Exhibit 10.1

 

 

 

SECOND AMENDED AND RESTATED

 

ADVISORY AGREEMENT

 

BY AND AMONG

 

AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.,

 

NEW YORK CITY OPERATING PARTNERSHIP, L.P.,

 

AND

 

NEW YORK CITY ADVISORS, LLC

 

Dated as of November 16, 2018

 

 

 

 

 

 

TABLE OF CONTENTS

 

Page

 

 

 

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

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20. INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP 21 21.
INDEMNIFICATION BY ADVISOR 22 22. NOTICES 23 23. MODIFICATION 24 24.
SEVERABILITY 24 25. GOVERNING LAW 24 26. ENTIRE AGREEMENT 24 27. NO WAIVER 24
28. PRONOUNS AND PLURALS 24 29. HEADINGS 24 30. EXECUTION IN COUNTERPARTS 24

 

 

 

 

ii 

 

 

 

SECOND AMENDED AND RESTATED
ADVISORY AGREEMENT

 

THIS SECOND AMENDED AND RESTATED ADVISORY AGREEMENT (this “Agreement”), dated as
of November 16, 2018, is entered into among American Realty Capital New York
City REIT, Inc., a Maryland corporation (the “Company”), New York City Operating
Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”),
and New York City Advisors, LLC, a Delaware limited liability company.

 

WITNESSETH

 

WHEREAS, the Company is a Maryland corporation created in accordance with the
Maryland General Corporation Law;

 

WHEREAS, the Company is the general partner of the Operating Partnership;

 

WHEREAS, the Company and the Operating Partnership desire to avail themselves of
the experience, sources of information, advice, assistance and certain
facilities of 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;

 

WHEREAS, the Advisor is willing 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, the Operating Partnership and the Advisor (i) entered into
that certain Advisory Agreement, dated as of April 24, 2014 (the “Original
Agreement”) and (ii) amended and restated the Original Agreement on June 26,
2015 (as amended by the First Amendment thereto, dated as of November 5, 2015,
as further amended, modified or supplemented from time to time, the “Amended and
Restated Advisory Agreement”); and

 

WHEREAS, as of the date hereof (the “Effective Date”), the Company, the
Operating Partnership and the Advisor desire to amend and restate the Amended
and Restated Advisory Agreement in its entirety on the terms and subject to the
conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto, intending to be legally
bound as of the Effective Date, hereby agree as follows:

 

1.    DEFINITIONS. As used in this Agreement, the following terms have the
definitions set forth below:

 

“Acquisition Expenses” means any and all expenses incurred by the Company, the
Operating Partnership, the Advisor or any of their Affiliates in connection with
the selection, evaluation, acquisition, origination, making or development of
any Investments, whether or not acquired, including, without limitation, legal
fees and expenses, travel and communications expenses, brokerage fees, costs of
appraisals, nonrefundable option payments on property not acquired, accounting
fees and expenses, title insurance premiums and the costs of performing due
diligence.

 

 

 

 

 

 

“Adjusted Outstanding Shares” means, for the applicable period, the diluted
weighted-average shares of Common Stock outstanding computed in accordance with
GAAP during such period, excluding any equity based awards that are subject to
performance metrics that are not currently achieved.

 

“Advisor” means New York City Advisors, LLC, a Delaware limited liability
company, or any permitted successors or assigns. Notwithstanding the foregoing,
a Person hired or retained by New York City Advisors, LLC to perform property
management and related services for the Company or the Operating Partnership
that is not hired or retained to perform substantially all of the functions of
New York City Advisors, LLC with respect to the Company and the Operating
Partnership as a whole shall not be deemed to be an Advisor.

 

“Advisor Employee Compensation” means, to the extent payable or reimbursable by
the Company or the Operating Partnership pursuant to Section 11(a) and subject
(as applicable) to the limitations set forth in Section 11(e), salaries, wages,
and benefits of all employees directly and indirectly involved in the
performance of the Advisor’s services under this Agreement, which compensation
shall not exceed comparable market rates and which, for the avoidance of doubt,
shall include such salaries, wages and benefits of executives and officers of
the Company.

 

“Advisor Employee Compensation Limit” means, an amount per fiscal year not to
exceed (i) $2,600,000, or (ii) if the Asset Cost as of the last day of such
fiscal year is equal to or greater than $1,250,000,000, (x) the Asset Cost as of
the last day of such fiscal year multiplied by (y) 0.30%.

 

“Advisor G&A Expense Limit” means, an amount per fiscal year equal to (i)
$400,000 or (ii) if the Asset Cost as of the last day of the fiscal quarter
immediately preceding such month is equal to or greater than $1,250,000,000, (x)
the Asset Cost as of the last day of such fiscal quarter multiplied by (y)
0.10%.

 

“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.

 

 2 

 

 

 

 

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

 

“Amended and Restated 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 Cost” means, as of any time of determination, the aggregate Contract
Purchase Price of all Investments, all cash and cash equivalents, the Value of
any marketable securities and all other tangible assets then held and recorded
on the balance sheet of the Company.

 

“Base Management Fee” means the fees payable to the Advisor or its assignees
pursuant to Section 10(b).

 

“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.

 

“Cause” means (i) fraud, criminal conduct, willful misconduct or illegal or
negligent breach of fiduciary duty by the Advisor, or (ii) if any of the
following events occur: (A) the Advisor shall breach any material provision of
this Agreement, and after written notice of such breach, shall not cure such
default within thirty (30) days or have begun action within thirty (30) days to
cure the default which shall be completed with reasonable diligence; (B) the
Advisor shall be adjudged bankrupt or insolvent by a court of competent
jurisdiction, or an order shall be made by a court of competent jurisdiction for
the appointment of a receiver, liquidator, or trustee of the Advisor, for all or
substantially all its property by reason of the foregoing, or if a court of
competent jurisdiction approves any petition filed against the Advisor for
reorganization, and such adjudication or order shall remain in force or unstayed
for a period of thirty (30) days; or (C) the Advisor shall institute proceedings
for voluntary bankruptcy or shall file a petition seeking reorganization under
the federal bankruptcy laws, or for relief under any law for relief of debtors,
or shall consent to the appointment of a receiver for itself or for all or
substantially all its property, or shall make a general assignment for the
benefit of its creditors, or shall admit in writing its inability to pay its
debts, generally, as they become due.

 

“Change of Control”  means (a) the consummation of any sale, lease, transfer,
conveyance or other disposition (including by way of liquidation or dissolution
of the Company or one or more of its subsidiaries), in a single transaction or
in a related series of transactions, of all or substantially all of the assets
of the Company and its subsidiaries, taken as a whole, to any other unaffiliated
Person(s); (b) any unaffiliated Person becoming, in a single transaction or in a
related series of transactions, whether by way of purchase, acquisition, tender,
exchange or other similar offer or recapitalization, reclassification,
consolidation, merger, share exchange, scheme of arrangement or other business
combination transaction, the beneficial owner of more than fifty-one percent
(51.0%) of the combined voting power of the outstanding voting stock or
equivalent voting interest of the Company entitled to vote generally in the
election of Directors; or (c) the consummation of any recapitalization,
reclassification, consolidation, merger, share exchange, scheme of arrangement
or other business combination transaction immediately following which the
beneficial owners of the voting stock or equivalent voting interest of the
Company entitled to vote generally in the election of Directors immediately
prior to the consummation of such transaction do not beneficially own more than
forty-nine percent (49.0%) of the combined voting power of the outstanding
voting stock or equivalent voting interest of such Person entitled to vote
generally in the election of directors (or Persons performing a similar
function) of the entity resulting from such transaction (including an entity
that, as a result of such transaction, owns such Person or all or substantially
all of the assets of such Person and its subsidiaries, taken as a whole, either
directly or indirectly through one or more subsidiaries of such entity) in
substantially the same proportion as their beneficial ownership of the voting
stock or equivalent voting interest of such Person entitled to vote generally in
the election of Directors (or Persons performing a similar function) immediately
prior to such transaction.

 

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“Change of Control Fee” means an amount equal to (i) $15,000,000; plus (ii) (x)
the Subject Multiple multiplied by (y) the Subject Fees.

 

“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 in the preamble.

 

“Contract Purchase Price” means the amount actually paid or allocated in respect
of (including, without duplication, any indebtedness and fair market value of
any liability assumed in) the purchase, development, improvement or construction
of a Real Estate Asset or the amount of funds advanced with respect to a
Mortgage, or the amount actually paid or allocated in respect of the purchase of
other Investments, in each case exclusive of Acquisition Expenses.

 

“Core Earnings” means the net income (loss), computed in accordance with GAAP,
excluding (i) non-cash equity compensation expense, (ii) the Variable Management
Fee, (iii) acquisition and transaction related fees and expenses, (iv) financing
related fees and expenses, (v) depreciation and amortization, (vi) realized
gains and losses on the sale of assets, (vii) any unrealized gains or losses or
other non-cash items that are included in net income (loss) for the applicable
reporting period, regardless of whether such items are included in other
comprehensive income or loss, or in net income, (viii) one-time events pursuant
to changes in GAAP and certain non-cash charges, (ix) impairment losses on real
estate related investments other than temporary impairment of securities, (x)
amortization of deferred financing costs, (xi) amortization of tenant
inducements, (xii) amortization of straight-line rent and any associated bad
debt reserves, (xiii) amortization of market lease intangibles, (xiv) provision
for loan losses and (xv) other non-recurring revenues and expenses, in each case
after discussions between the Advisor and the Independent Directors and approved
by a majority of the Independent Directors.

 

“Core Earnings Per Adjusted Share” means, for the applicable period, Core
Earnings divided by the Adjusted Outstanding Shares for such period.

 

“Dealer Manager” means any Person selected by the Board of Directors to act as
the dealer manager for the 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.

 

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“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.

 

“Equity Proceeds” means with respect to any period, the cumulative net proceeds
of all common and preferred equity and equity-linked securities issued by the
Company and its subsidiaries during such period, including: (1) any equity
issued in exchange or conversion of (x) exchangeable notes based on the stock
price at the date of issuance and (y) convertible equity of the Company; (2) any
other issuances of equity, including but not limited to units in the Operating
Partnership (excluding equity based compensation but including issuances related
to an acquisition, investment, joint-venture or partnership); and (3) effective
upon and after a dividend of at least $0.05 per share per annum hereafter being
paid to the Company’s stockholders, any cumulative Core Earnings in excess of
cumulative distributions paid on common stock.

 

“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.

 

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

 

“G&A Expenses” means, to the extent payable or reimbursable by the Company or
the Operating Partnership pursuant to Section 11(a), administrative services and
overhead expenses, including all costs and expenses incurred by the Advisor or
its Affiliates in directly or indirectly fulfilling its duties hereunder,
including overhead of all employees, directly involved in the performance of
such services; provided, however, that G&A Expenses shall not include any
amounts included in Advisor Employee Compensation.

 

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

 

“Good Reason” means: (i) any failure to obtain a satisfactory agreement from any
successor to the Company or the Operating Partnership to assume and agree to
perform obligations under this Agreement; or (ii) any material breach of this
Agreement of any nature whatsoever by the Company or the Operating Partnership.

 

“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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“Indemnitee” has the meaning set forth in Section 20.

 

“Independent Director” means a Director who is not and who has not been within
the last two years, directly or indirectly associated with the Sponsor or the
Advisor by virtue of ownership of an interest in the Sponsor, the Advisor or any
of their Affiliates.

 

“Independent Valuation Advisor” means a firm that is (i) engaged in the business
of conducting appraisals on real estate properties, (ii) not an affiliate of the
Advisor and (iii) engaged by the Company with the Board’s approval to appraise
the Real Properties and other Investments pursuant to the Valuation Guidelines.

 

“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.

 

“Investments” means any investments by the Company or the Operating Partnership,
directly or indirectly, in Real Estate Assets, Real Estate Related Loans or any
other asset.

 

“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 Investments.

 

“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 any indebtedness or obligations in respect of borrowed money or
evidenced by bonds, notes, debentures, deeds of trust, letters of credit or
similar instruments, including mortgages and mezzanine loans.

 

“Mortgages” means, in connection with mortgage financing provided by the
Company, all of the notes, deeds of trust, security interests or other evidences
of indebtedness or obligations, which are secured or collateralized by Real
Property owned by the borrowers under such notes, deeds of trust, security
interests or other evidences of indebtedness or obligations.

 

“NAV” means the Company’s net asset value, calculated pursuant to the Valuation
Guidelines.

 

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

 

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“Operating Partnership” has the meaning set forth in the preamble.

 

“Operating Partnership Agreement” means the Agreement of Limited Partnership of
the Operating Partnership, dated as of April 24, 2014, among the Company, New
York City 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.

 

“Organization and Offering Expenses” means all expenses (other than the Selling
Commission and the Dealer Manager Fee) to be paid by the Company in connection
with an Offering, including legal, accounting, printing, mailing and filing
fees, charges of the escrow holder and transfer agent, charges of the Advisor
for administrative services related to the issuance of Shares in an Offering,
reimbursement of the Advisor for costs in connection with preparing supplemental
sales materials, the cost of bona fide training and education meetings held by
the Company (primarily the travel, meal and lodging costs of the registered
representatives of broker-dealers), attendance and sponsorship fees and cost
reimbursement for employees of the Company’s Affiliates to attend retail
seminars conducted by broker-dealers and, in special cases, reimbursement to
soliciting broker-dealers for technology costs associated with an Offering,
costs and expenses related to such technology costs, and costs and expenses
associated with facilitation of the marketing of the Shares and the ownership of
Shares by such broker-dealer’s customers.

 

“Original Agreement” has the meaning set forth in the recitals.

 

“Person” means an individual, corporation, partnership, estate, trust (including
a trust qualified under Sections 401(a) or 501(c)(17) of the Code), portion of a
trust permanently set aside for or to be used exclusively for the purposes
described in Section 642(c) of the Code, association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other legal
entity and also includes a group as that term is used for purposes of Section
13(d)(3) of the Exchange Act.

 

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

 

“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.

 

“Real Estate Assets” means any investment by the Company or the Operating
Partnership in unimproved and improved Real Property (including fee or leasehold
interests, options and leases), directly, through one or more subsidiaries or
through a Joint Venture.

 

“Real Estate Related Loans” means any investments in mortgage loans and other
types of real estate related debt financing, including, mezzanine loans, bridge
loans, convertible mortgages, wraparound mortgage loans, construction mortgage
loans, loans on leasehold interests and participations in such loans, by the
Company or the Operating Partnership, directly, through one or more subsidiaries
or through a Joint Venture.

 

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“Real Property” means (i) land, (ii) rights in land (including leasehold
interests), and (iii) any buildings, structures, improvements, furnishings,
fixtures and equipment located on or used in connection with land and rights or
interests in land.

 

“Registration Statement” means the Company’s registration statement on Form S-11
(File No. 333-194135) and the prospectus contained therein.

 

“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.

 

“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” 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.

 

“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 or a successor thereto.

 

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

 

“Subject Fees” means (i) the product of (x) twelve (12) multiplied by (y) the
sum of the actual Base Management Fee, payable for the fiscal month immediately
prior to the fiscal quarter in which the Termination Date occurs, plus (ii) the
product of (x) four (4) multiplied by (y) the actual Variable Management Fee
payable for the fiscal quarter immediately prior to the fiscal quarter in which
the Termination Date occurs, plus (iii) without duplication, the annual increase
in the Base Management Fee resulting from Equity Proceeds in respect of the
fiscal quarter immediately prior to the fiscal quarter in which the Termination
Date occurs.

 

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“Subject Multiple” means, if the Termination Date occurs (i) on or prior to June
30, 2020, three (3) and (ii) after June 30, 2020, four (4).

 

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

 

“Trading Day” means a day on which the principal national securities exchange on
which a security is listed or admitted to trading is open for the transaction of
business or, if a security is not listed or admitted to trading on any national
securities exchange, shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.

 

“Value” means, with respect to any security, the average of the daily market
price of such security for the ten consecutive Trading Days immediately
preceding the date of such valuation. The market price for each such Trading Day
shall be: (i) if the security is listed or admitted to trading on the NYSE or
any national securities exchange, the last reported sale price, regular way, on
such day, or if no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, on such day, (ii) if the security is not
listed or admitted to trading on the NYSE or any national securities exchange,
the last reported sale price on such day or, if no sale takes place on such day,
the average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the Advisor, or (iii) if the security is
not listed or admitted to trading on the NYSE or any national securities
exchange and no such last reported sale price or closing bid and asked prices
are available, the average of the reported high bid and low asked prices on such
day, as reported by a reliable quotation source designated by the Advisor, or if
there shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than ten
days prior to the date in question) for which prices have been so reported;
provided, that if there are no bid and asked prices reported during the ten days
prior to the date in question, the value of the security shall be determined by
the Advisor acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the security includes any additional rights, then the value of such rights
shall be determined by the Advisor acting in good faith on the basis of such
quotations and other information as it considers, in its reasonable judgment,
appropriate.

 

“Variable Management Fee” means the fees payable to the Advisor or its assignees
pursuant to Section 10(a).

 

“Valuation Guidelines” means the valuation guidelines adopted by the Board, as
may be amended from time to time.

 

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.

 

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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:

 

(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,
property managers, 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 Real Estate Assets
and, to the extent necessary, perform all other operational functions for the
maintenance and administration of such Real Estate Assets; (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 Real Estate Assets and generating an annual budget for
the Company; (xii) recommend various liquidity events to the Board when
appropriate; and (xiii) source and structure Real Estate Related Loans;

 

 10 

 

 

 

 

(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 so 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, but not limited to,
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 Real Estate Assets
as may be required to be obtained by the Board, which costs shall be the
responsibility of the Company, the Operating Partnership or any of their
subsidiaries;

 

(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;

 

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

 

 11 

 

 

 

 

(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 Securities and
Exchange Commission, the Internal Revenue Service and other regulatory agencies;

 

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

 

(s)       prior to a Listing, calculate the NAV as provided in the Registration
Statement, and in connection therewith, obtain appraisals performed by the
Independent Valuation Advisor;

 

(t)       prior to a Listing, supervise one or more Independent Valuation
Advisor and, if and when necessary, recommend to the Board its replacement;

 

(u)       make reports to the Independent Directors 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, in each case to the extent such
investments constitute a conflict of interest or a potential conflict of
interest with the investment policies and objectives of the Company;

 

(v)       manage and coordinate with the transfer agent the monthly distribution
process and payments to Stockholders;

 

(w)       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;

 

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

 

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

 

(z)       effect any Listing, as may be approved by the Board.

 

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.

 

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(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 written 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. Except as provided in Section 10(d), 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.

 

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.

 

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10.    FEES.

 

(a)       Variable Management Fee. The Company shall pay the Advisor a Variable
Management Fee, payable quarterly in arrears, in an amount equal to (i) the
product of (A) the Adjusted Outstanding Shares for the calendar quarter
multiplied by (B) 15% multiplied by (C) the excess of Core Earnings Per Adjusted
Share for the previous 3-month period over $0.06, plus (ii) the product of (X)
the Adjusted Outstanding Shares for the calendar quarter multiplied by (Y) 10%
multiplied by (Z) the excess of Core Earnings Per Adjusted Share for the
previous 3-month period over $0.08.

 

(b)       Base Management Fee. The Company shall pay the Advisor a Base
Management Fee, payable on the first business day of each month following the
Effective Date. The Base Management Fee shall be equal to (x) $500,000; plus (y)
an amount equal to (A) 1.25% of the Equity Proceeds in respect of the period
following the Effective Date, divided by (B) twelve (12).

 

(c)       Payment of Fees.

 

(i)       In connection with the Variable Management Fee, the Company shall pay
such fees to the Advisor or its assignees in cash; provided, however, the
Advisor, in its sole discretion, may elect to receive such amounts in Shares, or
a combination of Shares and Cash, the combination of such payment to be
determined in the sole discretion of the Advisor.

 

(ii)       The Base Management Fee shall be payable in cash; provided, however,
the Advisor, in its sole discretion, may elect to receive such amounts in OP
Units, Shares, or any combination thereof.

 

(iii)       For the purposes of the payment of any fees in Shares or OP Units,
each Share or OP Unit, as applicable, shall be valued at the Value of a Share.

 

(d)       Exclusion of Certain Transactions.

 

(i)       If the Company or the Operating 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 the Board not otherwise
interested in such transaction, including a majority of the Independent
Directors.

 

(ii)       Neither the Company nor the Operating Partnership shall make Loans to
the Advisor or any Affiliate thereof or certain of the Stockholders except
Mortgages or loans to wholly owned subsidiaries of the Company. None of the
Advisor nor any Affiliate thereof, or certain of the Stockholders 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.

 

(e)       Elimination of Acquisition Fee, Disposition Fee, and Real Estate
Commission. For the avoidance of doubt, the Company shall no longer be required
to pay any Acquisition Fee, Disposition Fee, or Real Estate Commission (as each
of these terms is defined in the Amended and Restated Advisory Agreement) to the
Advisor. Additionally, the Advisor, in consideration of the Company and the
Operating Partnership entering into this Agreement, waives any Acquisition Fee,
Disposition Fee, and Real Estate Commission that would have become payable
within the sixty (60) days prior to the date of this Agreement. For the
avoidance of doubt, this Section 10(e) in no way waives or modifies any amounts
payable under the Operating Partnership Agreement.

 

11.     EXPENSES.

 

(a)       Expenses Generally. 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, subject to the limitations set forth in
this Section 11, monthly in arrears, 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, including third-party due
diligence fees related to the Primary Offering, as set forth in detailed and
itemized invoices; provided, however, that the Company shall not reimburse the
Advisor to the extent such reimbursement would cause the total amount of
Organization and Offering Expenses paid by the Company and the Operating
Partnership to exceed two percent (2.0%) of the Gross Proceeds raised in all
Primary Offerings;

 

(ii)       Acquisition Expenses and Insourced Acquisition Expenses;

 

(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;

 

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

 

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

 

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(vii)       expenses of managing and operating Investments 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 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 Advisor Employee Compensation (subject to the limitation in Section
11(b) of this Agreement) and G&A Expenses (subject to the limitation in Section
11(c) of this Agreement); 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)       Advisor Employee Compensation. In addition to the compensation paid to
the Advisor pursuant to Section 10, the Company or the Operating Partnership
shall reimburse the Advisor, monthly in arrears, for all Advisor Employee
Compensation. Notwithstanding anything to the contrary contained herein (or in
any other agreement between the Advisor or its Affiliates and the Company or the
Company’s affiliates), the total of all Advisor Employee Compensation payable in
connection with the Advisor’s services under this Agreement (whether
reimbursable or paid directly by the Company) shall be comparable to the
respective market rates and, in any event, shall not exceed, in any fiscal year
of the Company, the Advisor Employee Compensation Limit.

 

(c)       Advisor G&A Expense. In addition to the compensation paid to the
Advisor pursuant to Section 10, the Company or the Operating Partnership shall
reimburse the Advisor, monthly in advance, for all G&A Expenses. Notwithstanding
anything to the contrary contained herein (or in any other agreement between the
Advisor or its Affiliates and the Company or the Company’s affiliates), the
total of all G&A Expenses payable in connection with the Advisor’s services
under this Agreement shall be comparable to the respective market rates and, in
any event, shall not exceed, in any fiscal year of the Company, the Advisor G&A
Expense Limit.

 

 16 

 

 

 

 

(d)       Payment of Expenses. Expenses incurred by the Advisor on behalf of the
Company and the Operating Partnership or in connection with the services
provided by the Advisor hereunder and payable pursuant to this Section 11 shall
be reimbursed, no less than monthly, to the Advisor.

 

(e)       Allocable Share of Expenses. To the extent that any reimbursable
expenses or costs incurred or paid by the Advisor are also attributable to any
other entity advised by the Advisor or its Affiliates, or otherwise relate to a
purpose not exclusive to the Company, the Company shall only be responsible for
its allocable share of the expense or cost to the Advisor and only to the extent
it is incurred pursuant to the Advisor’s duties under this Agreement.

 

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 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.    OTHER ACTIVITIES OF THE ADVISOR. Except as set forth in this Section 13,
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. 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.

 

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14.    THE AMERICAN REALTY CAPITAL NAME. The Advisor and its Affiliates have or
may have a proprietary interest in the names “American Realty Capital,” “ARC”,
“AR Capital” and “AR Global.” 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”, “AR Capital” and “AR Global,” a
non-transferable, non-assignable, non-exclusive, royalty-free right and license
to use the names “American Realty Capital,” “ARC”, “AR Capital” and “AR Global”
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”, “AR Capital” and “AR Global,” 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”, “AR Capital”
and “AR Global” 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”, “AR Capital” and “AR Global” 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, servicemarks or other marks necessary to remove any
references to the words “American Realty Capital,” “ARC”, “AR Capital” and “AR
Global.” 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”, “AR
Capital” and “AR Global” 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”, “AR
Capital” and “AR Global” 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.”

 

15.    TERM OF AGREEMENT; RENEWAL. This Agreement shall be in effect from the
Effective Date through July 1, 2030, and shall be automatically renewed for
successive five-year terms thereafter unless either party gives written notice
of its election not to renew at least one hundred eighty (180) days prior to the
then-applicable expiration date; provided, however, that the Company and the
Operating Partnership may only elect not to renew this Agreement (and to provide
such notice) with the prior approval of at least two-thirds (2/3) of the
Independent Directors. For the avoidance of doubt, upon expiration of this
Agreement in accordance with this Section 15 at the end of its term, the Change
of Control Fee shall not be owed to the Advisor in respect to such non-renewal.

 

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16.    TERMINATION BY THE PARTIES. Notwithstanding Section 15, this Agreement
may be terminated at any time (i) in accordance with Section 18(b), (ii) upon
sixty (60) days’ prior written notice by the Advisor for Good Reason, or (iii)
upon forty-five (45) days’ prior written notice by the Independent Directors of
the Company for Cause. The provisions of Sections 14 and 18 through 30
(inclusive) of this Agreement shall survive any expiration or earlier
termination of this Agreement.

 

17.    ASSIGNMENT. This Agreement may be assigned by the Advisor to an Affiliate
of the Advisor with the approval of the Board of Directors (including a majority
of the Independent Directors). After a Listing, this Agreement may be assigned
by the Advisor to any party with expertise in comparable commercial real estate
and that has, together with its Affiliates, over $800 million of assets under
management upon prior written notice to the Company (which notice shall provide
details of the assignment and a copy of the agreement pursuant to which the
assignment is effectuated), but without obtaining the approval of the Board of
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;
provided, that in the event any such assignment constitutes a Change of Control,
the Advisor shall be entitled to receive from the Company or the Operating
Partnership the Change of Control Fee in accordance with Section 18(a).

 

18.    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 thirty
(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 shares of the Company and units
of partnership interests in the Operating Partnership; provided, however, any
fees or expenses accrued but unpaid on the date a Change of Control is
consummated, together with any Subject Fees payable as a result of a termination
in connection with a Change of Control shall be paid to the Advisor on the date
upon which the Change of Control is consummated.

 

(b)       Change of Control. The Company or the Advisor shall have the right to
terminate this Agreement in connection with the consummation of the first Change
of Control occurring during the initial term of this Agreement or any renewal
term thereof so long as (i) notice of such termination in connection with the
first Change of Control is delivered to the Advisor on the date the definitive
agreement is executed in connection with the consummation of such Change of
Control, (ii) the effective date of such termination of this Agreement is at
least one hundred eighty (180) days following such notice, (iii) in the case of
the Company, the Company has obtained the approval of at least two-thirds (2/3)
of the Independent Directors to so terminate this Agreement prior to delivering
such notice, (iv) the applicable Subject Fees are paid upon the consummation of
the Change of Control and (v) the Advisor continues to receive all compensation
and reimbursements which may be due to the Advisor hereunder (other than the
Subject Fees) up to the effective date of such termination. For the avoidance of
doubt, notice of termination as a result of a Change of Control may only be
given once during the initial term and once during each renewal term thereof and
the right to terminate for a Change of Control under this Section 18(b) shall
only apply during the term in which the Change of Control has occurred, and the
Company or Advisor shall not have the right to terminate for a Change of Control
which has occurred in a prior term.

 

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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 Investments, and
documents of the Company and the Operating Partnership then in the custody of
the Advisor; and

 

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

 

19.    INCORPORATION OF THE ARTICLES OF INCORPORATION AND THE OPERATING
PARTNERSHIP AGREEMENT. To the extent that the Articles of Incorporation or the
Operating Partnership Agreement as in effect on the date hereof impose
obligations or restrictions on the Advisor or grant the Advisor certain 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.

 

20.    INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP.

 

(a)       The Company and the Operating Partnership, jointly and severally,
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 and against all losses, claims,
damages, losses, joint or several, expenses (including reasonable attorneys’
fees and other legal fees and expenses), judgments, fines, settlements, and
other amounts (collectively, “Losses,” and each, a “Loss”) arising in the
performance of their duties hereunder, including reasonable attorneys’ fees, to
the extent such Losses 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 or the Charter. Notwithstanding the foregoing, the Company and the
Operating Partnership shall not provide for indemnification of an Indemnitee for
any Loss suffered by such Indemnitee, nor shall they provide that an Indemnitee
be held harmless for any Loss suffered by the Company and the Operating
Partnership, unless all the following conditions are met:

 

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(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;

 

(iii)       such Loss was not the result of negligence or willful 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 and the Operating Partnership for any Losses 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 Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of the Company or the Operating Partnership were
offered or sold as to indemnification for violation of securities laws.

 

(c)       In addition, the advancement of the Company’s or the Operating
Partnership’s funds to an Indemnitee for legal expenses and other costs incurred
as a result of any legal action for which indemnification is being sought is
permissible only if all the following conditions are satisfied:

 

(i)       the legal action 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 legal action is initiated by a third party who is not a
Stockholder or the legal action is initiated by a Stockholder acting in such
Stockholder’s capacity as such and a court of competent jurisdiction
specifically approves such advancement; and

 

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(iii)       the Indemnitee undertakes to repay the advanced funds to the Company
or the Operating Partnership, together with the applicable legal rate of
interest thereon, in cases in which such Indemnitee is found not to be entitled
to indemnification.

 

21.    INDEMNIFICATION BY ADVISOR. The Advisor shall indemnify and hold harmless
the Company and the Operating Partnership from Losses, including reasonable
attorneys’ fees to the extent that such Losses 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.

 

22.    NOTICES. Any notice, report or other communication required or permitted
to be given hereunder shall be in writing unless some other method of giving
such notice, report or other communication is required by the Articles of
Incorporation, the 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 City REIT, Inc.   405 Park
Avenue   New York, New York 10022   Attention: Chief Executive Officer and  
                 Chief Financial Officer       with a copy to:       Proskauer
Rose LLP   Eleven Times Square   New York, New York 10036   Attention: Peter M.
Fass, Esq.     To the Operating Partnership: New York City Operating
Partnership, L.P.   405 Park Avenue   New York, New York 10022   Attention:
Chief Executive Officer and                    Chief Financial Officer      
with a copy to:       Proskauer Rose LLP   Eleven Times Square   New York, New
York 10036   Attention: Peter M. Fass, Esq.

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To the Advisor: New York City Advisors, LLC   405 Park Avenue   New York, New
York 10022   Attention: Edward M. Weil, Jr.       with a copy to:       Paul,
Weiss, Rifkind, Wharton & Garrison LLP   1285 Avenue of the Americas   New York,
New York 10019   Attention: Jeffrey D. Marell, 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 22.

 

23.    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.

 

24.    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.

 

25.    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.

 

26.    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.

 

27.    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.

 

28.    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.

 

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29.    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.

 

30.    EXECUTION IN COUNTERPARTS. This Agreement may be executed (including by
facsimile 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.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the undersigned have executed this Second Amended and
Restated Advisory Agreement as of the date first written above.

 

  AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.           By: /s/ Edward M.
Weil, Jr.     Name:   Edward M. Weil, Jr.     Title:    Chief Executive Officer
                  NEW YORK CITY OPERATING PARTNERSHIP, L.P.           By:
American Realty Capital New York City REIT, Inc. its General Partner         By:
/s/ Edward M. Weil, Jr.     Name:   Edward M. Weil, Jr.     Title:     Chief
Executive Officer                   NEW YORK CITY ADVISORS, LLC           By:
New York City Special Limited Partnership, LLC, its sole member         By:
American Realty Capital III, LLC, its sole member         By: AR Global
Investments, LLC, its sole member         By: /s/ Michael R. Anderson     Name:
  Michael R. Anderson     Title:     Authorized Signatory

 

 

[Signature Page to American Realty Capital New York City REIT, Inc. – Second A&R
Advisory Agreement]