CONSULTING AGREEMENT
Exhibit 15.1
This
Agreement ("Agreement") is made this 10th day of October, 2008 by and between
American Real Estate Assets, Inc., a Delaware corporation having its principal
office at 000 Xxxxx Xxxxx Xx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000 (hereinafter
referred to as "Company"), and Xxxxx and Xxxxxxxxx Xxxx as
Co-Trustees of the Wise Family Trust dated June 14, 1995, J. Xxxxx
Xxxxxxxx, and Xxxxx Xxxxx ("Controlling Shareholders") and Going Public, LLC
having its principal office at 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, XX
00000 (hereinafter referred to as "Consultant").
In
consideration of the mutual promises contained herein and on the terms and
conditions hereinafter set forth, the Company, Controlling Shareholders,
and Consultant (collectively, the "Parties") agree as follows:
1.
Services.
1.1.
Consultant shall prepare all corporate document preparation necessary to achieve
a quote listing on the OTC Bulletin Board ("OTCBB"), including corporate
structuring, a custom private placement memorandum (PPM) under Rule 506 of
Regulation 0, Form D filings, U2 filings, filing the S1 registration, blue sky
filings, answering all comments and causing a market maker to file the Form 211,
thus ultimately achieving a quote by such market maker on behalf of the Company.
This does not include business plan preparation, corporation formation, state
blue sky fees (if applicable) or financial audit preparation. However, all legal
costs and opinions shall be provided at Consultant's expense.
1.2. Introductions
to additional Market Makers.
1.3. Introductions
to Investor Awareness (see paragraph 1.11, below) and Investor Relation
firms.
1.4. Introductions
to Broker Dealers, Investment Bankers and Underwriters.
1.5. Introductions
to SEC attorneys, PCAOB auditors and other specialized consultants
as needed.
1.6.
Review of and consultation regarding terms, structure, and contracts
submitted to Company by any of the above introductions, and review of and
consultation regarding terms submitted by similar professionals whether or not
introduced by Consultant.
1.7.
General consulting assistance in securing relationships with all of the above as
needed.
1.8. General
consulting assistance in structuring and developing the Company and
its business
plan for future growth and stability.
1.9.
In addition to the other services provided, Consultant hereby agrees to hire an
investor awareness company, for a non-invasive investor awareness campaign,
including, but not limited to, creation of a professional full-page company
profile, such profile to be featured on a high-traffic small cap stock website
with a guarantee of a minimum of 500,000 targeted, non-invasive, full-page
profile visits. In addition, Consultant may include Company on other stock
profile website(s) at our discretion. Other services may be provided by other
promotional companies in addition to those discussed here, including but not
limited to press release re-distribution at Consultant's discretion without
notice. Such investor awareness campaign is non-transferable. The obligation of
Consultant as per this Paragraph will not be due Company until Company is
publicly traded and until Consultant, or it's designees have full unencumbered
possession of the equity position discussed in paragraph 2, below, and after
such shares are free trading.
2.
Compensation.
2.1.
Cash
Fee. FOR VALUE RECEIVED, Company and its Controlling Shareholders hereby
agrees to pay a consultation fee of ONE HUNDRED THOUSAND AND NO/100 DOLLARS US
($100,000.00) as per the Addendum attached hereto as Schedule A (the "Cash Fee")
to Consultant for services as described in paragraph 1, herein. This Agreement
shall become effective upon the signature execution by all parties.
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2.1.1.
All Other Payment Provisions. All payments of the Cash Fee and interest
hereunder shall be payable to Consultant in lawful money of the United States of
America in immediately available funds. All delivery of payments shall be made
at the offices of Consultant, or at such other place as Consultant may designate
in writing. All payments shall be made via bank wire transmission as per the
following bank wire instructions:
Xxxxx
Fargo Bank
Dallas,
Texas
Routing
#000000000
Account
#2883986941
Account
Name: Going Public, LLC
2.2.
Consultant's Equity Position. In
addition to the Cash Fee set forth in paragraph 2.1, above, Company
understands and agrees that Consultant and/or Consultant's designees, are due
and shall be issued an equity position by Company that shall equal THIRTEEN
PERCENT (13%) of the total outstanding Company common stock post private
offering ("Equity Position").
2.2.1.
The Company and its Controlling Shareholders agree to execute a corporate
resolution issuing shares of its common stock to Consultant pursuant to section
2.2, above regarding the Equity Position immediately upon request by
Consultant.
2.3.
Introductions. In the event that the Consultant introduces the Company, directly
or indirectly, to a financing source or another third party which assists the
Company in the process of going public and/or receives financing then the
Consultant will receive the same cash and equity Compensation as set forth in
this Agreement at such time as the Company is approved to trade or receives the
financing.
3. No Cancellation Policy/Cash
Fee Due In Full/Breach and Default. All Compensation is earned upon
execution of this Agreement. As such, the Company and Controlling Shareholders
expressly understand and agree that there are no cancellations and/or refunds of
any kind, in part or full, even if the services described herein are incomplete
due to, among other things, the Company or Controlling Shareholders simply
changing their minds or otherwise failing to go public due to their own actions
or inactions and/or omissions or failures to provide Consultant with the
necessary documentation or information requested by Consultant or failures to
cooperate with Consultant's directives and/or breach this Agreement. The
following events, actions, inactions, or omissions, among others, are breaches
of this Agreement by Company and/or Controlling Shareholder:
4. Services Not
Included.
4.1. This
Consulting Agreement does not cover any of your legal cost if you decide
to have
your own attorney review Consultant's and Consultant's attorney's
work.
4.2.
This Consulting Agreement does not cover any of your exchange listing fees, if
applicable, audited financial costs, blue sky fees, transfer agent fees,
corporate restructuring, corporation formation, online PPM hosting, quarterly
reports and other filing fees, and other related ongoing costs associated with
being a publicly traded company.
4.3. General
bookkeeping is not included in Consultant's services. Client must have
up-to-date
accounting books and they must be in good order.
4.4. Travel
expenses related to on-site visits to complete Company's financial reports,
including but not limited to airfare and lodging, if applicable.
5.
No course
of dealing between Consultant and Company or any failure or delay on the part of
Consultant in exercising any rights or remedies hereunder shall operate as a
waiver of any rights or remedies of Consultant under this or any other
applicable instrument. No single or partial exercise of any rights or remedies
hereunder shall operate as a waiver or preclude the exercise of any other rights
or remedies hereunder.
6. Indemnification. Each
of the Parties to this Agreement hereby agree to protect, indemnify, defend
and hold harmless the other Party and its affiliated persons or entities from
any loss, liability, claim, damage, expense (including costs of investigation
and defense and reasonable attorneys' fees and
expenses) arising out of or in connection with a third-party claim of any kind
against the other Party or its affiliated persons or entities concerning any
transaction in which other Party participates as a result of or relating in any
way to this Agreement. Notwithstanding the foregoing, Company agrees to
indemnify and defend Consultant on any third-party claim arising from any act by
Consultant undertaken in good faith in accordance with the terms of this
Agreement.
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7. Liability. In no
event shall Consultant or its affiliated persons or entities be liable to
Company or its affiliated persons or entities for any special, consequential,
indirect, incidental or punitive damages or lost profits, however caused and on
any theory of liability (including negligence and strict liability) arising in
any way out of this Agreement, whether or not Consultant or Company has been
advised of the possibility of such damages.
8. Attorney Fees. In
any litigation or other proceeding by which one party either seeks to
enforce its rights under this Agreement (whether in contract, tort, or both) or
seeks a declaration of any rights or obligations under this Agreement, the
prevailing party shall be entitled to recover from the other party all actual
attorney's fees, expenses, and costs incurred in good faith by the prevailing
party. The term "prevailing party" shall include any party who engages counsel
and subsequently obtains substantially the result sought, whether by compromise,
settlement, or judgment.
9. Other Activities. The
Company recognizes that Consultant now renders and may continue to render
management and other services to other companies, which may or may not have
policies and conduct activities similar to those of the Company. Consultant
shall be free to render such advice and other services and the Company hereby
consents thereto. Consultant shall not be required to devote its full time and
attention to the performance of its duties under this Agreement, but shall
devote only so much of its time and attention as it deems reasonable or
necessary for such purposes, and shall have no obligation to procure or generate
a minimum amount of business, revenues, trading volume, or share price increase
for Company or its affiliated entities or persons.
10. Duties and
Obligations.
10.1.
It is important that Company and Controlling Shareholders cooperate fully and
timely with Consultant so
as to enable Consultant to perform its services. As such, requests for due
diligence documents and
information will typically be made via email from an employee, agent,
consultant, or attorney of
Consultant. Company and Controlling Shareholders agree to provide general due
diligence documents requested and information to Consultant promptly, but no
later than 20 days from the receipt of request.
10.2.
Should Consultant introduce Company to financial firms, Company will act
diligently and promptly in reviewing materials submitted to it, and will forward
copies of any such materials to Consultant for its review.
10.3.
Company shall retain a PCAOB registered auditor for the purpose of
completing an audit of its financials no later than 10 calendar days from the
date of this Agreement. Company shall complete such audit of its financials no
later than two (2) months from the date of this Agreement.
10.4.
If additional shareholders are required to bring total to at least 35, Company
agrees to complete a private offering through a Private Placement Memorandum
("PPM") under Regulation D Rule 506 in
which the Company sells shares of its stack to investors ("Private
Offering"). Company agrees to complete the Private Offering no later than 60
days from the date of this Agreement. The amount of funds to be raised and the
price per share can be determined by the Company, but Company agrees to a
minimum investment of 5,000 shares at a minimum of four cents (8.04) per share
($200 investment) and shall sell to enough investors to bring the total
shareholders up to 35 or more Real consideration must be received from each
investor. Company shall familiarize themselves with the rules of the Regulation
D
Rule 506 Offering, which are set forth in the PPM. Company must keep
careful records of all checks, subscription agreements, etc. for all
investors. If any of the investors are United States shareholders,
simultaneously with the offering, state securities filings must be undertaken in
each state in which the offering is being sold to, which Consultant will file
for Company (fee must be paid separately by Company for each state where
investor lives). It is Company's responsibility to immediately notify of and pay
Consultant for each new state where the Rule 506 offering has been sold upon
receipt of payment and subscription
agreement from investor so that Consultant can file and pay the appropriate
state blue sky fees, on behalf
of Company.
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10.5.
Company will immediately give written notice to Consultant of any change in the
Company's financial condition, or in the nature of its business or operations
which had or might have an adverse effect on its operations, assets, properties
or prospects of its business. Company will also inform Consultant of any outside
parties that are a potential investment, funding, merger or acquisition
candidates and forward copies of any such materials to Consultant for its
review. Company will give full disclosure of all material facts concerning
Company to Consultant and up date such information on a timely
basis.
10.6.
Company shall remain current on all billed items, if applicable.
10.7.
Company shall be required to remit a deposit to Consultant for the private
offering's Blue Sky Fees, if applicable. Any of the funds not needed to pay blue
sky fees shall be returned to Company promptly.
10.8. The
Company and Controlling Shareholders hereby agree that Company will pay all
compensation due Consultant under the provisions of this Agreement, immediately
when due
11. Representations and
Warranties of Comnany and its Controlling Shareholders. The Company and
its Controlling Shareholders hereby represents and warrants to Consultant as
follows:
11.1. The
Company and its Controlling Shareholders have full power and authority to
execute
this Agreement and to perform all of its obligations hereunder.
11.2.
Since October 9, 2008, there has been no material adverse change and no material
adverse development in the assets, liabilities, business, properties,
operations, financial condition, results of operations or prospects of the
Company or any of its Subsidiaries.
11.3.
This Agreement has been duly executed by all duly authorized Controlling
Shareholders and the Company and is a legal and binding agreement of Company
enforceable against Controlling Shareholders and Company in accordance with its
terms.
11.4.
Neither the Company, nor any of its controlling shareholders have been convicted
of any felony and/or any state or federal securities infractions whatsoever that
have not been already disclosed to and received by Consultant in
writing.
11.5.
The business and operations of Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of all authorities which affect the Company or its properties, assets,
businesses or prospects. The performance of this Agreement shall not result in
any breach of, or constitute a default under, or result in the imposition of any
lien or encumbrance upon any property of Company or cause acceleration under any
arrangement, agreement or other instrument to which Company is a party or by
which any of its assets are bound. Company has performed in all respects all of
its obligations which are, as
of the date of this Agreement, required to be performed by it pursuant to
the terms of any such agreement, contract or commitment.
11.6. Company
is a legitimate operating company and is going public in an effort to
enhance
its business and growth plan.
11.7.
The due diligence questionnaire attached hereto and entitled "Schedule 13—
Confidential Due Diligence Form", has been duly executed by an authorized
Controlling Shareholder who has the full power and authority to execute such
attestation, and hereby attests to its accuracy and completeness.
12. Representations and
Warranties of Consultant. The Consultant hereby represents and warrants
to Company as follows:
12.1.
So long as Company and its Controlling Shareholders cooperate with Consultant
throughout the process, and have not withheld information described in paragraph
14,4 herein, Consultant will be successful in taking Company public.
12.2. Consultant
is (i) an "accredited investor" within the meaning of Rule 501 of Regulation
D under the Securities Act, (ii) experienced in making investments of the kind
contemplated by this
Agreement/Note, (iii) capable, by reason of its business and financial
experience, of evaluating the relative merits and risks of an investment in the
Securities, and (iv) able to afford the loss of its investment in the
Securities.
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12.3. Consultant is
purchasing the Note Payable and the Common Stock issuable upon conversion or
redemption of the principal amount due Consultant (the "Conversion Shares" and, collectively
with the Note, the "Securities") for its own account, for
investment purposes only and not with a view towards or in connection with the
public sale or distribution thereof in violation of the Securities
Act.
12.4.
Consultant understands that the Securities are being offered and sold by the
Company in reliance on an exemption from the registration requirements of the
Securities Act and equivalent state securities and "blue sky" laws, and that the
Company is relying upon the accuracy of, and Consultant's compliance with,
Consultant's representations, warranties and covenants set forth in this Note to
determine the availability of such exemption and the eligibility of Consultant
to purchase the Securities;
12.5.
Consultant understands that the Securities have not been approved or disapproved
by the Securities and Exchange Commission (the "Commission") or any state or
provincial securities commission
13.
Miscellaneous.
13.1.
Company understands that, although Consultant's services may include general
advice and consultation regarding general legal topics relating to the
consulting services to be rendered, particularly with respect to areas of
financial expertise of Consultant, the services rendered by Consultant do not
include the rendition of professional legal services or any specific legal
service, advice or consultation by Consultant or its employees.
13.2.
Company understands that Consultant is not an underwriter or broker dealer and
that it performs no underwriting function. Company further understands that
Consultant's only function with relation to any potential funding is as an
introducing party. If introductions to funding sources are made to Company by
Consultant, Company understands and agrees that it is the Company's
responsibility to have its own independent counsel review all potential funding
terms, documents and agreements submitted to Company from funding sources and
that Consultant shall not be held responsible in any way for any terms of the
agreements, actions, inactions, performance or lack thereof, or possible
wrongdoings of the funding sources or other introductions it makes to
Company.
13.3.
Company understands that there are significant ongoing fees and costs related to
a listing on the OTC Bulletin Board ("OTCBB"), American Stock Exchange ("AMEX"),
or the NASDAQ stock exchange ("NASDAQ"), including but not limited to exchange
filing fees (AMEX and NASDAQ), audited financials, periodic SEC filings,
requirements of the Xxxxxxxx-Xxxxx Act and other increased legal, listing, and
accounting fees related to trading on the OTCBB, AMEX, or NASDAQ.
14.
Non-Circumvention and
Non-Compete.
14.1.
Company hereby irrevocably agrees not to circumvent, avoid, bypass, or otherwise
obviate Consultant or any of Consultant's associates, with
regard to introductions made to Company by Consultant directly or
indirectly, to avoid payment of fees in any transaction with any corporation,
partnership, or individuals, revealed by Consultant to Company (excluding those
previously known to Company), in conjunction with any project, transaction, or
loans, investments, collateral, or funding. Company acknowledges and agrees that
all introductions effected by Consultant are the proprietary property of
Consultant and integral to its income. Company further agrees not to disclose or
otherwise reveal, to any third party, any introductions or other confidential
information provided by Consultant, particularly that concerning registered
broker dealers, underwriters, investment bankers, fund managers or other funding
sources, market makers, investor relations firms, SEC attorneys, SEC
accountants, and other consultant's names, addresses, telex/fax/telephone
numbers or other means of access thereto, including bank information, codes or
references and/or such information, provided to Company by Consultant on a confidential or privileged
basis, without the specific, formal and written consent of
Consultant. Any and all names, addresses, telex/fax/telephone numbers, bank
information, codes or references provided shall be presumed to be confidential
and shared on a need to know basis' only with those
subject to a like non-circumvention non-disclosure agreement except where
otherwise agreed to in writing or required by law.
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14.2.
The Parties further irrevocably covenant and agree not to solicit, encourage, or
otherwise advise, divert, or otherwise interfere, directly or indirectly, any
associates of the other Party, including but not limited to employees, agents or
independent contractors, to terminate their employment and/or to cease any agent
or independent contractor relationship with the other Party for a period of
Three Hundred and Sixty Five (365) consecutive days following the termination of
this Agreement
15. Piggy-Back Registration
Rights. Company agrees that if it proposes to register its stock or other
securities wider the Securities Act of 1933, as amended (the "Securities Act"),
including a registration effected by the Company for shareholders, the Company
shall, at such time, promptly give Consultant written notice of such
registration, if Consultant or its designees hold shares of restricted stock.
Upon the written request of Consultant given within twenty (20) days after
mailing of such notice buy the Company, the Company shall cause to register
under the Securities Act, at Company's expense, all restricted shares of the
Consultant, or Consultant's designees or transferees, requested by the
Consultant to be registered.
16. Dilution of Consultant by
Reverse Split with Subsequent Issuance of Stock. Company agrees that it
will not cause Consultant to suffer any dilution of its percentage ownership of
Company's shares as
a result of any restructuring of the Company's stock through reverse
share split corresponding or followed with a share issuance. Should Company
conduct a reverse share split and corresponding or following issuance of shares,
Consultant will be issued shares so as not to cause Consultant to suffer any
dilution of its percentage ownership.
17. Notice. Any notice
required or permitted to be given under this Guaranty shall be in writing and
shall be deemed to have been given either (a) upon actual receipt or three (3) days after
deposit in the United States mail, registered or certified mail, postage
prepaid, return receipt requested; (b) upon actual receipt if sent via reputable
overnight courier or by personal delivery; or (c) upon confirmation of
telefacsimile or e-mail transmission, if sent via telefacsimile and/or e-mail.
All notices shall be addressed as follows (or sent to the following fax
numbers):
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If
to Consultant: Going Public, LLC
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Going
Public, LLC
00000
Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxx Xxxxxxx
Telephone:
000-000-0000
Facsimile:
000-000-0000
E-mail: xxxx@xxxxxxxxxxxx.xxx
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If
to Company or Controlling Shareholders:
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American
Real Estate Assets, Inc.
000
Xxxxx Xxxxx Xx, Xxxxx 000
Xxxxxx
Xxxxx, XX 00000
Attention:
Xxxxxxxxx Xxxx, CEO
Telephone:
000-000-0000 (x201)
Facsimile:
000-000-0000
Email: XxXxxx@xxxxxxxxx.xxx
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18. Confidentiality.
Company and Controlling Shareholders agree not to directly or indirectly
disclose to any other person or entity any of the terms of this Consulting
Agreement ("Terms"). Company hereby agrees to safeguard such Terms at all times
so that they are not exposed to, or taken by, any unauthorized person. If it
should become necessary to disclose the relationship created by this Agreement,
then such disclosure shall not include the Terms of compensation, unless
required by law. It is understood that, with regard to possible Funding
introduced to Company by Consultant, if applicable, Consultant, at its
discretion, may make one or more public announcements of the terms and specifics
of Funding secured for the Company, and such announcement may include, but shall
not be limited to, the amount of
the Funding agreement, the type and specifics of Funding, the relationship
between Consultant and Company, the name of the Funding Source and the name of
the Company.
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19. Termination and
Survival.
19.1.
This Agreement will become effective ("Effective Date") upon Consultant's
receipt of fully executed contract, and will terminate two years from the date
of this Agreement, or upon fulfilling all services described in Paragraph 1,
herein, whichever occurs first.
19.2. The
terms and conditions of paragraphs 2 through and including all paragraphs
prior to
this section shall survive termination of this Agreement.
20. General
Provisions.
20.1. Headings. The
headings in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement,
20.2.
Severability.
If a court of competent jurisdiction holds any provision of this
Agreement to be illegal, unenforceable, or invalid in whole or in part for any
reason, the validity and enforceability of the remaining provisions, or portions
of them, will not be affected.
20.3.
Relationship of
Parties. Nothing in this Agreement shall be deemed or construed by the
parties or any third party as creating the relationship of principal and agent,
partnership or joint venture between the parties.
20.4.
Entire
Agreement. This Agreement constitutes the entire agreement between the
Parties pertaining to the subject matter of this Agreement, and any and all
other written or oral agreements existing between the Parties before the
Effective Date of this Agreement with respect to the subject matter of this
Agreement are expressly cancelled.
20.5.
Modification of
Agreement. This Agreement may be supplemented, amended, or modified only
by the mutual agreement of the Parties. No supplement, amendment, or
modification of this Agreement shall be binding unless it is in writing and
signed by all Parties.
20.6.
Binding Effect.
Subject to any restrictions on assignment contained in this Agreement,
this Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective heirs, representatives, successors, and
assigns.
20.7.
Nonwaiver.
Any failure by any Party to enforce any part of this Agreement shall not
be deemed a waiver by such Party of its right to enforce this Agreement
according to its terms and applicable law. No waiver of any breach, failure of
any condition, or any right or remedy contained in or granted by the provisions
of this Agreement shall be effective unless it is in writing and signed by the
party waiving the breach, failure, right, or remedy. No waiver of any breach,
failure, right, or remedy shall be deemed a waiver of any other breach, failure,
right, or remedy, whether or not similar, nor shall any waiver constitute a
continuing waiver unless the writing so specifies.
20.8.
No Assignment.
Neither Party to this Agreement may assign any of its rights or delegate
any of its duties under this Agreement without the prior written consent of the
other party to this Agreement, which consent may not be unreasonably
withheld.
20.9.
Counterparts.
This Agreement may be executed in several counterparts, all of which
taken together shall constitute one instrument. A signature of a party delivered
by telecopy or other electronic communication shall constitute an original
signature of such party.
20.10.
Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, excluding its conflict of laws rules, The
Parties agree that a substantial amount of services under the Agreement will be
performed in San Diego County, and hereby exclusively agree and submit to, and
waive any objection to, jurisdiction and venue in the Superior Court for the
County of San Diego, California, for the purposes of any proceedings or
litigation arising out of or relating to this Agreement. The Parties also agree
that the provisions for Notice herein shall also be used for and be sufficient
for service of process for any papers related to any legal proceeding commenced
with respect to this Agreement.
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[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the undersigned has caused this Consulting Agreement to be
executed on the day and year first above written.
American
Real Estate Assets, Inc.
By /s/
Xxxxxxxxx
Xxxx
Xxxxxxxxx
Xxxx, Its CEO
And;
/s/Xxxxx
and Xxxxxxxxx
Xxxx
Xxxxx and
Xxxxxxxxx Xxxx as Co-Trustee of the Wise Family Trust dated June 14, 1995
individually
/s/
J Xxxxx
Rochform
J. Xxxxx
Xxxxxxxx, individual
/s/
Xxxxx
Xxxxx
Xxxxx
Xxxxx, individual
Consultant
/s/
Xxxxxx X.
Xxxx
Xxxxxx X.
Xxxx
Member
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Schedule
A
ADDENDUM
TO CONSULTING AGREEMENT
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1)
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This
Agreement, signed this 10th day of October, 2008 is an addendum to the
Consulting Agreement signed by Xxxxx and Xxxxxxxxx Xxxx as Co-Trustees of
the Wise Family Trust dated June 14, 1995, J. Xxxxx Xxxxxxxx, and Xxxxx
Xxxxx ("Controlling Shareholders") whereby Going Public, LLC
("Consultant") will convert American Real Estate Assets, Inc. (the
"Company") to a publicly traded entity and whereby Consultant has agreed
to a payment plan to Company and its Controlling Shareholders for payment
for Consultant's services.
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2)
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Payment Schedule. The Cash Fee of
$100,000.00 is to be paid to Consultant, as follows: $0 is to be paid upon
execution of this Addendum and the Consulting Agreement, executed
concurrently herewith, and; pursuant to the Secured Note also executed
concurrently herewith, $100,000.00 (the "Note") is to be paid via wire
transmission on or before July 1, 2009 (the "Maturity
Date").
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3)
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Interest,
Payments. Until the Nate is paid in full, interest shall be paid by
Company to Consultant monthly at the rate of ONE PERCENT (1%) of the
outstanding Note per calendar month ("Interest") starting the month
following the date of the Consulting Agreement and then each month
thereafter on the same day of each month ("due date") until the Cash Fee
is paid in full.
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4)
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All Other Payment
Provisions. All payments of the Cash Fee and interest hereunder
shall be payable to Consultant in lawful money of the United States of
America in immediately available funds. All delivery of payments shall be
made at the offices of Consultant, or at such other place as Consultant
may designate in writing, not later than 3 p.m. on the Maturity Date,
without offset. Any payment coming due on a day which is not a Business
Day, shall be made on the next succeeding Business Day, and any such
extension of the time of payment shall be included in the computation of
interest payments. All payments shall be made via bank wire transmission
as per the following bank wire
instructions:
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5)
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Security Interest in
Company Assets. For valuable consideration, UNTIL COMPANY IS
APPROVED TO TRADE ON THE OVER-THE-COUNTER BULLETIN BOARD, Company hereby
grants a fully perfected security interest in all of its real property and
tangible and intangible property assets to Consultant until the Cash Fee
and all interest thereon is paid in full. Consultant is hereby entitled to
and authorized to record a UCC-1 financing statement as to all of
the tangible and intangible personal property assets of Company and
a deed of trust or lien on any real property owned by the Company. Company
shall execute whatever documentation is necessary to effectuate these
security interests. Once Company is approved to trade on the
over-the-counter bulletin board, Company shall be forever released from
the security interests granted to Consultant in the Company's real
property and
tangible and intangible
property.
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6)
|
Escrow Shares.
Pursuant to the
Escrow Agreement executed concurrently herewith and attached as
Exhibit "1" hereto, the Controlling Shareholders hereby agree to transfer
a controlling interest of shares of the Company's common stock (including
any subsequent forward or reverse splits and/or dividends) with signature
medallion guaranteed stock powers ("Controlling Interest") to be held in
escrow by Xxxxxx & LLP in the name of Controlling Shareholders
("Escrow Shares") until the Note and all interest, as described herein, is
paid in full (the "Restriction Period"). During the Restriction Period,
Controlling Shareholders will retain voting rights, but agree that the
Escrow Shares shall not be traded. Upon the Note being paid including all
interest, the Restriction Period shall end, and the Escrow Shares shall be
immediately delivered to the Controlling Shareholders. Once Company is
approved to trade on the OTC bulletin board, in the event that the Company
defaults under the terms of the Consulting Agreement, the Consultant shall
immediately notify the Escrow Agent, Company and Controlling Shareholders
in writing of such default. In the event that the default is not remedied
within ten (10) business days of the receipt of the notice of default, the
Escrow Agent shall be authorized to immediately release the Escrow Shares
to the Consultant without prior approval from the Company or the
Controlling Shareholder. In such a case, once the Escrow Shares are
released to Consultant, Company shall forever be released from the
security interests granted to Consultant in Company's real property and
tangible and intangible personal
property.
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7)
|
UCC Filings.
All appropriate UCC filings shall be made to secure the
consultation fee as outlined
above. In addition, Company and Controlling Shareholders shall sign
a Secured Note, upon default.
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|
8)
|
Modification.
The terms of this Addendum can be modified, changed, extended at
any time by mutual agreement in
writing.
|
[SIGNATURE
PAGE FOLLOWS]
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Schedule
A
ADDENDUM
TO CONSULTING AGREEMENT
IN
WITNESS WHEREOF, the undersigned has caused this Addendum to Consulting
Agreement to be executed on the day and year first above written.
CONTROLLING
SHAREHOLDER:
By /s/
Xxxxxxxxx
Xxxx
Xxxxxxxxx
Xxxx, Its CEO
CONTROLLING
SHAREHOLDER:
/s/Xxxxx
and Xxxxxxxxx
Xxxx
Xxxxx and
Xxxxxxxxx Xxxx as Co-Trustee of the Wise Family Trust dated June 14, 1995
CONTROLLING
SHAREHOLDER:
/s/
J Xxxxx
Rochform
J. Xxxxx
Xxxxxxxx, Secretary
Consultant
/s/
Xxxxxx X.
Xxxx
Xxxxxx X.
Xxxx
Member
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