Unassociated Document


    FORM
OF

    MANAGEMENT
AGREEMENT

     

    This management agreement (this “Management
Agreement”) is made and entered into as of the ___ day of ____________,
2009, by and among EMPIRE AMERICAN REALTY TRUST, INC., a Maryland corporation
(the “Company”), EMPIRE
AMERICAN REALTY OPERATING PARTNERSHIP, LP, a Delaware limited partnership (the
“OP”), and
EMPIRE AMERICAN MANAGEMENT, LLC, a Delaware limited liability company (the
“Manager”).

     

    WHEREAS, the OP was organized to
acquire, own, operate, lease and manage real estate properties on behalf of the
Company; and

     

    WHEREAS, the Company intends to
continue to raise money from the sale of its common stock to be used, net of
payment of certain offering costs and expenses, for investment in the
acquisition and rehabilitation of income-producing real estate and other
real-estate related investments, which are to be acquired and held by the
Company or by the OP on behalf of the Company; and

     

    WHEREAS, the Owner desires to retain
the Manager to manage and coordinate the leasing of the real estate properties
acquired by the Owner, and the Manager desires to be so retained, all under the
terms and conditions set forth in this Management Agreement.

     

    NOW, THEREFORE, in consideration of the
premises and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound hereby, do hereby agree as follows:

     

    ARTICLE
I.

     

    DEFINITIONS

     

    Except as otherwise specified or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Management Agreement:

     

    1.1           “Account” has the
meaning set forth in Section 2.3(i)
hereof.

     

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

     

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

     

    1.4           “Budget” has the
meaning set forth in Section 2.5(c)
hereof.

     

    1.5           “Gross Revenues” means
all amounts actually collected as rents or other charges for the use and
occupancy of the Properties, but shall exclude interest and other investment
income of the Owner and proceeds received by the Owner for a sale, exchange,
condemnation, eminent domain taking, casualty or other disposition of assets of
the Owner.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.6           “Improvements” means
buildings, structures, equipment from time to time located on the Properties and
all parking and common areas located on the Properties.

     

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

     

    1.8           “Joint Venture” means
the joint venture or partnership arrangements (other than between the Company
and the OP) in which the Company or the OP or any of their subsidiaries is a
co-venturer or general partner which are established to own
Properties.

     

    1.9           “Management Fees” has
the meaning set forth in Section 4.1(a)
hereof.

     

    1.10         “Owner” means the
Company, the OP and any Joint Venture that owns, in whole or in part, any
Properties.

     

    1.11         “Ownership Agreements”
has the meaning set forth in Section 2.3(k)
hereof.

     

    1.12         “Person” means 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.

     

    1.13         “Plan” has the meaning
set forth in Section
2.5(c) hereof.

     

    1.14         “Properties” means all
real estate properties owned by the Owner and all tracts as yet unspecified but
to be acquired by the Owner containing income-producing Improvements or on which
the Owner will develop or rehabilitate income-producing
Improvements.

     

    ARTICLE
II.

    APPOINTMENT
OF THE MANAGER; SERVICES TO BE PERFORMED

     

    2.1           Appointment of the
Manager.  The Owner hereby engages and retains the Manager as
the sole and exclusive manager and agent of the Properties, and the Manager
hereby accepts such appointment, all on the terms and conditions hereinafter set
forth, it being understood that this Management Agreement shall cause the
Manager to be, at law, the Owner’s agent upon the terms contained
herein.

     

    2.2           General
Duties.  The Manager shall use commercially reasonable efforts
in performing its duties hereunder to manage, operate, maintain and lease the
Properties in a diligent, careful and vigilant manner.  The services
of the Manager are to be of scope and quality not less than those generally
performed by professional property managers of other similar properties in the
area.  The Manager shall make available to the Owner the full benefit
of the judgment, experience and advice of its members and staff with respect to
the policies to be pursued by the Owner relating to the operation and leasing of
the Properties.

     

    2.3           Specific
Duties.  The Manager’s duties include the
following:

     

    
      	
               
      

            	
              (a)

            	
              Lease
      Obligations.  The Manager shall perform all duties of the
      landlord under all leases insofar as such duties relate to the operation,
      maintenance, and day-to-day management of the Properties.  The
      Manager shall also provide or cause to be provided, at the Owner’s
      expense, all services normally provided to tenants of like premises,
      including, where applicable and without limitation, gas, electricity or
      other utilities required to be furnished to tenants under leases, normal
      repairs and maintenance, and cleaning and janitorial
      service.  The Manager shall arrange for and supervise the
      performance of all installations and improvements in space leased to any
      tenant which are either expressly required under the terms of the lease of
      such space or which are customarily provided to
  tenants.

            


    

     

    
      	
               
      

            	
              (b)

            	
              Maintenance.  The
      Manager shall cause the Properties to be maintained in the same manner as
      similar properties in the area.  The Manager’s duties and
      supervision in this respect shall include, without limitation, cleaning of
      the interior and the exterior of the Improvements and the public common
      areas on the Properties and the making and supervision of repair,
      alterations, and decoration of the Improvements, subject to and in strict
      compliance with this Management Agreement and any applicable
      leases.  Construction and rehabilitation activities undertaken
      by the Manager, if any, will be limited to activities related to the
      management, operation, maintenance, and leasing of the Property (e.g.,
      repairs, renovations, and leasehold
  improvements).

            


    

    
       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

    

    
      	
               
      

            	
              (c)

            	
              Leasing
      Functions.  The Manager shall coordinate the leasing of
      the Properties and shall negotiate and use its best efforts to secure
      executed leases from qualified tenants, and to execute same on behalf of
      the Owner, if requested, for available space in the Properties, such
      leases to be in form and on terms approved by the Owner and the Manager,
      and to bring about complete leasing of the Properties.  The
      Manager shall be responsible for the hiring of all leasing agents, as
      necessary for the leasing of the Properties, and to otherwise oversee and
      manage the leasing process on behalf of the
  Owner.

            


    

     

    
      	
               
      

            	
              (d)

            	
              Notice of
      Violations.  The Manager shall forward to the Owner,
      promptly upon receipt, all notices of violation or other notices from any
      governmental authority, and board of fire underwriters or any insurance
      company, and shall make such recommendations regarding compliance with
      such notice as shall be
appropriate.

            


    

     

    
      	
               
      

            	
              (e)

            	
              Personnel.  Any
      personnel hired by the Manager to maintain, operate and lease the Property
      shall be the employees or independent contractors of the Manager and not
      of the Owner.  The Manager shall use due care in the selection
      and supervision of such employees or independent
      contractors.  The Manager shall be responsible for the
      preparation of and shall timely file all payroll tax reports and timely
      make payments of all withholding and other payroll taxes with respect to
      each employee.

            


    

     

    
      	
               
      

            	
              (f)

            	
              Utilities
      and Supplies.  The Manager shall enter into or renew
      contracts for electricity, gas, steam, landscaping, fuel, oil, maintenance
      and other services as are customarily furnished or rendered in connection
      with the operation of similar rental property in the
  area.

            


    

     

    
      	
               
      

            	
              (g)

            	
              Expenses.  The
      Manager shall analyze all bills received for services, work and supplies
      in connection with maintaining and operating the Properties, pay all such
      bills, and, if requested by the Owner, pay, when due, utility and water
      charges, sewer rent and assessments, any applicable taxes, including,
      without limitation, any real estate taxes, and any other amount payable in
      respect to the Properties.  All bills shall be paid by the
      Manager within the time required to obtain discounts, if
      any.  The Owner may from time to time request that the Manager
      forward certain bills to the Owner promptly after receipt, and the Manager
      shall comply with any such request.  The payment of all bills,
      real property taxes, assessments, insurance premiums and any other amounts
      payable with respect to the Properties shall be paid out of the Account by
      the Manager.  All expenses shall be billed at net cost (i.e.,
      less all rebates, commissions, discounts and allowances, however
      designed).

            


    

     

    
      	
               
      

            	
              (h)

            	
              Monies
      Collected.  The Manager shall collect all rent and other
      monies from tenants and any sums otherwise due to the Owner with respect
      to the Properties in the ordinary course of business.  In
      collecting such monies, the Manager shall inform tenants of the Properties
      that all remittances are to be in the form of a check or money
      order.  The Owner authorizes the Manager to request, demand,
      collect and provide receipts for all such rent and other monies and to
      institute legal proceedings in the name of the Owner for the collection
      thereof and for the dispossession of any tenant in default under its
      lease.

            


    

     

    
      
        	
              	
                (i)

              	
                 Banking
      Accommodations. The Manager shall establish and maintain a separate
      checking account (the “Account”) for
      funds relating to the Properties.  All monies deposited from
      time to time in the Account shall be deemed to be trust funds and shall be
      and remain the property of the Owner and shall be withdrawn and disbursed
      by the Manager for the account of the Owner only as expressly permitted by
      this Management Agreement for the purposes of performing the obligations
      of the Manager hereunder.  No monies collected by the Manager on
      the Owner’s behalf shall be commingled with funds of the
      Manager.  The Account shall be maintained, and monies shall be
      deposited therein and withdrawn therefrom, in accordance with the
      following:

              


      

    

     

    (i)      All
sums received from rents and other income from the Properties shall be promptly
deposited by the Manager in the Account.  The Manager shall have the
right to designate two (2) or more persons who shall be authorized to draw
against the Account, but only for purposes authorized by this Management
Agreement.

    
       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

    

    (ii)                 All
sums due to the Manager hereunder, whether for compensation, reimbursement for
expenditures, or otherwise, as herein provided, shall be a charge against the
operating revenues of the Properties and shall be paid and/or withdrawn by the
Manager from the Account prior to the making of any other disbursements
therefrom.

     

    (iii)                 
On or before the 30th day following the end of each calendar quarter during the
term of this Management Agreement, the Manager shall forward to the Owner all
net operating proceeds from the preceding quarter, retaining at all times,
however, a reserve of $5,000, in addition to any other amounts otherwise
provided in the Budget.

     

    
      
        	
              	
                (j)

              	
                Tenant
      Complaints.  The Manager shall maintain business-like
      relations with the tenants of the
Properties.

              


      

    

     

    
      
        	
              	
                (k)

              	
                Ownership
      Agreements.  The Manager has received copies of the
      Agreement of Limited Partnership of the OP, Articles of Incorporation and
      the other constitutive documents of the Owner (collectively, the “Ownership
      Agreements”) and is familiar with the terms thereof.  The
      Manager shall use reasonable care to avoid any act or omission which, in
      the performance of its duties hereunder, shall in any way conflict with
      the terms of the Ownership
Agreements.

              


      

    

     

    
      
        	
              	
                (l)

              	
                Signs.  The
      Manager shall place and remove, or cause to be placed and removed, such
      signs upon the Properties as the Manager deems appropriate, subject,
      however, to the terms and conditions of the leases and to any applicable
      ordinances and regulations.

              


      

    

     

    2.4           Approval of Leases,
Contracts, Etc.  In fulfilling its duties to the Owner, the
Manager may and hereby is authorized to enter into any leases, contracts or
agreements on behalf of the Owner in the ordinary course of the management,
operation, maintenance and leasing of the Properties.

     

    2.5           Accounting, Records and
Reports.

     

    
      	
               
      

            	
              (a)

            	
              Records.  The
      Manager shall maintain all office records and books of account and shall
      record therein, and keep copies of, each invoice received from services,
      work and supplies ordered in connection with the maintenance and operation
      of the Properties.  Such records shall be maintained on a double
      entry basis.  The Owner and persons designated by the Owner
      shall at all reasonable times have access to and the right to audit and
      make independent examinations of such records, books and accounts and all
      vouchers, files and all other material pertaining to the Properties and
      this Management Agreement, all of which the Manager agrees to keep safe,
      available and separate from any records not pertaining to the Properties,
      at a place recommended by the Manager and approved by the
      Owner.

            


    

     

    
      	
               
      

            	
              (b)

            	
              Quarterly
      Reports.  On or before the 30th day following the end of
      each calendar quarter during the term of this Management Agreement, the
      Manager shall prepare and submit to the Owner the following reports and
      statements:

            


    

     

    
      	
               
      

            	
              (i)

            	
              Rental
      collection record;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Quarterly
      operating statement;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              Copy
      of cash disbursements ledger entries for such period, if
      requested;

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Copy
      of cash receipts ledger entries for such period, if
    requested;

            


    

     

    
      	
               
      

            	
              (v)

            	
              The
      original copies of all contracts entered into by the Manager on behalf of
      the Owner during such period, if requested;
and

            


    

    
       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

    

    
      	
               
      

            	
              (vi)

            	
              Copy
      of ledger entries for such period relating to security deposits maintained
      by the Manager, if requested.

            


    

     

    
      	
               
      

            	
              (c)

            	
              Budgets and
      Leasing Plans.  On or before November 15 of each calendar
      year, the Manager shall prepare and submit to the Owner for its approval
      an operating budget (a “Budget”) and a
      marketing and leasing plan (a “Plan”) on the
      Properties for the calendar year immediately following such
      submission.  Each Budget and Plan shall be in the form approved
      by the Owner prior to the date thereof.  As often as reasonably
      necessary during the period covered by any Budget or Plan, the Manager may
      submit to the Owner for its approval an updated Budget or Plan
      incorporating such changes as shall be necessary to reflect cost over-runs
      and the like during such period.  If the Owner does not
      disapprove a Budget or Plan within thirty (30) days after receipt thereof
      by the Owner, such Budget or Plan shall be deemed approved.  If
      the Owner shall disapprove any Budget or Plan, it shall so notify the
      Manager within said thirty (30) day period and explain the reasons
      therefor.  The Manager will not incur any costs other than those
      estimated in an approved Budget except
for:

            


    

     

    
      	
               
      

            	
              (i)

            	
              maintenance
      or repair costs under $5,000 per
Property;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              costs
      incurred in emergency situations in which action is immediately necessary
      for the preservation or safety of the Property, or for the safety of
      occupants or other persons on the Property (or to avoid the suspension of
      any necessary service of the
Property);

            


    

     

    
      	
               
      

            	
              (iii)

            	
              expenditures
      for real estate taxes and assessments;
and

            


    

     

    
      	
               
      

            	
              (iv)

            	
              maintenance
      supplies calling for an aggregate purchase price of less than $25,000 for
      all Properties.

            


    

     

    
      	
               
      

            	
              (d)

            	
              Returns
      Required by Law.  The Manager shall execute and file when
      due all forms, reports, and returns required by law relating to the
      employment of its personnel.

            


    

     

    
      	
               
      

            	
              (e)

            	
              Notices.  Promptly
      after receipt, the Manager shall deliver to the Owner all notices, from
      any tenant, or any governmental authority, that are not of a routine
      nature.  The Manager shall also report expeditiously to the
      Owner notice of any extensive damage to any part of the
      Properties.

            


    

     

    2.6           Subcontracting.  Notwithstanding
anything to the contrary contained in this Agreement, the Manager may
subcontract any of its duties hereunder, without the consent of the Owner, for a
fee that may be less than the Management Fees paid hereunder.  In the
event that the Manager does so subcontract any its duties hereunder, such fees
payable to such third parties may, at the instruction of the Manager, be
deducted from the Management Fee and paid by the Owner to such parties, or paid
directly by the Manager to such parties, in its discretion.

     

    ARTICLE
III.

    EXPENSES

     

    3.1           Owner’s
Expenses.  Except as otherwise specifically provided, all costs
and expenses incurred hereunder by the Manager in fulfilling its duties to the
Owner shall be for the account of and on behalf of the Owner.  Such
costs and expenses may include, without limitation, reasonable wages and
salaries and other employee-related expenses of all on-site and off-site
employees of the Manager who are engaged in the operation, management,
maintenance and leasing of the Properties, including taxes, insurance and
benefits relating to such employees, and legal, travel and other out-of-pocket
expenses which are directly related to the operation, management, maintenance
and leasing of specific Properties.  All costs and expenses for which
the Owner is responsible under this Management Agreement shall be paid by the
Manager out of the Account.  In the event the Account does not contain
sufficient funds to pay all of the costs and expenses, the Owner shall fund all
sums necessary to meet such additional costs and expenses.

    
       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

    

    3.2           Manager’s
Expenses.  The Manager shall, out of its own funds, pay all of
its general overhead and administrative expenses.

     

    ARTICLE
IV.

    MANAGER’S
COMPENSATION

     

    4.1           Management
Fees.

     

    
      	
               
      

            	
              (a)

            	
              The
      Owner shall pay the Manager property management and leasing fees (the
      “Management
      Fees”), on a monthly basis, equal to five percent (5.0%) of Gross
      Revenues, plus market-based leasing commissions applicable to the
      geographic location of the property.  Except as otherwise set
      forth herein, the Owner shall also reimburse the Manager for any costs and
      expenses incurred by the Manager in connection with managing the
      Properties.

            


    

     

    
      	
               
      

            	
              (b)

            	
              The
      Manager may charge a separate fee for the one-time initial rent-up or
      leasing-up of newly constructed Properties in an amount not to exceed the
      fee customarily charged in arm’s length transactions by others rendering
      similar services in the same geographic area for similar
      properties.

            


    

     

    
      	
               
      

            	
              (c)

            	
              Notwithstanding
      the foregoing, the Manager may be entitled to receive higher fees in the
      event the Manager can demonstrate to the satisfaction of the board of
      directors of the Company (including a majority of the Independent
      Directors) through empirical data that a higher competitive fee is
      justified for the services rendered and the type of Property
      managed.  As described in Section 2.6
      above, in the event that the Manager properly engages one or more third
      parties to perform the services described herein, the fees payable to such
      parties for such services will be deducted from the Management Fees, or
      paid directly by the Manager, at the Manager’s option.  The
      Manager’s compensation under this Section 4.1
      shall apply to all renewals, extensions or expansions of leases which the
      Manager originally negotiated.

            


    

     

    4.2           Additional
Fees.  In the event that the Manager provides services other
than those specified herein, the Owner shall pay to the Manager a monthly fee
equal to no more than that which the Owner would pay to a third party that is
not an Affiliate of the Owner or the Manager to provide such
services.

     

    4.3           Audit
Adjustment.  If any audit of the records, books or accounts
relating to the Properties discloses an overpayment or underpayment of
Management Fees, the Owner or the Manager shall promptly pay to the other party
the amount of such overpayment or underpayment, as the case may
be.  If such audit discloses an overpayment of Management Fees for any
fiscal year of more than the correct Management Fees for such fiscal year, the
Manager shall bear the cost of such audit.

     

    ARTICLE
V.

    INSURANCE
AND INDEMNIFICATION

     

    5.1           Insurance to be
Carried.

     

    
      	
               
      

            	
              (a)

            	
              The
      Manager shall obtain and keep in full force and effect insurance on the
      Properties against such hazards as the Owner and the Manager shall deem
      appropriate, but in any event, insurance sufficient to comply with the
      leases and the Ownership Agreements shall be maintained.  All
      liability policies shall provide sufficient insurance satisfactory to both
      the Owner and the Manager and shall contain waivers of subrogation for the
      benefit of the Manager.

            


    

     

    
      	
               
      

            	
              (b)

            	
              The
      Manager shall obtain and keep in full force and effect, in accordance with
      the laws of the state in which each Property is located, employer’s
      liability insurance applicable to and covering all employees of the
      Manager at the Properties and all persons engaged in the performance of
      any work required hereunder, and the Manager shall furnish the Owner
      certificates of insurers naming the Owner as a co-insured and evidencing
      that such insurance is in effect.  If any of the Manager’s
      duties hereunder are subcontracted as permitted under Section 2.6,
      the Manager shall include in each subcontract a provision that the
      subcontractor shall also furnish the Owner with such a
      certificate.

            


    

    
       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

    

    5.2           Cooperation with
Insurers.  The Manager shall cooperate with and provide
reasonable access to the Properties to representatives of insurance companies
and insurance brokers or agents with respect to insurance which is in effect or
for which application has been made.  The Manager shall use its best
efforts to comply with all requirements of insurers.

     

    5.3           Accidents and
Claims.  The Manager shall promptly investigate and report in
detail to the Owner all accidents, claims for damage relating to the ownership,
operation or maintenance of the Properties, and any damage or destruction to the
Properties and the estimated costs of repair thereof, and shall prepare for
approval by the Owner all reports required by an insurance company in connection
with any such accident, claim, damage, or destruction.  Such reports
shall be given to the Owner promptly and any report not so given within ten (10)
days after the occurrence of any such accident, claim, damage or destruction
shall be noted in the report delivered to the Owner pursuant to Section
2.5(b).  The Manager is authorized to settle any claim against
an insurance company arising out of any policy and, in connection with such
claim, to execute proofs of loss and adjustments of loss and to collect and
provide receipts for loss proceeds.

     

    5.4           Indemnification.  The
Manager shall hold the Owner harmless from and indemnify and defend the Owner
against any and all claims or liability for any injury or damage to any person
or property whatsoever for which the Manager is responsible occurring in, on, or
about the Properties, including, without limitation, the Improvements when such
injury or damage is caused by the negligence or misconduct of the Manager, its
agents, servants, or employees, except to the extent that the Owner recovers
insurance proceeds with respect to such matter.  The Owner will
indemnify and hold the Manager harmless against all liability for injury to
persons and damage to property caused by the Owner’s negligence and which did
not result from the negligence or misconduct of the Manager, except to the
extent the Manager recovers insurance proceeds with respect to such
matter.

     

    ARTICLE
VI.

    TERM;
TERMINATION

     

    6.1           Term.  This
Management Agreement shall commence on the date first above written and shall
continue until terminated in accordance with the earliest to occur of the
following:

     

    
      	
               
      

            	
              (a)

            	
              One
      year from the date of the commencement of the term
      hereof.  However, this Management Agreement will be
      automatically extended for an unlimited number of successive one year
      terms at the end of each year unless any party gives sixty (60) days’
      written notice to the other parties of its intention to terminate this
      Management Agreement;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Immediately
      upon the occurrence of any of the
following:

            


    

     

    (i)      A
decree or order is rendered by a court having jurisdiction (A) adjudging the
Manager as bankrupt or insolvent, (B) approving as properly filed a petition
seeking reorganization, readjustment, arrangement, composition or similar relief
for the Manager under the federal bankruptcy laws or any similar applicable law
or practice, or (C) appointing a receiver, liquidator, trustee or assignee in
bankruptcy or insolvency of the Manager or a substantial part of the Manager’s
assets, or for the winding up or liquidation of its affairs, or

     

    (ii)     The
Manager (A) voluntarily institutes proceedings to be adjudicated bankrupt or
insolvent, (B) consents to the filing of a bankruptcy proceeding against it, (C)
files a petition, answer or consent seeking reorganization, readjustment,
arrangement, composition  or relief under any similar applicable law
or practice, (D) consents to the filing of any such petition, or to the
appointment of a receiver, liquidator, trustee or assignee in bankruptcy or
insolvency for it or for a substantial part of its assets, (E) makes an
assignment for the benefit of creditors, (F) is unable to or admits in writing
its inability to pay its debts generally as they become due, unless such
inability shall be the fault of the Owner, or (G) takes corporate or other
action in furtherance of any of the aforesaid purposes; or

    
       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

    

    
      	
               
      

            	
              (c)

            	
              Upon
      written notice from the Owner in the event that the Manager commits an act
      of gross negligence or willful misconduct in the performance of its duties
      hereunder.

            


    

     

    Upon termination, the obligations of
the parties hereto shall cease, provided that the Manager
shall comply with the provisions hereof applicable in the event of termination
and shall be entitled to receive all compensation which may be due to the
Manager hereunder up to the date of such termination; provided, further, that if
this Management Agreement terminates pursuant to clauses (b) or (c) of this
Section 6.1,
the Owner shall have other remedies as may be available at law or in
equity.

     

    6.2           Manager’s Obligations after
Termination.  Upon the termination of this Management
Agreement, the Manager shall have the following duties:

     

    
      	
               
      

            	
              (a)

            	
              The
      Manager shall deliver to the Owner, or its designee, all books and records
      with respect to the Properties.

            


    

     

    
      	
               
      

            	
              (b)

            	
              The
      Manager shall transfer and assign to the Owner, or its designee, all
      service contracts and personal property relating to or used in the
      operation and maintenance of the Properties, except personal property paid
      for and owned by the Manager.  Manager shall also, for a period
      of sixty (60) days immediately following the date of such termination,
      make itself available to consult with and advise the Owner, or its
      designee, regarding the operation, maintenance and leasing of the
      Properties.

            


    

     

    
      	
               
      

            	
              (c)

            	
              The
      Manager shall render to the Owner an accounting of all funds of the Owner
      in its possession and shall deliver to the Owner a statement of Management
      Fees claimed to be due the Manager and shall cause funds of the Owner held
      by the Manager relating to the Properties to be paid to the Owner or its
      designee.

            


    

     

    
      	
               
      

            	
              (d)

            	
              The
      Manager shall cooperate with the Owner to provide an orderly transition of
      the Manager’s duties hereunder.

            


    

     

    


    ARTICLE
VII.

    MISCELLANEOUS

     

    7.1           Notices.  All
notices, approvals, consents and other communications hereunder shall be in
writing, and, except when receipt is required to start the running of a period
of time, shall be deemed given when delivered in person or on the fifth day
after its mailing by either party by registered or certified United States mail,
postage prepaid and return receipt requested, to the other party, at the
addresses set forth after their respect name below or at such different
addresses as either party shall have theretofore advised the other party in
writing in accordance with this Section
7.1.

    
       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

    

    
      	 
      	 
      	 
      
	
              To
      the Owner:

            	 
      	
              Empire
      American Realty Trust, Inc.

            
	 
      	 
      	
              25
      Philips Parkway

            
	 
      	 
      	
              Montvale,
      New Jersey 07645

            
	 
      	 
      	
              Attention:
      David Newman,

            
	 
      	 
      	
                               Chief
      Operating Officer

            
	 
      	 
      	 
      
	 
      	 
      	
              with
      a copy to:

            
	 
      	 
      	 
      
	 
      	 
      	
              Empire
      American Realty Operating Partnership, LP

            
	 
      	 
      	
              25
      Philips Parkway

            
	 
      	 
      	
              Montvale,
      New Jersey 07645

            
	 
      	 
      	
              Attention:
      David Newman

            
	 
      	 
      	 
      
	 
      	 
      	
              with
      a copy to:

            
	 
      	 
      	 
      
	 
      	 
      	
              Proskauer
      Rose LLP

            
	 
      	 
      	
              1585
      Broadway

            
	 
      	 
      	
              New
      York, New York 10036

            
	 
      	 
      	
              Attention:
      Peter M. Fass, Esq.

            
	 
      	 
      	 
      
	
              To
      the Manager:

            	 
      	
              Empire
      American Management, LLC

            
	 
      	 
      	
              25
      Philips Parkway

            
	 
      	 
      	
              Montvale,
      New Jersey 07645

            
	 
      	 
      	
              Attention:
      David Newman,

            
	 
      	 
      	
                               Chief
      Operating Officer

            
	 
      	 
      	 
      
	 
      	 
      	
              with
      a copy to:

            
	 
      	 
      	 
      
	 
      	 
      	
              Proskauer
      Rose LLP

            
	 
      	 
      	
              1585
      Broadway

            
	 
      	 
      	
              New
      York, New York 10036

            
	 
      	 
      	
              Attention:
      Peter M. Fass, Esq.

            
	 
      	 
      	 
      


    

    


    7.2           Governing
Law.  This Management Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law thereof.

     

    7.3           Assignment.  Except
as permitted in Section 2.6 hereof,
this Management Agreement may not be assigned by the Manager, except to an
Affiliate of the Manager, and then only upon the consent of the Owner and the
approval of a majority of the Independent Directors.  Any assignee of
the Manager shall be bound hereunder to the same extent as the
Manager.  This Agreement shall not be assigned by the Owner without
the written consent of the Manager, except to a Person which is a successor to
such Owner.  Such successor shall be bound hereunder to the same
extent as such Owner.  Notwithstanding anything to the contrary
contained herein, the economic rights of the Manager hereunder, including the
right to receive all compensation hereunder, may be sold, transferred or
assigned by the Manager without the consent of the Owner.

     

    7.4           No
Waiver.  Neither the failure nor any delay on the part of a
party to exercise any right, remedy, power or privilege under this Management
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 occurrences.  No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted such
waiver.

     

    7.5           Amendments.  This
Management Agreement may be amended only by an instrument in writing signed by
the party against whom enforcement of the amendment is sought.

     

    7.6           Headings.  The
headings of the various subdivisions of this Management Agreement are for
reference only and shall not define or limit any of the terms or provisions
hereof.

     

    7.7           Counterparts.  This
Management 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 Management Agreement shall become binding when one
or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the
signatories.

    
       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

    

    7.8           Entire
Agreement.  This Management 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.

     

    7.9           Disputes.  If
there shall be a dispute between the Owner and the Manager relating to this
Management Agreement resulting in litigation, the prevailing party in such
litigation shall be entitled to recover from the other party to such litigation
such amount as the court shall fix as reasonable attorneys’ fees.

     

    7.10           Activities of the
Manager.  The obligations of the Manager pursuant to the terms
and provisions of this Management Agreement shall not be construed to preclude
the Manager from engaging in other activities or business ventures, whether or
not such other activities or ventures are in competition with the Owner or the
business of the Owner.

     

    7.11           Independent
Contractor.  The Manager and the Owner shall not be construed
as joint venturers or partners of each other pursuant to this Management
Agreement, and neither party shall have the power to bind or obligate the other
except as set forth herein.  In all respects, the status of the
Manager to the Owner under this Management Agreement is that of an independent
contractor.

     

    7.12           Pronouns and
Plurals.  Whenever the context may require, any pronoun used in
this Management Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.

     

    [Remainder
of page intentionally left blank]


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


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

    


    
      
        
          
            
              	 
      	 
      	 
      
	
                      EMPIRE
      AMERICAN REALTY TRUST, INC.

                       

                    
	 
      	 
      
	
                      By:

                    	 
      	 
      
	 
      	 
      	
                      Name:
      David Newman

                    
	 
      	 
      	
                      Title:
      Chief Operating Officer

                    
	 
      
	
                      EMPIRE
      AMERICAN REALTY OPERATING PARTNERSHIP, LP

                       

                    
	 
      	 
      
	
                      By:

                    	 
      	
                      Empire
      American Realty Trust, Inc.

                    
	 
      	 
      	
                      its
      General Partner

                    
	 
      	 
      
	
                      By:

                    	 
      	 
      
	 
      	 
      	
                      Name:
      David Newman

                    
	 
      	 
      	
                      Title:
      Chief Operating Officer

                    
	 
      
	
                      EMPIRE
      AMERICAN MANAGEMENT, LLC

                       

                    
	 
      	 
      
	
                      By:

                    	 
      	 
      
	 
      	 
      	
                      Name:
      David Newman

                    
	 
      	 
      	
                      Title:
      Chief Operating
Officer