Document:

Wells CORE REIT Q2 2012 EX 10.3

EXHIBIT 10.3
ADVISORY AGREEMENT

THIS ADVISORY AGREEMENT, is made and entered into this 7th day of August, 2012, by and between WELLS CORE OFFICE INCOME REIT, INC., a Maryland corporation (the “Company”), and WELLS CORE OFFICE INCOME REIT ADVISORY SERVICES, LLC (formerly known as Wells Real Estate Advisory Services III, LLC), a Georgia limited liability company (the “Advisor”).
W I T N E S S E T H

WHEREAS, the Company desires to avail itself of the experience, sources of information, advice, assistance and certain facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the Board of Directors of the Company all as provided herein; and
WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board of Directors, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:
1.Definitions.  As used in this Advisory Agreement (the “Agreement”), the following terms have the definitions hereinafter indicated:

Acquisition Expenses.  Any and all expenses, excluding the fee payable to the Advisor pursuant to Paragraph 8(b), incurred by the Company, the Advisor, or any Affiliate of either in connection with the selection, acquisition, origination or development of any Property, Loan or other Permitted Investment whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, and title insurance premiums.
Acquisition Fees.  Any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person to any other Person (including any fees or commissions paid by or to any Affiliate of the Company or the Advisor) in connection with purchase, development, origination or construction of any Property, Loan or other Permitted Investment.  Included in the computation of such fees or commissions shall be any real estate commissions, acquisition fees, finder's fees, selection fees, Development Fees, Construction Fees, nonrecurring management fees, loan fees, points, or any other fees or commissions of a similar nature.  Excluded shall be Development Fees and Construction Fees paid to Persons not Affiliated with the Advisor in connection with the actual development and construction of a Property.
Adjusted Cost.  (A) As of any date of determination and until such time as the Company completes an Asset-based Valuation, the sum of: (a) other than with respect to Joint Ventures, the actual amount invested on behalf of the Company in Properties, Loans and other Permitted Investments as of the date of determination and (b) with respect to Joint Ventures, (1) the actual amount invested on behalf of the Company in the Joint Ventures as of the date of determination plus (2) the Company's allocable share of capital improvements.
(B) On and after such time as the Company completes an Asset-based Valuation, “Adjusted Cost” means, as of any date of determination, the lesser of (1) the amount determined in accordance with paragraph (A) above or (2) the aggregate value of the Company's interest in the Properties, Loans and other Permitted Investments and Joint Ventures as established in connection with the most recent Asset-based Valuation.  
Advisor.  Wells Core Office Income REIT Advisory Services, LLC (formerly known as Wells Real Estate Advisory Services III, LLC), a Georgia limited liability company, any successor advisor to the Company, or any Person(s) to which Wells Core Office Income REIT Advisory Services, LLC or any successor advisor subcontracts substantially all of its functions.
Affiliate or Affiliated.  An Affiliate of another Person includes only the following:  (i) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (ii) any Person directly or indirectly owning, controlling, or holding with the power to vote 10% or more of the outstanding voting securities of such other Person; (iii) any legal entity for which such Person acts as an executive officer, director, trustee, or general partner; (iv) any Person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other

Person; and (v) any executive officer, director, trustee, or general partner of such other Person.  An entity shall not be deemed to control or be under common control with an Advisor-sponsored program (or an Affiliate of an Advisor-sponsored program) unless (i) the entity owns 10% or more of the voting equity interests of such program or (ii) a majority of the board (or equivalent governing body) of such program is comprised of Affiliates of the entity.  
Appraised Value.  The “As Is” fair market value according to an appraisal made by an Independent Appraiser.
Articles of Incorporation.  The Articles of Incorporation of the Company under Title 2 of the Corporations and Associations Article of the Annotated Code of Maryland, as amended from time to time.
Asset-based Valuation.  An estimate of the value of a share of the Company's common stock approved by the Board of Directors of the Company and based in part on an estimate of the value of the Company's assets (as opposed to an estimate based solely on the most recent price paid for a share of the Company's common stock in an offering of such shares).  
Asset Management Fee.  The Asset Management Fee payable to the Advisor as defined in Paragraph 8(a).
Asset Management Fee Percentage.  The Asset Management Fee Percentage equals 0.75%.  
Average Invested Assets.  For a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Properties, Loans and other Permitted Investments secured by real estate before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period.  
Board of Directors or Board.  The persons holding such office, as of any particular time, under the Articles of Incorporation of the Company, whether they be the Directors named therein or additional or successor Directors.
Bylaws.  The bylaws of the Company, as the same are in effect from time to time.
Capped O&O Expenses.  All Organizational and Offering Expenses other than selling commissions and the dealer manager fee as described under “Plan of Distribution” in the Registration Statement.
Cash from Financings.  Net cash proceeds realized by the Company from the financing of Property, Loans or other Permitted Investments or from the refinancing of any Company indebtedness.
Cash from Sales.  Net cash proceeds realized by the Company from the sale, exchange or other disposition of any of its assets after deduction of all expenses incurred in connection therewith.  Cash from Sales shall not include Cash from Financings.
Cash from Sales and Financings.  The total sum of Cash from Sales and Cash from Financings.
Code.  Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto.  Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.
Company.  Wells Core Office Income REIT, Inc., a corporation organized under the laws of the State of Maryland.
Competitive Real Estate Commission.  A real estate or brokerage commission for the purchase or sale of property which is reasonable, customary, and competitive in light of the size, type, and location of the property. 
Conflicts Committee.  “Conflicts Committee” shall have the meaning set forth in the Articles of Incorporation.  
Construction Fee.  A fee or other remuneration for acting as general contractor and/or construction manager to construct improvements, supervise and coordinate projects or to provide major repairs or rehabilitation on a Property. 
Contract Sales Price.  The total consideration received by the Company for the sale of a Property, Loan or other Permitted Investment.
Development Fee.  A fee for the packaging of a Property, including negotiating and approving plans, and undertaking to assist in obtaining zoning and necessary variances and necessary financing for the Property, either initially or at a later date.

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Director.  A member of the Board of Directors of the Company.

Disposition Fee.  The Disposition Fee as defined in Paragraph 8(d).
Distributions.  Any distributions of money or other property by the Company to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes.
Event of Default.  An Event of Default as defined in Paragraph 21.
Financing Fee.  The Financing Fee as defined in Paragraph 8(c).
Gross Proceeds.  The aggregate purchase price of all Shares sold for the account of the Company through an Offering, without deduction for Organization and Offering Expenses. 
Guaranteed Obligations.  The Guaranteed Obligations as defined in Paragraph 23.
Guarantor.  The Guarantor as defined in Paragraph 23.
Independent Appraiser.  A person or entity with no material current or prior business or personal relationship with the Advisor or the Directors, who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company, and who is a qualified appraiser of real estate as determined by the Board.  Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers (“M.A.I.”) or the Society of Real Estate Appraisers (“S.R.E.A.”) shall be conclusive evidence of such qualification.
Invested Capital.  The amount calculated by multiplying the total number of Shares purchased by stockholders by the issue price, reduced by the portion of any Distribution that is attributable to Net Sales Proceeds and by any amounts paid by the Company to repurchase Shares pursuant to the Company's plan for redemption of Shares.  For purposes of calculating the Stockholders' 8% Return, Invested Capital shall be determined for each day during the period for which the Stockholders' 8% Return is being calculated net of (1) Distributions of Cash from Sales and Financings, except to the extent such Distributions would be required to achieve a cumulative, non-compounded, annual return of 8%, and (2) Distributions other than from Cash from Sales and Financings to the extent such Distributions provide a cumulative, non-compounded, annual return in excess of 8%, as all such amounts are computed on a daily basis based on a three hundred sixty-five day year.
Joint Venture.  Any joint venture, limited liability company or other Affiliate of the Company that owns, in whole or in part on behalf of the Company, any Property, Loan or other Permitted Investment.
Listing.  The listing of the Shares on a national securities exchange or over-the-counter market.
Loans.  Mortgage loans and other types of debt financing investments made by the Company or the Partnership, either directly or indirectly, including through ownership interests in a Joint Venture or partnership, and including, without limitation, mezzanine loans, B-notes, bridge loans, convertible mortgages, wraparound mortgage loans, construction mortgage loans, loans on leasehold interests, and participations in such loans.
Major Lease(s).  Any new lease or the renewal or extension of an existing lease that exceeds certain thresholds as defined by the Board or a committee thereof from time to time.
NASAA Guidelines.  The NASAA Statement of Policy Regarding Real Estate Investment Trusts as in effect on the date hereof. 
Net Asset Value.  The excess of (i) the aggregate of the Adjusted Cost over (ii) the aggregate outstanding amount of debt of the Company, the Partnership, and the Joint Ventures (as adjusted for the Company's interest in such Joint Ventures) and any accrued interest thereon (excluding debt borrowed for purposes other than acquiring or refinancing Properties).
Net Income.  For any period, the total revenues applicable to such period, less the total expenses applicable to such period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, Net Income for purposes of calculating total allowable Operating Expenses (as defined herein) shall exclude the gain from the sale of the Company's assets.

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Net Sales Proceeds.  In the case of a transaction described in clause (i) (A) of the definition of Sale, the proceeds of any such transaction less the amount of all real estate commissions and closing costs paid by the Company. In the case of a transaction described in clause (i) (B) of such definition, Net Sales Proceeds means the proceeds of any such transaction less the amount of any legal and other selling expenses incurred in connection with such transaction. In the case of a transaction described in clause (i) (C) of such definition, Net Sales Proceeds means the proceeds of any such transaction actually distributed to the Company from the joint venture.  In the case of a transaction described in clause (ii) of the definition of Sale, Net Sales Proceeds means the proceeds of such transaction or series of transactions less all amounts generated thereby and reinvested in one or more Properties within 180 days thereafter and less the amount of any real estate commissions, closing costs, and legal and other selling expenses incurred by or allocated to the Company in connection with such transaction or series of transactions.  Net Sales Proceeds shall not include any reserves established by the Company in its sole discretion.
Offering.  Any offering of Shares that is registered with the SEC, excluding Shares offered under any employee benefit plan.
Operating Expenses.  All costs and expenses incurred by the Company, as determined under generally accepted accounting principles, which in any way are related to the operation of the Company or to Company business, including fees paid to the Advisor, but excluding (i) the expenses of raising capital such as Organization and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and tax incurred in connection with the issuance, distribution, transfer, registration and Listing of the Shares, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad loan reserves, (v) incentive fees paid in compliance with Section IV.F. of the NASAA Guidelines and (vi) Acquisition Fees, Acquisition Expenses, real estate commissions on resale of property, and other expenses connected with the acquisition, disposition, and ownership of real estate interests, mortgage loans or other property (such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property).
Organization and Offering Expenses.  All expenses incurred by and to be paid from the assets of the Company in connection with and in preparing the Company for registration of and subsequently offering and distributing its Shares to the public, which may include but are not limited to, total underwriting and brokerage discounts and commissions (including fees of the underwriters' attorneys); expenses for printing, engraving and mailing; salaries of employees while engaged in sales activity; charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts; and expenses of qualification of the sale of the securities under Federal and State laws, including taxes and fees, accountants' and attorneys' fees.  
Partnership.  Wells Core Office Income Operating Partnership, L.P., a Delaware limited partnership formed to own and operate properties on behalf of the Company.
Permitted Investments.  All investments (other than Properties and Loans) in which the Company acquires an interest, either directly or indirectly, including through ownership interests in a Joint Venture or partnership, pursuant to its Articles of Incorporation, Bylaws and the investment objectives and policies adopted by the Board from time to time, other than short-term investments acquired for purposes of cash management.
Person.  An individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c) (17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government or any agency or political subdivision thereof, and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
Property or Properties.  Any real property or properties transferred or conveyed to the Company or the Partnership, either directly or indirectly, and/or any real property or properties transferred or conveyed to a Joint Venture or partnership in which the Company is, directly or indirectly, a co-venturer or partner.  
Property Manager.  Any entity that has been retained to perform and carry out at one or more of the Properties property management services, excluding persons, entities or independent contractors retained or hired to perform facility management or other services or tasks at a particular Property, the costs for which are passed through to and ultimately paid by the tenant at such Property.
REIT.  A “real estate investment trust” under Sections 856 through 860 of the Code.
Sale or Sales.  (i) Any transaction or series of transactions whereby: (A) the Company or the Partnership sells, grants, transfers, conveys, or relinquishes its ownership of any Property, Loan or other Permitted Investment or portion thereof, 

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including the transfer of any Property that is the subject of a ground lease, and including any event with respect to any Property, Loan or other Permitted Investment that gives rise to a significant amount of insurance proceeds or condemnation awards; (B) the Company or the Partnership sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Partnership in any Joint Venture or partnership in which it is, directly or indirectly, a co-venturer or partner; or (C) any Joint Venture or partnership (in which the Company or the Partnership is, directly or indirectly, a co-venturer or partner) sells, grants, transfers, conveys, or relinquishes its ownership of any Property, Loan or other Permitted Investment or portion thereof, including any event with respect to any Property, Loan or other Permitted Investment that gives rise to insurance claims or condemnation awards, but (ii) not including any transaction or series of transactions specified in clause (i) (A), (i) (B), or (i) (C) above in which the proceeds of such transaction or series of transactions are reinvested in one or more Properties, Loans or other Permitted Investments within 180 days thereafter.
Shares.  The Company's shares of common stock, par value $0.01 per share.    
Stockholders.  The registered holders of the Shares.
Stockholders' 8% Return means, as of any date, an aggregate amount equal to an 8% cumulative, non-compounded, annual return on Invested Capital (calculated like simple interest on a daily basis based on a three hundred sixty-five day year).  
Subordinated Incentive Fee.  The fee payable to the Advisor under certain circumstances if the Shares are listed on a national securities exchange or over-the-counter market as defined in Paragraph 8(f).
Subordinated Incentive Fee Threshold.  The Subordinated Incentive Fee Threshold as defined in Paragraph 8(f).
Subordinated Performance Fee Due Upon Termination.  Subordinated Performance Fee Due Upon Termination means a fee equal to (1) 15% of the amount, if any, by which (a) the Appraised Value of the Company's Properties at the Termination Date, less amounts of all indebtedness secured by the Company's Properties, plus the fair market value of all other Loans and Permitted Investments of the Company at the Termination Date, less amounts of indebtedness related to such Loans and Permitted Investments, plus total Distributions (excluding any stock dividend and Distributions paid on Shares that have been redeemed by the Company) through the Termination Date exceeds (b) the sum of Invested Capital plus total Distributions required to be made to the stockholders in order to pay the Stockholders' 8% Return from inception through the Termination Date to then existing Stockholders less (2) any prior payment to the Advisor of a Subordinated Share of Net Sales Proceeds.  For the purpose of the foregoing calculations, all asset values and liabilities shall be adjusted to exclude the portion of such amounts allocable to minority interest holders not otherwise considered in the calculation in the value of Joint Ventures.
Subordinated Performance Fee Due Upon Termination Threshold.  Subordinated Performance Fee Due Upon Termination Threshold means an amount equal to the sum of Invested Capital plus total Distributions required to be made the stockholders in order to pay the Stockholders' 8% Return from inception through the Termination Date to then existing Stockholders.
Subordinated Share of Net Sales Proceeds.  The Subordinated Share of Net Sales Proceeds as defined in Paragraph 8(e).
Subordinated Share of Net Sales Proceeds Threshold.  The Subordinated Share of Net Sales Proceeds Threshold as defined in Paragraph 8(e).
Termination Date.  The date of termination of the Agreement.
2%/25% Guidelines.  The requirement pursuant to the NASAA Guidelines that, in any 12-month period, total Operating Expenses not exceed the greater of 2% of the Company's Average Invested Assets during such 12-month period or 25% of the Company's Net Income over the same 12-month period.
1.Appointment.  The Company hereby appoints the Advisor to serve as its advisor and asset manager on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

2.Duties and Authority of the Advisor.  The Advisor undertakes to use its reasonable efforts (1) to present to the Company potential investment opportunities to provide a continuing and suitable investment program consistent with (i) the investment objectives and policies of the Company as determined and adopted from time to time by the Board and (ii) the investment allocation method described at Paragraph 11(b) of this Agreement and (2) to manage, administer, promote, maintain, and improve the Properties on an overall portfolio basis in a diligent manner.  The services of the Advisor are to be of 

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scope and quality not less than those generally performed by professional prudent asset managers of other similar property portfolios.  The Advisor shall make available the full benefit of the judgment, experience and advice of the members of the Advisor's organization and staff with respect to the duties it will perform under this Agreement.  The Advisor shall also obtain Property Managers, which may include Affiliates of the Advisor, to manage, promote, and lease the Properties.  To facilitate the Advisor's performance of these undertakings, but subject to the restrictions included in Paragraphs 4 and 7 and to the continuing and exclusive authority of the Board over the management of the Company and the Partnership, the Company hereby delegates to the Advisor the authority to, and the Advisor hereby agrees to, either directly or by engaging an Affiliate:

(a)serve as the Company'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 of the Company and perform and supervise the various administrative functions reasonably necessary for the management of the Company;

(c)maintain and preserve the books and records of the Company, including a stock ledger reflecting a record of the Stockholders and their ownership of the Company's Shares and acting as transfer agent for the Company's Shares and maintaining the accounting and other record-keeping functions at the asset and Company levels;

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

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

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

(g)oversee the performance by the loan servicers of their duties, including collection, and other loan administration services;

(h)conduct periodic on-site property visits to some or all (as the Advisor deems reasonably necessary) of the Properties to inspect the physical condition of the Properties and to evaluate the performance of the related Property Manager of its duties; 

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

(j)review and analyze on-going financial information pertaining to each Property, Loan and other Permitted Investment and the overall portfolio of Properties, Loans and other Permitted Investments; 

(k)formulate and oversee the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing, and disposition of Properties, Loans and other Permitted Investments on an overall portfolio basis;

(l)subject to the provisions of Paragraphs 3(m) and 4 hereof, (i) locate, analyze and select potential investments in Properties, Loans and other Permitted Investments, (ii) structure and negotiate the terms and conditions of transactions pursuant to which investment in Properties, Loans and other Permitted Investments will be made; (iii) coordinate the making of investments in Properties, Loans and other Permitted Investments on behalf of the Company or the Partnership in compliance with the investment objectives and policies of the Company; (iv) arrange for financing and refinancing and make other changes in the asset or capital structure of, and coordinate disposition of, reinvest the proceeds from the sale of, or otherwise deal with the investments in, any Property, Loan or other Permitted Investment; (v) enter into service contracts, as applicable, for each Property, Loan or other Permitted Investment including oversight of Affiliated companies that perform property management 

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services or loan servicing for the Company; (vi) oversee non-affiliated property managers and loan servicers and other non-affiliated Persons who perform services for the Company; (vii) negotiate, and present to the Company for execution by the Company, all leases for each Property; and (viii) to the extent necessary, perform all other operational functions for the maintenance and administration of such Property, Loan or other Permitted Investment;

(m)obtain the prior approval of the Board for any and all Major Leases and material amendments to Major Leases and all investments in Properties, Loans and other Permitted Investments (as well as any financing acquired by the Company or the Partnership in connection with such investment);

(n)if a transaction requires approval by the Board of Directors, deliver to the Board of Directors all documents required by them to properly evaluate the proposed investment in the Property, Loan or other Permitted Investment;

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

(p)obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of investments or contemplated investments of the Company in Properties, Loans and other Permitted Investments;

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

(r)from time to time, or at any time reasonably requested by the Board, make reports to the Board of the investment opportunities it has presented to other Advisor-sponsored programs or that it has pursued directly or through an Affiliate;

(s)provide the Company with all necessary cash management services;

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

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

(v)at the direction of Company management, prepare the Company's periodic reports and other filings made under the Securities Exchange Act of 1934, as amended, and the Company's Post-Effective Amendments to the Registration Statement as well as all related prospectuses, prospectus supplements and supplemental sales literature and assist in connection with the filing of such documents with the appropriate regulatory authorities; and

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

3.Modification or Revocation of Authority of Advisor.  The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority or approvals set forth in Paragraph 3, 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 (after obtaining approval of the Board of Directors if required hereunder) prior to the date of receipt by the Advisor of such notification.

4.Bank Accounts.  The Advisor may establish and maintain one or more bank accounts in its own name for the account of the Company or in the name of the Company and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company, under such terms and conditions as the Board may approve, provided that no funds shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and to the auditors of the Company.

5.Records; Access.  The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Board and by counsel, auditors and authorized agents of the Company, at any time or from time to time during normal business hours. The Advisor shall at all reasonable times have access to the books and records of the Company.

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6.Limitations on Activities.  Anything else in this Agreement to the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its reasonable judgment, would (a) adversely affect the status of the Company as a REIT, (b) subject the Company to regulation under the Investment Company Act of 1940, as amended, or (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, its Shares or its other securities, or the Articles of Incorporation or Bylaws, except if such action shall be ordered by the Board, in which case the Advisor shall notify promptly the Board of the Advisor's judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board.  In such event the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, its directors, officers, employees and stockholders, and stockholders, directors and officers of the Advisor's Affiliates shall not be liable to the Company or to the Board or stockholders for any act or omission by the Advisor, its directors, officers or employees, or stockholders, directors or officers of the Advisor's Affiliates except as provided in Paragraphs 18 and 19 of this Agreement.

7.Fees.

(a)Asset Management Fee.  Subject to the overall limitations contained below in this Paragraph 8(a), commencing on August 7, 2012, the Advisor shall be paid for the asset management services included in the services described in Paragraph 3 a monthly fee (the “Asset Management Fee”) in an amount equal to one-twelfth of the product of the Asset Management Fee Percentage multiplied by the Adjusted Cost calculated on the last day of each preceding month.  For purposes of clarity, the Asset Management Fee payment due in August 2012 will be based on July 31, 2012 Adjusted Cost amounts.

(b)Acquisition Fees.  The Advisor shall receive, as compensation for services rendered in connection with the investigation, selection and acquisition (by purchase, investment or exchange) of Properties, Loans and other Permitted Investments, Acquisition Fees in an amount equal to 2.0% of Gross Proceeds, payable by the Company upon the Company's receipt of Gross Proceeds; provided that upon termination of this Agreement, the Advisor will be obligated to reimburse the Company for any Acquisition Fee that has not been allocated to the purchase price of Company Properties, Loans and other Permitted Investments as provided for in Section 8.7 of the Articles of Incorporation.  

(c)Financing Fee.  In the event of any debt financing obtained (whether or not drawn), acquired or otherwise assumed by or for the Company, the Company will pay to the Advisor an annual fee (a “Financing Fee”) equal to (i) 0.20% of the amount available under the financing at the Company, Partnership, or any direct or indirect subsidiary level and (ii) 0.20% of the portion that is attributable to the Company's direct or indirect investment in a Joint Venture or partnership in which the Company or the Partnership is, directly or indirectly, a co-venturer or partner.  The Financing Fee includes the reimbursement of the specified cost incurred by the Advisor of engaging third parties to source debt financing, and nothing herein shall prevent the Advisor from entering fee-splitting arrangements with third parties with respect to the Financing Fee.  Notwithstanding the annual nature of the fee, in no event will the Company pay an aggregate amount of more than 0.50% (or, in the case of a Joint Venture, the portion of 0.50% attributable to the Company's investment in the Joint Venture) of the amount available under the financing or any refinancing of any particular financing.

(d)Disposition Fee.  If the Advisor or an Affiliate provides a substantial amount of the services (as determined by the Conflicts Committee) in connection with the Sale of one or more Properties, Loans or other Permitted Investments, the Advisor or such Affiliate shall receive at closing a Disposition Fee of 1.0% of the sales price of such Property, Loan or other Permitted Investment.  Any Disposition Fee payable under this section may be paid in addition to real estate commissions paid to non-Affiliates, provided that (i) if a non-Affiliate receives a real estate commission, then the Advisor or Affiliate thereof may not receive more than such non-Affiliate and (ii) the total real estate commissions (including such Disposition Fee) paid to all Persons by the Company for each Property disposed of shall not exceed an amount equal to the lesser of (A) 6.0% of the aggregate Contract Sales Price of each Property or (B) the Competitive Real Estate Commission for each Property.  

(e)Subordinated Share of Net Sales Proceeds.  The Subordinated Share of Net Sales Proceeds shall be payable to the Advisor in an amount equal to 15% of Net Sales Proceeds remaining after the Stockholders have received Distributions equal to the sum of the Stockholders' 8% Return and 100% of Invested Capital (this sum is the “Subordinated Share of Net Sale Proceeds Threshold”).  Following Listing, no Subordinated Share of Net Sales Proceeds will be paid to the Advisor.

(f)Subordinated Incentive Fee.  Upon Listing, the Advisor shall be entitled to the Subordinated Incentive Fee in an amount equal to 15.0% of the amount by which (i) the market value of the outstanding stock of the Company, measured by taking the average closing price or average of bid and asked price, as the case may be, over a period of 30 days during which the Shares are traded, with such period beginning 180 days after Listing (the “Market Value”), plus the total of all Distributions paid to then existing Stockholders from the Company's inception until the date that Market Value is determined, exceeds (ii) the sum of (A) 100% of Invested Capital, and (B) the total Distributions required to be paid to the then existing Stockholders in 

8

order to pay the Stockholders' 8% Return from inception through the date Market Value is determined (the sum of (A) and (B) is the “Subordinated Incentive Fee Threshold”).  The Advisor shall have the option to receive such fee in the form of cash (subject to availability), Shares, a promissory note to be negotiated in light of then existing market conditions or any combination of the foregoing.  The Subordinated Incentive Fee will be reduced by the amount of any prior payment to the Advisor of a Subordinated Share of Net Sales Proceeds.  In the event the Subordinated Incentive Fee is paid to the Advisor following Listing, no other performance fee or Subordinated Share of Net Sales Proceeds, including the Subordinated Performance Fee Due Upon Termination, will be paid to the Advisor.

(g)Changes to Fee Structure.  The Advisor and the Company shall not agree to increase the Acquisition Fee or reduce the Subordinated Share of Net Sale Proceeds Threshold, the Subordinated Incentive Fee Threshold, or the Subordinated Performance Fee Due Upon Termination Threshold without the approval of the Stockholders.  

8.Expenses.

(a)Reimbursable Expenses.  In addition to the compensation paid to the Advisor pursuant to Paragraph 8 hereof, the Company shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor (to the extent not reimbursable by another party, such as the dealer manager) in connection with the services it provides to the Company pursuant to this Agreement, including, but not limited to:

(i)the Organization and Offering Expenses; provided, however, that (A) the Company shall not reimburse the Advisor to the extent (1) Capped O&O Expenses borne by the Company exceed 2.0% of the Gross Proceeds raised as of the date of the reimbursement and (2) Organization and Offering Expenses (with respect to any Offering) borne by the Company exceed 15% of the Gross Proceeds raised (with respect to any Offering) as of the date of the reimbursement; (B) to the extent that Capped O&O Expenses borne by the Company or Organization and Offering Expenses borne by the Company exceed the above thresholds at the end of any fiscal quarter, the Advisor shall reimburse the Company for such excess within 60 days; and (C) if any such Organization and Offering Expenses are rendered by the Advisor or its Affiliates with respect to the organization of, or an offering for, any business, company or enterprise other than the Company, an appropriate allocation of such expenses, including personnel costs, shall be made as between the Company and the other business, company or enterprise, based upon an allocation methodology approved annually by the Conflicts Committee;

(ii)Acquisition Fees and Acquisition Expenses payable to unaffiliated Persons incurred in connection with the selection and acquisition of Properties, Loans and other Permitted Investments;

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

(iv)interest and other costs for borrowed money borrowed by the Company, including discounts, points and other similar fees;

(v)taxes and assessments on income or assets of the Company and taxes as an expense of doing the Company's business;

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

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

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

(ix)expenses associated with Listing or with the issuance and distribution of securities other than the Shares, such as selling commissions and fees, advertising expenses, taxes, legal and accounting fees, listing and registration fees;

(x)expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Company to the Stockholders;

9

(xi)expenses of organizing, redomesticating, merging, liquidating or dissolving the Company or of amending the Articles of Incorporation or the Bylaws;

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

(xiii)administrative service expenses, including all costs and expenses incurred by Advisor in fulfilling its duties hereunder, such as reasonable wages and salaries (but excluding bonuses) and other employee-related expenses of all employees of the Advisor or its Affiliates to the extent engaged in the management, administration, operations, and marketing of the Company, including taxes, insurance and benefits relating to such employees, and legal, travel and other out-of-pocket expenses that are directly related to their services provided hereunder; provided that, if any such administrative services are rendered by the Advisor or its Affiliates with respect to the management, administration, or operation of any business, company or enterprise other than the Company, an appropriate allocation of such expenses, including personnel costs, shall be made as between the Company and the other business, company or enterprise, based upon an allocation methodology approved annually by the Conflicts Committee; and

(xiv)audit, accounting and legal fees for audit, accounting and legal servies provided to the Company.

Notwithstanding the foregoing, no reimbursement shall be made for costs of personnel of the Advisor or its Affiliates to the extent that such personnel perform services for which the Advisor receives the Acquisition Fee or the Disposition Fee.  Likewise, no reimbursement shall be made for costs of personnel of the Advisor or its Affiliates to the extent that such personnel costs are reimbursable by the Company under a property management or other agreement between the Company and the Advisor or an Affiliate of the Advisor.
(b)Other Services.  Should the Board request that the Advisor or any director, officer or employee thereof render services for the Company other than set forth in Paragraph 3, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Conflicts Committee, 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.

(c)Timing of and Limitations on Reimbursements.  

(i)Expenses incurred by the Advisor on behalf of the Company and payable pursuant to this Paragraph 9 shall be reimbursed no less than monthly to the Advisor. The Advisor shall prepare a statement documenting the expenses of the Company during each quarter, and shall deliver such statement to the Company within 45 days after the end of each quarter.

(ii)Notwithstanding anything else in this Paragraph 9 to the contrary, the expenses enumerated in Paragraph 9 shall not become reimbursable to the Advisor unless and until the Company has raised $2.5 million in an offering.

(iii)The Company shall not reimburse the Advisor at the end of any fiscal quarter Operating Expenses that, in the four consecutive fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of 2% of Average Invested Assets or 25% of Net Income (the “2%/25% Guidelines”) for such year unless the Conflicts Committee determines that such excess was justified, based on unusual and nonrecurring factors which the Conflicts Committee deems sufficient; provided, however, that the Expense Year shall not commence prior to the earlier of (A) the date that the Company makes its first investment in a Property, Loan or Permitted Investment or (B) six months after the commencement of the Offering pursuant to the Registration Statement.  If the Conflicts Committee does not approve such excess as being so justified, any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company.  If the Conflicts Committee determines such excess was justified, then within 60 days after the end of any fiscal quarter of the Company for which total reimbursed Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Advisor, at the direction of the Conflicts Committee, shall send to the stockholders a written disclosure of such fact, together with an explanation of the factors the Conflicts Committee considered in determining that such excess expenses were justified.  The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board of Directors.  All figures used in the foregoing computation shall be determined in accordance with generally accepted accounting principles applied on a consistent basis.

(iv)The Advisor shall provide the following Persons (whether or not employees of the Advisor), and 

10

expend monies for the following supplies, and shall perform the following services, all of which shall be covered by the fees described in Paragraph 8 above and not be reimbursed by the Company:

(A) overhead or general expenses of the Advisor (including, without limitation, office supplies and rent for its corporate office);
(B) audit, accounting and legal fees for audit, accounting and legal services provided to the Advisor; and
(C) cost of the fidelity bond, comprehensive crime insurance or employee dishonesty coverage purchased by the Advisor as provided in Paragraph 10 below.
9.Fidelity Bond.  The Advisor shall maintain a fidelity bond, comprehensive crime insurance or employee dishonesty coverage for the benefit of the Company which bond or coverage shall insure the Company from losses of up to $10,000,000 and shall be of the type customarily purchased by entities performing services similar to those provided to the Company by the Advisor.

10.Other Activities of the Advisor.  

(a)General.  Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without limitation, the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer, employee, or stockholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall report to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Advisor's obligations to the Company and its obligations to or its interest in any other partnership, corporation, firm, individual, trust or association.  

(b)Policy with Respect to Allocation of Investment Opportunities.  Before  the Advisor presents an investment opportunity that would in its judgment be suitable for the Company to another Advisor-sponsored program, the Advisor shall determine in its discretion that the investment opportunity is more suitable for such other program than for the Company based on factors such as the following: the investment objectives and criteria of each program; the cash requirements and anticipated cash flow of each program; the size of the investment opportunity; the effect of the acquisition on diversification of each program's investments by type of commercial property, geographic area and tenant base; the estimated income tax effects of the purchase on each entity; the policies of each program relating to leverage; the funds of each entity available for investment and the length of time such funds have been available for investment; the size of the investment; the credit quality of the tenants; and the existence of special factors, such as whether the property is adjacent to another property owned by a program.  In the event that an investment opportunity becomes available that is, in the discretion of the Advisor, equally suitable for both the Company and another Advisor-sponsored program, then the Advisor may offer the other program the investment opportunity if it has had the longest period of time elapse since it was offered an investment opportunity.  The Advisor will use its reasonable efforts to fairly allocate investment opportunities in accordance with such allocation method and will promptly disclose any material deviation from such policy or the establishment of a new policy, which shall be allowed provided (1) the Board is provided with notice of such policy at least 60 days prior to such policy becoming effective and (2) such policy provides for the reasonable allocation of investment opportunities among such programs.  The Advisor shall provide the Conflicts Committee with any information reasonably requested so that the Conflicts Committee can insure that the allocation of investment opportunities is applied fairly.  Nothing herein shall be deemed to prevent the Advisor or an Affiliate from pursuing an investment opportunity directly rather than offering it to the Company or another Advisor-sponsored program so long as the Advisor is fulfilling its obligation to present a continuing and suitable investment program to the Company which is consistent with the investment policies and objectives of the Company.

11.Relationship of Advisor and Company.  The Company and the Advisor are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers or impose any liability as such on either of them.

12.Representations and Warranties.  

(a)Of the Company.  To induce the Advisor to enter into this Agreement, the Company hereby represents and warrants that:

11

(i)The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Maryland with all requisite corporate power and authority and all material licenses, permits and authorizations necessary to carry out the transactions contemplated by this Agreement.

(ii)The Company's execution, delivery and performance of this Agreement have been duly authorized.  This Agreement constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.  The Company's execution and delivery of this Agreement and its fulfillment of and compliance with the respective terms hereof do not and will not (A) conflict with or result in a breach of the terms, conditions or provisions of, (B) constitute a default under, (C) result in the creation of any lien, security interest, charge or encumbrance upon the assets of the Company pursuant to, (D) give any third party the right to modify, terminate or accelerate any obligation under, (E) result in a violation of or (F) require any authorization, consent, approval, exception or other action by or notice to any court or administrative or governmental body pursuant to, the Articles of Incorporation or Bylaws or any law, statute, rule or regulation to which the Company is subject, or any agreement, instrument, order, judgment or decree by which the Company is bound, in any such case in a manner that would have a material adverse effect on the ability of the Company to perform any of its obligations under this Agreement.

(b)Of the Advisor.  To induce the Company to enter into this Agreement, the Advisor represents and warrants that:

(i)The Advisor is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Georgia with all requisite limited liability company power and authority and all material licenses, permits and authorizations necessary to carry out the transactions contemplated by this Agreement.

(ii)The Advisor's execution, delivery and performance of this Agreement have been duly authorized.  This Agreement constitutes a valid and binding obligation of the Advisor, enforceable against the Advisor in accordance with its terms.  The Advisor's execution and delivery of this Agreement and its fulfillment of and compliance with the respective terms hereof do not and will not (A) conflict with or result in a breach of the terms, conditions or provisions of, (B) constitute a default under, (C) result in the creation of any lien, security interest, charge or encumbrance upon the Advisor's assets pursuant to, (D) give any third party the right to modify, terminate or accelerate any obligation under, (E) result in a violation of or (F) require any authorization, consent, approval, exemption or other action by or notice to any court or administrative or governmental body pursuant to, the Advisor's articles of organization or operating agreement, or any law, statute, rule or regulation to which the Advisor is subject, or any agreement, instrument, order, judgment or decree by which the Advisor is bound, in any such case in a manner that would have a material adverse effect on the ability of the Advisor to perform any of its obligations under this Agreement.

(iii)The Advisor has received copies of the Articles of Incorporation, Bylaws, and the Registration Statement and of the Partnership's limited partnership agreement and is familiar with the terms thereof, including without limitation the investment limitations included therein.  Advisor warrants that it will use reasonable care to avoid any act or omission that would conflict with the terms of the Articles of Incorporation, Bylaws, the Registration Statement, or the Partnership's limited partnership agreement in the absence of the express direction of the Conflicts Committee.

13.Term; Termination of Agreement.  This Agreement shall continue in force until November 6, 2012, subject to an unlimited number of successive renewals of no more than one year upon mutual consent of the parties. The Company, acting through the Board, will evaluate the performance of the Advisor at least annually.

14.Termination by Either Party.  This Agreement may be terminated upon 60 days written notice without cause or penalty, by either party (by majority of the Conflicts Committee or a majority of the Board of Directors of the Advisor, as the case may be).  The provisions of Paragraphs 1, 6, 7, 12, and 17 through 33 survive termination of this Agreement.

15.Assignment to an Affiliate.  This Agreement may be assigned by the Advisor to an Affiliate of the Advisor with the approval of a majority of the Conflicts Committee (which approval shall not be unreasonably withheld or delayed), provided that the assignee assumes all duties and obligations of the Advisor hereunder arising or accruing after such assignment pursuant to an assignment and assumption agreement in form reasonably satisfactory to a majority of the Conflicts Committee.  No such assignment or assumption shall relieve the assignor of its obligations and liability hereunder arising or accruing prior to the effective date of such assignment and assumption.  This Agreement shall not be assigned by the Company without the consent of the Advisor, except in the case of an assignment by the Company to a corporation or other organization which is a 

12

successor to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company is bound by this Agreement.

16.Payments to and Duties of Advisor upon Termination.  

(a)After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company within 30 days after the effective date of such termination the following:
(i)all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement; and

(ii)the Subordinated Performance Fee Due Upon Termination; provided that no Subordinated Performance Fee Due Upon Termination will be paid if this Agreement is terminated by the Company as a result of an Event of Default by the Advisor as provided in Paragraph 21 or if the Advisor voluntarily terminates this Agreement under Paragraph 15 hereof or if the Company has paid or is obligated to pay the Subordinated Incentive Fee.

(b)The Advisor shall promptly upon termination:

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

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

(iii)deliver to the Board all assets, including Properties, Loans and other Permitted Investments, and documents of the Company then in the custody of the Advisor; and

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

17.Indemnification by the Company.  The Company shall indemnify and hold harmless the Advisor and its Affiliates, including their respective officers, directors, partners and employees (collectively, “Indemnitees”), from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys' fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, subject to any limitations imposed by the laws of the State of Maryland or the Articles of Incorporation.  Notwithstanding the foregoing, the Indemnitees shall not be entitled to indemnification or be held harmless pursuant to this Paragraph 18 for any activity which the Advisor shall be required to indemnify or hold harmless the Company pursuant to Paragraph 19. Any indemnification of the Indemnitees may be made only out of the net assets of the Company and not from Stockholders.

18.Indemnification by Advisor.  The Advisor shall indemnify and hold harmless the Company from contract or other liability, claims, damages, taxes or losses and related expenses, including attorneys' fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and which arise out of or are incurred by reason of (a) any act by the Advisor which is outside the scope of Advisor's authority under this Agreement and which has not otherwise been requested of the Advisor by the Board of Directors or the Conflicts Committee, (b) the gross negligence, bad faith, fraud, willful misfeasance or misconduct of the Advisor or its employees, officers or agents, or (c) Advisor's breach of the duties and obligations required by this Agreement to be performed by Advisor.

19.Advisor's Insurance.  During the term of this Agreement, Advisor, as a reimbursable cost under this Agreement with regard to subsection (b) below, shall maintain in full force and effect the following kinds of insurance and levels of coverage:

(a)Commercial general liability (naming the Company as an additional insured), which is similar in scope of coverage to that maintained by other like advisory firms with insurance limits of liability of not less than Five Million Dollars ($5,000,000.00), combined single limits covering both bodily injury (including death) and property damage, and including contractual liability coverage. Such insurance will be excess and will not contribute with defense or other coverage afforded under any policy of insurance carried by the Company. Unless otherwise approved in writing by the Company, Advisor will require all independent contractors it employs hereunder to maintain liability 

13

insurance in the minimum amount of One Million Dollars ($1,000,000.00), combined single limit, covering both bodily injury (including death) and property damage.

(b)Workers' compensation and employer's liability insurance in the amount not less than required by applicable laws, covering all employees of Advisor who are engaged in any work under this Agreement.

(c)Commercial automobile liability insurance covering both owned and non-owned vehicles, with limits of not less than $1,000,000 for bodily injury and property damage, when the services to be performed require the use of a motor vehicle.

An umbrella or excess liability policy can be used to meet the above-referenced limits.  
20.Advisor Default.  Upon the happening of any Event of Default, the Company shall have the right to terminate this Agreement by giving written notice of such termination to Advisor, in addition to any other rights or remedies available at law or in equity (subject to the limitations contained in this Agreement). Any one or more of the following events shall constitute an "Event of Default" by Advisor under this Agreement:

(a)If the Advisor shall fail to satisfy any monetary obligation such as, for example, the payment of any sums payable under any indemnity obligations hereunder, within thirty (30) days after delivery of notice to the Advisor of such failure;

(b)If the Advisor shall fail to observe, perform or comply in any material respect with any term, covenant, agreement or condition of this Agreement which is to be observed, performed or complied with by the Advisor under the provisions of this Agreement, and such failure shall continue uncured for thirty (30) days after the giving of written notice thereof by the Company to the Advisor specifying the nature of such failure, unless such failure can be cured but is not susceptible of being cured within said thirty (30) day period, in which event such a failure shall not constitute an Event of Default if the Advisor commences curative action within said thirty (30) day period, and thereafter prosecutes such action to completion with all due diligence and dispatch and completes such cure within one hundred twenty (120) days after the giving of such notice;

(c)If the Advisor shall make a general assignment for the benefit of creditors;

(d)If any of the following occur: (i) filing a voluntary petition in bankruptcy on behalf of the Advisor; (ii) consenting to the filing of any involuntary petition in bankruptcy against the Advisor; (iii) filing any petition seeking, or consenting to, the reorganization or relief of the Advisor under any applicable federal or state law relating to bankruptcy or insolvency; (iv) consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Advisor or a substantial part of its property; or (v) admitting in writing the Advisor's inability to pay its debts generally as they become due;

(e)If the Advisor shall fail to carry and maintain the insurance required to be maintained by the Advisor pursuant to this Agreement and such failure shall continue uncured for five (5) business days after the giving of written notice thereof by the Company to the Advisor;

(f)If the Advisor shall transfer or assign its interest under this Agreement in violation of this Agreement; or

(g)If the Advisor shall commit fraud in connection with its services under this Agreement or shall misappropriate any funds of the Company in the possession or control of the Advisor or shall otherwise commit an act of fraud against the Company (except that if such fraud or misappropriation of funds is committed by an employee of the Advisor, such event may be cured by the Advisor if the Advisor makes full and prompt restitution to the Company and discharges such employee).

21.Default of Company.  If the Company fails to comply with or perform in any material respect any of the terms and provisions to be complied with or any of the obligations to be performed by the Company under this Agreement, and such failure continues uncured for a period of thirty (30) days after written notice to the Company specifying the nature of such default (or such longer period of time as may be needed in the exercise by the Company of due diligence to effect a cure of any such non-monetary default), then the Advisor shall have the right, in addition to all other rights and remedies available to the Advisor at law or in equity, at its option, to terminate this Agreement by giving written notice thereof to the Company.

14

22.Parent Guarantee.  Wells Real Estate Funds, Inc., a Georgia corporation and the parent company of the Advisor (the “Guarantor”), does hereby in all respects guarantee the due and proper performance of the services to be provided and the full and timely payment of the amounts payable under this Agreement by the Advisor, which guarantee shall extend to include any renewal or amendment to this Agreement, provided Guarantor's obligations are not materially increased by such renewal or amendment without the Guarantor's consent, such consent not to be unreasonably withheld.  If the Advisor fails to perform all or any of its obligations, duties, undertakings, and covenants to provide services (collectively, the “Guaranteed Obligations”) under this Agreement (unless relieved from the performance of any part of this Agreement by statute, by the decision of a court or tribunal of competent jurisdiction or by written waiver of the Company), upon written notice from the Company, the Guarantor shall perform or cause to be performed such Guaranteed Obligations.  The termination of the Advisor shall constitute a termination of this guarantee with respect to the future performance of the Guaranteed Obligations, but no termination of Advisor shall terminate or limit the obligations of the Guarantor under this guarantee arising or accruing prior to such termination of the Advisor.  This guarantee will be applicable to and binding upon the successors and assigns of Guarantor.  Guarantor joins in this Agreement as a signatory hereto for the purposes set forth in this Paragraph 23.

23.Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Articles of Incorporation, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

To the Board and to the Company:            Wells Core Office Income REIT, Inc.
6200 The Corners Parkway, Suite 250
Norcross, Georgia  30092
ATTN:  President

To the Advisor:                    Wells Core Office Income REIT Advisory 
Services, LLC
6200 The Corners Parkway, Suite 250
Norcross, Georgia  30092

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Paragraph 24.
24.Modification.  This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assignees, and any change or modification to this Agreement must be in accordance with Paragraph 8(g) hereof, to the extent applicable.

25.Severability.  The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

26.Construction.  The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Georgia.

27.Entire Agreement.  This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.  This Agreement may not be modified or amended other than by an agreement in writing.

28.Indulgences, Not Waivers.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

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

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

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

32.Name.  Wells Core Office Income REIT Advisory Services, LLC and its Affiliates have a proprietary interest in the name “Wells.”  Accordingly, and in recognition of this right, if at any time the Company ceases to retain Wells Core Office Income REIT Advisory Services, LLC or an Affiliate thereof to perform the services of Advisor, the Company will, promptly after receipt of written request from Wells Core Office Income REIT Advisory Services, LLC, cease to conduct business under or use the name “Wells” or any derivative thereof and the Company shall use its best efforts to change the name of the Company to a name that does not contain the name “Wells” or any other word or words that might, in the discretion of the Advisor, be susceptible of indication of some form of relationship between the Company and the Advisor or any Affiliate thereof. 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 “Wells” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company or its Board.

[Signatures appear on next page.]

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IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as of the date and year first above written.
            
WELLS CORE OFFICE INCOME REIT, INC.

By:  /s/ Douglas P. Williams                         
Name:  Douglas P. Williams
Title:   Executive Vice President

WELLS CORE OFFICE INCOME REIT ADVISORY SERVICES, LLC

By:  /s/ Douglas P. Williams                             
Name:  Douglas P. Williams
Title:    Senior Vice President and Assistant Secretary

The undersigned joins in this Advisory Agreement for the purposes set forth in Paragraph 23 hereof.

WELLS REAL ESTATE FUNDS, INC.

By:  /s/ Randall D. Fretz                                  
Name:  Randall D. Fretz
Title:    Vice President

17EX-10.1

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT, made and entered into as of this 24th day of July, 2009, by and
between The Kansas City Southern Railway Company, a Missouri corporation (referred to herein as the
“Company” or “KCSR”), and David Ebbrecht, an individual (“Executive”).

WHEREAS, the Company and Executive desire for the Company to employ Executive on the terms and
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, it
is agreed by and between the Company and Executive as follows:

1. Employment. The Company hereby employs Executive as its Sr. Vice President of
Transportation and Executive hereby accepts such employment, to have such titles, duties, powers
and responsibilities as may be prescribed or delegated from time to time by the President, or other
officer to whom Executive reports. Executive shall faithfully perform Executive’s duties under
this Agreement to the best of Executive’s ability and Executive shall devote substantially all of
Executive’s working time and efforts to the business and affairs of the Company and its
subsidiaries and joint ventures (“Affiliate(s)”).

2. Compensation. The Company shall pay Executive as compensation for Executive’s
services hereunder an annual base salary at the rate approved by the appropriate committee of the
Board of Directors of Kansas City Southern (“KCS”) (“Salary”), less applicable taxes and
withholdings. During the term of this Agreement, such rate shall not be reduced except as agreed
by the parties or except as part of a general salary reduction program imposed by the Company
applicable to all officers of the Company.

3. Benefits. During the term of the Agreement, the Company shall provide Executive
with coverage under such benefit plans and programs as shall be made generally available to
similarly situated employees of the Company, provided (a) the Company shall have no obligation with
respect to any plan or program if Executive is not eligible for coverage thereunder, and
(b) Executive acknowledges that any stock or equity participation awards (including by way of
example, but not limited to, stock options or restricted or performance stock) are to be granted in
the discretion of the Company Board or the appropriate committee of the Board of Directors of KCS
and that Executive has no right to receive any such stock or equity participation awards or any
particular number or level of such stock or equity participation awards, if any. In determining
contributions, coverage and benefits under any disability insurance policy and under any cash
compensation-based plan provided to Executive, it shall be assumed that the value of Executive’s
annual compensation is 145% of Executive’s annual base salary. Executive acknowledges that all
rights and benefits under benefit plans and programs shall be governed by the official text of each
plan or program and not by any summary or description thereof or any provision of this Agreement
and that the Company is not under any obligation to continue in effect or to fund any such plan or
program.

4. Business Expenses. While Executive is employed with the Company, Executive shall
be entitled to reimbursement for reasonable out-of-pocket business expenses incurred by Executive
in the performance of his/her duties hereunder to the extent and in the manner provided in the
general personnel policies of the Company with respect to such reimbursement. Executive shall
provide the Company with supporting documentation for all such business expenses.

5. Term and Termination. The “Term” of this Agreement shall begin on the date first
written above and continue until terminated as provided in this Paragraph 5.

(a) Termination by Executive. Executive may terminate this Agreement and Executive’s
employment hereunder by providing at least thirty (30) days advance written notice to the Company.

(b) Death or Disability. This Agreement and Executive’s employment hereunder shall
terminate automatically (i) should Executive become unable to perform the essential duties of
Executive’s job with a reasonable accommodation, should a reasonable accommodation exist, or
without a reasonable accommodation should no reasonable accommodation exist, for a continuous
period of one hundred eighty (180) days as a result of a physical or mental impairment or (ii) upon
Executive’s death.

(c) Termination by the Company For Cause. The Company may terminate this Agreement
and Executive’s employment for Cause immediately upon oral, written or other notice to Executive at
the Company’s sole discretion. For purposes of this Agreement, except as otherwise defined and
used in Paragraph 8, “Cause” shall mean any one or more of the following by Executive:

(i) Any material breach of this Agreement or of any other written agreement between
Executive and the Company;

(ii) Any dishonest act that the Company considers, in its sole discretion, detrimental
to its best interests or reputation;

(iii) Conviction or deferred adjudication of any felony, any misdemeanor for a violent
crime, or any other criminal offense involving fraud or dishonesty, or a finding of such an
offense in a civil trial or other forum;

(iv) Gross negligence or willful misconduct in the performance of Executive’s duties;

(v) Failure to substantially perform Executive’s duties and responsibilities hereunder,
including without limitation Executive’s willful failure to follow reasonable instructions
of the President, or other officer to whom Executive reports;

(vi) Breach of an employment policy of the Company or any Affiliate of the Company;

(vii) Breach of Executive’s fiduciary duty to the Company or any Affiliate of the
Company; or

(viii) Any other act or omission that would constitute just cause at common law.

(d) Termination by the Company Other Than For Cause.

(i) The Company may terminate this Agreement and Executive’s employment other than for
Cause immediately upon oral, written or other notice to Executive at the Company’s sole
discretion, and in such event, the Company shall provide severance benefits to Executive in
accordance with and subject to Paragraph 5(d)(ii) below. Executive acknowledges and agrees
that such severance benefits constitute the exclusive remedy of Executive upon such a
termination of employment other than for Cause. Notwithstanding any other provision of this
Agreement, as a condition to receiving such severance benefits, Executive shall execute a
Confidential Severance Agreement and Full and General Release, which shall include among
other provisions, at the Company’s sole discretion, a full release of claims in favor of the
Company and its Affiliates substantially similar to the form attached hereto as Appendix A
(“Release”).

(ii) If Executive’s employment is terminated under Paragraph 5(d)(i) and Executive
properly executes a Release, the Company shall pay Executive in addition to any unpaid
Salary, unused vacation pay and reimbursement of documented accrued and unreimbursed
expenses, severance and benefits for a period of twelve (12) months following Executive’s
execution of the Release and the expiration of any applicable revocation period with
respect to Executive’s execution of such Release, as follows:

(a) During the first six (6) months following Executive’s termination of
employment, the Company shall pay to Executive a monthly amount equal to one-twelfth
(1/12) of the annual Salary of Executive referenced in Paragraph 2, less applicable
taxes and withholdings, at the rate in effect immediately prior to Executive’s
termination of employment, provided that in no event shall the aggregate amount paid
during such initial six (6) months exceed two times the maximum amount that may be
taken into account under a qualified plan pursuant to Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended (“Code”), for the calendar year of
Executive’s termination of employment (the “401(a)(17) limit”). During the
remaining period of the twelve (12) month period, the Company shall pay to Executive
a monthly amount equal to one-twelfth (1/12) of the annual Salary of Executive
referenced in Paragraph 2, less applicable taxes and withholdings, at the rate in
effect immediately prior to Executive’s termination of employment; provided, that if
Executive’s severance pay during the first six (6) month period referenced above is
reduced in order to not exceed the 401(a)(17) limit, then the amount of such
reduction shall also be paid to Executive in equal monthly payments during the
remainder of the twelve (12) month period. The obligations of the Company under
this paragraph 5(d)(ii)(a) shall continue until the end of the twelve (12) month
period specified herein notwithstanding the death of Executive; and

(b) During the twelve (12) month period following Executive’s termination the
Company shall continue Executive’s group health insurance coverage for Executive
and/or his or her eligible dependents, provided that such coverage shall terminate
in the event that Executive (i) becomes eligible for comparable health coverage in
connection with other employment, (ii) fails to timely elect to continue such
coverage for himself or herself and/or his or her eligible dependents pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), (iii) fails to
meet the eligibility requirements under the applicable plan for any such coverage,
(iv) fails to timely pay the cost of such coverage at the rate that would be charged
to an active employee with similar coverage, or (v) dies.

(e) Upon any termination of Executive’s employment pursuant to Paragraph 5(a), (b) or (c),
notwithstanding any other provisions of this Agreement, Executive shall not be entitled to receive
thereafter any payment from the Company except for unpaid Salary, unused vacation pay and
reimbursement of documented accrued and unreimbursed expenses.

(f) Upon any termination of Executive’s employment, Executive’s benefits in all
Company-sponsored benefit plans not elsewhere referred to in this Agreement shall terminate in
accordance with the terms and conditions of such plans. To the extent Executive is not vested in
any equity awards as of any termination date, including without limitation, with respect to stock
options, restricted stock or performance shares, such unvested equity awards shall be forfeited as
of the termination date. Nothing herein shall extend the exercise period applicable to any
unexercised options outstanding as of any termination date.

6. Confidentiality and Non-Disclosure.

(a) Executive understands and agrees that Executive may be given Confidential Information (as
defined below) during Executive’s employment with the Company relating to the business of the
Company and its Affiliates, subject to Executive’s agreement herein. Executive shall maintain in
strictest confidence and not use in any way (including without limitation in any future business
relationship of Executive), publish, disclose or authorize anyone else to use in any way, publish
or disclose, any Confidential Information. Executive further agrees not to remove or retain any
calculations, letters, documents, lists, papers, or copies thereof, which embody Confidential
Information and to return, prior to Executive’s termination of employment for any reason, any such
information in Executive’s possession. If Executive discovers, or comes into possession of, any
Confidential Information after Executive’s termination, Executive shall promptly return it to the
Company. Executive acknowledges that the provisions of this paragraph are consistent with the
Company’s policies and procedures to which Executive, as an employee of the Company, is bound.

(b) For purposes of this Agreement, “Confidential Information” includes, but is not limited
to, information in the possession of, prepared by, obtained by, compiled by, or that is used by the
Company or any of its Affiliates or customers and (i) is proprietary to, about, or created by the
Company or any of its Affiliates or customers; (ii) gives the Company or any of its Affiliates or
customers some competitive business advantage, the opportunity of obtaining such advantage, or
disclosure of which might be detrimental to the interest of the Company or any of its Affiliates or
customers; and (iii) is not typically disclosed by the Company or any of its Affiliates or
customers, or known by persons who are not employed by the Company or any of its Affiliates or
customers. Without in any way limiting the foregoing and by way of example, Confidential
Information shall include: information pertaining to business operations of the Company or any of
its Affiliates or customers, such as financial and operational information and data, operational
plans and strategies, business and marketing strategies, pricing information, plans for various
products and services, and acquisition and divestiture planning. Upon separation of employment,
Executive shall notify the Company’s Department of Human Resources in writing of the name and
address of Executive’s intended future employer. Additionally, during any period that Executive is
receiving any severance pay, Executive shall notify the Company’s Department of Human Resources in
writing of the name and address any subsequent employer.

(c) In the event of any breach of this Paragraph 6 by Executive, the Company shall be entitled
to terminate any and all remaining severance benefits under Paragraph 5(d)(ii) and shall be
entitled to pursue such other legal and equitable remedies as may be available. Executive
acknowledges, understands and agrees that the Company and its Affiliates will suffer immediate and
irreparable harm if Executive fails to comply with any of Executive’s obligations under this
Paragraph 6, and that monetary damages alone will be inadequate to compensate the Company or any of
its Affiliates for such breach. Accordingly, Executive agrees that the Company and its Affiliates
shall, in addition to any other remedies available to them at law or in equity, be entitled to
temporary, preliminary, and permanent injunctive relief and specific performance to enforce the
terms of this Paragraph 6 without the necessity of proving inadequacy of legal remedies or
irreparable harm or posting bond.

7. Restrictive Covenants.

(a) Executive agrees that for a period of time beginning upon Executive’s termination of
employment from the Company (the “Termination Date”) and continuing for a period of one (1) year,
Executive shall not:

(i) directly or indirectly, either individually or as a principal, partner, agent,
employee, employer, consultant, stockholder, member, partner, joint venturer, or investor,
or as a director, manager or officer of any corporation or association, or in any other
manner or capacity whatsoever, engage in, assist or have any active interest in a business,
located anywhere in the geographic area then served by the Company or its Affiliates, that
competes with or engages in the business conducted by the Company or its Affiliates on the
date hereof or at any time through the Termination Date.

(ii) directly or indirectly, either individually, or as a principal, partner, agent,
employee, employer, consultant, stockholder, joint venturer, or investor, or as a director
or officer of any corporation or association, (1) divert or attempt to divert (by
solicitation or otherwise) from the Company or its Affiliates any business with any
customer, prospective customer or account of the Company or its Affiliates with which
Executive had any contact or association, which was under Executive’s supervision, or the
identity of which was learned by Executive as a result of his/her employment with the
Company; (2) accept the business of any customer, prospective customer or account of the
Company or its Affiliates with whom Executive had any contact or association, which was
under Executive’s supervision, or the identity of which was learned by Executive as a result
of his/her employment with the Company, whether or not solicited by Executive; or (3)
induce, solicit, or cause any employee of the Company or its Affiliates to leave the employ
of the Company or its Affiliates.

(iii) except that these Restrictive Covenants shall not apply in the event of a Change
in Control as defined in Paragraph 8(b).

(b) Executive acknowledges that any breach of the restrictive covenants contained in Paragraph
7(a) of this Agreement (the “Restrictive Covenants”) would cause irreparable injury to the Company
and that its remedy at law would be inadequate and, accordingly, consents to and agrees that
temporary and permanent injunctive relief may be granted, without bond, in any proceeding which may
be brought to enforce the Restrictive Covenants, without the necessity of proof of actual damage.
This right to an injunction shall not prohibit the Company from pursuing any other remedies
available to it including, but not limited to, the recovery of damages. Executive further agrees
that the Company may provide a copy of this Agreement to any prospective employer of Executive that
the Company believes is a competitor.

(c) If Executive violates the Restrictive Covenants, Executive (i) shall forfeit all right to
future benefits under this Agreement; (ii) shall refund to the Company any severance and benefits
and all associated taxes paid by the Company; (iii) shall pay reasonable attorneys’ fees and all
other costs incurred by the Company as a result of Executive’s breach; and (iv) acknowledges that
the Company may pursue any other remedies available to it as a result of Executive’s breach
including, but not limited to, the recovery of damages.

8. Termination Following Change in Control.

(a) Termination by Company or by Executive for Good Reason. If, within two (2) years
following the occurrence of a Change of Control (as defined in Paragraph 8(b)), Executive’s
employment is terminated by the Company other than for Cause (as defined in Paragraph 8(d)) or by
Executive for Good Reason (as defined in Paragraph 8(c)), and Executive properly executes a Release
(as provided in Paragraph 5(d)(ii)), Executive shall be entitled to the following:

(i) the severance benefits provided in Paragraph 5(d)(ii); and

(ii) a lump sum amount, to be paid within five (5) days of Executive’s execution of the
Release or the expiration of any applicable revocation period with respect to Executive’s
execution of such Release, equal to: (A) the product of 160% of Executive’s annual Salary
at the time of such termination multiplied by two (2), less (B) the aggregate payments to be
made to Executive pursuant to Paragraph 5(d)(ii)(a) as provided above; and

(iii) any unvested or unexercisable stock options, restricted stock, performance shares
or other awards of Company equity held by Executive as of such termination shall become
immediately vested and exercisable and any restrictions thereon shall be immediately
released to the extent permitted by applicable law and regulations.

Upon a termination as defined in this Paragraph 8(a), Executive’s benefits in all Company-sponsored
benefit plans not elsewhere referenced in this Agreement shall terminate in accordance with the
terms and conditions of such plans.

(b) Change in Control. For purposes of this Agreement, a “Change in Control” shall be
deemed to have occurred if:

(i) a majority of the members of the Company Board is replaced during any twelve (12)
month period with directors whose appointment or election was not endorsed by a majority of
the members of the Company Board, in office immediately prior to the date of such
appointment or election; or

(ii) any person or group has acquired during a twelve (12) month period ending on the
date of the most recent acquisition by such person or group of ownership of stock of KCS
possessing 30% or more of the total voting power of the outstanding stock of KCS; or

(iii) any person or group has acquired ownership of stock of KCS that, constitutes more
than 50% of the total fair market value or total voting power of the outstanding stock of
KCS; or

(iv) any person or group has acquired during a twelve (12) month period ending on the
date of the most recent acquisition by such person or group assets of KCS that have a total
gross fair market value of more than 40% of the total gross fair market value of all of the
assets of KCS immediately before such acquisition.

As used herein, “person” shall mean as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “1934 Act”) and “group” shall mean as such term is used in
Section 13(d)(3) and 14(d)(2) of the 1934 Act.

(c) Good Reason. For purposes of this Agreement, “Good Reason” means any of the
following:

(i) a material diminution or other material adverse change in Executive’s position,
authority or duties;

(ii) a material diminution in Executive’s compensation;

(iii) the Company’s requiring Executive to be based at any office or location more than
forty (40) miles from the location at which Executive previously performed his or her
duties; or

(iv) any other action or inaction by the Company that constitutes a material breach of
this Agreement.

Executive shall have a termination of employment for Good Reason only if: (A) Executive
provides written notice to the Company within ninety (90) days after the initial occurrence of an
above event describing in detail the event and stating that Executive’s employment will terminate
upon a specified date in such notice (the “Good Reason Termination Date”), which date is not
earlier than thirty (30) days after the date such notice is provided to the Company (the “Notice
Delivery Date”) and not later than ninety (90) days after the Notice Delivery Date, and (B) the
Company does not remedy the event prior to the Good Reason Termination Date.

(d) Termination for Cause After Control Change Date. Notwithstanding any other
provision of this Paragraph 8, at any time after the Control Change Date, Executive may be
terminated by the Company for Cause. For purposes of this Paragraph 8, “Cause” means commission by
Executive of any felony or willful breach of duty by Executive in the course of Executive’s
employment; except that Cause shall not mean:

(i) bad judgment or negligence;

(ii) any act or omission believed by Executive in good faith to have been in or not
opposed to the interest of the Company (without intent of Executive to gain, directly or
indirectly, a profit to which Executive was not legally entitled);

(iii) any act or omission with respect to which a determination could properly have
been made by the Company Board that Executive met the applicable standard of conduct for
indemnification or reimbursement under the Company’s By-laws, any applicable indemnification
agreement, or applicable law, in each case in effect at the time of such act or omission; or

(iv) any act or omission with respect to which Notice of Termination of Executive is
given, more than twelve (12) months after the earliest date on which any member of the
Company Board, not a party to the act or omission, knew or should have known of such act or
omission.

Any Termination of Executive’s employment by the Company for Cause shall be communicated to
Executive by Notice of Termination.

9. Duties Upon Termination; Survival.

(a) Duties. Upon termination of this Agreement by the Company or Executive for any
reason, such termination shall constitute written resignation by Executive from all positions as an
officer, director or member of any committee or board of the Company or of any of its Affiliates as
may be requested by the Company or such Affiliate and Executive shall sign such other documents and
papers relating to Executive’s employment, benefits and benefit plans as the Company may reasonably
request.

(b) Survival. The provisions of Paragraphs 6, 7 and 9(a) of this Agreement shall
survive any termination of this Agreement by the Company or Executive, and the provisions of
Paragraphs 5(d)(ii) and 5(d)(iii) shall survive any termination of this Agreement by the Company
under Paragraph 5(d)(i).

10. Notice. Any notice, request, consent or communication (collectively a “Notice”)
under this Agreement shall be effective only if it is in writing, except as otherwise provided
herein, and (i) personally delivered, (ii) sent by certified or registered mail, return receipt
requested, postage prepaid, (iii) sent by a nationally recognized overnight delivery service, with
delivery confirmed, or (iv) telecopied, with receipt confirmed, addressed as follows:

(a) If to Executive:

Mr. David Ebbrecht

5312 NW 78 Terr

Kansas City, MO. 64151

(b) If to the Company, to:

The Kansas City Southern Railway Company

Attention: John Derry / SVP Human Resources

427 West 12th St.

Kansas City, Missouri 64105

or such other persons or addresses as shall be furnished in writing by any party to the other
party. A Notice shall be deemed to have been given as of the date when (i) personally delivered,
(ii) five (5) days after the date when deposited with the United States mail properly addressed,
(iii) when receipt of a Notice sent by an overnight delivery service is confirmed by such overnight
delivery service, or (iv) when receipt of the telecopy is confirmed, as the case may be, unless the
sending party has actual knowledge that a Notice was not received by the intended recipient.

11. ARBITRATION. EXECUTIVE HEREBY WAIVES AND SHALL NOT SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, CLAIM, COUNTERCLAIM, DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN
RESPECT OF THIS AGREEMENT. EXECUTIVE AGREES THAT ANY SUCH DISPUTE RELATING TO OR IN RESPECT OF
THIS AGREEMENT, (OTHER THAN INJUNCTIVE OR EQUITABLE RELIEF WHICH, AT THE COMPANY’S OPTION, MAY BE
SOUGHT IN ANY FEDERAL OR STATE COURT HAVING JURISDICTION) SHALL BE SUBMITTED TO, AND RESOLVED
EXCLUSIVELY PURSUANT TO ARBITRATION IN ACCORDANCE WITH THE NATIONAL RULES FOR THE RESOLUTION OF
EMPLOYMENT DISPUTES OF THE AMERICAN ARBITRATION ASSOCIATION INCLUDING EXPEDITED PROCEDURES FOR
EMERGENCY RELIEF WHICH ARE EXPRESSLY ADOPTED HEREIN. SUCH ARBITRATION SHALL TAKE PLACE IN THE
KANSAS CITY, MISSOURI METROPOLITAN AREA OR OTHER MUTUALLY AGREEABLE LOCATION AND SHALL BE SUBJECT
TO THE SUBSTANTIVE LAWS OF THE STATE OF MISSOURI. DECISIONS PURSUANT TO SUCH ARBITRATION SHALL BE
FINAL, CONCLUSIVE AND BINDING ON THE PARTIES. THE PREVAILING PARTY IN ARBITRATION SHALL BE
ENTITLED TO RECOVER REASONABLE COSTS AND ATTORNEYS’ FEES FROM THE OTHER PARTY. UPON THE CONCLUSION
OF ARBITRATION, THE PARTIES MAY APPLY TO ANY FEDERAL OR STATE COURT HAVING JURISDICTION TO ENFORCE
THE DECISION PURSUANT TO SUCH ARBITRATION. EXECUTIVE AND COMPANY SHALL KEEP SUCH ARBITRATION AND
ALL RELATED PROCEEDINGS AND AWARDS CONFIDENTIAL, EXCEPT AS DISCLOSURE MAY BE REQUIRED BY LAW,
REGULATION OR JUDICIAL PROCESS.

12. Amendment. No provision of this Agreement may be amended, modified, waived or
discharged unless such amendment, waiver, modification or discharge is agreed to in writing signed
by Executive and an authorized officer of the Company. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the time or at any prior or subsequent time.

13. Successors in Interest. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding in each and every respect upon the direct
and indirect successors and assigns of the Company regardless of the manner in which such
successors or assigns shall succeed to the interests of the Company hereunder, and this Agreement
shall not be terminated by the voluntary or involuntary dissolution of the Company or by any merger
or consolidation or acquisition involving the Company, or upon any transfer of all or substantially
all of the Company’s assets, or terminated otherwise than in accordance with its terms. In the
event of any such merger or consolidation or transfer of assets, the provisions of this Agreement
shall be binding upon and shall inure to the benefit of the surviving corporation or the
corporation or other person to which such assets shall be transferred. Neither this Agreement nor
any of the payments or benefits hereunder may be pledged, assigned or transferred by Executive
either in whole or in part in any manner, without the prior written consent of the Company.

14. Severability. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed
in all respects as if such invalid or unenforceable provisions were omitted.

15. Controlling Law and Jurisdiction. The validity, interpretation and performance of
this Agreement shall be subject to and construed under the laws of the State of Missouri, without
regard to principles of conflicts of law.

16. Entire Agreement. This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and terminates and supersedes all other prior
agreements and understandings, both written and oral, between the parties with respect to the terms
of Executive’s employment or severance arrangements. The parties agree that this Agreement shall
be interpreted at all times in a manner compliant with Code Section 409A.

1

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

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

THE KANSAS CITY SOUTHERN RAILWAY COMPANY

	 
	By: /s/ Michael R. Haverty

	 

	Michael R. Haverty

KCS- Chairman and Chief Executive Officer

	By: /s/ David L. Starling

	 

	David L. Straling

KCS- President & Chief Operating Officer

	EXECUTIVE

	Name: /s/ David Ebbrecht

	 

	David Ebbrecht

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