Document:

Exhibit 10.2

 

FORM OF

 

ADVISORY AGREEMENT

BY AND AMONG

ARC REALTY FINANCE TRUST, INC.,

ARC REALTY FINANCE OPERATING PARTNERSHIP, L.P.,

AND

ARC REALTY FINANCE ADVISORS, LLC

Dated as of [__], 2013

 

    	 

    	 

    

 

TABLE OF CONTENTS

 

	 	Page
	 	 
	1.  DEFINITIONS	1
	 	 
	2.  APPOINTMENT	8
	 	 
	3.  DUTIES OF THE ADVISOR	8
	 	 
	4.  AUTHORITY OF ADVISOR	10
	 	 
	5.  FIDUCIARY RELATIONSHIP	11
	 	 
	6.  NO PARTNERSHIP OR JOINT VENTURE	11
	 	 
	7.  BANK ACCOUNTS	11
	 	 
	8.  RECORDS; ACCESS	11
	 	 
	9.  LIMITATIONS ON ACTIVITIES	11
	 	 
	10.  FEES	12
	 	 
	11.  EXPENSES	14
	 	 
	12.  OTHER SERVICES	15
	 	 
	13.  REIMBURSEMENT TO THE ADVISOR	16
	 	 
	14.  OTHER ACTIVITIES OF THE ADVISOR	16
	 	 
	15.  THE AMERICAN REALTY CAPITAL NAME	17
	 	 
	16.  TERM OF AGREEMENT	17
	 	 
	17.  TERMINATION BY THE PARTIES	17
	 	 
	18.  ASSIGNMENT TO AN AFFILIATE	17
	 	 
	19.  PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION	18
	 	 
	20.  NON-SOLICITATION	18
	 	 
	21.  INCORPORATION OF THE ARTICLES OF INCORPORATION AND THE OPERATING PARTNERSHIP AGREEMENT	18
	 	 
	22.  INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP	19
	 	 
	23.  INDEMNIFICATION BY ADVISOR	20
	 	 
	24.  NOTICES	20
	 	 
	25.  MODIFICATION	21
	 	 
	26.  SEVERABILITY	21
	 	 
	27. GOVERNING LAW	21
	 	 
	28.  ENTIRE AGREEMENT	22
	 	 
	29.  NO WAIVER	22
	 	 
	30.  PRONOUNS AND PLURALS	22
	 	 
	31.  HEADINGS	22
	 	 
	32.  EXECUTION IN COUNTERPARTS	22

 

    	 

    	 

    

 

FORM OF

 

ADVISORY AGREEMENT

 

THIS ADVISORY AGREEMENT
(this “Agreement”) dated as of [__], 2013, is entered into among ARC Realty Finance Trust, Inc., a Maryland
corporation (the “Company”), ARC Realty Finance Operating Partnership, L.P., a Delaware limited partnership
(the “Operating Partnership”), and ARC Realty Finance Advisors, LLC, a Delaware limited liability company.

 

WITNESSETH

 

WHEREAS, the Company
is a Maryland corporation organized in accordance with Maryland General Corporation Law and intends to qualify as a REIT;

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

    	1

    	 

    

 

“Advisor”
means ARC Realty Finance Advisors, LLC, a Delaware limited liability company, any successor advisor to the Company and the Operating
Partnership, or any Person to which ARC Realty Finance Advisors, LLC or any successor advisor subcontracts substantially all its
functions. Notwithstanding the foregoing, a Person hired or retained by ARC Realty Finance Advisors, LLC to perform property management
and related services for the Company or the Operating Partnership that is not hired or retained to perform substantially all the
functions of ARC Realty Finance Advisors, LLC with respect to the Company and the Operating Partnership as a whole shall not be
deemed to be an Advisor.

 

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

 

“Annual
Subordinated Performance Fee” means the fees payable to the Advisor or its assignees pursuant to Section 10(e).

 

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

 

“Asset
Management Fee” means the fees payable to the Advisor or its Affiliates pursuant to Section 10(d).

 

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

 

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

 

“Bylaws”
means the bylaws of the Company, as amended and as the same are in effect from time to time.

 

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

 

    	2

    	 

    

 

“Change
of Control” means a change of control of the Company of a nature that would be required to be reported in response
to the disclosure requirements of Schedule 14A of Regulation 14A promulgated under the Exchange Act, as enacted and in force on
the date hereof, whether or not the Company is then subject to such reporting requirements; provided, however, that, without
limitation, a Change of Control shall be deemed to have occurred if: (i) any “person” (within the meaning of Section
13(d) of the Exchange Act, as enacted and in force on the date hereof) is or becomes the “beneficial owner” (as that
term is defined in Rule 13d-3, as enacted and in force on the date hereof, under the Exchange Act) of securities of the Company
representing 9.8% or more of the combined voting power of the Company’s securities then outstanding; (ii) there occurs a
merger, consolidation or other reorganization of the Company which is not approved by the Board of Directors; (iii) there occurs
a sale, exchange, transfer or other disposition of substantially all the assets of the Company to another Person, which disposition
is not approved by the Board of Directors; or (iv) there occurs a contested proxy solicitation of the Stockholders that results
in the contesting party electing candidates to a majority of the Board of Directors’ positions next up for election.

 

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

 

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

 

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

 

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

 

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

 

“Cost of
Investments” means the Contract Purchase Price of Investments acquired, Acquisition Expenses, capital expenditures
and other customarily capitalized costs, but excludes Acquisition Fees.

 

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

 

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

 

“Director”
means a director of the Company.

 

    	3

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

“FINRA”
means the Financial Industry Regulatory Authority.

 

“GAAP”
means U.S. generally accepted accounting principles, consistently applied.

 

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

 

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

 

“Indemnitee”
has the meaning set forth in Section 22.

 

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

 

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

 

    	4

    	 

    

 

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

 

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

 

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

 

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

 

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

 

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

 

“NAV Pricing
Date” means the date within six months of [__], 2015, or two years from the commencement
of the Offering, that the Company begins selling shares in its initial Offering at a price equal to per share NAV; provided that
the NAV Pricing Date may be earlier if required by FINRA, the SEC or other applicable regulatory authority.

 

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

 

“Notice”
has the meaning set forth in Section 24.

 

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

 

“Operating
Partnership Agreement” means the Agreement of Limited Partnership of the Operating Partnership, among the Company,
the Operating Partnership and ARC Realty Finance Special Limited Partner, LLC, as the same may be amended from time to time.

 

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

 

    	5

    	 

    

 

“Organization
and Offering Expenses” means all expenses (other than the Selling Commission and the Dealer Manager Fee) to be paid
by the Company in connection with an Offering, including legal, accounting, printing, mailing and filing fees, charges of the escrow
holder, transfer agent expenses, due diligence expense reimbursements to the Dealer Manager and the Soliciting Dealers and amounts
to reimburse the Advisor for its portion of the salaries of the employees of its affiliates who provide services to the Advisor
and other costs in connection with administrative oversight of the Offering and marketing process and preparing supplemental sales
materials, holding educational conferences and attending retail seminars conducted by soliciting dealers.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	6

    	 

    

 

“Sale”
or “Sales” means any transaction or series of transactions whereby: (i) the Company or the Operating
Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys
or relinquishes its direct or indirect ownership of any Real Estate Asset, Real Estate Related Loan or other Investment or portion
thereof, including the lease of any Real Estate Assets consisting of a building only, and including any event with respect to any
Real Estate Assets that gives rise to a significant amount of insurance proceeds or condemnation awards; (ii) the Company or the
Operating 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 the direct or indirect interest of the Company or the Operating
Partnership in any Joint Venture in which it is a co-venturer, member or partner; (iii) any Joint Venture directly or indirectly
(except as described in other subsections of this definition) in which the Company or the Operating Partnership as a co-venturer,
member or partner sells, grants, transfers, conveys or relinquishes its direct or indirect ownership of any Real Estate Assets
or portion thereof, including any event with respect to any Real Estate Assets which gives rise to insurance claims or condemnation
awards; (iv) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this
definition) sells, grants, conveys or relinquishes its direct or indirect interest in any Real Estate Related Loans or portion
thereof (including with respect to any Real Estate Related Loan, all payments thereunder or in satisfaction thereof other than
regularly scheduled interest payments) and any event which gives rise to a significant amount of insurance proceeds or similar
awards; or (v) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys or relinquishes its direct or indirect ownership of any other asset not previously
described in this definition or any portion thereof, but not including any transaction or series of transactions specified in clauses
(i) through (v) above in which the proceeds of such transaction or series of transactions are reinvested by the Company in one
or more assets within 180 days thereafter.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

    	7

    	 

    

 

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

 

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

 

2.        
APPOINTMENT.          The Company and the Operating Partnership hereby appoint the Advisor to serve as their advisor to perform
the services set forth herein on the terms and subject to the conditions set forth in this Agreement and subject to the supervision
of the Board, and the Advisor hereby accepts such appointment.

 

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

 

a.           serve
as the Company’s and the Operating Partnership’s investment and financial advisor and provide research and economic
and statistical data in connection with the Company’s assets and investment policies;

 

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

 

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

 

d.           consult
with the officers and Directors of the Company and assist the Directors in the formulation and implementation of the Company’s
financial policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments
consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken
by the Company or the Operating Partnership;

 

    	8

    	 

    

 
 

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

 

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

 

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

 

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

 

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

 

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

 

    	9

    	 

    

  

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

 

l.            deliver
to, or maintain on behalf of, the Company copies of all appraisals obtained in connection with the investments in any Real Estate
Assets as may be required to be obtained by the Board;

 

m.           effect
any private placement of OP Units, tenancy-in-common or other interests in Investments as may be approved by the Board;

 

n.           perform
investor-relations and Stockholder communications functions for the Company;

 

o.           maintain
the Company’s accounting and other records and assist the Company in filing all reports required to be filed by it with the
Securities and Exchange Commission, the Internal Revenue Service and other regulatory agencies;

 

p.           notify
the Board of all proposed material transactions before they are completed;

 

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

 

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

 

s.          commencing
with the NAV Pricing Date, calculate the NAV on a quarterly basis as provided in the Registration Statement, and in connection
therewith, obtain appraisals performed by the Independent Valuation Advisors; and

 

t.            supervise
one or more Independent Valuation Advisors and, if and when necessary, recommend to the Board its replacement.

 

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

 

4.          AUTHORITY
OF ADVISOR.

 

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

 

    	10

    	 

    

  

b.           Notwithstanding
anything herein to the contrary, all acquisitions of Real Estate Assets will require the prior approval of the Board, any particular
Directors specified by the Board or any committee of the Board specified by the Board, as the case may be.

 

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

 

d.           The
Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority set forth in this Section 4;
provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be
applicable to investment transactions to which the Advisor has committed the Company or the Operating Partnership prior to the
date of receipt by the Advisor of such notification.

 

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

 

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

 

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

  

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

 

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

  

    	11

    	 

    

 

10.         FEES.

 

a.           Acquisition
Fee. Subject to Section 10(b), the Company shall pay an Acquisition Fee to the Advisor or its Affiliates as compensation
for services rendered in connection with the investigation, selection, acquisition and origination (by purchase, investment or
exchange) of Investments. If the Advisor is terminated without cause pursuant to Section 17(a), the Advisor or its
Affiliates shall be entitled to an Acquisition Fee for any Investments acquired after the Termination Date for which a contract
to acquire any such Investment had been entered into at or prior to the Termination Date. The total Acquisition Fee payable to
the Advisor or its Affiliates shall equal one percent (1.0%) of the Contract Purchase Price for any Investment acquired. The Contract
Purchase Price allocable for an Investment held through a Joint Venture shall equal the product of (i) the Contract Purchase Price
of the Investment and (ii) the direct or indirect ownership percentage in the Joint Venture held directly or indirectly by the
Company or the Operating Partnership. For purposes of this Section 10(a), “ownership percentage” shall be the percentage
of capital stock, membership interests, partnership interests or other equity interests held by the Company or the Operating Partnership,
without regard to classification of such equity interests. The Company shall pay the Advisor or its Affiliates the Acquisition
Fee promptly upon the closing of the Investment; provided, however, that such Acquisition Fee shall be paid to an Affiliate of
the Advisor that is registered as a FINRA member broker-dealer if applicable laws or regulations prohibit such payment to be made
to a person that is not a FINRA member broker-dealer. In addition, if during the period ending two years after the close of the
initial Offering, the Company sells an Investment and then reinvests in other Investments, the Company will pay to the Advisor
or its Affiliates one percent (1.0%) of the Contract Purchase Price for the other Investments.

  

b.           Limitation
on Total Acquisition Fees and Acquisition Expenses. The total of all Acquisition Fees and Acquisition Expenses payable
in connection with any Investment or any reinvestment shall be reasonable and shall not exceed an amount equal to four and one-half
percent (4.5%) of the Contract Purchase Price of such Investment; provided, however, that the
Advisor (i) will not be entitled to Acquisition Fees or reimbursement of Acquisition Expenses if there are insufficient Offering
proceeds or capital proceeds to pay such expenses and (ii) such expenses not paid to the Advisor will not be accrued and paid in
subsequent periods to the extent that there are not sufficient offering or capital proceeds to pay them; provided,
further, however, that a majority of the Directors (including a majority of the Independent Directors) not otherwise
interested in the transaction may approve fees and expenses in excess of these limits if they determine the transaction to be commercially
competitive, fair and reasonable to the Company.

 

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c.           Disposition
Fees. In connection with a Sale of an Investment in which the Advisor or any Affiliate of the Advisor provides a substantial
amount of services, as determined by the Independent Directors, the Company shall pay to the Advisor or its assignees a Disposition
Fee of one percent (1.0%) of the Contract Sales Price of each Investment sold, including mortgage-backed securities or collateralized
debt obligations issued by a subsidiary of the Company as part of a securitization transaction; provided, however, that
such Disposition Fee shall be paid to an Affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable
laws or regulations prohibit such payment to be made to a person that is not a FINRA member broker-dealer; provided, further,
that in no event may the Disposition Fee paid to the Advisor, its Affiliates and non-Affiliates exceed the lesser of six percent
(6.0%) of the Contract Sales Price and a Competitive Real Estate Commission. Notwithstanding the foregoing, the Company will not
pay a Disposition Fee upon the maturity, prepayment, workout, modification or extension of a Real Estate Related Loan unless there
is a corresponding fee paid by the borrower, in which case the Disposition Fee will be the lesser of: (i) one percent (1.0%) of
the principal amount of the Real Estate Related Loan prior to such transaction; or (ii) the amount of the fee paid by the borrower
in connection with such transaction. If the Company takes ownership of a Real Property as a result of a workout or foreclosure
of a Real Estate Related Loan, the Company will pay a Disposition Fee upon the sale of such Real Property.

 

d.           Asset
Management Fee. The Company shall pay the Advisor or its Affiliates as compensation for services rendered in connection
with the management of the Company’s Investments an annual Asset Management Fee equal to three-quarters percent (0.75%) of
the Cost of Investments. Commencing on the NAV Pricing Date, the Asset Management Fee will be based on the lower of three-quarters
percent (0.75%) of the Cost of Investments (as calculated in the preceding sentence) and three-quarters percent (0.75%) of the
quarterly NAV. The Asset Management Fee will be payable monthly in arrears, based on Investments held by the Company during the
measurement period, adjusted for appropriate closing dates for individual Investments. The Asset Management Fee will be reduced
to the extent that NAREIT FFO, as adjusted, during the six (6) months ending on the last day of the calendar quarter immediately
preceding the date that such Asset Management Fee is payable, is less than the Distributions declared with respect to such six
(6) month period. For purposes of this determination, NAREIT FFO, as adjusted, is NAREIT FFO adjusted to (i) include Acquisition
Fees and Acquisition Expenses; (ii) include non-cash restricted stock grant amortization, if any; and (iii) impairments of Investments,
if any.

  

e.           Annual
Subordinated Performance Fee. The Company may pay an Annual Subordinated Performance Fee to the Advisor calculated on the
basis of the total return to Stockholders for any year in which the Company’s total return on Stockholders’ capital
contributions exceeds six percent (6%) per annum. With respect to such year, the Advisor will be paid fifteen percent (15%) of
the excess total return, not to exceed ten percent (10%) of the aggregate total return for such year. This fee will only be payable
upon the Sale of Investments, Distributions or other event which results in the Company’s total return on Stockholders’
capital contributions exceeding six percent (6%) per annum. This fee will be calculated annually and will be payable monthly over
12 months following the year for which the fee is being paid.

 

f.            Payment
of Fees. In connection with the Acquisition Fee, Disposition Fee and Annual Subordinated Performance Fee, the Company shall
pay such fees to the Advisor or its Affiliates in cash or in Shares, or a combination of both, the form of payment to be determined
in the sole discretion of the Advisor. The Asset Management Fee shall be payable, at the discretion of the Board of Directors,
in cash, Shares or grants of restricted Shares, or any combination thereof. For the purposes of the payment of any fees in Shares,
prior to the NAV Pricing 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 the initial Offering. Commencing with the NAV Pricing Date, each
Share shall be valued using per share NAV; provided, however, that in the case of Asset Management Fees payable in grants
of restricted shares, each Share shall be valued in a manner consistent with the provisions of the equity incentive plan of the
Company.

 

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g.           Exclusion
of Certain Transactions.

 

i.            If
the Company or the Operating Partnership shall propose to enter into any transaction in which the Advisor, any Affiliate of the
Advisor or any of the Advisor’s directors or officers has a direct or indirect interest, then such transaction shall be approved
by a majority of the Board not otherwise interested in such transaction, including a majority of the Independent Directors.

 

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

 

11.         EXPENSES.

 

a.           In
addition to the compensation paid to the Advisor pursuant to Section 11, the Company or the Operating Partnership shall
pay directly or reimburse the Advisor for all the expenses paid or actually incurred by the Advisor or its Affiliates in connection
with the services it provides to the Company and the Operating Partnership pursuant to this Agreement, including, the following:

  

i.            Organization
and Offering Expenses, including third-party due diligence fees related to the Primary Offering, as set forth in detailed and itemized
invoices; provided, however, that the Company shall not reimburse the Advisor to the extent such reimbursement would cause
the total amount of Organization and Offering Expenses paid by the Company and the Operating Partnership to exceed one and three-quarters
percent (1.75%) of the Gross Proceeds raised in all Primary Offerings;

 

ii.         Acquisition
Expenses, subject to the limitations set forth in Section 10(b);

 

iii.         the
actual cost of goods and services used by the Company and obtained from Persons not Affiliated with the Advisor;

 

iv.         interest
and other costs for Financings, including discounts, points and other similar fees; taxes and assessments on income of the Company
or Investments;

 

v.           costs
associated with insurance required in connection with the business of the Company or by the Board;

 

vi.         expenses
of managing and operating Investments owned by the Company, whether payable to an Affiliate of the Company or a non-affiliated
Person;

 

    	14

    	 

    

 

vii.         all
expenses in connection with payments to the Directors for attending meetings of the Board and Stockholders;

 

viii.         expenses
associated with a Listing, if applicable, or with the issuance and distribution of Shares, such as selling commissions and fees,
advertising expenses, taxes, legal and accounting fees, listing and registration fees;

 

ix.         expenses
connected with payments of Distributions;

 

x.         expenses
of organizing, revising, amending, converting, modifying or terminating the Company, the Operating Partnership or any subsidiary
thereof or the Articles of Incorporation, Bylaws or governing documents of the Operating Partnership or any subsidiary of the Company
or the Operating Partnership;

 

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

 

xii.         administrative
service expenses, including all costs and expenses incurred by Advisor or its Affiliates in fulfilling its duties hereunder, including
reasonable salaries and wages, benefits and overhead of all employees directly involved in the performance of such services; provided,
however, that no reimbursement shall be made for costs of such employees of the Advisor or its Affiliates to the extent
that such employees perform services for which the Advisor receives an Acquisition Fee or a Disposition Fee; and

 

xiii.         audit,
accounting and legal fees.

  

b.           Commencing
six (6) months after the initial release of Offering proceeds from escrow in the Company’s initial Offering, expenses incurred
by the Advisor on behalf of the Company and the Operating Partnership or in connection with the services provided by the Advisor
hereunder and payable pursuant to this Section 11 shall be reimbursed, no less than monthly, to the Advisor.

 

12.           OTHER
SERVICES.           Should the Board request that the Advisor or any director, officer or employee thereof render services for the Company
and the Operating Partnership other than set forth in Section 3 , such services shall be separately compensated at such
customary rates and in such customary amounts as are agreed upon by the Advisor and the Board, including a majority of the Independent
Directors, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant
to the terms of this Agreement.

 

    	15

    	 

    

 

13.           REIMBURSEMENT
TO THE ADVISOR.           The Company shall not reimburse the Advisor at the end of any fiscal quarter in which Total Operating Expenses
incurred by the Advisor for the four (4) consecutive fiscal quarters then ended (the “Expense Year”) exceed
(the “Excess Amount”) the greater of two percent (2%) of Average Invested Assets or twenty-five percent (25%)
of Net Income (the “2%/25% Guidelines”) for such Expense Year. Any Excess Amount paid to the Advisor during
a fiscal quarter shall be repaid to the Company or, at the option of the Company, subtracted from the Total Operating Expenses
reimbursed during the subsequent fiscal quarter. If there is an Excess Amount in any Expense Year and the Independent Directors
determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, then the Excess
Amount may be carried over and included in Total Operating Expenses in subsequent Expense Years and reimbursed to the Advisor
in one or more of such years, provided that there shall be sent to the Stockholders a written disclosure of such fact within sixty
(60) days of the end of the fiscal quarter, together with an explanation of the factors the Independent Directors considered in
determining that such excess expenses were justified. Such determination shall be reflected in the minutes of the meetings of
the Board. All figures used in the foregoing computation shall be determined in accordance with GAAP applied on a consistent basis.

 

14.           OTHER
ACTIVITIES OF THE ADVISOR.           Except as set forth in this Section 14,
nothing herein contained shall prevent the Advisor or any of its Affiliates from engaging in or earning fees from other activities,
including the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored
or organized by the Sponsor or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer,
member, partner, employee or stockholder of the Advisor or any of its Affiliates to engage in or earn fees from any other business
or to render services of any kind to any other Person and earn fees for rendering such services; provided, however, that
the Advisor must devote sufficient resources to the Company’s business to discharge its obligations to the Company under
this Agreement. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and
service to each and every other participant therein, and earn fees for rendering such advice and service. Specifically, it is
contemplated that the Company may enter into Joint Ventures or other similar co-investment arrangements with certain Persons,
and pursuant to the agreements governing such Joint Ventures or arrangements, the Advisor may be engaged to provide advice and
service to such Persons, in which case the Advisor will earn fees for rendering such advice and service.

  

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

 

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

 

16.           TERM
OF AGREEMENT.           This Agreement shall continue in force for a period
of one (1)-year from the date hereof. Thereafter, the term may be renewed for an unlimited number of successive one-(1) year terms
upon mutual consent of the parties.

 

17.           TERMINATION
BY THE PARTIES. This Agreement may be terminated upon sixty (60) days’ written notice (a) by the Independent Directors
or the Advisor, without Cause and without penalty, (b) by the Advisor for Good Reason, or (c) by the Advisor upon a Change of
Control. The provisions of Sections 15 and 19 through 32 (inclusive) of this Agreement shall survive any expiration
or earlier termination of this Agreement.

 

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

 

    	17

    	 

    

 

19.         PAYMENTS
TO AND DUTIES OF ADVISOR UPON TERMINATION.

 

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

  

b.           Advisor’s
Duties. The Advisor shall promptly upon termination of this Agreement:

 

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

 

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

 

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

 

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

 

20.         NON-SOLICITATION.
The Company agrees not to solicit any current and/or future employees of Advisor for employment or in any consulting or
similar capacity during the term of the this Agreement and for two (2) years following the termination of this Agreement without
the consent of the Advisor. 

 

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

 

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22.         INDEMNIFICATION
BY THE COMPANY AND THE OPERATING PARTNERSHIP.

 

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

  

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

 

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

 

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

 

iv.         such
indemnification or agreement to hold harmless is recoverable only out of the Company’s net assets and not from the Stockholders.

 

b.           Notwithstanding
the foregoing, an Indemnitee shall not be indemnified by the Company and the Operating Partnership for any losses, liabilities
or expenses arising from or out of an alleged violation of federal or state securities laws by such Indemnitee unless one or more
of the following conditions are met:

 

i.            there
has been a successful adjudication on the merits of each count involving alleged securities law violations as to the Indemnitee;

 

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

 

iii.         a
court of competent jurisdiction approves a settlement of the claims against the Indemnitee and finds that indemnification of the
settlement and the related costs should be made, and the court considering the request for indemnification has been advised of
the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority
of a jurisdiction in which securities of the Company or the Operating Partnership were offered or sold as to indemnification for
violation of securities laws.

 

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

 

    	19

    	 

    
 

i.            the
legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company or the
Operating Partnership;

  

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

 

iii.         the
Indemnitee provides the Company or the Operating Partnership with a written affirmation of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification; and

 

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

 

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

 

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

 

	To the Company:	ARC Realty Finance Trust, Inc.
	 	405 Park Avenue
	 	New York, New York 10022
	 	Attention: Edward M. Weil, Jr.
	 	 
	 	with a copy to:
	 	Alston & Bird LLP
	 	1201 West Peachtree Street
	 	Atlanta, Georgia 30309
	 	Attention: Rosemarie A. Thurston
	 	 
	 	and
	 	 
	 	[Company Lead Director]
	 	_______________________
	 	_______________________
	 	_______________________

 

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	To the Operating Partnership:	ARC Realty Finance Operating Partnership, L.P.
	 	405 Park Avenue
	 	New York, New York 10022
	 	Attention:  Edward M. Weil, Jr.
	 	 
	 	with a copy to:
	 	 
	 	Alston & Bird LLP
	 	1201 West Peachtree Street
	 	Atlanta, Georgia 30309
	 	Attention:  Rosemarie A. Thurston
	 	 
	To the Advisor:	ARC Realty Finance Advisors, LLC
	 	405 Park Avenue
	 	New York, New York 10022
	 	Attention:  Edward M. Weil, Jr.
	 	 
	 	with a copy to:
	 	 
	 	Alston & Bird LLP
	 	1201 West Peachtree Street
	 	Atlanta, Georgia 30309
	 	Attention:  Rosemarie A. Thurston

 

Any party may at any time give Notice in
writing to the other parties of a change in its address for the purposes of this Section 24.

 

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

 

26.          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.

 

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

 

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

 

29.           NO
WAIVER.           Neither the failure nor any delay on the part of a party
to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence
be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such waiver.

 

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

 

31.           HEADINGS.
          The titles of sections and subsections contained in this Agreement
are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation
hereof.

 

32.           EXECUTION
IN COUNTERPARTS.           This Agreement may be executed (including by
facsimile transmission) with counterpart signature pages or in any number of counterparts, each of which shall be deemed to be
an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same
instrument.

 

[Remainder of page intentionally left
blank]

  

    	22

    	 

    

 

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

 

	 	ARC REALTY FINANCE TRUST, INC.
	 	 	 
	 	By:	 
	 	 	Name: Edward M. Weil, Jr.
	 	 	Title:   President
	 	 	 
	 	ARC REALTY FINANCE OPERATING PARTNERSHIP, L.P.
	 	 	 
	 	By:	ARC Realty Finance Trust, Inc.
	 	 	its General Partner
	 	 	 
	 	By:	 
	 	 	Name: Edward M. Weil, Jr.
	 	 	Title:   President
	 	 	 
	 	ARC REALTY FINANCE ADVISORS, LLC
	 	 	 
	 	By:	ARC Realty Finance Special Limited Partnership, LLC
	 	 	its Member
	 	 	 
	 	By:	AR Capital, LLC
	 	 	its Managing Member
	 	 	 
	 	By:	 
	 	 	Name: Nicholas S. Schorsch
	 	 	Title:   Authorized SignatorySECURITIES PURCHASE AGREEMENT

(Signature Page)

 

PETROSONIC ENERGY, INC.

57 Valley Woods way
NW

Calgary, AB CANADA

T3B 6A5

 

Ladies & Gentlemen:

 

The undersigned (the “Investor”),
hereby confirms its agreement with you as follows:

 

1.This Securities
Purchase Agreement, including the Terms and Conditions set forth in Annex I (the “Terms and Conditions”), the
Risk Factors set forth in Annex II (the “Risk Factors”), and exhibits, which are all attached hereto and incorporated
herein by reference as if fully set forth herein (the “Agreement”), is made as of the date set forth below between
Petrosonic Energy, Inc., a Nevada corporation (the “Company”), and the Investor.

 

2.The Company has
authorized the sale and issuance of up to 15,000,000 shares of the Company’s securities to certain Investors in a private
placement (the “Offering”).

 

3.Pursuant to the
Terms and Conditions, the Company and the Investor agree that the Investor will purchase from the Company and the Company will
issue and sell to the Investor ____________________________, for a purchase price of $0.25 per share, for an aggregate purchase
price of $__________________________ consisting of ___________ Shares. Unless otherwise requested by the Investor, certificates
representing the Common Stock purchased by the Investor will be registered in the Investor’s name and address as set forth
below.

 

Please confirm that
the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.

 

 

	Date: ________________, 2013	Investor:	 
	 	 	 
	 	By: 	 
	 	 	 
	 	Print Name: 	 
	 	Title: 	 
	 	 	 
	 	Address: 	 
	 	 	 
	 	 	 
	 	Phone:	 
	 	Fax: 	 
	 	Social Security Number or TIN (if applicable):
	 	 	 

 

 

    	 

    	 

    

ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF
SHARES

 

Investment in the Company involves
a high degree of risk. Investor should carefully consider the risk factors set forth in Annex II in addition to the other
information set forth in this Annex I before purchasing securities of the Company.

 

1.Authorization
and Sale of the Shares. Subject to these Terms and Conditions, the Company has authorized the sale of up to 15,000,000 Shares
of the Company, each consisting of 1 share of the Company’s common stock, $0.001 par value (the “Shares”). The
Company reserves the right to increase or decrease this number. All references to currency in this Securities Purchase Agreement
shall refer to the lawful currency of the United States of America.

 

2.Agreement
to Sell and Purchase the Shares.

 

2.1At the Closing
(as defined in Section 3 of this Annex I), the Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and conditions hereinafter set forth, the number of Shares, if applicable, set forth in Section 3 of the
Signature Page to the Securities Purchase Agreement at the purchase price set forth thereon.

 

2.2The Company may
enter into the same form of Securities Purchase Agreement (“Agreement”), including these Terms and Conditions, with
other Investors and expects to complete sales of subsequent shares to other Investors.

 

3.Delivery of
the Shares and at Closing. The completion of the purchase and sale of the shares (the “Closing”) shall occur at
the offices of the Company upon receipt of cleared funds and fully executed documents for the purchase of the shares on each date
set by the Company, provided that a final closing shall occur no later than January 31, 2013, which date may be extended at the
sole discretion of the Company. Within seven (7) days after each Closing, the Company shall deliver to the Investor one or more
stock certificates representing the number of Shares, representing the number of shares of common stock as set forth in Section
3 of the Signature Page to the Securities Purchase Agreement, each such certificate, certificates to be registered in the name
of the Investor, as set forth in Section 3 of the Signature Page to the Securities Purchase Agreement.

 

The Company’s
obligation to issue the Shares to the Investor shall be subject to the following conditions, any one or more of which may be waived
by the Company: (a) receipt by the Company of a certified or official bank check or wire transfer of funds in the full amount of
the purchase price for the shares being purchased hereunder as set forth in Section 3 of the Signature Page to the Securities Purchase
Agreement; and (b) the accuracy of the representations and warranties made by the Investor and the fulfillment of those undertakings
of the Investor to be fulfilled prior to the Closing.

 

The Investor’s
obligation to purchase the shares shall be subject to the following conditions, any one or more of which may be waived by the Investor:
(1) the representations and warranties of the Company set forth herein shall be true and correct as of the Closing Date in all
material respects and (2) the Investor shall have received such documents as such Investor shall reasonably have requested in connection
with its due diligence.

 

4.Representations,
Warranties and Covenants of the Company. The Company hereby represents and warrants to, and covenants with, the Investor, as
follows:

 

4.1Organization.
The Company is duly organized and validly existing in good standing under the laws of the jurisdiction of its organization. The
Company has full power and authority to own, operate and occupy its properties and to conduct its business as presently contemplated
and is registered or qualified to do business and in good standing in each jurisdiction in which the nature of the business conducted
by it or the location of the properties owned or leased by it requires such qualification and where the failure to be so qualified
would have a material adverse effect upon the condition (financial or otherwise), earnings, business, properties or operations
of the Company (a “Material Adverse Effect”), and no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification.

 

    	 

    	 

    

 

4.2Due Authorization
and Valid Issuance. The Company has all requisite power and authority to execute, deliver and perform its obligations under
the Agreement, and the Agreement has been duly authorized and validly executed and delivered by the Company and constitutes a legal,
valid and binding agreement of the Company enforceable against the Company in accordance with their terms, except as rights to
indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws, except
as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’
and contracting parties’ rights generally and except as enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at law). No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Shares. The Shares being
purchased by the Investor hereunder will, upon issuance and payment therefore pursuant to the terms hereof, be duly authorized,
validly issued, fully-paid and nonassessable.

 

4.3Non-Contravention.
The execution and delivery of the Agreement, the issuance and sale of the shares under the Agreement, the fulfillment of the terms
of the Agreement and the consummation of the transactions contemplated thereby will not (A) conflict with or constitute a violation
of, or default under, (i) any material bond, debenture, note or other evidence of indebtedness, lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company is a party or by which it or
its properties are bound, (ii) the charter, by-laws or other organizational documents of the Company, or (iii) any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company or
its properties, except in the case of clauses (i) and (iii) for any such conflicts, violations or defaults which are not reasonably
likely to have a Material Adverse Effect or (B) result in the creation or imposition of any lien, encumbrance, claim, security
interest or restriction whatsoever upon any of the material properties or assets of the Company or an acceleration of indebtedness
pursuant to any obligation, agreement or condition contained in any material bond, debenture, note or any other evidence of indebtedness
or any material indenture, mortgage, deed of trust or any other agreement or instrument to which the Company is a party or by which
any of them is bound or to which any of the material property or assets of the Company is subject.

 

4.4Capitalization.
As of October 30, 2012, there were 65,329,000
shares of the Company’s common stock issued and outstanding. Except as contemplated by documents filed by the Company with
the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), since such date through the date hereof (the “Exchange Act Documents”), there are no other outstanding
rights (including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable
for, any unissued shares of capital stock or other equity interest in the Company or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party or of which the Company has knowledge and relating to the issuance or
sale of any capital stock of the Company, any such convertible or exchangeable securities or any such rights, warrants or options.

 

4.5Legal Proceedings.
There is no material legal or governmental proceeding pending or, to the knowledge of the Company, threatened to which the Company
is or may be a party or of which the business or property of the Company is subject that is not disclosed in the Exchange Act Documents.

 

4.6No Violations.
The Company is not in violation of its charter, bylaws, or other organizational document, or in violation of any law, administrative
regulation, ordinance or order of any court or governmental agency, arbitration panel or authority applicable to the Company, which
violation, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, or is in default (and
there exists no condition which, with the passage of time or otherwise, would constitute a default) in any material respect in
the performance of any bond, debenture, note or any other evidence of indebtedness in any indenture, mortgage, deed of trust or
any other material agreement or instrument to which the Company is a party or by which the Company is bound or by which the properties
of the Company are bound, which would be reasonably likely to have a Material Adverse Effect.

 

 

    	 

    	 

    

 

4.7Finder’s
Fee. In connection with this Offering and subject to the approval of the Company's Board of Directors, the Company may have
to pay brokers, advisors and others up to the aggregate of 10% in cash and/or 5% in warrant (with an exercise of $0.50 per share)
fees based on the gross proceeds from the sale of the shares.

 

5.Representations,
Warranties and Covenants of the Investor.

 

5.1The Investor represents
and warrants to, and covenants with, the Company that: (i) the Investor is an “accredited investor” as defined in Rule
501 of Regulation D under the Securities Act and the Investor is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to investments in shares presenting an investment decision like that involved in the purchase
of the Shares, including investments in securities issued by the Company and investments in comparable companies, and has requested,
received, reviewed and considered all information it deemed relevant in making an informed decision to purchase the Shares; (ii)
the Investor has carefully read and fully understands the risks involved with an investment in the Company including, without limitation,
the risks identified on Annex II, attached hereto, (iii) the Investor is acquiring the number of shares set forth in Section
3 of the Signature Page to the Securities Purchase Agreement in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing any of such shares or any arrangement or understanding with any other
persons regarding the distribution of such Shares; (iv) the Investor will not, directly or indirectly, offer, sell, pledge, transfer
or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the shares except
in compliance with the Securities Act, applicable state securities laws and the respective rules and regulations promulgated thereunder;
(v) all of the representations made by the Investor are true, correct and complete as of the date hereof and will be true, correct
and complete as of the Closing Date; and (vi) the Investor has, in connection with its decision to purchase the number of shares
set forth in Section 3 of the Signature Page to the Securities Purchase Agreement, relied only upon the Exchange Act Documents
and the representations and warranties of the Company contained herein. There are no suits, pending litigation, or claims against
the undersigned that could materially affect the net worth of the Investor.

 

5.2The Investor acknowledges
that it has had access to the Exchange Act Documents and has carefully reviewed the same. The Investor further acknowledges that
the Company has made available to it the opportunity to ask questions of and receive answers from the Company’s officers
and directors concerning the terms and conditions of this Agreement and the business and financial condition of the Company, and
the Investor has received to its satisfaction, such information about the business and financial condition of the Company and the
terms and conditions of the Agreement as it has requested. The Investor has carefully considered the potential risks relating to
the Company and a purchase of the shares, and fully understands that the Shares are speculative investments, which involve a high
degree of risk of loss of the Investor’s entire investment. Among others, the undersigned has carefully considered each of
the risks identified under the caption “Risk Factors” in the Exchange Act Documents and Annex II.

 

5.3The Investor acknowledges,
represents and agrees that no action has been or will be taken in any jurisdiction outside the United States by the Company that
would permit an offering of the shares, or possession or distribution of offering materials in connection with the issuance of
the shares, in any jurisdiction outside the United States where legal action by the Company for that purpose is required. Investor
will comply with all applicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers
shares, or has in its possession or distributes any offering material, in all cases at its own expense.

 

5.4The Investor hereby
covenants with the Company not to make any sale of the shares, without complying with the provisions of this Agreement, and the
Investor acknowledges that the certificates evidencing the Shares will be imprinted with a legend that prohibits their transfer
except in accordance therewith. The overall commitment of the Investor to investments, which are not readily marketable, is not
excessive in view of the Investor’s net worth and financial circumstances, and any purchase of the shares will not cause
such commitment to become excessive. The Investor is able to bear the economic risk of an investment in the shares.

 

5.5The Investor further
represents and warrants to, and covenants with, the Company that (i) the Investor has full right, power, authority and capacity
to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (ii) this Agreement constitutes a valid and binding obligation of
the Investor enforceable against the Investor in accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).

 

 

    	 

    	 

    

 

5.6Investor will
not use any of the restricted Shares acquired pursuant to this Agreement to cover any short position in the Common Stock of the
Company if doing so would be in violation of applicable securities laws.

 

5.7The Investor understands
that nothing in the Exchange Act Documents, this Agreement or any other materials presented to the Investor in connection with
the purchase and sale of the shares constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and
investment advisors, as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the
shares.

 

5.8The Investor understands
that the issuance of the shares to the Investor has not been registered under the Securities Act in reliance upon one or more specific
exemptions therefrom, including Regulation D and/or Regulation S, which exemption depends upon, among other things, the accuracy
of the Investor’s representations made in this Agreement. The Investor understands that the shares must be held indefinitely
unless subsequently registered under the Securities Act and qualified under applicable state securities laws, or unless an exemption
from such registration and qualification requirements is otherwise available. The Investor acknowledges
that the Company has no obligation to register or qualify the shares or underlying Shares for resale. The Investor acknowledges
that the Company will refuse to register any transfer of Shares that is not made in accordance with the provisions of Regulation
S, registered pursuant to the Securities Act or otherwise exempt from such registration. The Investor
further acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period for the Shares and requirements relating to the
Company which are outside of the Investor’s control, and which the Company is under no obligation and may not be able to
satisfy. The Investor has been independently advised as to the applicable holding period imposed in respect of the Shares
by securities legislation in the jurisdiction in which the undersigned resides and confirms that no representation has been made
respecting the applicable holding periods for the Shares in such jurisdiction and it is aware of the risks and other characteristics
of the shares and of the fact that the undersigned may not resell the Shares except in accordance with applicable securities legislation
and regulatory policy.

 

5.9A copy of the
Company’s annual report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K and information statements
are available on the SEC’s website at www.sec.gov.

 

5.10For purposes
of compliance with the Regulation S exemption for the offer and sale of the Shares (defined in this Section 5.10 to include the
underlying Shares) to non-U.S. Persons, if the Investor is not a “U.S. Person,” as such term is defined in Rule 902(k)
of Regulation S,1 the Investor represents and warrants that the Investor is a person or entity that is outside the
United States, and further represents and warrants as follows:

 

 

 

		1	Regulation S provides in part as follows:

1.“U.S.
person” means: (i) any natural person resident in the United States; (ii) any partnership or corporation organized or incorporated
under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. person; (iv) any trust of
which any trustee is a U.S. person; (v) any agency or branch of a foreign entity located in the United States; (vi) any non-discretionary
account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a
U.S. person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary
organized, incorporated, or (if an individual) resident in the United States; and (viii) any partnership or corporation if: (A)
organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a U.S. person principally for the purpose
of investing in securities not registered under the Securities Act of 1933, as amended, unless it is organized or incorporated,
and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts.

2.The
following are not “U.S. persons”: (i) any discretionary account or similar account (other than an estate or trust)
held for the benefit or account of a non-U.S. person by a dealer or other professional fiduciary organized, incorporated, or (if
an individual) resident in the United States; (ii) any estate of which any professional fiduciary acting as executor or administrator
is a U.S. person if: (A) an executor or administrator of the estate who is not a U.S. person has sole or shared investment discretion
with respect to the assets of the estate; and (B) the estate is governed by foreign law; (iii) any trust of which any professional
fiduciary acting as trustee is a U.S. person, if a trustee who is not a U.S. person has sole or shared investment discretion with
respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person; (iv)
an employee benefit plan established and administered in accordance with the law of a country other than the United States and
customary practices and documentation of such country; (v) any agency or branch of a U.S. person located outside the United States
if: (A) the agency or branch operates for valid business reasons; and (B) the agency or branch is engaged in the business of insurance
or banking and is subject to substantive insurance or banking regulation, respectively, in the jurisdiction where located; and
(vi) the International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension
plans, and any other similar international organizations, their agencies, affiliates and pension plans.

 

    	 

    	 

    

 

(a)The Investor is
not acting and purchasing (or proposes to purchase) the shares on behalf of any other persons, entities or accounts and is not
acquiring the shares for the account or benefit of a U.S. Person. The Investor represents and warrants that the Investor is not
a “U.S. Person” (as defined in Rule 902(k) under the Securities Act) and was located outside the United States at the
time any offer to buy the shares was made and at the time the buy offer was originated by the undersigned.

 

(b)If the Investor
is a legal entity, it has not been formed specifically for the purpose of investing in the Company.

 

(c)The Investor hereby
represents that he, she or it has satisfied and fully observed the laws of the jurisdiction in which he, she or it is located or
domiciled, in connection with the acquisition of the Shares, including (i) the legal requirements of the Investor’s jurisdiction
for the acquisition of the shares, (ii) any foreign exchange restrictions applicable to such acquisition, (iii) any governmental
or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, which may be relevant
to the holding, redemption, sale, or transfer of the shares; and further, the Investor agrees to continue to comply with such laws
as long as he, she or it shall hold the shares.

 

(d)To the knowledge
of the Investor, without having made any independent investigation, neither the Company nor any person acting for the Company,
has conducted any “directed selling efforts” in the United States as the term “directed selling efforts”
is defined in Rule 902 of Regulation S, which, in general, means any activity undertaken for the purpose of, or that could reasonably
be expected to have the effect of, conditioning the marketing in the United States for any of the Shares being offered. Such activity
includes, without limitation, the mailing of printed material to investors residing in the United States, the holding of promotional
seminars in the United States, and the placement of advertisements with radio or television stations broadcasting in the United
States or in publications with a general circulation in the United States, which discuss the offering of the shares. To the knowledge
of the Investor, the shares were not offered to the undersigned through, and the undersigned is not aware of, any form of general
solicitation or general advertising, including without limitation, (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over television or radio, and (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general advertising.

 

(e)The Investor will
offer, sell or otherwise transfer the shares, only (A) pursuant to a registration statement that has been declared effective under
the Securities Act, (B) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S in
a transaction meeting the requirements of Rule 904 (or other applicable Rule) under the Securities Act, or (C) pursuant to another
available exemption from the registration requirements of the Securities Act, subject to the Company’s right prior to any
offer, sale or transfer pursuant to clauses (B) or (C) to require the delivery of an opinion of counsel, certificates or other
information reasonably satisfactory to the Company for the purpose of determining the availability of an exemption.

 

(f)The Investor will
not engage in hedging transactions involving the Shares unless such transactions are in compliance with the Securities Act.

 

(g)The Investor represents
and warrants that the undersigned is not a citizen of the United States and is not, and has no present intention of becoming, a
resident of the United States (defined as being any natural person physically present within the United States for at least 183
days in a 12-month consecutive period or any entity who maintained an office in the United States at any time during a 12-month
consecutive period). The Investor understands that the Company may rely upon the representations and warranty of this paragraph
as a basis for an exemption from registration of the shares under the Securities Act of 1933, as amended, and the provisions of
relevant state securities laws.

 

    	 

    	 

    
 

 

5.11The Investor
is not a “disqualified organization.” “Disqualified organization” means (i) the federal government of the
United States; (ii) any state or political subdivision of the United States; (iii) any foreign government; (iv) any international
organization; (v) any agency or instrumentality of any of the organizations listed in clauses (i), (ii), (iii) or (iv) above; (vi)
any other tax exempt organization, other than a farmer’s cooperative described in Section 521 of the Code that is exempt
from both income taxation and from taxation under the unrelated business taxable income provisions of the Code; or (vii) any rural
electrical or telephone cooperative.

 

5.12The Investor
represents that neither it nor, to the Investor’s knowledge, any person or entity controlling, controlled by or under common
control with the Investor, nor any person or entity having a beneficial interest in the Investor, nor any other person or entity
on whose behalf the undersigned is acting (i) is a person or entity listed in the annex to Executive Order No. 13224 (2001) issued
by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism); (ii) is named on the List of Specially Designated Nationals and Blocked Persons maintained
by the U.S. Office of Foreign Assets Control (OFAC); (iii) is a non-U.S. shell bank or is providing banking services indirectly
to a non-U.S. shell bank; (iv) is a senior non-U.S. political figure or an immediate family member or close associate of such figure;
or (v) is otherwise prohibited from investing in the Company pursuant to applicable U.S. anti-money laundering, antiterrorist and
asset control laws, regulations, rules or orders (categories (i) through (v) collectively, a “Prohibited Investor”).
The Investor agrees to provide the Company, promptly upon request, all information that the Company reasonably deems necessary
or appropriate to comply with applicable U.S. anti-money laundering, antiterrorist and asset control laws, regulations, rules and
orders. The Investor consents to the disclosure to U.S. regulators and law enforcement authorities by the Company and its affiliates
and agents of such information about the Investor as the Company reasonably deems necessary or appropriate to comply with applicable
U.S. anti-money laundering, antiterrorist and asset control laws, regulations, rules and orders. If the Investor is a financial
institution that is subject to the PATRIOT Act, Public Law No. 107-56 (Oct. 26, 2001) (the “Patriot Act”), the Investor
represents that the Investor has met all of its respective obligations under the Patriot Act. The Investor acknowledges that if,
following the investment in the Company by the Investor, the Company reasonably believes that the Investor is a Prohibited Investor
or is otherwise engaged in suspicious activity or refuses to provide promptly information that the Company requests, the Company
has the right or may be obligated to prohibit additional investments, segregate the assets constituting the investment in accordance
with applicable regulations or immediately require Investor to transfer the Shares. The Investor further acknowledges that the
Investor will not have any claim against the Company or any of its affiliates or agents for any form of damages as a result of
any of the foregoing actions.

 

6.Notices.
All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (A) if within the United
States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or
by facsimile, or (B) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed
given (i) if delivered by first-class registered or certified mail, three business days after so mailed, (ii) if delivered by nationally
recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business
days after so mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt and shall be delivered as addressed
as follows:

 

	 	(a)	if to the Company, to:	Petrosonic Energy, Inc.
	 	 	 	57 Valley Woods Way NW
	 	 	 	Calgary, AB, Canada
	 	 	 	T3B 6A5
	 	 	 	Attn: Chief Executive Officer
	 	 	 	Phone: (403) 708-7869
	 	 	 	 
	 	(b)	with a copy to:	Greenberg Traurig LLP
	 	 	 	1201 K Street, Suite 1100
	 	 	 	Sacramento, CA 95814
	 	 	 	Attn: Mark C Lee
	 	 	 	Phone: (916) 442-1111
	 	 	 	Fax: (916) 448-1709

 

    	 

    	 

    

 

(c)if to the Investor,
at its address on the signature page hereto, or at such other address or addresses as may have been furnished to the Company in
writing.

 

7.Changes.
This Agreement may not be modified or amended except pursuant to an instrument in writing signed by the Company and the Investor.

 

8.Headings.
The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed
to be part of this Agreement.

 

9.Severability.
In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

 

10.Governing
Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Nevada, without
giving effect to the principles of conflicts of law.

 

11.Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed
by each party hereto and delivered to the other parties.

 

12.Rule 144.
The Company covenants that it will timely file the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such rep orts, it will,
upon the request of the Investor holding Shares and Warrant Shares purchased hereunder made after the first anniversary of the
Closing Date, make publicly available such information as necessary to permit sales pursuant to Rule 144 under the Securities Act),
and it will take such further action as the Investor may reasonably request, all to the extent required from time to time to enable
such Investor to sell Shares or Warrant Shares purchased hereunder without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of the Investor, the Company will deliver to such holder
a written statement as to whether it has complied with such information and requirements.

 

13.Confidential
Information. The Investor represents to the Company that, at all times during the Company’s offering of the Shares, the
Investor has maintained in confidence all non-public information regarding the Company received by the Investor from the Company
or its agents, and covenants that it will continue to maintain in confidence such information and shall not use such information
for any purpose other than to evaluate the purchase of the Shares until such information (a) becomes generally publicly available
other than through a violation of this provision by the Investor or its agents or (b) is required to be disclosed in legal proceedings
(such as by deposition, interrogatory, request for documents, subpoena, civil investigation demand, filing with any governmental
authority or similar process), provided, however, that before making any use or disclosure in reliance on this subparagraph (b)
the Investor shall give the Company at least fifteen (15) days prior written notice (or such shorter period as required by law)
specifying the circumstances giving rise thereto and will furnish only that portion of the non-public information which is legally
required and will exercise its best efforts to obtain reliable assurance that confidential treatment will be accorded any non-public
information so furnished.

  

    	 

    	 

    

 

Annex
II

 

Risk
Factors

 

The risks described below are the ones
the Company believes are the most important for the Investor to consider, although these risks are not the only ones that the Company
faces. If events anticipated by any of the following risks actually occur, the Company’s business, operating results or financial
condition could suffer and the trading price of the Company’s common stock could decline. 

 

 

Risks Related to our Business

 

We have incurred losses in prior periods
and may incur losses in the future.

 

We cannot be assured that we can achieve
or sustain profitability on a quarterly or annual basis in the future.  Our operations are subject to the risks and competition
inherent in the establishment of a business enterprise.  There can be no assurance that future operations will be profitable.  We
may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.

 

Our future is dependent upon our ability
to obtain financing.  If we do not obtain such financing, we may have to cease our activities and investors could lose
their entire investment.

 

There is no assurance that we will operate
profitably or generate positive cash flow in the future.  We will require additional financing in order to proceed beyond
the establishment of our own stand-alone facilities, including the processing facility in Albania.  We will also require
additional financing to pay the fees and expenses necessary to become and operate as a public company.  We will also need
more funds if the costs of the development and operation of our existing technologies are greater than we have anticipated.  We
will also require additional financing to sustain our business operations if we are not successful in earning revenues. We may
not be able to obtain financing on commercially reasonable terms or terms that are acceptable to us when it is required.  Our
future is dependent upon our ability to obtain financing.  If we do not obtain such financing, our business could fail
and investors could lose their entire investment.

 

Because we may never earn revenues from
our operations, our business may fail and investors may lose all of their investment in our Company.

 

We have no history of revenues from operations.  We
have yet to generate positive earnings and there can be no assurance that we will ever operate profitably.  Our company
has a limited operating history.  If our business plan is not successful and we are not able to operate profitably, then
our stock may become worthless and investors may lose all of their investment in our company.

 

Prior to completion of the oil processing
facility in Albania, we anticipate that we will incur increased operating expenses without realizing any revenues.  We
therefore expect to incur significant losses into the foreseeable future.  We recognize that if we are unable to generate
significant revenues from our processing facilities in the future, we will not be able to earn profits or continue operations.  There
is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance
that we will generate any revenues or ever achieve profitability.  If we are unsuccessful in addressing these risks,
our business will fail and investors may lose all of their investment in our company.

 

We may not be fully indemnified against
financial losses in all circumstances where damage to or loss of property, personal injury, death or environmental harm occur.

 

As is customary in our industry, our contracts
will typically provide that our customers indemnify us for claims arising from the injury or death of their employees, the loss
or damage of their equipment, damage to the reservoir and pollution emanating from the customer’s equipment or from the reservoir
(including uncontained oil flow from a reservoir). Conversely, we will typically indemnify our customers for claims arising from
the injury or death of our employees, the loss or damage of our equipment, or pollution emanating from our equipment. Our contracts
will typically provide that our customer will indemnify us for claims arising from catastrophic events, such as a well blowout,
fire or explosion.

 

    	 

    	 

    
 

 

Our indemnification arrangements may not
protect us in every case. For example, from time to time we may enter into contracts with less favorable indemnities or perform
work without a contract that protects us; our indemnity arrangements may be held unenforceable in some courts and jurisdictions;
or we may be subject to other claims brought by third parties or government agencies. Furthermore, the parties from which we seek
indemnity may not be solvent, may become bankrupt, may lack resources or insurance to honor their indemnities, or may not otherwise
be able to satisfy their indemnity obligations to us. The lack of enforceable indemnification could expose us to significant potential
losses.

Further, our assets generally are not insured
against loss from political violence such as war, terrorism or civil commotion. If any of our assets are damaged or destroyed as
a result of an uninsured cause, we could recognize a loss of those assets.

 

Our operations are subject to environmental
and other laws and regulations that may expose us to significant liabilities and could reduce our business opportunities and revenues.

 

We are subject to various laws and regulations
relating to the energy industry in general and the environment in particular. An environmental claim could arise with respect to
one or more of our current businesses, products or services, or a business or property that one of our predecessors owned or used,
and such claims could involve material expenditures. Generally, environmental laws have in recent years become more stringent and
have sought to impose greater liability on a larger number of potentially responsible parties. The scope of regulation of our industry
and our products and services may increase further following the April 2010 accident in the Gulf of Mexico, including possible
increases in liabilities or funding requirements imposed by governmental agencies. We also cannot ensure that our future business,
if any, will be profitable in light of new regulations that have been and may continue to be promulgated and in light of the current
risk environment and insurance markets. Additional regulation could increase the costs of conducting our business and could materially
reduce our business opportunities and revenues if our customers decrease their levels of activity in response to such regulation.

 

We are subject to significant foreign
exchange and currency risks that could adversely affect our operations and our ability to reinvest earnings from operations, as
well as mitigate our foreign exchange risk through hedging transactions may be limited.

 

Since we currently conduct a significant
portion our operations outside the United State of America, our business is subject to foreign currency risks, including currency
exchange rates fluctuations and difficulties in converting local currencies into U.S. dollars. The exchange rates between the Albanian
Lek, the Canadian dollar, the Euro and the U.S. dollar and other foreign currencies is affected by, among other things, changes
in local political and economic conditions. Such currency fluctuations may materially affect the Company’s financial position
and results of operations and a material change in currency rates in our markets could affect our future results as well as affect
the carrying values of our assets.

 

We generally attempt to denominate our
contracts in U.S. dollars or in the currencies of our costs. However, we may enter into contracts that subject us to currency risk
exposure, primarily when our contract revenue is denominated in a currency different than the contract costs. We anticipate that
a significant portion of our consolidated revenue and consolidated operating expenses will be in foreign currencies. As a result,
we will be subject to significant foreign currency risks, including risks resulting from changes in foreign exchange rates and
limitations on our ability to reinvest earnings from operations in one country to fund the financing requirements of our operations
in other countries.

Customer credit risks could result in losses. 

The concentration of our future customers
in the energy industry may impact our overall exposure to credit risk as customers may be similarly affected by prolonged changes
in economic and industry conditions. Those countries that rely heavily upon income from hydrocarbon exports would be hit particularly
hard by a drop in oil prices. Further, laws in some jurisdictions in which we may operate could make collection difficult or time
consuming. We will perform ongoing credit evaluations of our customers and generally do not plan to require collateral in support
of our trade receivables. While we may maintain reserves for potential credit losses, we cannot assure such reserves will be sufficient
to meet write-offs of uncollectible receivables or that our losses from such receivables will be consistent with our expectations.

 

Global political, economic and market
conditions could affect projected results.

 

Our operating results are based on our
current assumptions about oil supply and demand, oil prices, rig count and other market trends. Our assumptions on these matters
are in turn based on currently available information, which is subject to change. The oil industry is extremely volatile and subject
to change based on political and economic factors outside our control. A weakened global economic climate generally results in
lower demand and lower prices for oil, which reduces drilling, processing and production activity, which in turn results in lower
revenues and income for us. Worldwide drilling activity and global demand for oil may also be affected by changes in governmental
policies and sovereign debt, laws and regulations related to environmental or energy security matters, including those addressing
alternative energy sources and the risks of global climate change. Worldwide economic conditions, and the related demand for oil
, may in future periods be significantly weaker than we have assumed.

 

    	 

    	 

    

 

We may be unable to recognize our expected
revenues from current and future contracts. 

 

Our potential customers, some of whom may
be national oil companies, often have significant bargaining leverage over us and may elect to cancel or revoke contracts, not
renew contracts, modify the scope of contracts or delay contracts, in some cases preventing us from realizing expected revenues
and/or profits.

 

Increases in the prices and availability
of our raw materials could affect our results of operations. 

 

We use significant amounts of raw materials
(including steel and other metals, chemicals, plastics, polymers and energy inputs) for manufacturing our products, facilities
and some of our fixed assets. The price of these raw materials has a significant impact on our cost of producing products for sale
or constructing fixed assets used in our business. There can be no assurance that the prices of our raw materials will remain within
a manageable range and will be readily available. If we are unable to obtain necessary raw materials or if we are unable to minimize
the impact of increased raw material costs or to realize the benefit of cost decreases in a timely fashion through our supply chain
initiatives or pricing, our margins and results of operations could be adversely affected.

 

Our long-term growth depends upon technological
innovation and commercialization. 

 

 Our ability to deliver our long-term
growth strategy depends in part on the commercialization of new technology. A central aspect of our growth strategy is to improve
our products and services through innovation, to obtain technologically advanced products through internal research and development
and/or acquisitions, to protect proprietary technology from unauthorized use and to expand the markets for new technology by leveraging
our infrastructure. Our success will depend on our ability to commercialize the technology that we have acquired and demonstrate
the enhanced value our technology brings to our customers’ operations. Our major technological advances include, but are
not limited to, those related to the design of enhanced mass transfer energy processes and reactors. We cannot be assured of the
successful commercialization of, and above-average growth from, our new products and services, as well as legal protection of our
intellectual property rights. Any failure in the commercialization of our technology could adversely affect our business and results
of operations.  

 

If we are unable to enforce our intellectual
property rights or if our intellectual property rights become obsolete, our competitive position could be adversely impacted.

 

We utilize a variety of intellectual property
rights in our services. We view our portfolio of process and design technologies as one of our competitive strengths and we use
it as part of our efforts to differentiate our service offerings. We may not be able to successfully preserve these intellectual
property rights in the future and these rights could be invalidated, circumvented, challenged or infringed upon. In addition, the
laws of some foreign countries in which our services may be sold do not protect intellectual property rights to the same extent
as the laws of the United States. If we are unable to protect and maintain our intellectual property rights, or if there are any
successful intellectual property challenges or infringement proceedings against us, our ability to differentiate our service offerings
could diminish. In addition, if our intellectual property rights or work processes become obsolete, we may not be able to differentiate
our service offerings and some of our competitors may be able to offer more attractive services to our customers. As a result,
our business and financial performance could be materially and adversely affected.

 

 

    	 

    	 

    

 

International and political events may adversely affect our
operations.

 

A significant portion of our revenue will
be derived from foreign operations, which exposes us to risks inherent in doing business in each of the countries where we transact
business. The occurrence of any of the risks described below could have a material adverse effect on our business operations and
financial performance. With respect to any particular country, these risks may include:

 

		·	expropriation and nationalization of our assets in that country;

 

		·	political and economic instability;

 

		·	civil unrest, acts of terrorism, force majeure, war, or other armed conflict;

 

		·	currency fluctuations, devaluations, and conversion restrictions;

 

		·	confiscatory taxation or other adverse tax policies;

 

		·	governmental activities that limit or disrupt markets, restrict payments, or limit the movement
of funds;

 

		·	governmental activities that may result in the deprivation of contract rights; and

 

		·	governmental activities that may result in the inability to obtain or retain licenses required
for operation.

 

Due to the unsettled political conditions
in many oil-producing countries, our financial performance is subject to the adverse consequences of war, the effects of terrorism,
civil unrest, strikes, currency controls, and governmental actions. Our customer’s operations are conducted in areas that
have significant amounts of political risk. In addition, military action or continued unrest in the Middle East could impact the
supply and price of oil, disrupt our customer’s operations in the region and elsewhere, and increase our costs related to
security worldwide.

 

Economic and political developments
in Albania may adversely affect our business.

 

A significant portion of our operations
and assets are currently located in Albania. As a result, our financial condition, results of operations and business may be affected
by and are subject to the general condition of the Albanian economy, the devaluation of the Albania Lek as compared to the U.S.
Dollar, Albanian inflation, interest rates, regulation, taxation, social instability and other political, social and economic developments
in or affecting Albania, including changes in the laws and policies that govern foreign investment, as well as changes in United
States laws and regulations relating to foreign trade and investment, over which we have no control. There can be no assurance
as to the future effect of any such changes on our results of operations, financial condition, or cash flows.

 

The dangers inherent in our operations
could cause disruptions and could expose us to potentially significant losses, costs, or liabilities. Any significant interruptions
in the operations of any of our facilities could materially and adversely affect our business, financial condition, and results
of operations.

 

Our operations are subject to significant
hazards and risks inherent in refining operations and in transporting and storing crude oil. These hazards and risks include, but
are not limited to, the following:

 

		·	natural disasters;

 

    	 

    	 

    

 

		·	weather-related disruptions;

 

		·	fires;

 

		·	explosions;

 

		·	pipeline ruptures and spills;

 

		·	third-party interference;

 

		·	disruption of natural gas deliveries;

 

		·	disruptions of electricity deliveries; and

 

		·	mechanical failure of equipment at our refineries or third-party facilities

 

Any of the foregoing could result in production
and distribution difficulties and disruptions, environmental pollution, personal injury or wrongful death claims, and other damage
to our properties and the properties of others. There is also risk of mechanical failure and equipment shutdowns both in general
and following unforeseen events.

 

Our activities will initially be conducted
at our facility in Albania. This facility constitutes a significant portion of our operating assets. Because of the significance
to us of this operation, the occurrence of any of the events described above could significantly disrupt our processing of crude
oil, and any sustained disruption could have a material adverse effect on our business, financial condition, and results of operations.

We may incur significant costs to comply
with environmental and health and safety laws and regulations.

 

Our operations and properties are subject
to extensive national, state, and local environmental, health, and safety regulations governing, among other things, the generation,
storage, handling, use, and transportation of petroleum and hazardous substances, the emission and discharge of materials into
the environment, waste management, characteristics, and the monitoring, reporting, and control of greenhouse gas emissions. If
we fail to comply with these regulations, we may be subject to administrative, civil, and criminal proceedings by governmental
authorities, as well as civil proceedings by environmental groups and other entities and individuals. A failure to comply, and
any related proceedings, including lawsuits, could result in significant costs and liabilities, penalties, judgments against us,
or governmental or court orders that could alter, limit, or stop our operations.

  

In addition, new environmental laws and
regulations, including new regulations relating to alternative energy sources, new regulations relating to fuel quality, and the
risk of global climate change regulation, as well as new interpretations of existing laws and regulations, increased governmental
enforcement, or other developments could require us to make additional unforeseen expenditures. Many of these laws and regulations
are becoming increasingly stringent, and the cost of compliance with these requirements can be expected to increase over time.
We are not able to predict the impact of new or changed laws or regulations or changes in the ways that such laws or regulations
are administered, interpreted, or enforced. The requirements to be met, as well as the technology and length of time available
to meet those requirements, continue to develop and change. To the extent that the costs associated with meeting any or all of
these requirements are substantial and not adequately provided for, there could be a material adverse effect on our business, financial
condition, and results of operations.

 

 

    	 

    	 

    

 

We may not have sufficient crude oil
to be able to run our Albania facility at full capacity.

 

Our Albania facility will process crude
oil from the local regions around the facility. To the extent sufficient local crude oil cannot be contracted to process and we
are unable to contract sufficient crude oil from non-local sources to supply the Albania facility, we may not have sufficient crude
oil to run the Albania facility at full capacity, which could have a material adverse impact on our business, financial condition,
and results of operations.

 

We could incur substantial costs or
disruptions in our business if we cannot obtain or maintain necessary permits and authorizations.

 

Our operations require numerous permits
and authorizations under various laws and regulations, including environmental and health and safety laws and regulations. These
authorizations and permits are subject to revocation, renewal, or modification and can require operational changes, which may involve
significant costs, to limit impacts or potential impacts on the environment and/or health and safety. A violation of these authorization
or permit conditions or other legal or regulatory requirements could result in substantial fines, criminal sanctions, permit revocations,
injunctions and/or refinery shutdowns. In addition, major modifications of our operations could require modifications to our existing
permits or expensive upgrades to our existing pollution control equipment, which could have a material adverse effect on our business,
financial condition, or results of operations.

 

Risks Associated with our Company
and our Securities

 

We will be required to incur significant
costs and require significant management resources to evaluate our internal control over financial reporting as required under
Section 404 of the Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse
effect on our stock price. 

 

As a smaller reporting company as defined
in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial
reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires us to include an
internal control report with the Annual Report on Form 10-K. This report must include management’s assessment of the effectiveness
of our internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of
any material weaknesses in internal control over financial reporting that we have identified. Failure to comply, or any adverse
results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect
on the trading price of our equity securities. Management believes that its internal controls and procedures are currently not
effective to detect the inappropriate application of U.S. GAAP rules. Management realize there are deficiencies in the design or
operation of our internal control that adversely affect our internal controls which management considers to be material weaknesses
including those described below:

 

	 	i)	The Company’s management is relying on external consultants for purposes of preparing its financial reporting package and may not be able to identify errors and irregularities in the financial reporting package before its release as a continuous disclosure document
	 	 	 
	 	ii)	As the Company is governed by one officer who is also a director, there is an inherent lack of segregation of duties and lack of independent governing board
	 	 	 

Achieving continued compliance with Section
404 may require us to incur significant costs and expend significant time and management resources. We cannot assure you that we
will be able to fully comply with Section 404 or that we and our independent registered public accounting firm would be able to
conclude that our internal control over financial reporting is effective at fiscal year end. As a result, investors could lose
confidence in our reported financial information, which could have an adverse effect on the trading price of our securities, as
well as subject us to civil or criminal investigations and penalties. In addition, our independent registered public accounting
firm may not agree with our management’s assessment or conclude that our internal control over financial reporting is operating
effectively.

 

    	 

    	 

    

 

All of our assets, and our sole officer
and director, are outside the United States, with the result that it may be difficult for investors to enforce within the United
States any judgments obtained against us or our directors and officers.

 

All of our assets are located outside the
United States. In addition, our sole officer and director is a national and resident of a country other than the United States,
and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors
to enforce within the United States any judgments obtained against us or our director and officers, including judgments predicated
upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be
effectively prevented from pursuing remedies under United States federal and state securities laws against us or our directors
and officers.

 

Our business is dependent on key executives
and the loss of any of our key executives could adversely affect our business, future operations and financial condition.

 

We are dependent on the services of key
executives, including our sole officer and director, Art Agolli. Mr. Agolli has many years of experience and an extensive background
in the oil industry in general. We may not be able to replace that experience and knowledge with other individuals. We do not have
“Key-Man” life insurance policies on our key executives. The loss of our key executives or our inability to attract
and retain additional highly skilled employees may adversely affect our business, future operations, and financial condition.

The elimination of monetary liability
against our directors, officers and employees under Nevada law and the existence of indemnification rights to our directors, officers
and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers
and employees.

 

Our Articles of Incorporation contain a
provision permitting us to eliminate the personal liability of our directors to our company and shareholders for damages for breach
of fiduciary duty as a director or officer to the extent provided by Nevada law.  The foregoing indemnification obligations
could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors
and officers, which we may be unable to recoup.  These provisions and resultant costs may also discourage our company
from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the
filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful,
might otherwise benefit our company and shareholders.

 

Our stock is categorized as a penny
stock.  Trading of our stock may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s
ability to buy and sell our stock.

 

Our stock is categorized as a penny stock.  The
SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price
(as defined) less than US$ 5.00 per share or an exercise price of less than US$ 5.00 per share, subject to certain exceptions.  Our
securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell
to persons other than established customers and accredited investors.  The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document
in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock
market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker-dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer’s confirmation.  In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must
make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s
written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny
stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules
discourage investor interest in and limit the marketability of our common stock.

 

 

    	 

    	 

    

 

FINRA sales practice requirements
may also limit a shareholder’s ability to buy and sell our stock.

 

In addition to the “penny stock”
rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must
have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative
low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about
the customer’s financial status, tax status, investment objectives and other information.  Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for
at least some customers.  The FINRA requirements make it more difficult for broker-dealers to recommend that their customers
buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

To date, we have not paid any cash dividends
and no cash dividends will be paid in the foreseeable future.

 

We do not anticipate paying cash dividends
on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay dividends.  Even
if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends.  We presently
intend to retain all earnings for our operations.

 

A limited public trading market exists
for our common stock, which makes it more difficult for our stockholders to sell their common stock in the public markets.

 

Our common shares are currently traded
under the symbol “PSON,” but currently with low or no volume, based on quotations on the “Over-the-Counter Bulletin
Board,” meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given
time may be relatively small or non-existent.  This situation is attributable to a number of factors, including the fact
that we are a small company which is still relatively unknown to stock analysts, stock brokers, institutional investors, and others
in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons,
they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase
of our shares until such time as we became more viable.  Additionally, many brokerage firms may not be willing to effect
transactions in the securities.  As a consequence, there may be periods of several days or more when trading activity
in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity
that will generally support continuous sales without an adverse effect on share price.  We cannot give you any assurance
that a broader or more active public trading market for our common stock will develop or be sustained, or that trading levels will
be sustained.

 

Shareholders should be aware that, according
to SEC Release No. 34-29093, the market for “penny stocks” has suffered in recent years from patterns of fraud and
abuse.  Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and
misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5)
the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level,
along with the resulting inevitable collapse of those prices and with consequent investor losses.  Our management is
aware of the abuses that have occurred historically in the penny stock market.  Although we do not expect to be in a
position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within
the confines of practical limitations to prevent the described patterns from being established with respect to our securities.  The
occurrence of these patterns or practices could increase the future volatility of our share price.

 

    	 

    	 

    
 

 

If we issue additional shares in the
future, it will result in the dilution of our existing shareholders.

 

Our articles of incorporation authorize
the issuance of up to 843,750,000 shares of common stock with a par value of $0.001 per share. Our Board of Directors may choose
to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating
requirements. The issuance of any such shares may reduce the book value per share and may contribute to a reduction in the market
price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate
ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

 

THE FOREGOING RISK FACTORS
DO NOT PURPORT TO BE A COMPLETE EXPLANATION OF ALL OF THE RISKS INVOLVED IN PURCHASING THE SHARES OFFERED HEREIN. POTENTIAL INVESTORS
SHOULD READ THIS MEMORANDUM IN ITS ENTIRETY AND REVIEW THE COMPANY’S EXCHANGE ACT DOCUMENTS BEFORE DETERMINING WHETHER TO
PURCHASE THE SHARES.

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