implicit and unconditional
release from the party bringing such lawsuit, claim or other proceeding of all indemnified persons.

 

The Company further
agrees that the indemnified persons are entitled to retain separate counsel of their choice in connection with any matters in respect
of which Indemnification, reimbursement or contribution may be sought under this Agreement. Fees for counsel will be payable only
if management and counsel to the Company have has been consulted and allowed to participate fully in the selection of reasonable
and appropriate counsel to the indemnified person(s). Each indemnified person shall give notice to the Company within thirty (30)
days of the assertion against such indemnified person of any claim or the commencement of any action or proceeding relating to
any foregoing, provided further that if the indemnified person fails to notify the Company, then the Company shall be relieved
of any liability that it may have to such indemnified person as to such claim hereunder.

 

The Company and Kuhns
Brothers agree that if any indemnification or reimbursement sought pursuant to the preceding paragraph is judicially determined
to be unavailable for a reason other than the gross negligence, bad faith or willful misconduct of Kuhns Brothers, then whether
or not Kuhns Brothers is the indemnified person, the Company and Kuhns Brothers shall contribute to the losses, claims, damages,
liabilities and expenses for which such indemnification or reimbursement is held unavailable (i) in such proportion as is appropriate
to reflect the relative benefits to the Company on the one hand, and Kuhns Brothers on the other hand, in connection with the financings
or transactions to which such indemnification or reimbursement relates, or (ii) if the allocation provided by clause (i) above
is judicially determined not to be permitted, in such proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative faults of the Company on the one hand, and Kuhns Brothers on the other hand, as well as
any other equitable considerations; provided, however, that in no event shall the amount to be contributed by Kuhns Brothers pursuant
to this paragraph exceed the amount of the fees actually received by Kuhns Brothers hereunder.

 

    	 

    	 

    

 

VII.        MISCELLANEOUS

 

Except as contemplated
by the terms hereof or subpoena issued by a court of competent jurisdiction, Kuhns Brothers shall keep confidential all non-public
information provided to it by the Company, and shall not disclose such information to any third party, other than such of its employees
and advisors as Kuhns Brothers determines to have a need to know.

 

Except as required
by applicable law, any advice to be provided by Kuhns Brothers under this Agreement shall not be disclosed publicly or made available
to any third parties without the prior approval by Kuhns Brothers, and accordingly such advice shall not be relied upon by any
person or entity other than the Company.

 

Upon the successful
close of the reverse merger transaction as contemplated in this Agreement, Kuhns Brothers shall not provide the similar service
to the Company’s competitors in China during the term of this Agreement.

 

The Company agrees
that Kuhns Brothers has the right to place advertisements in financial and other newspapers and journals describing the Company’s
Financing and Kuhns Brothers’ related services to the Company hereunder, provided that Kuhns Brothers will submit a copy
of any such advertisements to the Company for its prior approval, which approval shall not be unreasonably withheld.

 

Nothing in this Agreement,
expressed or implied, is intended to confer or does it confer on any person or entity other than the parties hereto or their respective
successors and assigns, and to the extent expressly set forth herein, the indemnified persons, any rights or remedies under or
by reason of this Agreement or as a result of the services to be rendered by Kuhns Brothers hereunder.

 

Neither the execution
and delivery of this Agreement by the Company nor the consummation of the financings or transactions contemplated hereby will,
directly or indirectly, with or without the giving of notice or lapse of time, or both: (i) violate any provisions of the Certificate
of Incorporation or By-laws of the Company; or (ii) violate, or be in conflict with, or constitute a default under, any agreement,
lease, mortgage, debt or obligation of the Company or require the payment, any pre-payment or other penalty with respect thereto.

 

The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.

 

    	 

    	 

    

 

VIII        TERMINATION; SURVIVAL OF CERTAIN
PROVISIONS. 

 

The term of Kuhns Brothers’
engagement hereunder shall extend from the date hereof until terminated. Subject to the provisions of this Agreement that shall
survive any termination or expiration of the understanding between the parties as set forth below, Kuhns Brothers may terminate
the engagement hereunder at any time by giving the Company at least 10 days written notice.

 

The expense, indemnification,
reimbursement, advertisements, and contribution obligations of the Company provided herein and Kuhns Brothers’ rights to
compensation (which term includes all fees, amounts and warrants due or which may become due) shall remain operative and in full
force and effect regardless of (i) any withdrawal, termination or consummation of or failure to initiate or consummate any transaction
described herein or (ii) any termination or the completion or expiration of this Agreement.

 

This Agreement may
not be amended or modified except in writing signed by each of the parties and shall be governed by and construed and enforced
in accordance with the laws of the State of Connecticut. The Company and Kuhns Brothers hereby irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the courts of the State of Connecticut and of the United States District Courts
located in Connecticut for any lawsuits, actions or other proceedings arising out of or relating to this Agreement and agree not
to commence any such lawsuit, action or other proceeding except in such courts. The Company further agrees that service of any
process, summons, notice or document by mail, return receipt requested, to the Company’s address set forth above shall be
effective service of process for any lawsuit, action or other proceeding brought against the Company in any such court. The Company
and Kuhns Brothers hereby irrevocably and unconditionally waive any objection to the laying of venue of any lawsuit, action or
other proceeding arising out of or relating to this Agreement in the courts of the State of Connecticut or the United States District
Courts located in the State of Connecticut, and hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such lawsuit, action or other proceeding brought in any such court has been brought in an inconvenient
forum. Any right to trial by jury with respect to any lawsuit, claim or other proceeding arising out of or relating to this Agreement
or the services to be rendered by Kuhns Brothers hereunder is expressly and irrevocably waived.

 

This Agreement is subject
to the approval of the board of directors of both companies. Johns D. Kuhns, Chief Executive Officer and a director of the Company
and Mary Fellows, Executive Vice President and a director of the Company are each affiliates of Kuhns Brothers. Accordingly, the
board of directors of the Company should take this relationship into consideration in approving this Agreement.

 

If the foregoing correctly
sets forth the understanding and agreement between Kuhns Brothers and the Company, please so indicate in the space provided for
that purpose below, whereupon this letter shall constitute a binding agreement as of the date hereof.

 

    	 

    	 

    

  

	 	Kuhns Brothers, Inc.
	 	 
	 	By:	/s/ Robert Drake
	 	Name:   Robert Drake
	 	Title:   Vice President

 

	AGREED:	 
	 	 
	Master Silicon Carbide Industries, Inc.	 
	 	 
	By:	Zhigang (Harry) Gao	 
	Name:     Mr. Zhigang (Harry) Gao	 
	 	 
	By:	Lin (Michael) Han	 
	Name:     Mr. Lin (Michael) Han	 

  

    	 

    	 

    

 

SCHEDULE A

 

Kuhns
Brothers Electronic Wire Transfer Instructions

 

Please wire funds to:EXHIBIT 10.1

 

FORM OF

 

ADVISORY AGREEMENT

 

BETWEEN

 

TERRA FIXED INCOME TRUST, INC.

 

AND

 

TERRA CAPITAL ADVISORS II, LLC

  

  

  

TABLE OF CONTENTS

	  	  	
Page

	  	  	  
	
ARTICLE 1 DEFINITIONS

	
1

	 	 
	
ARTICLE 2 APPOINTMENT

	
6

	 	 
	
ARTICLE 3 DUTIES OF THE ADVISOR

	
6

	
3.01

	
Offering Services

	
7

	
3.02

	
Acquisition Services

	
7

	
3.03

	
Asset Management Services

	
8

	
3.04

	
Accounting and Other Administrative Services

	
9

	
3.05

	
Stockholder Services

	
10

	
3.06

	
Financing Services

	
10

	
3.07

	
Disposition Services

	
10

	 	 
	
ARTICLE 4 AUTHORITY OF ADVISOR

	
11

	
4.01

	
Powers of the Advisor

	
11

	
4.02

	
Approval by the Board

	
11

	
4.03

	
Modification or Revocation of Authority of Advisor

	
11

	 	 
	
ARTICLE 5 BANK ACCOUNTS

	
11

	 	 
	
ARTICLE 6 RECORDS AND ACCESS

	
12

	 	 
	
ARTICLE 7 LIMITATION ON ACTIVITIES

	
12

	 	 
	
ARTICLE 8 FEES

	
12

	
8.01

	
Acquisition Fees

	
12

	
8.02

	
Asset Management Fees

	
13

	
8.03

	
Disposition Fees

	
13

	
8.04

	
Changes to Fee Structure

	
14

	 	 
	
ARTICLE 9 EXPENSES

	
14

	
9.01

	
General

	
14

	
9.02

	
Timing of and Additional Limitations on Reimbursements

	
15

	 	 
	
ARTICLE 10 OTHER SERVICES

	
16

	 	 
	
ARTICLE 11 VOTING AGREEMENT

	
16

	 	 
	
ARTICLE 12 RELATIONSHIP OF ADVISOR AND COMPANY; OTHER ACTIVITIES OF THE ADVISOR

	
17

	
12.01

	
Relationship

	
17

	
12.02

	
Time Commitment

	
17

	
12.03

	
Investment Opportunities and Allocation

	
17

  

i

  

	
ARTICLE 13 THE TERRA NAME

	
18

	 	 
	
ARTICLE 14 TERM AND TERMINATION OF THE AGREEMENT

	
18

	
14.01

	
Term

	
18

	
14.02

	
Termination by the Parties

	
18

	
14.03

	
Payments on Termination and Survival of Certain Rights and Obligations

	
18

	 	 
	
ARTICLE 15 ASSIGNMENT

	
19

	 	 
	
ARTICLE 16 INDEMNIFICATION AND LIMITATION OF LIABILITY

	
19

	
16.01

	
Indemnification

	
19

	
16.02

	
Limitation on Indemnification

	
20

	
16.03

	
Limitation on Payment of Expenses

	
20

	
16.04

	
Indemnification by Advisor

	
20

	 	 
	
ARTICLE 17 NON-SOLICITATION

	
21

	 	 
	
ARTICLE 18 MISCELLANEOUS

	
21

	
18.01

	
Notices

	
21

	
18.02

	
Modification

	
21

	
18.03

	
Severability

	
21

	
18.04

	
Construction

	
22

	
18.05

	
Entire Agreement

	
22

	
18.06

	
Waiver

	
22

	
18.07

	
Gender

	
22

	
18.08

	
Titles Not to Affect Interpretation

	
22

	
18.09

	
Counterparts

	
22

  

ii

  

ADVISORY AGREEMENT

 

THIS ADVISORY AGREEMENT (this “Agreement”), dated as of the __ day of _______, 2012, and effective as of the date that the Registration Statement (as defined below) is declared effective by the Securities and Exchange Commission (the “Effective Date”), is entered into by and between Terra Secured Income Trust, Inc., a Maryland corporation (the “Company”) and Terra Capital Advisors II, 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 permitted by the terms of Sections 856 through 860 of the Code;

 

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, origination or development of any Asset, whether or not acquired or originated, as applicable, 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 8.01 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 making 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.  Excluded shall be any commissions or fees incurred in connection with the leasing of a Property, and 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) Terra Capital Advisors II, LLC, a Delaware limited liability company, or (ii) any successor advisor to the Company.

 

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 8.02.

 

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, willful misconduct, gross negligence or breach of fiduciary duty by the Advisor, or a material breach of this Agreement by the Advisor.

 

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 Terra Fixed Income Trust, Inc., a corporation organized under the laws of the State of Maryland.

 

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

  

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Cost of Assets means the sum of (i) with respect to the acquisition or origination of an Asset to be wholly owned, directly or indirectly, by the Company, the amount actually paid or allocated to fund the acquisition, origination, development, construction or improvement of the Asset, inclusive of expenses associated with the making 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 or origination of an Asset through any Joint Venture, the portion of the amount actually paid or allocated to fund the acquisition, origination, development, construction or improvement of the Asset, inclusive of expenses associated with the making 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.

 

Dealer Manager means Terra Securities, LLC, a Delaware limited liability company, or such other Person or entity selected by the Board to act as dealer manager for the Offering.

 

Disposition Fee means the fee payable to the Advisor pursuant to Section 8.03.

 

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.

 

Excess Amount has the meaning set forth in Section 9.02.

 

Expense Year has the meaning set forth in Section 9.02.

 

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 of any nature whatsoever 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 Dealer Manager 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 mortgage loans and other types of debt financing investments made by the Company, either directly or indirectly, including through ownership interests in a Joint Venture, including, without limitation, mezzanine loans, B-notes, bridge loans, convertible debt, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests, and participations in such loans.

 

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.

 

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 or properties transferred or conveyed to the Company, either directly or indirectly, including through ownership interests in a Joint Venture or other partnership or investment interests.

 

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-                  ), 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.

  

5

  

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.

 

Shares means shares of common stock of the Company, par value $.01 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 14 hereof.

 

Termination Event means the termination or nonrenewal of this Agreement (i) in connection with a merger, sale of assets or transaction involving the Company pursuant to which a majority of the Board then in office are replaced or removed, (ii) by the Advisor for Good Reason or (iii) by the Company other than for Cause.

 

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 4.03 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:

  

6

  

3.01      Offering Services.

 

The Advisor shall manage and supervise:

 

(i)           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 Dealer Manager, 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;

 

(iv)         Preparation and approval of all marketing materials contemplated to be used by the Dealer Manager or others relating to the Offering;

 

(v)         Along with the Dealer Manager, 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 Offering; and

 

(vii)       All other services related to the Offering, other than services that (a) are to be performed by the Dealer Manager, (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.

 

3.02      Acquisition Services.

 

The Advisor shall:

 

(i)           Serve as the Company’s investment and financial advisor and obtain certain 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 made; and (c) acquire Assets on behalf of the Company;

 

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

  

7

  

(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 approved Assets and other transactions.

 

3.03      Asset Management Services.

 

The Advisor shall:

 

(i)           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;

 

(ii)          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;

 

(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;

 

(viii)      Coordinate and manage relationships between the Company and any Joint Venture partners; and

  

8

  

(ix)         Provide financial and operational planning services and investment portfolio management functions.

 

3.04       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)          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;

 

(iii)         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 with certain material aspects of this Agreement;

 

(iv)        Provide or arrange for administrative services and items, legal and other 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 all periodic financial reports and returns required to be filed with the SEC and any other regulatory agency, including annual financial statements;

 

(vii)       Maintain all appropriate books and records of the Company;

 

(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;

  

9

  

(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, including the Sarbanes-Oxley Act of 2002.

 

3.05       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.

 

3.06       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.

 

3.07      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.

  

10

  

 

ARTICLE 4

 

AUTHORITY OF ADVISOR

 

4.01      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. 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.

 

4.02      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 Maryland General Corporation Law require the prior approval of the Board.  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.

 

4.03      Modification or Revocation of Authority of Advisor.  The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority or approvals set forth in Article 3 and this Article 4 hereof; provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company prior to the 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 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.

  

11

  

 

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 sole judgment made in good faith, 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

 

8.01      Acquisition Fees.  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).  With respect to the acquisition or origination of an investment to be wholly owned, directly or indirectly, by the Company, the Acquisition Fee payable to the Advisor shall equal 1.0% 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.  With respect to the acquisition or origination of an Asset through any Joint Venture in which the Company is, directly or indirectly, a partner, the Acquisition Fee payable to the Advisor shall equal 1.0% of the portion of the amount actually paid or allocated by the Company to fund the acquisition, origination, development, construction or improvement of the Asset, inclusive of the Acquisition Expenses associated with such Asset, plus the pro rata 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.  Notwithstanding anything herein to the contrary, the payment of Acquisition Fees by the Company or a borrower shall be subject to the limitations on acquisition fees contained in (and defined in) the Charter. 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.

  

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8.02      Asset Management Fees.  The Company shall pay the Advisor as compensation for the services described in Section 3.03 hereof a monthly fee (the “Asset Management Fee”) in an amount equal to one-twelfth of 1.25% of the sum of the Cost of Assets, less any principal repaid by borrowers on Loans or other debt securities (or the Company’s proportionate share thereof in the case of an investment in an Asset made through a Joint Venture), as of the end of the preceding month.  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, as to any transaction 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.

 

8.03      Disposition Fees.  If the Advisor or any of its Affiliates provide a substantial amount of 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 of 1.0% of the Contract Sales Price of each Asset sold. The Advisor shall also receive a Disposition Fee upon the maturity, prepayment, workout, modification or extension of a Loan or other debt-related investment 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. 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, as to any transaction 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.

  

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8.04      Changes to Fee Structure.  In the event of Listing, the Company and the Advisor shall negotiate in good faith to establish a fee structure appropriate for a perpetual-life entity.

 

ARTICLE 9

 

EXPENSES

 

9.01      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 the Company shall not reimburse the Advisor to the extent such reimbursement would cause the total amount spent by the Company on Organization and Offering Expenses to exceed 15.0% of the Gross Proceeds raised as of the date of the reimbursement and provided further that within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company to the extent the Company incurred Organization and Offering Expenses exceeding 15.0% of the Gross Proceeds raised in the completed Offering;

 

(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 entities not Affiliated with the Advisor;

 

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

 

(v)         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;

 

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

 

(vii)       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;

  

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

 

(ix)         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 named executive officers of the Company (as defined in Regulation S-K, as promulgated by the SEC);

 

(x)          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;

 

(xi)         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;

 

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

 

(xiii)       Expenses connected with payments of Distributions made or caused to be made by the Company to the Stockholders;

 

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

 

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

 

9.02       Timing of and Additional Limitations on Reimbursements.

 

(i)           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. The Advisor shall prepare a statement documenting the expenses of the Company during each quarter and shall deliver such statement to the Company within 45 days after the end of each quarter.

 

(ii)          Notwithstanding anything else in this Article 9 to the contrary, the expenses enumerated in this Article 9 shall not become reimbursable to the Advisor unless and until the Company has raised $3 million in the Initial Public Offering.

  

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(iii)         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.

 

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

 

Terra Capital Advisors II, 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 Terra Capital Advisors II, LLC or any of its Affiliates as the Advisor or (ii) any transaction between the Company and Terra Capital Advisors II, LLC or any of its Affiliates.  This voting restriction shall survive until such time that Terra Capital Advisors II, LLC or any of its Affiliates is no longer serving as the Advisor.

  

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ARTICLE 12

 

RELATIONSHIP OF ADVISOR AND COMPANY;

OTHER ACTIVITIES OF THE ADVISOR

 

12.01    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.

 

12.02    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.

 

12.03    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.

  

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ARTICLE 13

 

THE TERRA NAME

 

The Advisor and its Affiliates have a proprietary interest in the name “Terra.” The Advisor hereby grants to the Company a non-transferable, non-assignable, non-exclusive royalty-free right and license to use the name “Terra” during the term of this Agreement. Accordingly, and in recognition of this right, if at any time the Company ceases to retain the Advisor or one of its Affiliates to perform advisory services for the Company, the Company will, promptly after receipt of written request from the Advisor, cease to conduct business under or use the name “Terra” or any derivative thereof and the Company shall change its name and the names of any of its subsidiaries to a name that does not contain the name “Terra” or any other word or words that might, in the reasonable discretion of the Advisor, be susceptible of indication of some form of relationship between the Company and the Advisor or any its Affiliates.  At such time, the Company will also make any changes to any trademarks, servicemarks or other marks necessary to remove any references to the word “Terra.” Consistent with the foregoing, it is specifically recognized that the Advisor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate loans, real estate-related debt securities and other real estate assets) and financial and service organizations having “Terra” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company.

 

ARTICLE 14

 

TERM AND TERMINATION OF THE AGREEMENT

 

14.01    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.

 

14.02    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 and without penalty 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 Article 13, Section 14.03 and Articles 16 through 18 of this Agreement shall survive termination of this Agreement.

 

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

 

(i)           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.

 

(ii)          The Advisor shall promptly upon termination:

  

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(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 to provide an orderly transition of advisory functions.

 

ARTICLE 15

 

ASSIGNMENT

 

This Agreement may be assigned by the Advisor to an Affiliate with the 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 without obtaining the approval of the Board. This Agreement shall not be assigned by the Company without the consent of the Advisor, except in the case of an assignment by the Company to a corporation or other organization that is a successor to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said assignment 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 15.

 

ARTICLE 16

 

INDEMNIFICATION AND LIMITATION OF LIABILITY

 

16.01    Indemnification.  Except as prohibited by the restrictions provided in this Section 16.01, Section 16.02 and Section 16.03, 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.

 

Notwithstanding the foregoing, the Company shall not indemnify the Advisors 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.

  

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16.02    Limitation on Indemnification.  Notwithstanding the foregoing, 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:

 

(i)           The Advisor or its Affiliates have determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company.

 

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

 

(iii)           Such liability or loss was not the result of negligence or misconduct by the Advisor or its Affiliates.

 

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

 

16.03    Limitation on Payment of Expenses.  The Company shall pay or reimburse reasonable legal expenses and other costs incurred by the Advisors 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 me the standard of conduct necessary for indemnification by the Company as authorized by Section 16.01 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.

 

16.04    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 17

 

NON-SOLICITATION

 

During the period commencing on the Effective Date and ending one year following the Termination Date, the Company shall not, without the Advisor’s prior written consent, directly or indirectly, (i) solicit or encourage any person to leave the employment or other service of the Advisor or its Affiliates, or (ii) hire, on behalf of the Company or any other person or entity, any person who has left the employment within the one year period following the termination of that person’s employment with the Advisor or its Affiliates. During the period commencing on the date hereof through and ending one year following the Termination Date, the Company will not, whether for its own account or for the account of any other Person, intentionally interfere with the relationship of the Advisor or its Affiliates with, or endeavor to entice away from the Advisor or its Affiliates, any person who during the term of the Agreement is, or during the preceding one-year period, was a borrower, co-investor, co-developer, joint venturer or other customer of the Advisor or its Affiliates.

 

ARTICLE 18

 

MISCELLANEOUS

 

18.01    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:

	
Terra Fixed Income Trust, Inc.

	  	
805 Third Avenue, 8th Floor

	  	
New York, New York 10022

	  	  
	
To the Advisor:

	
Terra Capital Advisors II, LLC

	  	
805 Third Avenue, 8th Floor

	  	
New York, New York 10022

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 18.01.

 

18.02    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.

 

18.03    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.

  

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18.04    Construction.  The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York.

 

18.05    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.

 

18.06    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.

 

18.07    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.

 

18.08    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.

 

18.09    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.

 

	
Terra Fixed Income Trust, Inc.

	  
	
By:

	  
	  	
Name:

	  	
Title:

	  
	
Terra Capital Advisors II, LLC

	  
	
By:

	  
	  	
Name:

	  	
Title:

  

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