Exhibit 10.1

 

Fourth Amended and Restated

Advisory Agreement

between

Phillips Edison – ARC Shopping Center REIT Inc.

and

American Realty Capital II Advisors, LLC

September 17, 2010

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Table of Contents

 

     Page

Article 1 – Definitions

   1

Article 2 – Appointment

   9

Article 3 – Duties Of The Advisor

   9

3.1 Organizational and Offering Services

   10

3.2 Acquisition Services

   10

3.3 Asset Management Services

   11

3.4 Stockholder Services

   14

3.5 Other Services

   14

Article 4 – Authority Of Advisor

   14

4.1 General

   14

4.2 Powers of the Advisor

   15

4.3 Approval by the Board

   15

4.4 Modification or Revocation of Authority of Advisor

   15

Article 5 – Bank Accounts

   15

Article 6 – Records And Financial Statements

   15

Article 7 – Limitation On Activities

   16

Article 8 – Fees

   16

8.1 Acquisition Fees

   16

8.2 Asset Management Fee

   17

8.3 Disposition Fees

   17

8.4 Financing Fee

   18

8.5 Subordinated Share of Cash Flows

   18

8.6 Subordinated Incentive Fee

   18

8.7 Other Services

   19

8.8 Changes to Fee Structure

   19

8.9 Internalization

   19

8.10 Limitation on Acquisition Fees, Acquisition Expenses and Financing Fees

   20

Article 9 – Expenses

   20

9.1 General

   20

9.2 Timing of and Limitations on Reimbursements

   22

Article 10 – Voting Agreement

   23

10.1 Election of Directors

   23

10.2 Other Voting of Shares

   24

Article 11 – Relationship Of Advisor And Company; Other Activities Of The
Advisor

   24

11.1 Relationship

   24

11.2 Time Commitment

   24

11.3 Investment Opportunities and Allocation

   25

Article 12 – The Phillips Edison and ARC Names

   26

12.1 The American Realty Capital and ARC Names

   26

12.2 The Phillips Edison and PECO Names

   26

Article 13 – Term And Termination of the Agreement and Sub-advisory Agreement

   27

 

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13.1 Term

   27

13.2 Termination by Either Party

   27

13.3 Payments on Termination and Survival of Certain Rights and Obligations

   28

Article 14 – Assignment

   29

14.1 Assignment of Agreement

   29

14.2 Assignment of Payments

   29

Article 15 – Indemnification And Limitation Of Liability

   30

15.1 Indemnification

   30

15.2 Limitation on Indemnification

   30

15.3 Limitation on Payment of Expenses

   31

Article 16 – Miscellaneous

   31

16.1 Notices

   31

16.2 Modification

   32

16.3 Severability

   33

16.4 Construction

   33

16.5 Entire Agreement

   33

16.6 Waiver

   33

16.7 Gender

   33

16.8 Titles Not to Affect Interpretation

   33

16.9 Third Party Beneficiary

   33

16.10 Counterparts

   34

16.11 Restricted Stock

   34

 

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Fourth Amended and Restated Advisory Agreement

This Fourth Amended and Restated Advisory Agreement, dated as of September 17,
2010 (this “Agreement”), is between Phillips Edison – ARC Shopping Center REIT
Inc., a Maryland corporation (the “Company”), and American Realty Capital II
Advisors, LLC, a Delaware limited liability company (the “Advisor”).

W I T N E S S E T H

WHEREAS, the parties entered into the Advisory Agreement on January 11, 2010;

WHEREAS, the parties entered into the Amended and Restated Advisory Agreement on
March 1, 2010;

WHEREAS, the parties entered into the Second Amended and Restated Advisory
Agreement on April 9, 2010;

WHEREAS, the parties entered into the Third Amended and Restated Advisory
Agreement on July 1, 2010 (the “Amended Agreement”);

WHEREAS, the parties have agreed to make certain amendments and desire to amend
and restate the Amended Agreement;

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

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

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, the parties hereto agree that the Amended
Agreement hereby is amended and restated to read in its entirety as follows:

Article 1

Definitions

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

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

 

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

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

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

“Affiliate” means, with respect to any Person, any of the following: (i) any
other Person directly or indirectly controlling, controlled by, or under common
control with such Person; (ii) any other Person directly or indirectly owning,
controlling, or holding with the power to vote 10% or more of the outstanding
voting securities of such Person; (iii) any legal entity for which such Person
acts as an executive officer, director, trustee, or general partner; (iv) any
other Person 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held, with power to vote, by such Person; and
(v) any executive officer, director, trustee, or general partner of such Person.
An entity shall not be deemed to control or be under common control with an
Advisor- or Sub-advisor-sponsored program unless (A) the entity owns 10% or more
of the voting equity interests of such program, or (B) a majority of the board
of directors (or equivalent governing body) of such program is composed of
Affiliates of the entity. The term “Affiliated” shall have a meaning correlative
thereto. For the avoidance of doubt, none of the Company, the Sub-advisor, any
subsidiary of the Company, any subsidiary of the Sub-advisor and any other
Person controlled by, controlling or under common control with Phillips Edison &
Company shall be an Affiliate of the Advisor.

“Appraised Value” means the value according to an appraisal made by an
Independent Appraiser.

“Articles of Incorporation” means the Articles of Incorporation of the Company
under Title 2 of the Corporations and Associations Article of the Annotated Code
of Maryland, as amended from time to time.

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

 

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“Average Invested Assets” means, for a specified period, the average of the
aggregate book value of the assets of the Company invested, directly or
indirectly, in Properties, Loans and other Permitted Investments secured by real
estate before reserves for depreciation or bad debts or other similar non-cash
reserves, computed by taking the average of such values at the end of each month
during such specified period.

“Board of Directors” or “Board” means the persons holding such office, as of any
particular time, under the Articles of Incorporation of the Company, whether
they be the Directors named therein or additional or successor Directors.

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

“Cash from Financings” means the net cash proceeds realized by the Company from
the financing of Properties, Loans or other Permitted Investments or from the
refinancing of any Company indebtedness (after deduction of all expenses
incurred in connection therewith).

“Cash from Sales and Settlements” means the net cash proceeds realized by the
Company: (i) from the sale, exchange or other disposition of any of its assets
or any portion thereof after deduction of all expenses incurred in connection
therewith; (ii) from the prepayment, maturity, workout or other settlement of
any Loan or Permitted Investment or portion thereof after deduction of all
expenses incurred in connection therewith; and (iii) from regular principal
payments on any Loan (or to the extent applicable, any Permitted Investment). In
the case of a transaction described in clause (i)(C) of the definition of “Sale”
and clause (i)(B) of the definition of “Settlement,” Cash from Sales and
Settlements means the proceeds of any such transaction actually distributed to
the Company from the Joint Venture or partnership. Cash from Sales and
Settlements shall not include Cash from Financings.

“Cash from Sales, Settlements and Financings” means the total sum of Cash from
Sales and Settlements and Cash from Financings.

“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.

“Company” means Phillips Edison – ARC Shopping Center REIT Inc., a corporation
organized under the laws of the State of Maryland.

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

“Conflicts Committee” shall have the meaning set forth in the Company’s Articles
of Incorporation.

 

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

“Contract Sales Price” means the total consideration received by the Company for
the sale of a Property, Loan or other Permitted Investment.

“Cost of Loans and other Permitted Investments” means the sum of the cost of all
Loans and Permitted Investments held by the Company, calculated each month on an
ongoing basis, and calculated as follows for each Loan or Permitted Investment:
the lesser of (i) the amount actually paid or allocated to acquire or fund the
Loan or Permitted Investment (exclusive of any fees payable to the Advisor or
the Sub-advisor or any their Affiliates in connection therewith, but inclusive
of other expenses related thereto and the amount of any debt associated with or
used to acquire or fund such Loan or Permitted Investment) and (ii) the
outstanding principal amount of such Loan or Permitted Investment, as of the
time of calculation. With respect to any Loan or Permitted Investment held by
the Company through a Joint Venture or partnership of which it is, directly or
indirectly, a co-venturer, such amount shall be the Company’s proportionate
share thereof.

“Cost of Real Estate Investments” means the sum of (i) with respect to
Properties wholly owned, directly or indirectly, by the Company, the amount
actually paid or allocated to the purchase, development, construction or
improvement of Properties (exclusive of any fees payable to the Advisor or the
Sub-advisor or any their Affiliates in connection therewith, but inclusive of
other expenses related thereto), plus the amount of any outstanding debt
attributable to such Properties and (ii) in the case of Properties owned by any
Joint Venture or partnership in which the Company or the Partnership is,
directly or indirectly, a co-venturer or partner, the portion of the amount
actually paid or allocated to the purchase, development, construction or
improvement of Properties (exclusive of any fees payable to the Advisor or the
Sub-advisor or any their Affiliates in connection therewith, but inclusive of
other expenses related thereto), plus the amount of any outstanding debt
associated with such Properties that is attributable to the Company’s investment
in the Joint Venture or partnership.

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

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

“Director” means a member of the Board of Directors of the Company.

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

 

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

“Financing Fee” shall have the meaning set forth in Section 8.4.

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

“Gross Proceeds” means the aggregate purchase price of all Shares sold for the
account of the Company through an Offering, without deduction for Organization
and Offering Expenses.

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

“Independent Appraiser” means a person with no material current or prior
business or personal relationship with the Advisor or the Directors, who is
engaged to a substantial extent in the business of rendering opinions regarding
the value of assets of the type held by the Company, and who is a qualified
appraiser of real estate as determined by the Board. Membership in a nationally
recognized appraisal society such as the American Institute of Real Estate
Appraisers (“M.A.I.”) or the Society of Real Estate Appraisers (“S.R.E.A.”)
shall be conclusive evidence of such qualification.

“Initial Public Offering” means the initial public offering of Shares registered
on the Registration Statement pursuant to the Securities Act of 1933, as
amended.

“Invested Capital” means the amount calculated by multiplying the total number
of Shares purchased by Stockholders by the issue price, reduced by any amounts
paid by the Company to repurchase or redeem Shares pursuant to the Company’s
plan for redemption of Shares or otherwise.

“Joint Venture” means any joint venture, limited liability company or other
Affiliate of the Company that owns, in whole or in part, on behalf of the
Company any Properties, Loans or other Permitted Investments.

“Listed” or “Listing” shall have the meaning set forth in the Company’s Articles
of Incorporation.

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

“Management Fee Base” means, for a specified period, the sum of the Cost of Real
Estate Investments and the Cost of Loans and other Permitted Investments
computed by taking the average of such sums at the end of each month during such
specified period.

 

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“NASAA Guidelines” means the NASAA Statement of Policy Regarding Real Estate
Investment Trusts as in effect on the date hereof.

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

“Offering” means any offering of Shares that is registered with the SEC pursuant
to the Securities Act of 1933, as amended, excluding Shares offered under any
employee benefit plan.

“Operating Cash Flow” means Operating Revenue Cash Flows minus the sum of
(i) Operating Expenses, (ii) all principal and interest payments on indebtedness
and other sums paid to lenders, (iii) the expenses of raising capital such as
Organization and Offering Expenses, legal, audit, accounting, underwriting,
brokerage, listing, registration, and other fees, printing and other such
expenses and taxes incurred in connection with the issuance, distribution,
transfer, registration and Listing of the Shares, (iv) taxes, (v) incentive fees
paid in compliance with Section IV.F. of the NASAA Guidelines and
(vi) Acquisition Fees, Acquisition Expenses, real estate commissions on resale
of property, and other expenses connected with the acquisition, disposition, and
ownership of real estate interests, loans or other property (other than
commissions on the sale of assets other than real property), such as the costs
of foreclosure, insurance premiums, legal services, maintenance, repair and
improvement of property.

“Operating Expenses” means all costs and expenses incurred by the Company, as
determined under GAAP, that in any way are related to the operation of the
Company or to Company business, including fees paid to the Advisor, but
excluding (i) the expenses of raising capital such as Organization and Offering
Expenses, legal, audit, accounting, underwriting, brokerage, listing,
registration, and other fees, printing and other such expenses and taxes
incurred in connection with the issuance, distribution, transfer, registration
and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash
expenditures such as depreciation, amortization, bad loan reserves, impairments
of value, and mark-to-market losses, (v) incentive fees paid in compliance with
Section IV.F. of the NASAA Guidelines, and (vi) Acquisition Fees, Acquisition
Expenses, real estate commissions on resale of property, property management
fees, and other expenses connected with the acquisition, disposition, and
ownership of real estate interests, loans or other property (other than
commissions on the sale of assets other than real property), such as the costs
of foreclosure, insurance premiums, legal services, maintenance, repair and
improvement of property.

“Operating Revenue Cash Flows” means the Company’s cash flow from ownership
and/or operation of (i) Properties, (ii) Loans, (iii) Permitted Investments,
(iv) short-term investments, and (v) interests in Properties, Loans and
Permitted Investments owned by any Joint Venture or any partnership in which the
Company or the Partnership is, directly or indirectly, a co-venturer or partner.

 

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

“Other Liquidity Event” has the meaning set forth in Section 13.3(F).

“Partnership” means Phillips Edison – ARC Shopping Center Operating Partnership,
L.P., a Delaware limited partnership formed to own and operate Properties, Loans
and other Permitted Investments on behalf of the Company.

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

“Person” or “person” means an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c) (17) of the
Code), a 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 entity, or any government or any agency or political subdivision
thereof, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

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

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

“Prorated Term Fraction” means the fraction, the numerator of which is the
number of days from and including January 11, 2010 to and including the
Termination Date, and the denominator of which is the number of days elapsed
from and including

 

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January 11, 2010 to and including the date of the determination of the amount of
any Subordinated Share of Cash Flows and/or the Subordinated Incentive Fee, as
applicable.

“Registration Statement” means the registration statement filed by the Company
with the SEC pursuant to the Securities Act of 1933, as amended, on Form S-11,
as amended from time to time, in connection with the Initial Public Offering.

“REIT” means a “real estate investment trust” under Sections 856 through 860 of
the Code.

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

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

“Settlement” means (i) the payment of principal, prepayment, maturity, workout
or other settlement of any Loan or other Permitted Investment or portion thereof
owned, directly or indirectly, by (A) the Company or the Partnership or (B) any
Joint Venture or any partnership in which the Company or the Partnership is,
directly or indirectly, a partner, but (ii) not including any transaction or
series of transactions specified in clause (i)(A) or (i)(B) above in which the
proceeds of such prepayment, maturity, workout or other settlement are
reinvested in one or more Properties, Loans or other Permitted Investments
within 180 days thereafter.

“Shares” means the shares of common stock of the Company, par value $.01 per
share.

“Stockholders” means the registered holders of the Shares.

“Stockholders’ 7% Return” means, as of any date, an aggregate amount equal to a
7% cumulative, non-compounded, annual return on Invested Capital (calculated
like simple interest on a daily basis based on a three hundred sixty-five day
year). For

 

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purposes of calculating the Stockholders’ 7% Return, Invested Capital shall be
determined for each day during the period for which the Stockholders’ 7% Return
is being calculated and shall be calculated net of (1) Distributions of
Operating Cash Flow to the extent such Distributions of Operating Cash Flow
provide a cumulative, non-compounded, annual return in excess of 7%, as such
amounts are computed on a daily basis based on a three hundred sixty-five day
year and (2) Distributions of Cash from Sales, Settlements and Financings,
except to the extent such Distributions would be required to supplement
Distributions of Operating Cash Flow in order to achieve a cumulative,
non-compounded, annual return of 7%, as such amounts are computed on a daily
basis based on a three hundred sixty-five day year.

“Sub-advisor” means (i) Phillips Edison NTR LLC (formerly known as Phillips
Edison & Company SubAdvisor LLC), a Delaware limited liability company, or
(ii) any successor sub-advisor to the Advisor.

“Sub-advisory Agreement” means that Second Amended and Restated Sub-advisory
Agreement between the Advisor and the Sub-advisor, dated as of the date hereof,
as the same may be amended, restated or otherwise modified from time to time in
accordance with its terms.

“Subordinated Incentive Fee” means the fee payable to the Advisor under certain
circumstances if the Shares are Listed, as calculated in Section 8.6.

“Subordinated Share of Cash Flows” means any amount payable to the Advisor or
its assignees pursuant to Section 8.5.

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

“Termination Date” means the date of termination of the Agreement if such
termination does not coincide with the parties entering into a renewed or
amended advisory agreement.

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

Article 2

Appointment

The Company hereby appoints the Advisor to serve as its advisor and asset
manager on the terms and subject to the conditions set forth in this Agreement,
and the Advisor hereby accepts such appointment.

 

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Article 3

Duties Of The Advisor

The Advisor is responsible for managing, operating, directing and supervising
the operations and administration of the Company and its assets. The Advisor
undertakes to use commercially reasonable efforts to present to the Company
potential investment opportunities and to provide the Company with 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. Subject to the limitations set forth in this Agreement, including Article
4 hereof, consistent with the provisions of the Articles of Incorporation and
Bylaws and the continuing and exclusive authority of the Board over the
supervision of the Company, the Advisor shall, either directly or by engaging an
Affiliate, the Sub-advisor or third party, perform the following duties:

 

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

 

3.2 Acquisition Services. The Advisor shall:

 

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

 

  (B) Subject to Article 4 hereof and the investment objectives and policies of
the Company: (a) locate, analyze and select potential investments; (b) structure
and negotiate the terms and conditions of transactions pursuant to which
investments in Properties, Loans and other Permitted Investments will be made;
(c) acquire, originate and dispose of Properties, Loans and other Permitted
Investments on behalf of the Company (including through Joint Ventures);
(d) arrange for financing and refinancing and make other changes in the asset or
capital structure of investments in Properties, Loans and other Permitted
Investments; (e) select Joint Venture partners and structure corresponding
agreements; and (f) enter into leases, service contracts and other agreements
for Properties, Loans and other Permitted Investments;

 

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

 

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

 

  (E) Obtain reports (which may be prepared by the Advisor, the Sub-advisor or
their Affiliates), where appropriate, concerning the value of contemplated
investments of the Company;

 

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  (F) Deliver to or maintain on behalf of the Company copies of all appraisals
obtained in connection with the Company’s investments; and

 

  (G) Negotiate and execute approved investments and other transactions,
including Settlements of Loans and other Permitted Investments.

 

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

 

  (A) Real Estate and Related Services:

 

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

 

  (2) Negotiate and service the Company’s debt facilities and other financings
and negotiate on behalf of the Company with banks or other lenders for debt
facilities to be made to the Company or with investment banking firms and
broker-dealers or negotiate private sales of Shares or obtain debt facilities
for the Company, but in no event in such a manner so that the Advisor shall be
acting as a 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;

 

  (3) Monitor applicable markets and obtain reports (which may be prepared by
the Advisor, the Sub-advisor or their Affiliates) where appropriate, concerning
the value of investments of the Company;

 

  (4) Monitor and evaluate the performance of each asset of the Company and the
Company’s overall portfolio of assets, provide daily management services to the
Company and perform and supervise the various management and operational
functions related to the Company’s investments;

 

  (5)

Formulate and oversee the implementation of strategies for the administration,
promotion, management, operation, maintenance, investment, improvement,
financing and refinancing, marketing,

 

11

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leasing and disposition of Properties, Loans and other Permitted Investments on
an overall portfolio basis;

 

  (6) Consult with the Company’s officers and the Board and assist the Board in
the formulation and implementation of the Company’s financial policies, and, as
necessary, furnish the Board with advice and recommendations with respect to the
making of investments consistent with the investment objectives and policies of
the Company and in connection with any borrowings proposed to be undertaken by
the Company;

 

  (7) Oversee the performance by the Property Managers of their duties,
including collection and proper deposits of rental payments and payment of
Property expenses and maintenance;

 

  (8) Conduct periodic on-site property visits to some or all (as the Advisor or
its designee deems reasonably necessary) of the Properties to inspect the
physical condition of the Properties and to evaluate the performance of the
Property Managers;

 

  (9) Review, analyze and comment upon the operating budgets, capital budgets
and leasing plans prepared and submitted by each Property Manager and aggregate
these property budgets into the Company’s overall budget;

 

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

 

  (11) Consult with the Company’s officers and the Board and provide assistance
with the evaluation and approval of potential asset dispositions, sales and
refinancings.

 

  (B) Accounting and Other Administrative Services:

 

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

 

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

 

  (3)

Make reports to the Conflicts Committee each quarter of the investments that
have been made by other programs sponsored by the Advisor, the Sub-advisor or
any of their respective Affiliates, as well as any investments that have been
made by the Advisor, Sub-advisor or any of their Affiliates directly, in each
case to the extent such investments constitute a conflict of interest or a

 

12

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potential conflict of interest with the investment policies and objectives of
the Company;

 

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

 

  (5) Provide financial and operational planning services;

 

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

 

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

 

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

 

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

 

  (10) Deliver to, or maintain on behalf of, the Company copies of all
appraisals obtained in connection with Properties, Loans and Permitted
Investments;

 

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

 

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

 

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

 

  (14) 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;

 

13

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3.5 Other Services. Except as provided in Article 7, the Advisor shall perform
any other services reasonably requested by the Company (acting through the
Conflicts Committee).

Article 4

Authority of Advisor

 

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

 

14

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

 

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

 

4.4 Modification or Revocation of Authority of Advisor. The Board may, at any
time upon the giving of notice to the Advisor, modify or revoke the authority or
approvals set forth in Article 3 hereof and this Article 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 prior to the date of receipt by the Advisor of
such notification.

Article 5

Bank Accounts

The Advisor may establish and maintain one or more bank accounts in the name of
the Company 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,
under such terms and conditions as the Board may approve; provided, that no
funds shall be commingled with the funds of the Advisor. The Advisor shall upon
request render appropriate accountings of such collections and payments to the
Board and the independent auditors of the Company.

Article 6

Records And Financial Statements

The Advisor, in the conduct of its responsibilities to the Company, shall
maintain adequate and separate books and records for the Company’s operations in
accordance with GAAP, which shall be supported by sufficient documentation to
ascertain that such books and records are properly and accurately recorded. Such
books and records shall be the property of the Company and shall be available
for inspection by the Board and by counsel, auditors and other authorized agents
of the Company, at any time or from time

 

15

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to time during normal business hours. Such books and records shall include all
information necessary to calculate and audit the fees or reimbursements paid
under this Agreement. The Advisor shall utilize procedures to attempt to ensure
such control over accounting and financial transactions as is reasonably
required to protect the Company’s assets from theft, error or fraudulent
activity. All financial statements that the Advisor delivers to the Company
shall be prepared on an accrual basis in accordance with GAAP, except for
special financial reports that by their nature require a deviation from GAAP.
The Advisor shall liaise with the Company’s officers and independent auditors
and shall provide such officers and auditors with the reports and other
information that the Company so requests.

Article 7

Limitation On Activities

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

Article 8

Fees

8.1 Acquisition Fees. As compensation for the investigation, selection, sourcing
and acquisition or origination (by purchase, investment or exchange) of
Properties, Loans and other Permitted Investments, the Company shall pay an
Acquisition Fee calculated as set forth below in this Section 8.1 to the Advisor
or its assignees for each such investment (whether an acquisition or
origination). With respect to the acquisition or origination of a Property, Loan
or other Permitted Investment to be owned, directly or indirectly, by the
Company or the Partnership, the Acquisition Fee payable to the Advisor or its
assignees shall equal 1.0% of the sum of the amount actually paid or allocated
to fund the acquisition, origination, development, construction or improvement
of the Property, Loan or other Permitted Investment, inclusive of the
Acquisition Expenses associated with such Property, Loan or other Permitted
Investment and the amount of any debt

 

16

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associated with, or used to fund the investment in, such Property, Loan or other
Permitted Investment, but exclusive of the Acquisition Fee payable to the
Advisor or its assignees. The calculation of Acquisition Fees payable to the
Advisor or its assignees will also include any amounts incurred or reserved for
capital expenditures that will be used to provide funds for capital improvements
and repairs applied to any real property investment acquired where the Company
plans to add value. With respect to the acquisition or origination of a
Property, Loan or other Permitted Investment through any Joint Venture or any
partnership in which the Company or the Partnership is, directly or indirectly,
a co-venturer or partner, the Acquisition Fee payable to the Advisor or its
assignees shall equal 1.0% of the portion that is attributable to the Company’s
or the Partnership’s direct or indirect investment in such Joint Venture or
partnership of the amount actually paid or allocated to fund the acquisition,
origination, development, construction or improvement of the Property, Loan or
other Permitted Investment, inclusive of the Acquisition Expenses associated
with such Property, Loan or other Permitted Investment, plus the amount of any
debt associated with, or used to fund the investment in, such Property, Loan or
other Permitted Investment, but exclusive of the Acquisition Fee so payable to
the Advisor or its assignees. The Advisor shall submit an invoice to the Company
following the closing or closings of each acquisition or origination,
accompanied by a computation of the Acquisition Fee. The Acquisition Fee payable
to the Advisor or its assignees shall be paid at the closing of the transaction
upon receipt of the invoice by the Company.

 

8.2 Asset Management Fee. The Company shall pay the Advisor or its assignees as
compensation for the services described in Section 3.3 hereof a quarterly fee
(the “Asset Management Fee”) in an amount equal to 0.25% of the Management Fee
Base. The Asset Management Fee is payable quarterly in advance, on
January 1, April 1, July 1 and October 1, in the amount of 0.25% of the
Management Fee Base for the preceding fiscal quarter. The Advisor shall submit
an invoice to the Company, accompanied by a computation of the Asset Management
Fee for the applicable period. The Asset Management Fee will be appropriately
pro rated for any partial fiscal quarter.

 

8.3

Disposition Fees. If the Advisor or Sub-advisor or any of their Affiliates
provides a substantial amount of services (as determined by the Conflicts
Committee) in connection with a Sale, then the Advisor or its assignees shall
receive a fee at the closing (a “Disposition Fee”) equal to 2.0% of the Contract
Sales Price; provided, however, that no Disposition Fee shall be payable if the
Sale is to an Affiliate of either the Advisor or the Sub-Advisor; provided
further, however, that the payment of any Disposition Fees by the Company shall
be subject to any limitations contained in the Company’s Articles of
Incorporation. Any Disposition Fee payable under this Section 8.3 may be paid in
addition to commissions paid to non-Affiliates, provided that the total
commissions (including such Disposition Fee) paid to all Persons by the Company
for each Sale shall not exceed an amount equal to the lesser of (i) 6.0% of the
aggregate Contract Sales Price of each applicable Property, Loan or other
Permitted

 

17

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Investment and (ii) the Competitive Real Estate Commission for each applicable
Property, Loan or other Permitted Investment. Substantial assistance in
connection with the Sale of a Property includes the preparation of an investment
package for the Property (including a new investment analysis, rent rolls,
tenant information regarding credit, a property title report, an environmental
report, a list of prospective buyers, a structural report and exhibits) or such
other substantial services performed by the Advisor or Sub-advisor or any of
their Affiliates in connection with a Sale. The Disposition Fee payable to the
Advisor or its assignees shall be paid at the closing of the transaction upon
receipt of the invoice by the Company.

 

8.4 Financing Fee. In the event of any debt financing obtained by or for the
Company, the Company will pay to the Advisor or its assignees upon the closing
of such debt financing a fee (a “Financing Fee”) equal to (i) 0.75% of the
amount available under such debt financing, whether at the Company, Partnership,
or any direct or indirect subsidiary level, and (ii) 0.75% of the portion that
is attributable to the Company’s or the Partnership’s direct or indirect
investment in a Joint Venture or partnership in which the Company or the
Partnership is, directly or indirectly, a co-venturer or partner. The Advisor
(or Sub-advisor) may reallow all or a portion of any Financing Fee to reimburse
a non-Affiliated third party with whom it may subcontract to procure any such
debt financing. All or any portion of the Financing Fees not taken as to any
fiscal year shall be deferred without interest and may be paid in such other
fiscal year as the Advisor shall determine.

 

8.5 Subordinated Share of Cash Flows. Subject to the last sentence of
Section 8.6, the Company will pay, from time to time when available,
Subordinated Share of Cash Flows to the Advisor or its assignees in an amount
equal to 15% of Operating Cash Flow and 15% of Cash from Sales, Settlements and
Financings remaining after the Stockholders have received Distributions of
Operating Cash Flow and of Cash from Sales, Settlements and Financings such that
the owners of all outstanding Shares have received Distributions in an aggregate
amount equal to the sum of, as of such point in time:

 

  (A) the Stockholders’ 7% Return; and

 

  (B) Invested Capital.

    When determining whether the above threshold has been met:

 

  (1) Any stock dividend shall not be included as a Distribution; and

 

  (2) Distributions paid on Shares repurchased or redeemed by the Company (and
thus no longer included in the determination of Invested Capital) shall not be
included as a Distribution.

 

8.6

Subordinated Incentive Fee. Upon Listing, the Advisor or its assignees shall be
entitled to the Subordinated Incentive Fee in an amount equal to 15.0% of the
amount by which (i) the market value of the outstanding Shares, measured by

 

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taking the average closing price or the average of the bid and asked price, as
the case may be, over a period of 30 days during which the Shares are traded,
with such period beginning 180 days after Listing (the “Market Value”), plus the
total of all Distributions paid to Stockholders (excluding any stock dividends
and any Distributions paid on Shares that have been repurchased or redeemed by
the Company) from the Company’s inception until the date that Market Value is
determined, exceeds (ii) the sum of (A) 100% of Invested Capital and (B) the
total Distributions required to be paid to the Stockholders as of the date
Market Value is determined in order to pay the Stockholders’ 7% Return from
inception through the date Market Value is determined. The Company shall have
the option to pay such fee in the form of cash, Shares, a non-interest-bearing
short-term promissory note or any combination of the foregoing. The Subordinated
Incentive Fee will be reduced by the amount of any prior payments to the Advisor
or its assignees of Subordinated Share of Cash Flows. In the event the
Subordinated Incentive Fee is paid to the Advisor or its assignees following
Listing, no additional Subordinated Share of Cash Flows will be paid to the
Advisor or its assignees.

 

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

 

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

 

8.9 Internalization. In the event that the Company’s board of directors elects
to internalize any management services provided by the Advisor or the
Sub-advisor, the Company shall not pay any compensation or other remuneration to
the Advisor or the Sub-advisor or any of their Affiliates in connection with
such internalization transaction. For the avoidance of doubt, any compensation
paid or payable by the Company to employees of the Company in connection with
their employment by the Company (which employees were formerly employed by the
Advisor or the Sub-Advisor or any of their Affiliates) shall not be deemed to be
compensation or other remuneration in connection with any internalization
transaction for purposes of the immediately preceding sentence. This provision
shall not limit any other consideration or distributions that the Company may
pay the Advisor or the Sub-Advisor in accordance with this agreement or the
Sub-Advisory Agreement (in each case, as such agreement may be amended, restated
or modified from time to time) or any other agreement. This provision shall in
no way obligate the Advisor or the Sub-Advisor to facilitate an internalization
transaction with the Advisor, the Sub-Advisor or any of their Affiliates.

 

19

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8.10 Limitation on Fees. Notwithstanding anything herein to the contrary, the
payment of any fees or expenses pursuant to Articles 8 and 13 by the Company
shall be subject to the limitations thereon contained in the Articles of
Incorporation.

Article 9

Expenses

9.1 General. In addition to the compensation paid to the Advisor pursuant to
Article 8 hereof, the Company shall pay directly or reimburse the Advisor or
Sub-advisor, as the case may be, for all of the expenses paid or incurred by the
Advisor, the Sub-advisor or their Affiliates on behalf of the Company or in
connection with the services provided to the Company pursuant to this Agreement,
including, but not limited to:

 

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

 

  (1) the Company shall not reimburse the Advisor or Sub-advisor to the extent
such reimbursement would cause the total amount spent by the Company on
Organization and Offering Expenses (excluding underwriting and brokerage
discounts and commissions, but including third-party due diligence fees and
expenses as set forth in detailed and itemized invoices) to exceed 1.5% of Gross
Proceeds raised in an Offering as of the termination of such Offering;

 

  (2) within 60 days after the end of the month in which an Offering terminates,
the Advisor shall reimburse the Company to the extent the Company incurred
Organization and Offering Expenses (excluding underwriting and brokerage
discounts and commissions, but including third-party due diligence fees and
expenses as set forth in detailed and itemized invoices) exceeding 1.5% of Gross
Proceeds raised in such Offering;

 

  (3) the Company shall not reimburse the Advisor or Sub-advisor for any
Organization and Offering Expenses that the Conflicts Committee determines are
not fair and commercially reasonable to the Company; and

 

  (4) the Company shall not make any reimbursement for any of the following
Organization and Offering Expenses incurred by the Dealer Manager that are to be
paid out of the Dealer Manager’s fee:

 

  (a) participating broker-dealer expense reimbursements (including meals with
financial advisors and participating broker-dealer client seminars);

 

20

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  (b) sales seminars sponsored by participating broker-dealers;

 

  (c) promotional items;

 

  (d) marketing support;

 

  (e) expenses in connection with bona fide training and educational meetings;

 

  (f) wholesaling commissions, wholesaling salaries and wholesaling expense
reimbursements (including travel, meals and lodging in connection with the
Offering);

 

  (g) occasional meals and entertainment expenses of participating
broker-dealers; and

 

  (h) legal fees and expenses of the Dealer Manager associated with
FINRA-related filings or the drafting and review of any dealer manager
agreements, participating broker-dealer agreements and due diligence agreements.

 

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

 

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

 

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

 

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

 

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

 

  (G)

Expenses of managing, improving, developing, operating and selling Properties,
Loans and other Permitted Investments owned, directly or

 

21

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indirectly, by the Company, as well as expenses of other transactions relating
to such Properties, Loans and other Permitted Investments, including
prepayments, maturities, workouts and other settlements of Loans and other
Permitted Investments;

 

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

 

  (I) All out-of-pocket expenses associated with a Listing, if applicable;

 

  (J) Personnel and related employment costs incurred by the Advisor, the
Sub-advisor or their Affiliates in performing the services described in Article
3 hereof, including reasonable salaries and wages (but excluding bonuses),
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, Sub-advisor or their Affiliates to the extent
that such employees performed services for which the Advisor received
Acquisition Fees, Financing Fees or Disposition Fees;

 

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

 

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

 

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

 

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

 

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

 

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

 

9.2 Timing of and Additional Limitations on Reimbursements.

 

  (A)

Expenses incurred by the Advisor or Sub-advisor on behalf of the Company and
reimbursable pursuant to this Article 9 shall be reimbursed no less than monthly
to the Advisor or Sub-advisor in the manner and

 

22

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proportion directed by the Advisor and Sub-advisor. The Advisor shall prepare a
statement documenting the expenses of the Company during each quarter and shall
deliver such statement to the Company within 45 days after the end of each
quarter.

 

  (B) Notwithstanding anything else in this Article 9 to the contrary, the
expenses enumerated in this Article 9 shall not become reimbursable to the
Advisor unless and until the Company has raised $2,500,000 in the Initial Public
Offering.

 

  (C) Commencing upon the earlier to occur of the end of the fourth fiscal
quarter after (1) the Company’s acquisition of its first real estate asset and
(2) six months after the commencement of the Initial Public Offering, the
following limitation on Operating Expenses shall apply: The Company shall not
reimburse the Advisor or Sub-advisor at the end of any fiscal quarter for the
portion of Operating Expenses that in the four consecutive fiscal quarters then
ended (the “Expense Year”) exceeds (the “Excess Amount”) the greater of (i) 2%
of Average Invested Assets and (ii) 25% of Net Income (the “2%/25% Guidelines”)
for such year unless the Conflicts Committee determines that the Excess Amount
was justified, based on unusual and nonrecurring factors that the Conflicts
Committee deems sufficient. If the Conflicts Committee does not approve the
Excess Amount as being so justified, the Advisor or Sub-advisor shall repay to
the Company any Excess Amount paid to the Advisor or Sub-advisor during a fiscal
quarter. If the Conflicts Committee determines the Excess Amount was justified,
then, within 60 days after the end of any fiscal quarter of the Company for
which total reimbursed Operating Expenses for the Expense Year exceed the 2%/25%
Guidelines, the Advisor, at the direction of the Conflicts Committee, shall
cause such fact to be disclosed to the Stockholders in writing (or the Company
shall disclose such fact to the Stockholders in the next quarterly report of the
Company or by filing a Current Report on Form 8-K with the SEC within 60 days of
such quarter end), together with an explanation of the factors the Conflicts
Committee considered in determining that the Excess Amount was justified. The
Company will ensure that such determination will be reflected in the minutes of
the meetings of the Board. All figures used in the foregoing computation shall
be determined in accordance with GAAP applied on a consistent basis.

Article 10

Voting Agreement

 

10.1

Election of Directors. The Company agrees that it will take such actions that
are necessary to cause William M. Kahane, Nicholas Schorsch or another
representative of the Advisor reasonably satisfactory to the Company and
Sub-advisor to be a member of the initial Board of Directors of the Company if
such

 

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representative executes an advance letter of resignation to become effective
upon such time that the Advisor is no longer serving as the advisor to the
Company.

 

10.2 Other Voting of Shares. The Advisor agrees that, with respect to any Shares
now or hereinafter owned by it, the Advisor will not vote or consent on matters
submitted to the stockholders of the Company regarding (i) the removal of the
Advisor or any Affiliate of the Advisor or (ii) any transaction between the
Company and the Advisor or any of its Affiliates. This voting restriction shall
survive until such time that the Advisor is no longer serving as such.

Article 11

Relationship Of Advisor And Company; Other Activities Of The Advisor

 

11.1 Relationship. The Company and the Advisor are not partners or joint
venturers with each other, and nothing in this Agreement shall be construed to
make them such partners or joint venturers. Except as set forth in Section 11.3,
nothing herein contained shall prevent the Advisor or any of its Affiliates from
engaging in or earning fees from other activities, including, without
limitation, the rendering of advice to other Persons (including other REITs) and
the management of other programs advised, sponsored or organized by the Advisor
or any of its Affiliates. Nor shall this Agreement limit or restrict the right
of any manager, director, officer, member, partner, employee or equityholder of
the Advisor or any of its Affiliates to engage in or earn fees from any other
business or to render services of any kind to any other Person. The Advisor may,
with respect to any investment in which the Company is a participant, also
render advice and service to each and every other participant therein, and earn
fees for rendering such advice and service. Specifically, it is contemplated
that the Company may enter into Joint Ventures or other similar co-investment
arrangements with certain Persons, and pursuant to the agreements governing such
Joint Ventures or other similar co-investment arrangements, the Advisor may be
engaged to provide advice and service to such Persons, in which case the Advisor
will earn fees for rendering such advice and service. The Advisor shall promptly
disclose to the Board the existence of any condition or circumstance, existing
or anticipated, of which it has knowledge, that creates or which would
reasonably result in a conflict of interest between the Advisor’s obligations to
the Company and its obligations to or its interest in any other Person (it being
understood and agreed that the conditions and circumstances referred to in the
second paragraph of Section 11.3 are deemed to have been disclosed to the Board
for purposes of this Section 11.1).

 

11.2

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

 

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Company and may provide services to Persons other than the Company or any of its
Affiliates.

 

11.3 Investment Opportunities. The Advisor shall be required to use commercially
reasonable efforts to present a continuing and suitable investment program to
the Company that is consistent with the investment policies and objectives of
the Company. So long as the Advisor is acting in its capacity as advisor under
this Agreement, the Advisor will not (and will cause its Affiliates to not)
(i) pursue any opportunity to acquire any Property, Loan or other Permitted
Investment that fits within the Company’s strategy, or (ii) offer such Property,
Loan or other Permitted Investment to a third party, in each case unless and
until such opportunity is first presented to the Company. The Company shall have
30 days from the date of its receipt of a complete written offering package
relating to such opportunity, customary in scope and content, to notify the
Advisor of the Company’s decision as to whether or not to pursue such
opportunity. If the Company fails so to notify the Advisor within such 30-day
period, the Company shall be deemed to have passed on such opportunity. If the
Company passes on such opportunity, then the Advisor or such Affiliate, as the
case may be, may acquire the subject investment or offer the subject investment
to a third party for a period of 180 days, in each case on terms and conditions
(including price) that are not materially different from the terms and
conditions set forth in the offering package to the Company. If at the
expiration of such 180-day period, such opportunity remains available, then the
provisions of this Section 11.3 shall once again apply to such opportunity.

Notwithstanding the preceding, however, the Advisor or any Affiliate of the
Advisor shall be permitted to pursue any opportunity or to offer any opportunity
to a third party in respect of (i) any net leased retail, office and industrial
properties or other property consistent with the investment policies of American
Reality Capital Trust, Inc., (ii) any commercial real estate or other real
estate investments that relate to office, retail, multi-family residential,
industrial and hotel property types, located primarily in the New York
metropolitan area or other property consistent with the investment policies of
American Realty Capital New York Recovery REIT, Inc., or (iii) any investments
to be made by a contemplated non-traded REIT (the “Identified REIT”) that the
Advisor or any of its Affiliates described as (a) intending to invest primarily
in “power center” real estate developments, (b) being sponsored or co-sponsored
by ARC (or one of its Affiliates), the acquisition services for which will be
provided by an international commercial and residential real estate developer
and manager (or one of its Affiliates), and (c) being the subject of an executed
letter of intent or term sheet between the Advisor (or one of its Affiliates)
and such international commercial and residential real estate developer and
manager (or one of its Affiliates), and which has or will have as its publicly
disclosed (and not subsequently revised or required to be revised under
applicable securities laws) investment objectives to have less than 20% of its
assets (measured by purchase price) in anchored shopping centers with purchase
prices of less than $20,000,000 per property (determined once the proceeds of
the offering have been fully invested).

 

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Article 12

The Phillips Edison and ARC Names

 

12.1 The American Realty Capital and ARC Names. The Advisor and its Affiliates
have or may have a proprietary interest in the names “American Realty Capital,”
“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” or “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” or “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 will also make any
changes to any trademarks, servicemarks or other marks necessary to remove any
references to any of the names “American Realty Capital,” “ARC” or “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” or “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” or “AR Capital” licensed hereunder or the
use thereof (including without limitation as to whether the use of the name
“American Realty Capital,” “ARC” or “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” or “AR
Capital.”

 

12.2

The Phillips Edison and PECO Names. The Sub-advisor and its Affiliates have or
may have a proprietary interest in the names “Phillips Edison” and “PECO.” The
Sub-advisor hereby grants to the Company, to the extent of any proprietary
interest the Sub-advisor may have in the names “Phillips Edison” and “PECO,” a

 

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non-transferable, non-assignable, non-exclusive royalty-free right and license
to use the names “Phillips Edison” and “PECO” during the term of this Agreement.
The Company and Advisor agree that the Sub-advisor and its Affiliates will have
the right to approve of any use by the Company of the names “Phillips Edison” or
“PECO,” such approval not to be unreasonably withheld or delayed. Accordingly,
and in recognition of this right, if at any time the Advisor ceases to retain
the Sub-advisor or one of its Affiliates to perform advisory services for the
Company, the Company will, promptly after receipt of written request from the
Sub-advisor, cease to conduct business under or use the names “Phillips Edison”
and “PECO” 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 any of the
names “Phillips Edison” and “PECO” or any other word or words that might, in the
reasonable discretion of the Sub-advisor, be susceptible of indication of some
form of relationship between the Company and the Sub-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
any of the names “Phillips Edison” or “PECO.” Consistent with the foregoing, it
is specifically recognized that the Sub-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 the names “Phillips
Edison” or “PECO” 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
Sub-advisor nor any of its Affiliates makes any representation or warranty,
express or implied, with respect to the names “Phillips Edison” or “PECO”
licensed hereunder or the use thereof (including without limitation as to
whether the use of the name “Phillips Edison” or “PECO” will be free from
infringement of the intellectual property rights of third parties).
Notwithstanding the preceding, the Sub-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 “Phillips Edison” or “PECO.”

Article 13

Term And Termination Of The Agreement

 

13.1 Term. This Agreement shall have an initial term ending June 30, 2011 and
may be renewed for an unlimited number of successive one-year terms upon mutual
consent of the parties. The Company (acting through the Conflicts Committee)
will evaluate the performance of the Advisor annually before renewing this
Agreement, and each such renewal shall be for a term of no more than one year.
Any such renewal must be approved by the Conflicts Committee.

 

13.2

Termination by Either Party. This Agreement may be terminated upon 60 days’
written notice without cause or penalty by either the Company (acting through
the Conflicts Committee) or the Advisor. The provisions of Section 8.5, 8.6 and
14.2 and Articles 1, 12, 13, 15 and 16 (other than Section 16.11) shall

 

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survive termination of this Agreement. Notwithstanding anything else that may be
to the contrary herein, the expiration or earlier termination of this Agreement
shall not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination.

 

13.3 Payments on Termination and Survival of Certain Rights and Obligations.

 

  (A) After the Termination Date, the Advisor shall not be entitled to
compensation for further services hereunder except the Advisor (and its
assignees, including the Sub-advisor) shall be entitled to receive from the
Company (1) all unpaid reimbursements of expenses and all earned but unpaid fees
payable to the Advisor or its assignees prior to termination of this Agreement,
payable within 30 days after the effective date of such termination, and (2) to
the extent not already payable pursuant to the preceding clause or to the extent
not already paid, the Subordinated Share of Cash Flows and/or the Subordinated
Incentive Fee payable when and as provided in Article 8; provided, that the
amount of each Subordinated Share of Cash Flows and the amount of the
Subordinated Incentive Fee shall be reduced by multiplying such amount by the
Prorated Term Fraction.

 

  (B) The Advisor shall promptly upon termination:

 

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

 

  (2) 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;

 

  (3) deliver to the Board all assets and documents of the Company then in the
custody of the Advisor; and

 

  (4) cooperate with the Company to provide an orderly transition of advisory
functions.

 

  (C)

After the Termination Date, the Sub-advisor shall be entitled to receive from
the Company (1) all unpaid reimbursements of expenses and all earned but unpaid
fees payable to the Sub-advisor prior to the termination of this Agreement,
payable within 30 days after the effective date of such termination, and (2) to
the extent not already payable pursuant to the preceding clause or to the extent
not already paid, the Sub-advisor’s share of the Subordinated Share of Cash
Flows and/or the Subordinated Incentive Fee, as assignee thereof, payable when
and as provided in Article 8; provided, that the amount of the Sub-advisor’s
share of each

 

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Subordinated Share of Cash Flows and the amount of the Sub-advisor’s share of
the Subordinated Incentive Fee shall be reduced by multiplying such amount by
the Prorated Term Fraction.

 

  (D) After the termination of the Sub-advisory Agreement, to the extent
payments are not provided for by Section 13.3(C) (i.e., if the Sub-advisory
Agreement is terminated independently of the Advisory Agreement), the
Sub-advisor shall be entitled to receive from the Company, within 30 days after
the effective date of such termination, all unpaid reimbursements of expenses
and all earned but unpaid fees payable to the Sub-advisor prior to the
termination of the Sub-advisory Agreement.

 

  (E) Promptly upon the termination of the Sub-advisory Agreement, the
Sub-advisor shall promptly upon such termination:

 

  (1) pay over to the Company all money, if any, collected and held on behalf of
the Company pursuant to the Sub-advisory Agreement after deducting any accrued
compensation and reimbursement for its expenses to which it is then entitled;

 

  (2) 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;

 

  (3) deliver to the Board all assets and documents of the Company then in the
custody of the Sub-advisor; and

 

  (4) cooperate with the Company to provide an orderly transition of advisory or
sub-advisory functions.

Article 14

Assignment

 

14.1 Assignment of Agreement. This Agreement may be assigned by the Advisor to
an Affiliate with the consent of the Conflicts Committee. This Agreement shall
not be assigned by the Company without the consent of the Advisor, except in the
case of an assignment by the Company to a corporation or other organization that
is a successor to all of the assets, rights and obligations of the Company, in
which case such successor organization shall be bound hereunder and by the terms
of said assignment in the same manner as the Company is bound by this Agreement.

 

14.2

Assignment of Payments. The Advisor may assign any rights to receive fees or
other payments under this Agreement without obtaining the approval of the Board

 

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or Conflicts Committee, and the Company shall honor and pay directly the
assignee of such assignment.

Article 15

Indemnification And Limitation Of Liability

 

15.1 Indemnification. Except as prohibited by the restrictions provided in this
Section 15.1, Section 15.2 and Section 15.3, the Company shall indemnify, defend
and hold harmless the Advisor, the Sub-advisor and their Affiliates, as well as
their respective officers, directors, equity holders, members, partners and
employees, from all liability, claims, damages or losses arising in the
performance of their duties hereunder or under any sub-advisory agreement, and
related expenses, including reasonable attorneys’ fees, to the extent such
liability, claims, damages or losses and related expenses are not fully
reimbursed by insurance. Any indemnification of the Advisor or Sub-advisor may
be made only out of the net assets of the Company and not from Stockholders.

Notwithstanding the foregoing, the Company shall not indemnify the Advisor or
Sub-advisor or their Affiliates, as well as their respective officers,
directors, equity holders, members, partners and employees, for any loss,
liability or expense arising from or out of an alleged violation of federal or
state securities laws by such party unless one or more of the following
conditions are met: (i) there has been a successful adjudication on the merits
of each count involving alleged material securities law violations as to the
particular indemnitee; (ii) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to the particular indemnitee;
or (iii) a court of competent jurisdiction approves a settlement of the claims
against a particular indemnitee and finds that indemnification of the settlement
and the related costs should be made, and the court considering the request for
indemnification has been advised of the position of the Securities and Exchange
Commission and of the published position of any state securities regulatory
authority in which securities of the Company were offered or sold as to
indemnification for violations of securities laws.

 

15.2 Limitation on Indemnification. Notwithstanding the foregoing, the Company
shall not provide for indemnification of the Advisor, the Sub-advisor or their
Affiliates or of their respective officers, directors, equity holders, members,
partners and employees, for any liability or loss suffered by any of them, nor
shall any of them be held harmless for any loss or liability suffered by the
Company, unless all of the following conditions are met:

 

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

 

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

 

  (C) Such liability or loss was not the result of negligence or misconduct by
the Advisor, the Sub-advisor or one of their Affiliates (as applicable).

 

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

Article 16

Miscellaneous

 

16.1 Notices. Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the parties hereto (each a “Notice”) shall be in writing and shall be
(a) delivered in person, (b) sent by facsimile transmission (with the original
thereof also contemporaneously given by another method specified in this
Section 16.1), (c) sent by a nationally-recognized overnight courier service, or
(d) sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such party set forth herein.

To the Company or the Board:

Phillips Edison – ARC Shopping Center REIT Inc.

11501 Northlake Drive

Cincinnati, OH 45249

with a copy to (which shall not constitute Notice):

DLA Piper LLP (US)

4141 Parklake Drive , Suite 300

Raleigh, North Carolina 27612

Attention: Robert Bergdolt

Telephone: (919) 786-2002

 

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Facsimile: (919) 786-2202

To the Advisor:

American Realty Capital II Advisors, LLC

405 Park Avenue

New York, New York 10022

Attention: Nicholas S. Schorsch

Jesse Galloway

with a copy to (which shall not constitute Notice):

Proskauer Rose LLP

1585 Broadway

New York, New York 10036

Attention: Peter M. Fass, Esq.

James P. Gerkis, Esq.

Telephone: (212) 969-3000

Facsimile: (212) 969-2900

To the Sub-advisor:

Phillips Edison NTR LLC

11501 Northlake Drive

Cincinnati, OH 45249

with a copy to (which shall not constitute Notice):

DLA Piper LLP (US)

4141 Parklake Drive, Suite 300

Raleigh, North Carolina 27612

Attention: Robert Bergdolt

Telephone: (919) 786-2002

Facsimile: (919) 786-2202

Any party may at any time give Notice in writing to the other party of a change
in its address for the purposes of this Section 16.1. Each Notice shall be
deemed given and effective upon receipt (or refusal or receipt).

 

16.2 Modification. This Agreement shall not be amended, supplemented, changed,
modified, terminated or discharged, in whole or in part, except by an instrument
in writing signed by the Company and the Advisor, or their respective successors
or permitted assigns; provided, however, that no modification that impacts the
rights or obligations of the Sub-advisor may be made without the Sub-advisor’s
consent and signature.

 

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16.3 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.

 

16.4 Construction. 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.

 

16.5 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 and/or usage of the trade
inconsistent with any of the terms hereof. In all events, nothing contained
herein shall be read, construed, interpreted or applied in any manner that
prevents or hinders the Company from qualifying as a real estate investment
trust under Section 856(c) of the Code.

 

16.6 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.

 

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

 

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

 

16.9 Third Party Beneficiary. The Sub-advisor is intended to be a third party
beneficiary of the Company’s payment and indemnification obligations hereunder.
Except as set forth in the immediately preceding sentence and except for those
Persons entitled to indemnification under Article 15 who shall be third party
beneficiaries of this Agreement, no other Person is a third party beneficiary of
this Agreement.

 

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

 

16.11 Restricted Stock. Each of the Company, the Advisor and the Sub-advisor
agrees that no restricted stock awards or grants shall be made by the Company to
any Persons other than to (a) both the Advisor and the Sub-advisor, or (b) the
members of the Conflicts Committee. To the extent that the Company makes
restricted stock awards or grants to the Advisor and the Sub-advisor, the
Company shall issue (and the Advisor and the Sub-advisor shall use reasonable
efforts to cause the Company to issue) 15% of such restricted stock awards or
grants to the Advisor and 85% of such restricted stock awards or grants to the
Sub-advisor. In turn, each of the Advisor and the Sub-advisor may allocate, in
its sole discretion and as it may determine, all or any part of such restricted
stock award or grant so issued to it to its or its Affiliates’ directors,
officers, equityholders, partners, employees, members or to its respective
Affiliates on such terms and conditions as may be determined by it.
Notwithstanding Section 13.2, the provision of this Section 16.11 shall
terminate upon termination of this Agreement in accordance with its terms.

[The remainder of this page is intentionally left blank.

Signature page follows.]

 

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

 

    Phillips Edison – ARC Shopping Center REIT Inc.     By:   /s/    JOHN B.
BESSEY         John B. Bessey, President     American Realty Capital II
Advisors, LLC     By:   /s/    William Kahane         William Kahane, President

With respect to Sections 8.9, 12.2

and 13.3, Articles 9, 14, 15 and 16:

   

Phillips Edison NTR LLC (formerly known as

Phillips Edison & Company SubAdvisor LLC)

    By:   /s/    JOHN B. BESSEY         John B. Bessey, President

 

 

 

[Signature Page to Fourth Amended and Restated Advisory Agreement between
Phillips Edison – ARC Shopping Center REIT Inc. and American Realty Capital II
Advisors, LLC]