Common use of Subordinated Distribution Clause in Contracts

Subordinated Distribution. i. After Stockholders have received Dividends in an amount equal to the Invested Capital plus an 8% Return, the Advisor is entitled to receive a cash distribution equal to 10.0% of the remaining net sales proceeds from the Sale of Investments. The Advisor shall not be entitled to such distributions if a Listing occurs or upon the termination of this Agreement. ii. Upon the termination of this Agreement, the Advisor shall not be entitled to Subordinated Disposition Fees. If a Listing has not occurred as of the date of the termination of this Agreement and the Advisor was not terminated for Cause, the Advisor shall receive a distribution, in the form of (A) Shares, (B) a promissory note with market terms, payable solely from the proceeds of Sales of Investments, due and payable no later than three years from the date of issuance of such promissory note, or (C) any combination thereof, equal to 10.0% of the amount by which (A) the appraised value of the Company’s assets on the date of termination of this Agreement, less any indebtedness secured by such assets, plus total Dividends made through the date of the termination of this Agreement, exceeds (B) the Remaining Capital and an amount that, if distributed to the Stockholders as of the termination of this Agreement, would have provided them an annual 8% Return. In the event that a promissory note is issued hereunder and such promissory note has not been paid in full out of the proceeds of the Company’s Sales of Investments following the three-year term of the promissory note, the outstanding balance of such promissory note may, at the Advisor’s election, be converted into Shares, with the number of Shares to be determined based on the fair market value of the Shares upon issuance as determined by the Board including a majority of Independent Directors. In the event the Advisor receives Shares and the Company’s Shares are not listed on a national securities exchange, at the election of the Advisor, the Advisor and the Company shall enter into an agreement whereby the Company shall register the resale of such Shares with the SEC. iii. On the Listing Date, the Advisor shall not be entitled to Subordinated Disposition Fees. If the Advisor has not been terminated under this Agreement as of the Listing Date, the Advisor shall receive a distribution, in the form of (A) Shares, (B) a promissory note with market terms, payable solely from the proceeds of Sales of Investments, due and payable no later than three years from the date of issuance of such promissory note, or (C) any combination thereof, equal to 10.0% of the amount by which (A) the market value of the Company’s outstanding Shares plus Dividends made prior to Listing, exceeds (B) the Remaining Capital and an amount that, if distributed to the Stockholders as of the Listing Date, would have provided them an annual 8% Return. In the event a promissory note is issued hereunder and such promissory note has not been paid in full out of the proceeds of the Company’s Sales of Investments following the three-year term of the promissory note, the outstanding balance of such promissory note may, at the Advisor’s election, be converted into Shares, with the number of Shares to be determined based on the fair market value of the Shares upon issuance as determined by the Board including a majority of Independent Directors. In the event the Advisor receives Shares and the Company’s Shares are not listed on a national securities exchange, at the election of the Advisor, the Advisor and the Company shall enter into an agreement whereby the Company shall register the resale of such Shares with the SEC.