Exhibit 10.4

ADVISORY AGREEMENT
This ADVISORY AGREEMENT (this “Agreement”) is entered into on this 17th day of
March, 2014, by and between COLE CREDIT PROPERTY TRUST V, INC., a Maryland
corporation (the “Company”), and COLE REIT ADVISORS V, LLC, a Delaware limited
liability company (the “Advisor”).
W I T N E S S E T H
WHEREAS, the Company intends to issue shares of its common stock, par value
$.01, to the public, upon registration of such shares with the Securities and
Exchange Commission pursuant to the Securities Act;
WHEREAS, the Company intends to qualify as a real estate investment trust and to
invest its funds in investments permitted by the terms of the Company’s Articles
of Amendment and Restatement and Sections 856 through 860 of the Code;
WHEREAS, the Company desires to avail itself of the 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 (the “Board”) 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, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
The following defined terms used in this Agreement shall have the meanings
specified below:
Acquisition Expenses. Any and all expenses incurred by the Company, the Advisor,
or any Affiliate of either in connection with the selection, evaluation,
structuring, acquisition or development of any Asset, whether or not acquired,
including, without limitation, legal fees and expenses, travel and
communications expenses, costs of appraisals, nonrefundable option payments on
property not acquired, accounting fees and expenses, and title insurance
premiums.
Acquisition Fees. The fees payable to the Advisor pursuant to Section 3.01(b) of
this Agreement.
Advisor. Cole REIT Advisors V, LLC, a Delaware limited liability company, any
successor advisor to the Company, or any Person to which Cole REIT Advisors V,
LLC, or any successor advisor subcontracts all or substantially all of its
functions.
Advisory Fee. The fee payable to the Advisor for day-to-day professional
management services in connection with the Company and its investments in Assets
pursuant to this Agreement.
Affiliate or Affiliated . As to any Person, (i) any Person directly or
indirectly owning, controlling, or holding, with the power to vote, 10% or more
of the outstanding voting securities of such Person; (ii) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled, or held, with power to vote, by such other Person; (iii) any Person,
directly or indirectly, controlling, controlled by, or under common control with
such Person; (iv) any executive officer, director, trustee or general partner of
such Person; and (v) any legal entity for which such Person acts as an executive
officer, director, trustee or general partner.
Appraised Value. Value according to an appraisal made by an Independent Expert.
 

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Articles of Incorporation. The Articles of Incorporation of the Company filed
with the Maryland State Department of Assessments and Taxation in accordance
with the Maryland General Corporation Law, as amended from time to time.
Assets. Properties, Mortgages and other direct or indirect investments in equity
interests in, or loans secured by, Real Property (other than investments in bank
accounts, money market funds or other current assets, whether of the proceeds
from an Offering or the sale of an Asset or otherwise) owned by the Company,
directly or indirectly through one or more of its Affiliates.
Average Invested Assets. For a specified period, the average of the aggregate
book value of the Assets, before reserves for depreciation, amortization, bad
debts or other similar non-cash reserves, other than impairment charges,
computed by taking the average of such values at the end of each business day
during such period; provided, however, that after the NAV Pricing Start Date,
“Average Invested Assets” will be based upon the aggregate valuation of the
Assets as reasonably determined by the Board.
Board. The Board of Directors of the Company.
Bylaws. The bylaws of the Company, as the same are in effect as amended from
time to time.
Change of Control. Any event (including, without limitation, issue, transfer or
other disposition of Shares of capital stock of the Company or equity interests
in the Partnership, merger, share exchange or consolidation) after which any
“person” (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) is or becomes the “beneficial owner” (as
defined in Rule 13d-j of the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities of the Company or the Partnership
representing greater than 50% or more of the combined voting power of the
Company’s or the Partnership’s then outstanding securities, respectively;
provided, that, a Change of Control shall not be deemed to occur as a result of
any widely distributed public offering of the Shares.
Code. 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. Cole Credit Property Trust V, Inc., a corporation organized under the
laws of the State of Maryland.
Competitive Real Estate Commission. A real estate or brokerage commission paid
or, if no such commission is paid, the amount that customarily would be paid,
for the purchase or sale of a Property which is reasonable, customary, and
competitive in light of the size, type and location of the Property.
Construction Fee. 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 rehabilitations on a Property.
Contract Purchase Price. The amount actually paid or allocated in respect of the
purchase, development, construction or improvement of an Asset, or the amount of
funds advanced with respect to a Mortgage, exclusive of Acquisition Fees and
Acquisition Expenses.
Contract Sales Price. The total consideration provided for in the sales contract
for the sale of a Property.
Dealer Manager. Cole Capital Corporation, an Affiliate of the Advisor, or such
Person selected by the Board to act as the dealer manager for an Offering.
Director. A member of the Board of Directors.
Disposition Fees. The fees payable to the Advisor pursuant to Section 3.01(d) of
this Agreement.
Distributions. Any dividends or other 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.

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Gross Proceeds. The aggregate purchase price of all Shares sold for the account
of the Company through an Offering, without deduction for Selling Commissions,
volume discounts, any marketing support and due diligence expense
reimbursements, dealer manager fees, or Organization and Offering Expenses. For
the purpose of computing Gross Proceeds, the purchase price of any Share for
which reduced Selling Commissions or dealer manager fees are paid to the Dealer
Manager or a Soliciting Dealer (where net proceeds to the Company are not
reduced) shall be deemed to be the full amount of the Offering price per Share
pursuant to the Prospectus for such Offering without reduction.
 
Independent Director. A Director who is not, and within the last two years has
not been, directly or indirectly associated with the Sponsor or the Advisor by
virtue of (i) ownership of an interest in the Sponsor, the Advisor or any of
their Affiliates, (ii) employment by the Sponsor, the Advisor or any of their
Affiliates, (iii) service as an officer or director of the Sponsor, the Advisor
or any of their Affiliates, (iv) performance of services, other than as a
Director, for the Company, (v) service as a director or trustee of more than
three real estate investment trusts organized by the Sponsor or advised by the
Advisor or (vi) maintenance of a material business or professional relationship
with the Sponsor, the Advisor or any of their Affiliates. A business or
professional relationship is considered “material” per se if the gross revenue
derived by the prospective Independent Director from the Sponsor, the Advisor
and their Affiliates exceeds 5.0% of either (x) the prospective Independent
Director’s annual gross revenue, derived from all sources, during either of the
last two years, or (y) the prospective Independent Director’s net worth on a
fair market value basis. An indirect relationship with the Sponsor or the
Advisor shall include circumstances in which a Director’s spouse, parent, child,
sibling, mother- or father-in-law, son- or daughter-in-law, or brother- or
sister-in-law is or has been associated with the Sponsor, the Advisor, any of
their Affiliates or the Company.
Independent Expert. 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.
Insourced Acquisition Expenses. Acquisition Expenses incurred in connection with
services performed by the Advisor or any of its Affiliates, including legal
advisory expenses, due diligence expenses, personnel expenses,
acquisition-related administrative and advisory expenses, survey, property,
contract review expenses, travel and communications expenses and other closing
costs.
Invested Capital. The amount calculated by multiplying the total number of
Shares purchased by Stockholders by the issue price at the time of such
purchase, reduced by the portion of any Distribution that is attributable to Net
Sales Proceeds and by any amounts paid by the Company to repurchase Shares
pursuant to the Company’s plan for repurchase of Shares.
Joint Ventures. The joint venture or partnership arrangements in which the
Company or the Partnership is a co-venturer or general partner which are
established to acquire or hold Assets.
Listing or Listed. The approval of the Company’s application to list the Shares
by a national securities exchange and the commencement of trading in the Shares
on the respective national securities exchange. Upon such Listing, the Shares
shall be deemed Listed.
Market Check. An analysis comparing (A) the amount of Insourced Acquisition
Expenses paid in the previous calendar year to the Advisor or any of its
Affiliates with (B) the projected amount of Acquisition Expenses for the
following calendar year assuming that a Person other than the Advisor or its
Affiliates performs substantially similar services for a substantially similar
amount of Assets.
Market Value. Upon Listing, the market value of the outstanding Shares, measured
by taking the average closing price for a single Share over a period of 30
consecutive trading days, with such period beginning 180 days after Listing,
multiplying that number by the number of Shares outstanding on the date of
measurement.
Mortgages. In connection with mortgage financing provided, invested in or
purchased by the Company, all of the notes, deeds of trust, security interests
or other evidences of indebtedness or obligations, which are secured or
collateralized by Real Property owned by the borrowers under such notes, deeds
of trust, security interests or other evidences of indebtedness or obligations.

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NASAA Guidelines. The Statement of Policy Regarding Real Estate Investment
Trusts published by the North American Securities Administrators Association,
Inc. on May 7, 2007, and in effect on the date hereof.
NAV. The Company’s net asset value, calculated pursuant to the Valuation
Guidelines.
NAV Pricing Start Date. The first date on which the Company calculates NAV.
Net Income. For any period, the Company’s total revenues applicable to such
period, less the total expenses applicable to such period other than additions
to reserves for depreciation, bad debts or other similar non-cash reserves and
excluding any gain from the sale of the Assets. If the Advisor is paid a
Subordinated Performance Fee in connection with a Listing, “Net Income” for
purposes of calculating total Operating Expenses, shall exclude the gain from
the Sale of any Assets.
Net Sales Proceeds. In the case of a transaction described in clause (A) of the
definition of Sale, the proceeds of any such transaction less the amount of
selling expenses incurred by or on behalf of the Company, including all real
estate commissions, closing costs and legal fees and expenses. In the case of a
transaction described in clause (B) of such definition, Net Sales Proceeds means
the proceeds of any such transaction less the amount of selling expenses
incurred by or on behalf of the Company, including any legal fees and expenses
and other selling expenses incurred in connection with such transaction. In the
case of a transaction described in clause (C) of such definition, Net Sales
Proceeds means the proceeds of any such transaction actually distributed to the
Company from the Joint Venture less the amount of any selling expenses,
including legal fees and expenses incurred by or on behalf of the Company (other
than those paid by the Joint Venture). In the case of a transaction or series of
transactions described in clause (D) of the definition of Sale, Net Sales
Proceeds means the proceeds of any such transaction (including the aggregate of
all payments under a Mortgage or in satisfaction thereof other than regularly
scheduled interest payments) less the amount of selling expenses incurred by or
on behalf of the Company, including all commissions, closing costs and legal
fees and expenses. In the case of a transaction described in clause (E) of such
definition, Net Sales Proceeds means the proceeds of any such transaction less
the amount of selling expenses incurred by or on behalf of the Company,
including any legal fees and expenses and other selling expenses incurred in
connection with such transaction. In the case of a transaction described in the
last sentence of the definition of Sale, Net Sales Proceeds means the proceeds
of such transaction or series of transactions less all amounts generated thereby
which are reinvested in one or more Assets within 180 days thereafter and less
the amount of any real estate commissions, closing costs, and legal fees and
expenses and other selling expenses incurred by or allocated to the Company in
connection with such transaction or series of transactions. Net Sales Proceeds
shall also include any consideration (including non-cash consideration such as
stock, notes, or other property or securities) that the Company determines, in
its discretion, to be economically equivalent to proceeds of a Sale, valued in
the reasonable determination of the Company. Net Sales Proceeds shall not
include any reserves established by the Company in its sole discretion.
Offering. Any public offering and sale of Shares pursuant to an effective
registration statement filed under the Securities Act, other than Shares offered
under any employee benefit plan.
Operating Expenses. All costs and expenses paid or incurred by the Company, as
determined under generally accepted accounting principles, which are in any way
related to the operation of the Company or to Company business, including the
Advisory Fee, 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 tax 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 and
bad debt reserves, (v) the Subordinated Performance Fee, (vi) Acquisition Fees
and Acquisition Expenses, (vii) real estate commissions on the Sale of Property,
and (viii) other fees and expenses connected with the acquisition, disposition,
management and ownership of real estate interests, mortgage loans or other
property (including the costs of foreclosure, insurance premiums, legal
services, maintenance, repair and improvement of property).
Organization and Offering Expenses. Any and all costs and expenses incurred by
and to be paid from the Assets in connection with the formation of the Company
and the qualification and registration of an Offering, and the marketing and
distribution of Shares, including, without limitation, total underwriting and
brokerage discounts and commissions (including fees of the underwriters’
attorneys), expenses for printing, engraving and amending registration
statements or supplementing prospectuses, mailing and distributing costs,
salaries of employees while engaged in sales activity, telephone and other
telecommunications costs, all advertising and marketing expenses (including the
costs related to investor and broker-dealer sales meetings), charges of transfer
agents, registrars, trustees, escrow holders, depositories and experts and fees,
expenses and taxes related to the filing, registration and qualification of the
sale of the Shares under federal and state laws, including taxes and fees and
accountants’ and attorneys’ fees.

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Partnership. Cole Operating Partnership V, LP, a Delaware limited partnership,
through which the Company may own Assets.
Person. An individual, corporation, business trust, estate, trust, partnership,
limited liability company or other legal entity.
Property or Properties. As the context requires, any, or all, respectively, of
the Real Property acquired by the Company, either directly or indirectly
(whether through joint venture arrangements or other partnership or investment
interests).
Prospectus. Prospectus has the meaning set forth in Section 2(10) of the
Securities Act, including a preliminary prospectus, an offering circular as
described in Rule 253 of the General Rules and Regulations under the Securities
Act or, in the case of an intrastate offering, any document by whatever name
known, utilized for the purpose of offering and selling securities of the
Company to the public.
Real Property. Land, rights in land (including leasehold interests), and any
buildings, structures, improvements, furnishings, fixtures and equipment located
on or used in connection with land and rights or interests in land.
REIT. A corporation, trust, association or other legal entity (other than a real
estate syndication) that is engaged primarily in investing in equity interests
in real estate (including fee ownership and leasehold interests) or in loans
secured by real estate or both in accordance with Sections 856 through 860 of
the Code.
Sale or Sales. Any transaction or series of transactions whereby: (A) the
Company or the Partnership directly or indirectly (except as described in other
subsections of this definition) sells, grants, transfers, conveys, or
relinquishes its ownership of any Property or portion thereof, including the
lease of any Property consisting of a building only, and including any event
with respect to any Property which gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) the Company or the Partnership
directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its ownership of
all or substantially all of the interest of the Company or the Partnership in
any Joint Venture in which it is a co-venturer or partner; (C) any Joint Venture
directly or indirectly (except as described in other subsections of this
definition) in which the Company or the Partnership as a co-venturer or partner
sells, grants, transfers, conveys, or relinquishes its ownership of any Property
or portion thereof, including any event with respect to any Property which gives
rise to insurance claims or condemnation awards; (D) the Company or the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, conveys or relinquishes its interest in any
Mortgage or portion thereof (including with respect to any Mortgage, all
repayments thereunder or in satisfaction thereof other than regularly scheduled
interest payments) and any event with respect to a Mortgage which gives rise to
a significant amount of insurance proceeds or similar awards; or (E) the Company
or the Partnership directly or indirectly (except as described in other
subsections of this definition) sells, grants, transfers, conveys, or
relinquishes its ownership of any other Asset not previously described in this
definition or any portion thereof. Notwithstanding the foregoing, “Sale” or
“Sales” shall not include any transaction or series of transactions specified in
clause (A) through (E) above in which the proceeds of such transaction or series
of transactions are reinvested in one or more Assets within 180 days thereafter.
Securities Act. The Securities Act of 1933, as amended from time to time, or any
successor statute thereto. Reference to any provision of the Securities Act
shall mean such provision as in effect from time to time, as the same may be
amended, and any successor provision thereto, as interpreted by any applicable
regulations as in effect from time to time.
Selling Commissions. Any and all commissions payable to underwriters, dealer
managers or other broker-dealers in connection with the sale of the Shares,
including, without limitation, commissions payable to the Dealer Manager.
Shares. Any Shares of the Company’s common stock, par value $.01 per share.

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Soliciting Dealers. Broker-dealers who are members of the Financial Industry
Regulatory Authority, Inc., or that are exempt from broker-dealer registration,
and who, in either case, have executed participating broker or other agreements
with the Dealer Manager to sell Shares.
Sponsor. Cole Capital Advisors, Inc.
Stockholders. The record holders of the Shares as maintained in the books and
records of the Company or its transfer agent.
Stockholders’ 6.0% Return. As of any date, an aggregate amount equal to a 6.0%
cumulative, noncompounded, annual return on Invested Capital.
Subordinated Performance Fee. The fee payable to the Advisor under certain
circumstances as described in Section 3.01(c).
Termination Date. The date of termination of this Agreement.
Valuation Guidelines. The Valuation guidelines adopted by the Board, as my be
amended from time to time.
2%/25% Guidelines. The requirement pursuant to the NASAA Guidelines that, in any
four consecutive fiscal quarters, total Operating Expenses not exceed the
greater of 2% of Average Invested Assets during such period or 25% of Net Income
over the same period.
ARTICLE II
THE ADVISOR
2.01 Appointment. The Company hereby appoints the Advisor to serve as its
advisor on the terms and conditions set forth in this Agreement, and the Advisor
hereby accepts such appointment. By accepting such appointment, the Advisor
acknowledges that it has contractual and fiduciary responsibility to the Company
and the Stockholders.
2.02 Duties of the Advisor. Subject to Section 2.07, the Advisor undertakes to
use its commercially reasonable best efforts to present to the Company potential
investment opportunities consistent with the investment objectives and policies
of the Company as determined and adopted from time to time by the Board. In
performance of this undertaking, subject to the supervision of the Board and
consistent with the provisions of the Company’s most recent Prospectus for
Shares, Articles of Incorporation and Bylaws, the Advisor shall, either directly
or by engaging a duly qualified and licensed Affiliate of the Advisor or other
duly qualified and licensed Person:

 
(a)
serve as the Company’s investment and financial advisor and provide research and
economic and statistical data in connection with the Assets and the Company’s
investment policies;

 
 
(b)
provide the daily management of the Company and perform and supervise the
various administrative functions reasonably necessary for the management and
operations of the Company;

 
 
(c)
provide oversight and management of all third party and affiliated property
management and leasing functions;

 
 
(d)
maintain and preserve the books and records of the Company, including stock
books and records reflecting a record of the Stockholders and their ownership of
the Company’s Shares;

 
 
(e)
investigate, select, and, on behalf of the Company, engage and conduct business
with such Persons as the Advisor deems necessary to the proper performance of
its obligations hereunder, including but not limited to consultants,
accountants, correspondents, lenders, technical advisors, attorneys, brokers,
underwriters, corporate fiduciaries, escrow agents, depositaries, custodians,
agents for collection, insurers, insurance agents, banks, builders, developers,
property owners, mortgagors, property management companies, transfer agents and
any and all agents for any of the foregoing, including Affiliates of the
Advisor, and Persons acting in any other capacity deemed by the Advisor
necessary or desirable for the performance of any of the foregoing services,
including but not limited to entering into contracts in the name of the Company
with any of the foregoing;

 

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(f)
consult with, and provide information to, the 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;

 
 
(g)
subject to the provisions of Sections 2.02(j) and 2.03 hereof, (i) locate,
analyze and select potential investments in Assets, (ii) structure and negotiate
the terms and conditions of transactions pursuant to which investment in Assets
will be made; (iii) make investments in Assets on behalf of the Company or the
Partnership in compliance with the investment objectives and policies of the
Company; (iv) arrange, structure and negotiate financing and refinancing and
make other changes in the asset or capital structure of, and dispose of,
reinvest the proceeds from the sale of, or otherwise deal with the investments
in, Assets; (v) enter into leases of Property and service contracts for Assets;
and (vi) review and analyze each Property’s operating and capital budget; and,
to the extent necessary, perform all other operational functions for the
maintenance and administration of such Assets, including the servicing of
Mortgages;

 
 
(h)
provide the Board with periodic reports regarding prospective investments in
Assets;

 
 
(i)
if a transaction requires approval by the Board, deliver to the Board all
documents required by them to properly evaluate the proposed transaction;

 
 
(j)
obtain the prior approval of a majority of the Independent Directors and a
majority of the Board not otherwise interested in any transaction with the
Advisor or its Affiliates;

 
 
(k)
negotiate on behalf of the Company with banks or lenders for loans to be made to
the Company, negotiate on behalf of the Company with investment banking firms
and broker-dealers, and negotiate private sales of Shares and other securities
of the Company or obtain loans for the Company, as and when appropriate, but in
no event in such a way so that the Advisor shall be acting as broker-dealer or
underwriter; and provided, further, 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;

 
 
(l)
obtain reports (which may be prepared by or for the Advisor or its Affiliates),
where appropriate, concerning the value of investments or contemplated
investments of the Company in Assets;

 
 
(m)
from time to time, or at any time reasonably requested by the Board, make
reports to the Board of its performance of services to the Company under this
Agreement;

 
 
(n)
provide the Company with, or assist the Company in arranging for, all necessary
cash management services;

 
 
(o)
deliver to or maintain on behalf of the Company copies of all appraisals
obtained in connection with the investments in Assets;

 
 
(p)
upon request of the Company, act, or obtain the services of others to act, as
attorney-in-fact or agent of the Company in making, requiring and disposing of
Assets, disbursing, and collecting the funds, paying the debts and fulfilling
the obligations of the Company and handling, prosecuting and settling any claims
of the Company, including foreclosing and otherwise enforcing mortgage and other
liens and security interests comprising any of the Assets;

 
 
(q)
arrange for the disposal of Properties on the Company’s behalf in compliance
with the Company’s investment objectives and policies as stated in the Company’s
most recent Prospectus for Shares and advise the Board in connection with
liquidity opportunities;

 
 
(r)
supervise the preparation and filing and distribution of returns and reports to
governmental agencies and to Stockholders and other investors and act on behalf
of the Company in connection with investor relations;

 

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(s)
oversee recruitment and hiring of personnel who will have direct responsibility
for the operations of each property we acquire, which may include, but is not
limited to, on-site managers and building and maintenance personnel, and direct
and establish policies for such personnel;

 
 
(t)
provide office space, equipment and supplies as required for the performance of
the foregoing services as Advisor;

 
 
(u)
assist the Company in preparing all reports and returns required by the
Securities and Exchange Commission, Internal Revenue Service and other state or
federal governmental agencies;

 
 
(v)
at the end of each quarter, calculate the NAV as provided in the prospectus, and
in connection therewith, obtain appraisals performed by the Independent Expert;

 
 
(w)
advise the Board on the timing and method of providing liquidity opportunities
to Stockholders; and

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

2.03 Authority of Advisor. Pursuant to the terms of this Agreement, including
the duties set forth in Section 2.02 and the restrictions included in this
Section 2.03 and in Section 2.06, and subject to the continuing and exclusive
authority of the Board over the management of the Company, the Board hereby
delegates to the Advisor the authority to (i) find and evaluate investment
opportunities for the Company and the Partnership consistent with the Company’s
investment objectives, (ii) structure the terms and conditions of transactions
pursuant to which investments will be made or acquired for the Company or the
Partnership, (iii) acquire Properties, make and acquire Mortgages and other
loans and invest in other Assets in compliance with the investment objectives
and policies of the Company, (iv) arrange for financing and refinancing of
Assets, (v) enter into leases for the Properties and service contracts for the
Assets with duly qualified and licensed non-affiliated and Affiliated Persons,
including oversight of non-affiliated and Affiliated Persons that perform
property management, acquisition, advisory, disposition or other services for
the Company, and (vi) arrange for, or provide, accounting and other
record-keeping functions at the Asset level.
The Board may, at any time upon the giving of notice to the Advisor, modify or
revoke the authority set forth in this Section 2.03, provided however, that such
modification or revocation shall be effective upon receipt by the Advisor or
such later date as is specified by the Board and included in the notice provided
to the Company and such modification or revocation 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, or, if later, the
effective date of such modification or revocation specified by the Board.
2.04 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 of the Company or the Partnership shall be
commingled with the funds of the Advisor; and the Advisor shall from time to
time, upon request by the Board, its Audit Committee or the auditors of the
Company, render appropriate accountings of such collections and payments to the
Board, its Audit Committee and the auditors of the Company.
2.05 Records; Access. The Advisor shall maintain appropriate records of all its
activities hereunder and make such records available for inspection by the Board
and by counsel, auditors and authorized agents of the Company, at any time or
from time to time, upon reasonable request, during normal business hours. The
Advisor shall at all reasonable times have access to the books and records of
the Company.
 
2.06 Limitations on Activities . Anything else in this Agreement to the contrary
notwithstanding, the Advisor shall refrain from taking any action which, in its
sole judgment made in good faith, would (a) adversely affect the status of the
Company as a REIT, (b) subject the Company to regulation under the Investment
Company Act of 1940, as amended, (c) violate any law, rule, regulation or
statement of policy of any governmental body or agency having jurisdiction over
the Company, the Shares or its other securities, or (d) not be permitted by the
Articles of Incorporation or Bylaws, except if such action shall be ordered by
the Board, in which case the Advisor shall notify promptly the Board of the
Advisor’s judgment of the potential impact of such action and shall refrain from
taking such action until it receives further clarification or instructions from
the Board. In such event the Advisor shall have no liability for acting in
accordance with the specific instructions of the Board so given. Notwithstanding
the foregoing, the Advisor, its directors, officers, employees and stockholders,
and the directors, officers, employees and stockholders of the Advisor’s
Affiliates shall not be liable to the Company or to the Board or Stockholders
for

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any act or omission by the Advisor, its directors, officers, employees or
stockholders, or for any act or omission of any Affiliate of the Advisor, its
directors, officers, employees or stockholders, except as provided in
Section 5.02 of this Agreement.
2.07 Other Activities of the Advisor . Nothing herein contained shall prevent
the Advisor or its Affiliates from engaging in 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 its Affiliates; nor shall this Agreement limit or restrict the
right of any director, officer, employee, or stockholder of the Advisor or its
Affiliates to engage in 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. The Advisor shall report to the Board the existence of any
condition or circumstance, existing or anticipated, of which it has knowledge,
which creates or could create a conflict of interest between the Advisor’s
obligations to the Company and its obligations to or its interest in any other
Person. The Advisor or its Affiliates shall promptly disclose to the Board
knowledge of such condition or circumstance. If the Sponsor, Advisor, any
Director or Affiliates thereof have sponsored other investment programs with
similar investment objectives which have investment funds available at the same
time as the Company, it shall be the duty of the Board (including the
Independent Directors) to adopt the method set forth in the Company’s most
recent Prospectus for its Shares or another reasonable method by which
investments are to be allocated to the competing investment entities and to use
their best efforts to apply such method fairly to the Company.
ARTICLE III
COMPENSATION
3.01 Fees.
 
 
(a)
Advisory Fee . On the last day of each month, the Company shall pay to the
Advisor a monthly Advisory Fee based upon the monthly Average Invested Assets.
The Advisory Fee shall be calculated according to the following schedule:

 
 
 
 
 
Average Invested Assets
 
Annualized
Fee Rate
$0 - $2 billion
  
0.75
% 
Over $2 billion - $4 billion
  
0.70
% 
Over $4 billion
  
0.65
% 

The Advisory Fee shall be applied according to the above schedule for each level
of monthly Average Invested Assets, resulting in a blended annualized rate for
fees paid in respect of Average Invested Assets in excess of $2 billion. For
example, the annualized rate for fees paid in respect of Average Invested Assets
of $5 billion is 0.71%. Any portion of the Advisory Fee may be deferred and paid
in a subsequent period upon the mutual agreement of the parties hereto.
 
 
(b)
Acquisition Fees . The Company shall pay the Advisor, or an Affiliate of the
Advisor, a fee in the amount of 2.0% of the Contract Purchase Price of each
Asset as Acquisition Fees. The total of all Acquisition Fees and any Acquisition
Expenses shall be limited in accordance with the Articles of Incorporation,
shall be reasonable and shall not exceed an amount equal to 6.0% of the
aggregate Contract Purchase Price paid for the total portfolio of Assets.
Acquisition Fees shall be paid as follows: (1) for real property (including
properties where development/redevelopment is expected), at the time of
acquisition, (2) for development/redevelopment projects (other than the initial
acquisition of the real property), at the time a final budget is approved, and
(3) for loans and similar assets (including without limitation mezzanine loans),
quarterly based on the value of loans made or acquired. In the case of a
development/redevelopment project subject to clause (2) above, upon completion
of the development/redevelopment project, the Advisor shall determine the actual
amounts paid. To the extent the amounts actually paid vary from the budgeted
amounts on which the Acquisition Fee was initially based, the Advisor will pay
or invoice the Company for 2.0% of the budget variance such that the Acquisition
Fee is ultimately 2.0% of amounts expended on such development/redevelopment
project. Any portion of the Acquisition Fee may be deferred and paid in a
subsequent period upon the mutual agreement of the parties hereto.
  
 

 

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(c)
Subordinated Performance Fee . The Company shall pay the Advisor a Subordinated
Performance Fee in connection with any one of the following events: (1) Upon
Listing, the Advisor shall be entitled to the Subordinated Performance Fee in an
amount equal to 15.0% of the amount by which (i) the Market Value of the
Company’s outstanding Shares plus distributions paid by the Company prior to
Listing, exceeds (ii) the sum of (A) 100% of Invested Capital and (B) the total
Distributions required to be paid to the Stockholders in order to pay the
Stockholders’ 6.0% Return from inception through the date that Market Value is
determined. The Company shall have the option to pay such fee in the form of
cash, Shares, a non-interest bearing promissory note, or any combination of the
foregoing. If the Company pays such fee with a non-interest bearing promissory
note, payment in full shall be made from the Net Sales Proceeds of the first
Sale completed by the Company after Listing. If the Net Sales Proceeds from the
first Sale after Listing are insufficient to pay the promissory note in full,
then the promissory note shall be paid in part with such Net Sales Proceeds, and
in part from the Net Sales Proceeds from the next successive Sales until the
amount owing pursuant to such promissory note is paid in full. If the promissory
note has not been paid in full within five years from the date of Listing, then
the Advisor, or its successors or assigns, may elect to convert the unpaid
balance into Shares at a price per Share equal to the average closing price of
the Shares over the ten trading days immediately preceding the date of such
election. If the Shares are no longer Listed at such time as the promissory note
becomes convertible into Shares as provided in the immediately preceding
sentence, then the price per Share, for purposes of conversion, shall be
determined pursuant to the last sentence of this Section 3.01(c). (2) Upon a
Sale, the Advisor shall be entitled to the Subordinated Performance Fee in an
amount equal to 15.0% of Net Sale Proceeds remaining after the Stockholders have
received Distributions equal to the sum of the Stockholders’ 6.0% Return and
100% of Invested Capital. The Company shall have the option to pay such fee in
the form of cash, Shares, a non-interest bearing promissory note, or any
combination of the foregoing. (3) Upon termination, unless such termination is
by the Company because of a material breach of this Agreement by the Advisor or
occurs upon a Change of Control, the Advisor shall be entitled to receive a
payment of the Subordinated Performance Fee equal to 15.0% of the amount, if
any, by which (i) (A) prior to the NAV Pricing Start Date, the Appraised Value
of the Assets, valued on a portfolio basis, on the Termination Date, less the
amount of all indebtedness secured by the Assets, or (B) after the NAV Pricing
Start Date, the most recent NAV on the Termination Date plus, in either case,
the total Distributions paid to Stockholders from the Company’s inception
through the Termination Date, exceeds (ii) Invested Capital plus an amount equal
to the Stockholders’ 6.0% Return from inception through the Termination Date.
The Company shall pay such Subordinated Performance Fee at such time as the
Company completes the first Sale after the Termination Date. Payment shall be
made from the Net Sales Proceeds of such Sale. The Company shall have the option
to pay such fee in the form of cash, Shares, a non-interest bearing promissory
note, or any combination of the foregoing. If the Net Sales Proceeds from the
first Sale after the Termination Date are insufficient to pay the Subordinated
Performance Fee in full, then the Subordinated Performance Fee shall be paid in
part with such Net Sales Proceeds, and in part from the Net Sales Proceeds from
the next successive Sales until the Subordinated Performance Fee is paid in
full. If the Subordinated Performance Fee has not been paid in full within five
years from the Termination Date, then the Advisor, its successors or assigns,
may elect to convert the balance of the fee into Shares at a price per Share
equal to the average closing price of the Shares over the ten trading days
immediately preceding the date of such election if the Shares are Listed at such
time. If the Shares are not Listed at such time, the Advisor, its successors or
assigns, may elect to convert the balance of the fee into Shares at a price per
Share that shall be determined pursuant to the last sentence of this Section
3.01(c). Notwithstanding the foregoing, if termination occurs upon a Change of
Control, the Advisor shall be entitled to payment of the Subordinated
Performance Fee equal to 15.0% of the amount, if any, by which (i) the value of
the Assets on the Termination Date as determined in good faith by the Board,
including a majority of the Independent Directors, based upon such factors as
the consideration paid in connection with the Change of Control and the most
recent (A) prior to the NAV Pricing Start Date, Appraised Value of the Assets,
valued on a portfolio basis, less the amount of all indebtedness secured by the
Assets, or (B) after the NAV Pricing Start Date, NAV, plus, in either case, the
total Distributions paid to Stockholders from the Company’s inception through
the Termination Date, exceeds (ii) Invested Capital plus an amount equal to the
Stockholders’ 6.0% Return from inception through the Termination Date. No
deferral of payment of the Subordinated Performance Fee may be made under this
paragraph of this Section 3.01(c). In the event that the Advisor disagrees with
the valuation of Shares pursuant to the immediately preceding three sentences
where the Shares are not Listed for purposes of determining the number of Shares
to be issued to the Advisor following the Advisor’s election to convert the
balance of the Subordinated Performance Fee owed to the Advisor, then the fair
market value of such Shares shall be determined by an Independent Expert of
equity value selected by the Advisor. For the purposes of the payment of the
Subordinated Performance Fee in Shares pursuant to this Section 3.01(c), (i)
prior to the NAV Pricing Start Date, each Share shall be valued at the per share
offering price of the Shares in such Offering minus the maximum Selling
Commissions and dealer manager fee allowed in such Offering, and (ii) after the
NAV Pricing Start Date, each Share shall be valued at the then-current NAV per
Share; provided, however that the determination of the value of each Share shall
be subject to any regulatory requirements that may be applicable to such
determination.

 

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(d)
Disposition Fee . If the Advisor or an Affiliate of the Advisor provides a
substantial amount of the services (as determined by a majority of the
Independent Directors) in connection with the Sale of one or more Properties,
the Advisor or such Affiliate shall receive a Disposition Fee equal to up to
one-half of the real estate commission paid on the Sale of the Property, not to
exceed 1% of the Contract Sales Price of each Property sold; provided, however,
in no event may the Disposition Fee paid to the Advisor or an Affiliate of the
Advisor, when added to the real estate commissions paid to non-Affiliates,
exceed the lesser of (i) the Competitive Real Estate Commission or (ii) 6.0% of
the Contract Sales Price of a Property

 
 
(e)
Limitation on Insourced Acquisition Expenses.

(i) The total of all Insourced Acquisition Expenses with respect to any Asset
shall initially be fixed at, and shall not exceed, 0.50% of the Contract
Purchase Price of the Property or other Asset or 0.50% of the amount advanced
with respect to a Mortgage, which the Company shall pay to the Advisor or its
Affiliate as follows: (1) for real property (including properties where
development/redevelopment is expected), at the time of acquisition, (2) for
development/redevelopment projects (other than the initial acquisition of the
real property), at the time a final budget is approved, and (3) for loans and
similar assets (including without limitation mezzanine loans), quarterly based
on the value of loans made or acquired. For the avoidance of doubt, no payment
in respect of Insourced Acquisition Expenses shall be made unless the Advisor or
its Affiliates shall have performed services related to selecting, evaluating
and acquiring an Asset, regardless of whether such Asset is ultimately acquired.
(ii) The total of all Insourced Acquisition Expenses for any calendar year shall
initially be fixed at, and shall not exceed, 0.50% of the aggregate Contract
Purchase Price paid for the total portfolio of Properties or other Assets
acquired during such period or 0.50% of the aggregate amounts advanced with
respect to Mortgages during such period (to be prorated for any partial calendar
year); provided, however, within a reasonable period of time following the end
of each such calendar year, the Company shall perform a Market Check and provide
the results thereof to the Advisor within a reasonable period of time and, if
the result of the Market Check is that the projected amount of Acquisition
Expenses that would be incurred if substantially similar services with respect
to a substantially similar amount of Assets were to be provided by a Person
other than the Advisor or any of its Affiliates during the subsequent calendar
year is lower than the amount of Insourced Acquisition Expenses paid to the
Advisor or its Affiliates during the previous calendar year, either (A) the
Advisor shall agree to reduce the cap on the Insourced Acquisition Expenses
until the next Market Check such that the cap on Insourced Acquisition Expenses
does not exceed the projected amount of Acquisition Expenses that would be
incurred if substantially similar services with respect to a substantially
similar amount of Assets were to be provided by a Person other than the Advisor
or any of its Affiliates during the subsequent calendar year or (B) the Company
may outsource to a Person other than the Advisor or its Affiliate certain
services previously provided by the Advisor or its Affiliates until the next
Market Check.
3.02 Expenses.
 
 
(a)
In addition to the compensation paid to the Advisor pursuant to Section 3.01
hereof, the Company shall pay directly or reimburse the Advisor, as applicable,
for all of the expenses paid or incurred by the Advisor in connection with the
services it provides to the Company pursuant to this Agreement, including, but
not limited to:

(i) Organization and Offering Expenses; provided, however, that within 60 days
after the end of the month in which an Offering terminates, the Advisor shall
reimburse the Company for any Organization and Offering Expenses reimbursed by
the Company to the Advisor to the extent that such reimbursements exceed 2.0% of
the Gross Proceeds raised in the completed Offering. The Advisor shall be
responsible for the payment of Organization and Offering Expenses in excess of
2.0% of the Gross Proceeds;
(ii) Acquisition Expenses (excluding Insourced Acquisition Expenses) incurred in
connection with the selection and acquisition of Assets in an amount estimated
to be up to 0.5% of the Contract Purchase Price and Insourced Acquisition
Expenses, subject to the limitations set forth in Section 3.01(e) of this
Agreement;
(iii) the actual cost of goods, services and materials used by the Company and
obtained from Persons not affiliated with the Advisor, other than Acquisition
Expenses, including property management and leasing services;

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(iv) interest and other costs for borrowed money, including discounts, points
and other similar fees;
(v) taxes and assessments on income or property and taxes as an expense of doing
business;
(vi) costs associated with insurance required in connection with the business of
the Company or by the Board;
(vii) expenses of managing and operating Assets owned by the Company, whether
payable to an Affiliate of the Company, including wages and salaries and other
personnel-related expenses, unless otherwise waived, in whole or in part, by the
Affiliate in its sole discretion, of all on-site and off-site employees of the
Affiliate who are engaged in the operation, management, maintenance and leasing
or access control of the Asset, or to a non-affiliated Person;
(viii) all expenses in connection with payments to the Board for attendance at
meetings of the Board and Stockholders;
(ix) expenses associated with Listing or with the issuance and distribution of
Shares and other securities of the Company, such as Selling Commissions and
fees, advertising expenses, taxes, legal and accounting fees, and Listing and
registration fees;
(x) expenses connected with payments of Distributions in cash or otherwise made
or caused to be made by the Company to the Stockholders;
(xi) expenses of organizing, reorganizing, liquidating or dissolving the Company
or amending the Articles of Incorporation or the Bylaws;
(xii) expenses of any third party transfer agent for the Shares and of
maintaining communications with Stockholders, including the cost of preparation,
printing, and mailing annual reports and other Stockholder reports, proxy
statements and other reports required by governmental entities;
(xiii) administrative service expenses, including all costs and expenses
incurred by Advisor in fulfilling its duties hereunder. Such costs and expenses
may include reasonable wages and salaries and other personnel-related expenses
of all employees of Advisor or its Affiliates who are engage in the management,
administration, operations, and marketing of the Company and its Assets,
including taxes, insurance and benefits relating to such employees, and legal,
travel and other out-of-pocket expenses which are directly related to their
services provided hereunder, provided, however that the Company shall not
reimburse the Advisor for salaries and benefits paid to persons who are
executive officers of the Company, nor shall the Company pay personnel costs in
connection with services for which the Advisor receives an Acquisition Fee or
Disposition Fee; and
(xiv) audit, accounting and legal fees, and other fees and expenses associated
with regulatory compliance.
 
 
(b)
Expenses incurred by the Advisor on behalf of the Company and payable pursuant
to this Section 3.02 shall be reimbursed (excluding Insourced Acquisition
Expenses which shall be paid as described in Section 3.01(e)(i) of this
Agreement) no less than quarterly to the Advisor within 60 days after the end of
each quarter. 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.

3.03 Other Services. Should the Board request that the Advisor or any director,
officer or employee thereof render services for the Company other than set forth
in Section 2.02, or should the Advisor or an Affiliate of the Advisor provide a
substantial amount of the services (as determined by a majority of the
Independent Directors) in connection with the Sale of one or more Assets that
are not Properties, such services shall be separately compensated at such rates
and in such amounts as are agreed by the Advisor and the Board, 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; provided, however, in no
event may the compensation agreed upon by the Advisor and the Board in
connection with the Sale of one or more Assets that are not Properties, if any,
exceed 1% of the total consideration provided for in the sales contract for the
sale of each such Asset sold; and provided, further, that any such compensation
must be approved by a majority of the Independent Directors.

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3.04 Reimbursement to the Advisor. The Company shall not reimburse the Advisor,
at the end of any fiscal quarter, for any Operating Expenses to the extent that,
in the four consecutive fiscal quarters then ended (the “Expense Year”) the
Operating Expenses exceed (the “Excess Amount”) the greater of (i) 2% of Average
Invested Assets or (ii) 25% of Net Income (the “2%/25% Guidelines”) for that
period of four consecutive quarters unless the Independent Directors determine
that such excess was justified, based on unusual and nonrecurring factors which
the Independent Directors deem sufficient. If the Independent Directors do not
approve such excess as being so justified, any Excess Amount paid to the Advisor
during a fiscal quarter shall be repaid to the Company. If the Independent
Directors determine such excess was justified, then within 60 days after the end
of any fiscal quarter of the Company for which total reimbursed Operating
Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the
direction of the Independent Directors, shall cause such fact to be disclosed in
the next quarterly report of the Company or in a separate writing and sent to
the stockholders, together with an explanation of the factors the Independent
Directors considered in determining that such excess expenses were justified.
The Company will ensure that such determination will be reflected in the minutes
of the meetings of the Board. All figures used in the foregoing computation
shall be determined in accordance with generally accepted accounting principles
applied on a consistent basis.
ARTICLE IV
TERM AND TERMINATION
4.01 Term; Renewal. Subject to Section 4.02 hereof, this Agreement has a
one-year term and shall continue in force until the first anniversary of the
date hereof. Thereafter, this Agreement may be renewed for an unlimited number
of successive one-year terms upon mutual consent of the parties. It is the
Board’s Duty to evaluate the performance of the Advisor annually before renewing
the Agreement, and each such renewal shall be for a term of no more than one
year.
4.02 Termination. This Agreement will automatically terminate upon Listing. This
Agreement also may be terminated at the option of either party upon 60 days
written notice without cause or penalty (if termination is by the Company, then
such termination shall be upon the approval of a majority of the Independent
Directors). Notwithstanding the foregoing, the provisions of this Agreement
which provide for payment to the Advisor of expenses, fees or other compensation
following the date of termination ( i.e. , Sections 3.01(c) and 4.03) shall
continue in full force and effect until all amounts payable thereunder to the
Advisor are paid in full. The provisions of Sections 2.05, 2.06 and 4.03 through
6.11 shall survive the termination of this Agreement.
 
4.03 Payments to and Duties of Advisor upon Termination.
 
 
(a)
After the Termination Date, the Advisor shall not be entitled to compensation
for further services hereunder except it shall be entitled to and receive from
the Company within 30 days after the effective date of such termination all
unpaid reimbursements of expenses, subject to the provisions of Section 3.04
hereof, and all contingent liabilities related to fees payable to the Advisor
prior to termination of this Agreement, provided that the Subordinated
Performance Fee, if any, shall be paid in accordance with the provisions of
Section 3.01(c).

 
 
(b)
The Advisor shall promptly upon termination:

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

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

 
 
iii.
deliver to the Board all assets, including the Assets, and documents of the
Company then in the custody of the Advisor; and

 
 
iv.
cooperate with, and take all reasonable actions requested by, the Company to
provide an orderly management transition.

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ARTICLE V
INDEMNIFICATION
5.01 (a) The Company shall indemnify and hold harmless the Advisor and its
Affiliates, including their respective officers, directors, partners and
employees, from all liability, claims, damages or losses arising in the
performance of their duties hereunder, and related expenses, including
reasonable attorneys’ fees, to the extent such liability, claims, damages or
losses and related expenses are not fully reimbursed by insurance, subject to
any limitations imposed by the laws of the State of Maryland, the Articles of
Incorporation and the NASAA Guidelines under the Articles of Incorporation. The
Company shall not indemnify or hold harmless the Advisor or its Affiliates,
including their respective officers, directors, partners and employees, for any
liability or loss suffered by the Advisor or its Affiliates, including their
respective officers, directors, partners and employees, nor shall it provide
that the Advisor or its Affiliates, including their respective officers,
directors, partners and employees, be held harmless for any loss or liability
suffered by the Company, unless all of the following conditions are met: (i) the
Advisor or its Affiliates, including their respective officers, directors,
partners and employees, have determined, in good faith, that the course of
conduct which caused the loss or liability was in the best interests of the
Company; (ii) the Advisor or its Affiliates, including their respective
officers, directors, partners and employees, were acting on behalf of or
performing services of the Company; (iii) such liability or loss was not the
result of negligence or misconduct by the Advisor or its Affiliates, including
their respective officers, directors, partners and employees; and (iv) such
indemnification or agreement to hold harmless is recoverable only out of the
Company’s net assets and not from Stockholders. Notwithstanding the foregoing,
the Advisor and its Affiliates, including their respective officers, directors,
partners and employees, shall not be indemnified by the Company for any losses,
liability or expenses 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 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; and (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.
 
(b) The Articles of Incorporation provide that the advancement of Company funds
to the Advisor or its Affiliates, including their respective officers,
directors, partners and employees, for legal expenses and other costs incurred
as a result of any legal action for which indemnification is being sought is
permissible only if all of the following conditions are satisfied: (i) the legal
action relates to acts or omissions with respect to the performance of duties or
services on behalf of the Company; (ii) the legal action is initiated by a
third-party who is not a Stockholder or the legal action is initiated by a
Stockholder acting in his or her capacity as such and a court of competent
jurisdiction specifically approves such advancement; (iii) the Advisor or its
Affiliates, including their respective officers, directors, partners and
employees, undertake to repay the advanced funds to the Company together with
the applicable legal rate of interest thereon, in cases in which such Advisor or
its Affiliates, including their respective officers, directors, partners and
employees, are found not to be entitled to indemnification.
(c) Notwithstanding the provisions of this Section 5.01, the Advisor shall not
be entitled to indemnification or be held harmless pursuant to this Section 5.01
for any activity which the Advisor shall be required to indemnify or hold
harmless the Company pursuant to Section 5.02.
5.02 Indemnification by Advisor . The Advisor shall indemnify and hold harmless
the Company from contract or other liability, claims, damages, taxes or losses
and related expenses including attorneys’ fees, to the extent that (i) such
liability, claims, damages, taxes or losses and related expenses are not fully
reimbursed by insurance and (ii) are incurred by reason of the Advisor’s bad
faith, fraud, misfeasance, misconduct, negligence or reckless disregard of its
duties. The Advisor shall not be held responsible for any action of the Board in
following or declining to follow any advice or recommendation given by the
Advisor.

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ARTICLE VI
MISCELLANEOUS
6.01 Assignment to an Affiliate . This Agreement may be assigned by the Advisor
to an Affiliate of the Advisor with the approval of a majority of the Board
(including a majority of the Independent Directors). The Advisor may assign any
rights to receive fees or other payments under this Agreement without obtaining
the approval of the Board. 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 which 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. This Agreement shall be
binding on successors to the Company resulting from a Change of Control or sale
of all or substantially all the assets of the Company or the Partnership, and
shall likewise be binding upon any successor to the Advisor.
6.02 Relationship of Advisor and Company . 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 or impose any
liability as such on either of them.
6.03 Notices. Any notice, report or other communication required or permitted to
be given hereunder shall be in writing unless some other method of giving such
notice, report or other communication is required by the Articles of
Incorporation, the Bylaws, or accepted by the party to whom it is given, and
shall be given by being delivered by hand or by overnight mail or other
overnight delivery service to the addresses set forth herein:
 
 
 
 
To the Directors and to the Company:
  
Cole Credit Property Trust V, Inc.
 
  
2325 E. Camelback Road, Suite 1100
 
  
Phoenix, Arizona 85016
 
  
Attention: Chief Executive Officer and President
 
 
To the Advisor:
  
Cole REIT Advisors V, LLC
 
  
2325 E. Camelback Road, Suite 1100
 
  
Phoenix, Arizona 85016
 
  
Attention: President

Either party shall, as soon as reasonably practicable, give notice in writing to
the other party of a change in its address for the purposes of this
Section 6.03.
6.04 Modification. This Agreement shall not be changed, modified, or amended, in
whole or in part, except by an instrument in writing signed by both parties
hereto, or their respective successors or assignees.

6.05 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.
6.06 Choice of Law; Venue. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the State of Arizona, and venue
for any action brought with respect to any claims arising out of this Agreement
shall be brought exclusively in Maricopa County, Arizona.
6.07 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. This Agreement may not be modified or
amended other than by an agreement in writing signed by each of the parties
hereto.

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6.08 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.
6.09 Gender; Number. 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.
6.10 Headings. The titles and headings of sections and subsections contained in
this Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation hereof.
6.11 Execution in Counterparts. This Agreement may be executed 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
the counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
6.12 Initial Investment. The Advisor or one of its Affiliates has contributed
$200,000 (the “Initial Investment”) in exchange for the initial issuance of
Shares of the Company. The Advisor or its Affiliates may not sell any of the
Shares purchased with the Initial Investment while the Advisor acts in an
advisory capacity to the Company. The restrictions included above shall not
apply to any Shares acquired by the Advisor or its Affiliates other than the
Shares acquired through the Initial Investment. Neither the Advisor nor its
Affiliates shall vote any Shares they now own, or hereafter acquires, or consent
such Shares to be voted on matters submitted to the Stockholders regarding
(i) the removal of Cole REIT Advisors V, LLC or any of its Affiliates as the
Advisor; (ii) the removal of any member of the Board or (iii) any transaction by
and between the Company and the Advisor, a member of the Board or any of their
Affiliates.

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IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as
of the date and year first above written.
 
COLE CREDIT PROPERTY TRUST V, INC.
 
 
By:
 
 /s/ D. Kirk McAllaster, Jr.
 
 
D. Kirk McAllaster, Jr.
 
 
Executive Vice President, Chief Financial Officer and Treasurer

 
    
COLE REIT ADVISORS V, LLC
 
 
By:
 
 /s/ D. Kirk McAllaster, Jr.
 
 
D. Kirk McAllaster, Jr.
 
 
Executive Vice President, Chief Financial Officer and Treasurer

 
 

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