SECURED INCOME GROUP INC...2020/07/01 · THE SALE OF SECURED DEBENTURES COVERED BY THIS PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION

PRIVATE PLACEMENT MEMORANDUM SECURED INCOME GROUP, INC. $200,000,000

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Memorandum Number: ___________

SECURED INCOME GROUP INC. A California Corporation

PRIVATE PLACEMENT MEMORANDUM

SERIES C SECURED DEBENTURES

Maximum Offering Amount: $200,000,000

6 MONTH MATURITY AT 6.15% PER ANNUM





Minimum Investment Amount:

$10,000 (6 MONTH, 9 MONTH, 12 MONTH)

$25,000 (24 MONTH, 36 MONTH)

JUNE 1, 2020

Secured Income Group, Inc., (the “Company” or “SIG”) is a California corporation. The Company is

hereby offering (the “Offering”) by means of this private placement memorandum (the “Memorandum”)

a third series of Secured Debentures (“Series C Secured Debentures” or “Secured Debentures”) of up to

Two-Hundred Million Dollars ($200,000,000). The Offering shall be on an “as needed” basis to

accredited investors (See “Investor Suitability” below). The Company was formed with the purpose of

funding, financing, and originating loans (“Loans”) secured by real property located across the United

States with a primary focus in Southern California.


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Prospective investors who execute a subscription agreement will acquire Series C Secured Debentures

from the Company and will become a holder of the Series C Secured Debentures once the Company

deposits the Investor’s investment into the Company’s main operating account and subject to the terms

and conditions in this Private placement memorandum and Subscription Agreement. (See “The Offering”

below).

Prospective investors should understand and consider the income tax associated with investing in the

Series C Secured Debentures. (See “Income Tax Considerations” below.)

The Series C Secured Debentures shall be offered at varying interest rates and varying terms. (See Exhibit

C).

Debenture Term Interest Rate

6 months 6.15% per annum





This Offering shall be conducted on an ongoing and “best efforts” basis. The Offering will continue

subject to the sole and absolute discretion of the Company to shorten or extend the offering period. No

minimum offering amount has been set.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES

COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON

THE ADEQUACY OR ACCURACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY

REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS OFFERING IS

MADE IN RELIANCE ON AN EXEMPTION FROM REGISTRATION WITH THE SECURITIES

AND EXCHANGE COMMISSION PROVIDED BY SECTION 4(2) OF THE SECURITIES ACT OF

1933, AS AMENDED (THE “ACT”), RULE 506(C) OF REGULATION D, AND REGULATION S

PROMULGATED THEREUNDER.


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CERTAIN TERMS OF THE OFFERING

THIS PRIVATE PLACEMENT MEMORANDUM HAS BEEN PREPARED SOLELY FOR THE

BENEFIT OF AUTHORIZED PERSONS INTERESTED IN THE OFFERING. IT CONTAINS

CONFIDENTIAL INFORMATION AND MAY NOT BE DISCLOSED TO ANYONE OTHER THAN

AUTHORIZED PERSONS SUCH AS ACCOUNTANTS, FINANCIAL PLANNERS OR ATTORNEYS

RETAINED FOR THE PURPOSE OF RENDERING PROFESSIONAL ADVICE RELATED TO THE

PURCHASE OF SECURITIES OFFERED HEREIN. IT MAY NOT BE REPRODUCED, DIVULGED

OR USED FOR ANY OTHER PURPOSE UNLESS WRITTEN PERMISSION IS OBTAINED FROM

THE COMPANY. THIS PRIVATE PLACEMENT MEMORANDUM DOES NOT CONSTITUTE AN

OFFER OR SOLICITATION TO ANY PERSON EXCEPT THOSE PARTICULAR PERSONS WHO

SATISFY THE SUITABILITY STANDARDS DESCRIBED HEREIN.

THE SALE OF SECURED DEBENTURES COVERED BY THIS PRIVATE PLACEMENT

MEMORANDUM HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE

COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON

THE EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS SET FORTH IN SECTION

4(2) OF THE ACT AND RULE 506(C) OF REGULATION D AND REGULATION S THEREUNDER.

THESE SECURIITES HAVE NOT BEEN QUALIFIED OR REGISTERED IN ANY STATE IN

RELIANCE UPON THE EXEMPTIONS FROM SUCH QUALIFICATION OR REGISTRATION

UNDER STATE LAW. THESE SECURITIES ARE “RESTRICTED SECURITIES” AND MAY NOT

BE RESOLD OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT

COVERING DISPOSITION OF SUCH SECURED DEBENTURES IS THEN IN EFFECT OR AN

EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

THERE IS NO PUBLIC MARKET FOR THE SECURED DEBENTURES AND NONE IS EXPECTED

TO DEVELOP IN THE FUTURE.

NON-U.S. INVESTORS HAVE CERTAIN RESTRICTIONS ON RESALE AND HEDGING UNDER

REGULATION S OF THE ACT. DISTRIBUTIONS UNDER THIS OFFERING MIGHT RESULT IN

A TAX LIABILITY FOR THE NON-U.S. INVESTORS. EACH PROSPECTIVE INVESTOR IS

URGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR OR PENSION CONSULTANT TO

DETERMINE HIS, HER OR ITS TAX LIABILITY.

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY

INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THAT INFORMATION

AND THOSE REPRESENTATIONS SPECIFICALLY CONTAINED IN THIS PRIVATE

PLACEMENT MEMORANDUM; ANY OTHER INFORMATION OR REPRESENTATIONS

SHOULD NOT BE RELIED UPON. ANY PROSPECTIVE PURCHASER OF THE SECURED

DEBENTURES WHO RECEIVES ANY OTHER INFORMATION OR REPRESENTATIONS

SHOULD CONTACT THE COMPANY IMMEDIATELY TO DETERMINE THE ACCURACY OF

SUCH INFORMATION AND REPRESENTATIONS. NEITHER THE DELIVERY OF THIS

PRIVATE PLACEMENT MEMORANDUM NOR ANY SALES HEREUNDER SHALL, UNDER ANY

CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE

AFFAIRS OF THE COMPANY OR IN THE INFORMATION SET FORTH HEREIN SINCE THE

DATE OF THIS PRIVATE PLACEMENT MEMORANDUM SET FORTH ABOVE.

PROSPECTIVE PURCHASERS SHOULD NOT REGARD THE CONTENTS OF THIS PRIVATE

PLACEMENT MEMORANDUM OR ANY OTHER COMMUNICATION FROM THE COMPANY AS

A SUBSTITUTE FOR CAREFUL AND INDEPENDENT TAX AND FINANCIAL PLANNING.

EACH POTENTIAL INVESTOR IS ENCOURAGED TO CONSULT WITH HIS, HER OR ITS OWN


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INDEPENDENT LEGAL COUNSEL, ACCOUNTANT AND OTHER PROFESSIONALS WITH

RESPECT TO THE LEGAL AND TAX ASPECTS OF THIS INVESTMENT AND WITH SPECIFIC

REFERENCE TO HIS, HER OR ITS OWN TAX SITUATION, PRIOR TO SUBSCRIBING FOR THE

SECURED DEBENTURES.

THE PURCHASE OF SECURED DEBENTURES BY AN INDIVIDUAL RETIREMENT ACCOUNT,

KEOGH PLAN OR OTHER QUALIFIED RETIREMENT PLAN INVOLVES SPECIAL TAX RISKS

AND OTHER CONSIDERATIONS THAT SHOULD BE CAREFULLY CONSIDERED. INCOME

EARNED BY QUALIFIED PLANS AS A RESULT OF AN INVESTMENT IN THE COMPANY MAY

BE SUBJECT TO FEDERAL INCOME TAXES, EVEN THOUGH SUCH PLANS ARE OTHERWISE

TAX EXEMPT. (SEE “INCOME TAX CONSIDERATIONS” AND “ERISA CONSIDERATIONS.”)

THE SECURED DEBENTURES ARE OFFERED SUBJECT TO PRIOR SALE, ACCEPTANCE OF A

LOAN, AND TO WITHDRAWAL OR CANCELLATION OF THE OFFERING WITHOUT NOTICE.

THE COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTIONS IN WHOLE OR IN

PART FOR ANY OR NO REASON.

THE COMPANY WILL MAKE AVAILABLE TO ANY PROSPECTIVE INVESTOR AND HIS, HER

OR ITS ADVISORS THE OPPORTUNITY TO ASK QUESTIONS AND RECEIVE ANSWERS

CONCERNING THE TERMS AND CONDITIONS OF THE OFFERING, THE COMPANY OR ANY

OTHER RELEVANT MATTERS, AND TO OBTAIN ANY ADDITIONAL INFORMATION TO THE

EXTENT THAT THE COMPANY POSSESSES SUCH INFORMATION.

THE INFORMATION CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM HAS

BEEN SUPPLIED BY THE COMPANY. THIS PRIVATE PLACEMENT MEMORANDUM

CONTAINS SUMMARIES OF DOCUMENTS NOT CONTAINED IN THIS PRIVATE PLACEMENT

MEMORANDUM, BUT ALL SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY

REFERENCES TO THE ACTUAL DOCUMENTS. COPIES OF DOCUMENTS REFERRED TO IN

THIS PRIVATE PLACEMENT MEMORANDUM, BUT NOT INCLUDED AS AN EXHIBIT, WILL

BE MADE AVAILABLE TO QUALIFIED PROSPECTIVE INVESTORS UPON REQUEST.


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TABLE OF CONTENTS

CONTENTS

SUMMARY OF THE OFFERING....................................................................................................................... 1 FORWARD LOOKING STATEMENTS .............................................................................................................. 2 TERMS OF THE OFFERING .............................................................................................................................. 2 INVESTOR SUITABILITY ................................................................................................................................. 4

Investors: Minimum and Maximum Offering............................................................................. 5 How to Subscribe ........................................................................................................................ 6 Subscription Agreements ............................................................................................................ 6 Restrictions on Transfer .............................................................................................................. 6

EVIDENCE OF INDEBTEDNESS AND SECURITY INTEREST .................................................................... 7 USE OF PROCEEDS ........................................................................................................................................... 7

BUSINESS STRATEGY ............................................................................................................ 7 INVESTMENT STANDARDS AND POLICIES ................................................................................................ 8

Sale of Loans............................................................................................................................. 11 Borrowing/Hypothecation......................................................................................................... 11

COLLATERAL ASSIGNMENT OF SECURED LOAN PORTFOLIO ........................................................... 11 COMPENSATION ............................................................................................................................................. 12 OFFICERS AND DIRECTORS ......................................................................................................................... 13 RISK FACTORS ................................................................................................................................................ 13 INVESTMENT RISKS ....................................................................................................................................... 13

No Registration: Limited Governmental Review ..................................................................... 13

Limited Transferability of Interests .......................................................................................... 14 Size of the Offering ................................................................................................................... 14 Investors Not Independently Represented ................................................................................ 14

BUSINESS RISKS ............................................................................................................................................. 14 Reliance on Key Personnel ....................................................................................................... 14 Lack of Regulation .................................................................................................................... 15

Tax and ERISA Risks ............................................................................................................... 15 Possible Repeal of Usury Exemption ....................................................................................... 15

KEY PERSONNEL ............................................................................................................................................ 17 LEGAL PROCEEDINGS ................................................................................................................................... 17 INCOME TAX CONSIDERATIONS ................................................................................................................ 18

Federal Income Tax Aspects ..................................................................................................... 18 Tax Law Subject to Change ...................................................................................................... 18

State and Local Taxes ............................................................................................................... 18 ERISA CONSIDERATIONS ............................................................................................................................. 19 LEGAL MATTERS ............................................................................................................................................ 21 FINANCIAL INFORMATION .......................................................................................................................... 21 ADDITIONAL INFORMATION AND UNDERTAKINGS ............................................................................. 22 HOW TO SUBSCRIBE FOR A SECURED DEBENTURE ............................................................................. 23

EXHIBITS

Exhibit A How to Subscribe for a Secured Debenture

Exhibit B Subscription Agreement


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Exhibit C Form of Secured Debenture: Series C Secured Debenture

Exhibit D Security Agreement

Exhibit E Financial Information

Exhibit F Articles and Bylaws


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NASAA UNIFORM LEGEND

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN

EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS

OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES

HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION

OR REGULATORY AUTHORITY. FURTHERMORE, THE FORGOING AUTHORITIES HAVE

NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS

DOCUMENT. ANY REPRESENTION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE

AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT,

AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR

EXEMPTION THEREFROM. INVESTORS SHOULD BE MADE AWARE THAT THEY WILL BE

REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE

PERIOD OF TIME.

NOTICE REQUIREMENTS IN STATES WHERE SECURED DEBENTURES MAY BE SOLD

ARE AS FOLLOWS:

ALABAMA. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION

UNDER THE ALABAMA SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO

THESE SECURITIES HAS NOT BEEN FILED WITH THE ALABAMA SECURITIES

COMMISSION. THE COMMISSION DOES NOT RECOMMEND OR ENDORSE THE PURCHASE

OF ANY SECURITIES, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF

THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY

IS A CRIMINAL OFFENSE. THE PURCHASE PRICE OF THE INTEREST ACQUIRED BY A NON-

ACCREDITED INVESTOR RESIDING IN THE STATE OF ALABAMA MAY NOT EXCEED 20%

OF THE PURCHASER’S NET WORTH.

ALASKA. THE SECURITIES OFFERED HAVE BEEN REGISTERED WITH THE

ADMINISTRATOR OF SECURITIES OF THE STATE OF ALASKA UNDER PROVISIONS OF 3

AAC 08.500-3 AAC 08.506. THE INVESTOR IS ADVISED THAT THE ADMINSTRATOR HAS

MADE ONLY A CURSORY REVIEW OF THE REGISTRATION STATEMENT AND HAS NOT

REVIEWED THIS DOCUMENT SINCE THE DOCUMENT IS NOT REQUIRED TO BE FILED

WITH THE ADMINSTRATOR. THE FACT OF REGISTRATION DOES NOT MEAN THAT THE

ADMINISTRATOR HAS PASSED IN ANY WAY UPON THE MERITS, RECOMMENDED, OR

APPROVED THE SECURITIES.

ANY REPRESENTATION TO THE CONTRARY IS A VIOLATION OF A.S. 45.55.170. THE

INVESTOR MUST RELY ON THE INVESTOR’S OWN EXAMINATION OF THE PERSON OR

ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE

MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION ON THESE

SECURITIES.

ARIZONA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF ARIZONA AND, THEREFORE, CANNOT BE RESOLD UNLESS THEY ARE

REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS

AVAILABLE.


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ARKANSAS. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION

UNDER SECTION 14(b)(14) OF THE ARKANSAS SECURITIES ACT AND SECTION 4(2) OF THE

SECURITIES ACT OF 1933. A REGISTRATION STATEMENT RELATING TO THESE

SECURITIES HAS NOT BEEN FILED WITH THE ARKANSAS SECURITIES DEPARTMENT OR

WITH THE SECURITIES AND EXCHANGE COMMISSION. NEITHER THE DEPARTMENT NOR

THE COMMISSION HAS PASSED UPON THE VALUE OF THESE SECURITIES, MADE ANY

RECOMMENDATIONS AS TO THEIR PURCHASE; APPROVED OR DISAPPROVED THE

OFFERING, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS MEMORANDUM.

ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE PURCHASE PRICE OF THE

INTEREST ACQUIRED BY AN UNACCREDITED INVESTOR RESIDING IN THE STATE OF

ARKANSAS MAY NOT EXCEED 20% OF THE PURCHASER’S NET WORTH.

CALIFORNIA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933, AS AMENDED, OR THE CALIFORNIA CORPORATIONS CODE, BY

THE REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED

AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED

OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE

SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATIONS IS AVAILABLE.

The certificates representing all such subject to such a restriction on transfer, whether upon initial

issuance or upon any transfer thereof, shall bear on their face a legend, prominently stamped or printed

thereon in capital letters of not less than 10-point size, reading as follows:

IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY

INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFORE, WITHOUT THE

PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF

CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER’S RULES.

COLORADO. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE COLORADO SECURITIES ACT OF 1981, BY REASON OF

SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE

OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE

DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY

REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

CONNECTICUT. THESE SECURITES HAVE NOT BEEN REGISTERED UNDER SECTION 36-

485 OF THE CONNECTICUT UNIFORM SECURITIES ACT AND THEREFORE CANNOT BE

RESOLD UNLESS THEY ARE REGISTERED UNDER SUCH ACT OR UNLESS AN EXEMPTION

FROM REGISTRATION IS AVAILABLE.

DELAWARE. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE DELAWARE

SECURITIES ACT AND ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER

SECTION 7309(b)(9) OF THE DELAWARE SECURITIES ACT AND RULE 9(b)(9)(II)

THEREUNDER. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE


REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.


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DISTRICT OF COLUMBIA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER

THE DISTRICT OF COLUMBIA SECURITIES ACT SINCE SUCH ACT DOES NOT REQUIRE

REGISTRATION OF SECURITIES ISSUED. THESE SECURITIES CANNOT BE SOLD,

TRANSFERRED, OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS THEY

ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,

OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

FLORIDA. THE SHARE REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY,

THE HOLDER IN A TRANSACTION EXEMPT UNDER § 517.061 OF THE FLORIDA SECURITIES

ACT. THE SECURED DEBENTURES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN

THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE

PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST

TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT

OF THE ISSUER OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE

AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER,

WHICHEVER OCCURS LATER.

GEORGIA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR SECTION 10-5-5 OF THE GEORGIA SECURITIES ACT OF 1973

AND ARE BEING ISSUED AND SOLD IN RELIANCE UPON CODE SECTION 10-5-9 UNDER

GEORGIA SECURITIES LAW.

THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF TO

ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN

EXEMPTION FROM REGISTRATION IS AVAILABLE. THE INVESTMENT IS SUITABLE IF IT

DOES NOT EXCEED 20% OF THE INVESTOR’S NET WORTH.

HAWAII. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT

OF 1933, AS AMENDED, OR THE HAWAII UNIFORM SECURITIES ACT (MODIFIED), BY

REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED

AVAILABITLIY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED,


SUBSEQUENTLY REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

IDAHO. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE IDAHO

SECURITIES ACT AND MAY BE TRANSFERRED OR RESOLD BY RESIDENTS OF IDAHO

ONLY IF REGISTREED PURSUANT TO THE PROVISIONS OF THE ACT OR IF AN EXEMPTION

FROM REGISTRATION IS AVAILABLE. THE INVESTMENT IS SUITABLE IF IT DOES NOT

EXCEED 10% OF THE INVESTOR’S NET WORTH.

ILLINOIS. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE

SECRETARY OF STATE OF ILLINOIS OR THE STATE OF ILLINOIS, NOR HAS THE

SECRETARY OF STATE OF ILLINOIS OR THE STAE OF ILLINOIS PASSED UPON THE

ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE.


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INDIANA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 3 OF THE

INDIANA BLUE SKY LAW AND ARE OFFERED PURSUANT TO AN EXEMPTION PURSUANT

TO SECTION 23-2-1-2(b)(10) THEREOF AND MAY BE TRANSFERRED OR RESOLD ONLY IF

SUBSEQUENTLY REGISTERED OR IF AN EXEMPTION FROM REGISTRATION IS

AVAILABLE. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR

THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

INDIANA REQUIRES INVESTOR SUITABILITY STANDARDS OF A NET WORTH (EXCLUSIVE

OF HOME, FURNISHINGS, AND AUTOMOBILES) OF THREE TIMES THE INVESTMENT BUT

NOT LESS THAN $75,000 OR A NET WORTH (EXCLUSIVE OF HOME, FURNISHINGS, AND

AUTOMOBILES) OF TWICE THE INVESTMENT BUT NOT LESS THAN $30,000 AND GROSS

INCOME OF $30,000.

IOWA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE IOWA UNIFORM

SECURITIES ACT AND ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER

SECTION 502.203(9) OF THE ACT. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED,



INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE

FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

KANSAS. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION

UNDER THE KANSAS SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO

THESE SECURITIES HAS NOT BEEN FILED WITH THE KANSAS SECURITIES COMMISSION.

THEREFORE, THESE SECURITIES CANNOT BE RESOLD OR OTHERWISE TRANSFERRED

UNLESS THEY ARE REGISTERED UNDER APPLICABLE SECURITIES LAWS OR AN

EXEMPTION FROM REGISTRATION IS AVAILABLE.

KENTUCKY. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION

UNDER THE KENTUCKY SECURITIES ACT. THE KENTUCKY SECURITIES ADMINISTRATOR

NEITHER RECOMMENDS NOR ENDORSES THE PURCHASE OF ANY SECURITY, NOR HAS

THE ADMINISTRATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THE

INFORMATION PROVIDED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A

CRIMINAL OFFENSE.

LOUISIANA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE LOUISIANA SECURITIES LAW, BY REASON OF




REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE INVESTMENT

IS SUITABLE IF IT DOES NOT EXCEED 25% OF THE INVESTOR’S NET WORTH.

MAINE. THESE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM

REGISTRATION WITH THE BANK SUPERINTENDENT OF THE STATE OF MAINE UNDER

SECTION 10502(2) (R) OF TITLE 32 OF THE MAINE REVISED STATUTES. THESE SECURITIES

MAY BE DEEMED RESTRICTED SECURITIES AND AS SUCH THE HOLDER MAY NOT BE

ABLE TO RESELL THE SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER STATE

OR FEDERAL SECURITIES LAWS OR UNLESS AN EXEMPTION UNDER SUCH LAWS EXISTS.


xi

MARYLAND. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE MARYLAND SECURITIES ACT, BY REASON OF


OFFERING.


ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENLY REGISTERED OR AN


MASSACHUSETTS. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933, AS AMENDED, OR THE MASSACHUSETTS UNIFORM SECURITIES

ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED

AVAILABILITY OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED,



MICHIGAN. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER SECTION 451.701

OF THE MICHIGAN UNIFORM SECURITIES ACT AND MAY BE TRANSFERRED OR RESOLD

BY RESIDENTS OF MICHIGAN ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF

THE ACT OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE. AT LEAST 48

HOURS BEFORE A SALE, ISSUER WILL PROVIDE EACH OFFEREE WITH A PRIVATE

PLACEMENT MEMORANDUM THAT WILL INCLUDE THE FOLLOWING STATEMENT FOR

RESIDENTS OF MICHIGAN:

TO MICHIGAN RESIDENTS: THIS OFFERING MEMORANDUM INCLUDES STATEMENTS

ABOUT:

I. THE APPLICATION OR USE OF PROCEEDS.

II. A STATEMENT THAT THE ASSETS OF THE OPERATION WILL GENERATE SUFFICIENT

CASH FUNDS TO MEET THE OBLIGATIONS AS THEY COME DUE, AND/OR THAT THE

ASSETS EXCEED THE OBLIGATIONS UNDERTAKEN BY THE OFFEROR.

III. AN OUTLINE DISCLOSING REMUNERATION TO CONSULTANTS.

IV. A STATEMENT THAT CALIFORNIA IS THE JURISDICTION OF THE OFFERING AND THE

OFFEROR.

V. A STATEMENT THAT THE OFFEROR SHALL PRESENT AN ACCOUNTING OF

DISTRIBUTION OF FUNDS AT LEAST ANNUALLY.

MINNESOTA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER CHAPTER 80A OF

THE MINNESOTA SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE

DISPOSED OF EXCEPT PURSUANT TO REGISTRATION, OR AN EXEMPTION THEREFROM.

MISSISSIPPI. THESE SECURITIES ARE OFFERED PURSUANT TO A CERTIFICATE OF

REGISTRATION ISSUED BY THE SECRETARY OF STATE OF MISSISSIPPI PURSUANT TO

RULE 477, WHICH PROVIDES A LIMITED REGISTRATION PROCEDURE FOR CERTAIN

OFFERINGS.


xii

THE SECRETARY OF STATE DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF

ANY SECURITIES, NOR DOES THE SECRETARY OF STATE PASS UPON THE TRUTH, MERITS,

OR COMPLETENESS OF ANY OFFERING MEMORANDUM FILED WITH THE SECRETARY OF

STATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

MISSOURI. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE MISSOURI UNIFORM SECURITIES ACT, BY REASON

OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF

THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE



MONTANA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT OF MONTANA, BY REASON OF


OFFERING. THESE SECURITIES CANNOT BE SOLD, TRSNFERRED, OR OTHERWISE



NEBRASKA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT OF NEBRASKA, BY REASON OF




REIGSTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

NEVADA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE NEVADA SECURITIES ACT, BY REASON OF SPECIFIC

EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE

OFFERING.


ANY PERSON OR ENTITY UNLESS THEY ARE SUBSEQUENTLY REGISTERED OR AN


NEW HAMPSHIRE. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933, AS AMENDED, OR THE NEW HAMPSHIRE UNIFORM SECURITIES





THE INVESTMENT IS SUITABLE IF IT DOES NOT EXCEED 10% OF THE INVESTOR’S NET

WORTH.

NEW JERSEY. THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY HAS NOT

PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. THE FILING OF THE WITHIN

OFFERING WITH THE BUREAU OF SECURITIES DOES NOT CONSTITUTE APPROVAL OF

THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF SECURITIES OR THE

DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEW JERSEY. ANY

REPRESENTATION TO THE CONTRARY IS UNLAWFUL.


xiii

NEW MEXICO. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY

THE SECURITIES BUREAU OF THE NEW MEXICO DEPARTMENT OF REGULATION AND

LICENSING, NOR HAS THE SECURITIES BUREAU PASSED UPON THE ACCURACY OR

ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A

CRIMINAL OFFENSE.

NEW YORK. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE NEW YORK FRAUDULENT PRACTICES (.MARTIN.)



OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE NEW YORK

FRAUDULENT PRACTICES (.MARTIN.) ACT, IF SUCH REGISTRATION IS REQUIRED.

THIS PRIVATE OFFERING MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY

THE ATTORNEY GENERAL PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL

OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS

OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

PURCHASE OF THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. THIS PRIVATE

OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A

MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE

STATEMENTS MADE, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE

MADE, NOT MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS OF

DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN.

NORTH CAROLINA. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF

EXEMPTION UNDER THE NORTH CAROLINA SECURITIES ACT. THE NORTH CAROLINA

SECURITIES ADMINISTRATOR NEITHER RECOMMENDS NOR ENDORSES THE PURCHASE

OF ANY SECURITY, NOR HAS THE ADMINISTRATOR PASSED UPON THE ACCURACY OR

ADEQUACY OF THE INFORMATION PROVIDED HEREIN. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE.

NORTH DAKOTA. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY

THE SECURITIES COMMISSIONER OF THE STATE OF NORTH DAKOTA NOR HAS THE

COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS.

ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

OHIO. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT

OF 1933, AS AMENDED, OR THE OHIO SECURITIES ACT, BY REASON OF SPECIFIC




REGISTERED OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IN ACCORDANCE

WITH SECTION 1707.43 OF THE OHIO REVISED CODE, PURCHASERS ARE ENTITLED TO A

FULL REFUND OF THEIR PURCHASE PROVIDED SUCH A REQUEST IS MADE WITHIN TWO

(2) WEEKS FROM THE DATE OF SAID PURCHASE. HOWEVER, NO PURCHASER IS

ENTITLED TO THE BENEFIT OF SECTION 1707.43 WHO HAS FAILED TO ACCEPT A REFUND

WITHIN THIRTY (30) DAYS FROM THE DATE OF SUCH OFFER.


xiv

OKLAHOMA. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE OKLAHOMA

SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY

NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE

REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND/OR

THE OKLAHOMA SECURITIES ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE

ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.

OREGON. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR

OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE

TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE

SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES

COMMISSION OR REGULATORY AUTHORITY.

FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY

OR DETERMINED THE ADEQUACY OF THE DOCUMENT. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO

RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR

RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933 AS AMENDED,

PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE

AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS

INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

THE INVESTOR MUST RELY ON THE INVESTOR’S OWN EXAMINTATION OF THE

COMPANY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING

THE MERITS AND RISKS INVOLVED IN MAKING AN INVESTMENT DECISION ON THESE

SECURITIES.

PENNSYLVANIA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE 1933

SECURITIES ACT, BEING EXEMPTED FROM REGISTRATION BY SAID ACT. THE

AVAILABILITY OF THAT EXEMPTION DOES NOT MEAN THAT THE SECURITIES

ADMINSTRATOR HAS PASSED IN ANY WAY UPON THE MERITS, OR QUALIFICATIONS OF,

THESE SECURITIES OR THEIR OFFER OF SALE IN THE STATE OF PENNSYLVANIA. ANY

REPRESENTATION INCONSISTENT WITH THE FOREGOING IS UNLAWFUL. INVESTORS

MUST PURCHASE THESE SECURITIES ONLY FOR THEIR OWN BENEFIT AND MAY NOT

SELL THESE SECURITIES FOR A PERIOD OF NO LESS THAN 12 MONTHS FROM THE DATE

OF PURCHASE. NOTICE PURSUANT TO SECTION 203(m) OF THE ACT: THE ISSUER MUST

OBTAIN THE WRITTEN AGREEMENT OF EACH PURCHASER NOT TO SELL, EXCEPT IN

ACCORDANCE WITH REGULATION 204.011, THE SECURITY WITHIN TWELVE MONTHS

AFTER THE DATE OF PURCHASE AND FILE WITH THE COMMISSION A COPY OF THE

PROPOSED AGREEMENT THAT INVESTORS WILL BE ASKED TO SIGN.

THE SECURED DEBENTURES OFFERED HEREBY HAS NOT BEEN REGISTERED UNDER

SECTION 201 OF THE PENNSYLVANIA SECURITIES ACT OF 1972 (THE “ACT”) AND MAY BE

RESOLD BY RESIDENTS OF PENNSYLVANIA ONLY IF REGISTERED PURSUANT TO THE

PROVISIONS OF THAT ACT OR IF AN EXEMPTION FROM REGISTRATION IS AVAILABLE.


xv

EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM

REGISTRATION BY SECTION 203(d), (f), (p), or (r), DIRECTLY FROM AN ISSUER OR

AFFILIATE OF AN ISSUER, SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE

WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY), OR ANY

OTHER PERSON WITHIN TWO BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE

ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A

TRANSACTION IN WHICH THERE IS NO WRITTEN BINDING CONTRACT OF PURCHASE,

WITHIN TWO BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE

SECURITIES BEING OFFERED.

TO ACCOMPLISH THIS WITHDRAWAL A LETTER OR TELEGRAM SHOULD BE SENT TO:

Secured Income Group, Inc.

17592 E. 17th

Street,

Suite 100

Tustin, CA 92780

IT IS PRUDENT TO SEND SUCH NOTICE CERTIFIED MAIL, RETURN RECEIPT REQUESTED.

A WRITTEN ACKWNOLEDGEMENT WILL BE RETURNED.

NEITHER THE PENNSLYVANIA SECURITIES COMMISSION NOR ANY OTHER AGENCY HAS

PASSED ON OR ENDORSED THE MERITS OF THE OFFERING, AND ANY REPRESENTATION

TO THE CONTRARY IS UNLAWFUL. PENNSYLVANIA SUBSCRIBERS MAY NOT SELL THEIR

INTERESTS FOR ONE YEAR FROM THE DATE OF PURCHASE IF SUCH A SALE WOULD

VIOLATE SECTION 203(d) OF THE PENNSYLVANIA SECURITIES ACT.

RHODE ISLAND. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933, AS AMENDED, OR THE BLUE SKY LAW OF RHODE ISLAND, BY

REASON OF SPECIFIC SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE



SOUTH CAROLINA. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON

THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND

TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE

SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES

COMMISSION OR REGULATORY AUTHORITY.

FURTHERMORE, THE FOREGOING AUTHORIES HAVE NOT CONFIRMED THE ACCURACY

OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO

RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR

RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,

AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR

EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE

REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE

PERIOD OF TIME.


xvi

SOUTH DAKOTA. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER CHAPTER

47-31 OF THE SOUTH DAKOTA SECURITIES LAWS AND MAY NOT BE SOLD,

TRANSFERRED, OR OTHERWISE DISPOSED OF FOR VALUE EXCEPT PURSUANT TO

REGISTRATION, EXEMPTION THEREFROM, OR OPERATION OF LAW.

EACH SOUTH DAKOTA RESIDENT PURCHASING ONE OR MORE WHOLE OR FRACTIONAL

UNITS MUST WARRANT THAT HE HAS EITHER (1) A MINIMUM NET WORTH (EXCLUSIVE

OF HOME, FURNISHING AND AUTOMOBILES) OF $30,000 AND A MINIMUM ANNUAL

GROSS INCOME OF $30,000 OR (2) A MINIMUM NET WORTH (EXCLUSIVE OF HOME,

FURNISHINGS AND AUTOMBILES) OF $75,000.

ADDITIONALLY, EACH INVESTOR WHO IS NOT AN ACCREDITED INVESTOR OR WHO IS

AN ACCREDITED INVESTOR SOLELY BY REASON OF HIS NET WORTH, INCOME OR

AMOUNT OF INVESTMENT, SHALL NOT MAKE AN INVESTMENT IN THE PROGRAM IN

EXCESS OF 20% OF HIS NET WORTH (EXCLUSIVE OF HOME, FURNISHING AND

AUTOMOBILES).

TENNESSEE. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE TENNESSE SECURITIES ACT OF 1980, BY REASON OF





TEXAS. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION

UNDER THE TEXAS SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO

THESE SECURITIES HAS NOT BEEN FILED WITH THE TEXAS SECURITIES COMMISSION.

THEREFORE, THESE SECURITIES CANNOT BE RESOLD OR OTHERWISE TRANSFERRED

UNLESS THEY ARE REGISTERED UNDER APPLICABLE SECURITIES LAWS OR AN


UTAH. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT

OF 1933, AS AMENDED, OR THE UTAH UNIFORM SECURITIES ACT, BY REASON OF





VERMONT. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE VERMONT SECURITIES ACT, BY REASON OF SPECIFIC





WASHINGTON. THE ADMINISTRATOR OF SECURITIES HAS NOT REVIEWED THE

OFFERING OR THE MEMORANDUM AND THE SECURITIES HAVE NOT BEEN REGISTERED

UNDER THE SECURITIES ACT OF THE STATE OF WASHINGTON, CHAPTER 21.20 RCW, AND,

THEREFORE, CANNOT BE RESOLD UNLESS THEY ARE REGISTERED UNDER THE

SECURITIES ACT OF THE STATE OF WASHINGTON CHAPTER 21.20 RCW OR UNLESS AN

EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.


xvii

WEST VIRGINIA. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF

EXEMPTION UNDER THE UNIFORM SECURITIES ACT. A REGISTRATION STATEMENT

RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE WEST VIRIGINA

SECURITIES COMMISSIONER. THE COMMISSIONER DOES NOT RECOMMEND NOR

ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON THE ACCURACY

OR COMPLETENESS OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY

REPRESENTATIONS TO THE CONTRARY IS A CRIMINAL OFFENSE.

WISCONSIN. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES

ACT OF 1933, AS AMENDED, OR THE WISCONSIN UNIFORM SECURITIES LAW, BY REASON

OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF

THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE



WYOMING. THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION

UNDER THE WYOMING SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO

THESE SECURITIES HAS NOT BEEN FILED WITH THE WYOMING SECRETARY OF STATE.

FOR RESIDENTS OF ALL STATES. THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE

REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT

BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN ANY PARTICULAR

STATE. THIS MEMORANDUM MAY BE SUPPLEMENTED BY ADDITIONAL STATE

LEGENDS. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE

LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE ADVISED TO CONTACT THE

COMPANY FOR A CURRENT LIST OF STATES IN WHICH OFFERS OR SALES MAY BE

LAWFULLY MADE. AN INVESTMENT IN THIS OFFERING IS SPECULATIVE AND INVOLVES

A HIGH DEGREE OF FINANCIAL RISK. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD

CONSIDER ALL OF THE RISK FACTORS DESCRIBED BELOW.

UNITED STATES TERRITORIES AND POSSESSIONS. THESE SECURITIES ARE NOT

AUTHORIZED FOR OFFERING OR SALE IN ANY TERRITORY OR POSSESSION OF THE

UNITED STATES IN LIEU OF APPLICABLE SECURITIES LAWS TO THE CONTRARY.

SECURITIES AND/OR CAPITAL GUARDIANSHIPS ARE NOT AUTHORIZED FOR SALE IN

SUCH TERRITORIES OR POSSESSIONS.


1

SUMMARY OF THE OFFERING

The following information is only a brief summary of, and is qualified in its entirety by, the detailed

information appearing elsewhere in this Private Placement Memorandum (this “Private Placement

Memorandum” or the “Memorandum”). This Private Placement Memorandum, together with the exhibits

attached including, but not limited to, the Articles of Incorporation and Bylaws of the Company

(respectively, the “Articles” and the “Bylaws”), copies of which are attached hereto as Exhibit E, should

be carefully read in their entirety before any investment decision is made. If there is a conflict between

the terms contained in this Private Placement Memorandum and the Articles or Bylaws, the Articles and

Bylaws shall prevail and no Investor should rely on any reference herein to the Articles or Bylaws

without consulting the actual underlying documents.

The Company

Secured Income Group, Inc. (the “Company” or “SIG”) is a California

corporation. The Company is hereby offering (the “Offering”) by means

of this Private Placement Memorandum (the “Memorandum”) a third

series of Secured Debentures (“Series C Secured Debentures” or “Secured

Debentures”) on a “best efforts” basis to qualified investors who meet the

Investor Suitability standards as set forth herein (See “Investor Suitability”

below).

Business

The Company was formed with the purpose of funding, financing, and

originating loans (“Loans”) secured by real property located across the

United States with a primary focus in Southern California.

Compensation

Officers and directors of the Company will receive compensation for their

services to the Company. (See “Compensation” and “Officers and

Directors” below.)

Suitability Standards

Secured Debentures are offered exclusively to certain individuals, Keogh

plans, individual retirement accounts and other qualified investors who

meet certain minimum standards of income and/or net worth. Each

Investor must execute a Subscription Agreement making certain

representations and warranties to the Company, including such purchaser’s

qualifications as an “Accredited Investor” as defined by the Securities and

Exchange Commission in Rule 501(a) of Regulation D may be allowed to

purchase Secured Debentures in this offering. (See “Investor Suitability”

below.)

Offering of Secured

Debentures

The Company will be offering a maximum of Two-Hundred Million

Dollars ($200,000,000) of Series C Secured Debentures. The minimum

investment amount for a Series C Secured Debenture is Ten Thousand

Dollars ($10,000).

Prior Experience The officers and directors of the Company have extensive prior experience

in the real estate and mortgage industry. (See “Key Personnel” below.)

Prepayment of Note

The Company may prepay all or a portion of any Secured Debenture

before the Maturity Date (as defined below) of the Secured Debenture in

the Company’s sole and absolute discretion. The Company will not incur

any penalties for prepaying any Secured Debenture at any time.

Origination, Servicing

and Management

SIG (or its designated third party agent or representative) will originate its

own investment opportunities for Loans, and service and manage any

Loans in which it may invest or otherwise participate.


2

FORWARD LOOKING STATEMENTS

Investors should not rely on forward-looking statements because they are inherently uncertain. Investors

should not rely on forward-looking statements in this Memorandum. This Memorandum contains

forward-looking statements that involve risks and uncertainties. We use words such as “anticipated,”

“projected”, “forecasted”, “estimated”, “prospective”, “believes,” “expects,” ”plans” “future” “intends,”,

“should,” “can”, “could”, “might”, “potential,” “continue,” “may,” “will,” and similar expressions to

identify these forward-looking statements. Investors should not place undue reliance on these forward-

looking statements, which may apply only as of the date of this Memorandum.

TERMS OF THE OFFERING

This Offering is made to a limited number of qualified investors to invest in Secured Debentures that are

issued by the Company. These Secured Debentures will generally have the features described below.

The proceeds from the sale of Secured Debentures shall be utilized to increase the Company’s origination,

funding and/or making of Loans. The brief summary of the features of the Secured Debentures provided

below is qualified in its entirety by the terms and provisions of the actual Secured Debentures. In the

event of any conflict between the short summary presented below and the actual terms and provisions of

the Secured Debentures, the latter shall govern.


3

1. Interest. The Company intends to offer Secured Debentures to investors at a fixed

Interest Rate (as defined below) per annum in each year through the Maturity Date payable on a quarterly

basis. Interest on the unpaid principal balance will accrue interest starting on the date (the “Interest

Date”) on which the investment proceeds have been distributed by the Investor to, or on behalf of, the

Company following acceptance of the Investor’s subscription agreement by the Company. Subject to the

terms of the Secured Debentures, Interest payments shall be made on a quarterly basis on March 31, June

30, September 30, and December 31 of each calendar year. For those Investors who acquire a Secured

Debenture mid-quarter, interest payments shall be calculated on a per-diem basis on a 360 day calendar

year.

Interest payments will continue until the Secured Debenture is fully paid, with any and all unpaid

principal and interest due and payable on the date that is exactly the Secured Debenture term from the

effective date of the Secured Debenture (the “Maturity Date”), unless such Maturity Date is extended or

renewed as provided in the Secured Debenture or as otherwise agreed to in writing by Investor and

Company.

2. Interest Rate and Maturity Date. The Investor shall select the term and interest rate of the

Secured Debenture they are to acquire. The interest rates and term of each Secured Debenture shall vary

as follows:

Secured Debenture Term Interest Rate






Investment in Series C Secured Debentures will be subject to SIG review. SIG, in its sole and

absolute discretion, may reject and/or postpone an Investor’s subscription, for any reason.

3. Prepayment Ability. The Company may (in its sole and absolute discretion) prepay the

Secured Debentures early at any time for any reason (or no reason) without any prepayment premium or

penalty.

4. Payments. Investors will receive quarterly payments from the Company as set forth in

greater detail in the Secured Debenture. The Company shall make these quarterly payments as interest-

only and shall not be required to make any payment of the principal balance until the Maturity Date.

Payments shall be made on the last day of each quarter of the calendar year: March 31, June 30,

September 30, and December 31.

5. Debenture Maturity / Roll-Over / Principal Additions. Investors must notify SIG no later

than sixty (60) days prior to the Maturity Date of their intention to either Redeem, Rollover, or add to

their Debenture Investment. If Investors fail to notify SIG of their intentions prior to sixty (60) days of

their Maturity Date, the Company will not be obligated to Redeem their investment for a minimum of

sixty (60) days from the date of written notification. Investors may elect to Rollover all or any portion of

their Secured Debenture investment by delivering written confirmation of their intent to SIG. All

Rollovers will be executed under the current pricing of the Debenture Offering at the time of a Rollover

election. SIG will also allow, at its discretion, a principal addition to an original Debenture Investment

prior to its Maturity date. Any principal additions to an existing Debenture Investment will be subject to


4

the same terms and conditions of the original Debenture, with interest on a principal addition starting

once funds are cleared through SIG’s bank account.

6. Financial Information. At the Investor’s specific written request, within one hundred and

twenty (120) days following the end of each fiscal year of Company (subsequent to the date of the

Secured Debentures and prior to the Maturity Date), the Company will deliver a copy of its annual

financial statements to the Investors. All Company financial statements shall be prepared by GAAP

standards.

7. Early Withdrawal. An Investor may request an early withdrawal of all or a portion of

their Debenture Investment. The Company may fulfill an early withdrawal request at its sole and absolute

discretion and has no commitment (implied or express) to complete a request for early withdrawal.

8. Penalty for Early Withdrawal: Interest rate will be re-calculated to reflect similar term

length. If a Debenture Holder elects to redeem all or any portion of his investment before the scheduled

maturity date, then the Company will only be required to pay interest on the portion redeemed at the

interest rate closest in term under the table of rates at the time of his or her original investment. This will

be the Debenture Holder's redemption interest rate. By example, if a Debenture Holder elects to invest

$100,000 for a three year Debenture at 8.25%, and requests a full redemption of their $100,000

investment at 14 months, than the interest earned will be re-calculated at 7.15%, instead of 8.25%. The

new rate of 7.15% is the closest to the pre-published interval of a 12 month investment in the table of

rates & terms issued by the Company, at the time the Debenture investment was made. Accordingly, by

the same example cited above, if the $100,000 was redeemed in the 26th month, instead of 14 months, the

new interest rate would be 7.65% since the redemption period is closest to the Company's 2 year term,

rather than its one year term. In all cases, the table of rates at the time the Debenture was purchased will

be utilized for determining the nearest term length and corresponding redemption interest rate. Please

note: in some cases, a Debenture Investor may receive LESS than their original principal investment if

they receive an excess of interest payments at a much higher rate in comparison to their updated

redemption interest rate.

INVESTOR SUITABILITY

Each person (the “Investor”) acquiring Secured Debentures will be required to represent that he, she, or it

is purchasing for his, her, or its own account for investment purposes and not with a view to resale or

distribution. The Company will sell Secured Debentures to an unlimited number of “Accredited

Investors” only. To qualify as an “Accredited Investor” an investor must meet ONE of the following

conditions:

1. Any natural person who had an individual income in excess of Two Hundred Thousand

Dollars ($200,000) in each of the two most recent years or joint income with that person’s spouse in

excess of Three Hundred Thousand Dollars ($300,000) in each of those years and who has a reasonable

expectation of reaching the same income level in the current year;

2. Any natural person whose individual net worth or joint net worth, with that person’s spouse,

at the time of their purchase exceeds One Million Dollars ($1,000,000.00) (excluding the value of such

person’s primary residence);

3. Any bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or

other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or

fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities and Exchange

Act of 1934 (the “Exchange Act”); any insurance company as defined in Section 2(13) of the Exchange


5

Act; any investment company registered under the Investment Company Act of 1940 or a business

development company as defined in Section 2(a)(48) of that Act; any Small Business Investment

Company (SBIC) licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the

Small Business Investment Act of 1958; any plan established and maintained by a State, its political

subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its

employees, if such plan has total assets in excess of $5,000,000.00; any employee benefit plan within the

meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by

a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan

association, insurance company, or registered investment advisor, or if the employee benefit plan has total

assets in excess of Five Million Dollars ($5,000,000.00) or, if a self-directed plan, with investment

decisions made solely by persons who are Accredited Investors;

4. Any private business development company as defined in Section 202(a)(22) of the

Investment Advisors Act of 1940;

5. Any organization described in Section 501(c)(3)(d) of the Internal Revenue Code of 1986, as

amended (the “Code”), corporation, Massachusetts or similar business trust, or partnership, not formed

for the specific purpose of acquiring the securities offered, with total assets in excess of Five Million

Dollars ($5,000,000.00);

6. Any director or executive officer, or Company of the issuer of the securities being sold, or

any director, executive officer, or Company of a Company of that issuer;

7. Any trust, with total assets in excess of Five Million Dollars ($5,000,000.00), not formed for

the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated

person as described in Section 506(b)(2)(ii) of the Code; or

8. Any entity in which all the equity owners are accredited investors as defined above.

Investors: Minimum and Maximum Offering

The maximum offering amount of this Private Placement Memorandum is Two-Hundred Million Dollars

($200,000,000) (the “Maximum Offering Amount”) and the minimum investment amount is Ten

Thousand Dollars ($10,000) (“Minimum Offering Amount”). The Company may, at its sole and absolute

discretion, at any time during the period of the Offering, increase or decrease the Maximum Offering

Amount or the Minimum Investment Amount.

The maximum gross proceeds will be the Maximum Offering Amount which will comprise, subject to

adjustments as described elsewhere in this Private Placement Memorandum, the total capitalization of the

Company. This Offering may, however, be terminated at the sole discretion and option of the Company

at any time before the Maximum Offering Amount is received hereunder.

Any monies raised during this Offering may be immediately used by the Company as and when received

to originate loans on real property. The Company intends to use funds loaned to the Company by

prospective Investors as the funds are received and the Company accepts the applicable subscription

agreement of the prospective Investor.


6

How to Subscribe

To subscribe with the Company and purchase Secured Debentures, a prospective investor must meet

certain eligibility and suitability standards, some of which are set forth above (See “Investor Suitability”).

Additionally, a prospective investor must execute and deliver a Subscription Agreement in the form

attached hereto as Exhibit B, together with a check or wire in the amount of the purchase price payable to

the Company. By executing the Subscription Agreement, an investor makes certain representations and

warranties upon which the Company will rely in accepting subscriptions.

Subscription Agreements

Subscription Agreements from prospective investors will be accepted or rejected by the Company within

five (5) days after their receipt. The Company reserves the sole and absolute right to reject any

subscription tendered for any reason or no reason, or to accept it in part only. (See “Use of Proceeds”

below.)

Subscription Agreements are non-cancelable and irrevocable by the Investor and subscription funds are

non-refundable for any reason, except with the express written consent of the Company or as expressly

set forth herein or in the Subscription Agreement. If accepted by the Company, an Investor shall become

an Investor only when the Company deposits the Investor’s contribution into the Company’s main

operating bank account. Until such time, an Investor’s subscription agreement is non-revocable, and

subscription funds shall be held by the Company and may, at the sole discretion of the Company, be

deposited in a call account (the “Subscription Account”).

Notwithstanding the previous paragraph, should the process from depositing an Investor’s funds into the

Subscription Account and acceptance as an Investor take longer than five (5) business days, the Investor

may request in writing to recover his, her or its investment funds. If, upon receipt of such request in

writing, the Company has not yet accepted the Investor, then the Company may, in its sole and absolute

discretion, return the Investor’s funds to the investor and revoke the Subscription Agreement within ten

(10) business days of receipt of such request from the Investor.

Restrictions on Transfer

As a condition to this Offering, restrictions have been placed upon the ability of Investors to resell or

otherwise transfer any Secured Debentures purchased hereunder. Specifically, no Investor may resell or

otherwise transfer any Secured Debentures without the satisfaction of certain conditions designed to

ensure compliance with applicable tax and securities laws including, without limitation, the requirement

that certain legal opinions be provided to the Company with respect to such matters and the requirement

that any transfer of shares to a transferee does not violate any state or federal securities laws.

To the extent required by applicable law or in the sole and absolute discretion of the Company, legends

shall be placed on all instruments or certificates evidencing ownership of the Secured Debentures stating

that the Secured Debentures have not been registered under the federal securities laws and setting forth

limitations on resale, and notations regarding these limitations shall be made in the appropriate records of

the Company with respect to all Secured Debentures offered through this Offering.

A Secured Debenture will be signed by an officer of the Company to evidence the loan from the Investor.

The Secured Debenture will be held by the Company or an agent of the Company as determined by the

Company in its sole and absolute discretion. The Secured Debenture will not be recorded. However, the

Secured Debenture will be evidenced on the Company’s books and records. The Investor will receive an

original copy of the Secured Debenture


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EVIDENCE OF INDEBTEDNESS AND SECURITY INTEREST

Each Secured Debenture will be signed by an authorized officer of the Company to evidence the

Company’s obligation to the Debenture Holder. Each Secured Debenture shall be secured by a Security

Agreement granting the Debenture holder a security interest in all promissory notes receivable by the

Company that are secured by deeds of trust encumbering real property, whether said notes are

currently existing or hereafter received. All Secured Debentures issued pursuant to this Offering will

be reflected on the Company’s books, records and financial statements. Each Debenture Holder will

receive a fully and duly executed original copy of his, her or its Secured Debenture, Security Agreement

and corresponding Subscription Agreement.

USE OF PROCEEDS

The Company anticipates using the proceeds to increase origination of Loans, volume, market share, and

profitability. Specifically, proceeds will be used to fund Loans for investment as determined by the

Company’s management and its advisors in their sole and absolute business discretion and judgment. The

Company plans to use any proceeds as and when received from Investors. Accordingly, the Company

does not plan to close this Offering or raise any set amount of proceeds before accepting subscriptions (in

the sole and absolute discretion of the Company) and utilizing funds advanced to the Company by

Investors.

BUSINESS STRATEGY

SIG’s business strategy is designed to generate income through the origination and servicing of Loans

secured by real property located throughout the United States with a primary focus in Southern

California. There is a significant market opportunity to make loans to real estate investors whose

financing needs are not met by traditional banks. SIG lends to such borrowers provided that they have

sufficient equity in the stabilized value of the subject property, and otherwise meet SIG’s lending criteria.

In return, we receive a higher total interest yield on the Loans originated. In addition, the Company takes

steps intended to mitigate the risks, such as imposing a lower loan-to-value ratio. By focusing on the

value of the underlying real estate, which serves as collateral on our loans, SIG can approve loans on

properties quickly in a lending niche not offered by mainstream lenders.

SIG has three primary investment objectives:

Preserve and return Investor capital contributions;

Produce revenues from interest and fee income on Loans originated, funded, made,

acquired, and/or serviced by the Company

Provide quarterly cash distributions to our Secured Debenture holders;

The Company’s lending parameters are an extension of our commitment to our first investment objective

- the preservation of capital. The Company and its principals believe that lending almost exclusively on

single-family residences and 2-4 unit properties substantially reduces both our short-term and long-term

portfolio risks. Entry-level single-family homes & 2-4 unit properties represent the most basic form of

improved real estate & appeal to the largest pool of buyers and are the least affected by an economic

downturn or recession. In addition, the short-term nature of the Company’s financing reduces exposure to

market fluctuations.


8

Conventional & FHA financing, with as little as 3-5% down, is also a consistent and effective force

driving the Company’s loan payoffs. For prospective buyers of our client’s properties, entry-level single-

family residences & 2-4 unit properties are among the easiest class of properties to obtain mortgage

financing.

The expanding minority demographics in California continue to drive the purchase of entry-level single-

family residences & 2-4 unit properties. The Company’s average loan amount of approximately three

hundred and forty thousand dollars ($340,000) allows for the risk variable to be spread over a larger

number of loans within the Company’s portfolio.

INVESTMENT STANDARDS AND POLICIES

SIG will engage in originating, acquiring, managing or selling Loans secured by either mortgages or

deeds of trusts secured by real property (single family residential real estate) located around the United

States with a primary focus in Southern California. The value and balance of the Loans will not be

guaranteed by any governmental agency or private entity, but may be guaranteed by affiliates and

associates of the underlying borrowers. The Company (or its designated third party agent or

representative) will originate its own investment opportunities for Loans and service and manage any

Loans in which it may invest or otherwise participate.

Subject to the sole and absolute discretion of the Company to amend, modify, cancel, or revise any of the

following at any time, SIG generally intends to make Loans according to the following lending standards

and policies:

General Lending Guidelines

1. Lien Priority. The deeds of trusts and mortgages securing the Loans will be first, junior, or

subordinated lien positions. However, the Company intends to focus on Loans secured by a first position

deed of trust, mortgage or lien position.

2. Location of Real Property Securing Loans. Deeds of trusts and mortgages will be secured by

real property located around the United States with a primary focus in Southern California.

3. Type of Property. Investment in Loans may involve underlying assets of real property that will

generally consist of single family residences and 2-4 unit properties. The Loans will involve both non-

owner occupied investment properties as well as owner occupied properties.

4. Loan-to-Value Ratio. A Loan investment by the Company will generally not exceed the Loan-

to-Value percentage ratios set forth below. The Loan-to-Value ratio is calculated by taking the amount of

the Loan combined with the amount of outstanding debt secured by other liens on the property, dividing

that by the value of the real property securing the deed of trust or mortgage and multiplying that figure by

100 to come to a percentage. “Value” shall be determined by an independent certified appraiser or non-

certified appraiser doing an appraisal on the real property or commercial or residential real estate broker

giving his, her, or its opinion of value of the real property. Notwithstanding the foregoing, the Company

may, in its sole and absolute discretion, exceed the below stated Loan-to-Value ratios at any time and for

any reason, including (without limitation) if SIG determines in its sole business judgment that a higher

loan amount is warranted by the circumstances of that particular loan, such as being able to secure

multiple properties, called “cross-collateralization”, personal guaranties, prior loan history with the

borrower, market conditions, if mortgage insurance is obtained, or other factors.


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The Company plans to routinely re-evaluate the portfolio and Loan-to-Value ratio maximums set forth

herein and may revise the Loan-to-Value ratio maximums at any time if it considers it to be in its best

interests. Subject to the specific ratios set forth below, SIG will maintain a weighted Loan-to-Value ratio

of no more than seventy percent (70%). The value of the property will be calculated on an “after

completion” or post-rehabilitation basis. Prospective investors should carefully evaluate and understand

that calculation of the ratio using such “after completion” values exposes the Loans to additional risks in

the event that the rehabilitation is not completed or the value of the rehabilitation is not timely or

ultimately achieved.

5. Terms of Loans. The terms of the Loans will vary, but will generally have a term between six

(6) months and twelve (12) months, but may have loan terms exceeding twelve (12) months. Most Loans

originated or acquired by SIG will generally provide for monthly payments of principal and/or interest

and a “balloon” payment payable in full at the end of the term. At the end of the term, SIG will require

the borrower to pay the loan in full, to refinance the loan, or to sell the real property to pay back the loan.

6. Interest Rates on Loans. The interest rates paid by borrowers on Loans will vary, but will

generally be around nine percent to fifteen percent (9% to 15%) per annum.

7. Title Insurance. Satisfactory title insurance coverage will be obtained for all Loans and will

usually be paid by the borrower. The title insurance policy will name the Company as the insured and

provide title insurance in an amount not less than the principal amount of the loan unless there is multiple

forms of security for the loan, in which case SIG shall use its business judgment in determining whether

and to what extent title insurance shall be required. Title insurance insures only the validity and priority

of the deed of trust or mortgage, and does not insure SIG against any loss from other causes, such as

(without limitation) diminution in the value of the secured property, loan defaults, and other such losses.

8. Fire and Casualty Insurance. Satisfactory fire and casualty insurance will be obtained for all

improved real property loans which insurance will name SIG as its loss payee in the amount equal to the

improvements on the real property. (See “Business Risks – Uninsured Losses” below.)

9. Mortgage Insurance. SIG does not intend to, but may if the property otherwise qualifies,

arrange for mortgage insurance, which would afford some protection against loss if the Company

foreclosed on a loan and there existed insufficient equity in the security property to repay all sums owed.

10. Acquiring Loans from Other Lenders. SIG may also purchase loans from other private lenders

or private sources, for loans meeting the requirements set forth above. In the event the Company acquires

loans from other lenders, SIG will receive assignments of all beneficial interest in any loans purchased.

11. Purchase of Loans from Affiliates. SIG may purchase Loans from its Affiliates, so long as the

Loans meet the lending requirements set forth above. For the purposes hereof, the term “Affiliates” with

respect to any entity shall mean any of the following: (1) a Person that, directly or indirectly, through one

or more intermediaries, controls, is controlled by, or is under common control with the entity, (2) a Person

who, directly or indirectly, owns or controls at least ten percent (10%) of the outstanding voting interests

of the entity, (3) a Person who is an officer, director, manager or member of the entity, or (4) a Person

who is an officer, director, manager, member, general partner, trustee or owns at least ten percent (10%)

of the outstanding voting interests of a Person described in clauses (1) through (3) of this sentence. The

term “Person” shall mean a natural person or Entity. The term “Entity” shall mean an association,

relationship or artificial person through or by means of which an enterprise or activity may be lawfully

conducted, including, without limitation, a partnership, trust, limited liability company, corporation, joint

venture, cooperative or association.


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12. Credit Evaluations. SIG may consider the income level and general creditworthiness of a

borrower to determine his, her or its ability to repay any loan according to its terms in addition to

considering the loan-to-value ratios and sources of security for repayment. Loans may be made to

borrowers who are in default under other obligations or in bankruptcy or who do not have sources of

income that would be sufficient to qualify for loans from other lenders such as banks or savings and loan

associations.

13. Loan Packaging and Servicing. SIG or its affiliates will assemble and/or obtain all necessary

information required to make a funding decision on any loan request. It is presently anticipated that all

Loans will be serviced (i.e., loan payments collected and other services relating to the loan) by the

Company (although the Company may, at any time, retain a third-party loan servicing company) (the

“Servicer”). If the Servicer is a third party, the Company will oversee the Servicer. The Company may,

in its sole and absolute discretion, decide to service Loans in-house at such time as conditions warrant.

SIG may change or replace its Servicer at any time and for any reason in its sole and absolute discretion.

14. Diversification. No loan originated, acquired, made, funded or held by the Company shall exceed

Three percent (3%) of the Company’s loan portfolio

Specific Loan Terms

The Company intends to focus on two types of Loans: Bridge Loans and Construction Loans. Each will

be secured by a Property located in the United States with a primary focus in Southern California.

1. Bridge Financing. The Company’s borrowers will identify and bid on distressed properties that

can be purchased from local banks, S & L’s, government agencies, probate sales, and private parties at

significant discounts from their stabilized values. Many of the properties are bank repossessions obtained

through foreclosure. The borrower has made a below market purchase of a property that is in fair to poor

condition but needs cosmetic repairs and improvements. Typical improvements might involve upgrades

or replacement of any one of the following; roof, kitchen, bathroom(s), plumbing and fixtures, paint –

exterior & interior, stucco, drywall, carpeting & tile, and minor landscaping. On many occasions a

borrower will have his own “crew” to perform the work for a significant cost reduction.

Bridge Loans are designed to allow borrowers to buy and stabilize distressed properties so they may be

sold or refinanced. It is a lending niche that is traditionally prohibited by local and mainstream mortgage

sources because of their own underwriting restrictions. The Company will review the appraisal of the

value of the property and the proposed improvements, and will arrange Loans to borrowers that seldom

exceed seventy percent (70%) of the future value of the property. The general guidelines for bridge loans

are as follows:

Loan Range: $100,000-$2,000,000.

Maximum Loan Amount: 70% of improved Loan-to-Value.

Loan Type: Fixed, interest-only.

Interest Rate: 9.0%-15.0%, based primarily on credit scores

Loan Term: 12 months; 3-month extension periods available.

Prepayment: N/A

Security: First trust deed on subject property.

Borrowing entity: Individual(s) with approved credit/Corp/LLC/non-profit.

Fees/Costs: Generally 2-3 points at origination & $750 in fees. Extension

fee is 1½ points per 12-month period.


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2. Construction Financing. A construction loan provides funds for the construction of one or

more structures on developed land. SIG’s construction program is limited to single-family residences and

two (2) – four (4) unit residential properties. Funds under this type of Loan are generally not forwarded

to the borrower until work in the previous phase of the project has been completed and SIG has verified

certain aspects of the construction and its costs. SIG will review the appraisal of the value of the property

and proposed construction, and will arrange loans for up to seventy percent (70%) of the “as completed”

or “after repair” value. If a borrower and project qualify, the Company also considers financing both the

acquisition & development and the construction up to seventy percent (70%) of the appraised project

value in return for a higher Loan fee. The general guidelines for construction Loans are as follows:

Loan Range: $100,000-$2,000,000. Maximum Loan Amount: 70% of completed value.

Loan Type: Fixed, interest-only.

Interest Rate: 9.0%-15.0%, based primarily on credit scores.

Loan Term: 12 months; 3-month extension periods available.

Prepayment: N/A

Security: First trust deed on subject property.

Borrowing entity: Individual(s) with approved credit/Corp/LLC/non-profit.

Fees/Costs: Generally 3-4 points at origination & $750 in fees. Extension

fee is 1 ½ points per 12-month period.

Sale of Loans

The Company does not plan on investing in Loans for the primary purpose of reselling such Loans in the

course of business. However, the Company may sell Loans, or fractional interests in such Loans, when

the Company determines, in its sole and absolute discretion, that it appears to be advantageous for the

Company to do so, based upon then current interest rates, the length of time that the Loan has been held

by the Company and the overall investment objectives of the Company.

Borrowing/Hypothecation

The Company intends to obtain or maintain a credit facility for the purpose of making Loans and

investing in Loans and may assign all or a portion of its loan portfolio as security for such loan(s). The

Company anticipates engaging in this type of transaction when the interest rate at which the Company can

borrow funds is significantly less than the rate that can be earned by SIG on its loans, giving the

Company the opportunity to earn a profit as a “spread.” The Company may also in its sole and absolute

discretion elect to finance its investments with borrowed funds.

COLLATERAL ASSIGNMENT OF SECURED LOAN PORTFOLIO

As security for the Secured Debentures issued pursuant to this Offering, the Company shall assign to its

Debenture Holders 100% of its beneficial interest in each and every one of its secured real estate Loans

concurrently with their making, until all of the Secured Debentures so issued have been fully repaid. Such

assignments shall be evidenced by the Company executing a Security Agreement in favor of Debenture

holders in the form as shown in Exhibit D.


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COMPENSATION

Aside from interest income from Loans, the principal sources of the Company’s revenues are listed

below. The Company will explore other sources of revenues as operations continue.

Form of Compensation Estimated Amount or Method of Compensation

LOAN INTEREST

Loan interest income is collected on each loan

originated by the Company. In general, note rates

vary from 9% to 12%, depending on the type of loan,

property, and qualifications of borrower. The

majority of the Company’s loans are one year or less

in term length.

LOAN ORIGINATION

FEES

Loan origination fees are collected from borrowers.

Such fees generally average between two to six

percent (2-6%) depending on market conditions and

different types of loans. Most commonly, such fees

represent three to four percent (3%-4%) of the value

of the Loan. Loan origination fees collected by the

Company are part of the Company’s compensation

from Loans.

LOAN EXTENSION AND

MODIFICATION FEES

Loan extension and modification fees are collected

from borrowers and payable to the Company. Such

fees are typically between one and three percent (1-

3%) of the original loan amount, but could be higher

depending on market rates and conditions.

LOAN PROCESSING,

LOAN DOCUMENTATION

AND SIMILAR FEES

Loan processing and loan documentation and other

similar fees are collected from the borrower and

payable to SIG at prevailing industry rates.

OTHER LOAN FEES

SIG will earn other loan fees as follows:

One Hundred Percent (100%) of each of the

following:

(1) All late payment fees incurred by borrowers

on loans;

(2) All default interest incurred by borrowers on

defaulted loans;

(3) All prepayment penalties incurred by

borrowers; and

(4) All forbearance fees, extension fees and all

other fees incurred by borrowers.

SIG will also earn interest income from loans originated by SIG. Borrowers pay interest to SIG on a

monthly basis on the full amount of their indebtedness. The Company will generally attempt to charge

borrowers a higher interest rate (“spread”) than the rates paid to Investors in this Offering.


13

OFFICERS AND DIRECTORS

Under applicable law, the officers and directors are generally accountable to the Company as a fiduciary,

which means that they are required to exercise good faith and integrity with respect to corporate affairs

and sound business judgment. This is a rapidly developing and changing area of the law, and Members

should consult with their own independent legal counsel in this regard.

The Company has not been separately represented by independent legal counsel in its formation or in the

dealings with its officers, directors or affiliates. As such, Investors must rely on the good faith and

integrity of the Company’s officers, directors and affiliates to act in accordance with the terms and

conditions of this Offering.

The Bylaws provide that the officers and directors will not have any liability to the Company for losses

resulting from errors in judgment or other acts or omissions unless they are guilty of fraud, bad faith, or

willful misconduct. The Bylaws also provide that the Company will indemnify the officers and directors

against liability and related expenses (including, without limitation, legal fees and costs) incurred in

dealing with the Company, Investors, or third parties as long as no fraud, bad faith, or willful misconduct

on the part of the officers and directors is involved. Therefore, Investors may have a more limited right of

action than they would have absent these provisions in the Bylaws. A successful indemnification of the

officers and directors or any litigation that may arise in connection with the Company’s indemnification

thereof could deplete the assets of the Company. Investors who believe that a breach of the officers’ and

directors’ fiduciary duties has occurred should consult with their own legal counsel in the event of fraud,

willful misconduct, or bad faith.

Investors are urged to carefully read the articles and bylaws in their entirety. Any summary of the articles

or bylaws is qualified in its entirety by the actual underlying documents which shall govern in the event of

any conflict between the actual documents and any summary or reference thereof included herein.

It is the position of the U.S. Securities and Exchange Commission that indemnification for liabilities

arising from, or out of, a violation of federal securities law is void as contrary to public policy. However,

indemnification will be available for settlements and related expenses of lawsuits alleging securities law

violations if a court approves the settlement and indemnification, and also for expenses incurred in

successfully defending such lawsuits if a court approves such indemnification.

Officers and directors of the Company will be entitled to receive compensation based on the profitability

of the Company.

RISK FACTORS

The Company may attempt (in its sole and absolute discretion) to comply with requests for the early

payment of the Secured Debentures if the financial position of the Company can accommodate it and the

Company elects to do so (provided, that the Company is not under any obligation to permit an early

redemption or withdrawal of the Secured Debentures requested by any Investor). Investors should

consider each of the following risks.

INVESTMENT RISKS

No Registration: Limited Governmental Review

This Offering has not been registered with, or reviewed by, the U.S. Securities and Exchange

Commission, or any State securities regulator or authority, nor is registration or review contemplated.


14

Limited Transferability of Interests

Although the Company may attempt to redeem Secured Debentures (when possible, in the Company’s

sole and absolute discretion), there is no public market for the Secured Debentures and none is expected

to develop in the future. Even if a potential buyer could be found, the transferability of these Secured

Debentures is also restricted by the provisions of the Securities Act of 1933 (as amended) and Rule 144

promulgated thereunder. Unless an exemption is available, these Secured Debentures may not be sold or

transferred without registration under the Securities Act of 1933 (as amended) and the prior written

consent of applicable State securities regulator(s). Any sale or transfer of these Secured Debentures also

requires the prior written consent of the Company. Investors must be capable of bearing the economic

risks of this investment with the understanding that these Secured Debentures may not be liquidated by

resale or redemption and should expect to hold their Secured Debentures as a long-term investment.

Size of the Offering

There is no assurance that the Company will obtain capital investments equal to the amount required to

close the Offering. In addition, receipt of capital investments of less than the Maximum Offering Amount

will reduce the ability of SIG to spread investment risks through diversification of its loan portfolio.

Investors Not Independently Represented

The Investors in the Company have not been represented by independent counsel with respect to this

Offering. Attorneys assisting in the formation of the Company and the preparation of this Memorandum

have represented only the Company and its principals and affiliates.

Provisions in the Secured Debenture

The Company has set the terms of the Secured Debenture in a manner which is favorable to the Company

and has not made an attempt to consider the favorability or suitability of such terms for any prospective

investors.

Lack of Regulation

The Company is not supervised or regulated by any federal or state authority, except to the extent that the

Company’s lending and brokerage activities are regulated and supervised by applicable authorities in at

least the State of California.

BUSINESS RISKS

Reliance on Key Personnel

The directors and officers of the Company will make virtually all decisions with respect to the

management of the Company including, without limitation, the determination as to which loans to make

and the terms thereof. The Investors will not have a voice in the management decisions of the Company

and can exercise only a limited (if any) amount of control over the Company. The Company gives no

assurance that the Company will operate at a profit or positive cash flow. The Company is dependent to a

substantial degree on the continued services of its key personnel. In the event of the death, incapacity or

other termination of key personnel, the business and operations of the Company may be adversely

affected. Furthermore, all investments related to specific Loans will be undertaken by the Company

without the Investors having any ability to directly affect such transactions.


15

Lack of Regulation

The management and investment practices of the Company are not supervised or regulated by any Federal

or State legal or regulatory authority.

Tax and ERISA Risks

An investment in the Company involves certain tax risks of general application to all investors and certain

other risks specifically applicable to Keogh accounts, Individual Retirement Accounts and other tax-

exempt investors. (See “Income Tax Considerations” and “ERISA Considerations” below).

Possible Repeal of Usury Exemption

To the extent that any Loans are arranged by or through a mortgage lending license and are therefore

generally exempt from the otherwise applicable state’s usury limitation, should this exemption be

repealed, the Company may no longer be able to originate loans in excess of the usury limit, potentially

reducing its return on investment or forcing it to limit its lending activities or otherwise burdening its

profitability and cash flow.

Uninsured and Underinsured Losses

SIG intends to maintain comprehensive insurance coverage of the type and amount it believes is

customarily obtained by any lender of real estate. There are, however, certain types of losses, generally

of a catastrophic nature, such as earthquakes, war and floods, that may be uninsurable or not

economically insurable from which the real estate properties may be at risk. In addition, because of

coverage limits and deductibles, insurance coverage in the event of a substantial loss may not be

sufficient to pay the full current market value or current replacement cost of the underlying investment.

Inflation, changes in building codes and ordinances, environmental considerations and other factors also

might make it unfeasible to use insurance proceeds to replace a property after it has been damaged or

destroyed. Under such circumstances, the insurance proceeds received by SIG might not be adequate to

restore its economic position with respect to its real estate properties. Additionally, SIG does not intend

to require mortgage insurance on Loans, which would protect the Company from losses due to defaults by

borrowers.

Fluctuations in Interest Rates

Mortgage interest rates are subject to abrupt and substantial fluctuations and the purchase of Secured

Debentures are a relatively illiquid investment. If prevailing interest rates rise above the average interest

rate being earned by Secured Debentures, the Investors may wish to liquidate their investment to take

advantage of higher available returns but may be unable to do so due to restrictions on transfer and

withdrawal.


16

Litigation Risks

SIG will act in good faith and use reasonable judgment in selecting borrowers and making, purchasing,

and managing the Loans. However, as a lender the Company is exposed to the risk of litigation by a

borrower, tenant, or other counter-party for any warranted or unwarranted allegations regarding the terms

of any transaction or the actions or representations of SIG in making, managing or foreclosing on Loans.

It is impossible to foresee the allegations that a party will bring against the Company, but the Company

will use its best efforts to avoid litigation if, in its sole and absolute discretion, it is in the best interests of

the Company. If the Company is required to incur legal fees and costs to respond to any lawsuit, the costs

and fees could have an adverse impact on the Company’s cash flow and profitability.

Participation with Other Parties

While SIG does not expect to participate in transactions with other parties, there is a possibility that it

may do so. When participating in Loans with other lenders the Company may not have control over the

determination of when and how to enforce a default, depending on the terms of any participation

agreement with the other lenders or owners, other lenders or owners may have varied amounts of input

into such decision-making process, including (without limitation) the ultimate decision-making power on

if and when to enforce a default. There is no certainty as to who will be a lead lender or lead investor (as

applicable) in a situation where SIG participates in ownership of a Loan with another entity.

Risks of Government Action

While the Company will use its best efforts to comply with all laws, including federal, state and local

laws and regulations, there is a possibility of governmental action to enforce any alleged violations of

(without limitation) mortgage lending laws which may result in legal fees and damage awards that would

adversely affect the applicable entity.

Unforeseen Changes

While the Company has enumerated certain material risk factors herein, it is impossible to know all risks

which may arise in the future. In particular, Members may be negatively affected by changes in any of

the following: (i) laws, rules and regulations; (ii) regional, national and/or global economic factors and/or

real estate trends; (iii) the capacity, circumstances and relationships of partners of Affiliates, the Company

or the Manager; (iv) general changes in financial or capital markets, including (without limitations)

changes in interest rates, investment demand, valuations or prevailing equity or bond market conditions;

or (v) the presence, availability or discontinuation of real estate and/or housing incentives.

The Company continuously encounters changes in its operating environment, and the Company may have

fewer resources than many of its competitors to continue to adjust to those changes. The operating

environment of the Company is undergoing rapid changes, with frequent introductions of laws,

regulations, competitors, market approaches, and economic impacts. Future success will depend, in part,

upon the ability of the Company to address the needs of its borrowers, sponsors and clients by adapting to

those changes and providing products and services that will satisfy the demands of their respective

businesses and projects. Many of the competitors have substantially greater resources to adapt to those

changes. The Company may not be able to effectively react to all of the changes in its operating

environment or be successful in adapting its products, services and approach.


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KEY PERSONNEL

The Company is currently managed by officers, listed below. The Company may hire additional officers

and employees once sufficient resources have been acquired to support the costs for such positions. Loan

Officers will be critical to support the anticipated rapid growth of the Company and to provide a level of

management depth. The role of the Loan Officer will be to help manage the daily flow of activities

between prospects, wholesalers/brokers and existing borrowers and to provide a second level of oversight

as well as generate additional business for SIG.

The following individuals comprise the officers of the Company as of the date of this Private Placement

Memorandum:

Max E. McDermott, 51, President of SIG. Mr. McDermott has served in the mortgage industry for over

24 years. Mr. McDermott serves as founder and President of SIG, and serves as a board member. In

1991 and 1992, he served as a loan officer for VMC Mortgage Co., a residential mortgage company based

in Marina Del Rey, California. In 1992, Mr. McDermott left VMC and co-founded Barrington Capital

Corporation, which focused on the origination and underwriting of residential mortgage loans. Mr.

McDermott served as President until he sold his interest in Barrington in 1994. From July 1995 to

present, Mr. McDermott has served as founder and President of Secured Income Group, Inc. (formerly

Capital Quick). SIG provides bridge, construction, and value added property financing to the professional

real estate community. As of 2017, SIG has grown to over $70 Million in assets under management with

Mr. McDermott’s involvement.

Amy Sutton, 43, Chief Operating Officer of SIG, has served in the mortgage and realty industry for over

10 years. From 2000-2005, she worked for New York and Company was promoted to District Sales

Manager for the Western United States. From 2006 to 2009, she worked for City Funding Group as

Branch Manager of their Los Angeles Office. From 2009 to 2012, Ms. Sutton worked for Prudential

California Realty as Branch Manager for their Rancho Cucamonga Office. From 2013 to 2014, she served

as COO of Realty One Group Trilogy. Ms. Sutton has been with the Company since 2014 as COO of

Secured Income Group, Arbor One Escrow, and Realty Masters.

Sabrina Rossetti, 34, Controller of SIG, has served in the finance industry for over 3 years. Mrs. Rossetti

earned a BA in Qualitative Analysis / Accounting from Arizona State in 2005, and her Masters in

Statistics from Claremont Graduate University in 2012. From 2013 to 2015, she worked for the County

of San Bernardino as Head of Statistical Analysis. Mrs. Rossetti joined the Company in 2015, and serves

as Controller for Secured Income Group, Arbor One Escrow, and Realty Masters.

LEGAL PROCEEDINGS

Neither the Company nor any of its directors or officers, are now, or within the past five (5) years have

been, involved in any material litigation or arbitration.


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INCOME TAX CONSIDERATIONS

Federal Income Tax Aspects

The following discussion generally summarizes the material federal income tax consequences of an

investment in the Company based upon the existing provisions of the Internal Revenue Code of 1986, as

amended (the “Code”), and applicable Treasury regulations thereunder, current administrative rulings and

procedures and applicable judicial decisions. However, it is not intended to be a complete description of

all tax consequences to prospective Investors with respect to their investment in the Company. No

assurance can be given that the Internal Revenue Service (the “IRS”) will agree with the interpretation of

the current federal income tax laws and regulations summarized below. In addition, the Company or the

Investors may be subject to state and local taxes in jurisdictions in which the Company may be deemed to

be doing business.

ACCORDINGLY, ALL PROSPECTIVE INVESTORS SHOULD INDEPENDENTLY SATISFY

THEMSELVES REGARDING THE POTENTIAL FEDERAL AND STATE TAX CONSEQUENCES

OF PARTICIPATION IN THE COMPANY AND ARE URGED TO CONSULT WITH THEIR OWN

TAX ADVISORS, ATTORNEYS OR ACCOUNTANTS IN CONNECTION WITH ANY INTEREST

IN THE COMPANY. EACH PROSPECTIVE INVESTOR/SHAREHOLDER SHOULD SEEK, AND

RELY UPON, THE ADVICE OF THEIR OWN TAX ADVISORS IN EVALUATING THE

SUITABILITY OF AN INVESTMENT IN THE COMPANY IN LIGHT OF THEIR PARTICULAR

INVESTMENT AND TAX SITUATION.

Tax Law Subject to Change

Frequent and substantial changes have been made, and will likely continue to be made, to the federal and

state income tax laws. The changes made to the tax laws by legislation are pervasive, and in many cases,

have yet to be interpreted by the IRS or the courts.

State and Local Taxes

A description or analysis of the state and local tax consequences of an investment in the Company is

beyond the scope of this discussion. Prospective Investors are advised to consult their own tax counsel

and advisors regarding these consequences and the preparation of any state or local tax returns that an

Investor may be required to file.

IRS Audits

Returns filed by the Company are subject to audit by the IRS. The IRS devotes considerable attention to

the proper application of the tax laws to corporations. An audit of the Company’s return may lead to

adjustments which adversely affect the federal income tax treatment of Secured Debentures and cause

Investors to be liable for tax deficiencies, interest thereon and penalties for underpayment. An audit of the

Company’s tax return could also lead to an audit of their individual tax return that may not otherwise have

occurred, and to the adjustment of items unrelated to the Company. Prospective investors should make

their determination to invest based on the economic considerations of the Company rather than any

anticipated tax benefits. Furthermore, the IRS has taken the position in Temp. Reg. 1.163-9T that any

interest on income taxes owed by an individual is personal interest, subject to limitations on deduction,

regardless of the nature of the activity that produced the income that was the source of the tax.


19

Understatement Penalties

The Company will be subject to a substantial understatement penalty in the event that it understates its

income tax. The IRS imposes a penalty of 20% on any substantial understatement of income tax.

Furthermore, the IRS can charge interest on underpayments of income tax exceeding One Hundred

Thousand ($100,000) for any tax year owing by certain corporations at a rate that is higher than the

normal interest rate. The Company strongly advises prospective investors to consult with their own tax

advisor to be sure that they fully evaluate the proposed tax treatment of Company as described herein.

ERISA CONSIDERATIONS

The following is a discussion of how certain requirements of the Employee Retirement Income Security

Act of 1974, as amended (“ERISA”) and the Code relating to Employee Benefit Plans and certain Other

Benefit Arrangements (each as defined below) may affect an investment in the Secured Debentures. It is

not, however, a complete or comprehensive discussion of all employee benefits aspects of such an

investment. If the prospective investors are trustees or other fiduciaries of an Employee Benefit Plan or

Other Benefit Arrangement, before purchasing Units, they should consult with their own independent

legal counsel to assure that the investment does not violate any of the applicable requirements of ERISA

or the Code, including, without limitation, the ERISA fiduciary rules and the prohibited transaction

requirements of ERISA and the Code.

ERISA Fiduciary Duties

Under ERISA, persons who serve as trustees or other fiduciaries of an Employee Benefit Plan have

certain duties, obligations and responsibilities with respect to the participants and beneficiaries of such

plans. Among the ERISA fiduciary duties are the duty to invest the assets of the plan prudently, and the

duty to diversify the investment of plan assets so as to minimize the risk of large losses. An “Employee

Benefit Plan” is a plan subject to ERISA that is an employee pension benefit plan (such as a defined

benefit pension plan or a section 401(k) or 403(b) plan) or any employee welfare benefit plan (such as an

employee group health plan).

Prohibited Transaction Requirements

Section 406 of ERISA and Section 4975 of the Code proscribe certain dealings between Employee

Benefit Plans or Other Benefit Arrangements, on the one hand, and “parties-in interest” or “disqualified

persons” with respect to those plans or arrangements on the other. An “Other Benefit Arrangement” is a

benefit arrangement described in Section 4975(e)(1) of the Code (such as a self-directed individual

retirement account (“IRA”), other than an Employee Benefit Plan.

Prohibited transactions include, directly or indirectly, any of the following transactions between an

Employee Benefit Plan or Other Benefit Arrangement and a party in interest or disqualified person:

(a) sales or exchanges of property;

(b) lending of money or other extension of credit;

(c) furnishing of goods, services or facilities; and

(d) transfers to, or use by or for the benefit of, a party in interest or disqualified person of any

assets of the Employee Benefit Plan or Other Benefit Arrangement.


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In addition, prohibited transactions include any transaction where a trustee or other fiduciary of an

Employee Benefit Plan or Other Benefit Arrangement:

(a) deals with plan assets for his own account,

(b) acts on the behalf of parties whose interests are adverse to the interest of the plan, or

(c) receives consideration for his own personal account from any party dealing with the plan

with respect to plan assets.

The terms “party in interest” under ERISA and “disqualified person” under the Code have similar

definitions. The terms include persons who have particular relationships with respect to an Employee

Benefit Plan or Other Benefit Arrangement, such as:

(a) fiduciaries;

(b) persons rendering services of any nature to the plan;

(c) employers any of whose employees are participants in the plan, as well as owners of 50%

or more of the equity interests of such employers;

(d) spouses, lineal ascendants, lineal descendants, and spouses of such ascendants or

descendants of any of the above persons;

(e) employees, officers, directors and 10% or more owners of such fiduciaries, service

providers, employers or owners;

(f) entities in which any of the above-described parties hold interests of 50% or more; and

(g) 10% or more joint venturers or partners of certain of the parties described above.

Certain transactions between Employee Benefit Plans or Other Benefit Arrangements and parties in

interest or disqualified persons that would otherwise be prohibited transactions are exempt from the

prohibited transaction rules due to the application of certain statutory or regulatory exemptions. In

addition, the United States Department of Labor (the “DOL”) has issued class exemptions and individual

exemptions for certain types of transactions. Violations of the prohibited transaction rules may require

the prohibited transactions to be rescinded and will cause the parties in interest or disqualified persons to

be subject to excise taxes under Section 4975 of the Code.

Investments in the Company

If a prospective investor is a fiduciary of an Employee Benefit Plan, the investor must act prudently and

ensure that the plan’s assets are adequately diversified to satisfy the ERISA fiduciary duty requirements.

Whether an investment in the Company is prudent and whether an Employee Benefit Plan’s investments

are adequately diversified must be determined by the plan’s fiduciaries in light of all of the relevant facts

and circumstances. A fiduciary should consider, among other factors, the limited marketability of the

Secured Debentures.


21

Prospective investors also should be aware that under certain circumstances the DOL may view the

underlying assets of the Company as “plan assets” for purposes of the ERISA fiduciary rules and the

ERISA and Internal Revenue Code prohibited transaction rules. DOL regulations indicate that Company

assets will not be considered plan assets if less than 25% of the value of the Secured Debentures is held

by Employee Benefit Plans and Other Benefit Arrangements.

The Company anticipates that if any investor is an Employee Benefit Plan subject to ERISA, the

Company will limit the investments by all Employee Benefit Plans and Other Benefit Arrangements to

ensure that the 25% limit is not exceeded. Because the 25% limit is determined after every subscription

or redemption, the Company has the authority to require the redemption of all or some of the Secured

Debentures held by any Investor that is an Employee Benefit Plan or Other Benefit Arrangement if the

continued holding of such Secured Debentures, in the sole opinion of the Company, could result in the

Company being subject to the ERISA fiduciary rules.

If there are no Employee Benefit Plan investors in the Company, the Company anticipates that

investments by Other Benefit Arrangements (such as self-directed IRAs) may exceed the 25% limit. This

may cause the underlying assets of the Company to be considered plan assets for purposes of the Code

prohibited transaction rules. In such a case, the Other Benefit Arrangement investors must ensure that

their investments do not constitute prohibited transactions under Section 4975 of the Code. Such

investors should consult with independent legal counsel on these issues.

Special Limitations

The discussion of the ERISA fiduciary aspects and the ERISA and Code prohibited transaction rules

contained in this Memorandum is not intended as a substitute for careful planning. The applicability of

ERISA fiduciary rules and the ERISA or Code prohibited transaction rules to Investors may vary from

one Investor to another, depending upon that Investor’s situation. Accordingly, prospective investors

should consult with their own attorneys, accountants and other personal advisors as to the effect of

ERISA and the Code on their situation of a purchase and ownership of the Secured Debentures and as to

potential changes in the applicable law.

LEGAL MATTERS

The Company has retained Geraci Law Firm, APC of Irvine, California to advise it in connection with the

preparation of this Offering, the Secured Debenture, the Subscription Agreement and any other

documents related thereto. Geraci Law Firm, APC has not been retained to represent the interests of any

Investors or Investors in connection with this Offering. All investors that are evaluating or purchasing

Promissory Secured Debentures should retain their own independent legal counsel to review this

Offering, the Memorandum, the Promissory Note, the Subscription Agreement and any other documents

and matters related whatsoever to this Offering, and to advise them accordingly.

FINANCIAL INFORMATION

The following financial statements attached hereto in Exhibit D have been prepared from the Company’s

books and records by the Company’s accountant and management. They are unaudited. Management

believes that the statements fairly reflect the financial condition and operating results of the Company.

The Company has been taxed as a subchapter S corporation. By following certain guidelines, income of a

subchapter S corporation can be passed through to stockholders without the corporation being subject to

the federal corporate income tax. Subchapter S corporations must divest most of their income to their

stockholders in order to retain their subchapter S status.


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ADDITIONAL INFORMATION AND UNDERTAKINGS

The Company undertakes to make available to each prospective investor every opportunity to obtain any

additional information from the Company necessary to verify the accuracy of the information contained in

this Memorandum, to the extent that the Company possesses such information or can acquire it without

unreasonable effort or expense. This additional information includes, without limitation, all the

organizational documents of the Company, recent financial statements for the Company and all other

documents or instruments relating to the operation and business of the Company and material to this

offering and the transactions contemplated and described in this Memorandum so long as such additional

information does not violate any Investor’s privacy or confidentiality rights.


23

EXHIBIT A

HOW TO SUBSCRIBE FOR A SECURED DEBENTURE

Any subscriber who wishes to open an account and purchase a Secured Debenture should deliver the

following documents to the Company's Corporate Headquarters, at 17592 E. 17th Street, STE

100, Tustin, CA 92780;

One dated and signed Subscription Agreement (Exhibit B); and

A wire transfer* or check payable to the Company in the amount of the face value of the

Secured Debenture the subscriber wishes to purchase.

Upon acceptance by the Company, an executed original Secured Debenture with the

selected term and rate will be returned to the subscriber along with a copy of the

executed Subscription Agreement. Please keep them in a safe place with your other

important papers.

*WIRE INSTRUCTIONS:

BANK: Farmer’s & Merchants Bank of Long Beach

4827 E. 2nd Street

Long Beach, CA 90803

(562) 621-1430

ROUTING #: 122 201 198

ACCOUNT #: 08-06266-8

FOR CREDIT TO: Secured Income Group, Inc.

17592 E. 17th Street #100

Tustin, CA 92780

Please contact Sabrina Rossetti, Chief Financial Officer, for any questions

regarding your investment.

(714) 925-3142

[email protected]


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EXHIBIT B

(SEE ATTACHED)


25

EXHIBIT C

SECURED DEBENTURE

THE SALE OF THESE SECURED DEBENTURES HAS NOT BEEN REGISTERED WITH THE

SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS

AMENDED, IN RELIANCE UPON THE EXEMPTIONS FROM SUCH REGISTRATION

REQUIREMENTS SET FORTH IN SECTION 4(2) OF THE ACT AND REGULATION A

PROMULGATED THEREUNDER. THESE SECURED DEBENTURES HAVE NOT BEEN

QUALIFIED OR REGISTERED IN ANY STATE IN RELIANCE UPON THE EXEMPTIONS

FROM SUCH QUALIFICATION OR REGISTRATION UNDER STATE LAW. THESE

SECURED DEBENTURES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER OR

DISPOSITION PURSUANT TO THE OFFERING CIRCULAR OF THE UNDERSIGNED

BORROWER THROUGH WHICH THESE SECURED DEBENTURES ARE TO BE ISSUED.

ANY PURCHASER OF THESE SECURED DEBENTURES SHOULD READ AND

UNDERSTAND THE OFFERING CIRCULAR OF THE UNDERSIGNED BORROWER

THROUGH WHICH THESE SECURED DEBENTURES ARE TO BE ISSUED.

$ .00 Date: , 20__

Tustin, California

FOR VALUE RECEIVED, the undersigned, SECURED INCOME GROUP, INC., a

California corporation (“Borrower”), hereby promises to pay to

(“Lender”), the principal sum of

Dollars ($ .00), together with interest on the unpaid principal balance of this Secured

Debenture (the “Secured Debenture”), as follows:

1. Interest. Interest on the unpaid principal balance will accrue from the date the proceeds have

been distributed to or on behalf of the Borrower (the “Date of Advance”) at a fixed Interest Rate per

annum in each year through the Maturity Date. Interest shall be computed based on a 360-day year

and the actual number of days elapsed. Interest computed based on a 360-day year is greater than

interest computed based on a 365-day year. Interest payments will continue until the Secured

Debenture is fully paid, with any and all unpaid principal and interest due and payable on the date

that is exactly the Secured Debenture Term from the date of the Secured Debenture (the “Maturity

Date”), unless such Maturity Date is extended or renewed as provided in the Secured Debenture or as

otherwise agreed to in writing by Lender and Borrower.

For the purposes hereof, as of the date hereof, the Lender shall select the Interest Rate and

Term. Such election is irrevocable and shall apply through the Maturity Date of the Secured

Debenture.


26

Please check below and initial to the left of your selection:

For a Secured Debenture Term of six (6) months, the applicable Interest Rate

Will be defined as Six and 15/100 Percent (6.15%) annually (hereinafter,

“Six Month Secured Debenture”).

For a Secured Debenture Term of nine (9) months, the applicable Interest

Rate will be defined as Six and 60/100 Percent (6.60%) annually

(hereinafter, “Nine Month Secured Debenture”).

For a Secured Debenture Term of twelve (12) months, the applicable Interest

Rate will be defined as Seven and 15/100 Percent (7.15%) annually

(hereinafter, “Twelve Month Secured Debenture”).

For a Secured Debenture Term of twenty-four (24) months, the applicable

Interest Rate will be defined as Seven and 65/100 Percent (7.65%) annually

(hereinafter, “Twenty-Four Month Secured Debenture”).

For a Secured Debenture Term of thirty-six (36) months, the applicable

Interest Rate will be defined as Eight and 25/100 Percent (8.25%) annually

(hereinafter, “Thirty-Six Month Secured Debenture”).

At Lender’s reasonable discretion, upon the Maturity Date of Secured Debenture, the term of

the Secured Debenture will rollover automatically into a new term with the same Interest Rate,

Payment Schedule, Term, and any other material provision. If Lender elects not to rollover the term

of the Secured Debenture automatically, Lender shall provide Borrower with 90 days’ written notice

of such election prior to the maturity date of ___________________ (insert maturity date). If Lender

elects to change the terms of the Secured Debenture upon rollover, Lender shall provide Borrower

with 60 days’ written notice of such election prior to the maturity date of ___________________

(insert maturity date).

Interest on the unpaid principal balance will accrue interest starting on the date (the “Interest

Date”) on which the investment proceeds have been distributed by the Lender to, or on behalf of, the

Borrower following acceptance of the Borrower’s subscription agreement by the Borrower, payment

of such interest will be made at the end of each yearly quarter (March 31, June 30, September 30, and

December 31) (each a “Quarter”) from Interest Date.


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2. Payment of Interest.

2.1 Payments.

2.1.1 Quarterly Payments. Lender will receive quarterly payments from

Borrower on the following schedule:

Please check below and initial to the left of your selection:

For a Six Month Secured Debenture, each quarterly installment payment shall

be in the amount of Dollars ($ .__).

For a Nine Month Secured Debenture, each quarterly installment payment

shall be in the amount of Dollars ($ .__).

For a Twelve Month Secured Debenture, each quarterly installment payment

shall be in the amount of Dollars ($ .__).

For a Twenty-Four Month Secured Debenture, each quarterly installment

payment shall be in the amount of Dollars ($ .__).

For a Thirty-Six Month Secured Debenture, each quarterly installment

payment shall be in the amount of Dollars ($ .__).

Borrower shall make these payments as interest-only. Payments shall be made on the last

day of each Quarter until the Maturity Date.

2.1.2 Daily Payments. In the event that a full Quarter has not passed before a

quarterly payment is due or the Maturity Date occurs, interest payments will be calculated on a daily

basis based on a 360-day year, and due at the end of the Quarter or on the Maturity Date. Lender will

receive payments based on the daily interest rate.

2.2 Order of Application of Payments. Unless otherwise agreed to in writing by the

parties or required by applicable law, each payment under this Secured Debenture shall be credited in

the following order: (a) Late Charges due to Lender; (b) interest payable under the Secured

Debenture, including accrued but unpaid interest, and (c) principal amount outstanding under the

Secured Debenture.

2.3 Delivery of Payments. Payments shall be made to Lender at his, her or its address,

which is provided in Section 10 below, or to another address if so designated in writing by Lender.

3. Late Charge. Borrower acknowledges and agrees that default in the payment of any sum

due under this Secured Debenture will result in losses and additional expenses to Lender in servicing

the indebtedness evidenced by this Secured Debenture, handling such delinquent payments, and

meeting its other financial obligations.


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4. Default.

4.1 Events of Default. On (a) Borrower's failure to make any three (3) consecutive

payments due under this Secured Debenture when due and payable, upon receipt of written notice

from Lender of such failure, (b) any breach of any other material covenant or obligation in this

Secured Debenture, or (c) the occurrence of events specified in Section 8 below, an event of default

(“Event of Default”) shall have occurred. If an Event of Default occurs that remains uncured after

written notice of such Event of Default from Lender to Borrower, then Lender may, at its option,

declare this Secured Debenture (including, without limitation, all accrued interest) due and payable

immediately regardless of the Maturity Date. If an Event of Default occurs that remains uncured, in

lieu of payment in full to Lender, Borrower may, at its sole option, assign the income stream secured

by certain assets that it holds directly to Lender.

4.2 Cure. Upon the occurrence of any Event of Default, the Borrower shall have thirty

(30) days from the date of written notice from Lender of such Event of Default to cure such Event of

Default; provided, that if the cure is of a nature that reasonably requires under the circumstances

greater than thirty (30) days to cure such Event of Default, then Borrower shall only have the

obligation to have initiated within thirty (30) days of Lender’s notice of the Event of Default

reasonable steps to produce a cure.

5. Prepayment Option.

5.1 No Prepayment Premium or Penalty. If Borrower prepays this Secured Debenture

in whole or in part at any time from the date of this Secured Debenture, no prepayment premium or

penalty shall be due to Lender. All prepayments of principal on this Secured Debenture shall be

applied to the most remote principal installment or installments then unpaid.

5.2 Ability to Pay Prepayment. Borrower may, at its sole option, elect to prepay all or

any portion of the Secured Debenture, including any unpaid principal balance, at any time and shall

give Lender five (5) days’ prior written notice of its intention to prepay all or any portion of this

Secured Debenture. Said notice shall include the amount Borrower intends to prepay.

5.3 Prepayment Waivers. BORROWER AND LENDER EXPRESSLY

ACKNOWLEDGE AND AGREE THAT BORROWER HAS THE RIGHT TO PREPAY THIS

SECURED DEBENTURE AT ANY TIME AS PROVIDED IN THIS SECTION 5 HEREOF.

BORROWER AND LENDER FURTHER ACKNOWLEDGE AND AGREE THAT THERE

SHALL BE NO PREPAYMENT PREMIUM OR PENALTY DUE TO THE LENDER IN

CONNECTION WITH ANY PREPAYMENT OF THE SECURED DEBENTURE, INCLUDING

ANY UNPAID PRINCIPAL BALANCE, BY BORROWER.

6. Early Withdrawal.

6.1 Early Withdrawal. A Lender may request an early withdrawal of the original

principal balance of his, her or its Secured Debenture. The Borrower may fulfill an early withdrawal

request at its sole and absolute discretion and has no commitment (implied or express) to complete a

request for early withdrawal. The Borrower may charge Lender fees, penalties and/or additional

interest if the Borrower elects to process any early withdrawal (in whole or in part).


29

6.2 Ability to Request Early Withdrawal. Lender may request an early withdrawal of

any portion of the original principal balance of this Secured Debenture by giving Borrower fourteen

(14) days prior written notice of its intention to request an early withdrawal of its original principal

balance, in whole or in part, under this Secured Debenture. Said notice shall include the amount

Lender requests to withdraw. Notwithstanding the foregoing, the Borrower may fulfill the early

withdrawal request at its sole and absolute discretion and has no commitment (implied, express or

otherwise) to complete a request for early withdrawal. Lender understands and agrees that Borrower

has no obligation to complete a request for early withdrawal and may not fulfill the Lender’s request

for any reason or no reason at all. Lender acknowledges and agrees that the Secured Debenture is not

a liquid investment and may in fact be highly illiquid, resulting in a partial or total inability for

Lender to receive a withdrawal of any portion of its original principal balance prior to the Maturity

Date.

6.3 Early Withdrawal Waivers. BORROWER AND LENDER ACKNOWLEDGE

AND AGREE THAT LENDER MAY REQUEST AN EARLY WITHDRAWAL OF ITS

ORIGINAL PRINCIPAL BALANCE UNDER THIS SECURED DEBENTURE. LENDER

FURTHER ACKNOWLEDGES AND AGREES THAT BORROWER HAS NO DUTY TO

HONOR LENDER’S REQUEST FOR AN EARLY WITHDRAWAL OF FUNDS AND THERE IS

ABSOLUTELY NO GUARANTEE THAT ANY EARLY WITHDRAWAL REQUEST WILL BE

FULFILLED OR COMPLETED BY BORROWER AT ANY TIME. LENDER UNDERSTANDS

AND AGREES THAT ANY FUNDS LOANED TO THE BORROWER ARE NOT READILY

AVAILABLE OR FREELY LIQUID. LENDER MAY REQUEST, BUT SHOULD NOT EXPECT

TO AND HAS NO RIGHT TO DEMAND, THE RETURN OF ANY PORTION OF ITS

ORIGINAL PRINCIPAL BALANCE UNDER THIS SECURED DEBENTURE PRIOR TO THE

MATURITY DATE.

7. Interest on Interest. If any interest payment under this Secured Debenture is not paid when

due, the unpaid interest shall be added to the principal of this Secured Debenture, shall become and

be treated as principal, and shall thereafter bear like interest. For the avoidance of doubt, such

additions to the principal of this Secured Debenture shall not be deemed to constitute the original

principal balance of this Secured Debenture as such term is referenced in Section 6 hereof.

8. Due-on-Sale, Transfer, or Insolvency.

8.1 Borrower’s Action. If Borrower sells, conveys, assigns or otherwise transfers all or

substantially all of the beneficial interest of Borrower (which shall not include a sale or other transfer

to any affiliate of Borrower) or commences any proceeding under bankruptcy or insolvency laws,

without the prior written consent of Lender, then an Event of Default shall have occurred and Lender

may elect to accelerate the Maturity Date and declare the entire unpaid principal, accrued interest,

and other sums due hereunder to be immediately due and payable pursuant to the provisions of

Section 4 hereof.

8.2 Lender’s Action. If Lender sells, conveys, assigns or otherwise transfers all or

substantially all of the beneficial interest of Lender (which shall include a sale or other transfer to any

affiliate of Borrower) or commences any proceeding under bankruptcy or insolvency laws, without

the prior written consent of Borrower, then Borrower may elect to accelerate the Maturity Date and

declare the entire unpaid principal, accrued interest, and other sums due hereunder to be immediately

due and payable without penalty to Borrower.


30

9. Attorneys’ Fees. In any dispute or litigation arising hereunder or related to this Secured

Debenture, the losing party shall pay the reasonable costs, expenses, and attorneys’ fees paid or

incurred by the prevailing party.

10. Notice. Any notice required to be provided in this Secured Debenture shall be given in

writing and shall be sent (a) for personal delivery by a delivery service that provides a record of the

date of delivery, the individual to whom delivery was made, and the address where delivery was

made; (b) by first-class certified United States mail, postage prepaid, return receipt requested; or (c)

by a nationally recognized overnight courier service, marked for next day business delivery. All

notices shall be addressed to the party to whom such notice is to be given at the following addresses

Lender:

Borrower: Secured Income Group, Inc.

17592 East 17th Street, Suite 100

Tustin, California 92780

or to such other address as a party may designate by written notice to the other party. All notices

shall be deemed effective on the earliest of (a) actual receipt; (b) rejection of delivery by the

receiving party; (c) if sent by certified mail, the third day on which regular United States mail

delivery service is provided after the day of mailing or, if sent by overnight delivery service, on the

next day on which such service makes next-business-day deliveries after the day of sending.

11. Assignment. This Secured Debenture inures to and binds the heirs, legal representatives,

successors, and permitted assigns of Borrower and Lender; provided, however, that Borrower may

not assign this Secured Debenture, or assign or delegate any of its rights or obligations (except to any

affiliate of Borrower), without Lender's prior written consent in each instance. Lender may, upon at

least ten (10) business days’ prior written notice to Borrower, transfer this Secured Debenture or sell

or assign participations or other interests in all or any part of this Secured Debenture. Whenever

used herein, the terms “Lender” and “Borrower” shall be deemed to include their respective

permitted heirs, legal representatives, successors and permitted assigns.

12. Governing Law and Venue. This Secured Debenture shall be construed and enforced for all

purposes according to the laws of the State of California, excluding its conflicts of law provisions. In

any dispute, controversy, claim or cause of action arising from or in connection with this Secured

Debenture, both parties agree to submit to the jurisdiction in Tustin, California or otherwise as

required by Section 14 below.

13. Made or Arranged by a Broker. Borrower and Lender acknowledge that this Secured

Debenture may have been made or arranged by a licensed real estate broker or a securities broker-

dealer licensed under the Financial Industry Regulatory Authority (“FINRA”) and that the broker’s

participation may have been a material factor in consummating this loan.

14. Arbitration. The parties expressly agree that all disputes, claims, controversies and other

matters of contention arising out of or relating to this Secured Debenture, or the performance or

breach thereof, shall be submitted to confidential and binding arbitration as specified herein. The


31

arbitration shall take place in Tustin, California (or as close thereto as possible, in the event that such

venue is not available for the arbitration) and be held before and decided by a single neutral

arbitrator, who shall be mutually selected by the parties and shall have experience in evaluating

matters similar to the subject matter hereof. If the parties cannot agree as to an arbitrator, each party

shall nominate one temporary arbitrator (who shall have experience in evaluating matters similar to

the subject matter hereof) and together these two temporary arbitrators shall select the single neutral

arbitrator to hold and decide the arbitration between the parties. The parties shall be entitled to

undertake reasonable discovery (which shall be kept to a minimum without first securing the

approval of the arbitrator) as a part of the arbitration. The final award decision of the arbitrator on all

matters of contention between the parties shall be considered final and the arbitrator shall have the

power to award to the prevailing party all costs and expenses of the arbitration, including, without

limitation, attorneys’ fees.

15. Usury. All agreements between Borrower and Lender are expressly limited, so that in no

event or contingency, whether because of the advancement of the proceeds of this Secured

Debenture, acceleration of maturity of the unpaid principal balance, or otherwise, shall the amount

paid or agreed to be paid to Lender for the use, forbearance, or retention of the money to be advanced

under this Secured Debenture exceed the highest lawful rate permissible under applicable usury laws.

If, under any circumstances, fulfillment of any provision of this Secured Debenture, after timely

performance of such provision is due, shall involve exceeding the limit of validity prescribed by law

that a court of competent jurisdiction deems applicable, then, ipso facto, the obligations to be

fulfilled shall be reduced to the limit of such validity. If, under any circumstances, Lender shall ever

receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive

interest shall be applied to reduce the unpaid principal balance under this Secured Debenture and not

to pay interest, or, if such excessive interest exceeds the unpaid principal balance under this Secured

Debenture, such excess shall be refunded to Borrower. This provision shall control every other

provision of all agreements between Borrower and Lender.

16. Representation on Use of Proceeds. Borrower represents and warrants to Lender that the

proceeds of this Secured Debenture will be used solely for business, commercial investment or

lending, or similar purposes, and that no portion of it will be used for personal, family, or household

purposes.

17. No Modifications or Amendments; No Waiver. Except as specified herein, this Secured

Debenture may not be amended, modified or changed, nor shall any waiver of the provisions hereof

be effective, except only by an instrument in writing signed by the party against whom enforcement

of any waiver, amendment, change, modification or discharge is sought. The lack of enforcement by

either party of any of its rights, privileges or benefits under this Secured Debenture shall not

constitute a waiver, whether express or implied, of such rights, privileges or benefits. Additionally, a

waiver of any provision in one event shall not be construed as a waiver of any other provision at any

time, as a continuing waiver, or as a waiver of such provision on a subsequent event.

18. Severability. Any provision of this Secured Debenture which shall be held by a court of

competent jurisdiction to be invalid, void or illegal shall in no way affect, impair or invalidate any

other provision or term hereof, and such other provisions or terms shall remain in full force and

effect. In addition, such invalid, void or illegal provision shall be interpreted by the court so that

both the intent and objective of the parties with respect to such provision are effectuated to the

maximum extent permitted by applicable law.


32

19. Financial Information. At the Lender’s specific written request, within one hundred and

twenty (120) days following the end of each fiscal year of Company, subsequent to the date of the

Secured Debenture and prior to the Maturity Date, Borrower will deliver a copy of its annual

financial statements to the Lender; provided, that Borrower shall only have a duty to deliver said

financial statements if Lender expressly requested the same in writing.

20. Counterparts; Facsimile. This Secured Debenture may be executed via facsimile and in

separate counterparts, each of which, when so executed shall be deemed an original and all such

counterparts shall constitute one and the same original agreement.

21. Headings. Section and paragraph headings are for reference only and shall not affect the interpretation or meaning of any provisions of this Secured Debenture.

22. Lender Representations. If Lender is a foreign person as defined by the Internal Revenue

Code §§ 871(h) and 881(c), et seq., as amended (the “Code”), Lender shall deliver to Borrower

evidence proving Lender’s status as a foreign person prior to the execution of this Secured

Debenture. Subject and pursuant to the Code, Lender makes the following representations to

Borrower: (i) Lender is not a bank extending credit in the course of its ordinary trade or business, as

defined by the Code; (ii) Lender is not a “ten percent shareholder” of Borrower as defined by the

Code; and, (iii) Lender, and/or its principals, members, officers, shareholders, or directors share no familial relation with any principal, member, officer, director, or shareholder of Borrower.

[Signature Page Follows]


33

IN WITNESS WHEREOF, each of Borrower and Lender has executed this Secured Debenture as of

the date first set forth above.

BORROWER:

SECURED INCOME GROUP, INC.,

A CALIFORNIA CORPORATION

By:

Name: Max E. McDermott

Title: President

LENDER:

By:

Name:

By:

Name:


34

EXHIBIT D

Security Agreement

This AGREEMENT is made on this ____________ day of ___________, 20___ between

Secured Income Group, Inc. of 17592 East 17th Street, Suite 100, Tustin, California, 92780,

hereinafter Debtor and

_____________________________________________________________________ residing at

_________________________________________________________California

_________________, hereinafter Secured Debenture Holder.

The Parties to this Agreement agree to the following:

1. Creation of Security Interest

The Secured Debenture Holder shall secure the payment and performance of Debtor's Secured

Debenture in the principal amount of $_______________________________________ and the

payment and performance of all other liabilities and obligations of Debtor to Secured Debenture

Holder of every kind and description, direct or indirect, absolute or contingent, due or to become

due now existing or hereafter arising, hereinafter Obligations.

In addition, Debtor hereby grants to Secured Debenture Holder a security interest in the

Collateral described in Paragraph 2 to secure the performance or payment of the Obligations of

Debtor to Secured Debenture Holder under Paragraph 4.

2. Collateral

The Collateral of this Security Agreement is as follows:

All promissory notes receivable by Debtor that are secured by deeds of trust encumbering real

property, whether said notes are currently existing or hereafter received.

3. Security Interest

Debtor grants to Secured Debenture Holder a security interest in the Collateral as described in

Paragraph 2 now or hereafter placed upon the premises located at 17592 East 17th Street, Suite

100, Tustin, California 92780, or used in connection therewith and in which Debtor now has or

hereafter acquires any right and the proceeds wherefrom. Debtor also assigns to Secured

Debenture Holder a security interest in any other rights or interests which Debtor now has or

hereafter acquires.


35

4. Warrants and Covenants

Debtor hereby warrants and covenants that Debtor shall pay to Secured Debenture Holder the

sum or sums evidenced by the Secured Debenture or Secured Debentures executed pursuant to

this Security Agreement in accordance with the terms of the Secured Debenture or Secured

Debentures. The collateral will not be removed from the Premises other than in the ordinary

course of business. Debtor will immediately notify Secured Debenture Holder in writing of any

change in Debtor's address. The Debtor will not hypothecate, sell, dispose, or otherwise transfer

the collateral or any interest therein without the prior written consent of Secured Debenture

Holder, and the Debtor shall keep the collateral free from unpaid charges, taxes, and liens.

Debtor shall maintain insurance at all times with respect to all collateral against risks of fire,

theft, and other such risks and in such amounts as Secured Debenture Holder may require. The

Debtor shall make all repairs, replacements, additions, and improvements necessary to maintain

any Collateral in good working order and condition.

5. Default

The Debtor shall be in default under this Agreement upon any non-compliance with or non-

performance of the Debtor's obligations under this Agreement. Upon default and at any time

thereafter, Secured Debenture Holder may declare all obligations secured hereby immediately

due and payable and shall have the remedies of a Secured Debenture Holder under the law.

6. Waiver

No waiver by Secured Debenture Holder of any default shall operate as a waiver of any other

default or of the same default on a future occasion.

7. Notices

Any notices required to be given under this Agreement by either party to the other may be

effected by personal delivery in writing or by registered or certified mail, postage prepaid, return

receipt requested. A notice shall be deemed communicated as of the time of delivery if

personally delivered, or as of the time of mailing. The address of the Debtor for the purpose of

receiving notice shall be 17592 East 17th Street, Suite 100, Tustin, California. 92780 The

address of the Secured Party for this purpose shall be _________________________________,

____________________, California _________________. Either party may change its address

for the purpose of receiving notice by giving the other party written notice of the change.

8. Governing Law

This Agreement shall be construed under and in accordance with the laws of California and all

obligations of the parties created under this Agreement are performable in California.

9. Parties Bound

This Agreement shall be binding on and inure to the benefit of the parties to this Agreement and

their respective heirs, executors, administrators, legal representatives, successors and assigns as

permitted by this Agreement.


36

10. Legal Construction

In the event, any one or more of the provisions contained in this Agreement shall for any reason

be held invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or

unenforceability shall not affect any other provision. This Agreement shall be construed as if the

invalid, illegal, or unenforceable provision had never been contained in it.

11. Prior Agreements Superseded

This Agreement constitutes the sole and only agreement of the parties and supersedes any prior

understandings or written or oral agreements between the parties respecting the subject matter of

this Agreement.

12. Amendments

This Agreement may be amended by the parties only by a written agreement.

13. Attorney's Fees

If any action at law or in equity is brought to enforce or interpret the provisions of this

Agreement, the prevailing party will be entitled to reasonable attorneys' fees in addition to any

other relief to which that party may be entitled.

14. Signatories

This Agreement shall be signed on behalf of Secured Income Group, Inc. by Max McDermott, its

President, and on behalf of Secured Debenture Holder by

________________________________, and shall be effective as of the date first written above.

Secured Income Group, Inc.

_______________________________

By: Max McDermott, its President

Secured Debenture Holder

By:________________________________

Name:


37

EXHIBIT E

SECURED INCOME GROUP, INC Income Statement

For the Twelve Months Ending December 31, 2019

Year to Date

Revenues REVENUE

$4,238,411.83 70.91%

OTHER REVENUE

$62,180.00 1.04%

OTHER FEES

$1,348,508.29 22.56%

LATE FEES

$135,343.89 2.26%

SERVICE FEES

$0.00 0.00%

Misc Income

$0.00 0.00%

RENTAL INCOME

$0.00 0.00%

EXTENSION FEES

$192,312.75 3.22%

INSURANCE PROCEEDS

$0.00 0.00%

Total Revenues

$5,976,756.76 100.00%

Cost of Sales

Total Cost of Sales

$0.00 0.00%

Gross Profit

$5,976,756.76 100.00%

Expenses DUES & SUBSCRIPTIONS

$3,200.00 0.05%

ADVERTISING

$38,687.10 0.65%

LEGAL SERVICES

$28,539.87 0.48%

DEBENTURE PREPARATION

$2,500.00 0.04%

FORCED PLACED PROP. INSURANCE

$51,415.28 0.86%

INSURANCE - OTHER

$3,450.00 0.06%

PROCTOR FINANCIAL-INSURANCE

$590.00 0.01%

DOCUMENT PREPARATION

$45,862.50 0.77%

INSPECTION FEES

$16,790.00 0.28%

MOVING EXPENSES

$0.00 0.00%

ANSWERING SERVICE

$0.00 0.00%

OFFICE RENT

$53,820.00 0.90%

OFFICE SUPPLIES

$36,347.07 0.61%

ADP PROCESSING FEES

$5,200.17 0.09%

PRINTING

$8,570.37 0.14%


38

ACCOUNTING SERVICES

$26,537.50 0.44%

CONSULTING SERVICES

$0.00 0.00%

LICENSES

$850.00 0.01%

COMPUTER EXPENSE

$14,878.28 0.25%

TRW FEES

$0.00 0.00%

F & M WIRE CHARGES

$4,460.00 0.07%

FCI Fees

$0.00 0.00%

APPRAISAL FEES

$65,125.00 1.09%

CNB LOAN COSTS

$0.00 0.00%

F & M MISC. LOAN COSTS

$7,418.75 0.12%

F & M COLLECTION FEES

$0.00 0.00%

COMMISSIONS-MISC

$8,000.00 0.13%

BONUSES

$62,800.00 1.05%

SALARIES

$462,900.00 7.75%

PAYROLL TAXES

$44,807.40 0.75%

1999 PENSION

$0.00 0.00%

1999 IRA SEP

$0.00 0.00%

1998 PENSION

$0.00 0.00%

1997 IRA SEP

$0.00 0.00%

HEALTH INSURANCE

$37,434.47 0.63%

SEP/IRA-2007

$0.00 0.00%

PENSION-2002

$0.00 0.00%

PENSION-2001

$0.00 0.00%

SEP/IRA-2001

$0.00 0.00%

TELEPHONE

$20,841.56 0.35%

CELLULAR PHONE

$3,846.82 0.06%

UTILITIES

$9,965.22 0.17%

MISCELLANEOUS

$21,953.25 0.37%

ADVERTISING

$0.00 0.00%

COURIER EXPENSE

$21,915.68 0.37%

BAD DEBT EXPENSE

$0.00 0.00%

CONFERENCES

$2,825.00 0.05%

TRAVEL

$0.00 0.00%

MEALS & ENTERTAINMENT

$3,271.42 0.05%

DEPRECIATION

$0.00 0.00%

AMORTIZATION

$0.00 0.00%

RENTAL EXPENSE

$0.00 0.00%

REO-SERVICES

$0.00 0.00%

Officers Life Insurance

$0.00 0.00%

Moving Expense

$0.00 0.00%

Repairs/Maintenance

$0.00 0.00%

STATE INCOME TAX EXPENSE

$800.00 0.01%

FEDERAL INCOME TAX EXPENSE

$800.00 0.01%


39

Property Taxes

$0.00 0.00%

INT. EXP.-CCM CONV. DEBENTURE

$0.00 0.00%

INT EXP-MARNO-MAX CONV. DEB.

$0.00 0.00%

INT. EXP-NOTE PAY. M & M TRUST

$0.00 0.00%

INT EXP.-BAY LAKE CONV. DEB.

$0.00 0.00%

INT. EXP.- F & M NOTES PAYABLE

$0.00 0.00%

INT EXP-NOTE PAYABLE BAY LAK

$0.00 0.00%

INT EXP-NOTE PAYABLE-CCM

$0.00 0.00%

INT EXP-NOTE PAYABLE MLP

$0.00 0.00%

INT EXP-MM IRREVOCABLE TRUS

$0.00 0.00%

INT EXP-MM III TRUST

$0.00 0.00%

INTEREST EXPENSE-DEBENTURES

$4,062,542.04 67.97%

INT EXP-CNB LINE OF CREDIT

$0.00 0.00%

INT EXP-NOTE PAYABLE A. WARR

$0.00 0.00%

INT EXP-NOTE PAYABLE CHAYSE

$0.00 0.00%

INT EXP-NOTE PAYABLE Max M

$0.00 0.00%

INTEREST EXPENSE- OTHER

$0.00 0.00%

DIVIDEND INCOME

$0.00 0.00%

INTEREST INCOME

$0.00 0.00%

CHARITABLE CONTRIBUTIONS

$4,200.00 0.07%

INVESTMENT PROPERTY EXPENS

$0.00 0.00%

Total Expenses

$5,183,144.75 86.72%

Net Income $

$793,612.01 13.28%

[Balance Sheet Follows]


40

SECURED INCOME GROUP, INC.

Balance Sheet

December 31, 2019

ASSETS

Current Assets

CASH-F & M-SIG CHECKING $217,470.74 CASH-F & M-SIG SAVINGS $2,402,801.44 CASH-F&M SIG TRUST $83,951.88 NOTES RECEIVABLE-CURRENT $68,504,680.56 INTEREST RECEIVABLE $251,448.32

Total Current Assets

$71,460,352.94

Property and Equipment SOFTWARE $11,170.24

FURNITURE & FIXTURES $18,027.19

ACC. DEPRECIATION ($29,197.43)

Total Property and Equipment $0.00

Other Assets DEPOSITS $3,760.00

Total Other Assets $3,760.00

Total Assets $71,464,112.94

LIABILITIES AND CAPITAL

Current Liabilities

ACCRUED INTEREST-DEBENTURES $0.00

Total Current Liabilities $0.00

Long-Term Liabilities $125,580.00

DEBENTURES-Series "A" $0.00

DEBENTURES-Series "B" $0.00

DEBENTURES - Series "C" $69,470,721.26

Total Long-Term Liabilities $69,596,301.26

Total Liabilities $69,596,301.26


41

COMMON STOCK $5,000.00

RETAINED EARNINGS $1,069,199.67

Net Income $793,612.01

Total Equity $1,867,811.68

Total Liabilities & Equity $71,464,112.94


42

EXHIBIT F

CERTIFICATE OF AMENDMENT

OF

ARTICLES OF INCORPORATION

ENDORSED • FILED in the office of the Secretary of State

of the State of California

JUN - 5 2009

The undersigned certifies that:

1. He is the president and the secretary, of James A venue Properties, Inc. , a Californ ia corporation.

2. Article One of the Articles of Incorporation of this corporation is amended to read as follows:

I. The n_arne of this corporation is Secured Income Group, Inc.

3. The foregoing amendment of Articles of Incorporation has been dul y approved by the board of directors.

4. 'The foregoing amendment of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section 902, California Corporntions Code. The total number of outstanding shares of the corporation is 10,000,000. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%.

We further declare under penalty of perjury under the Jaws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge.

Date: 6 /z/ D 9' I' I

Date: 6 /o '!> /4 9-~I'

Max McDermott, President

-~-~~ Max McDermott, Secretary


43

A069231 I

State of California Secretary of State

I, DEBRA BOWEN, Secretary of State of the State of California , hereby certify:

That the attached transcript of _~ _ page(s) has been compared with the record on file in this office, of which it purports to be a copy, and that it is full, true and correct.

Sec/State Form CE-107 (REV 112007)

IN WITNESS WHEREOF , I execute this certificate and aff ix the Great Seal of the State of California this day of

JUN - 8 2009

bb,--~ DEBRA BOWEN Secretary of State

e OSPOB 111441


44

2973821


~,cEO & . ·~--

(/) • -~.:a:

I , DEBRA BOWEN, Secretary of State of the State of California, hereby certify:

That the attached transcript of -~- page(s) has been compared with the record on file in this office, of which it purports to be a copy, and that it is full , true and correct.

Sec/Sta te Form CE- 107 (REV 112007)

IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of

MAK 2 0 2007

c}i.~ ~ DEBRA BOWEN Secretary of State

Je::,.;i; OSP 06 99734


45

2973 821

ARTICLES OF INCORPORATION

OF

JAMES A VENUE PROPERTIES, INC.

I.

The name of this corporation is JAMES AVENUE PROPER TIES, INC.

II.

ENDORSED • Fll f:D In the office of the Secretary of State

of the State of California

FEB l 6 2007

The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organ ized under the General Corporatio n Law of Ca lifornia, othe r than the banking business, the trust company busi ness or the practice of a profession permitted to be incorporated by the California Corporat ions Code.

III .

The name and address in the State of California of this corporation's initial age nt for serv ice of process is:

DA YID M. SINGLETON, Esq. 15135 Germain Street Sui te 300 Mission Hills, CA 91345-2013

IV.

This corporatio n is authorized to issue only one class of shares of stock; and total number of shares which this corporation is authorized to issue is 10,000,000 (TEN MIL LION) shares of com mon stock.


46


CERTIFICATE OF STATUS DOMESTIC CORPORATION

I, DEBRA BOWEN, Secretary of State of the State of California, hereby certify :

That on the 16th day of FEBRUARY, 2007, JAMES AVENUE PROPERTIES, INC. became incorporated under the laws of the State of California by filing its Articles of Incorporation in this office ; and

That said corporation's corporate powers , rights and privileges are not suspended on the records of this office ; and

That according to the records of this office, the said corporation is authorized to exercise all its corporate powers, rights and privileges and is in good legal standing in the State of California; and

That no information is available in this office on the financial condition, business activity or practices of this corporation .

NP-25 (REV 112007)

IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of November 21, 2007 .

DEBRABOWEN Secretary of State

8 OSP 06 99731


47

BY-LAWS

OF

ARTICLE I - OFFICES

The office of the Corporation shall be located in the City and State designated in the Articles of Incorporation. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine.

ARTICLE II - MEETING OF SHAREHOLDERS

Section I - Annual Meetini:s;

The annual meeting of the shareholders of the Corporation shall be held within five months after the close of the fiscal year of the Corporation, for the purpose of elect ing directors , and transacting such other business as may properly come before the meeting.

Section 2-Special Meetings·

Special meetings of the shareholders may be called at any time by the Board of Directors or by the President, and shall be called by the President or the Secretary at the written request of the holders of ten per cent (10%) of the shares then outstanding and entitled to vote thereat, or as otherwise required under the provisions of the Business Corporation Act.

Section 3 - Place of Meetings;

All meetings of shareholders shall be held at the principal office of the Corporation, or at such other places as shall be designated in the notices or waivers of notice of such meetings.

By-Laws- 1


48

Section 4- Notice of Meetinl's:

(a) Except as otherwise provided by Statute, written notice of each meeting of shareholders, whether annual or special, stating the time when and place where it is to be held, shall be served ei1hcr personally or by mail, not less than ten or more than fifty days before the meeting, upon each shareholder of record entitled to vote at such meeting, and to any other shareholder to whom the giving of notice may be required by law. Notice of a special meeting sball also state the purpose or purposes for which the meeting is called, and shall indicate that it is being issued by, or at the direction of, the person or persons calling the meeting. If, at any meeting, action is proposed to be taken that would, if taken, entitle shareholders to receive payment for their shares pursuant to Statute, the notice of such meeting shall include a statement of that purpose and to that effect. If mailed, such notice shall be directed to each such shareholder at his address, as it appears on the records of the shareholders of the Corporation, unless he shall have previously filed with the Secretary of the Corporation a written request that notices intended for him be mailed to the address designated in such request.

(b) Notice of any meeting need not be given to any person who may become a shareholder of record after the mailing of such notice and prior to the meeting, or to any shareholder who attends such meeting, in person or by proxy , or to any shareholder who, in person or by proxy, submits a signed waiver of notice either before or after such meeting. Notice of any adjourned meeting of shareholders need not be given, unless otherwise required by statute .

Section 5 - Quorum:

(a) Except as otherwise provided herein, or by statute, or in the Certificate of Incorporation (such Certificate and any amendments thereof being hereinafter collectively referred to as the "Certificate oflncorporation"), at all meetings of shareholders of the Corporation, the presence at the commencement of such meetings in person or by proxy of shareholders holding of record a majority of the total number of shares of the Corporation then issued and outstanding and entitled to vote, shall be necessary and


49

sufficient to constitute a quorum for the transaction of any business. The withdrawal of any shareholder after the commencement of a meeting shall have no effect on the existence of a quorum, after a quorum has been established at such meeting.

(b) Despite the absence of a quorum at any annual or special meeting of shareholders, the shareholders, by a majority of the votes cast by the holders of shares entitled to vote thereon, may adjomn the meeting. At any such adjourned meeting at which a quorum is present, any business may be transacted at the meeting as originally called if a quorum had been present.

Section 6 - Voting:

(a) Except as otherwise provided by statute or by the Certificate of Incorporation, any corporate action, other than the election of directors to be taken by vote of the shareholders, shall be authorized by a majority of votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon.

(b) Except as otherwise provided by statute or by the Certificate of Incorporation, at each meeting of shareholders, each holder of record of stock of the Corporation entitled to vote thereat, shall be entitled to one vote for each share of stock registered in his name on the books of the Corporation.

(c) Each shareholder entitled to vote or to express consent or dissent without a meeting, may do so by proxy; provided, however, that the instrument authorizing such proxy to act shall have been executed in writing by the shareholder himself, or by his attorney -in-fact thereunto duly authorized in writing. No proxy shall be valid after the expiration of eleven months from the date of its execution, unless the persons executing it shall have specified therein the length of time it is to continue in force. Such instrument shall be exhibited to the Secretary at the meeting and shall be filed with the records of the Corporation .

By-Laws -3


50

(d) Any resolution in writing, signed by all of the shareholders entitled to vote thereon, shall be and constitute action by such shareholders to the effect therein expressed, with the same force and effect -as if the same had been duly passed by unanimous vote at a duly called meeting of shareholders and such resolution so signed shall be inserted in the Minute Book of the Coiporation under its proper date .

ARTICLE ill - BOARD OF DIRECTORS

Section I - Number Election and Tenn of Office:

(a) The number of the directors of the CoipOration shall be five ~. unless and until otherwise determined by vote of a majority of the entire Board of Directors. The number of Directors shall not be less than three, unless all of the outstanding shares are owned beneficially and of record by less than three shareholders, in which event the number of directors shall not be less than the number of shareholders permitted by statute.

(b) Except as may otherwise be provided herein or in the Certificate oflncoiporation, the members of the Board of Directors of the COiporation, who need not be shareholders, shall be elected by a majority of the votes cast at a meeting of shareholders, by the holders of shares, present in person or by proxy, entitled to vote in the election .

( c) Each director shall hold office until the annual meeting of the shareholders next succeeding his election, and until his successor is elected and qualified, or until his prior death, resignation or removal.

Section 2 - Duties and Powers:

The Board of Directors shall be responsible for the control and management of the affairs, property and interests of the Coiporation, and may exercise all powers of the Coiporation, except as are in the Certificate of Incorporation or by statute expressly conferred upon or reserved to the shareholders.

Section 3 - Annual and Regular Meetinl's: Notice:

(a) A regular annual meeting of the Board of Directors shall be held immediately following the annual meeting of the shareholders, at the place of such annual meeting of shareholders.

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(b) The Board of Directors, from time to time, may provide by resolution for the holding of other regular meetings of the Board of Directors, and may fix the time and place thereof.

( c) Notice of any regular meeting of the Board of Directors shall not be required to be given and, if given , need not specify the purpose of the meeting; provided, however, that in case the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be given to each director who shall not have been present at the meeting at which such action was taken within the time limited, and in the manner set forth in paragraph (b) of Section 4 of ·this Article m, with respect to special meetings , unless such notice shall be waived in the manner set forth in paragraph (c) of such Section 4.

Section 4 - Special Meetings: Notice:

(a) Special meetings of the Board of Directors shall be held whenever called by the President or by one of the directors, at such time and place as may be specified in the respective notices or waivers of notice thereof.

(b) Except as otherwise required by statute, notice of special meeting shall be mailed directly to each director, addressed to him at his residence or usual place of business. at least two (2) days before the day on which the meeting is to be held, or shall be sent to him at such place by telegram, radio or cable, or shall be delivered to him personally or given to him orally, not later than the day before the day on which the meeting is to be held. A notice, or waiver of notice, el(cept as required by Section 8 of this Article III, need not specify the purpose of the meeting.

(c) Notice of any special meeting shall not be required to be given to any director who shall attend such meeting without protesting prior thereto or at its commencement, the lack of notice to him, or who submits a signed waiver of ·notice, whether before or after the meeting . Notice of any adjourned meeting shall not be required to be given.

Section 5 - Chajnnan:

At all meetings of the Board of Directors the Chairman of the Board, if any and if present, shall preside. If there shall be no Chairman, or he shall be absent, then the President shall preside, and in his absence, a Chairman chosen by the directors shall preside.

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Section ·6- Quorum and Adjournments:

(a) At all meetings of the Board of Directors, the presence of a majority of the entire Board shall be na:essary and sufficient to constitute a quorum for the transaction of business, except as od!erwise provided by law, by the Certificate of Incorporation, or by these ByLaws.

(b) A majority of the directors present at the time and place of any regular or special meeting, ahhough less than a quorum, may adjourn the same from time to time without notk:e, unnl a quorum shall be present.

Section 7 - Manner of Acting:

(a) At all meetings of the Board of Directors, each director present shall have one vote, irrcspectiYC of the number of shares of stock, if any, which he may hold.

(b) Except as otherwise provided by statute, by the Certificate of Incorporation, or these ByLaws, the action of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. Any action authorized in writing, by all of the directors entitled to vote thereon and filed with the minutes of the corporation shall be the act of the Board of Directors with the same force and effect as if the same had been passed by unanimous vote at a duly called meeting of the Board.

Section 8 -Vacancies:

Any vacancy in the Board of Directors occurring by reason of an increase in the number of directors, or by reason of the death, resignation, disqualification, removal (unless a vacancy created by the removal of a director by the shareholders shall be filled by the shareholders at the meeting at which the removal was effected) or inability to act of any director, or otherwise, shall be filled for the unexpired portion of the term by a majority vote of the remaining directors, though less than a quorum, at any regular meeting or special meeting of the Board of Directors called for that purpose.

Section 9 - Rcsii:nation:

Any director may resign at any time by giving written notice to the Board of Directors, the President or the Secretary of the Corporation. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or such officer, and the acceptance of such resignation shall not be necessary to make it effective.

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Section IQ - Removal:

Any director may be removed with or without cause at any time by the affirmative vote of shareholden holding of record in the aggregate at least a majority of the outstanding shares of the Corporation at a special meeting of the shareholders called for that purpose, and may be removed for caused by action of the Board.

Section 11 - SaJazy:

No stated salary shall be paid to directors, as such, for their services, but by resolution of the Board of Directors a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided, however, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

Section 12 - Contracts:

(a) No contract or other -transaction between this Corporation and any other Corporation shall be impaired, affected or invalidated, nor shall any director be liable in any way by reason of the fact that any one or more of the directors of this Corporation is or are interested in, or is a director or officer, or are directors or officers of such other Corporation, provided that such facts are disclosed or made known to the Board of Directors.

(b) Any director, personally and individually , may be a party to or may be interested in any contract or transaction of this Corporation, and no director shall be liable in any way by reason of such interest, provided that the fact of such interest be disclosed or made known to the Board of Directors, and provided that the Board of Directors shall authorize, approve or ratify such contract or transaction by the vote (not counting the vote of any such director) of a majority of a quorum, notwithstanding the presence of any such director at the meeting at which such action is taken. Such director or directors may be counted in determining the presence of a quorum at such meeting. This Section shall not

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be construed to impair or invalidate or in any way affect any contract or other transaction which would otherwise be valid under the law (common, statutory or otherwise) applicable thereto.

Section 13 - Committees·

The Board of Directors, by resolution adopted by a majority of the entire Board. may from time to time designate from among its members an executive committee and such other committees, and alternate members thereof, as they deem desirable, each consisting of three or more members, with such powers and authority (to the extent permitted by law) as may be provided in such resolution. Each such committee shall serve at the pleasure of the Board.

ARTICLE IY - OFFICERS

Section I -Number Qualifications Election and Term of Office:

(a) The officers of the Corporation shall consist of a President, a Secretary, a Treasurer, and such other officers, including a Chairman of the Board of Directors, and one or more Vice Presidents, as the Board of Directors may from time to time deem advisable. Any officer other than the Chairman of the Board of Directors may be, but is not required to be, a director of the Corporation. Any two or more offices may be held by the same person.

(b) The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of shareholders.

(c) Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his election, and until his successor shall have been elected and qualified, or until his death, resignation or removal .

Section 2 -Resienation·

Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, or to the President or the Secretary of the Corporation. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or by such officer, and the acceptance of such resignation shall not be necessary to make it effective.

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Section 3 -Removal·

Any officer may be removed, either with or without cause, and a successor elected by a majority of the Board of Directors at any time.

Section 4 - Vacancies:

A vacancy in any office by reason of death, resignation, inability to act, disqualification, or any other cause, may at any time be filled for the unexpired portion of the term by the Board of Directors.

Section 5 -Duties of Officers:

Officers of the Corporation shall, unless otherwise provided by the Board of Directors, each have such powers and duties as generally pertain to their respective offices as well as such powers and duties as may be set forth in these By-laws, or may from time to time be specifically conferred or imposed by the Board of Directors . The President shall be the chief executive officer of the Corporation.

Section 6 - Sureties and Bonds:

In case the Board of Directors shall so require, any officer, employee or agent of the Corporation shall execute to the Corporation a bond in such sum, and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence and for the accounting for all property, funds or securities of the Corporation which may come into his hands.

Section 7 - Shares of Other Cm:porations:

Whenever the Corporation is the holder of shares of any other Corporation, any right or power of the Corporation as such shareholder (including the attendance, acting and voting at shareholders' meetings and execution of waivers, consents, proxies or other instruments) may be exercised on behalf of the Corporation by the President, any Vice President, or such other person as the .Board of Directors may authorize.

ARTICLE V - SHARES OF STOCK

Section l - Certificate of Stock:

(a) The certificates representing shares of the Corporation shall be in such form as shall

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be adopted by the Board of Directors, and shall be numbered and registered in the order issued. They shall bear the holder's name and the number of shares, and shall be signed by (i) the Chairman of the Board or the President or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant Secretary or Assistant Treasurer, and shall bear the corporate seal.

(b) No certificate representing shares shall be issued until the full amount of consideration therefor has been paid, except as otherwise permitted by law.

( c) To the extent permitted by law, the Board of Directors may authorize the issuance of certificates for fractions of a share which shall entitle the holder to exercise voting rights, receive dividends and participate in liquidating distributions, in proportion to the fractional holdings; or it may authorize the payment in cash of the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined; or it may authorize the issuance, subject to such conditions as may be permitted by law, of scrip in registered or bearer form over the signature of an officer or agent of the Corporation, exchangeable as therein provided for full shares , but such scrip shall not entitle the holder to any rights of a shareholder, except as therein provided .

Section 2 • Lost or Destroyed Certificates:

The holder of any certificate representing shares of the Corporation shall immediately notify the Corporation of any loss or destruction of the certificate representing the same. The Corporation may issue a new certificate in the place of any certificate theretofore issued by it, alleged to have been Jost or destroyed. On production of such evidence of loss or destruction as the Board of Directors in its discretion may require, the Board of Directors may, in its discretion, require the owuer of the lost or destroyed certificate , or his legal representatives, to give the Corporation a bond in such sum as the Board may direct, and with such surety or sureties as may be satisfactory to the Board , to indemnify the Corporation against any claims, Joss, liability or damage it may suffer on account of the issuance of the new certificate. A new certificate may be issued without requiring any such evidence or bond when , in the judgment of the Board of Directors, it is proper so to do.

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Section 3 -Transfers of Shares:

(a) Transfers of shares of the Corporation shall be made on the share records of the Corporation only by the holder of record thereof, in person or by his duly authorized attorney, upon surrender for cancellation of the certificate or certificates representing such shares, with an assignment or power of transfer endorsed thereon or delivered therewith, duly executed, with such proof of the authenticity of the signature and of authority to transfer and of payment of transfer taxes as the Corporation or its agents may require.

(b) The Corporation shall be entitled to treat the holder ofrecord of any share or shares as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to , or interest in, such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.

Section 4 - Record Date:

In lieu of closing the share records of the Corporation, the Board of Directors may fix, in advance, a date not exceeding fifty days , nor Jess than ten days, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. If no record date is fixed, the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if no notice is given, the day on which the meeting is held; the record date for determining shareholders for any other purpose shall be at the close of business on the day on which the resolution of the directors relating thereto is adopted. When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided for herein, such determination shall apply to any adjournment thereof, unless the directors fix a new record date for the adjourned meeting.

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ARTICLE VI - DNIDENDS

Subject to applicable law, dividends may be declared and paid out of any funds available -therefor, as often, in such amounts, and at such time or times as the Board of Directors may detennine.

ARTICLE VII -F1SCAL YEAR

The fiscal year of the Corporation shall be fixed by the Board of Directors from time to time, subject to applicable law.

ARTICLE Yill- CORPORATE SEAL

The corporate seal, if any, shall be in such form as shall be approved from time to time by the Board of Directors.

ARTICLE IX - AMENDMENTS

Section 1 - By Shareholders:

All by-laws of the Corporation shall be subject to alteration or repeal, and new by-laws may be made, by the affirmative vote of shareholders holding of record in the aggregate at least a majority of the outstanding shares entitled to vote in the election of directors at any annual or special meeting of shareholders, provided that the notice or waiver of notice of such meeting shall have summarized or set forth in full therein, the proposed amendment.

Section 2 - By l)jrectors:

The Board of Directors shall have power to make, adopt, alter, amend and repeal, from time to time, by-laws of the Corporation; provided, however, that the shareholders entitled to vote with respect thereto as in this Article IX above-provided may alter, amend or repeal by-laws made by the Board of Directors, except that the Board of Directors shall have no power to change the quorum for meetings of shareholders or of the Board of Directors, or to change any provisions of the by -laws with respect to the removal of directors or the filling of vacancies in the Board resulting from the removal by the shareholders. If any by-law regulating an impending election of directors is adopted, amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of shareholders for the election of directors, the by-law so adopted, amended or repealed, together with a concise statement of the changes made.

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ARTICLE X - INDEMNITY

(a) Any person made a party to any action, suit or proceeding, by reason of the fact that he, his testator or intestate representative is or was a director, officer or employee of the Corporation, or of any Corporation in which be served as such at the request of the Corporation, shall be indemnified by the Corporation against the reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with the defense of such action, suit or procc:-.edings, or in connection with any appeal therein that such officer, director or employee is liable for negligence or misconduct in the performance of his duties.

(b) The foregoing right of indemnification shall not be deemed exclusive of any other rights to which any officer or director or employee may be entitled apart from the provisions of this section.

(c) Toe amount of indemnity to which any officer or any director may be entitled shall be fixed by the Board of Directors, except that in any case where there is no disinterested majority of the Board available, the amount shall be fIXed by arbitration pursuant to then existing rules of the American Arbitration Association.

The undersigned Incorporator certifies that he has adopted the foregoing bylaws as the first by-laws of the Corporation .

Documents

SECURED INCOME GROUP INC...2020/07/01 · THE SALE OF SECURED DEBENTURES COVERED BY THIS PRIVATE PLACEMENT MEMORANDUM HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION