Exhibit 10.19

 

SECOND AMENDED AND RESTATED ADVISORY AGREEMENT

 

This SECOND AMENDED AND RESTATED ADVISORY AGREEMENT, dated as of January 14,
2014 (this “Agreement”), is between American Realty Capital – Retail Centers of
America, Inc., a Maryland corporation (the “Company”), American Realty Capital
Retail Operating Partnership, L.P., a Delaware limited partnership (the
“Operating Partnership”) and American Realty Capital Retail Advisor, LLC, a
Delaware limited liability company (the “Advisor”).

 

WITNESSETH

 

WHEREAS, the Company desires to avail itself of the knowledge, experience,
sources of information, advice, assistance and certain facilities available to
the Advisor and to have the Advisor undertake the duties and responsibilities
hereinafter set forth, on behalf of, and subject to the supervision of, the
Board of Directors of the Company, all as provided herein; and

 

WHEREAS, the Advisor is willing to undertake to render such services, subject to
the supervision of the Board of Directors of the Company, on the terms and
subject to the conditions hereinafter set forth.

 

WHEREAS, the Company and the Advisor entered into that certain Advisory
Agreement, dated as of March 17, 2011.

 

WHEREAS, the Company and the Advisor entered into that certain Amended and
Restated Advisory Agreement, dated as of July 15, 2013, (as amended, the
“Amended Advisory Agreement”).

 

WHEREAS, the Company and the Advisor desire to amend and restate the Amended
Advisory Agreement and have entered into this Agreement with the Operating
Partnership in order to authorize the issuance of Subordinated Participation
Interests (as defined below) to the Advisor pursuant to the Operating
Partnership Agreement (as defined below).

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto agree as follows:

 

Article 1

Definitions

 

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

 

“Acquisition Expenses” means any and all expenses, excluding the Acquisition
Fees, incurred by the Company, the Advisor or any Affiliate of either in
connection with the

 

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consideration, investigation, selection, evaluation, acquisition or development
of any Investment, whether or not acquired or originated, as applicable,
including legal fees and expenses, travel and communications expenses, brokerage
fees, costs of appraisals, nonrefundable option payments on Investments not
acquired, accounting fees and expenses, title insurance premiums and the costs
of performing due diligence.

 

“Acquisition Fees” means the fee payable to the Advisor pursuant to Section 8.1
plus all other fees and commissions, excluding Acquisition Expenses, paid by any
Person to any Person in connection with making or investing in any Investment or
the purchase, development or construction of any Property by the
Company.  Included in the computation thereof shall be any real estate
commission, selection fee, Development Fee, Construction Fee, nonrecurring
management fee, loan fees or points or any fee of a similar nature, however
designated.  Excluded in the computation thereof shall be Development Fees and
Construction Fees paid to Persons not Affiliated with the Advisor in connection
with the actual development and construction of a Property.

 

“Advisor” has the meaning set forth at the head of this Agreement.

 

“Affiliate” means, with respect to any Person, any of the following: (i) any
other Person directly or indirectly controlling, controlled by, or under common
control with such Person; (ii) any other Person directly or indirectly owning,
controlling, or holding with the power to vote 10% or more of the outstanding
voting securities of such Person; (iii) any legal entity for which such Person
acts as an executive officer, director, trustee, or general partner; (iv) any
other Person 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held, with power to vote, by such Person; and
(v) any executive officer, director, trustee, or general partner of such Person.
An entity shall not be deemed to control or be under common control with an
Advisor-sponsored program unless (A) the entity owns 10% or more of the voting
equity interests of such program or (B) a majority of the board of directors (or
equivalent governing body) of such program is composed of Affiliates of the
entity.  The term “Affiliated” shall have a meaning correlative thereto.

 

“Agreement” has the meaning set forth in the preamble, and such term shall
include any amendment or supplement hereto from time to time.

 

“Amended Advisory Agreement” has the meaning set forth in the recitals.

 

“Articles of Incorporation” means the charter of the Company, as the same may be
amended from time to time. 

 

“Asset Management Fee” shall have the meaning set forth in Section 8.2.

 

“Average Invested Assets” has the meaning set forth in the Articles of
Incorporation.  For an equity interest owned in a Joint Venture, the calculation
of Average Invested Assets shall take into consideration the underlying Joint
Venture’s aggregate book value for the equity interest.

 

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“Board of Directors” or “Board” means the Board of Directors of the Company.

 

“Bylaws” means the bylaws of the Company, as amended from time to time.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor statute thereto.  Reference to any provision of the Code shall
mean such provision as in effect from time to time, as the same may be amended,
and any successor provision thereto, as interpreted by any applicable
regulations as in effect from time to time.

 

“Common Stock” means the shares of the Company’s common stock, par value $0.01
per share.

 

“Company” means American Realty Capital – Retail Centers of America, Inc.

 

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

 

“Competitive Real Estate Commission” means a real estate or brokerage commission
for the purchase or sale of a Property which is reasonable, customary and
competitive in light of the size, type and location of the Property.

 

“Contract Purchase Price” has the meaning set forth in the Articles of
Incorporation.

 

“Contract Sales Price” means the total consideration received by the Company for
the sale of an Investment.

 

“Cost of Assets” means the Contract Purchase Price of an asset plus Acquisition
Expenses, capital expenditures and other customarily capitalized costs, but
shall exclude Acquisition Fees associated with the acquisition of such asset.

  

“Dealer Manager” means (i) Realty Capital Securities, LLC, a Delaware limited
liability company, or (ii) any successor dealer manager to the Company.

 

“Development Fee” means a fee for the packaging of a Property, including
negotiating and approving plans, and undertaking to assist in obtaining zoning
and necessary variances and necessary financing for the Property, either
initially or at a later date.

 

“Director” means a director of the Company.

 

“Distributions” means any distributions of money or other property by the
Company to Stockholders, including distributions that may constitute a return of
capital for U.S. federal income tax purposes.

 

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“Effective Date” means the date upon which the Registration Statement for the
Company’s initial public offering is declared effective by the Securities and
Exchange Commission.

 

“Excess Amount” has the meaning set forth in Section 9.2(A).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, or any successor statute thereto. Reference to any provision of the
Exchange Act shall mean such provision as in effect from time to time, as the
same may be amended, and any successor provision thereto, as interpreted by any
applicable regulations as in effect from time to time.

 

“Expense Year” has the meaning set forth in Section 9.2(A).

 

“Financing Coordination Fee” shall have the meaning set forth in Section 8.5.

 

“FINRA” means the Financial Industry Regulatory Authority Inc.

 

“GAAP” means accounting principles generally accepted in the United States as
currently in effect.

 

“Gross Proceeds” means the aggregate purchase price of all Shares sold for the
account of the Company through an Offering, without deduction for Organization
and Offering Expenses. For the purpose of computing Gross Proceeds, the purchase
price of any Share for which reduced Selling Commissions are paid to the Dealer
Manager or a Soliciting Dealer (where net proceeds to the Company are not
reduced) shall be deemed to be the full amount of the offering price per Share
pursuant to the Prospectus for such Offering without reduction.

 

“include,” “included,” “including” and “such as” are to be construed as if
followed by the phrase “without limitation.”

 

“Independent Director” shall have the meaning set forth in the Articles of
Incorporation.

 

“Insourced Acquisition Expenses” means Acquisition Expenses incurred in
connection with services performed by the Advisor or any of its Affiliates,
including legal advisory expenses, due diligence expenses, personnel expenses,
acquisition-related administrative and advisory expenses, survey, property,
contract review expenses, travel and communications expenses and other closing
costs.

 

“Investment” or “Investments” means any investment or investments by the Company
or the Partnership, directly or indirectly, in Properties, Loans or other
Permitted Investments.

 

“Joint Venture” means any joint venture, limited liability company or other
entity through which the Company directly or indirectly owns, in whole or in
part, any Investments.

 

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“Lincoln” shall have the meaning set forth in Article 3.

  

“Listing” means the listing of the Common Stock on a national securities
exchange, or the inclusion of the Common Stock for trading in the
over-the-counter-market.

 

“Loans” means mortgage loans and other types of debt financing investments made
by the Company, either directly or indirectly, including through ownership
interests in a Joint Venture or other entity, and including mezzanine loans,
B-notes, bridge loans, convertible mortgages, wraparound mortgage loans,
construction mortgage loans, loans on leasehold interests, and participations in
such loans.

 

“Market Check” means an analysis comparing (a) the amount of Insourced
Acquisition Expenses paid in the previous calendar year to the Advisor or any of
its Affiliates with (b) the projected amount of Acquisition Expenses for the
following calendar year assuming that a Person other than the Advisor or its
Affiliates performs substantially similar services for a substantially similar
amount of Investments.

 

“MGCL” means the Maryland General Corporation Law, as amended from time to time.

 

“NAREIT FFO” means funds from operations (“FFO”), consistent with the standards
established by the White Paper on FFO approved by the Board of Governors of the
National Association of Real Estate Investment Trusts (“NAREIT”), as revised in
February 2004 and as modified by NAREIT from time to time.

 

“NASAA REIT Guidelines” means the Statement of Policy Regarding Real Estate
Investment Trusts as revised and adopted by the North American Securities
Administrators Association on May 7, 2007, as the same may be amended from time
to time.

 

“Net Income” means, for any period, the total revenues of the Company applicable
to such period, less the total expenses applicable to such period excluding
additions to reserves for depreciation, bad debts or other similar non-cash
reserves; provided, however, that Net Income for purposes of calculating total
allowable Operating Expenses shall exclude the gain from the sale of the
Company’s assets.

 

“Notice” has the meaning set forth in Section 15.1.

 

“Offering” means the public offering and sale of Shares pursuant to an effective
registration statement filed under the Securities Act.

 

“Operating Expenses” means all costs and expenses incurred by the Company, as
determined under GAAP, that in any way are related to the operation of the
Company or to Company business, including fees paid to the Advisor, but
excluding (i) the expenses of raising capital such as Organization and Offering
Expenses, legal, audit, accounting, underwriting, brokerage, listing,
registration, and other fees, printing and other such expenses and taxes
incurred in connection with the issuance, distribution, transfer, registration
and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash
expenditures such as depreciation,

 

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amortization, bad loan reserves, impairments of value, and mark-to-market
losses, (v) incentive fees paid in compliance with Section IV.F. of the NASAA
REIT Guidelines and (vi) Acquisition Fees and Acquisition Expenses (including
Financing Coordination Fees), real estate commissions on resale of property,
property management fees, and other expenses connected with the acquisition,
disposition, management and ownership of real estate interests, loans or other
property (other than commissions on the sale of assets other than real
property), such as the costs of foreclosure, insurance premiums, legal services,
maintenance, repair and improvement of property.

 

“Operating Partnership” has the meaning set forth at the head of this Agreement.

 

“Operating Partnership Agreement” means that certain Amended and Restated
Agreement of Limited Partnership of American Realty Capital Retail Operating
Partnership, L.P., dated as of January 14, 2014, among the Company and the
Advisor, as the same may be amended from time to time.

 

“Organization and Offering Expenses” means all expenses incurred by or on behalf
of the Company in connection with or in preparing the Company for registration
of and subsequently offering and distributing its Shares to the public, whether
incurred before, on or after the date of this Agreement, which may include total
underwriting and brokerage discounts and commissions (including fees of the
underwriters’ attorneys); any expense allowance granted by the Company to the
underwriter or any reimbursement of expenses of the underwriter by the Company;
expenses for printing, engraving and mailing; compensation of employees while
engaged in sales activity; charges of transfer agents, registrars, trustees,
escrow holders, depositaries and experts; and expenses of qualification of the
sale of the securities under Federal and state laws, including taxes and fees,
accountants’ and attorneys’ fees.

  

“Oversight Fee” shall have the meaning set forth in Section 8.3.

 

“Partnership” means American Realty Capital Retail Operating Partnership, L.P.,
a Delaware limited partnership formed to own and operate Investments on behalf
of the Company.

 

“Permitted Investments” means all investments (other than Properties and Loans)
in which the Company acquires an interest, either directly or indirectly,
including through ownership interests in a Joint Venture or other entity,
pursuant to the Articles of Incorporation, Bylaws and the investment objectives
and policies adopted by the Board from time to time, other than short-term
investments acquired for purposes of cash management.

 

“Person” has the meaning set forth in the Articles of Incorporation.

 

“Property” or “Properties” means any real property or properties transferred or
conveyed to the Company or any subsidiary of the Company or the Partnership,
either directly or indirectly, and/or any real property or properties
transferred or conveyed to a Joint Venture or partnership in which the Company
is, directly or indirectly, a co-venturer or partner.

 

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“Property Manager” means an entity that has been retained to perform and carry
out at one or more of the Properties property management services, excluding
Persons retained or hired to perform facility management or other services or
tasks at a particular Property, the costs for which are passed through to and
ultimately paid by the tenant at such Property.

 

“Prospectus” means a final prospectus of the Company filed pursuant to Rule
424(b) of the Securities Act, as the same may be amended or supplemented from
time to time.

 

“Registration Statement” means the registration statement filed by the Company
with the SEC pursuant to the Securities Act on Form S-11, as amended from time
to time, in connection with an Offering.

 

“Real Estate Commission” shall have the meaning set forth in Section 8.4.

 

“REIT” means a corporation, trust, association or other legal entity (other than
a real estate syndication) that is engaged primarily in investing in equity
interests in real estate (including fee ownership and leasehold interests) or in
loans secured by real estate or both, as defined pursuant to Sections 856
through 860 of the Code and any successor or other provisions of the Code
relating to real estate investment trusts (including provisions as to the
attribution of ownership of beneficial interests therein) and the regulations
promulgated thereunder.

 

“Sale” or “Sales” means (i) any transaction or series of transactions whereby:
(A) the Company sells, grants, transfers, conveys, or relinquishes its direct or
indirect ownership of any Investment or portion thereof, including the transfer
of any Property that is the subject of a ground lease, and including any event
with respect to any Investment that gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) the Company sells, grants,
transfers, conveys, or relinquishes its ownership of all or substantially all of
the direct or indirect interest of the Company in any Joint Venture or other
entity in which it, directly or indirectly, has an interest; or (C) any Joint
Venture or other entity (in which the Company, directly or indirectly, has an
interest) sells, grants, transfers, conveys, or relinquishes its direct or
indirect ownership of any Investment or portion thereof, including any event
with respect to any Investment that gives rise to insurance claims or
condemnation awards, but (ii) not including any transaction or series of
transactions specified in clause (i) (A), (i) (B), or (i) (C) above in which the
proceeds of such transaction or series of transactions are reinvested by the
Company, directly or indirectly, in one or more Investments within 180 days
thereafter.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
or any successor statute thereto. Reference to any provision of the Securities
Act shall mean such provision as in effect from time to time, as the same may be
amended, and any successor provision thereto, as interpreted by any applicable
regulations as in effect from time to time.

 

“Shares” means the shares of beneficial interest or of common stock of the
Company of any class or series, including Common Stock, that has the right to
elect the Directors of the Company.

 

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“Soliciting Dealers” means broker-dealers who are members of FINRA or that are
exempt from broker-dealer registration, and who, in either case, have executed
soliciting dealer or other agreements with the Dealer Manager to sell Shares.

 

“Stockholders” means the holders of record of the Shares as maintained on the
books and records of the Company or its transfer agent.

 

“Subordinated Participation Interest” means a profits interest in the Operating
Partnership designated as a Class B Unit in accordance with the terms of the
Operating Partnership Agreement.

 

 “Targeted Assets” means a portfolio consisting of: (i) existing anchored,
stabilized core retail properties, including power centers, lifestyle centers,
grocery-anchored shopping centers with a purchase price in excess of twenty
million dollars ($20,000,000) and other need-based shopping centers (not less
than sixty-five percent (65%) by value) which are located in the United States
and at least eighty percent (80%) leased at the time of acquisition; (ii)
existing grocery-anchored shopping centers (up to twenty percent (20%) by
value), the purchase price of which is twenty million dollars ($20,000,000) or
less; (iii) existing enclosed mall opportunities for de-malling and
reconfiguration into an open air format (up to twenty percent (20%) by value)
which are located in the United States; and (iv) real estate-related debt and
investments (up to fifteen percent (15%) by value) secured by, or which
represent a direct or indirect interest in, the assets described in clauses (i)
- (iii).

 

“Termination” means the termination of this Agreement in accordance with Article
12 hereof.

 

“Termination Date” means the date of termination of the Agreement determined in
accordance with Article 12 hereof.

 

“2%/25% Guidelines” has the meaning set forth in Section 9.2(B).

  

Article 2

Appointment

 

The Company hereby appoints the Advisor to serve as its advisor to perform the
services set forth herein on the terms and subject to the conditions set forth
in this Agreement and subject to the supervision of the Board, and the Advisor
hereby accepts such appointment.

 

Article 3

Duties of the Advisor

 

The Advisor is responsible for managing, operating, directing and supervising
the operations and administration of the Company and its assets.  The Advisor
undertakes to use its commercially reasonable efforts to present to the Company
potential investment opportunities in Targeted Assets and to provide the Company
with a continuing and suitable investment program

 

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in Targeted Assets consistent with the investment objectives and policies of the
Company as determined and adopted from time to time by the Board.  Subject to
the limitations set forth in this Agreement, including Article 4 hereof,
consistent with the provisions of the Articles of Incorporation and Bylaws and
the continuing and exclusive authority of the Board over the supervision of the
Company, the Advisor shall, either directly or by engaging Lincoln Retail REIT
Services, LLC, a Delaware limited liability company (“Lincoln”), or another
third party, perform the following duties:

 

3.1Organizational and Offering Services.  The Advisor shall perform all services
related to the organization of the Company or any Offering or private sale of
the Company’s securities, other than services that (i) are to be performed by
the Dealer Manager, (ii) the Company elects to perform directly or (iii) would
require the Advisor to register as a broker-dealer with FINRA, the SEC or any
state.

 

3.2Acquisition and Disposition Services.  The Advisor shall (or shall retain
other Persons to (but shall remain responsible to the Company)):

 

(A)Serve as the Company’s investment and financial advisor and provide relevant
market research and economic and statistical data in connection with the
Properties, investment objectives and policies;

 

(B)Subject to the investment objectives and policies of the Company: (a) locate,
analyze and select potential Investments; (b) structure and negotiate the terms
and conditions of transactions pursuant to which investments in Targeted Assets
and other Investments will be made; (c) acquire, originate and dispose of
Targeted Assets and other Investments on behalf of the Company (including
through Joint Ventures); (d) arrange for financing and refinancing and make
other changes in the asset or capital structure of investments in Targeted
Assets and other Investments; (e) select Joint Venture partners and structure
corresponding agreements; and (f) enter into leases, service contracts and other
agreements for Targeted Assets and other Investments;

 

(C)Perform due diligence on prospective investments and create due diligence
reports summarizing the results of such work;

 

(D)Prepare reports regarding prospective investments that include
recommendations and supporting documentation necessary for the Board of the
Company to evaluate the proposed investments;

 

(E)Obtain reports, where appropriate, concerning the value of the Properties;

 

(F)Deliver to, or maintain on behalf of the Company, copies of all appraisals
obtained in connection with the Properties;

 

(G)Negotiate and execute approved investments and other transactions, including
acquisitions of Targeted Assets and other Investments; and

 

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(H)Consult with the Company’s officers and the Board and provide assistance with
the evaluation and approval of potential Investment dispositions, sales and
refinancing, including reports to the Board regarding the foregoing.

 

3.3Asset Management Services.  The Advisor shall (or shall retain other Persons
to (but shall remain responsible to the Company)):

 

(A)Investigate, select and, on behalf of the Company, engage and conduct
business with (including enter contracts with) and supervise the performance of
such Persons as the Advisor deems necessary to the proper performance of its
obligations as set forth in this Agreement, including consultants, accountants,
lenders, technical advisors, attorneys, brokers, underwriters, corporate
fiduciaries, escrow agents, depositaries, custodians, agents for collection,
insurers, insurance agents, banks, builders, developers, property owners,
security investment advisors, mortgagors, the registrar and the transfer agent,
construction companies, Property Managers and any and all Persons acting in any
other capacity deemed by the Advisor necessary or desirable for the performance
of any of the foregoing services;

 

(B)Monitor applicable markets and obtain reports where appropriate, concerning
the value of the Properties;

 

(C)Monitor and evaluate the performance of each of the Properties and the
Company’s overall portfolio of Properties and perform and supervise the various
management and operational functions related to the Properties;

 

(D)Formulate and oversee the implementation of strategies for the
administration, promotion, management, operation, maintenance, investment,
improvement, financing and refinancing, marketing, leasing and disposition of
Investments on an overall portfolio basis;

 

(E)Consult with the Company’s officers and the Board and assist the Board in the
formulation and implementation of the Company’s financial policies, and, as
necessary, furnish the Board with advice and recommendations with respect to the
making of investments consistent with the investment objectives and policies of
the Company;

 

(F)Engage a Property Manager for each of the Properties;

 

(G)Coordinate and manage relationships between the Company and any co-venturers
or partners; and

 

(H)Negotiate and service the Company’s debt facilities and other financings and
negotiate on behalf of the Company with banks or other lenders for debt
facilities to be made to the Company and its subsidiaries; provided, however,
that any fees

 

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and costs payable to third parties incurred by the Advisor in connection with
the foregoing shall be the responsibility of the Company.

  

3.4Accounting and Other Administrative Services.  The Advisor shall (or shall
retain other Persons to (but shall remain responsible to the Company)):

 

(A)Provide the day-to-day management of the Company and perform and supervise
the various administrative functions reasonably necessary for the management of
the Company;

 

(B)From time to time, or at any time reasonably requested by the Board, make
reports to the Board on the Advisor’s performance of services to the Company
under this Agreement;

 

(C)Make reports to the Company each quarter of the investments that have been
made by other programs sponsored by the Advisor or any of its Affiliates, as
well as any investments that have been made by the Advisor or any of its
Affiliates directly;

 

(D)Provide or arrange for any administrative services and items, legal and other
services, office space, office furnishings, personnel and other overhead items
necessary and incidental to the Company’s business and operations;

 

(E)Provide financial and operational planning services;

 

(F)Maintain accounting and other record-keeping functions at the Company and
investment levels, including information concerning the activities of the
Company as shall be required to prepare and to file all periodic financial
reports, tax returns and any other information required to be filed with the
SEC, the Internal Revenue Service and any other regulatory agency;

 

(G)Maintain and preserve all appropriate books and records of the Company;

 

(H)Provide tax and compliance services and coordinate with appropriate third
parties, including the Company’s independent auditors and other consultants, on
related tax matters;

 

(I)Provide the Company with all necessary cash management services;

 

(J)Deliver to, or maintain on behalf of, the Company copies of all appraisals
obtained in connection with Investments;

 

(K)Manage and coordinate with the transfer agent the monthly dividend process
and payments to Stockholders;

 

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(L)Consult with the Company’s officers and the Board and assist the Board in
evaluating and obtaining adequate insurance coverage based upon risk management
determinations;

 

(M)Consult with the Company’s officers and the Board and assist the Board in
evaluating various liquidity events when appropriate;

 

(N)Provide the Company’s officers and the Board with timely updates related to
the overall regulatory environment affecting the Company, as well as managing
compliance with such matters, including compliance with the Sarbanes-Oxley Act
of 2002;

 

(O)Consult with the Company’s officers and the Board relating to the corporate
governance structure and appropriate policies and procedures related thereto;

 

(P)Perform all reporting, record keeping, internal controls and similar matters
in a manner to allow the Company to comply with applicable law, including
federal and state securities laws and the Sarbanes-Oxley Act of 2002;

 

(Q)Notify the Board of all proposed material transactions before they are
completed; and

 

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

 

3.5Stockholder Services.  The Advisor shall (or shall retain other Persons to
(but shall remain responsible to the Company)):

 

(A)Manage services for and communications with Stockholders, including answering
phone calls, preparing and sending written and electronic reports and other
communications;

  

(B)Oversee the performance of the transfer agent and registrar;

  

(C)Establish technology infrastructure to assist in providing Stockholder
support and service; and

  

(D)Consistent with Section 3.1, perform the various subscription processing
services reasonably necessary for the admission of new Stockholders.

 

3.6Other Services.  Except as provided in Article 7, the Advisor shall perform
any other services reasonably requested by the Company (with the consent of a
majority of the Independent Directors).

 

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Article 4

Authority of the Advisor

 

4.1General.  All rights and powers to manage and control the day-to-day business
and affairs of the Company shall be vested in the Advisor.  The Advisor shall
have the power to delegate all or any part of its rights and powers to manage
and control the business and affairs of the Company to such officers, employees,
Affiliates, agents and representatives of the Advisor or the Company or a third
party as it may deem appropriate.  Any authority delegated by the Advisor to any
other Person shall be subject to the limitations on the rights and powers of the
Advisor specifically set forth in this Agreement or the Articles of
Incorporation.

 

4.2Powers of the Advisor.  Subject to the express limitations set forth in this
Agreement, to the continuing and exclusive authority of the Board over the
supervision of the Company, and to the right of the Advisor to delegate its
responsibilities pursuant to Section 4.1, the power to direct the management,
operation and policies of the Company shall be vested in the Advisor, which
shall have the power by itself and shall be authorized and empowered on behalf
and in the name of the Company to carry out any and all of the objectives and
purposes of the Company and to perform all acts and enter into and perform all
contracts and other undertakings that it may in its sole discretion deem
necessary, advisable or incidental thereto to perform its obligations under this
Agreement.

 

4.3Approval by the Board.  Notwithstanding the foregoing, the Advisor may not
take any action on behalf of the Company without the prior approval of the Board
or duly authorized committees thereof if the Articles of Incorporation or the
MGCL require the prior approval of the Board.  The Advisor will deliver to the
Board all documents required by it to evaluate a proposed investment (and any
related financing).

 

4.4Modification or Revocation of Authority of Advisor.  The Board may, at any
time upon the giving of Notice to the Advisor, modify or revoke the authority or
approvals set forth in Article 3 and this Article 4 hereof; provided, however,
that such modification or revocation shall be effective upon receipt by the
Advisor and shall not be applicable to investment transactions to which the
Advisor has committed the Company prior to the date of receipt by the Advisor of
such notification.

  

Article 5

Bank Accounts

 

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

 

13

 

 

Article 6

Records and Financial Statements

 

The Advisor, in the conduct of its responsibilities to the Company, shall
maintain adequate and separate books and records for the Company’s operations in
accordance with GAAP, which shall be supported by sufficient documentation to
ascertain that such books and records are properly and accurately
recorded.  Such books and records shall be the property of the Company and shall
be available for inspection by the Board and by counsel, auditors and other
authorized agents of the Company, at any time or from time to time during normal
business hours. Such books and records shall include all information necessary
to calculate and audit the fees or reimbursements paid under this
Agreement.  The Advisor shall utilize procedures to attempt to ensure such
control over accounting and financial transactions as is reasonably required to
protect the Company’s assets from theft, error or fraudulent activity.  All
financial statements that the Advisor delivers to the Company shall be prepared
on an accrual basis in accordance with GAAP, except for special financial
reports that by their nature require a deviation from GAAP. The Advisor shall
liaise with the Company’s officers and independent auditors and shall provide
such officers and auditors with the reports and other information that the
Company so requests.

 

Article 7

Limitation on Activities

 

Notwithstanding any provision in this Agreement to the contrary, the Advisor
shall not take any action that, in its sole judgment made in good faith, would
(i) adversely affect the ability of the Company to qualify or continue to
qualify as a REIT under the Code (unless the Board has determined that REIT
qualification is not in the best interests of the Company and its Stockholders),
(ii) subject the Company to regulation under the Investment Company Act of 1940,
as amended, (iii) violate any law, rule, regulation or statement of policy of
any governmental body or agency having jurisdiction over the Company, its Shares
or its other securities, (iv) require the Advisor to register as a broker-dealer
with the SEC or any state, or (v) violate the Articles of Incorporation or
Bylaws.  In the event an action that would violate (i) through (v) of the
preceding sentence but such action has been ordered by the Board, the Advisor
shall notify the Board of the Advisor’s judgment of the potential impact of such
action and shall refrain from taking such action until it receives further
clarification or instructions from the Board.  In such event, the Advisor shall
have no liability for acting in accordance with the specific instructions of the
Board so given.

Article 8

Fees

 

8.1Acquisition Fees.

 

(A)Subject to Section 8.1(B), the Company shall pay an Acquisition Fee to the
Advisor or its Affiliates as compensation for services rendered in connection
with the investigation, selection and acquisition (by purchase, investment or
exchange) of Investments.  The total Acquisition Fee payable to the Advisor
shall equal one

 

14

 

 

percent (1.0%) of the Contract Purchase Price of the Investment.  The amount
actually paid or allocated for an Investment held through a Joint Venture shall
equal the sum of (x) the product of (i) the amount actually paid or allocated to
fund, or the amount advanced for, the acquisition, origination, development,
construction or improvement of the Investment, as applicable, by the Joint
Venture and (ii) the direct or indirect ownership percentage of the Joint
Venture held directly or indirectly by the Company or the Partnership and (y)
any expense of the Company associated with such Investment.  For purposes of
this section, “ownership percentage” shall be the percentage of capital stock,
membership interests, partnership interests or other equity interests held by
the Company or the Partnership, without regard to classification of such equity
interests.  The Advisor shall submit an invoice to the Company, accompanied by a
computation of the Acquisition Fee at or prior to the closing of the
acquisition.  The Company shall pay to the Advisor the Acquisition Fee at the
closing of the Investment and shall cover services rendered by the Advisor or
its Affiliates until such time as a letter of intent to purchase such Investment
has been submitted to the seller by the Advisor and the Advisor has presented a
detailed investment memorandum to the Board of Directors for approval.  In
addition, if during the period ending two years after the close of the initial
Offering, the Company sells an Investment and then reinvests in other
Investments, the Company will pay to the Advisor or its Affiliates one percent
(1.0%) of the Contract Purchase Price of the Investments.

 

(B)

 

(i)The total of all Acquisition Fees, Financing Coordination Fees and
Acquisition Expenses payable in connection with the Company’s total portfolio of
Investments and reinvestments, if any, shall be reasonable and shall not exceed
an amount equal to four and one half percent (4.5%) of the Contract Purchase
Price of the Company’s total portfolio of Investments or four and one half
percent (4.5%) of the amount advanced for Company’s total portfolio of
Investments; provided, however, that once all the proceeds from the initial
Offering have been fully invested, the total of all Acquisition Fees and
Financing Coordination Fees shall not exceed one and one-half percent (1.5%) of
the Contract Purchase Price of all the Investments acquired.

 

(ii)In accordance with the Articles of Incorporation, the total of all
Acquisition Fees, Financing Coordination Fees and Acquisition Expenses payable
in connection with any Investment or any reinvestment shall be reasonable and
shall not exceed an amount equal to four and one-half percent (4.5%) of the
Contract Purchase Price of the Investment or four and one-half percent (4.5%) of
the amount advanced for any Investment; provided, further, however, that a
majority of the Directors (including a majority of the Independent Directors)
not otherwise interested in the transaction may approve fees and expenses in
excess of these limits if they determine the transaction to be commercially
competitive, fair and reasonable to the Company.

 

15

 

 

8.2Asset Management Fee.  The Company shall pay an Asset Management Fee to the
Advisor as compensation for services rendered in connection with the management
of the Company’s assets for the period prior to and including September 30, 2013
in an amount equal to 0.75% per annum of the Cost of Assets; provided, however,
that the Asset Management Fee shall be reduced by any Oversight Fee payable to
the Advisor, such that the aggregate Asset Management Fee and the Oversight Fee
do not exceed 0.75% per annum of the Cost of Assets. The Asset Management Fee is
payable on the first business day of each month for the respective current month
in the amount of 0.0625% of the Cost of Assets as of such date. The Advisor
shall submit an invoice to the Company, accompanied by a computation of the
Asset Management Fee for the applicable month. The Asset Management Fee to be
paid for a month will be reduced by the average monthly amount that NAREIT FFO,
as adjusted, during the six months ending on the last day of the calendar
quarter immediately preceding the date that such Asset Management Fee is payable
is less than the Distributions declared with respect to such six month period;
provided, however, that the asset management fee will not be reduced below the
following amounts: (i) six months after the Effective Date of the Offering,
.35%; (ii) twelve months after the Effective Date of the Offering, .65% and
(iii) beginning eighteen months after the Effective Date of the Offering, no
reduction. For purposes of this determination, NAREIT FFO, as adjusted, is
NAREIT FFO adjusted to (i) include acquisition fees and related expenses which
is deducted in computing NAREIT FFO; and (ii) include non-cash restricted stock
grant amortization, if any, which is deducted in computing NAREIT FFO.

 

8.3Oversight Fee.  The Company shall pay the Advisor an Oversight Fee equal to
one percent (1.0%) of the gross revenues from Properties managed by any Person
that is not an Affiliate of the Advisor.  The Oversight Fee is payable quarterly
in advance, on January 1, April 1, July 1 and October 1.  The Advisor shall
submit an invoice to the Company, accompanied by a computation of the Oversight
Fee for the applicable quarter.

 

8.4Real Estate Commission.  In connection with a Sale of a Property in which the
Advisor or any Affiliate or agent of the Advisor provides a substantial amount
of services, as determined by the Independent Directors, the Company shall pay
to the Advisor a Real Estate Commission equal to two percent (2.0%) of the
Contract Sales Price of such Property, but in no event shall the Real Estate
Commission exceed one-half of the Competitive Real Estate Commission paid if a
non-Affiliate is also involved; provided, however, that in no event may the sum
of the Real Estate Commission and such brokerage commissions exceed the lesser
of six percent (6.0%) of the Contract Sales Price and a Competitive Real Estate
Commission.  The Advisor shall submit an invoice to the Company, accompanied by
a computation of the Real Estate Commission at or prior to the closing of the
Sale.  The Company shall pay to the Advisor the Real Estate Commission at the
closing of the Sale.

 

8.5 Financing Coordination Fee.  The Company shall pay a Financing Coordination
Fee to the Advisor in connection with the financing of any Investment,
assumption of any loans with respect to any Investment or refinancing of any
loan in an amount equal to one percent (1.0%) of the amount made available
and/or outstanding under any such loan,

 

16

 

 

including any assumed loan.  In no event will the aggregate Acquisition Fees and
Financing Coordination Fees, at the time that the net proceeds of the Offering
are fully invested or at any time thereafter, exceed, in the aggregate, one and
a half percent (1.5%) of the aggregate Contract Purchase Price of all of the
Properties acquired by the Company.  The Advisor shall submit an invoice to the
Company, accompanied by a computation of the Financing Coordination Fee at or
prior to the closing of the financing.  The Company shall pay to the Advisor the
Financing Coordination Fee at the closing of the financing.

 

8.6Limitation on Insourced Acquisition Expenses.

 

(A)The total of all Insourced Acquisition Expenses with respect to any
Investment shall initially be fixed at, and shall not exceed, 0.50% of the
Contract Purchase Price of the Investment or 0.50% of the amount advanced for an
Investment, which the Company shall pay to the Advisor or its Affiliate at the
closing of each Investment. For the avoidance of doubt, no payment in respect of
Insourced Acquisition Expenses shall be made unless the Advisor or its
Affiliates shall have performed services related to selecting, evaluating and
acquiring an Investment, regardless of whether such Investment is ultimately
acquired.

 

(B)The total of all Insourced Acquisition Expenses for any calendar year shall
initially be fixed at, and shall not exceed, 0.50% of the Contract Purchase
Price of the Investments acquired during such period or 0.50% of the amounts
advanced for the Investments made during such period (to be prorated for any
partial calendar year); provided, however, within a reasonable period of time
following the end of each such calendar year, the Company shall perform a Market
Check and provide the results thereof to the Advisor within a reasonable period
of time and, if the result of the Market Check is that the projected amount of
Acquisition Expenses that would be incurred if substantially similar services
with respect to a substantially similar amount of properties were to be provided
by a Person other than the Advisor or any of its Affiliates during the
subsequent calendar year is lower than the amount of Insourced Acquisition
Expenses paid to the Advisor or its Affiliates during the previous calendar
year, either (A) the Advisor shall agree to reduce the cap on the Insourced
Acquisition Expenses until the next Market Check such that the cap on Insourced
Acquisition Expenses does not exceed the projected amount of Acquisition
Expenses that would be incurred if substantially similar services with respect
to a substantially similar amount of properties were to be provided by a Person
other than the Advisor or any of its Affiliates during the subsequent calendar
year or (B) the Company may outsource to a Person other than the Advisor or its
Affiliate certain services previously provided by the Advisor or its Affiliates
until the next Market Check.

 

8.7Payment of Fees.  In connection with the Acquisition Fee, Real Estate
Commission and Financing Coordination Fee, the Company shall pay such fees to
the Advisor in cash or in Shares, or a combination of both, the form of payment
to be determined in the sole discretion of the Advisor. The Asset Management Fee
shall be payable, at the discretion

 

17

 

 

of the Board of Directors, up to and including September 30, 2013, in cash or
Shares, or in any combination thereof, at the discretion of the Advisor. For the
purposes of the payment of such fees in Shares, each Share shall be valued at
the per share offering price of the Shares in the initial Offering minus the
maximum selling commissions and dealer manager fee allowed in the initial
Offering.

 

8.8Exclusion of Certain Transactions.

 

(C)If the Company or the Partnership shall propose to enter into any transaction
in which the Advisor, any Affiliate of the Advisor or any of the Advisor’s
directors or officers has a direct or indirect interest, then such transaction
shall be approved by a majority of disinterested Directors, including a majority
of disinterested Independent Directors.

 

(D)If the Board elects to internalize any management services provided by
the Advisor, neither the Company nor the Partnership shall pay any compensation
or other remuneration to the Advisor or its Affiliates in connection with the
internalization transaction.

 

8.9Subordinated Participation Interests.  The Company shall cause the Operating
Partnership to periodically issue Subordinated Participation Interests in the
Operating Partnership to the Advisor or its assignees, pursuant to the terms and
conditions contained in the Operating Partnership Agreement, in connection with
the Advisor’s (or its assignees’) management of the Operating Partnership’s
assets commencing October 1, 2013.

 

8.10Other Services.  Should the Board request that the Advisor or any Affiliate,
or any director, officer or employee of any of the foregoing, render services
for the Company other than as set forth in this Agreement, such services shall
be separately compensated at such rates and in such amounts as are agreed upon
by the Advisor or such Affiliate or other Person, on the one hand, and the
Board, including a majority of the Independent Directors, on the other hand,
subject to the limitations contained in the Articles of Incorporation, and shall
not be deemed to be services pursuant to the terms of this Agreement.

 

8.11Changes to Fee Structure.  In the event of Listing, the Company and the
Advisor shall negotiate in good faith to establish a fee structure appropriate
for a perpetual-life entity.

 

Article 9

Expenses

 

9.1General.  In addition to the compensation paid to the Advisor pursuant to
Article 8 hereof, the Company shall pay directly or reimburse the Advisor, as
the case may be, for all of the expenses paid or incurred by the Advisor or its
Affiliates on behalf of the Company or in connection with the services provided
to the Company (including any

 

18

 

 

expenses paid or incurred by third parties engaged by the Advisor to render any
portion of such services) pursuant to this Agreement, including, but not limited
to:

  

(A)All Organization and Offering Expenses; provided, however, that:

 

(1)the Company shall not reimburse the Advisor to the extent such reimbursement
would cause the total amount spent by the Company on Organization and Offering
Expenses (excluding underwriting and brokerage discounts and commissions) to
exceed 1.5% of Gross Proceeds raised in an Offering as of the termination of
such Offering; and

 

(2)within 60 days after the end of the month in which an Offering terminates,
the Advisor shall reimburse the Company to the extent the Company incurred
Organization and Offering Expenses (excluding underwriting and brokerage
discounts and commissions) exceeding 1.5% of Gross Proceeds raised in such
Offering;

 

(B)Acquisition Fees and Acquisition Expenses incurred in connection with the
selection and acquisition of Investments, including such expenses incurred
related to assets pursued or considered but not ultimately acquired by the
Company, provided that, notwithstanding anything herein to the contrary, the
payment of Acquisition Fees and Acquisition Expenses by the Company shall be
subject to the limitations contained in the Articles of Incorporation;

 

(C)Third-party due diligence fees of up to 0.5% of the Gross Proceeds as set
forth in a detailed and itemized invoice;

 

(D)The actual out-of-pocket cost of goods and services used by the Company and
obtained from entities not Affiliated with the Advisor, including travel, meals
and lodging expenses incurred by the Advisor in performing duties associated
with the acquisition or origination of Investments;

 

(E)Interest and other costs for borrowed money, including discounts, points and
other similar fees;

 

(F)Taxes and assessments on income or Properties, taxes as an expense of doing
business and any other taxes otherwise imposed on the Company and its business,
assets or income;

 

(G)Out-of-pocket costs associated with insurance required in connection with the
business of the Company or by its officers and Directors;

 

(H)Expenses of managing, improving, developing, operating and selling
Investments owned, directly or indirectly, by the Company, as well as expenses
of other transactions relating to such Investments, including prepayments,
maturities and workouts of Loans and other Permitted Investments;

 

19

 

 

(I)All out-of-pocket expenses in connection with payments to the Board and
meetings of the Board and Stockholders;

 

(J)All out-of-pocket expenses associated with a Listing, if applicable, or with
the issuance and distribution of Shares, such as selling commissions and fees,
advertising expenses, taxes, legal and accounting fees, listing and registration
fees, and other Organization and Offering Expenses;

 

(K)Personnel and related employment costs incurred by the Advisor or its
Affiliates in performing the services described in Article 3 hereof, including
reasonable salaries and wages, benefits and overhead of all employees directly
involved in the performance of such services, provided that no reimbursement
shall be made for costs of such employees of the Advisor or its Affiliates to
the extent that such employees perform services for which the Advisor receives
Acquisition Fees or Real Estate Commissions;

 

(L)Out-of-pocket expenses of providing services for and maintaining
communications with Stockholders, including the cost of preparation, printing,
and mailing annual reports and other Stockholder reports, proxy statements and
other reports required by governmental entities;

 

(M)Audit, accounting and legal fees, and other fees for professional services
relating to the operations of the Company and all such fees incurred at the
request, or on behalf of, the Board or any committee of the Board;

 

(N)Out-of-pocket costs for the Company to comply with all applicable laws,
regulations and ordinances;

 

(O)Expenses connected with payments of Distributions made or caused to be made
by the Company to the Stockholders;

 

(P)Expenses of organizing, redomesticating, merging, liquidating or dissolving
the Company or of amending the Articles of Incorporation or the Bylaws; and

 

(Q)All other out-of-pocket costs incurred by the Advisor in performing the
Advisor’s duties hereunder.

 

9.2Timing of and Additional Limitations on Reimbursements.  Commencing upon the
earlier to occur of (i) the fifth fiscal quarter after the Company makes its
first Investment or (ii) six (6) months after the commencement of the Company’s
initial Offering, expenses incurred by the Advisor on behalf of the Company or
in connection with the services provided to the Company (including any expenses
paid or incurred by third parties engaged by the Advisor to render any portion
of such services) and reimbursable pursuant to this Article 9 shall be
reimbursed, no less than monthly, to the Advisor in the manner and proportion
directed by the Advisor.  The Advisor shall prepare a statement

 

20

 

 

 

documenting the expenses of the Company during each month and shall deliver such
statement to the Company within three (3) business days after the end of each
month.

 

(A)The Company shall not reimburse the Advisor at the end of any fiscal quarter
for Operating Expenses that in the four consecutive fiscal quarters then ended
(the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of Average
Invested Assets or 25% of Net Income (the “2%/25% Guidelines”) for such year
unless the Independent Directors determine that such excess was justified, based
on unusual and nonrecurring factors that the Independent Directors deem
sufficient.  If the Independent Directors do not approve such excess as being so
justified, the Advisor shall repay to the Company any Excess Amount paid to the
Advisor during a fiscal quarter.  If the Independent Directors determine such
excess was justified, then, within 60 days after the end of any fiscal quarter
of the Company for which total reimbursed Operating Expenses for the Expense
Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the
Independent Directors, shall cause such fact to be disclosed to the Stockholders
in writing (or the Company shall disclose such fact to the Stockholders in the
next quarterly report of the Company or by filing a Current Report on Form 8-K
with the SEC within 60 days of such quarter end), together with an explanation
of the factors the Independent Directors considered in determining that such
excess expenses were justified.  The Company will ensure that such determination
will be reflected in the minutes of the meetings of the Board.  All figures used
in the foregoing computation shall be determined in accordance with GAAP applied
on a consistent basis.

 

(B)Notwithstanding this Article 9, or any other provision in this Agreement
seemingly to the contrary, Advisor, its Affiliates and agents shall not be
required to advance for reimbursement (i) any earnest money deposits required in
connection with any Investments, (ii) any fees, deposits or other amounts due to
any lender or other Person in order to secure and close any financings, (iii)
any commissions, fees or other amounts due to any brokers or other Persons in
connection with any Investments or to any third parties retained to help source
any financings or (iv) any other out-of-pocket pursuit costs incurred to secure,
assess and close each Investment, such as legal fees and consultant fees for due
diligence activities including, but not limited to building condition and
environmental assessments and reports.  Any such amounts shall be funded when
due by the Company directly in accordance with the agreement or agreements
requiring the payment of such amounts.  The Company’s obligation to fund all
such amounts shall apply whether the agreements requiring the payment of such
amounts are executed in the name of the Company, the Advisor or any of its
Affiliates or agents.

 

21

 

 

Article 10

Relationship of the Advisor and the Company; Other Activities of the Advisor

 

10.1       Relationship.  Except as provided in Section 8.9, the Company and the
Advisor are not partners or joint venturers with each other, and nothing in this
Agreement shall be construed to make them such partners or joint venturers.
Nothing herein contained shall prevent the Advisor or any of its Affiliates from
engaging in or earning fees from other activities, including the rendering of
advice to other Persons (including other REITs) and the management of other
programs advised, sponsored or organized by the Advisor or any of its
Affiliates; nor shall this Agreement limit or restrict the right of any manager,
director, officer, member, partner, employee or equity holder of the Advisor or
any of its Affiliates to engage in or earn fees from any other business or to
render services of any kind to any other Person.  The Advisor may, with respect
to any investment in which the Company is a participant, also render advice and
service to each and every other participant therein, and earn fees for rendering
such advice and service.  Specifically, it is contemplated that the Company may
enter into Joint Ventures or other similar co-investment arrangements with
certain Persons, and pursuant to the agreements governing such Joint Ventures or
other similar co-investment arrangements, the Advisor may be engaged to provide
advice and service to such Persons, in which case the Advisor will earn fees for
rendering such advice and service. The Advisor shall promptly disclose to the
Board the existence of any condition or circumstance, existing or anticipated,
of which it has knowledge that creates or could create a conflict of interest
between the Advisor’s obligations to the Company and its obligations to or its
interest in any other Person.

 

10.2       Time Commitment.  The Advisor shall, and shall cause its Affiliates
and their respective employees, officers and agents to, devote to the Company
such time as shall be reasonably necessary to conduct the business and affairs
of the Company in an appropriate manner consistent with the terms of this
Agreement.  The Company acknowledges that the Advisor and its Affiliates and
their respective employees, officers and agents may also engage in activities
unrelated to the Company and may provide services to Persons other than the
Company or any of its Affiliates.

 

10.3       Investment Opportunities.  The Advisor shall be required to use
commercially reasonable efforts to present a continuing and suitable investment
program in Targeted Assets to the Company that is consistent with the investment
policies and objectives of the Company.  So long as the Advisor acts in its
capacity under this Agreement, nothing herein contained shall prevent the
Advisor or any of its Affiliates from engaging in or earning fees from other
activities, including the acquisition of any investment that is directly
competitive with the Company’s strategy, the rendering of advice to other
Persons (including other REITs) and the management of other programs advised,
sponsored or organized by the Advisor or its Affiliates; nor shall this
Agreement limit or restrict the right of any director, officer, member, partner,
employee or stockholder of the Advisor or any of its Affiliates to engage in or
earn fees from any other business or to render services of any kind to any other
Person and earn fees for rendering such services; provided, however, that the
Advisor must devote sufficient resources (directly or through third parties
retained for such purposes) to the Company’s business to discharge its
obligations to the Company under this Agreement.  The Advisor may, with respect
to any

 

22

 

 

Investment in which the Company is a participant, also render advice and service
to each and every other participant therein, and earn fees for rendering such
advice and service.

 

The Advisor shall report to the Board the existence of any condition or
circumstance, existing or anticipated, of which it has knowledge, which creates
or could create a conflict of interest between the Advisor’s obligations to the
Company and its obligations to or its interest in any other Person.  If the
Advisor, Director or Affiliates thereof have sponsored other investment programs
with similar investment objectives which have investment funds available at the
same time as the Company, the Advisor shall inform the Board of the method to be
applied by the Advisor in allocating investment opportunities among the Company
and competing investment entities and shall provide regular updates to the Board
of the investment opportunities provided by the Advisor to competing programs in
order for the Board (including the Independent Directors) to fulfill its duty to
ensure that the Advisor and its Affiliates use their reasonable best efforts to
apply such method fairly to the Company.

 

Article 11

The American Realty Capital and ARC Names

 

11.1       The American Realty Capital and ARC Names.  The Advisor and its
Affiliates have or may have a proprietary interest in the names “American Realty
Capital” and “ARC.”  The Advisor hereby grants to the Company, to the extent of
any proprietary interest the Advisor may have in any of the names “American
Realty Capital” and “ARC,” a non-transferable, non-assignable, non-exclusive
royalty-free right and license to use the names “American Realty Capital” and
“ARC” during the term of this Agreement.  The Company agrees that the Advisor
and its Affiliates will have the right to approve of any use by the Company of
the names “American Realty Capital” or “ARC,” such approval not to be
unreasonably withheld or delayed.  Accordingly, and in recognition of this
right, if at any time the Company ceases to retain the Advisor or one of its
Affiliates to perform advisory services for the Company, the Company will,
promptly after receipt of written request from the Advisor, cease to conduct
business under or use the names “American Realty Capital” and “ARC” or any
derivative thereof and the Company shall change its name and the names of any of
its subsidiaries to a name that does not contain the names “American Realty
Capital” or “ARC” or any other word or words that might, in the reasonable
discretion of the Advisor, be susceptible of indication of some form of
relationship between the Company and the Advisor or any its Affiliates.  At such
time, the Company will also make any changes to any trademarks, service marks or
other marks necessary to remove any references to any of the names “American
Realty Capital” or “ARC.”  Consistent with the foregoing, it is specifically
recognized that the Advisor or one or more of its Affiliates has in the past and
may in the future organize, sponsor or otherwise permit to exist other
investment vehicles (including vehicles for investment in real estate) and
financial and service organizations having any of the names “American Realty
Capital” or “ARC” as a part of their name, all without the need for any consent
(and without the right to object thereto) by the Company.  Neither the Advisor
nor any of its Affiliates makes any representation or warranty, express or
implied, with respect to the names “American Realty Capital” or “ARC” licensed
hereunder or the use thereof (including without limitation as to whether the use
of the name “American Realty Capital” or “ARC” will be free from infringement of
the intellectual property rights of third parties).  Notwithstanding the
preceding, the Advisor represents and warrants that

 

23

 

 

it is not aware of any pending claims or litigation or of any claims threatened
in writing regarding the use or ownership of the names “American Realty Capital”
or “ARC.”

 

Article 12

Term and Termination of the Agreement

 

12.1Term.  This Agreement shall have an initial term of one year from the date
hereof and may be renewed for an unlimited number of successive one-year terms
upon mutual consent of the parties.  The Company (acting through the Independent
Directors) will evaluate the performance of the Advisor annually before renewing
this Agreement, and each such renewal shall be for a term of no more than one
year.  Any such renewal must be approved by a majority of the Independent
Directors.

 

12.2Termination by Either Party.  This Agreement may be terminated upon 60 days’
written Notice without cause or penalty by either the Company (with the consent
of a majority of the Independent Directors) or the Advisor.  The provisions of
Articles 1, 11, 12, 14 and 15 shall survive termination of this
Agreement.  Notwithstanding anything else that may be to the contrary herein,
the expiration or earlier termination of this Agreement shall not relieve a
party for liability for any breach occurring prior to such expiration or earlier
termination.

 

12.3Payments to and Duties of the Advisor Upon Termination.

 

(A)Amounts Owed.  After the Termination Date, the Advisor shall be entitled to
receive from the Company or the Partnership within thirty (30) days after the
effective date of such termination all amounts then accrued and owing to the
Advisor, including all its interest, if any, in the Company’s income, losses,
distributions and capital by payment of an amount equal to the then-present fair
market value of the Advisor’s interest, if any, subject to the 2%/25% Guidelines
to the extent applicable.

 

(B)Advisor’s Duties.  The Advisor shall promptly upon termination of this
Agreement:

 

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

 

(ii)deliver to the Board a full accounting, including a statement showing all
payments collected by it and a statement of all money held by it, covering the
period following the date of the last accounting furnished to the Board;

 

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

 

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(iv)cooperate with the Company and the Partnership to provide an orderly
management transition.

  

Article 13

Assignment

 

This Agreement may be assigned by the Advisor to an Affiliate with the consent
of the Independent Directors.  This Agreement shall not be assigned by the
Company without the consent of the Advisor, except in the case of an assignment
by the Company to a corporation or other organization that is a successor to all
of the assets, rights and obligations of the Company, in which case such
successor organization shall be bound hereunder and by the terms of said
assignment in the same manner as the Company is bound by this Agreement. The
Advisor may assign any rights to receive fees or other payments under this
Agreement to any Person without obtaining the approval of the Board.

  

Article 14

Indemnification and Limitation of Liability

 

14.1       Indemnification.  Except as prohibited by the restrictions provided
in this Section 14.1, Section 14.2 and Section 14.3, the Company shall
indemnify, defend and hold harmless the Advisor, Lincoln and their respective
Affiliates, as well as their respective officers, directors, equity holders,
members, partners, managers and employees, from all liability, claims, damages
or losses arising in the performance of their duties hereunder or under any
services agreement and related expenses, including reasonable attorneys’ fees,
to the extent such liability, claims, damages or losses and related expenses are
not fully reimbursed by insurance.  Any indemnification of the Advisor or
Lincoln may be made only out of the net assets of the Company and not from
Stockholders. Notwithstanding the foregoing, the Company shall not indemnify the
Advisor, Lincoln or their respective Affiliates, or their respective officers,
directors, equity holders, members, partners, managers and employees, for any
loss, liability or expense arising from or out of an alleged violation of
federal or state securities laws by such party unless one or more of the
following conditions are met: (i) there has been a successful adjudication on
the merits of each count involving alleged material securities law violations as
to the particular indemnitee; (ii) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as to the
particular indemnitee; or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the
position of the SEC and of the published position of any state securities
regulatory authority in which securities of the Company were offered or sold as
to indemnification for violations of securities laws.

 

14.2Limitation on Indemnification.  Notwithstanding the foregoing, the Company
shall not provide for indemnification of the Advisor, Lincoln or their
respective Affiliates or of their respective officers, directors, equity
holders, members, partners, managers and employees, for any liability or loss
suffered by any of them, nor shall any of them be held

 

25

 

 

  harmless for any loss or liability suffered by the Company, unless all of the
following conditions are met:

  

(A)The Advisor or one of its Affiliates or Lincoln or one of its Affiliates, as
applicable, has determined, in good faith that the course of conduct that caused
the loss or liability was in the best interests of the Company.

 

(B)The Advisor or one of Affiliates or Lincoln or one of its Affiliates, as
applicable, was acting on behalf of or performing services for the Company.

 

(C)Such liability or loss was not the result of negligence or misconduct by the
Advisor or one of its Affiliates or Lincoln or one of its Affiliates, as
applicable.

 

14.2       Limitation on Payment of Expenses.  The Company shall pay or
reimburse reasonable legal expenses and other costs incurred by any of the
Advisor or its Affiliates or Lincoln or its Affiliates, as applicable, or by any
of their respective officers, directors, equity holders, members, partners,
managers and employees, in advance of the final disposition of a
proceeding.  Such expenses shall be paid with respect to the Advisor or its
Affiliates or Lincoln or its Affiliates, as applicable, or any of their
respective officers, directors, equity holders, members, partners, managers and
employees only if (in addition to any applicable procedures required by the
MGCL) all of the following are satisfied: (a) the proceeding relates to acts or
omissions with respect to the performance of duties or services on behalf of the
Company, (b) the legal proceeding was initiated by a third party who is not a
stockholder or, if by a stockholder acting in his or her capacity as such, a
court of competent jurisdiction approves such advancement and (c) such Person
undertakes to repay the amount paid or reimbursed by the Company, together with
the applicable legal rate of interest thereon, if it is ultimately determined
that such Person is not entitled to indemnification.

  

Article 15

Miscellaneous

 

15.1       Notices.  Any notice, request, demand, approval, consent, waiver or
other communication required or permitted to be given hereunder or to be served
upon any of the parties hereto (each a “Notice”) shall be in writing and shall
be (a) delivered in person, (b) sent by facsimile transmission (with the
original thereof also contemporaneously given by another method specified in
this Section 15.1), (c) sent by a nationally-recognized overnight courier
service, or (d) sent by certified or registered mail (postage prepaid, return
receipt requested), to the address of such party set forth herein.

 

To the Company: American Realty Capital – Retail Centers of America, Inc.   405
Park Avenue   New York, New York 10022   Attention: Edward M. Weil, Jr.,
President   Facsimile: (212) 421-5799

 

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  With a copy to:       Proskauer Rose LLP   Eleven Times Square   New York, New
York 10036   Attention:  Peter Fass, Esq.   Attention:  James Gerkis, Esq.  
Facsimile:  (212) 969-2900     To the Advisor: American Realty Capital Retail
Advisor, LLC   405 Park Avenue   New York, New York 10022   Attention: Edward M.
Weil, Jr., President   Facsimile: (212) 421-5799       With a copy to:      
Proskauer Rose LLP   Eleven Times Square   New York, New York 10036  
Attention:  Peter Fass, Esq.   Attention:  James Gerkis, Esq.   Facsimile: (212)
969-2900

 

Any party may at any time give Notice in writing to the other parties of a
change in its address for the purposes of this Section 15.1.

 

15.2Modification.  This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by the Company and the Advisor, or their respective successors
or permitted assigns.

 

15.3Severability.  The provisions of this Agreement are independent of and
severable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

15.4Third Party Beneficiary.  The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto, their Affiliates and their
respective successors and permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person; except
with respect to the benefits conferred upon or derived by Lincoln and its
Affiliates and their respective successors and assigns under Articles 9, 13 and
14. Lincoln, its Affiliates and their respective successors and assigns shall
have all rights, remedies, powers and privileges provided in such Articles and
shall have the right to directly seek enforcement of such rights, remedies,
powers and privileges under this Agreement. Neither the failure nor any delay on
the part of Lincoln, its Affiliates or their respective successors and assigns
to exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy,

 

 

27

 

 

power or privilege preclude any other or further exercise of the same or of any
other right, remedy, power or privilege, nor shall any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence.  No waiver shall be effective unless it is in writing and is signed
by the party asserted to have granted such waiver.  Copies of any Notice
delivered in accordance with Section 15.1 of this Agreement shall be (a)
delivered in person, (b) sent by facsimile transmission, (c) sent by a
nationally-recognized overnight courier service, or (d) sent by certified or
registered mail (postage prepaid, return receipt requested), to Lincoln at the
following address:

 

Lincoln Retail REIT Services, LLC

2000 McKinney Avenue

Suite 1000

Dallas, Texas 75201

Facsimile:  (214) 740-3313

Attention:  Mr. Robert Dozier

Attention:  Mr. Gregory S. Courtwright

 

with a copy to:

 

Greenburg Traurig, LLP

200 Park Avenue

New York, NY 10166

Telephone: (212) 801-9330

Facsimile: (212) 805-9330

Attention:  Judith D. Fryer, Esq.

 

15.5Construction.  The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect, without regard to the principles of conflicts of laws thereof.

 

15.6Entire Agreement.  This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.

 

15.7Waiver.  Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with

 

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respect to any other occurrence.  No waiver shall be effective unless it is in
writing and is signed by the party asserted to have granted such waiver.

 

 

15.8Gender.  Words used herein regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.

 

15.9Titles Not to Affect Interpretation.  The titles of Articles and Sections
contained in this Agreement are for convenience only, and they neither form a
part of this Agreement nor are they to be used in the construction or
interpretation hereof.

 

15.10Counterparts.  This Agreement may be executed with counterpart signature
pages or in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterpart signatures pages or counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.

  

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

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

 

  AMERICAN REALTY CAPITAL – RETAIL CENTERS OF AMERICA, INC.       By: /s/ Edward
M. Weil, Jr.   Name: Edward M. Weil,Jr.   Title: President       AMERICAN REALTY
CAPITAL OPERATING PARTNERSHIP, L.P.       By: American Realty Capital – Retail
Centers of America, Inc., Its General Partner       By: /s/ Edward M. Weil, Jr.
  Name: Edward M. Weil, Jr.   Title: President       AMERICAN REALTY CAPITAL
RETAIL ADVISOR, LLC       By: American Realty Capital Retail Special Limited
Partnership, LLC, Its Member         By: American Realty Capital IV, LLC, Its
Managing Member         By: /s/ Nicholas S. Schorsch   Name: Nicholas S.
Schorsch   Title: Authorized Signatory

 

 

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