Amended
and Restated Advisory Agreement


between


Phillips Edison – ARC
Shopping Center REIT Inc.,


Phillips Edison – ARC
Shopping Center Operating Partnership, L.P.


and


American Realty Capital II
Advisors, LLC


 


 


 


February 4, 2013












 










 








 








 


Table of Contents


 


 


	
       
                                                                                                                             

  	
   

  	
  Page

  
	
  Article 1

  	
  Definitions

  	
  2

  
	
  Article 2

  	
  Appointment

  	
  9

  
	
  Article 3

  	
  Duties Of The Advisor

  	
  10

  
	
  3.1

  	
  Organizational and Offering Services

  	
  10

  
	
  3.2

  	
  Acquisition Services

  	
  10

  
	
  3.3

  	
  Asset Management Services

  	
  11

  
	
  3.4

  	
  Stockholder Services

  	
  14

  
	
  3.5

  	
  Other Services

  	
  15

  
	
  Article 4

  	
  Authority of Advisor

  	
  15

  
	
  4.1

  	
  General

  	
  15

  
	
  4.2

  	
  Powers of the Advisor

  	
  15

  
	
  4.3

  	
  Approval by the Board

  	
  15

  
	
  4.4

  	
  Modification or Revocation of Authority of Advisor

  	
  15

  
	
  Article 5

  	
  Bank Accounts

  	
  16

  
	
  Article 6

  	
  Records And Financial Statements

  	
  16

  
	
  Article 7

  	
  Limitation On Activities

  	
  16

  
	
  Article 8

  	
  Fees

  	
  17

  
	
  8.1

  	
  Acquisition Fees

  	
  17

  
	
  8.2

  	
  Asset Management Fee

  	
  18

  
	
  8.3

  	
  Disposition Fees

  	
  18

  
	
  8.4

  	
  Financing Fee

  	
  19

  
	
  8.5

  	
  Subordinated Participation Interests

  	
  19

  
	
  8.6

  	
  Other Services

  	
  19

  
	
  8.7

  	
  Changes to Fee Structure

  	
  20

  
	
  8.8

  	
  Internalization

  	
  20

  
	
  8.9

  	
  Limitation on Fees

  	
  20

  
	
  8.1

  	
  20

  	
  20

  
	
  Article 9

  	
  Expenses

  	
  20

  
	
  9.1

  	
  General

  	
  20

  
	
  9.2

  	
  Timing of and Additional Limitations on Reimbursements

  	
  23

  
	
  Article 10

  	
  Voting Agreement

  	
  24

  
	
  10.1

  	
  Election of Directors

  	
  24

  
	
  10.2

  	
  Other Voting of Shares

  	
  24

  
	
  Article 11

  	
  Relationship Of Advisor And Company; Other Activities Of The Advisor

  	
  25

  
	
  11.1

  	
  Relationship

  	
  25

  
	
  11.2

  	
  Time Commitment

  	
  25

  
	
  11.3

  	
  Investment Opportunities

  	
  25

  
	
  Article 12

  	
  The Phillips Edison and ARC Names

  	
  26

  
	
  12.1

  	
  The American Realty Capital and ARC Names

  	
  26

  
	
  12.2

  	
  The Phillips Edison and PECO Names

  	
  27

  
	
  Article 13

  	
  Term And Termination Of The Agreement

  	
  28

  
	
  13.1

  	
  Term

  	
  28

  
	
  13.2

  	
  Termination by Either Party

  	
  28

  




 












 










 








 








 


	
  13.3

  	
  Payments on Termination and Survival of Certain Rights and
  Obligations

  	
  29

  
	
  Article 14

  	
  Assignment

  	
  30

  
	
  14.1

  	
  Assignment of Agreement

  	
  30

  
	
  14.2

  	
  Assignment of Payments

  	
  30

  
	
  Article 15

  	
  Indemnification And Limitation Of Liability

  	
  30

  
	
  15.1

  	
  Indemnification

  	
  30

  
	
  15.2

  	
  Limitation on Indemnification

  	
  31

  
	
  15.3

  	
  Limitation on Payment of Expenses

  	
  31

  
	
  Article 16

  	
  Miscellaneous

  	
  32

  
	
  16.1

  	
  Incorporation of the Partnership Agreement

  	
  32

  
	
  16.2

  	
  Notices

  	
  32

  
	
  16.3

  	
  Modification

  	
  34

  
	
  16.4

  	
  Severability

  	
  34

  
	
  16.5

  	
  Construction

  	
  34

  
	
  16.6

  	
  Entire Agreement

  	
  34

  
	
  16.7

  	
  Waiver

  	
  34

  
	
  16.8

  	
  Gender

  	
  34

  
	
  16.9

  	
  Titles Not to Affect Interpretation

  	
  34

  
	
  16.10

  	
  Third Party Beneficiary

  	
  35

  
	
  16.11

  	
  Counterparts

  	
  35

  
	
  16.12

  	
  Restricted Stock

  	
  35

  


















 










 








 








Amended and Restated Advisory Agreement


 


This Amended and Restated Advisory Agreement, dated as
of February 4, 2013 (this “Agreement”), is between Phillips Edison – ARC
Shopping Center REIT Inc., a Maryland corporation (the “Company”),
Phillips Edison – ARC Shopping Center Operating Partnership L.P., a Delaware limited
partnership (the “Partnership”) and American Realty Capital II Advisors,
LLC, a Delaware limited liability company (the “Advisor”). 


W
I T N E S S E T H


WHERES, the Company and the Advisor entered into that
certain Advisory Agreement dated as of July 1, 2011;


WHEREAS, the Company and the Advisor entered into that
certain First Amendment to the Advisory Agreement dated as of September 20,
2011;


WHEREAS, the Company and the Advisor entered into that
certain Second Amendment to the Advisory Agreement dated as of October 27, 2011
(the Advisory Agreement dated July 1, 2011, the First Amendment to the Advisory
Agreement dated September 20, 2011, and the Second Amendment to the Advisory
Agreement dated October 27, 2011 are collectively referred to as the “Original
Agreement”); 


WHEREAS, the Company and the Advisor desire to amend
and restate the Original Agreement, which, among other things adds the
Partnership as a party to this Agreement;


WHEREAS, the Company and the Partnership desire to
avail themselves of the knowledge, 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 of the
Company, on the terms and subject to the conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements contained herein, the parties hereto
agree that the Agreement hereby is as follows:













1 




 










 

Article 1


Definitions


The following defined
terms used in this Agreement shall have the meanings specified below:


“Acquisition Expenses” means any and all
expenses, excluding the Acquisition Fees, incurred by the Company, the Advisor
or any Affiliate of either in connection with the consideration, investigation,
selection, evaluation, acquisition or development of any Property, Loan or
other Permitted Investment, whether or not acquired or originated, as
applicable, including legal fees and expenses, travel and communications
expenses, brokerage fees, costs of appraisals, nonrefundable option payments on
Properties, Loans or other Permitted Investments not acquired, accounting fees
and expenses, title insurance premiums and the costs of performing due
diligence.


“Acquisition Fees” means (i) the fees
payable to the Advisor pursuant to Section 8.1, and (ii) all
other fees and commissions, excluding Acquisition Expenses, paid by any Person
to any Person in connection with making or investing in any Property, Loan or
other Permitted Investment or the purchase, development or construction of any
Property by the Company.  Included in clause (ii) above shall
be any real estate commission, selection fee, Development Fee, Construction
Fee, nonrecurring management fee, loan fees or points or any fee of a similar
nature, however designated.  Excluded in clause (ii) above
shall be Development Fees and Construction Fees paid to Persons not Affiliated
with the Advisor or Sub‐advisor in connection with the actual development
and construction of a Property.


“Advisor” has the meaning set forth at the head
of this Agreement.


“Affiliate” means, with respect to any Person,
any of the following:  (i) any other Person directly or indirectly
controlling, controlled by, or under common control with such Person;
(ii) any other Person directly or indirectly owning, controlling, or
holding with the power to vote 10% or more of the outstanding voting securities
of such Person; (iii) any legal entity for which such Person acts as an
executive officer, director, trustee, or general partner; (iv) any other
Person 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held, with power to vote, by such Person; and
(v) any executive officer, director, trustee, or general partner of such
Person.  An entity shall not be deemed to control or be under common control
with an Advisor‐ or Sub‐advisor‐sponsored program unless
(A) the entity owns 10% or more of the voting equity interests of such
program, or (B) a majority of the board of directors (or equivalent
governing body) of such program is composed of Affiliates of the entity.  The
term “Affiliated” shall have a meaning correlative thereto.  For the
avoidance of doubt, none of the Company, the Partnership, the Sub‐advisor,
any subsidiary of the Company, any subsidiary of the Sub‐advisor and any
other Person controlled by, controlling or under common control with Phillips
Edison & Company shall be an Affiliate of the Advisor.




 

“Appraised Value”
means the value according to an appraisal made by an Independent Appraiser.  


“Articles of Incorporation” means 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 Management Fee” shall have the meaning
set forth in Section 8.2. 


“Average Invested Assets” means, 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 specified period.


“Board of Directors” or “Board” means
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” means the bylaws of the Company, as
amended from time to time.


“Cash from Financings” means the net cash
proceeds realized by the Company from the financing of Properties, Loans or
other Permitted Investments or from the refinancing of any Company indebtedness
(after deduction of all expenses incurred in connection therewith).  


“Cash from Sales and Settlements” means the net
cash proceeds realized by the Company:  (i) from the sale, exchange or
other disposition of any of its assets or any portion thereof after deduction
of all expenses incurred in connection therewith; (ii) from the prepayment,
maturity, workout or other settlement of any Loan or Permitted Investment or
portion thereof after deduction of all expenses incurred in connection
therewith; and (iii) from regular principal payments on any Loan (or to
the extent applicable, any Permitted Investment).  In the case of a transaction
described in clause (i)(C)  of the definition of “Sale” and clause (i)(B) 
of the definition of “Settlement,” Cash from Sales and Settlements means the
proceeds of any such transaction actually distributed to the Company from the
Joint Venture or partnership.  Cash from Sales and Settlements shall not
include Cash from Financings.  


“Cash from Sales, Settlements and Financings”
means the total sum of Cash from Sales and Settlements and Cash from
Financings.


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









3 




 










 








 








“Company” means
Phillips Edison – ARC Shopping Center REIT Inc., a corporation organized under
the laws of the State of Maryland.


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


“Conflicts Committee” shall have the meaning
set forth in the Company’s Articles of Incorporation.


“Construction Fee” means 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” means the total
consideration received by the Company for the sale of a Property, Loan or other
Permitted Investment.  


“Cost of Loans and other Permitted Investments”
means the sum of the cost of all Loans and Permitted Investments held by the
Company, calculated each month on an ongoing basis, and calculated as follows
for each Loan or Permitted Investment:  the lesser of (i) the amount
actually paid or allocated to acquire or fund the Loan or Permitted Investment
(exclusive of any fees payable to the Advisor or the Sub‐advisor or any
their Affiliates in connection therewith, but inclusive of other expenses
related thereto and the amount of any debt associated with or used to acquire
or fund such Loan or Permitted Investment) and (ii) the outstanding
principal amount of such Loan or Permitted Investment, as of the time of
calculation.  With respect to any Loan or Permitted Investment held by the
Company through a Joint Venture or partnership of which it is, directly or
indirectly, a co‐venturer, such amount shall be the Company’s
proportionate share thereof.  


“Cost of Real Estate Investments” means the sum
of (i) with respect to Properties wholly owned, directly or indirectly, by
the Company, the amount actually paid or allocated to the purchase,
development, construction or improvement of Properties (exclusive of any fees
payable to the Advisor or the Sub‐advisor or any of their Affiliates in
connection therewith, but inclusive of other expenses related thereto), plus
the amount of any outstanding debt attributable to such Properties and
(ii) in the case of Properties owned by any Joint Venture or partnership
in which the Company or the Partnership is, directly or indirectly, a co‐venturer
or partner, the portion of the amount actually paid or allocated to the
purchase, development, construction or improvement of Properties (exclusive of
any fees payable to the Advisor or the Sub‐advisor or any their
Affiliates in connection therewith, but inclusive of other expenses related
thereto), plus the amount of any outstanding debt associated with such
Properties that is attributable to the Company’s investment in the Joint
Venture or partnership.


“Dealer Manager” means (i) Realty Capital
Securities, LLC, a Delaware limited liability company, or (ii) any
successor dealer manager to the Company.









4 




 










 








 








“Development Fee”
means 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.


“Director” means a member of the Board of
Directors of the Company.


“Disposition Fee” shall have the meaning set
forth in Section 8.3.   


“Distributions” means 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.  


“Financing Fee” shall have the meaning set
forth in Section 8.4. 


“GAAP” means accounting principles generally
accepted in the United States.


“Gross Proceeds” means the aggregate purchase
price of all Shares sold for the account of the Company through an Offering,
without deduction for Organization and Offering Expenses.  


“include,” “included,” “including”
and “such as” are to be construed as if followed by the phrase “without
limitation.”


“Independent Appraiser” means a person with no
material current or prior business or personal relationship with the Advisor or
the Directors, who is engaged to a substantial extent in the business of
rendering opinions regarding the value of assets of the type held by the
Company, 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.  


“Initial Public Offering” means the initial
public offering of Shares registered on the Registration Statement pursuant to
the Securities Act of 1933, as amended.


“Invested Capital” means the amount calculated
by multiplying the total number of Shares purchased by Stockholders by the
issue price, reduced by any amounts paid by the Company to repurchase or redeem
Shares pursuant to the Company’s plan for redemption of Shares or otherwise.  


“Joint Venture” means 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 Properties, Loans or other Permitted
Investments.


“Listed” or “Listing” shall have the
meaning set forth in the Company’s Articles of Incorporation.









5 




 










 








 








“Loans” means
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 mezzanine
loans, B‐notes, bridge loans, convertible mortgages, wraparound mortgage
loans, construction mortgage loans, loans on leasehold interests, and
participations in such loans.


“Management Fee Base” means, for a specified
period, the sum of the Cost of Real Estate Investments and the Cost of Loans
and other Permitted Investments computed by taking the average of such sums at
the end of each month during such specified period.


“NASAA Guidelines” means the NASAA Statement of
Policy Regarding Real Estate Investment Trusts as in effect on the date
hereof.  


“Net Income” means, for any period, the total
revenues of the Company 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,
that Net Income shall exclude the gain from the sale of the Company’s assets.  


“Offering” means any offering of Shares that is
registered with the SEC pursuant to the Securities Act of 1933, as amended,
excluding Shares offered under any employee benefit plan.


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


“Operating Cash Flow” means Operating Revenue
Cash Flows minus the sum of (i) Operating Expenses, (ii) all
principal and interest payments on indebtedness and other sums paid to lenders,
(iii) 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 taxes
incurred in connection with the issuance, distribution, transfer, registration
and Listing of the Shares, (iv) taxes, (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, loans or other property (other than
commissions on the sale of assets other than real property), such as the costs
of foreclosure, insurance premiums, legal services, maintenance, repair and
improvement of property.


“Operating Expenses” means all costs and
expenses incurred by the Company, as determined under GAAP, that 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 taxes 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, bad loan reserves, 







6 




 










 








 








impairments of value, and mark‐to‐market
losses, (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, property management fees, and
other expenses connected with the acquisition, disposition, and ownership of
real estate interests, loans or other property (other than commissions on the
sale of assets other than real property), such as the costs of foreclosure,
insurance premiums, legal services, maintenance, repair and improvement of
property.  


“Operating Revenue Cash Flows” means the
Company’s cash flow from ownership and/or operation of (i) Properties,
(ii) Loans, (iii) Permitted Investments, (iv) short‐term
investments, and (v) interests in Properties, Loans and Permitted
Investments owned by any Joint Venture or any partnership in which the Company
or the Partnership is, directly or indirectly, a co‐venturer or partner.


“Organization and Offering Expenses” means all
expenses incurred by or on behalf of the Company in connection with or in
preparing the Company for registration of and subsequently offering and
distributing its Shares to the public, whether incurred before, on or after the
date of this Agreement, including total dealer‐manager, underwriting and
brokerage discounts and commissions; legal fees and expenses of any dealer‐manager
or underwriter; expenses for printing, engraving and mailing; compensation of
employees while engaged in sales activity; charges of transfer agents,
registrars, trustees, escrow holders, depositaries and experts; expenses of
qualification of the sale of the securities under Federal and state laws; taxes
and fees, accountants’ and attorneys’ fees and expenses.  


“Other Liquidity Event” has the meaning set
forth in Section 13.3(F). 


“Partnership” means Phillips Edison – ARC
Shopping Center Operating Partnership, L.P., a Delaware limited partnership
formed to own and operate Properties, Loans and other Permitted Investments on
behalf of the Company.


“Partnership Agreement” means the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
February 4, 2013, among the Company, Phillips Edison Shopping Center OP GP LLC,
the Advisor, and PE – ARC Special Limited Partner LLC, as the same may be
amended from time to time.  


“Permitted Investments” means 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” or “person” means 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 







7 




 










 








 








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” means any
real property or properties transferred or conveyed to the Company, the
Partnership, or any subsidiary of 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” means an entity that has
been retained to perform and carry out at one or more of the Properties
property‐management services, excluding Persons 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.


“Registration Statement” means the registration
statement filed by the Company with the SEC pursuant to the Securities Act of
1933, as amended, on Form S‐11, as amended from time to time, in
connection with the Initial Public Offering.


“REIT” means a “real estate investment trust”
under Sections 856 through 860 of the Code.


“Sale” or “Sales” means (i) any
transaction or series of transactions whereby:  (A) the Company or the
Partnership sells, grants, transfers, conveys, or relinquishes its direct or
indirect ownership of any Property, Loan or other Permitted Investment or
portion thereof, 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 direct or indirect 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 direct or indirect 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.


“SEC” means the United States Securities and
Exchange Commission.


“Settlement” means (i) the payment of
principal, prepayment, maturity, workout or other settlement of any Loan or
other Permitted Investment or portion thereof owned, directly or indirectly, by
(A) the Company or the Partnership or (B) any Joint Venture or 







8 




 










 

any partnership in which the Company or the Partnership
is, directly or indirectly, a partner, but (ii) not including any
transaction or series of transactions specified in clause (i)(A)  or
(i)(B)  above in which the proceeds of such prepayment, maturity, workout
or other settlement are reinvested in one or more Properties, Loans or other
Permitted Investments within 180 days thereafter.  


“Shares” means the shares of common stock of
the Company, par value $.01 per share.  


“Stockholders” means the registered holders of
the Shares.  


“Sub‐advisor” means (i) Phillips
Edison NTR LLC (formerly known as Phillips Edison & Company SubAdvisor
LLC), a Delaware limited liability company, or (ii) any successor sub‐advisor
to the Advisor.


“Sub‐advisory Agreement” means that
Fourth Amended and Restated Sub‐advisory Agreement between the Advisor
and the Sub‐advisor, dated as of the date hereof, as the same may be
amended, restated or otherwise modified from time to time in accordance with
its terms.


“Subordinated Participation Interest” means a
profits interest in the Partnership designated as a Class B Unit in accordance
with the terms of the Partnership Agreement. 


“Termination” means the termination of this
Agreement in accordance with Article 13  hereof.


“Termination Date” means the date of
termination of the Agreement if such termination does not coincide with the
parties entering into a renewed or amended advisory agreement.  


“2%/25% Guidelines” has the meaning set forth
in Section 9.2(C). 


Article 2



Appointment


The Company and the Partnership hereby appoint the
Advisor to serve as their advisor and asset manager on the terms and subject to
the conditions set forth in this Agreement, and the Advisor hereby accepts such
appointment.










9 




 










 

Article 3



Duties Of The Advisor


The Advisor is responsible for managing, operating,
directing and supervising the operations and administration of the Company, the
Partnership and their assets.  The Advisor undertakes to use commercially
reasonable efforts to present to the Company and the Partnership potential
investment opportunities and to provide a continuing and suitable investment
program consistent with the investment objectives and policies of the Company
as determined and adopted from time to time by the Board.  Subject to the
limitations set forth in this Agreement, including Article 4 
hereof, consistent with the provisions of the Articles of Incorporation,
Bylaws and the Partnership Agreement and the continuing and exclusive authority
of the Board over the supervision of the Company, the Advisor shall, either
directly or by engaging an Affiliate, the Sub‐advisor or third party,
perform the following duties:


3.1      Organizational and Offering Services.  The Advisor shall perform all services related to the organization
of the Company or any Offering or private sale of the Company’s securities,
other than services that (i) are to be performed by the Dealer Manager,
(ii) the Company elects to perform directly or (iii) would require
the Advisor to register as a broker‐dealer with the SEC or any state.


3.2      Acquisition
Services.  The Advisor shall:


(A)      Serve as the Company’s and the Partnership’s investment and
financial advisor and provide relevant market research and economic and
statistical data in connection with the Company’s and the Partnership’s assets
and investment objectives and policies;


(B)       Subject to Article 4  hereof and the investment
objectives and policies of the Company:  (a) locate, analyze and select
potential investments; (b) structure and negotiate the terms and
conditions of transactions pursuant to which investments in Properties, Loans
and other Permitted Investments will be made; (c) acquire, originate and
dispose of Properties, Loans and other Permitted Investments on behalf of the
Company (including through Joint Ventures); (d) arrange for financing and
refinancing and make other changes in the asset or capital structure of
investments in Properties, Loans and other Permitted Investments;
(e) select Joint Venture partners and structure corresponding agreements;
and (f) enter into leases, service contracts and other agreements for
Properties, Loans and other Permitted Investments;


(C)       Perform due diligence on prospective investments and create
due diligence reports summarizing the results of such work;




 








 








(D)      Prepare reports regarding prospective
investments that include recommendations and supporting documentation necessary
for the Directors to evaluate the proposed investments;


(E)       Obtain reports (which may be prepared by the Advisor, the Sub‐advisor
or their Affiliates), where appropriate, concerning the value of contemplated
investments of the Company and the Partnership; 


(F)       Deliver to or maintain on behalf of the Company copies of all
appraisals obtained in connection with the Company’s and the Partnership’s
investments; and


(G)      Negotiate and execute approved investments and other
transactions, including Settlements of Loans and other Permitted Investments.


3.3       Asset Management Services. 
The Advisor shall (or shall retain other Persons to (but shall remain
responsible to the Company and the Partnership)):


(A)      Real Estate and Related Services:


(1)       Investigate, select and, on behalf of the Company, engage and
conduct business with (including enter contracts with) and supervise the
performance of such Persons as the Advisor deems necessary to the proper
performance of its obligations as set forth in this Agreement, including
consultants, accountants, lenders, technical advisors, attorneys, brokers,
underwriters, corporate fiduciaries, escrow agents, depositaries, custodians,
agents for collection, insurers, insurance agents, banks, builders, developers,
property owners, security investment advisors, mortgagors, the registrar and
the transfer agent, construction companies, Property Managers and any and all
Persons acting in any other capacity deemed by the Advisor necessary or
desirable for the performance of any of the foregoing services;


(2)       Negotiate and service the Company’s and the Partnership’s
debt facilities and other financings and negotiate on behalf of the Company
with banks or other lenders for debt facilities to be made to the Company or
with investment banking firms and broker‐dealers or negotiate private
sales of Shares or obtain debt facilities for the Company and the Partnership,
but in no event in such a manner so that the Advisor shall be acting as a
broker‐dealer or underwriter; provided, however, that any
fees and costs payable to third parties incurred by the Advisor in connection
with the foregoing shall be the responsibility of the Company and the
Partnership;


(3)       Monitor applicable markets and obtain reports (which may be
prepared by the Advisor, the Sub‐advisor or their Affiliates) where 







11 




 










 

appropriate, concerning the value of investments of the
Company and the Partnership;


(4)       Monitor and evaluate the performance of each asset of the
Company and the Partnership and the Company’s and the Partnership’s overall
portfolio of assets, provide daily management services to the Company and
perform and supervise the various management and operational functions related
to the Company’s and the Partnership’s investments;


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


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


(7)       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;


(8)       Conduct periodic on‐site property visits to some or all
(as the Advisor or its designee deems reasonably necessary) of the Properties
to inspect the physical condition of the Properties and to evaluate the
performance of the Property Managers;


(9)       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 and the
Partnership’s overall budget; 


(10)     Coordinate and manage relationships between the Company, the
Partnership and any co‐venturers or partners; and


(11)     Consult with the Company’s officers and the Board and provide
assistance with the evaluation and approval of potential asset dispositions,
sales and refinancings.









12 




 










 








 








(B)       Accounting and
Other Administrative Services:


(1)              
Provide the day‐to‐day
management of the Company and the Partnership and perform and supervise the
various administrative functions reasonably necessary for the management of the
Company and the Partnership;


(2)              
From time to time, or at any time
reasonably requested by the Board, make reports to the Board on the Advisor’s
performance of services to the Company and the Partnership under this
Agreement;


(3)              
Make reports to the Conflicts
Committee each quarter of the investments that have been made by other programs
sponsored by the Advisor, the Sub‐advisor or any of their respective
Affiliates, as well as any investments that have been made by the Advisor, Sub‐advisor
or any of their Affiliates directly, in each case to the extent such
investments constitute a conflict of interest or a potential conflict of
interest with the investment policies and objectives of the Company; 


(4)              
Provide or arrange for any
administrative services and items, legal and other services, office space,
office furnishings, personnel and other overhead items necessary and incidental
to the Company’s and the Partnership’s business and operations;


(5)              
Provide financial and operational
planning services;


(6)              
Maintain accounting and other
record‐keeping functions at the Company, the Partnership, and investment
levels, including  information concerning the activities of the Company and the
Partnership as shall be required to prepare and to file all periodic financial
reports, tax returns and any other information required to be filed with the
SEC, the Internal Revenue Service and any other regulatory agency;


(7)              
Maintain and preserve all appropriate
books and records of the Company and the Partnership;


(8)              
Provide tax and compliance
services and coordinate with appropriate third parties, including the Company’s
independent auditors and other consultants, on related tax matters; 


(9)              
Provide the Company and the
Partnership with all necessary cash management services;









13 




 










 








 








(10)          
Deliver to, or maintain on behalf
of, the Company and the Partnership copies of all appraisals obtained in
connection with Properties, Loans and Permitted Investments;


(11)          
Manage and coordinate with the
transfer agent the monthly dividend process and payments to Stockholders;


(12)          
Consult with the Company’s
officers and the Board and assist the Board in evaluating and obtaining
adequate insurance coverage based upon risk management determinations;


(13)          
Consult with the Company’s
officers and the Board and assist the Board in evaluating various liquidity
events when appropriate;


(14)          
Provide the Company’s officers and
the Board with timely updates related to the overall regulatory environment
affecting the Company, as well as managing compliance with such matters,
including compliance with the Sarbanes‐Oxley Act of 2002;


(15)          
Consult with the Company’s
officers and the Board relating to the corporate governance structure and
appropriate policies and procedures related thereto; 


(16)          
Perform all reporting, record
keeping, internal controls and similar matters in a manner that allows the
Company to comply with applicable law, including federal and state securities
laws and the Sarbanes‐Oxley Act of 2002;


(17)          
Notify the Board of all proposed
material transactions before they are completed; and


(18)          
Do all things necessary to assure
its ability to render the services described in this Agreement.


3.4       Stockholder Services.  The
Advisor shall (or shall retain other Persons to (but shall remain responsible
to the Company)):


(A)            
Manage services for and
communications with Stockholders, including answering phone calls, preparing
and sending written and electronic reports and other communications; 


(B)             
Oversee the performance of the
transfer agent and registrar; 


(C)             
Establish technology
infrastructure to assist in providing Stockholder support and service; and


(D)            
Consistent with Section 3.1,
perform the various subscription processing services reasonably necessary for
the admission of new Stockholders.










14 




 










 








 








3.5       Other Services.  Except as
provided in Article 7, the Advisor shall perform any other services
reasonably requested by the Company (acting through the Conflicts Committee)
and the Partnership.


Article 4



Authority of Advisor


4.1       General.  All rights and powers to manage and control the day‐to‐day
business and affairs of the Company and the Partnership shall be vested in the
Advisor.  The Advisor shall have the power to delegate all or any part of its
rights and powers to manage and control the business and affairs of the Company
and the Partnership to such officers, employees, Affiliates, agents and
representatives of the Advisor or the Company or to the Sub‐advisor as it
may deem appropriate.  Any authority delegated by the Advisor to any other
Person shall be subject to the limitations on the rights and powers of the
Advisor specifically set forth in this Agreement or the Articles of
Incorporation.


4.2      Powers of the
Advisor.  Subject to the express
limitations set forth in this Agreement, to the continuing and exclusive
authority of the Board over the supervision of the Company, and to the right of
the Advisor to delegate its responsibilities pursuant to Section 4.1,
the power to direct the management, operation and policies of the Company and
the Partnership shall be vested in the Advisor, which shall have the power by
itself and shall be authorized and empowered on behalf and in the name of the
Company and the Partnership to carry out any and all of the objectives and
purposes of the Company and the Partnership and to perform all acts and enter
into and perform all contracts and other undertakings that it may in its sole
discretion deem necessary, advisable or incidental thereto to perform its
obligations under this Agreement.


4.3      Approval by the
Board.  Notwithstanding the
foregoing, the Advisor may not take any action on behalf of the Company or the
Partnership without the prior approval of the Board or duly authorized
committees thereof if the Articles of Incorporation or Maryland General
Corporation Law require the prior approval of the Board.  The Advisor will
deliver to the Board all documents reasonably required by it to evaluate a
proposed investment (and any related financing).


4.4       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 Article 3 
hereof and this Article 4; provided, however, that
such modification or revocation shall be effective upon receipt by the Advisor
and shall not be applicable to investment transactions to which the Advisor has
committed the Company prior to the date of receipt by the Advisor of such
notification.










15 




 










 








 








Article 5



Bank Accounts


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


Article 6



Records And Financial Statements


The Advisor, in the conduct of its responsibilities to
the Company and the Partnership, shall maintain adequate and separate books and
records for the Company’s and the Partnership’s operations in accordance with
GAAP, which shall be supported by sufficient documentation to ascertain that
such books and records are properly and accurately recorded.  Such books and
records shall be the property of the Company and the Partnership and shall be
available for inspection by the Board and by counsel, auditors and other
authorized agents of the Company and the Partnership, at any time or from time
to time during normal business hours.  Such books and records shall include all
information necessary to calculate and audit the fees or reimbursements paid
under this Agreement.  The Advisor shall utilize procedures to attempt to
ensure such control over accounting and financial transactions as is reasonably
required to protect the Company’s and the Partnership’s assets from theft,
error or fraudulent activity.  All financial statements that the Advisor
delivers to the Company and the Partnership shall be prepared on an accrual
basis in accordance with GAAP, except for special financial reports that by
their nature require a deviation from GAAP.  The Advisor shall liaise with the
Company’s officers and independent auditors and shall provide such officers and
auditors with the reports and other information that the Company so requests.


Article 7



Limitation On Activities


Notwithstanding any provision in this Agreement to the
contrary, the Advisor shall not take any action that, in its sole judgment made
in good faith, would (i) adversely affect the ability of the Company to
qualify or continue to qualify as a REIT under the Code (unless the Board has
determined that REIT qualification is not in the best interests of the Company
and its Stockholders), (ii) subject the Company to regulation under the
Investment Company Act of 1940, as amended, (iii) 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,
(iv) require the Advisor to register as a broker‐dealer with the SEC
or any state, or (v) violate the Articles of Incorporation or 







16 




 










 

Bylaws.  In the event an action that would violate any of
clauses (i) through (v) of the preceding sentence but such
action has been ordered by the Board, the Advisor shall notify 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.  


Article 8



Fees


8.1       Acquisition Fees.  As compensation for the investigation, selection,
sourcing and acquisition or origination (by purchase, investment or exchange)
of Properties, Loans and other Permitted Investments, the Company shall pay an
Acquisition Fee calculated as set forth below in this Section 8.1 
to the Advisor or its assignees for each such investment (whether an
acquisition or origination).  With respect to the acquisition or origination of
a Property, Loan or other Permitted Investment to be owned, directly or
indirectly, by the Company or the Partnership, the Acquisition Fee payable to
the Advisor or its assignees shall equal 1.0% of the sum of the amount actually
paid or allocated to fund the acquisition, origination, development,
construction or improvement of the Property, Loan or other Permitted
Investment, inclusive of the Acquisition Expenses associated with such
Property, Loan or other Permitted Investment and the amount of any debt
associated with, or used to fund the investment in, such Property, Loan or
other Permitted Investment, but exclusive of the Acquisition Fee payable to the
Advisor or its assignees.  The calculation of Acquisition Fees payable to the
Advisor or its assignees will also include any amounts incurred or reserved for
capital expenditures that will be used to provide funds for capital
improvements and repairs applied to any real property investment acquired where
the Company plans to add value.  With respect to the acquisition or origination
of a Property, Loan or other Permitted Investment through any Joint Venture or
any partnership in which the Company or the Partnership is, directly or
indirectly, a co‐venturer or partner, the Acquisition Fee payable to the
Advisor or its assignees shall equal 1.0% of the portion that is attributable
to the Company’s or the Partnership’s direct or indirect investment in such
Joint Venture or partnership of the amount actually paid or allocated to fund
the acquisition, origination, development, construction or improvement of the
Property, Loan or other Permitted Investment, inclusive of the Acquisition
Expenses associated with such Property, Loan or other Permitted Investment,
plus the amount of any debt associated with, or used to fund the investment in,
such Property, Loan or other Permitted Investment, but exclusive of the
Acquisition Fee so payable to the Advisor or its assignees.  The Advisor shall
submit an invoice to the Company following the closing or closings of each
acquisition or origination, accompanied by a computation of the Acquisition
Fee.  The Acquisition Fee payable to the Advisor or its assignees shall be paid
at the closing of the transaction upon receipt of the invoice by the Company.  









17 




 










 








 








8.2       Asset Management Fee.  The Company
shall pay the Advisor or its assignees as compensation for the services
described in Section 3.3  hereof a fee (the “Asset Management Fee”)
payable on the first business day of each month up to and including September
30, 2012 in the amount of 0.08333% of the Management Fee Base for the preceding
monthly period and shall be payable, at the discretion of the Board of
Directors of the Company, in cash, Shares or grants of restricted Shares, or
any combination thereof.  The Advisor shall submit an invoice to the Company,
accompanied by a computation of the Asset Management Fee for the applicable
period.  The Asset Management Fee will be appropriately pro rated for any
partial monthly period.  For the purposes of the payment of any fees in Shares,
(i) if at the applicable time an Offering is underway, each Share shall be
valued at the per‐share offering price of the Shares in such Offering
minus the maximum selling commissions and dealer manager fee allowed in such
Offering; and (ii) at all other times, each Share shall be valued by the
Board in good faith (A) at the estimated value thereof, calculated in
accordance with the provisions of NASD Rule 2340(c)(1) (or any successor or
similar FINRA rule), or (B) if no such rule shall then exist, at the fair
market value thereof; provided, however, that in the case of Asset Management
Fees payable in grants of restricted Shares, each Share shall be valued in
accordance with the provisions of the equity incentive plan of the Company
pursuant to which such grants are to be made.


Notwithstanding
the foregoing, the Advisor shall reimburse the Company on a quarterly basis for
all or a portion of the Asset Management Fees paid to the Advisor in the
immediately preceding fiscal quarter to the extent the Company’s Modified Funds
From Operations (“MFFO”) for the immediately preceding fiscal quarter
were less than the amount of distributions declared with respect to all record
dates during such quarter, provided that the distribution rate during such
quarter was no more than $0.65 per share on an annualized basis.  Accordingly,
the portion of the Asset Management Fee that is reimbursed with respect to the
applicable period will result in the Company achieving an MFFO amount for the
period that is equal to the distributions declared during such period (assuming
that the shortfall was no more than the amount of total Asset Management Fees
for the period).  As used herein, MFFO shall be defined in accordance with the
Investment Program Association Practice Guidelines 2010‐01 issued in November 2010
or as subsequently modified by the Investment Program Association, with an
additional adjustment to add back amounts received or receivable from the Sub‐advisor
or an Affiliate thereof in the form of an additional capital contribution
(without any corresponding issuance of equity in the form of common or
preferred shares of beneficial interest to the Sub‐advisor or its
Affiliate).


8.3       Disposition Fees. 
If the Advisor or Sub‐advisor or any of their Affiliates provides a
substantial amount of services (as determined by the Conflicts Committee) in
connection with a Sale, then the Advisor or its assignees shall receive a fee
at the closing (a “Disposition Fee”) equal to 2.0% of the Contract Sales Price; provided,
however, that no Disposition Fee shall be payable if the Sale is to an
Affiliate of either the Advisor or the Sub-advisor; provided further,  







18 




 










 








 








however, that the payment of any Disposition Fees
by the Company shall be subject to any limitations contained in the Company’s
Articles of Incorporation.  Any Disposition Fee payable under this Section 8.3 
may be paid in addition to commissions paid to non‐Affiliates, provided
that the total commissions (including such Disposition Fee) paid to all Persons
by the Company for each Sale shall not exceed an amount equal to the lesser of
(i) 6.0% of the aggregate Contract Sales Price of each applicable
Property, Loan or other Permitted Investment and (ii) the Competitive Real
Estate Commission for each applicable Property, Loan or other Permitted Investment. 
Substantial assistance in connection with the Sale of a Property includes the
preparation of an investment package for the Property (including a new
investment analysis, rent rolls, tenant information regarding credit, a
property title report, an environmental report, a list of prospective buyers, a
structural report and exhibits) or such other substantial services performed by
the Advisor or Sub‐advisor or any of their Affiliates in connection with
a Sale.  The Disposition Fee payable to the Advisor or its assignees shall be
paid at the closing of the transaction upon receipt of the invoice by the
Company.  


8.4       Financing Fee.  In the event
of any debt financing obtained by or for the Company, the Company will pay to
the Advisor or its assignees upon the closing of such debt financing a fee (a “Financing Fee”)
equal to (i) 0.75% of the amount available under such debt financing,
whether at the Company, Partnership, or any direct or indirect subsidiary
level, and (ii) 0.75% of the portion that is attributable to the Company’s
or the Partnership’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 Advisor (or Sub‐advisor) may reallow
all or a portion of any Financing Fee to reimburse a non‐Affiliated third
party with whom it may subcontract to procure any such debt financing.  All or
any portion of the Financing Fees not taken as to any fiscal year shall be
deferred without interest and may be paid in such other fiscal year as the
Advisor shall determine.  


8.5       Subordinated
Participation Interests. The
Partnership shall periodically issue Subordinated Participation Interests in
the Partnership to the Advisor or its assignees, pursuant to the terms and
conditions contained in the Partnership Agreement, in connection with the
Advisor’s (or its assignees’) management of the Company’s and the Partnership’s
assets commencing on October 1, 2012.


8.6       Other Services.  Should the Board request that the Advisor or the
Sub‐advisor or any Affiliate or director, officer or employee of any of
the foregoing render services for the Company other than as set forth in this
Agreement, such services shall be separately compensated at such rates and in
such amounts as are agreed upon by the Advisor, Sub‐advisor or such
Affiliate or other Person, on the one hand, and the Board, including a majority
of the Conflicts Committee, on the other hand, 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.










19 




 










 

8.7       Changes to Fee Structure.  In
the event of Listing, the Company and the Advisor shall negotiate in good faith
to establish a fee structure appropriate for a perpetual‐life entity.  


8.8       Internalization.  In the event that the Board elects to internalize
any management services provided by the Advisor or the Sub‐advisor,
neither the Company nor the Partnership shall not pay any compensation or other
remuneration to the Advisor or the Sub‐advisor or any of their Affiliates
in connection with such internalization transaction.  For the avoidance of
doubt, any compensation paid or payable by the Company to employees of the
Company in connection with their employment by the Company (which employees
were formerly employed by the Advisor or the Sub‐advisor or any of their
Affiliates) shall not be deemed to be compensation or other remuneration in
connection with any internalization transaction for purposes of the immediately
preceding sentence.  This provision shall not limit any other consideration or
distributions that the Company or the Partnership may pay the Advisor or the
Sub‐advisor in accordance with this Agreement or the Sub‐advisory
Agreement (in each case, as such agreement may be amended, restated or modified
from time to time) or any other agreement.  This provision shall in no way
obligate the Advisor or the Sub‐advisor to facilitate an internalization
transaction with the Advisor, the Sub‐advisor or any of their Affiliates.


8.9       Limitation on
Fees.  Notwithstanding anything
herein to the contrary, the payment of any fees or expenses pursuant to Articles 8 
and 13  by the Company shall be subject to the limitations thereon
contained in the Articles of Incorporation.  


8.10     Investments through Joint Ventures.  Notwithstanding anything herein to the contrary, if
any Properties, Loans or other Permitted Investments are owned by the Company
or the Partnership through a Joint Venture and if such Joint Venture pays or
reimburses the Advisor or Sub‐advisor or any of their Affiliates in
connection with the provision of advisory services similar to any of the
services to be provided to the Company and the Partnership hereunder, then an
adjustment shall be made to the amounts owed under this Agreement to avoid
duplication of fees or reimbursement of expenses paid by the Company (directly
or indirectly) to the Advisor.  The
Company’s or the Partnership’s share of any profits interest paid to the
Advisor, Sub-advisor, or any of their Affiliates by such a Joint Venture
pursuant to the joint venture agreement or otherwise shall also be credited
toward the amount of any Subordinated Participation Interests owed under Section
8.5. 


Article 9 



Expenses


9.1       General.  In addition to the compensation paid to the Advisor
pursuant to Article 8  hereof, the Company shall pay directly or
reimburse the Advisor or Sub‐advisor, as the case may be, for all of the
expenses paid or incurred by the 







20 




 










 








 








Advisor, the Sub‐advisor
or their Affiliates on behalf of the Company or in connection with the services
provided to the Company pursuant to this Agreement, including, but not limited
to:


(A)            
All Organization and Offering
Expenses; provided, however, that:


(1)              
the Company shall not reimburse
the Advisor or Sub‐advisor to the extent such reimbursement would cause
the total amount spent by the Company on Organization and Offering Expenses
(excluding underwriting and brokerage discounts and commissions, but including
third‐party due diligence fees and expenses as set forth in detailed and
itemized invoices) to exceed 1.5% of Gross Proceeds raised in an Offering as of
the termination of such Offering; 


(2)              
within 60 days after the end of
the month in which an Offering terminates, the Advisor shall reimburse the
Company to the extent the Company incurred Organization and Offering Expenses
(excluding underwriting and brokerage discounts and commissions, but including
third‐party due diligence fees and expenses as set forth in detailed and
itemized invoices) exceeding 1.5% of Gross Proceeds raised in such Offering;


(3)              
the Company shall not reimburse
the Advisor or Sub‐advisor for any Organization and Offering Expenses
that the Conflicts Committee determines are not fair and commercially
reasonable to the Company; and


(4)              
the Company shall not make any
reimbursement for any of the following Organization and Offering Expenses
incurred by the Dealer Manager that are to be paid out of the Dealer Manager’s
fee:


(a)               
participating broker‐dealer
expense reimbursements (including meals with financial advisors and
participating broker‐dealer client seminars);


(b)              
sales seminars sponsored by
participating broker‐dealers;


(c)               
promotional items;


(d)              
marketing support;


(e)               
expenses in connection with bona
fide training and educational meetings;


(f)               
wholesaling commissions,
wholesaling salaries and wholesaling expense reimbursements (including travel,
meals and lodging in connection with the Offering); 









21 




 










 








 








(g)              
occasional meals and entertainment
expenses of participating broker‐dealers; and


(h)              
legal fees and expenses of the
Dealer Manager associated with FINRA‐related filings or the drafting and
review of any dealer manager agreements, participating broker‐dealer
agreements and due diligence agreements.


(B)             
Acquisition Fees and Acquisition
Expenses incurred in connection with the selection and acquisition of
Properties, Loans and other Permitted Investments, including such expenses
incurred related to assets pursued or considered but not ultimately acquired by
the Company or the Partnership; provided, however, that, notwithstanding
anything herein to the contrary, the payment of Acquisition Fees and
Acquisition Expenses by the Company shall be subject to the limitations
contained in the Company’s Articles of Incorporation;


(C)             
The actual out‐of‐pocket
cost of goods and services used by the Company and obtained from entities not
Affiliated with the Advisor or Sub‐advisor, including travel, meals and
lodging expenses incurred by the Advisor or Sub‐advisor in performing
duties associated with the acquisition or origination of Properties, Loans or
other Permitted Investments;


(D)            
Interest and other costs for
borrowed money, including discounts, points and other similar fees;


(E)             
Taxes and assessments on income or
Properties, taxes as an expense of doing business and any other taxes otherwise
imposed on the Company and the Partnership and their respective businesses,
assets or income;


(F)              
Out‐of‐pocket costs
associated with insurance required in connection with the business of the
Company, the Partnership or by the Company’s officers and Directors;


(G)            
Expenses of managing, improving,
developing, operating and selling Properties, Loans and other Permitted
Investments owned, directly or indirectly, by the Company or the Partnership,
as well as expenses of other transactions relating to such Properties, Loans
and other Permitted Investments, including prepayments, maturities, workouts
and other settlements of Loans and other Permitted Investments;


(H)            
All out‐of‐pocket
expenses in connection with payments to the Board and meetings of the Board and
Stockholders;


(I)               
All out‐of‐pocket
expenses associated with a Listing, if applicable;


(J)               
Personnel and related employment
costs incurred by the Advisor, the Sub‐advisor or their Affiliates in
performing the services described in 


 








 








Article 3
hereof, including reasonable salaries and wages (but excluding bonuses),
benefits and overhead of all employees directly involved in the performance of
such services; provided, however, that no reimbursement shall be
made for costs of such employees of the Advisor, Sub‐advisor or their
Affiliates to the extent that such employees performed services for which the
Advisor received Acquisition Fees, Financing Fees or Disposition Fees;


(K)            
Out‐of‐pocket expenses
of providing services for and 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;


(L)             
Audit, accounting and legal fees,
and other fees for professional services relating to the operations of the
Company and all such fees incurred at the request, or on behalf of, the Board,
the Conflicts Committee or any other committee of the Board;


(M)           
Out‐of‐pocket costs
for the Company and the Partnership to comply with all applicable laws, regulations
and ordinances; 


(N)            
Expenses connected with payments
of Distributions made or caused to be made by the Company to the Stockholders;


(O)            
Expenses of organizing,
redomesticating, merging, liquidating or dissolving the Company or of amending
the Articles of Incorporation or the Bylaws; and


(P)              
All other out‐of‐pocket
costs incurred by the Advisor or Sub‐advisor in performing the Advisor’s
duties hereunder.


9.2       Timing of and Additional Limitations on Reimbursements. 


(A)            
Expenses incurred by the Advisor
or Sub‐advisor on behalf of the Company and the Partnership and
reimbursable pursuant to this Article 9  shall be reimbursed no less
than monthly to the Advisor or Sub‐advisor in the manner and proportion
directed by the Advisor and Sub‐advisor.  The Advisor shall prepare a
statement documenting the expenses of the Company and the Partnership during
each quarter and shall deliver such statement to the Company and the
Partnership within 45 days after the end of each quarter.  


(B)             
Commencing upon the earlier to
occur of the end of the fourth fiscal quarter after (1) the Company’s
acquisition of its first real estate asset and (2) six months after the
commencement of the Initial Public Offering, the following limitation on
Operating Expenses shall apply:  The Company shall not reimburse the Advisor or
Sub‐advisor at the end of any fiscal quarter for the portion of Operating
Expenses that in the four consecutive 







23 




 










 








 








fiscal quarters then ended (the “Expense Year”)
exceeds (the “Excess Amount”) the greater of (i) 2% of Average Invested
Assets and (ii) 25% of Net Income (the “2%/25% Guidelines”) for
such year unless the Conflicts Committee determines that the Excess Amount was
justified, based on unusual and nonrecurring factors that the Conflicts
Committee deems sufficient.  If the Conflicts Committee does not approve the
Excess Amount as being so justified, the Advisor or Sub‐advisor shall
repay to the Company any Excess Amount paid to the Advisor or Sub‐advisor
during a fiscal quarter.  If the Conflicts Committee determines the Excess
Amount 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 cause such fact to be disclosed to the Stockholders
in writing (or the Company shall disclose such fact to the Stockholders in the
next quarterly report of the Company or by filing a Current Report on Form 8‐K
with the SEC within 60 days of such quarter end), together with an explanation
of the factors the Conflicts Committee considered in determining that the
Excess Amount was justified.  The Company will ensure that such determination
will be reflected in the minutes of the meetings of the Board.  All figures
used in the foregoing computation shall be determined in accordance with GAAP
applied on a consistent basis.


Article 10



Voting Agreement


10.1     Election of Directors.  The Company agrees that it will take such actions
that are necessary to cause William M.  Kahane, Nicholas Schorsch or another
representative of the Advisor reasonably satisfactory to the Company and Sub‐advisor
to be a member of the initial Board of Directors of the Company if such
representative executes an advance letter of resignation to become effective
upon such time that the Advisor is no longer serving as the advisor to the
Company.  


10.2     Other Voting of Shares.  The Advisor agrees that, with respect to any Shares
now or hereinafter owned by it, the Advisor will not vote or consent on matters
submitted to the stockholders of the Company regarding (i) the removal of
the Advisor or any Affiliate of the Advisor or (ii) any transaction
between the Company and the Advisor or any of its Affiliates.  This voting restriction
shall survive until such time that the Advisor is no longer serving as such.










24 




 










 








 








Article 11



Relationship Of Advisor, Company and Partnership; Other Activities Of The
Advisor


11.1     Relationship.  Except as
provided in Section 8.5, the Company, the Partnership, the Advisor, and
the Sub-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.  Except as set forth in Section 11.3, nothing
herein contained shall prevent the Advisor or any of its Affiliates from
engaging in or earning fees from 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 any of its Affiliates.  Nor shall this Agreement limit or restrict
the right of any manager, director, officer, member, partner, employee or
equityholder of the Advisor or any of its Affiliates to engage in or earn fees
from any other business or to render services of any kind to any other Person. 
The Advisor may, with respect to any investment in which the Company or the
Partnership is a participant, also render advice and service to each and every
other participant therein, and earn fees for rendering such advice and
service.  Specifically, it is contemplated that the Company and the Partnership
may enter into Joint Ventures or other similar co‐investment arrangements
with certain Persons, and pursuant to the agreements governing such Joint
Ventures or other similar co‐investment arrangements, the Advisor may be
engaged to provide advice and service to such Persons, in which case the
Advisor will earn fees for rendering such advice and service.  The Advisor
shall promptly disclose to the Board the existence of any condition or
circumstance, existing or anticipated, of which it has knowledge, that creates
or which would reasonably result in a conflict of interest between the
Advisor’s obligations to the Company and the Partnership and its obligations to
or its interest in any other Person (it being understood and agreed that the
conditions and circumstances referred to in the second paragraph of Section 11.3 
are deemed to have been disclosed to the Board for purposes of this Section 11.1). 


11.2     Time Commitment.  The Advisor shall, and shall cause its Affiliates
and their respective employees, officers and agents to, devote to the Company
and the Partnership such time as shall be reasonably necessary to conduct the
business and affairs of the Company and the Partnership in an appropriate
manner consistent with the terms of this Agreement.  The Company and the
Partnership each acknowledges that the Advisor and its Affiliates and their
respective employees, officers and agents may also engage in activities
unrelated to the Company and the Partnership and may provide services to
Persons other than the Company, the Partnership or any of their Affiliates.


11.3     Investment
Opportunities.  The Advisor shall
be required to use commercially reasonable efforts to present a continuing and
suitable investment program to the Company that is consistent with the
investment policies and objectives of the Company.  So long as the Advisor is
acting in its capacity as advisor under this 







25 




 










 








 








Agreement,
the Advisor will not (and will cause its Affiliates to not) (i) pursue any
opportunity to acquire any Property, Loan or other Permitted Investment that
fits within the Company’s strategy, or (ii) offer such Property, Loan or
other Permitted Investment to a third party, in each case unless and until such
opportunity is first presented to the Company.  The Company shall have 30 days
from the date of its receipt of a complete written offering package relating to
such opportunity, customary in scope and content, to notify the Advisor of the
Company’s decision as to whether or not to pursue such opportunity.  If the
Company fails so to notify the Advisor within such 30‐day period, the
Company shall be deemed to have passed on such opportunity.  If the Company
passes on such opportunity, then the Advisor or such Affiliate, as the case may
be, may acquire the subject investment or offer the subject investment to a
third party for a period of 180 days, in each case on terms and conditions
(including price) that are not materially different from the terms and
conditions set forth in the offering package to the Company.  If at the
expiration of such 180‐day period, such opportunity remains available,
then the provisions of this Section 11.3  shall once again apply to
such opportunity.


Notwithstanding
the preceding, however, the Advisor or any Affiliate of the Advisor shall be
permitted to pursue any opportunity or to offer any opportunity to a third
party in respect of (i) any net leased retail, office and industrial
properties or other property consistent with the investment policies of
American Reality Capital Trust, Inc., (ii) any commercial real estate or
other real estate investments that relate to office, retail, multi‐family
residential, industrial and hotel property types, located primarily in the New
York metropolitan area or other property consistent with the investment
policies of American Realty Capital New York Recovery REIT, Inc., or
(iii) any investments to be made by a contemplated non‐traded REIT
(the “Identified REIT”) that the Advisor or any of its Affiliates
described as (a) intending to invest primarily in “power center” real
estate developments, (b) being sponsored or co‐sponsored by ARC (or
one of its Affiliates), the acquisition services for which will be provided by
an international commercial and residential real estate developer and manager
(or one of its Affiliates), and (c) being the subject of an executed
letter of intent or term sheet between the Advisor (or one of its Affiliates)
and such international commercial and residential real estate developer and
manager (or one of its Affiliates), and which has or will have as its publicly
disclosed (and not subsequently revised or required to be revised under
applicable securities laws) investment objectives to have less than 20% of its
assets (measured by purchase price) in anchored shopping centers with purchase
prices of less than $20,000,000 per property (determined once the proceeds of
the offering have been fully invested).


Article 12



The Phillips Edison and ARC Names


12.1     The American
Realty Capital and ARC Names. 
The Advisor and its Affiliates have or may have a proprietary interest in the
names “American Realty Capital,” 







26 




 










 








 








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


12.2     The Phillips
Edison and PECO Names.  The Sub‐advisor
and its Affiliates have or may have a proprietary interest in the names “Phillips
Edison” and “PECO.”  The Sub‐advisor hereby grants to the Company, to the
extent of any proprietary interest the Sub‐advisor may have in the names
“Phillips Edison” and “PECO,” a non‐transferable, non‐assignable,
non‐exclusive royalty‐free right and license to use the names
“Phillips Edison” and “PECO” during the term of this Agreement.  The Company
and Advisor agree that the Sub‐advisor and its Affiliates will have the
right to approve of any use by the Company of the names “Phillips Edison” or “PECO,”
such approval not to be unreasonably withheld or delayed.  Accordingly, and in
recognition of this right, if at any time the Advisor ceases to 







27 




 










 








 








retain the Sub‐advisor or one of its Affiliates to
perform advisory services for the Company, the Company will, promptly after
receipt of written request from the Sub‐advisor, cease to conduct
business under or use the names “Phillips Edison” and “PECO” or any derivative
thereof and the Company shall change its name and the names of any of its
subsidiaries to a name that does not contain any of the names “Phillips Edison”
and “PECO” or any other word or words that might, in the reasonable discretion
of the Sub‐advisor, be susceptible of indication of some form of
relationship between the Company and the Sub‐advisor or any its
Affiliates.  At such time, the Company will also make any changes to any
trademarks, servicemarks or other marks necessary to remove any references to
any of the names “Phillips Edison” or “PECO.”  Consistent with the foregoing,
it is specifically recognized that the Sub‐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 the names “Phillips
Edison” or “PECO” as a part of their name, all without the need for any consent
(and without the right to object thereto) by the Company.  Neither the Sub‐advisor nor any of its
Affiliates makes any representation or warranty, express or implied, with
respect to the names “Phillips Edison” or “PECO” licensed hereunder or the use
thereof (including without limitation as to whether the use of the name
“Phillips Edison” or “PECO” will be free from infringement of the intellectual
property rights of third parties).  Notwithstanding the preceding, the Sub‐advisor
represents and warrants that it is not aware of any pending claims or
litigation or of any claims threatened in writing regarding the use or
ownership of the names “Phillips Edison” or “PECO.”  


Article 13


Term
And Termination Of The Agreement


13.1     Term.  This Agreement shall have an initial term ending
June 30, 2013 and may be renewed for an unlimited number of successive one‐year
terms upon mutual consent of the parties.  The Company (acting through the
Conflicts Committee) will evaluate the performance of the Advisor annually
before renewing this Agreement, and each such renewal shall be for a term of no
more than one year.  Any such renewal must be approved by the Conflicts
Committee.


13.2     Termination by
Either Party.  This Agreement may
be terminated upon 60 days’ written notice without cause or penalty by either
the Company (acting through the Conflicts Committee) or the Advisor.  The
provisions of Section 8.5  and 14.2  and Articles 1,
12, 13, 15  and 16  (other than Section 16.11)
shall survive termination of this Agreement. 
Notwithstanding anything else that may be to the contrary herein, the
expiration or earlier termination of this Agreement shall not relieve a party
for liability for any breach occurring prior to such expiration or earlier
termination.










28 




 










 








 








13.3      Payments on Termination and Survival of
Certain Rights and Obligations.   


(A)         
After the Termination Date, the
Advisor shall not be entitled to compensation for further services hereunder
except the Advisor (and its assignees, including the Sub‐advisor) shall
be entitled to receive from the Company all unpaid reimbursements of expenses,
all earned but unpaid fees payable and all Subordinated Participation Interests
earned but unissued to the Advisor or its assignees prior to termination of
this Agreement, payable within 30 days after the effective date of such
termination.


(B)          
The Advisor shall promptly upon
termination:


(1)              
pay over to the Company all money
collected and held on behalf of the Company pursuant to this Agreement, if any,
after deducting any accrued compensation and reimbursement for its expenses to
which it is then entitled;


(2)              
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;


(3)              
deliver to the Board all assets
and documents of the Company then in the custody of the Advisor; and


(4)              
cooperate with the Company to
provide an orderly transition of advisory functions.


(C)          
After the Termination Date, the
Sub‐advisor shall be entitled to receive from the Company all unpaid
reimbursements of expenses and all earned but unpaid fees payable to the Sub‐advisor
prior to the termination of this Agreement, payable within 30 days after the
effective date of such termination.


(D)         
After the termination of the Sub‐advisory
Agreement, to the extent payments are not provided for by Section 13.3(C) 
(i.e., if the Sub‐advisory Agreement is terminated independently of the
Advisory Agreement), the Sub‐advisor shall be entitled to receive from
the Company, within 30 days after the effective date of such termination, all
unpaid reimbursements of expenses and all earned but unpaid fees payable to the
Sub‐advisor prior to the termination of the Sub‐advisory Agreement.


(E)          
Promptly upon the termination of
the Sub‐advisory Agreement, the Sub‐advisor shall promptly upon
such termination:


(1)              
pay over to the Company all money,
if any, collected and held on behalf of the Company pursuant to the Sub‐advisory
Agreement 







29 




 










 

after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled;


(2)              
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;


(3)              
deliver to the Board all assets
and documents of the Company then in the custody of the Sub‐advisor; and


(4)              
cooperate with the Company to
provide an orderly transition of advisory or sub‐advisory functions.


Article 14



Assignment


14.1     Assignment of
Agreement.  This Agreement may be
assigned by the Advisor to an Affiliate with the consent of the Conflicts
Committee.  This Agreement shall not be assigned by the Company or the
Partnership without the consent of the Advisor, except in the case of an
assignment by the Company to a corporation or other organization that is a
successor to all of the assets, rights and obligations of the Company, in which
case such successor organization shall be bound hereunder and by the terms of
said assignment in the same manner as the Company is bound by this Agreement.


14.2     Assignment of
Payments.  The Advisor may assign
any rights to receive fees or other payments under this Agreement without
obtaining the approval of the Board or Conflicts Committee, and the Company and
the Partnership shall honor and pay directly the assignee of such assignment.


Article 15



Indemnification And Limitation Of Liability


15.1     Indemnification.  Except as prohibited by the restrictions provided
in this Section 15.1, Section 15.2  and Section 15.3,
the Company shall indemnify, defend and hold harmless the Advisor, the Sub‐advisor
and their Affiliates, as well as their respective officers, directors, equity
holders, members, partners and employees, from all liability, claims, damages
or losses arising in the performance of their duties hereunder or under any sub‐advisory
agreement, 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.  Any indemnification of the Advisor or Sub‐advisor
may be made only out of the net assets of the Company and not from
Stockholders.




 








 








Notwithstanding the foregoing, the Company shall not
indemnify the Advisor or Sub‐advisor or their Affiliates, as well as
their respective officers, directors, equity holders, members, partners and
employees, for any loss, liability or expense arising from or out of an alleged
violation of federal or state securities laws by such party unless one or more
of the following conditions are met:  (i) there has been a successful
adjudication on the merits of each count involving alleged material securities
law violations as to the particular indemnitee; (ii) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee; or (iii) a court of competent jurisdiction
approves a settlement of the claims against a particular indemnitee and finds
that indemnification of the settlement and the related costs should be made,
and the court considering the request for indemnification has been advised of
the position of the Securities and Exchange Commission and of the published
position of any state securities regulatory authority in which securities of
the Company were offered or sold as to indemnification for violations of
securities laws.


15.2     Limitation on
Indemnification.  Notwithstanding
the foregoing, the Company shall not provide for indemnification of the
Advisor, the Sub‐advisor or their Affiliates or of their respective
officers, directors, equity holders, members, partners and employees, for any
liability or loss suffered by any of them, nor shall any of them be held
harmless for any loss or liability suffered by the Company, unless all of the
following conditions are met:


(A)               
The Advisor, the Sub‐advisor
or one of their Affiliates (as applicable) has determined, in good faith, that
the course of conduct that caused the loss or liability was in the best
interests of the Company.


(B)                
The Advisor, the Sub‐advisor
or one of Affiliates (as applicable) was acting on behalf of or performing
services for the Company.  


(C)                
Such liability or loss was not the
result of negligence or misconduct by the Advisor, the Sub‐advisor or one
of their Affiliates (as applicable).  


15.3     Limitation on
Payment of Expenses.  The Company shall pay or reimburse reasonable legal
expenses and other costs incurred by any of the Advisor, the Sub‐advisor
or their Affiliates, or by any of their
respective officers, directors, equity holders, members, partners and
employees, in advance of the final
disposition of a proceeding only if (in addition to any applicable procedures
required by the Maryland General Corporation Law, as amended from time to time)
all of the following are satisfied:  (a) the proceeding relates to acts or
omissions with respect to the performance of duties or services on behalf of
the Company; (b) the legal proceeding was initiated by a third party who
is not a stockholder or, if by a stockholder acting in his or her capacity as
such, a court of competent jurisdiction approves such advancement; and
(c) such Person undertakes to repay the amount paid or reimbursed by the
Company, together 







31 




 










 








 








with the applicable legal rate of
interest thereon, if it is ultimately determined that such Person is not
entitled to indemnification.  


Article 16



Miscellaneous


16.1     Incorporation
of the Partnership Agreement.  To
the extent that the Partnership Agreement imposes obligations or restrictions
on the Advisor or grants the Advisor any rights which are not set forth in this
Agreement, the Advisor shall abide by such obligations or restrictions and such
rights shall inure to the benefit of the Advisor with the same force and effect
if they were set forth herein.


16.2     Notices.  Any notice, request, demand, approval, consent, waiver or other
communication required or permitted to be given hereunder or to be served upon
any of the parties hereto (each a “Notice”) shall be in writing and
shall be (a) delivered in person, (b) sent by facsimile transmission
(with the original thereof also contemporaneously given by another method
specified in this Section 16.2), (c) sent by a nationally‐recognized
overnight courier service, or (d) sent by certified or registered mail
(postage prepaid, return receipt requested), to the address of such party set
forth herein.


	
  To the Company or the Board:

   

  Phillips Edison – ARC Shopping Center
  REIT Inc. 

  11501 Northlake Drive

  Cincinnati, OH 45249

   

  
	
  with a copy to (which shall not
  constitute Notice):

   

  DLA Piper LLP (US)

  4141 Parklake Drive , Suite 300

  Raleigh, North Carolina 27612

  Attention:  Robert Bergdolt

  Telephone:  (919) 786‐2002

  Facsimile:  (919) 786‐2202

  
	
  To the Partnership:

   

  Phillips Edison – ARC Shopping Center
  Operating Partnership L.P. 

  11501 Northlake Drive

  Cincinnati, OH 45249

  
	
  with a copy
  to (which shall not constitute Notice):

   

  DLA Piper LLP (US)

  4141 Parklake Drive , Suite 300

  Raleigh, North Carolina 27612

  Attention:  Robert Bergdolt

  Telephone:  (919) 786‐2002

  Facsimile:  (919) 786‐2202

  
	
  To the Advisor:

   

  American Realty Capital II Advisors,
  LLC

  405 Park Avenue

  New York, New York 10022

  Attention:        Nicholas S. Schorsch

                           Jesse
  Galloway

   

  
	
  with a copy to (which shall not
  constitute Notice):

   

  Proskauer Rose LLP

  Eleven Times Square

  New York, New York 10036

  Attention:        Peter M.
  Fass, Esq.

                          James P. Gerkis, Esq.

  Telephone:  (212) 969‐3000

  Facsimile:  (212) 969‐2900

   

  
	
  To the Sub‐advisor:

   

  Phillips Edison NTR LLC

  11501 Northlake Drive

  Cincinnati, OH 45249

   

  
	
  with a copy to (which shall not
  constitute Notice):

   

  DLA Piper LLP (US)

  4141 Parklake Drive, Suite 300

  Raleigh, North Carolina 27612

  Attention:  Robert Bergdolt

  Telephone:  (919) 786‐2002

  Facsimile:  (919) 786‐2202

   

  











32 




 










 








 








Any party
may at any time give Notice in writing to the other party of a change in its
address for the purposes of this Section 16.2.  Each
Notice shall be deemed given and effective upon receipt (or refusal or
receipt).










33 




 










 








 








16.3     Modification.  This Agreement shall not be amended, supplemented,
changed, modified, terminated or discharged, in whole or in part, except by an
instrument in writing signed by the Company, the Partnership and the Advisor,
or their respective successors or permitted assigns; provided, however,
that no modification that impacts the
rights or obligations of the Sub‐advisor may be made without the Sub‐advisor’s
consent and signature.


16.4     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.


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


16.6     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.  In all events, nothing
contained herein shall be read, construed, interpreted or applied in any manner
that prevents or hinders the Company from qualifying as a real estate
investment trust under Section 856(c) of the Code.


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


16.8     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.


16.9     Titles Not to
Affect Interpretation.  The
titles of Articles and Sections 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.










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16.10   Third Party Beneficiary. 
The Sub‐advisor is intended to be a third party beneficiary of the
Company’s payment and indemnification obligations hereunder.  Except as set
forth in the immediately preceding sentence and except for those Persons
entitled to indemnification under Article 15  who shall be third
party beneficiaries of this Agreement, no other Person is a third party
beneficiary of this Agreement.


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


16.12   Restricted Stock.  Each of the Company, the Advisor and the Sub‐advisor
agrees that no restricted stock awards or grants shall be made by the Company
to any Persons other than to (a) both the Advisor and the Sub‐advisor,
or (b) the members of the Conflicts Committee.  To the extent that the
Company makes restricted stock awards or grants to the Advisor and the Sub‐advisor,
the Company shall issue (and the Advisor and the Sub‐advisor shall use
reasonable efforts to cause the Company to issue) 15% of such restricted stock
awards or grants to the Advisor and 85% of such restricted stock awards or
grants to the Sub‐advisor.  In turn, each of the Advisor and the Sub‐advisor
may allocate, in its sole discretion and as it may determine, all or any part
of such restricted stock award or grant so issued to it or its Affiliates’
directors, officers, equityholders, partners, employees, members or to its
respective Affiliates on such terms and conditions as may be determined by it. 
Notwithstanding Section 13.2, the provision of this Section 16.12 
shall terminate upon termination of this Agreement in accordance with its
terms.


[The
remainder of this page is intentionally left blank.


Signature
page follows.]












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


	
   

  	
   

  	
  Phillips Edison – ARC Shopping Center
  REIT Inc.

   

   

  By:  /s/ R. Mark Addy______________________­­__                      
                

  R. Mark Addy, Chief Operating Officer

   

  
	
   

  	
   

  	
  Phillips Edison – ARC Shopping Center
  Operating Partnership, L.P.

   

  By: Phillips Edison – ARC Shopping
  Center OP GP, LLC, its general partner

   

  By: Phillips Edison – ARC Shopping Center REIT Inc.,
  its sole member

   

   

         By:  /s/ R. Mark Addy____________________

         R. Mark Addy, Chief Operating Officer

   

  
	
   

  	
   

  	
  American Realty Capital II Advisors,
  LLC

   

   

  By:  /s/ William Kahane______________________

  William Kahane, President

   

  
	
  With respect to Sections 8.8,
  11.1, 12.2  and 13.3, Articles 9, 14, 15 
  and 16: 

  	
   

  Phillips Edison NTR LLC (formerly
  known as Phillips Edison & Company SubAdvisor LLC)

   

   

  By:  /s/ R. Mark Addy_______________________

  R. Mark Addy, President