FORM OF
ADVISORY AGREEMENT AMONG
AMERICAN REALTY CAPITAL TRUST, INC.,
AMERICAN REALTY CAPITAL OPERATING PARTNERSHIP,
L.P.
and
AMERICAN REALTY CAPITAL ADVISORS, LLC
This
Advisory Agreement (this “Agreement”) dated as of
_______, 2008 is among American Realty Capital Trust, Inc., a
Maryland corporation (the “Company”), American
Realty Capital Operating Partnership, L.P., a Delaware limited
partnership (the “OP”), and American Realty
Capital Advisors, LLC, a Delaware limited liability company
(the “Advisor”). The Company and the OP are
sometimes referred to herein collectively as the
“Advisees” and each individually as an
“Advisee.”
WITNESSETH :
WHEREAS,
the Company is a Maryland corporation created in accordance
with applicable provisions of the Maryland General Corporation
Law, as amended from time to time (the “Maryland
GCL”); and
WHEREAS,
the purposes of the Company are, as determined from time to
time by the board of directors of the Company (the
“Board of Directors”), to engage in any lawful
business or activity for which a corporation may be created
under the Maryland GCL; and
WHEREAS,
the Company is the general partner of the OP; and
WHEREAS,
the Company desires, on its own behalf and as general partner
of the OP, to avail itself of the experience, sources of
information, advice and assistance of the Advisor and to have
the Advisor undertake the duties and responsibilities
hereinafter set forth, on behalf of and subject to the
supervision of the Board of Directors, all as provided herein;
and
WHEREAS,
the Advisor is willing to render such services, subject to the
supervision of the Board of Directors, on the terms and
conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the mutual covenants herein
contained, IT IS AGREED as follows:
1.
Definitions .
Capitalized terms used but not defined herein shall have the
meaning ascribed to them in the Company’s Charter (as herein
defined), and the following terms, as used herein, shall have the
meanings set forth below:
(a)
“
Acquisition Expenses ”
shall mean expenses related to the Advisee’s selection of,
and investment in, real properties and mortgage investments and
other investments, whether or not acquired or made, including but
not limited to advertising costs, brokerage fees, environmental,
engineering and other due diligence expenses, legal fees and
expenses, travel and communications expenses, cost of appraisals,
accounting fees and expenses, title insurance and miscellaneous
other expenses.
(b)
“
Acquisition Fee ”
shall have the meaning set forth in Section 11(a)(i).
(c)
“
Affiliate ”
means a Person who is (i) in the case of an individual, any
relative of such Person, (ii) any officer, director, trustee,
partner, manager, employee or holder of ten percent (10%) or more
of any class of the voting securities of or equity interest in such
Person; (iii) any corporation, partnership, limited liability
company, trust or other entity controlling, controlled by or under
common control with such Person; or (iv) any officer, director,
trustee, partner, manager, employee or holder of ten percent (10%)
or more of the outstanding voting securities of any corporation,
partnership, limited liability company, trust or other entity
controlling, controlled by or under common control with such
Person. For purposes of this definition, the term
“controls,” “is controlled by,” or
“is under common control with” shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of an entity, whether
through the ownership of voting rights, by contract or
otherwise.
(d)
“
Asset Management Fee ”
shall have the meaning set forth in Section 11(a)(ii).
(e)
“
Average Invested Assets ”
shall mean the average, at the end of each calendar month during
the calendar quarter in respect of which an Asset Management Fee is
being calculated, of the aggregate book value of the
Advisees’ assets invested in equity interests in and loans
secured by real estate, before reserves for depreciation or bad
debt or other similar non-cash reserves.
(f)
“
Board of Directors ”
shall have the meaning set forth in the recitals
hereto.
(g)
“
Cause ”
shall mean (x) fraud, criminal conduct, willful misconduct or
illegal or negligent breach of fiduciary duty by the Advisor or a
breach of this Agreement by the Advisor; or (y) if any of the
following events occur: (i) the Advisor shall violate any material
provision of this Agreement, and after written notice of such
violation, shall not cure such default within 30 days or have begun
action within 30 days to cure the default which shall be completed
with reasonable diligence, (ii) the Advisor shall be adjudged
bankrupt or insolvent by a court of competent jurisdiction, or an
order shall be made by a court of competent jurisdiction for the
appointment of a receiver, liquidator, or trustee of the Advisor,
for all or substantially all of its property by reason of the
foregoing, or if a court of competent jurisdiction approves any
petition filed against the Advisor for reorganization, and such
adjudication or order shall remain in force or unstayed for a
period of 30 days, (iii) the Advisor shall institute proceedings
for voluntary bankruptcy or shall file a petition seeking
reorganization under the federal bankruptcy laws, or for relief
under any law for relief of debtors, or shall consent to the
appointment of a receiver for itself or for all or substantially
all of its property, or shall make a general assignment for the
benefit of its creditors, or shall admit in writing its inability
to pay its debts, generally, as they become due.
(h)
“
Charter ”
shall mean the Articles of Incorporation of the Company, as amended
from time to time.
(i)
“
Financing Coordination Fee ”
shall have the meaning set forth in Section
11(a)(iii).
(j)
“
Good Reason ”
shall mean, with respect to the termination of this Agreement, (x)
any failure to obtain a satisfactory agreement from any successor
to an Advisee to assume and agree to perform such Advisee’s
obligations under this Agreement; or (y) any material breach of
this Agreement of any nature whatsoever by an Advisee.
(k)
“
Independent Director ”
shall have the meaning set forth in the By-laws of the Company, as
amended from time to time.
(l)
“
Initial Term ”
shall have the meaning set forth in Section 17(a).
(m)
“
Offering Expenses ”
shall have the meaning set forth in Article 1 of the Partnership
Agreement.
(n)
“
Offering Proceeds ”
shall have the meaning set forth in Section 16.
(o)
“
Partnership Agreement ”
shall mean the Agreement of Limited Partnership of the OP, as
amended and restated from time to time.
(p)
“
Person ”
shall mean an individual, corporation, partnership, joint venture,
association, company (whether of limited liability or otherwise),
trust, bank or other entity, or government or any agency or
political subdivision of a government.
(q)
“
Property Disposition Fee ”
shall have the meaning set forth in Section 11(a)(iv).
(r)
“
Preferred Return ”
shall mean the receipt by the stockholders of the Company of (i) a
Cumulative Non-Compound Return of 7% per year on such
stockholders’ net investment, and (ii) the amount of such net
investment.
(s)
“
Prospectus ”
shall mean the final prospectus of the Company in connection with
the initial registration of the Shares filed with the SEC on Form
S-11, as amended and supplemented from time to time.
(t)
“
SEC ”
shall mean the United States Securities and Exchange
Commission.
(u)
“
Share ”
shall mean a share of the Common Stock, par value $0.01, of the
Company.
(v)
“
Total Operating Expenses ”
of a Person means the aggregate of all expenses paid or incurred by
such Person, but excluding organization and offering expenses,
interest payments, taxes, non-cash expenditures, any Acquisition
Fee or other acquisition expenses.
2.
Duties of Advisor .
The Company, on its own behalf, and as general partner of the OP,
hereby retains and appoints the Advisor as the advisor of the
Company and the OP to perform the services hereinafter set forth,
and the Advisor hereby accepts such appointment, all subject to the
terms and conditions hereinafter set forth. In the performance of
this undertaking, subject to the supervision of the Board of
Directors and consistent with the provisions of the Company’s
Charter and the Agreement of Limited Partnership of the OP (the
“Partnership Agreement”), the Advisor shall devote
sufficient resources to the administration of the Company to
discharge is obligations hereunder and shall:
a.
obtain
for the Advisees, furnish and/or supervise the services
necessary to perform any ministerial functions in connection
with the management of the day-to-day operations of the
Advisees;
b.
use
its best efforts to seek out, present and recommend to the
Advisees, whether through its own efforts or those of third
parties retained by it, suitable investment opportunities that
are consistent with the Advisees’ respective investment
objectives and policies and acquisition strategy and
objectives, as adopted by the Board of Directors from time to
time, and negotiate on behalf of the Advisees with respect to
potential investments or the disposition thereof;
c.
exercise
absolute discretion, subject to the Board of Directors’
review, in decisions to originate, acquire, retain or sell
real properties,
provided ,
that ,
the Advisor may acquire on behalf of the Advisees any real property
with purchase price that is less than $15,000,000, or finance such
an acquisition on the Advisees’ behalf, without the prior
approval of the Board of Directors if and to the extent
that:
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i.
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the
proposed acquisition or financing would not, if consummated,
violate or conflict with the investment guidelines of the Advisees
as set forth in the Prospectus;
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ii.
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the
proposed acquisition or financing would not, if consummated,
violate the restriction set forth in section 2(f) below;
and
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iii.
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the
consideration proposed to be paid for such real property does not
exceed the fair market value of such property, as determined by a
qualified independent real estate appraiser selected in good faith
by the Advisor and acceptable to the Independent
Directors;
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d.
recommend
investment opportunities consistent with the Advisees’
respective investment objectives and policies and negotiate on
behalf of the Advisees with respect to potential investments
or the disposition thereof;
e.
structure
the terms and conditions pursuant to which acquisitions of
properties will be made, subject to the Board of
Directors’ review;
f.
arrange
for financing and refinancing of properties, subject to the
Board of Directors’ prior approval if such financing or
refinancing, when consummated causes the total leverage on
each such property or on all such properties in the aggregate
to exceed 75% of such property’s or properties’,
as the case may be, fair market value;
g.
obtain
for the Advisees such other services as may be required in
acquiring or disposing of investments, disbursing and
collecting the funds of the Advisees, paying the debts and
fulfilling the obligations of the Advisees, and handling,
prosecuting and settling any claims of the
Advisees;
h.
obtain
for the Advisees such services as may be required for property
management, leasing, mortgage brokerage and servicing, and
other activities relating to the investment portfolio of the
Advisees;
i.
supervise
the servicing of the Advisees’ loan
portfolios;
j.
administer
the Advisee’s respective bookkeeping and accounting
functions, and prepare, or cause to be prepared, statements
and other relevant information for distribution to
stockholders or partners, as the case may be, including annual
and quarterly reports and any filings required by regulatory
authorities;
k.
monitor
operations and expenses of the Advisees;
l.
from
time to time, or as requested by the Board of Directors, make
reports to the Advisees as to its performance of the foregoing
services;
m.
perform
any other powers of the Board of Directors or the Company (as
general partner of the OP) which (with respect to the Company)
are set forth in the Charter and the Partnership Agreement, as
applicable, which may be delegated to it by the Board of
Directors from time to time;
n.
render
such other services as the Board of Directors deems
appropriate; and
o.
do
all things necessary to assure its ability to render the
services contemplated herein.
3.
Fiduciary Relationship .
The Advisor, as a result of its relationship with the Advisees
pursuant to this Agreement, stands in a fiduciary relationship with
the stockholders of the Company and the partners of the
OP.
4.
No Partnership or Joint Venture .
The Advisees and the Advisor are not partners or joint venturers
with each other and nothing herein shall be construed to make them
partners or joint venturers or impose any liability as such on
either of them.
5.
Records .
At all times, the Advisor shall keep books of account and records
relating to services performed hereunder, which books of account
and records shall be accessible for inspection by the Advisees and
the Advisee’s appointees at any time during the ordinary
business hours of the Advisor.
6.
REIT Qualification; Other Limitations on Advisor Actions
.
Anything else in this Agreement to the contrary notwithstanding,
the Advisor shall refrain from any action which, in its sole
judgment made in good faith, or, in the judgment of the Board of
Directors provided that the Board of Directors give the Advisor
written notice to such effect, would (a) adversely affect the
status of the Company as a real estate investment trust pursuant to
Section 856 of the Code; (b) cause the Advisees to be classified as
an “investment company” for purposes of the Investment
Company Act of 1940, as amended, (c) cause the OP to be classified
other than as a partnership for purposes of the Code; (d) violate
any law, rule, regulation or statement of policy of any
governmental body or agency having jurisdiction over the Advisees
or over their securities, or (e) be prohibited by the
Company’s Charter or the Partnership Agreement of the
OP.
7.
Bank Accounts .
The Advisor may establish and maintain one or more bank accounts in
the name of the Advisees or in its own name as agent for the
Advisees and may collect and deposit in and disburse from any such
account, any money on behalf of the Advisees, under such terms and
conditions as the Board of Directors may approve, provided that no
funds in such account shall be commingled with funds of the
Advisor. From time to time and upon appropriate request, the
Advisor shall render appropriate accounting of such collections and
payments to the Board of Directors and the auditors of the
Advisees.
8.
Bond .
If required by the Board of Directors, the Advisor will maintain a
fidelity bond with a responsible surety company in such amounts as
may be required by the Board of Directors, covering all members or
partners thereof together with employees and agents of the advisor
handling funds of the Advisees and investment documents or records
pertaining to investments of the Advisees. Such bonds shall inure
to the benefit of the Advisees in respect of losses from acts of
such partners, employees and agents through theft, embezzlement,
fraud, negligence, error or omission or otherwise. The premiums on
such bonds shall be paid by the Advisees.
9.
Information Furnished to Advisor .
The Board of Directors shall, at all times, keep the Advisor fully
informed with regard to the investment policies of the Advisees,
including any specific types of real properties, mortgage
investments and mortgage securities desired, and any criteria or
conditions established by the Board of Directors as to whether the
Advisees will make a particular investment, the capitalization
policy of the Advisees (including the policy with regard to the
incurrence of indebtedness by the Advisees) and their intentions as
to the future operations of the Advisees. In particular, the Board
of Directors shall notify the Advisor promptly of their intention
to either sell or otherwise dispose of any of the Advisees’
investments, to make any new investment, to incur any indebtedness
or to issue any ad
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