Document:

ex10-2.htm

  

  

  

Exhibit 10.2

FORM OF

ADVISORY AGREEMENT

 

This ADVISORY AGREEMENT (this “Agreement”) is entered into on this the ___ day of ____________, 2011, by and between AEI CORE PROPERTY INCOME TRUST, INC., a Minnesota corporation (the “Company”), and AEI TRUST ADVISORS, INC., a Minnesota corporation (the “Advisor”).

 

W I T N E S S E T H

 

WHEREAS, the Company and the Advisor wish to enter into this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

The following defined terms used in this Agreement shall have the meanings specified below:

 

Acquisition Expenses.  Any and all expenses incurred by the Company, the Advisor, or any Affiliate of either in connection with the selection, acquisition or development of any Asset, whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, and title insurance premiums.

 

Acquisition Fees. 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 Mortgages or the purchase, development or construction of an Asset, including, without limitation, real estate commissions, selection fees, Development Fees, Construction Fees, non-recurring management fees, loan fees, points or any other fees of a similar nature. Excluded shall be Development Fees and Construction Fees paid to any Person not affiliated with the Sponsor in connection with the actual development and construction of any Property.

 

Advisor.  AEI Trust Advisors, Inc., a Minnesota corporation, any successor advisor to the Company, or any Person to which AEI Trust Advisors, Inc., or any successor advisor subcontracts all or substantially all of its functions.

 

Affiliate or Affiliated.  As to any Person, (i) any Person directly or indirectly owning, controlling, or holding, with the power to vote, 10% or more of the outstanding voting securities of such Person; (ii) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; (iii) any Person, directly or indirectly, controlling, controlled by, or under common control with such Person; (iv) any executive officer, director, trustee or general partner of such Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

 

Appraised Value.  Value according to an appraisal made by an Independent Appraiser.

 

Articles of Incorporation.  The Articles of Incorporation of the Company filed with the Secretary of State of State of Minnesota, as amended from time to time.

 

Assets.  Properties, Mortgages and other direct or indirect investments in equity interests in, or loans secured by, Real Property (other than investments in bank accounts, money market funds or other current assets, whether of the proceeds from an Offering or the sale of an Asset or otherwise) owned by the Company, directly or indirectly through one or more of its Affiliates.

 

Asset Management Fee.  The fee payable to the Advisor for day-to-day professional management services in connection with the Company and its investments in Assets pursuant to this Agreement.

 

Average Invested Assets.  For a specified period, the average of the aggregate book value of the Assets, before deducting depreciation, amortization, 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; provided, however, that after the Board is determining on a regular basis an estimated per share value of the Shares, “Average Invested Assets” will be based upon the aggregate valuation of the Assets as reasonably established by the Board.

 

Board.  The Board of Directors of the Company.

 

Bylaws.  The bylaws of the Company, as the same are in effect as amended from time to time.

 

Change of Control.  Any event (including, without limitation, issue, transfer or other disposition of Shares of capital stock of the Company, merger, share exchange or consolidation) after which any “person” (as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as defined in Rule 13d-j of the Securities Exchange Act of 1934, as amended), directly or indirectly, of securities of the Company or the Partnership representing greater than 50% or more of the combined voting power of the Company’s then outstanding securities; provided, that, a Change of Control shall not be deemed to occur as a result of any widely distributed public offering of the Shares.

 

Code.  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.  AEI Core Property Income Trust, Inc., a corporation organized under the laws of the State of Minnesota.

 

Construction Fee. A fee or other remuneration for acting as general contractor and/or construction manager to construct improvements, supervise and coordinate projects or to provide major repairs or rehabilitations on a Property.

 

Contract Purchase Price.  The amount actually paid or allocated in respect of the purchase, development, construction or improvement of an Asset, or the amount of funds advanced with respect to a Mortgage, exclusive of Acquisition Expenses.

 

Contract Sales Price.  The total consideration provided for in the sales contract for the sale of a Property.

 

Dealer Manager.  AEI Securities, Inc, an Affiliate of the Advisor, or such Person selected by the Board to act as the dealer manager for an Offering.

 

Development Fee.  A fee for the packaging of a Property or Mortgage, including the negotiation and approval of plans, and any assistance in obtaining zoning and necessary variances and financing for a specific Property, either initially or at a later date.

 

Director.  A member of the Board of Directors.

 

Distributions.  Any dividends or other distributions of money or other property by the Company to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes.

 

Gross Proceeds.  The aggregate purchase price of all Shares sold for the account of the Company through an Offering, without deduction for Selling Commissions, volume discounts, dealer manager fees, or Organization and Offering Expenses.  For the purpose of computing Gross Proceeds, the purchase price of any Share for which reduced Selling Commissions or dealer manager fees are paid to the Dealer Manager or a Soliciting Dealer (where net proceeds to the Company 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 Appraiser.  A Person with no material current or prior business or personal relationship with the Advisor or the Directors and who is a qualified appraiser of Real Property of the type held by the Company or of other Assets as determined by the Board.  Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification as to Real Property.

 

Independent Director.  A Director who is not; on the date of determination and within the last two years from the date of determination has not been, directly or indirectly associated with the Sponsor or the Advisor by virtue of (i) ownership of an interest in the Sponsor, the Advisor or any of their Affiliates, other than the Company, (ii) employment by the Sponsor, the Advisor or any of their Affiliates, (iii) service as an officer or director of the Sponsor, the Advisor or any of their Affiliates, other than as a Director of the Company or as a director of any other real estate investment trust organized by the Sponsor or advised by the Advisor, (iv) performance of services, other than as a Director, for the Company, (v) service as a director or trustee of more than three real estate investment trusts organized by the Sponsor or advised by the Advisor or (vi) maintenance of a material business or professional relationship with the Sponsor, the Advisor or any of their Affiliates.  A business or professional relationship is considered “material” per se if the aggregate gross revenue derived by the Director from the Sponsor, the Advisor and their Affiliates exceeds 5.0% of either the Director’s annual gross revenue during either of the last two years or the Director’s net worth on a fair market value basis.  An indirect association with the Sponsor or the Advisor shall include circumstances in which a Director’s spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law, or brother- or sister-in-law is or has been associated with the Sponsor, the Advisor, any of their Affiliates or the Company.

 

Invested Capital.  The amount calculated by multiplying the total number of Shares purchased by Stockholders by the issue price at the time of such purchase, reduced by the portion of (i) any Net Sales Proceeds paid to owners as a Distribution and (ii) any Net Sales Proceeds paid by the Company to repurchase Shares pursuant to the Company’s Share repurchase plan.

 

Joint Ventures.  The joint venture, co-ownership or partnership arrangements in which the Company is a co-venturer, co-owner or general partner which are established to acquire or hold Assets.

 

Listing or Listed.  The approval of the Company’s application to list the Shares by a national securities exchange and the commencement of trading in the Shares on the respective national securities exchange.  Upon such Listing, the Shares shall be deemed Listed.

 

Market Value.  Upon Listing, the market value of the outstanding Shares, measured by taking the average closing price for a single Share over a period of 30 consecutive trading days, with such period beginning 180 days after Listing, multiplying that number by the number of Shares outstanding on the date of measurement.

 

Mortgages.  In connection with mortgage financing provided, invested in or purchased by the Company, all of the notes, deeds of trust, security interests or other evidences of indebtedness or obligations, which are secured or collateralized by Real Property owned by the borrowers under such notes, deeds of trust, security interests or other evidences of indebtedness or obligations.

 

NASAA Guidelines.  The Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association, Inc. on May 7, 2007, and in effect on the date hereof.

 

Net Income.  For any period, the Company’s total revenues applicable to such period, less the total expenses applicable to such period other than additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of the Assets.  If the Advisor is paid a Subordinated Incentive Listing Fee, “Net Income” for purposes of calculating Total Operating Expenses, shall exclude the gain from the Sale of any Assets.

 

Net Sales Proceeds.  In the case of a transaction described in clause (A) of the definition of Sale, the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company, including all real estate commissions, closing costs and legal fees and expenses.  In the case of a transaction described in clause (B) of such definition, Net Sales Proceeds means the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company, including any legal fees and expenses and other selling expenses incurred in connection with such transaction.  In the case of a transaction described in clause (C) of such definition, Net Sales Proceeds means the proceeds of any such transaction actually distributed to the Company from the Joint Venture less the amount of any selling expenses, including legal fees and expenses incurred by or on behalf of the Company (other than those paid by the Joint Venture).  In the case of a transaction or series of transactions described in clause (D) of the definition of Sale, Net Sales Proceeds means the proceeds of any such transaction less the amount of selling expenses incurred by or on behalf of the Company, including any legal fees and expenses and other selling expenses incurred in connection with such transaction.  In the case of a transaction described in the last sentence of the definition of Sale, Net Sales Proceeds means the proceeds of such transaction or series of transactions less all amounts generated thereby which are reinvested in one or more Assets within 180 days thereafter and less the amount of any real estate commissions, closing costs, and legal fees and expenses and other selling expenses incurred by or allocated to the Company in connection with such transaction or series of transactions.  Net Sales Proceeds shall also include any consideration (including non-cash consideration such as stock, notes, or other property or securities) that the Company determines, in its discretion, to be economically equivalent to proceeds of a Sale, valued in the reasonable determination of the Company.  Net Sales Proceeds shall not include any reserves established by the Company in its sole discretion.

 

Offering.  Any public offering and sale of Shares pursuant to an effective registration statement filed under the Securities Act, other than a public offering of Shares under a distribution reinvestment plan and Shares offered under any employee benefit plan.

 

Operating Expenses.  All costs and expenses paid or incurred by the Company, as determined under generally accepted accounting principles, which are in any way related to the operation of the Company or to Company business, including the Asset Management Fee, 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 tax 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) the Subordinated Share of Net Sales Proceeds, (vi) the Performance Fee, (vii) the Subordinated Incentive Listing Fee, (viii)  Acquisition Expenses, (ix) real estate commissions on the Sale of Property, and (x) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property).

 

Organization and Offering Expenses.  All expenses incurred by, and to be paid from, the assets of the Company in connection with and in preparing the Company for registration of and subsequently offering and distributing its Shares to the public, which may include, but are not limited to, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys); expenses for printing, engraving and mailing; salaries of employees while engaged in sales activities; charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts; and expenses of qualification of the sale of the securities under federal and state laws, including taxes and fees; and accountants’ and attorneys’ fees.

 

Performance Fee.  The fee payable to the Advisor upon termination of this Agreement under certain circumstances if certain performance standards have been met pursuant to Section 4.03(b) or (c) of this Agreement.

 

Person.  An individual, corporation, business trust, estate, trust, partnership, limited liability company or other legal entity.

 

Property or Properties.  As the context requires, any, or all, respectively, of the Real Property acquired by the Company, either directly or indirectly (whether through joint venture arrangements or other partnership or investment interests).

 

Prospectus.  Prospectus has the meaning set forth in Section 2(10) of the Securities Act, including a preliminary prospectus, an offering circular as described in Rule 253 of the General Rules and Regulations under the Securities Act or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling securities of the Company to the public.

 

Real Property.  Land, rights in land (including leasehold interests), and any buildings, structures, improvements, furnishings, fixtures and equipment located on or used in connection with land and rights or interests in land.

 

REIT.  A corporation, trust, association or other legal entity (other than a real estate syndication) that is engaged primarily in investing in equity interests in real estate (including fee ownership and leasehold interests) or in loans secured by real estate or both in accordance with Sections 856 through 860 of the Code.

 

Sale or Sales.  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 Property or portion thereof, including the lease of any Property consisting of a building only, and including any event with respect to any Property 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 directly or indirectly (except as described in other subsections of this definition) in which the Company as a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including any event with respect to any Property which gives rise to insurance claims or condemnation awards; or (D)  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.  Notwithstanding the foregoing, “Sale” or “Sales” shall not include any transaction or series of transactions specified in clause (A) through (E) above in which the proceeds of such transaction or series of transactions are reinvested in one or more Assets within 180 days thereafter.

 

Securities Act.  The Securities Act of 1933, as amended from time to time, or any successor statute thereto.  Reference to any provision of the Securities Act 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.

 

Selling Commissions.  Any and all commissions payable to underwriters, dealer managers or other broker-dealers in connection with the sale of the Shares.

 

Shares.  Shares of the Company’s common stock, par value $.01 per share.

 

Sponsor.  AEI Capital Corporation.

 

Stockholders.  The record holders of the Shares as maintained in the books and records of the Company or its transfer agent.

 

Stockholders’ 7.0% Return.  As of any date, an aggregate amount equal to an 7.0% cumulative, noncompounded, annual return on Invested Capital.

 

Subordinated Incentive Listing Fee.  The fee payable to the Advisor under certain circumstances if the Shares are Listed pursuant to Section 3.01(d).

 

Subordinated Share of Net Sales Proceeds.  The fee payable to the Advisor under certain circumstances following receipt of Net Sales Proceeds pursuant to Section 3.01(c).

 

Termination Date.  The date of termination of this Agreement.

 

ARTICLE II

 

THE ADVISOR

 

2.01 Appointment.  The Company hereby appoints the Advisor to serve as its advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.  By accepting such appointment, the Advisor acknowledges that it has contractual and fiduciary responsibility to the Company and the Stockholders.

 

2.02 Duties of the Advisor.  Subject to Section 2.07, the Advisor undertakes to use its commercially reasonable best efforts to provide administrative services on behalf of the Company in connection with each Offering, to the present to the Company potential investment opportunities in Properties consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board, to manage the day-to-day operations of the Company, and to present to the Company opportunities for the disposition of Properties consistent with such investment objectives and policies.  In performance of this undertaking, subject to the supervision of the Board and consistent with the provisions of the Company’s most recent Prospectus for Shares, Articles of Incorporation and Bylaws, the Advisor shall, either directly or by engaging a duly qualified and licensed Affiliate of the Advisor or other duly qualified and licensed Person:

 

(a) administer on behalf of the Company, and represent the Company, in the sale of Shares in any Offering;

 

(b) serve as the Company’s investment and financial advisor and provide research and economic and statistical data in connection with the Properties and the Company’s investment policies;

 

(c) provide the daily management of the Company and perform and supervise the various administrative functions reasonably necessary for the management and operations of the Company;

 

(d) maintain and preserve the books and records of the Company, including stock books and records reflecting a record of the Stockholders and their ownership of the Company’s Shares;

 

(e) 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, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, mortgagors, property management companies, transfer agents and any and all agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services, including but not limited to entering into contracts in the name of the Company with any of the foregoing;

 

(f) consult with, and provide information to, the officers and the Board and assist the Board in the formulation and implementation of the Company’s financial policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the Company;

 

(g) subject to the provisions of Sections 2.02(i) and 2.03 hereof, (i) locate, analyze and select potential investments in Properties, (ii) structure and negotiate the terms and conditions of transactions pursuant to which investment in Properties will be made; (iii) make investments in Properties on behalf of the Company in compliance with the investment objectives and policies of the Company; (iv) arrange, structure and negotiate the structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with the investments in, Properties; (v) enter into leases of Property and service contracts for Assets; and (vi) review and analyze each Property’s operating and capital budget; and, to the extent necessary, perform all other operational functions for the maintenance and administration of such Properties;

 

(h) administer the compliance with lease obligations relative to the properties, including, without limitation, receive on behalf of the Company and deposit in the Company’s accounts monthly lease payments; periodically verify payment of real estate taxes and insurance coverage; periodically inspect properties and tenant sales records, where applicable; negotiate disputes with tenants; manage the re-letting and remodeling of properties;

 

(i) provide the Board with periodic reports regarding prospective investments in Assets;

 

(j) if a transaction requires approval by the Board, deliver to the Board all documents required by them to properly evaluate the proposed transaction;

 

(k) obtain the prior approval of a majority of the Independent Directors and a majority of the Board not otherwise interested in any transaction with the Advisor or its Affiliates;

 

(l) negotiate on behalf of the Company with banks or lenders for loans to be made to the Company, negotiate on behalf of the Company with investment banking firms and broker-dealers, and negotiate private sales of Shares and other securities of the Company or obtain loans for the Company, as and when appropriate, but in no event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and provided, further, that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company;

 

(m) obtain reports (which may be prepared by or for the Advisor or its Affiliates), where appropriate, concerning the value of investments or contemplated investments of the Company in Assets;

 

(n) from time to time, or at any time reasonably requested by the Board, make reports to the Board of its performance of services to the Company under this Agreement;

 

(o) provide the Company with, or assist the Company in arranging for, all necessary cash management services;

 

(p) deliver to or maintain on behalf of the Company copies of all appraisals obtained in connection with the investments in Assets;

 

(q) upon request of the Company, act, or obtain the services of others to act, as attorney-in-fact or agent of the Company in making, requiring and disposing of Assets, disbursing, and collecting the funds, paying the debts and fulfilling the obligations of the Company and handling, prosecuting and settling any claims of the Company, including foreclosing and otherwise enforcing mortgage and other liens and security interests comprising any of the Assets;

 

(r) arrange for the disposal of Properties on the Company’s behalf in compliance with the Company’s investment objectives and policies as stated in the Company’s most recent Prospectus for Shares and advise the Board in connection with an exit strategy;

 

(s) supervise the preparation and filing and distribution of returns and reports to governmental agencies and to Stockholders and other investors and act on behalf of the Company in connection with investor relations;

 

(t) provide office space, equipment and personnel as required for the performance of the foregoing services as Advisor;

 

(u) assist the Company in preparing all reports and returns required by the Securities and Exchange Commission, Internal Revenue Service and other state or federal governmental agencies; and

 

(v) do all things necessary to assure its ability to render the services described in this Agreement.

 

2.03 Authority of Advisor.  Pursuant to the terms of this Agreement, including the duties set forth in Section 2.02 and the restrictions included in this Section 2.03 and in Section 2.06), and subject to the continuing and exclusive authority of the Board over the management of the Company, the Board hereby delegates to the Advisor the authority to (i) locate, analyze and select investment opportunities for the Company, (ii) structure the terms and conditions of transactions pursuant to which investments will be made or acquired for the Company, (iii) acquire Properties, make construction loans secured by Mortgages and other loans and invest in other Assets in compliance with the investment objectives and policies of the Company, (iv) arrange for borrowings (subject to approval of the Board), (v) enter into leases for the Properties and service contracts for the Assets with duly qualified and licensed non-affiliated and Affiliated Persons, including oversight of non-affiliated and Affiliated Persons that perform property management, acquisition, advisory, disposition or other services for the Company, and (vi) arrange for, or provide, accounting and other record-keeping functions at the Asset level.

 

The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority set forth in this Section 2.03, provided however, that such modification or revocation shall be effective upon receipt by the Advisor or such later date as is specified by the Board and included in the notice provided to the Company and such modification or revocation 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, or, if later, the effective date of such modification or revocation specified by the Board.

 

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

 

2.05 Records; Access.  The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Board and by counsel, auditors and authorized agents of the Company, at any time or from time to time, upon reasonable request, during normal business hours.  The Advisor shall at all reasonable times have access to the books and records of the Company.

 

2.06 Limitations on Activities.  Anything else in this Agreement to the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made in good faith, would (a) adversely affect the status of the Company as a REIT, (b) subject the Company to regulation under the Investment Company Act of 1940, as amended, (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, the Shares or its other securities, or (d) not be permitted by the Articles of Incorporation or Bylaws, except if such action shall be ordered by the Board, in which case the Advisor shall notify promptly 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.  Notwithstanding the foregoing, the Advisor, its directors, officers, employees and stockholders, and the directors, officers, employees and stockholders of the Advisor’s Affiliates shall not be liable to the Company or to the Board or Stockholders for any act or omission by the Advisor, its directors, officers, employees or stockholders, or for any act or omission of any Affiliate of the Advisor, its directors, officers, employees or stockholders, except as provided in Section 5.02 of this Agreement.

 

2.07 Other Activities of the Advisor.  Nothing herein contained shall prevent the Advisor or its Affiliates from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs or real estate programs) 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 director, officer, employee, or stockholder 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 report to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which 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.  The Advisor or its Affiliates shall promptly disclose to the Board knowledge of such condition or circumstance.  The Advisor shall inform the Board at least quarterly of the investment opportunities that were offered to other programs sponsored by the Sponsor, Advisor or any Director or their Affiliates with similar investment objectives as the Company’s.  If the Sponsor, Advisor, any Director or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, it shall be the duty of the Board (including the Independent Directors) to adopt the method set forth in the Company’s most recent Prospectus for its Shares or another reasonable method by which investments are to be allocated to the competing investment entities and to use their best efforts to apply such method fairly to the Company.

 

ARTICLE III

 

COMPENSATION

 

3.01 Fees.

 

(a) Asset Management Fee.  On the last day of each month, the Company shall pay to the Advisor a monthly Asset Management Fee equal to 0.05%, which is one twelfth of 0.60%, of the Average Invested Assets, plus costs and expenses incurred by the Advisor in providing asset management services.

 

(b) Property Disposition Coordination Fee.  If the Advisor or an Affiliate of the Advisor provides a substantial amount of the services (as determined by a majority of the Independent Directors) in connection with the Sale of one or more Properties, the Advisor or such Affiliate shall receive a Property Disposition Coordination Fee of 2% of the Contact Sales Price of such Property or Properties; provided, however, that (i) the Advisor shall not receive any other fixed fee in connection with a sale of a Property; (ii) no Property Disposition Coordination Fee shall be payable to the Advisor for the Sale of Properties if such Sale involves the Company selling all or substantially all of its Properties in one or more transactions designed to effectuate a business combination transaction (as opposed to a Company liquidation, in which case the Property Disposition Coordination Fee would be payable if the Advisor or an Affiliate of the Advisor provides a substantial amount of services as provided above); and (iii) the Property Disposition Coordination Fee, together with all real estate commissions paid to all Persons by the Company, shall not exceed an amount equal to the lesser of (x) the amount of a real estate or brokerage fee that is reasonable, customary and competitive in light of the size, type and location of the Property, or (y) 6.0% of the Contract Sales Price of a Property.

 

(c) Subordinated Share of Net Sales Proceeds.  A Subordinated Share of Net Sales Proceeds shall be payable to the Advisor in an amount equal to 10.0% of Net Sales Proceeds remaining after the Stockholders have received Distributions equal to the sum of the Stockholders’ 7.0% Return and 100% of Invested Capital.  The Company shall have the option to pay such fee in the form of cash, Shares, a promissory note, or any combination of the foregoing.  In no event will the Company pay a Subordinated Share of Net Sales Proceeds, including any interest payable in connection with any promissory note issued by the Company in payment of the Subordinated Share of Net Sales Proceeds, in excess of the amount that would be presumptively reasonable under Section 9.7 of the Articles of Incorporation.

 

(d) Subordinated Incentive Listing Fee.  Upon Listing, the Advisor shall be entitled to the Subordinated Incentive Listing Fee in an amount equal to 10.0% of the amount by which (i) the Market Value of the Company’s outstanding Shares plus distributions paid by the Company prior to Listing, exceeds (ii) the sum of (A) 100% of Invested Capital and (B) the total Distributions required to be paid to the Stockholders in order to pay the Stockholders’ 7.0% Return from inception through the date that Market Value is determined.  The Company shall have the option to pay such fee in the form of cash, Shares, a promissory note, or any combination of the foregoing.  If the Company pays such fee with a promissory note, payment in full shall be made from the Net Sales Proceeds of the first Sale completed by the Company after Listing, and interest will accrue at a rate deemed fair and reasonable by the Board from and after the date of Listing.  If the Net Sales Proceeds from the first Sale after Listing are insufficient to pay the promissory note in full, including accrued interest, then the promissory note shall be paid in part with such Net Sales Proceeds, and in part from the Net Sales Proceeds from the next successive Sales until the amount owing pursuant to such promissory note is paid in full.  If the promissory note has not been paid in full within five years from the date of Listing, then the Advisor, or its successors or assigns, may elect to convert the unpaid balance, including accrued but unpaid interest, into Shares at a price per Share equal to the average closing price of the Shares over the ten trading days immediately preceding the date of such election.  If the Shares are no longer Listed at such time as the promissory note becomes convertible into Shares as provided by this paragraph, then the price per Share, for purposes of conversion, shall equal the fair market value for the Shares as determined by the Board based upon the Appraised Value of the Assets as of the date of election.

 

(e) 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.

 

(f) Limitations.  Except in accordance with Section 3.01(e), the Company shall not pay the Advisor or any Affiliate, (i) any Acquisition Fee, Construction Fee, Development Fee or other fee of any nature in connection with the acquisition, construction or development of Properties, or (ii) any financing fee, refinancing fee or other fee of any nature in connection with borrowings of the Company.  Nothing in this Section 3.01(f) shall affect the ability of the Advisor and its Affiliates to be reimbursed for expenses in accordance with Section 3.02.

 

3.02 Expenses.

 

(a) In addition to the compensation paid to the Advisor pursuant to Section 3.01 hereof, the Company shall pay directly or reimburse the Advisor, as applicable, for all of the expenses paid or incurred by the Advisor in connection with the services it provides to the Company pursuant to this Agreement, including, but not limited to:

 

(i) Organization and Offering Expenses; provided, however, that within 60 days after the end of the month in which an Offering terminates, the Advisor shall reimburse the Company for any Organization and Offering Expenses reimbursed by the Company to the Advisor to the extent that such reimbursements exceed 15% of the Gross Proceeds raised in the completed Offering.  The Advisor shall be responsible for the payment of Organization and Offering Expenses in excess of 15% of the Gross Proceeds;

 

(ii) Acquisition Expenses incurred in connection with the selection and acquisition of Assets, in an amount estimated to be up to 2.0% of the Contract Purchase Price;

 

(iii) the actual cost of goods, services and materials used by the Company and obtained from Persons not affiliated with the Advisor, including brokerage fees paid in connection with the purchase and sale of Shares;

 

(iv) interest and other costs for borrowed money, including discounts, points and other similar fees;

 

(v) taxes and assessments on income or property and taxes as an expense of doing business;

 

(vi) costs associated with insurance required in connection with the business of the Company or by the Board;

 

(vii) expenses of managing and operating Assets owned by the Company;

 

(viii) all expenses in connection with payments to the Board for attendance at meetings of the Board and Stockholders;

 

(ix) expenses associated with Listing or with the issuance and distribution of Shares and other securities of the Company, such as Selling Commissions and fees, advertising expenses, taxes, legal and accounting fees, and Listing and registration fees;

 

(x) expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Company to the Stockholders;

 

(xi) expenses of organizing, reorganizing, liquidating or dissolving the Company or amending the Articles of Incorporation or the Bylaws;

 

(xii) expenses of any transfer agent for the Shares and of 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;

 

(xiii) administrative service expenses, including all costs and expenses incurred by Advisor in fulfilling its duties hereunder.  Such costs and expenses may include reasonable wages and salaries and other employee-related expenses of all employees of Advisor who are engaged in the management, administration, operations, and marketing of the Company, including taxes, insurance and benefits relating to such employees, and legal, travel and other out-of-pocket expenses which are directly related to their services provided hereunder; and

 

(xiv) audit, accounting and legal fees.

 

(b) Expenses incurred by the Advisor on behalf of the Company and payable pursuant to this Section 3.02 shall be reimbursed no less than quarterly to the Advisor within 60 days after the end of each quarter.  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.

 

3.03 Other Services.  Should the Board request that the Advisor or any director, officer or employee thereof render services for the Company other than set forth in Section 2.02, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Board, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement.

 

3.04 Reimbursement to the Advisor.  The Company shall not reimburse the Advisor, at the end of any fiscal quarter, for any Operating Expenses to the extent that, in the four consecutive fiscal quarters then ended (the “Expense Year”) the Operating Expenses exceed (the “Excess Amount”) the greater of (i) 2% of Average Invested Assets or (ii) 25% of Net Income for that period of four consecutive quarters unless the Independent Directors determine that such excess was justified, based on unusual and nonrecurring factors which the Independent Directors deem sufficient.  If the Independent Directors do not approve such Excess Amount as being so justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company.  If the Independent Directors determine such Excess Amount 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 include an Excess Amount, the Advisor, at the direction of the Independent Directors, shall cause such fact to be disclosed in the next quarterly report of the Company or in a separate writing and sent to the stockholders, together with an explanation of the factors the Independent Directors considered in determining that such Excess Amount was justified.  The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board.  All figures used in the foregoing computation shall be determined in accordance with generally accepted accounting principles applied on a consistent basis.

 

ARTICLE IV

 

TERM AND TERMINATION

 

4.01 Term; Renewal.  Subject to Section 4.02 hereof, this Agreement has a one-year term and shall continue in force until the first anniversary of the date hereof.  Thereafter, this Agreement may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties.  It is the Board’s duty to evaluate the performance of the Advisor annually before renewing the Agreement, and each such renewal shall be for a term of no more than one year.

 

4.02 Termination.  This Agreement will automatically terminate upon Listing.  This Agreement also may be terminated at the option of either party (i) immediately upon a Change of Control or (ii) upon 60 days written notice without cause or penalty (in either case, if termination is by the Company, then such termination shall be upon the approval of a majority of the Independent Directors).  Notwithstanding the foregoing, the provisions of this Agreement which provide for payment to the Advisor of expenses, fees or other compensation following the date of termination (i.e., Sections 3.01(d) and 4.03) shall continue in full force and effect until all amounts payable thereunder to the Advisor are paid in full.  The provisions of Sections 2.05, 2.06 and 4.03 through 6.11 shall survive the termination of this Agreement.

 

4.03 Payments to and Duties of Advisor upon Termination.

 

(a) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to and receive from the Company within 30 days after the effective date of such termination all unpaid reimbursements of expenses, subject to the provisions of Section 3.04 hereof, and all contingent liabilities related to fees payable to the Advisor prior to termination of this Agreement, provided that the Subordinated Incentive Listing Fee, if any, shall be paid in accordance with the provisions of Section 3.01(d).

 

(b) Upon termination, unless such termination is by the Company because of a material breach of this Agreement by the Advisor or occurs upon a Change of Control, the Advisor shall be entitled to receive a payment of the Performance Fee equal to 10.0% of the amount, if any, by which (i) the Appraised Value of the Assets on the Termination Date, less the amount of all indebtedness secured by the Assets, plus the total Distributions paid to Stockholders from the Company’s inception through the Termination Date, exceeds (ii) Invested Capital plus an amount equal to the Stockholders’ 7.0% Return from inception through the Termination Date.  The Company shall pay such Performance Fee, by way of a promissory note bearing interest, accruing beginning on the Termination Date, at a rate deemed fair and reasonable by the Board on the Termination Date.  Payment of principal on such promissory note shall be made from time to time until paid in full, from Net Sales Proceeds. If the Performance Fee has not been paid in full within five years from the Termination Date, then the Advisor, its successors or assigns, may elect to convert the balance of the fee, including accrued but unpaid interest, into Shares at a price per Share equal to the average closing price of the Shares over the ten trading days immediately preceding the date of such election if the Shares are Listed at such time.  If the Shares are not Listed at such time, the Advisor, its successors or assigns, may elect to convert the balance of the fee, including accrued but unpaid interest, into Shares at a price per Share equal to the fair market value for the Shares as determined by the Board based upon the Appraised Value of the Assets on the date of election.

 

(c) Notwithstanding the foregoing, if termination occurs upon a Change of Control, the Advisor shall be entitled to payment of the Performance Fee equal to 10.0% of the amount, if any, by which (i) the value of the Assets on the Termination Date as determined in good faith by the Board, including a majority of the Independent Directors, based upon such factors as the consideration paid in connection with the Change of Control and the most recent Appraised Value, less the amount of all indebtedness secured by the Assets, plus the total Distributions paid to Stockholders from the Company’s inception through the Termination Date, exceeds (ii) Invested Capital plus an amount equal to the Stockholders’ 7.0% Return from inception through the Termination Date.  No deferral of payment of the Performance Fee may be made under this Section 4.03(c).

 

(d) In the event that the Advisor disagrees with the valuation of Shares pursuant to Section 4.03(b) where the Shares are not Listed for purposes of determining the number of Shares to be issued to the Advisor following the Advisor’s election to convert the balance of the Performance Fee owed to the Advisor, then the fair market value of such Shares shall be determined by an Independent Appraiser of equity value selected by the Advisor.

 

(e) Notwithstanding sections 4.03 (b) and (c), in the event the Subordinated Incentive Listing Fee is paid to the Advisor following Listing, no Performance Fee will be paid to the Advisor.

 

(f) The Advisor shall promptly upon termination:

 

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

 

(ii) 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;

 

(iii) deliver to the Board all assets, including the Assets, and documents of the Company then in the custody of the Advisor; and

 

(iv) cooperate with, and take all reasonable actions requested by, the Company to provide an orderly management transition.

 

ARTICLE V

 

INDEMNIFICATION

 

5.01 (a)           The Company shall indemnify and hold harmless the Advisor and its Affiliates, including their respective officers, directors, 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, subject to any limitations imposed by the laws of the State of Minnesota, the Articles of Incorporation and the NASAA Guidelines under the Articles of Incorporation.  The Company shall not indemnify or hold harmless the Advisor or its Affiliates, including their respective officers, directors, partners and employees, for any liability or loss suffered by the Advisor or its Affiliates, including their respective officers, directors, partners and employees, nor shall it provide that the Advisor or its Affiliates, including their respective officers, directors, partners and employees, 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, including their respective officers, directors, partners and employees, have determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of the Company; (ii) the Advisor or its Affiliates, including their respective officers, directors, partners and employees, were acting on behalf of or performing services of the Company; (iii) such liability or loss was not the result of negligence or misconduct by the Advisor or its Affiliates, including their respective officers, directors, partners and employees; and (iv) such indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from Stockholders.  Notwithstanding the foregoing, the Advisor and its Affiliates, including their respective officers, directors, partners and employees, shall not be indemnified by the Company for any losses, liability or expenses 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 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; and (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 Securities and Exchange Commission 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.

 

(b) The Articles of Incorporation provide that the advancement of Company funds to the Advisor or its Affiliates, including their respective officers, directors, partners and employees, for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought is permissible only if all of the following conditions are satisfied:  (i) the legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company; (ii) the legal action is initiated by a third-party who is not a Stockholder or the legal action is initiated by a Stockholder acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; (iii) the Advisor or its Affiliates, including their respective officers, directors, partners and employees, undertake to repay the advanced funds to the Company together with the applicable legal rate of interest thereon, in cases in which such Advisor or its Affiliates, including their respective officers, directors, partners and employees, are found not to be entitled to indemnification.

 

(c) Notwithstanding the provisions of this Section 5.01, the Advisor shall not be entitled to indemnification or be held harmless pursuant to this Section 5.01 for any activity which the Advisor shall be required to indemnify or hold harmless the Company pursuant to Section 5.02.

 

5.02 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 (i) such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and (ii) are incurred by reason of the Advisor’s bad faith, fraud, misfeasance, misconduct, negligence or reckless disregard of its duties.  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.

 

ARTICLE VI

 

MISCELLANEOUS

 

6.01 Assignment to an Affiliate.  This Agreement may be assigned by the Advisor to an Affiliate of the Advisor 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 which 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.  This Agreement shall be binding on successors to the Company resulting from a Change of Control or sale of all or substantially all the assets of the Company or the Partnership, and shall likewise be binding upon any successor to the Advisor.

 

6.02 Relationship of Advisor and Company.  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 or impose any liability as such on either of them.

 

6.03 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 Articles of Incorporation, the Bylaws, or 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 Directors and to the Company:

	
AEI National Income Property Trust 35, Inc.

1300 Wells Fargo Place

30 East Seventh Street

Saint Paul, Minnesota 55101

	
To the Advisor:

	
AEI Trust Advisors 35, Inc.

1300 Wells Fargo Place

30 East Seventh Street

Saint Paul, Minnesota 55101

Either party shall, as soon as reasonably practicable, give notice in writing to the other party of a change in its address for the purposes of this Section 6.03.

 

6.04 Modification.  This Agreement shall not be changed, modified, or amended, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assignees.

 

6.05 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.

 

6.06 Choice of Law; Venue.  The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Minnesota, and venue for any action brought with respect to any claims arising out of this Agreement shall be brought exclusively in Hennepin County, Minnesota.

 

6.07 Entire Agreement.  This Agreement contains the entire agreement and understanding among 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 signed by each of the parties hereto.

 

6.08 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.

 

6.09 Gender; Number.  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.

 

6.10 Headings.  The titles and headings of sections and subsections 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.

 

6.11 Execution in 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 the counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

6.12 Initial Investment.  The Advisor or one of its Affiliates has contributed $200,000 (the “Initial Investment”) in exchange for the initial issuance of Shares of the Company.  The Advisor or its Affiliates may not sell any of the Shares purchased with the Initial Investment while the Advisor acts in an advisory capacity to the Company.  The restrictions included above shall not apply to any Shares acquired by the Advisor or its Affiliates other than the Shares acquired through the Initial Investment.  Neither the Advisor nor its Affiliates shall vote any Shares they now own, or hereafter acquires, in any vote for the election of Directors or any vote regarding the approval or termination of any contract with the Advisor or any of its Affiliates.

 

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

 

AEI CORE PROPERTY INCOME TRUST, INC.

 

 

 

By:       

 

Robert P. Johnson

Chief Executive Officer and President

 

AEI TRUST ADVISORS, INC.

 

 

 

By:       

 

Robert P. Johnson

Presidentex1031form8k112811.htm

SALE AND PURCHASE AGREEMENT

This Agreement for sale and purchase together with the Exhibits A to D attached hereto, hereinafter referred to as "Contract" or "Agreement", is executed this 15th day of November, 2011, by and between, Clarita Ablazo Jeffery of Penthouse 8, Jakarta Building, Raya Gardens, Merville, Paranaque, hereinafter referred to as "Seller", and Intelligent Communication Enterprise Corporation Inc., a company incorporated in Pennsylvania, USA, Corporation, and whose registered office is 1515 Market Street, Suite
1210, Philadelphia, PA 19102, United States of America, hereinafter referred to as "Buyer."

Seller or Buyer is referred to individually as “Party” and Buyer and Seller collectively are referred to as “the Parties” in this Agreement.

WITNESSETH:

WHEREAS, Seller is the beneficial owner of all 10,000 of the issued and outstanding shares which represent a hundred percentage (100%) ownership (hereinafter referred to as the “Sale Shares”), in Global Integrated Media Ltd, a company incorporated in Hong Kong, whose registered office is at 2308 Chinacem Exchange Square, Kings Road, North Point, Hong Kong, hereinafter referred to as the "GIM"; and

WHEREAS, during the twelve months prior to this Agreement the Seller has held senior executive positions or has been closely affiliated with GIM and is considered to be aware of all material facts about the two companies; and

WHEREAS, Buyer is desirous of acquiring the Sale Shares and Seller is desirous of selling the Sale Shares to Buyer.

NOW, THEREFORE, for and in consideration of the mutual covenants and promises hereinafter contained, the Seller agrees to sell and the Buyer agrees to buy the Shares upon the following terms and conditions.

1.           PURCHASE PRICE AND METHOD OF PAYMENT.  Buyer shall pay and Seller shall accept the Purchase Price for the Shares in the manner of payment set forth in Exhibit "A" attached hereto and made a part hereof.

2.           EFFECTIVE DATE AND CLOSING.  This Agreement is effective and binding on the Parties on the date last signed (the “Effective Date”), with the closing of the transactions contemplated by this Agreement, to in Hong Kong on the 30th November 2011 or other date as the Parties hereto may agree, and hereinafter referred to as the “Closing Date.”

3.           REPRESENTATIONS AND WARRANTIES OF SELLER.  Seller represents and warrants to Buyer the correctness, truthfulness and accuracy of the matters shown on Exhibit "B" attached hereto, all of which shall survive closing.  In addition, Seller represents and warrants to Buyer that the documents enumerated in Exhibit "C" attached hereto and made a part hereof, are true, authentic and correct copies of the original, or, if appropriate, the originals themselves, and no alterations or modifications thereof have been
made.

 

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4.           TRANSACTIONS PRIOR TO CLOSING.  Seller hereby covenants the following:

a.           Conduct of Seller's Business in the usual manner until Closing.  Except as Buyer may otherwise consent in writing prior to the Closing Date, Seller will not enter into any transaction, take any action or fail to take any action which would result in, or could reasonably be expected to result in or cause any of the representations and warranties of Seller contained in this Agreement to be void, invalid or false on the Closing Date.

b.           Satisfactions.  Seller shall deliver to Buyer on the Closing Date a satisfaction of any encumbrance or lien on the Shares satisfactory in form and substance to the Buyer indicating that the then outstanding unpaid principal balance of any promissory note secured thereby has been paid in full prior to or simultaneously with the closing.

c.           Advice of Changes and Claims.  Between the date hereof and the Closing Date, Seller will promptly advise Buyer in writing of any fact including but not limited to any impending legal action, threat of legal action or other claims whatsoever which, if existing or known at the date hereof, that would adversely affect the value of the Shares would have been required to be set forth herein or disclosed pursuant to this Agreement.

d.           Documents.  Seller shall deliver to Buyer at closing such documents which are, in Buyer's sole discretion, necessary to fully satisfy the objectives of this Agreement in content and form reasonably intended to do so.

5.           EXPENSES.  Each of the parties hereto shall pay its own expenses in connection with this Agreement and the transactions contemplated hereby, including but not limited to the fees and expenses of its counsel and its certified public accountants.

6.           GENERAL.

a.           Survival of Representations and Warranties.  Each of the parties to this Agreement covenants and agrees that their respective representations, warranties, covenants, statements, and agreements contained in this Agreement shall survive the Closing Date.  Except as set forth in this Agreement, the exhibits hereto or in the documents and papers delivered by Seller to Buyer in connection herewith, there are no other agreements, representations, warranties, or covenants by or among the parties hereto with respect to the subject matter hereof.

b.           Waivers.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein or therein and in any documents delivered in connection herewith or therewith.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

c.           Notices.  All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered or mailed, first class mail, postage prepaid,

To Seller:

Clarita Ablazo Jeffery

Penthouse 8

Jakarta Building

Raya Gardens

Merville

Paranaque

 

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To Buyer:

Intelligent Communication Enterprise Corporation Inc.

75 High Street,

Singapore, 179435

Singapore

or to such other address as such party shall have specified by notice in writing to the other party.

d.           Sections and Other Headings.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretations of this Agreement.

e.           Governing Law.  This Agreement and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of the State of New York.  The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in the State of New York.  In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party's reasonable attorney's fees, court costs, and all other expenses, whether or not taxable by the court as costs, in
addition to any other relief to which the prevailing party may be entitled.  In such event, no action shall be entertained by said court or any court of competent jurisdiction if filed more than one year subsequent to the date the cause(s) of action actually accrued regardless of whether damages were otherwise as of said time calculable.

f.           Conditions Precedent.  The Conditions Precedent to the enforceability of this Agreement are outlined more fully in Exhibit "D", attached hereto and made a part hereof.  In the event that said Conditions Precedent are not fulfilled by the appropriate dates thereof, then this Agreement shall be deemed null and void and any deposits or other form of advance compensation paid at said time shall be returned to the Buyer forthwith.

g.           Captions.  The Captions of this contract are for convenience and reference only and in no way define, describe, extend, or limit the scope or intent of this contract, or the intent of any provisions hereof.

h.           Typewritten or Handwritten Provisions.  Hand-written provisions inserted in this contract and typewritten provisions initialed by both parties shall control over the typewritten provisions in conflict therewith.

i.           Time is of the Essence.  Time and timely performance are of the essence of this contract and of the covenants and provisions hereunder.

j.           Successors and Assigns.  Rights and obligations created by this contract shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns.  Whenever used, the singular number shall include the plural, the plural the singular, and the use of any gender shall include all genders.

k.           Contractual Procedures.  Unless specifically disallowed by law, should litigation arise hereunder, service of process therefore may be obtained through certified mail, return receipt requested; the parties hereto waiving any and all rights they may have to object to the method by which service was perfected.

 

3

  

  

  

l.           Extraordinary Remedies.  To the extent cognizable at law, the parties hereto, in the event of breach and in addition to any and all other remedies available thereto, may obtain injunctive relief, regardless of whether the injured party can demonstrate that no adequate remedy exists at law.

m.           Non-Compete: Seller shall refrain from entering into any trade that directly or indirectly competes with the Company for a period of one year from closing.  This restriction would apply globally.  During such one-year term, the Seller will not engage in such business on his own account, or become interested therein, directly or indirectly, as an individual, partner, shareholder, director, consultant, independent contractor, officer, clerk, principal, agent, employee, trustee, or in any relation or capacity whatsoever.  In addition, Seller shall not solicit or induce any employee of the Company to terminate their
employment with the Company for a three-year period commencing from the date when this agreement is signed

8.           INITIALS AND EXHIBITS.  This contract shall not be valid and enforceable unless it is properly executed by Buyer and Seller and their initials affixed to each page of the exhibits attached hereto and made a part hereof.

IN WITNESS WHEREOF, this Agreement has been executed by each of the individual parties hereto and signed by an officer thereunto duly authorized and attested under the corporate seal of the Secretary of the Corporate party hereto, if any, all on the date and year first above written.

Signed, sealed and delivered in the presence of:

	
For Seller

By: Clarita Ablazo Jeffery

 

/s/ Clarita Ablazo Jeffery

 

Date:

 

	
For Buyer

By: Bala Balamurali

 

/s/ Bala Balamurali

 

Date: 28 November 2011

	
 

Witnessed by:

 

/s/ Charles Greene

 

Name: Charles Greene

Date 28 Nov 2011

 

	
 

Witnessed by:

 

/s/ Allyce Kong

 

Name: Allyce Kong

Date 28 November 2011

 

4

  

  

  

EXHIBIT "A"

AMOUNT AND PAYMENT OF PURCHASE PRICE IN THE FORM OF SHARES IN INTELLIGENT COMMUNICATION ENTERPRISE CORPORATION INC. (“ICE Corp”):

	
  

	
a.

	
In consideration for the Sale Shares totaling 10,000 equivalent to 100% of the issued and outstanding shares of GIM, the Buyer will pay to the Seller by way of Payment Shares an amount equivalent to the value of United States Dollars One Million and Nine Hundred Thousand only (US$1,900,000).

	
  

	
b.

	
Payment Shares have not been registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), and to the extent that their sale and purchase is subject to U.S. regulation, they are being offered in reliance on the transaction “safe harbor” afforded by Regulation S promulgated under the Securities Act.

	
  

	
c.

	
The unit price of the Payment Shares will be determined to be the value weighted average price per share (OTCBB : ICMC) over a ninety day period, prior to the Effective Date of this Agreement.

Initials:

Seller                      /s/ Clarita Ablazo Jeffery

Buyer                      /s/ Bala Balamurali

  

  

  

EXHIBIT "B"

REPRESENTATIONS AND WARRANTIES OF SELLER

In this Exhibit [B], “Seller’s Knowledge” means a fact, circumstance, or other matter of which the Seller has actual knowledge or reasonably should have knowledge after due inquiry of the GIM’s officers, directors, and key employees and reasonable review of its books and records

	
A:

	
REPRESENTATIONS AND WARRANTIES: The Seller represents and warrants to the Buyer as follows as of the Effective Date of this Agreement.

	
  

	
1.

	
Organization, Good Standing, and Qualification.  GIM (including its subsidiaries if any) are entities duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to carry on its business as now conducted and to own its properties.

	
  

	
2.

	
Authorization.  Seller has full power and authority and has taken all requisite action on the part of Seller necessary for the authorization, execution, and delivery of this Agreement.

	
  

	
3.

	
Consents.  The execution, delivery, and performance by Seller of this Agreement requires no consent of, action by or in respect of, or filing with any Person, governmental body, agency, or official.

	
  

	
4.

	
No Material Adverse Change.  Since the 1st day of January, 2011, except as described herein, there has not been:

	
  

	
a.

	
any change in the consolidated assets, liabilities, financial condition, or operating results of GIM, except for changes in the ordinary course of business that have not and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

	
  

	
b.

	
any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of GIM, or any redemption or repurchase of any securities of GIM;

	
  

	
c.

	
any material damage, destruction, or loss, whether or not covered by insurance to any assets or properties of GIM or its Subsidiaries;

	
  

	
d.

	
any waiver, not in the ordinary course of business, by GIM or any Subsidiary of a material right or of a material debt owed to it;

	
  

	
e.

	
any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by GIM or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results, or business of GIM and its Subsidiaries taken as a whole (as such business is presently conducted and as it is proposed to be conducted);

	
  

	
f.

	
any change or amendment to GIM’ charter documents, or material change to any material contract or arrangement by which GIM or any Subsidiary is bound or to which any of their respective assets or properties is subject;

	
  

	
g.

	
any material labor difficulties or labor union organizing activities with respect to employees of GIM or any Subsidiary;

	
  

	
h.

	
any transaction entered into by GIM or a Subsidiary other than in the ordinary course of business;

	
  

	
i.

	
the loss of the services of any key employee or material change in the composition or duties of the senior management of GIM or any Subsidiary;

	
  

	
j.

	
the loss or threatened loss of any customer that has had or could reasonably be expected to have a Material Adverse Effect; or

  

  

  

	
  

	
k.

	
any other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.

	
  

	
5.

	
No Conflict, Breach, Violation, or Default.  To Seller’s Knowledge, the execution, delivery, and performance of this Agreement by Seller will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (a) GIM’s charter documents in effect on the date hereof (copies of which have been provided to Buyer before the date hereof); or (b)(i) any statute, rule, regulation, or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over GIM, any Subsidiary, or any of their respective assets or properties, or (ii) any agreement or instrument to which GIM or any Subsidiary is a party or by which GIM or a Subsidiary is
bound or to which any of their respective assets or properties is subject.

	
  

	
6.

	
Tax Matters.  To Seller’s Knowledge, GIM have timely prepared and filed all tax returns required to have been filed by GIM with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it.  The charges, accruals, and reserves on the books of the GIM in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against GIM nor, to Seller’s Knowledge, any basis for the assessment of any additional taxes, penalties, or interest for any fiscal period or audits by any federal, state, or local taxing authority, except for any assessment that is not material to GIM taken as a whole.  To
Seller’s Knowledge all taxes and other assessments and levies that GIM is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due.  There are no tax liens or claims pending or, to Seller’s Knowledge, threatened against Seller or any Subsidiary or any of their respective assets or property.  There are no outstanding tax-sharing agreements or other such arrangements between GIM or other corporation or entity.

	
  

	
7.

	
Title to Properties.  To the Seller’s Knowledge, GIM has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances, and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and GIM holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

	
  

	
8.

	
Certificates, Authorities, and Permits.  To Seller’s Knowledge, GIM possess adequate certificates, authorities, or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and GIM has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority, or permit that, if determined adversely to Seller or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

	
  

	
9.

	
No Labor Disputes.  No material labor dispute with the employees of GIM exists or, to Seller’s Knowledge, is imminent.

  

  

  

	
  

	
10.

	
Intellectual Property

	
  

	
a.

	
To Seller’s knowledge, all Intellectual Property of GIM is currently in compliance with all legal requirements (including timely filings, proofs, and payments of fees) and is valid and enforceable.  No Intellectual Property of GIM that is necessary for the conduct of GIM’s business is currently conducted or as currently proposed to be conducted has been or is now involved in any cancellation, dispute, or litigation and, to Seller’s Knowledge, no such action is threatened.  No patent of GIM has been or is now involved in any interference, reissue, reexamination, or opposition proceeding.

	
  

	
b.

	
All of the licenses and sublicenses and consent, royalty, or other agreements concerning Intellectual Property that are necessary for the conduct of GIM’s business as currently conducted or as currently proposed to be conducted to which GIM is a party or by which any of its assets are bound (other than generally commercially available, non-custom, off-the-shelf software application programs having a retail acquisition price of less than US$3,000 per license) are valid and binding obligations of GIM that is party thereto and, to Seller’s Knowledge, the other parties thereto, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other similar laws
affecting the enforcement of creditors’ rights generally, and there exists no event or condition that will result in a material violation or breach of or constitute (with or without due notice or lapse of time or both) a default by GIM under any such license agreement.

	
  

	
c.

	
To Seller’s knowledge, GIM owns or have the valid right to use all of the Intellectual Property that is necessary for the conduct of GIM’ business as currently conducted or as currently proposed to be conducted and for the ownership, maintenance, and operation of GIM’ properties and assets, free and clear of all liens, encumbrances, adverse claims, or obligations to license all such owned Intellectual Property and Confidential Information, other than licenses entered into in the ordinary course of GIM’s business.  GIM has a valid and enforceable right to use all third-party Intellectual Property and Confidential Information used or held for use in the respective businesses of GIM.

	
  

	
d.

	
To Seller’s knowledge, the conduct of GIM’ business as currently conducted does not Infringe any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party and the Intellectual Property and Confidential Information of GIM that are necessary for the conduct of GIM’s business as currently conducted or as currently proposed to be conducted are not being Infringed by any third party.  There is no litigation or order pending or outstanding or, to Seller’s Knowledge, threatened or imminent that seeks to limit or challenge or that concerns the ownership, use, validity, or enforceability of any Intellectual Property or Confidential Information of GIM and GIM’s use of any Intellectual Property or Confidential
Information owned by a third party and, to Seller’s Knowledge, there is no valid basis for the same.

	
  

	
e.

	
To Seller’s knowledge, the consummation of the transactions contemplated hereby will not result in the alteration, loss, impairment of, or restriction on GIM’s  ownership or right to use any of the Intellectual Property or Confidential Information that is necessary for the conduct of GIM’s business as currently conducted or as currently proposed to be conducted.

	
  

	
f.

	
All software owned by GIM and, to Seller’s Knowledge, all software licensed from third parties by GIM: (i) is free from any material defect, bug, virus, or programming, design, or documentation error; (ii) operates and runs in a reasonable and efficient business manner; and (iii) conforms in all material respects to the specifications and purposes thereof.

  

  

  

	
  

	
g.

	
GIM has taken reasonable steps to protect the rights of GIM in their Intellectual Property and Confidential Information.  Each employee, consultant, and contractor that has had access to Confidential Information that is necessary for the conduct of the GIM’ business as currently conducted or as currently proposed to be conducted has executed an agreement to maintain the confidentiality of such Confidential Information and has executed appropriate agreements that are substantially consistent with GIM’ standard forms thereof.  Except under confidentiality obligations, there has been no material disclosure of any of the Confidential Information of GIM to any third party.

	
  

	
11.

	
Litigation.  There are no pending actions, suits, or proceedings against or affecting GIM, or any of its properties; and to Seller’s Knowledge, no such actions, suits, or proceedings are threatened or contemplated.

	
  

	
12.

	
Financial Statements.  The financial statements of GIM present fairly, in all material respects, the consolidated financial position of GIM as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (except as may be disclosed therein or in the notes thereto).  Except as set forth in the financial statements described in Exhibit “D”, GIM has not incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business and consistent (as to amount and nature) with past practices
since the date of such financial statements, individually or in the aggregate, that have or could reasonably be expected to have a Material Adverse Effect.

	
  

	
13.

	
Insurance Coverage.  To Seller’s Knowledge, GIM maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by GIM, and Seller reasonably believes such insurance coverage to be adequate against all liabilities, claims, and risks against which it is customary for comparably situated companies to insure.

	
  

	
14.

	
Brokers and Finders.  No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest, or claim against or upon Seller, GIM, or Buyer for any commission, fee, or other compensation pursuant to any agreement, arrangement, or understanding entered into by or on behalf of Seller.

	
  

	
15.

	
Questionable Payments.  GIM, to Seller’s Knowledge, any of their respective current or former stockholders, directors, officers, employees, agents, or other Persons acting on behalf of GIM, on behalf of GIM or in connection with their respective businesses, has not: (a) used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of GIM; or (e) made any unlawful bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment of any nature.

  

  

  

	
  

	
16.

	
Transactions with Affiliates.  None of the officers or directors of GIM and, to Seller’s Knowledge, none of the employees of GIM is presently a party to any transaction with GIM (other than as holders of stock options and/or warrants, and for services as employees, officers, and directors), including any contract, agreement, or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director, or such employee or, to Seller’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, or partner.

	
  

	
17.

	
Internal Controls.  GIM maintains a system of internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (c) access to assets is permitted only in accordance with management’s general or specific authorization, and (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

	
  

	
18.

	
Disclosures.  This Agreement, including all exhibits and schedules thereto, does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

	
  

	
B:

	
SURVIVAL AND INDEMNIFICATION

	
  

	
1.

	
Survival.  All representations, warranties, covenants, and agreements contained in this Agreement shall be deemed to be representations, warranties, covenants, and agreements as of the date hereof and shall survive the execution and delivery of this Agreement for a period of three years from the date of this Agreement.

	
  

	
2.

	
Indemnification.  The Seller agrees to indemnify and hold harmless, on an after-insurance recovery basis, the Buyer and its Affiliates and their respective directors, officers, employees, and agents from and against any and all losses, claims, damages, liabilities, and expenses (including reasonable attorney fees, disbursements, and other expenses incurred in connection with investigating, preparing, or defending any action, claim, or proceeding, pending or threatened, and the costs of enforcement hereof) to which the Buyer may become subject to as a result of any breach of representation, warranty, covenant, or agreement made by the Seller under this Agreement, and will reimburse the Buyer for all such amounts as they are
incurred by the Buyer.

 

 

  

  

  

	
  

	
3.

	
Conduct of Indemnification Proceedings.  Promptly after receipt by the Buyer or its Affiliates and their respective directors, officers, employees, and agents (the “Indemnified Person”) of notice of any demand, claim, or circumstances that would or might give rise to a claim or the commencement of any action, proceeding, or investigation in respect of which indemnity may be sought pursuant to this Agreement, such Indemnified Person shall promptly notify the Seller (the “Indemnifying Party”) in writing and Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses;
provided, however, that the failure of any Indemnified Person so to notify Indemnifying Party shall not relieve Indemnifying Party of its obligations hereunder except to the extent that Indemnifying Party is materially prejudiced by such failure to notify.  In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (a) Indemnifying Party and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (b) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, Indemnifying Party shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, Indemnifying Party shall not affect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding.

Initials:

Seller                      /s/ Clarita Ablazo Jeffery

Buyer                      /s/ Bala Balamurali

  

  

  

EXHIBIT "C"

DOCUMENTS FOR REVIEW

	
  

	
1.

	
GIM’s Financial/Accounting and Operating Statements (Profit & Loss, Balance sheets etc.) for the two financial years immediately preceding the Effective Date;

	
  

	
2.

	
Corporate Articles of Incorporation of the GIM;

	
  

	
3.

	
Corporate By-laws of the GIM.

Initials:

Seller                      /s/ Clarita Ablazo Jeffery

Buyer                      /s/ Bala Balamurali

  

  

  

EXHIBIT "D"

CONDITIONS PRECEDENT

- None -

Initials:

Seller                      /s/ Clarita Ablazo Jeffery

Buyer                      /s/ Bala Balamurali

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