Item 1.01 - Entry into a Material
Definitive Agreement.
As previously reported
in that certain Current Report on Form 8-K of Sitestar Corporation (“Sitestar”) filed with the Securities and Exchange
Commission on September 19, 2016, Sitestar’s management previously had identified, and resolved to undertake definitive
documentation in order to consummate, an opportunity with Alluvial Capital Management, LLC (“Alluvial Capital”), an
unaffiliated and unrelated Delaware limited liability company and registered investment adviser, to make a “seed investment”
in Alluvial Fund, LP (“Alluvial Fund”), a private investment fund and limited partnership to be launched and managed
by Alluvial Capital, as general partner and investment adviser.
On December 27,
2016, Willow Oak Asset Management, LLC, a wholly-owned subsidiary of Sitestar (“Willow Oak”), executed and entered
into that certain Limited Partnership Agreement of Alluvial Fund dated as of January 1, 2017 (the “Limited Partnership Agreement”).
In connection with entering into the Limited Partnership Agreement, Willow Oak also entered into a certain Side Letter Agreement
dated December 28, 2016 with Alluvial Capital and Alluvial Fund (the “Side Letter”).
The Limited Partnership
Agreement sets forth the general terms and conditions governing the arrangements among Alluvial Capital, as general partner, and
the various limited partner investors of Alluvial Fund (including Willow Oak, which was admitted as a limited partner of Alluvial
Fund pursuant to the terms thereof). The Side Letter, as a side letter agreement to the Limited Partnership, sets forth certain
unique undertakings and terms negotiated as between Willow Oak and Alluvial Capital in connection with Willow Oak’s admission
as a limited partner of Alluvial Fund.
Under the terms
of the Limited Partnership Agreement and the Side Letter, Willow Oak has subscribed for a limited partnership interest in Alluvial
Fund and, in connection therewith, has committed to make capital contributions to Alluvial Fund in the aggregate amount of up
to $10,000,000, which Willow Oak may fund in four equal installments of $2,500,000 on each of December 31, 2016, March 31, 2017,
June 30, 2017 and September 30, 2017.
The foregoing description
of the Limited Partnership Agreement and the Side Letter is qualified in its entirety by the contents of the Limited Partnership
Agreement and the Side Letter, each of which are incorporated into this Item 1.01 by reference. A copy of the Limited Partnership
Agreement is attached hereto as
Exhibit 10.1
. A copy of the Side Letter is attached hereto as
Exhibit 10.2
. Portions
of the Side Letter have been redacted based upon a request for confidential treatment filed with the Securities and Exchange Commission.