EXECUTION COPY

 

 

 

THIRD AMENDED AND RESTATED ADVISORY AGREEMENT
BY AND AMONG
AMERICAN REALTY CAPITAL NEW YORK RECOVERY REIT, INC.,
NEW YORK RECOVERY OPERATING PARTNERSHIP, L.P.,
AND
NEW YORK RECOVERY ADVISORS, LLC

Dated as of August 7, 2012

 

 

 

 

TABLE OF CONTENTS

 

    Page       1. DEFINITIONS 1       2. APPOINTMENT 6       3. DUTIES OF THE
ADVISOR 6       4. AUTHORITY OF ADVISOR 9       5. FIDUCIARY RELATIONSHIP 9    
  6. NO PARTNERSHIP OR JOINT VENTURE 9       7. BANK ACCOUNTS 9       8.
RECORDS; ACCESS 10       9. LIMITATIONS ON ACTIVITIES 10       10. FEES 10      
11. EXPENSES 13       12. OTHER SERVICES 15       13. REIMBURSEMENT TO THE
ADVISOR 15       14. OTHER ACTIVITIES OF THE ADVISOR 15       15. THE AMERICAN
REALTY CAPITAL NAME 16       16. TERM OF AGREEMENT 17       17. TERMINATION BY
THE PARTIES 17       18. ASSIGNMENT TO AN AFFILIATE 17       19. PAYMENTS TO AND
DUTIES OF ADVISOR UPON TERMINATION 17       20. INCORPORATION OF THE ARTICLES OF
INCORPORATION AND THE OPERATING PARTNERSHIP AGREEMENT 20       21.
INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP 20       22.
INDEMNIFICATION BY ADVISOR 21

 

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TABLE OF CONTENTS

(continued)

 

 

    Page       23. NOTICES 22       24. MODIFICATION 23       25. SEVERABILITY
23       26. GOVERNING LAW 23       27. ENTIRE AGREEMENT 23       28. NO WAIVER
23       29. PRONOUNS AND PLURALS 23       30. HEADINGS 23       31. EXECUTION
IN COUNTERPARTS 23

 

 

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THIRD AMENDED AND RESTATED ADVISORY AGREEMENT

 

THIS THIRD AMENDED AND RESTATED ADVISORY AGREEMENT, dated as of August 7, 2012
(this “Agreement”), is entered into among American Realty Capital New York
Recovery REIT, Inc., a Maryland corporation (the “Company”), New York Recovery
Operating Partnership, L.P., a Delaware limited partnership (the “Operating
Partnership”), and New York Recovery Advisors, LLC, a Delaware limited liability
company.

 

WITNESSETH

 

WHEREAS, the parties (i) entered into the Advisory Agreement on February 17,
2010 (the “Original Agreement”), (ii) amended and restated the Original
Agreement on April 8, 2010 (such amended and restated agreement, the “Amended
and Restated Agreement”), (iii) amended and restated the Amended and Restated
Agreement on September 2, 2010 (such amended and restated agreement, the “Second
Amended and Restated Agreement”), and (iv) amended the Second Amended and
Restated Agreement on June 23, 2011 (such amendment, the “First Amendment”) and
on April 13, 2012 (such amendment, the “Second Amendment”); and

 

WHEREAS, the parties have agreed to make certain amendments and desire to amend
and restate the Second Amended and Restated Agreement, as amended by the First
Amendment and the Second Amendment, in its entirety;

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree that the Second Amended and Restated Agreement, as amended
by the First Amendment and the Second Amendment, hereby is amended and restated
in its entirety to read as follows:

 

1. DEFINITIONS. As used in this Agreement, the following terms have the
definitions set forth below; provided, however, that in no event is this
Agreement intended to modify any substantive provision of the Articles of
Incorporation. In the event of a conflict between the terms of this Agreement
and the terms of the Articles of Incorporation, the terms of the Articles of
Incorporation shall control.

 

“2%/25% Guidelines” has the meaning set forth in Section 13.

 

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

 

“Acquisition Fee” means the fee payable to the Advisor or its assignees pursuant
to Section 10(a).

 

“Advisor” means New York Recovery Advisors, LLC, a Delaware limited liability
company, any successor advisor to the Company and the Operating Partnership, or
any Person to which New York Recovery Advisors, LLC or any successor advisor
subcontracts all or substantially all its functions, including but not limited
to directing or performing the day-to-day business affairs of the Company.
Notwithstanding the foregoing, a Person hired or retained by New York Recovery
Advisors, LLC to perform property management and related services for the
Company or the Operating Partnership that is not hired or retained to perform
all or substantially all the functions of New York Recovery Advisors, LLC,
including but not limited to directing or performing the day-to-day business
affairs of the Company, shall not be deemed to be an Advisor.

 

 

 

 

“Affiliate” or “Affiliated” means with respect to any Person, (i) any other
Person directly or indirectly owning, controlling or holding, with the power to
vote, ten percent (10%) or more of the outstanding voting securities of such
Person; (ii) any other Person ten percent (10%) or more of whose outstanding
voting securities are directly or indirectly owned, controlled or held, with the
power to vote, by such Person; (iii) any other Person directly or indirectly
controlling, controlled by or under common control with such Person; (iv) any
executive officer, director, trustee or general partner of such Person; and (v)
any legal entity for which such Person acts as an executive officer, director,
trustee or general partner. For purposes of this definition, the terms
“controls,” “is controlled by,” or “is under common control with” shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of an entity, whether through ownership or voting
rights, by contract or otherwise.

 

“Agreement” has the meaning set forth at the head of this Agreement, and such
term shall include any amendment or supplement hereto from time to time.

 

“Amended and Restated Agreement” has the meaning set forth at the head of this
Agreement.

 

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

 

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

 

“Asset Management Fee” means the fee payable to the Advisor pursuant to
Section 10(d).

 

“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.

 

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

 

“By-laws” means the by-laws of the Company, as amended and as the same are in
effect 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” has the meaning set forth at the head of this Agreement.

 

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“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 Asset.

 

“Cost of Assets” means, with respect to all Assets in the aggregate, the
purchase price, including Acquisition Expenses, capital expenditures and other
customarily capitalized costs, but excluding Acquisition Fees.

 

“Dealer Manager” means Realty Capital Securities, LLC, or such other Person
selected by the Board of Directors to act as the dealer manager for an Offering.

 

“Dealer Manager Fee” means the fee from the sale of Shares in a Primary
Offering, payable to the Dealer Manager for serving as the dealer manager of
such Primary Offering.

 

“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.

 

“Excess Amount” has the meaning set forth in Section 13.

 

“Expense Year” has the meaning set forth in Section 13.

 

“Financing Coordination Fee” means the fee payable to the Advisor pursuant to
Section 10(e).

  

“FINRA” means the Financial Industry Regulatory Authority, Inc.

 

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

 

“GAAP” means United States generally accepted accounting principles,
consistently applied.

 

“Gross Proceeds” means the aggregate purchase price of all Shares sold for the
account of the Company through an Offering, without deduction for Selling
Commissions, volume discounts, any marketing support and due diligence expense
reimbursement or 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.

 

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“Included Assets” has the meaning set forth in Section 19(b)(ii).

 

“Indemnitee” has the meaning set forth in Section 21.

 

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

 

“Joint Ventures” means the joint venture or partnership or other similar
arrangements (other than between the Company and the Operating Partnership) in
which the Company or the Operating Partnership or any of their subsidiaries is a
co-venturer, limited liability company member, limited partner or general
partner, which are established to acquire or hold Assets.

 

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

 

“Management Agreement” means the Amended and Restated Management Agreement,
dated as of September 2, 2010, among the Company, the Operating Partnership and
New York Recovery Properties, LLC, as the same may be amended from time to time.

 

“Memorandum” means the private placement memorandum of the Company prepared in
connection with the Private Offering, as amended or supplemented to date.

 

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

 

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

 

“Net Income” means, for any period, the Company’s total revenues applicable to
such period, less the total expenses applicable to such period other than
additions to reserves for depreciation, bad debts or other similar non-cash
reserves and excluding any gain from the sale of the Assets.

 

“Net Sales Proceeds” has the meaning set forth in the Articles of Incorporation.

 

“Notice” has the meaning set forth in Section 23.

 

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

 

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

 

“Operating Partnership Agreement” means the Second Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated as of
September 2, 2010, among the Company, New York Recovery Special Limited
Partnership, LLC and the Advisor, as the same may be amended from time to time.

 

“OP Units” means units of limited partnership interest in the Operating
Partnership.

 

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“Organization and Offering Expenses” has the meaning set forth in the Articles
of Incorporation.

 

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

 

“Other Liquidity Event” means the liquidation or sale of all or substantially
all the Assets, a sale or merger of the Company, or any other liquidity event
(other than a Listing).

 

“Oversight Fees” has the meaning set forth in Section 4.2 of the Management
Agreement.

 

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

 

“Preferred Stock” means the shares of the Company’s Series A Convertible
Preferred Stock, par value $0.01 per share. Notwithstanding all references to
the Preferred Stock in this Agreement, the parties acknowledge that on November
14, 2011, the Company exercised its option to convert all the Preferred Stock
into Common Stock, such conversion was effective on December 15, 2011, and no
Preferred Stock is outstanding as of the date hereof.

 

“Primary Offering” means the portion of an Offering other than the Shares
offered pursuant to the Company’s distribution reinvestment plan.

 

“Private Offering” means the private offering of Preferred Stock pursuant to the
Memorandum.

 

“Property” or “Properties” has the meaning set forth in the Articles of
Incorporation.

 

“Property Disposition Fee” means the fee payable to the Advisor pursuant to
Section 10(c).

 

“Prospectus” means the same as that term is defined in Section 2(a)(10) of the
Securities Act, including a preliminary prospectus and an offering circular as
described in Rule 253 of the General Rules under the Securities Act.

 

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

 

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

 

“Sale” or “Sales” has the meaning set forth in the Articles of Incorporation.

 

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

 

“Second Amended and Restated Agreement” has the meaning set forth at the head of
this Agreement.

 

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

 

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

 

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“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.

 

“Selling Commission” means the fee payable to the Dealer Manager and reallowable
to Soliciting Dealers with respect to Shares sold by them in a Primary Offering.

 

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

 

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

 

“Sponsor” means American Realty Capital III, LLC, a Delaware limited liability
company.

 

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

 

“Subordinated Incentive Listing Fee” means the fee payable to the Advisor or its
assignees pursuant to Section 10(f).

 

“Subordinated Participation In Net Sales Proceeds” means the fee payable to the
Advisor or its assignees pursuant to Section 10(g).

 

“Subordinated Termination Fee” means the fee payable to the Advisor pursuant to
Section 19(b).

 

“Termination Date” means the date of termination of this Agreement.

 

“Total Operating Expenses” has the meaning set forth in the Articles of
Incorporation. The definition of “Total Operating Expenses” set forth above is
intended to encompass only those expenses which are required to be treated as
Total Operating Expenses under the NASAA REIT Guidelines. As a result, and
notwithstanding the definition set forth above, any expense of the Company which
is not part of Total Operating Expenses under the NASAA REIT Guidelines shall
not be treated as part of Total Operating Expenses for purposes hereof.

 

2. APPOINTMENT. The Company and the Operating Partnership hereby appoint the
Advisor to serve as their 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.

 

3. DUTIES OF THE ADVISOR. The Advisor will use its reasonable best efforts to
present to the Company and the Operating Partnership potential investment
opportunities and to provide a continuing and suitable investment program
consistent with the investment objectives and policies of the Company as
determined and adopted from time to time by the Board. In performance of this
undertaking, subject to the supervision of the Board and consistent with the
provisions of the Articles of Incorporation, By-laws and the Operating
Partnership Agreement, the Advisor, directly or indirectly, will:

 

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(a) serve as the Company’s and the Operating Partnership’s investment and
financial advisor;

 

(b) provide the daily management for the Company and the Operating Partnership
and perform and supervise the various administrative functions necessary for the
day-to-day management of the operations of the Company and the Operating
Partnership;

 

(c) investigate, select and, on behalf of the Company and the Operating
Partnership, engage and conduct business with and supervise the performance of
such Persons as the Advisor deems necessary to the proper performance of its
obligations hereunder (including consultants, accountants, correspondents,
lenders, technical advisors, attorneys, brokers, underwriters, corporate
fiduciaries, escrow agents, depositaries, custodians, agents for collection,
insurers, insurance agents, banks, builders, developers, property owners, real
estate management companies, real estate operating companies, securities
investment advisors, mortgagors, the registrar and the transfer agent and any
and all agents for any of the foregoing), including Affiliates of the Advisor
and Persons acting in any other capacity deemed by the Advisor necessary or
desirable for the performance of any of the foregoing services (including
entering into contracts in the name of the Company and the Operating Partnership
with any of the foregoing);

 

(d) consult with the officers and Directors of the Company and assist the
Directors 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 and in connection with any borrowings
proposed to be undertaken by the Company or the Operating Partnership;

 

(e) subject to the provisions of Section 4 (i) participate in formulating an
investment strategy and asset allocation framework; (ii) locate, analyze and
select potential investments; (iii) structure and negotiate the terms and
conditions of transactions pursuant to which acquisitions and dispositions of
investments will be made; (iv) research, identify, review and recommend
acquisitions and dispositions of investments to the Board and make investments
on behalf of the Company and the Operating Partnership in compliance with the
investment objectives and policies of the Company; (v) arrange for financing and
refinancing and make other changes in the asset or capital structure of, and
dispose of, reinvest the proceeds from the sale of, or otherwise deal with,
investments; (vi) enter into leases and service contracts for Properties and, to
the extent necessary, perform all other operational functions for the
maintenance and administration of such Properties; (vii) actively oversee and
manage investments for purposes of meeting the Company’s investment objectives
and reviewing and analyzing financial information for each of the investments
and the overall portfolio; (viii) select Joint Venture partners, structure
corresponding agreements and oversee and monitor these relationships; (ix)
oversee, supervise and evaluate Affiliated and non-Affiliated property managers
who perform services for the Company or the Operating Partnership; (x) oversee
Affiliated and non-Affiliated Persons with whom the Advisor contracts to perform
certain of the services required to be performed under this Agreement; (xi)
manage accounting and other record-keeping functions for the Company and the
Operating Partnership, including reviewing and analyzing the capital and
operating budgets for the Properties and generating an annual budget for the
Company; (xii) recommend various liquidity events to the Board when appropriate;
and (xiii) source and structure Mortgages;

 

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(f) upon request, provide the Board with periodic reports regarding prospective
investments;

 

(g) make investments in, and dispositions of, investments within the
discretionary limits and authority as granted by the Board;

 

(h) negotiate on behalf of the Company and the Operating Partnership with banks
or other lenders for loans to be made to the Company, the Operating Partnership
or any of their subsidiaries, and negotiate with investment banking firms and
broker-dealers on behalf of the Company, the Operating Partnership or any of
their subsidiaries, or negotiate private sales of Shares or obtain loans for the
Company, the Operating Partnership or any of their subsidiaries, but in no event
in such a manner that the Advisor shall be acting as broker-dealer or
underwriter; provided, however, that any fees and costs payable to third parties
incurred by the Advisor in connection with the foregoing shall be the
responsibility of the Company, the Operating Partnership or any of their
subsidiaries;

 

(i) obtain reports (which may, but are not required to, be prepared by the
Advisor or its Affiliates), where appropriate, concerning the value of
investments or contemplated investments of the Company and the Operating
Partnership;

 

(j) from time to time, or at any time reasonably requested by the Board, make
reports to the Board of its performance of services to the Company and the
Operating Partnership under this Agreement, including reports with respect to
potential conflicts of interest involving the Advisor or any of its Affiliates;

 

(k) provide the Company and the Operating Partnership with all necessary cash
management services;

 

(l) deliver to, or maintain on behalf of, the Company copies of all appraisals
obtained in connection with the investments in any Properties as may be required
to be obtained by the Board;

 

(m) notify the Board of all proposed material transactions before they are
completed;

 

(n) effect any private placement of OP Units, tenancy-in-common (TIC) or other
interests in investments as may be approved by the Board;

 

(o) perform investor relations and Stockholder communications functions for the
Company;

 

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(p) render such services as may be reasonably determined by the Board of
Directors consistent with the terms and conditions herein;

 

(q) maintain the Company’s accounting and other records and assist the Company
in filing all reports required to be filed by it with the SEC, the Internal
Revenue Service and other regulatory agencies; and

 

(r) do all things reasonably necessary to assure its ability to render the
services described in this Agreement.

 

Notwithstanding the foregoing or anything else that may be to the contrary in
this Agreement, the Advisor may delegate any of the foregoing duties to any
Person so long as the Advisor or its Affiliate remains responsible for the
performance of the duties set forth in this Section 3 

 

4. AUTHORITY OF ADVISOR

 

(a) Pursuant to the terms of this Agreement (including the restrictions included
in this Section 4 and in Section 9), and subject to the continuing and exclusive
authority of the Board over the supervision of the Company, the Company, acting
on the authority of the Board of Directors, hereby delegates to the Advisor the
authority to perform the services described in Section 3.

 

(b) Notwithstanding anything herein to the contrary, all investments will
require the prior approval of the Board, any particular Directors specified by
the Board or any committee of the Board specified by the Board, as the case may
be.

 

(c) If a transaction requires approval by the Independent Directors, the Advisor
will deliver to the Independent Directors all documents and other information
reasonably required by them to evaluate properly the proposed transaction.

 

(d) The Board may, at any time upon the giving of notice to the Advisor, modify
or revoke the authority set forth in this Section 4; 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 or the Operating Partnership prior to the date of receipt
by the Advisor of such notification.

 

5. FIDUCIARY RELATIONSHIP. The Advisor, as a result of its relationship with the
Company and the Operating Partnership pursuant to this Agreement, has a
fiduciary responsibility and duty to the Company, the Stockholders and the
partners in the Operating Partnership.

 

6. NO PARTNERSHIP OR JOINT VENTURE. The parties to this Agreement are not
partners or joint venturers with each other and nothing herein shall be
construed to make them partners or joint venturers or impose any liability as
such on either of them.

 

7. 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 any 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; and, upon
request, the Advisor shall render appropriate accountings of such collections
and payments to the Board and to the auditors of the Company.

 

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8. RECORDS; ACCESS. The Advisor shall maintain appropriate records of all its
activities hereunder and make such records available for inspection by the
Directors and by counsel, auditors and authorized agents of the Company, at any
time and from time to time. The Advisor shall at all reasonable times have
access to the books and records of the Company and the Operating Partnership.

 

9. LIMITATIONS ON ACTIVITIES. Notwithstanding anything herein to the contrary,
the Advisor shall refrain from taking any action which, in its sole judgment, or
in the sole judgment of the Company, made in good faith, would (a) adversely
affect the status of the Company as a REIT, unless the Board has determined that
REIT qualification is not in the best interests of the Company and its
Stockholders, (b) subject the Company to regulation under the Investment Company
Act of 1940, as amended, or (c) violate any law, rule, regulation or statement
of policy of any governmental body or agency having jurisdiction over the
Company, the Operating Partnership or the Shares, or otherwise not be permitted
by the Articles of Incorporation or By-laws, except if such action shall be
ordered by the Board, in which case the Advisor shall notify promptly 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.

 

10. FEES

 

(a) Acquisition Fee. The Company shall pay an Acquisition Fee to the Advisor or
its assignees as compensation for the review and evaluation of potential
investments in Assets. If the Advisor is terminated without cause pursuant to
Section 17(a), the Advisor or its assignees shall be entitled to an Acquisition
Fee for any Asset acquired after the Termination Date for which a contract to
acquire such Asset had been entered into at or prior to the Termination Date.
The total Acquisition Fee payable to the Advisor or its assignees shall equal
one percent (1.0%) of the Contract Purchase Price of each Asset acquired. The
purchase price allocable for an Asset held through a Joint Venture shall equal
the product of (i) the Contract Purchase Price of the Asset and (ii) the direct
or indirect ownership percentage in the Joint Venture held directly or
indirectly by the Company or the Operating Partnership. 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 Operating Partnership, without regard to classification of
such equity interests. The Company shall pay to the Advisor or its assignees the
Acquisition Fee promptly upon the closing of the purchase of the Asset. In
addition, if during the period ending two years after the close of the initial
Offering, the Company sells an Asset and then reinvests in other Assets, the
Company will pay to the Advisor or its assignees one percent (1.0%) of the
Contract Purchase Price.

 

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(b) Limitation on Total Acquisition Fees, Financing Coordination Fees and
Acquisition Expenses. 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 Asset;
provided, 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 this limit if they determine the transaction to
be commercially competitive, fair and reasonable to the Company.

 

(c) Property Disposition Fee. In connection with a Sale of one or more
Properties in which the Advisor provides a substantial amount of services, as
determined by the Independent Directors, the Company shall pay to the Advisor a
Property Disposition Fee up to the lesser of (i) two percent (2.0%) of the
Contract Sales Price of such Property and (ii) one-half (½) of the Competitive
Real Estate Commission paid if a non-Affiliate is also involved; provided,
however, that in no event may the Property Disposition Fee, when added to all
other real estate commissions paid to non-affiliates of the Advisor in
connection with such Sale, exceed the lesser of six percent (6.0%) of the
Contract Sales Price and a Competitive Real Estate Commission.

 

(d) Asset Management Fee. The Company shall pay an Asset Management Fee to the
Advisor and its Affiliates as compensation for services rendered in connection
with the management of the Company’s Assets in an amount equal to 0.75% per
annum of the Cost of Assets plus costs and expenses incurred by the Advisor or
any Affiliate of the Advisor in providing asset management services; provided,
however, that the Asset Management Fee shall be reduced by any amounts payable
to New York Recovery Properties, LLC under Section 4.2 of the Management
Agreement (the “Oversight Fees”), such that the aggregate of the Asset
Management Fee and the Oversight Fees does not exceed 0.75% per annum of the
Cost of Assets plus costs and expenses incurred by the Advisor or any Affiliate
of the Advisor in providing asset management services. The Asset Management Fee
will be payable in monthly installments on the first business day of each month
in the amount of 0.0625% of the Cost of Assets as of such date, subject to the
proviso set forth above in this Section 10(d).

 

(e) Financing Coordination Fee. The Company shall pay a Financing Coordination
Fee to the Advisor and its Affiliates for services provided in connection with
the origination or refinancing of Mortgages the Company obtains, the proceeds of
which are used to acquire Assets, or that are assumed directly or indirectly, in
connection with the acquisition of Assets, in an amount equal to 0.75% of the
amount made available and/or outstanding under any such Mortgage, including any
assumed Mortgage. The Advisor may reallow some of or all this Financing
Coordination Fee to reimburse third parties with whom it may subcontract to
procure any such Mortgage.

 

(f) Subordinated Incentive Listing Fee. Upon Listing of the Common Stock, the
Company shall pay the Advisor or its assignees a Subordinated Incentive Listing
Fee in the form of a non-interest-bearing promissory note equal to fifteen
percent (15%) of the amount, if any, by which (i) the market value of the
outstanding Shares plus Distributions paid by the Company prior to Listing,
exceeds (ii) the sum of the total amount of capital raised from investors and
the amount of cash flow necessary to generate an annual six percent (6%)
cumulative, non-compounded return to investors. The non-interest-bearing
promissory note shall be repaid from the net sales proceeds of each Sale of an
Asset that occurs after the date of the Listing. At the time of each such Sale,
the Company may pay at its discretion all or a portion of such
non-interest-bearing promissory note in Shares, which may or may not be
registered under the Securities Act, or cash.

 

11

 

 

(g) Subordinated Participation In Net Sales Proceeds. The Company shall pay the
Advisor or its assignees from time to time, when available, a Subordinated
Participation In Net Sales Proceeds in an amount equal to fifteen percent (15%)
of remaining Net Sales Proceeds after return of capital contributions plus
payment to investors in Shares of an annual six percent (6%) cumulative,
pre-tax, non-compounded return on the capital contributed by such investors. Any
Subordinated Participation in Net Sales Proceeds becoming due and payable to the
Advisor or its assignees hereunder shall be reduced by the amount of any
distribution made to New York Recovery Special Limited Partnership, LLC pursuant
to the Operating Partnership Agreement.

 

(h) Payment of Fees. In connection with the Acquisition Fee, Property
Disposition Fee and Financing Coordination Fee, the Company shall pay such fees
to the Advisor or its assignees in cash, 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 of the Board of
Directors, in cash, Shares or grants of restricted Shares, or any combination
thereof. For the purposes of the payment of any fees in Shares, (i) if at the
applicable time an Offering is underway, each Share shall be valued at the
per-share offering price of the Shares in such Offering minus the maximum
selling commissions and dealer manager fee allowed in such Offering; and (ii) at
all other times, each Share shall be valued by the Board in good faith (A) at
the estimated value thereof, calculated in accordance with the provisions of
NASD Rule 2340(c)(1) (or any successor or similar FINRA rule), or (B) if no such
rule shall then exist, at the fair market value thereof; provided, however, that
in the case of Asset Management Fees payable in grants of restricted Shares,
each Share shall be valued in accordance with the provisions of the equity
incentive plan of the Company pursuant to which such grants are to be made.

 

(i) Exclusion of Certain Transactions.

 

(i) If the Company or the Operating Partnership shall propose to enter into any
transaction in which the Advisor or any Affiliate thereof has a direct or
indirect interest, then such transaction shall be approved by a majority of the
Board (including a majority of the Independent Directors) not otherwise
interested in such transaction as fair and reasonable to the Company and on
terms and conditions not less favorable to the Company than those available from
unaffiliated third parties.

 

(ii) Neither the Company nor the Operating Partnership shall make loans to the
Advisor or any Affiliate thereof except Mortgages pursuant to Section 9.3(iii)
of the Articles of Incorporation (or any successor provision) or loans to wholly
owned subsidiaries of the Company. Neither the Advisor nor any Affiliate thereof
shall make loans to the Company or the Operating Partnership, or to Joint
Ventures, unless approved by a majority of the Directors (including a majority
of the Independent Directors) not otherwise interested in such transaction as
fair, competitive, and commercially reasonable, and no less favorable to the
Company or Operating Partnership, as applicable, than comparable loans between
unaffiliated parties.

 

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(iii) The Company and the Operating Partnership may enter into Joint Ventures
with the Advisor or its Affiliates, provided that (a) a majority of Directors
(including a majority of Independent Directors) not otherwise interested in the
transaction approves the transaction as being fair and reasonable to the Company
or Operating Partnership, as applicable, and (b) the investment by the Company
or Operating Partnership, as applicable, is on substantially the same terms as
those received by other joint venturers.

 

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

 

11. EXPENSES

 

(a) In addition to the compensation paid to the Advisor pursuant to Section 10,
the Company or the Operating Partnership shall pay directly or reimburse the
Advisor for all the expenses paid or incurred by the Advisor or its Affiliates
in connection with the services it provides to the Company and the Operating
Partnership pursuant to this Agreement, including the following:

 

(i) Organization and Offering Expenses and expenses related to the Private
Offering, including (A) third-party due diligence fees related to the Primary
Offering of up to one-half percent (0.5%) of the Gross Proceeds raised in all
Primary Offerings, and (B) third-party due diligence fees related to the Private
Offering of up to one-half percent (0.5%) of the Gross Proceeds raised in the
Private Offering, in each case as set forth in detailed and itemized invoices;
provided, however, that the Company will not reimburse the Advisor to the extent
that such reimbursement would cause (A) the total amount of Organization and
Offering Expenses paid by the Company and the Operating Partnership to exceed
one and one-half percent (1.5%) of the Gross Proceeds raised in all Primary
Offerings, or (B) the total amount of the expenses related to the Private
Offering to exceed one and one-half percent (1.5%) of the Gross Proceeds raised
in the Private Offering;

 

(ii) Acquisition Expenses incurred in connection with the selection and
acquisition of Assets, subject to the aggregate four and one-half percent (4.5%)
cap on Acquisition Fees, Financing Coordination Fees and Acquisition Expenses
set forth in Section 10(b);

 

(iii) the actual cost of goods and services used by the Company and obtained
from entities not Affiliated with the Advisor;

 

(iv) interest and other costs for loans, including discounts, points and other
similar fees;

 

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(v) taxes and assessments on income of the Company or Assets;

 

(vi) costs associated with insurance required in connection with the business of
the Company or by the Board;

 

(vii) expenses of managing and operating Assets owned by the Company, whether
payable to an Affiliate of the Company or a non-affiliated Person;

 

(viii) all expenses in connection with payments to the Directors for attending
meetings of the Board and Stockholders;

 

(ix) 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;

 

(x) expenses connected with payments of Distributions;

 

(xi) expenses of organizing, revising, amending, converting, modifying or
terminating the Company, the Operating Partnership or any subsidiary thereof or
the Articles of Incorporation, By-laws or governing documents of the Operating
Partnership or any subsidiary of the Company or the Operating Partnership;

 

(xii) expenses of maintaining communications with Stockholders, including the
cost of preparation, printing, and mailing of annual reports and other
Stockholder reports, proxy statements and other reports required by governmental
entities;

 

(xiii) administrative service expenses, including all costs and expenses
incurred by the Advisor or its Affiliates in fulfilling its duties hereunder,
including reasonable salaries and wages, benefits and overhead of all employees
directly involved in the performance of such services; provided, however, 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 a separate fee; and

 

(xiv) audit, accounting and legal fees.

 

(b) Expenses incurred by the Advisor on behalf of the Company and the Operating
Partnership and payable pursuant to this Section 11 shall be reimbursed no less
than monthly to the Advisor.

 

14

 

 

12. OTHER SERVICES. Should the Board request that the Advisor or any director,
officer or employee thereof render services for the Company and the Operating
Partnership other than those set forth in Section 3, such services shall be
separately compensated at such customary rates and in such customary amounts as
are agreed upon by the Advisor and the Board, including a majority of the
Independent Directors, 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.

 

13. REIMBURSEMENT TO THE ADVISOR. The Company shall not reimburse the Advisor at
the end of any fiscal quarter in which Total Operating Expenses incurred by the
Advisor for the four consecutive fiscal quarters then ended (the “Expense Year”)
exceed (the “Excess Amount”) the greater of two percent (2%) of Average Invested
Assets or twenty-five percent (25%) of Net Income (the “2%/25% Guidelines”) for
such year. Any Excess Amount paid to the Advisor during a fiscal quarter shall
be repaid to the Company or, at the option of the Company, subtracted from the
Total Operating Expenses reimbursed during the subsequent fiscal quarter. If
there is an Excess Amount in any Expense Year and the Independent Directors
determine that such excess was justified based on unusual and nonrecurring
factors which they deem sufficient, then the Excess Amount may be carried over
and included in Total Operating Expenses in subsequent Expense Years and
reimbursed to the Advisor in one or more of such years; provided, that there
shall be sent to the Stockholders a written disclosure of such fact, together
with an explanation of the factors the Independent Directors considered in
determining that such excess expenses were justified. Such determination shall
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.

 

14. OTHER ACTIVITIES OF THE ADVISOR. Except as set forth in this Section 14,
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 Sponsor 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 to the Company’s
business to discharge its obligations to the Company under this Agreement. 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 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 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. Before the
Advisor may take advantage of an investment opportunity for its own account or
recommend it to others, the Advisor is obligated to present such opportunity to
the Company if (a) such opportunity is compatible with the Company’s investment
objectives and policies, (b) such opportunity is of a character which could be
taken by the Company, and (c) the Company has the financial resources to take
advantage of such opportunity.

 

15

 

 

If an investment opportunity becomes available that is suitable for both the
Company and a public or private entity with which the Advisor or its Affiliates
are affiliated for which both entities have sufficient uninvested funds, and the
requirements of the preceding paragraph have been satisfied, then the entity
that has had the longest period of time elapse since it was offered an
investment opportunity will first be offered the investment opportunity. An
investment opportunity will not be considered suitable for an entity if the
2%/25% Guidelines could not be satisfied if the entity were to make the
investment. In determining whether or not an investment opportunity is suitable
for more than one entity, the Board and the Advisor will examine such factors,
among others, as the cash requirements of each entity, the effect of the
acquisition both on diversification of each entity’s investments by type of
property and geographic area and on diversification of the tenants of its
properties, the policy of each entity relating to leverage of properties, the
anticipated cash flow of each entity, the income tax effects of the purchase to
each entity, the size of the investment and the amount of funds available to
each program and the length of time such funds have been available for
investment. If a subsequent development, such as a delay in the closing of the
acquisition of such investment or a delay in the construction of a property,
causes any such investment, in the opinion of the Board and the Advisor, to be
more appropriate for an entity other than the entity that committed to make the
investment, the Advisor may determine that the other entity affiliated with the
Advisor or its Affiliates will make the investment. It shall be the duty of the
Board, including the Independent Directors, to ensure that the method used by
the Advisor for the allocation of the acquisition of investments by two or more
affiliated programs seeking to acquire similar types of Assets is applied fairly
to the Company.

 

15. THE AMERICAN REALTY CAPITAL NAME. The Advisor and its Affiliates have or may
have a proprietary interest in the names “American Realty Capital,” “ARC” and
“AR Capital.” 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,” “ARC” and “AR Capital,” a non-transferable, non-assignable,
non-exclusive, royalty-free right and license to use the names “American Realty
Capital,” “ARC” and “AR Capital” 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,” “ARC” and “AR
Capital,” 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,” “ARC” and “AR Capital” 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,” “ARC” and “AR Capital” 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 also will make any
changes to any trademarks, servicemarks or other marks necessary to remove any
references to the words “American Realty Capital,” “ARC” and “AR Capital.”
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,” “ARC” and “AR Capital” 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,” “ARC” and “AR Capital” licensed hereunder or
the use thereof (including without limitation as to whether the use of the names
“American Realty Capital,” “ARC” and “AR Capital” will be free from infringement
of the intellectual property rights of third parties). Notwithstanding the
preceding, the Advisor represents and warrants that 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,” “ARC” and “AR
Capital.”

 

16

 

 

16. TERM OF AGREEMENT. This Agreement shall continue in force for a period of
one year from the date hereof and thereafter may be renewed for an unlimited
number of successive one-year periods upon mutual consent of the parties.

 

17. TERMINATION BY THE PARTIES. This Agreement may be terminated upon 60 days’
prior written notice by a majority of the Independent Directors or the Advisor,
without cause and without penalty. The provisions of Sections 19 through 31 of
this Agreement shall survive termination of this Agreement.

 

18. ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the Advisor to
an Affiliate with the approval of a majority of the Directors (including a
majority of the Independent Directors). The Advisor may assign any rights to
receive fees or other payments under this Agreement to any Person without
obtaining the approval of the Directors. This Agreement shall not be assigned by
the Company or the Operating Partnership without the consent of the Advisor,
except in the case of an assignment by the Company or the Operating Partnership
to a Person which is a successor to all the assets, rights and obligations of
the Company or the Operating Partnership, in which case such successor Person
shall be bound hereunder and by the terms of said assignment in the same manner
as the Company or the Operating Partnership, as applicable, is bound by this
Agreement.

 

19. PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION

 

(a) Amounts Owed. After the Termination Date, the Advisor shall be entitled to
receive from the Company or the Operating Partnership within 30 days after the
effective date of such termination all amounts then accrued and owing to the
Advisor, including all its interest 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, subject to the 2%/25% Guidelines to the
extent applicable.

 

17

 

 

(b) Subordinated Termination Fee.

 

(i) Upon the termination of this Agreement under Section 17 or upon the
non-renewal of this Agreement, the Company shall pay the Advisor a Subordinated
Termination Fee. The Subordinated Termination Fee, if any, will be payable in
the form of a non-interest-bearing promissory note equal to (A) fifteen percent
(15%) of the amount, if any, by which (1) the sum of (v) the fair market value
(determined by appraisal as of the Termination Date) of the Assets on the
Termination Date, less (w) any loans secured by such Assets, plus (x) total
Distributions paid through the Termination Date on Securities issued in
offerings through the Termination Date, less (y) the liquidation preference of
all Preferred Stock issued on or prior to the Termination Date (whether or not
converted into Common Stock), which liquidation preference shall be reduced by
any amounts paid on or prior to the Termination Date to purchase or redeem any
shares of Preferred Stock or any Common Stock issued on conversion of any
Preferred Stock, less (z) any amounts distributable as of the Termination Date
to limited partners who received OP Units in connection with the acquisition of
any Assets upon the liquidation or sale of such Assets (assuming the liquidation
or sale of such Assets on the Termination Date), exceeds (2) the sum of the
Gross Proceeds raised in all offerings through the Termination Date (less
amounts paid on or prior to the Termination Date to purchase or redeem any
Common Stock purchased in an offering pursuant to the Company’s share repurchase
plan) and the total amount of cash that, if distributed to those Stockholders
who purchased Common Stock in an offering on or prior to the Termination Date,
would have provided such Stockholders an annual six percent (6%) cumulative,
non-compounded return on the Gross Proceeds raised in all offerings through the
Termination Date, measured for the period from inception through the Termination
Date, less (B) any prior payments to the Advisor of the Subordinated
Participation In Net Sales Proceeds or the Subordinated Incentive Listing Fee.
In addition, at the time of termination, the Advisor may elect to defer its
right to receive a Subordinated Termination Fee until either a Listing or an
Other Liquidity Event occurs.

 

(ii) If the Advisor elects to defer its right to receive a Subordinated
Termination Fee and there is a Listing, then the Advisor will be entitled to
receive a Subordinated Termination Fee in an amount equal to (A) fifteen percent
(15%) of the amount, if any, by which (1) the sum of (t) the fair market value
(determined by appraisal as of the date of Listing) of the Assets owned as of
the Termination Date, less (u) any loans secured by such Assets owned as of the
Termination Date, plus (v) the fair market value (determined by appraisal as of
the date of Listing) of the Assets acquired after the Termination Date for which
the Advisor would been entitled to receive an Acquisition Fee (collectively, the
“Included Assets”), less (w) any loans secured by the Included Assets, plus (x)
total Distributions paid through the date of Listing on Securities issued in
offerings through the Termination Date, less (y) the liquidation preference of
all Preferred Stock issued on or prior to the Termination Date (whether or not
converted into Common Stock), which liquidation preference shall be reduced by
any amounts paid on or prior to the date of Listing to purchase or redeem any
shares of Preferred Stock or any Common Stock issued on conversion of any
Preferred Stock, less (z) any amounts distributable as of the date of Listing to
limited partners who received OP Units in connection with the acquisition of any
Included Assets upon the liquidation or sale of such Included Assets (assuming
the liquidation or sale of such Included Assets on the date of Listing), exceeds
(2) the sum of (y) the Gross Proceeds raised in all offerings through the
Termination Date (less amounts paid on or prior to the date of Listing to
purchase or redeem any Common Stock purchased in an offering on or prior to the
Termination Date pursuant to the Company’s share repurchase plan), plus (z) the
total amount of cash that, if distributed to those Stockholders who purchased
Common Stock in an offering on or prior to the Termination Date, would have
provided such Stockholders an annual six percent (6%) cumulative, non-compounded
return on the Gross Proceeds raised in all offerings through the Termination
Date, measured for the period from inception through the date of Listing, less
(B) any prior payments to the Advisor of the Subordinated Participation In Net
Sales Proceeds or the Subordinated Incentive Listing Fee.

 

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(iii) If the Advisor elects to defer its right to receive a Subordinated
Termination Fee and there is an Other Liquidity Event, then the Advisor will be
entitled to receive a Subordinated Termination Fee in an amount equal to (A)
fifteen percent (15%) of the amount, if any, by which (1) the sum of (t) the
fair market value (determined by appraisal as of the date of Listing) of the
Assets owned as of the Termination Date, less (u) any loans secured by such
Assets owned as of the Termination Date, plus (v) the fair market value
(determined by appraisal as of the date of the Other Liquidity Event) of the
Included Assets, less (w) any loans secured by the Included Assets, plus (x)
total Distributions paid through the date of the Other Liquidity Event on
Securities issued in offerings through the Termination Date, less (y) the
liquidation preference of all Preferred Stock issued on or prior to the
Termination Date (whether or not converted into Common Stock), which liquidation
preference shall be reduced by any amounts paid on or prior to the date of the
Other Liquidity Event to purchase or redeem any shares of Preferred Stock or any
Common Stock issued on conversion of any Preferred Stock, less (z) any amounts
distributable as of the date of the Other Liquidity Event to limited partners
who received OP Units in connection with the acquisition of any Included Assets
upon the liquidation or sale of such Included Assets (assuming the liquidation
or sale of such Included Assets on the date of the Other Liquidity Event),
exceeds (2) the sum of (y) the Gross Proceeds raised in all offerings through
the Termination Date (less amounts paid on or prior to the date of the Other
Liquidity Event to purchase or redeem any Common Stock purchased in an offering
on or prior to the Termination Date pursuant to the Company’s share repurchase
plan) plus (z) the total amount of cash that, if distributed to those
Stockholders who purchased Common Stock in an offering on or prior to the
Termination Date, would have provided such Stockholders an annual six percent
(6%) cumulative, non-compounded return on the Gross Proceeds raised in all
offerings through the Termination Date, measured for the period from inception
through the date of the Other Liquidity Event, less (B) any prior payments to
the Advisor of the Subordinated Participation In Net Sales Proceeds or the
Subordinated Incentive Listing Fee.

 

(iv) Any portion of the Subordinated Participation In Net Sales Proceeds
received prior to a Listing shall offset any Subordinated Incentive Listing Fee
that otherwise would be payable. If the Advisor receives the Subordinated
Incentive Listing Fee, it no longer shall be entitled to receive a Subordinated
Participation In Net Sales Proceeds or a Subordinated Termination Fee. If the
Advisor receives the Subordinated Termination Fee, it no longer shall be
entitled to receive the Subordinated Participation In Net Sales Proceeds or the
Subordinated Incentive Listing Fee.

 

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

 

(i) pay over to the Company and the Operating Partnership all money collected
and held for the account of the Company and the Operating Partnership 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 Assets, and documents of
the Company and the Operating Partnership then in the custody of the Advisor;
and

 

(iv) cooperate with the Company and Board in making an orderly transition of the
advisory function.

 

20. INCORPORATION OF THE ARTICLES OF INCORPORATION AND THE OPERATING PARTNERSHIP
AGREEMENT. To the extent that the Articles of Incorporation or the Operating
Partnership Agreement imposes obligations or restrictions on the Advisor or
grants the Advisor any rights which are not set forth in this Agreement, the
Advisor shall abide by such obligations or restrictions and such rights shall
inure to the benefit of the Advisor with the same force and effect as if they
were set forth herein.

 

21. INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP

 

(a) The Company and the Operating Partnership shall indemnify and hold harmless
the Advisor and its Affiliates, as well as their respective officers, directors,
equity holders, members, partners, stockholders, other equity holders and
employees (collectively, the “Indemnitees,” and each, an “Indemnitee”), from all
liability, claims, damages or losses arising in the performance of their duties
hereunder, 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, and to the extent that such indemnification would
not be inconsistent with the laws of the State of New York, the Articles of
Incorporation or the provisions of Section II.G of the NASAA REIT Guidelines.
Notwithstanding the foregoing, the Company and the Operating Partnership shall
not provide for indemnification of an Indemnitee for any loss or liability
suffered by such Indemnitee, nor shall they provide that an Indemnitee be held
harmless for any loss or liability suffered by the Company and the Operating
Partnership, unless all the following conditions are met:

 

(i) the Indemnitee has determined, in good faith, that the course of conduct
that caused the loss or liability was in the best interest of the Company and
the Operating Partnership;

 

(ii) the Indemnitee was acting on behalf of, or performing services for, the
Company or the Operating Partnership;

 

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(iii) such liability or loss was not the result of negligence or misconduct by
the Indemnitee; and

 

(iv) such indemnification or agreement to hold harmless is recoverable only out
of the Company’s Net Assets and not from the Stockholders.

 

(b) Notwithstanding the foregoing, an Indemnitee shall not be indemnified by the
Company or the Operating Partnership for any loss, liability or expense arising
from or out of an alleged violation of federal or state securities laws by such
Indemnitee 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 securities law violations as to the Indemnitee;

 

(ii) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the Indemnitee; or

 

(iii) a court of competent jurisdiction approves a settlement of the claims
against the 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 were
offered or sold as to indemnification for violation of securities laws.

 

(c) The Company or the Operating Partnership may pay or reimburse reasonable
legal expenses and other costs incurred by an Indemnitee in advance of final
disposition of a proceeding only if: (i) the proceeding relates to acts or
omissions with respect to the performance of duties or services on behalf of the
Company or the Operating Partnership; (ii) the Indemnitee provides the Company
or the Operating Partnership with a written affirmation of the Indenmitee’s good
faith belief that the Indemnitee has met the standard of conduct necessary for
indemnification by the Company or the Operating Partnership as authorized by
this Section 21; (iii) the 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 (iv) the
Indemnitee provides the Company or the Operating Partnership with a written
undertaking to repay the amount paid or reimbursed by the Company or the
Operating Partnership, together with the applicable legal rate of interest, if
it is ultimately determined that the Indemnitee did not comply with the
requisite standard of conduct.

 

22. INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold harmless
the Company and the Operating Partnership from contract or other liability,
claims, damages, taxes or losses and related expenses, including reasonable
attorneys’ fees, to the extent that such liability, claims, damages, taxes or
losses and related expenses are not fully reimbursed by insurance and are
incurred by reason of the Advisor’s bad faith, fraud, willful misfeasance,
intentional misconduct, gross negligence or reckless disregard of its duties;
provided, however, that the Advisor shall not be held responsible for any action
of the Board in following or declining to follow any advice or recommendation
given by the Advisor.

 

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23. NOTICES. Any notice, report or other communication (each a “Notice”)
required or permitted to be given hereunder shall be in writing unless some
other method of giving such Notice is required by the Articles of Incorporation
or By-laws, and shall be given by being delivered by hand, by courier or
overnight carrier or by registered or certified mail to the addresses set forth
below:

 

To the Company: American Realty Capital New York Recovery REIT, Inc.   405 Park
Avenue   New York, New York 10022   Attention:  Nicholas S. Schorsch,    Chief
Executive Officer       with a copy to:       Proskauer Rose LLP   Eleven Times
Square   New York, New York 10036   Attention:  Peter M. Fass, Esq.  
Attention:  James P. Gerkis, Esq.     To the Operating Partnership: New York
Recovery Operating Partnership, L.P.   405 Park Avenue   New York, New York
10022   Attention:  Nicholas S. Schorsch       with a copy to:       Proskauer
Rose LLP   Eleven Times Square   New York, New York 10036   Attention:  Peter M.
Fass, Esq.   Attention:  James P. Gerkis, Esq.     To the Advisor: New York
Recovery Advisors, LLC   405 Park Avenue   New York, New York 10022  
Attention:  Nicholas S. Schorsch       with a copy to:       Proskauer Rose LLP
  Eleven Times Square   New York, New York 10036   Attention:  Peter M. Fass,
Esq.   Attention:  James P. Gerkis, Esq.

 

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 23.

 

 

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24. MODIFICATION. This Agreement shall not be amended, supplemented, terminated,
or discharged, in whole or in part, except by an instrument in writing signed by
the parties hereto, or their respective successors or assignees.

 

25. SEVERABILITY. 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.

 

26. GOVERNING LAW. 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.

 

27. ENTIRE 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 or usage of the trade
inconsistent with any of the terms hereof.

 

28. NO WAIVER. 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 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.

 

29. PRONOUNS AND PLURALS. Whenever the context may require, any pronoun used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall include the
plural and vice versa.

 

30. HEADINGS. The titles of sections and subsections 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.

 

31. EXECUTION IN COUNTERPARTS. This Agreement may be executed (including by
facsimile, PDF or other electronic transmission) 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.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.

 

  AMERICAN REALTY CAPITAL NEW YORK RECOVERY REIT, INC.           By: /s/
Nicholas S. Schorsch     Name: Nicholas S. Schorsch     Title:  Chief Executive
Officer         NEW YORK RECOVERY OPERATING PARTNERSHIP, L.P.           By:
American Realty Capital New York Recovery REIT, Inc.           its General
Partner               By: /s/ Nicholas S. Schorsch     Name:  Nicholas S.
Schorsch     Title:  Chief Executive Officer         NEW YORK RECOVERY ADVISORS,
LLC       By: New York Recovery Special Limited Partnership, LLC           its
Member         By: American Realty Capital III, LLC           its Managing
Member               By: /s/ Nicholas S. Schorsch     Name: Nicholas S. Schorsch
    Title:  Authorized Signatory

 

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