Document:

CASCADE
BANCORP

     

    REGISTRATION
RIGHTS AGREEMENT

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Table of
Contents

    

    
      
        
          
            
              	 
      	 
      	
                      Page

                    
	 
      	 
      	 
      
	
                      SECTION
      1 DEFINITIONS

                    	
                      1

                    
	 
      	 
      	 
      
	
                      1.1

                    	
                      Certain
      Definitions

                    	
                      1

                    
	 
      	 
      	 
      
	
                      SECTION
      2 REGISTRATION

                    	
                      3

                    
	 
      	 
      	 
      
	
                      2.1

                    	
                      Registration

                    	
                      3

                    
	
                      2.2

                    	
                      Expenses
      of Registration

                    	
                      5

                    
	
                      2.3

                    	
                      Obligations
      of the Company

                    	
                      5

                    
	
                      2.4

                    	
                      Suspension
      of Sales

                    	
                      8

                    
	
                      2.5

                    	
                      Termination
      of Registration Rights

                    	
                      8

                    
	
                      2.6

                    	
                      Free
      Writing Prospectuses

                    	
                      9

                    
	
                      2.7

                    	
                      Indemnification.

                    	
                      9

                    
	
                      2.8

                    	
                      Assignment
      of Registration Rights

                    	
                      10

                    
	
                      2.9

                    	
                      Holdback

                    	
                      10

                    
	
                      2.10

                    	
                      Rule
      144; Rule 144A Reporting

                    	
                      10

                    
	
                      2.11

                    	
                      Forfeiture

                    	
                      11

                    
	 
      	 
      	 
      
	
                      SECTION
      3 MISCELLANEOUS

                    	
                      11

                    
	 
      	 
      	 
      
	
                      3.1

                    	
                      Governing
      Law

                    	
                      11

                    
	
                      3.2

                    	
                      Waiver
      of Jury Trial

                    	
                      11

                    
	
                      3.3

                    	
                      Successors
      and Assigns

                    	
                      11

                    
	
                      3.4

                    	
                      Entire
      Agreement; Amendment; Waiver

                    	
                      12

                    
	
                      3.5

                    	
                      Additional
      Parties

                    	
                      12

                    
	
                      3.6

                    	
                      Notices,
      Etc

                    	
                      12

                    
	
                      3.7

                    	
                      Delays
      or Omissions

                    	
                      12

                    
	
                      3.8

                    	
                      Rights;
      Separability

                    	
                      12

                    
	
                      3.9

                    	
                      Information
      Confidential

                    	
                      12

                    
	
                      3.10

                    	
                      Expenses

                    	
                      13

                    
	
                      3.11

                    	
                      Legend
      on Certificates

                    	
                      13

                    
	
                      3.12

                    	
                      Captions

                    	
                      13

                    
	
                      3.13

                    	
                      Counterparts;
      Facsimile

                    	
                      13

                    

            

          

        

      

    

     

    
      
         

      

      
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      REGISTRATION
RIGHTS AGREEMENT

       

      THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”)
is made and entered into as of the 28th day of January, 2011 by and among
Cascade Bancorp, an Oregon corporation (the “Company”),
and the persons identified on the signature pages hereof (the “Shareholders”).

       

      Recitals

       

      WHEREAS, the Shareholders have
entered into separate Securities Purchase Agreements with the Company
(collectively, the “Securities
Purchase Agreements”), pursuant to which each Shareholder has purchased
shares of common stock of the Company (the “Common
Stock”); and

       

      WHEREAS, as a condition to the
closing of the Shareholders’ acquisition of the Common Stock pursuant to the
Securities Purchase Agreements, the Shareholders and the Company have agreed to
enter into this Registration Rights Agreement.

       

      NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein, all parties
hereto agree as follows:

       

      SECTION
1

       

      DEFINITIONS

       

      1.1        Certain
Definitions. As used in this
Agreement, the following terms shall have the following respective
meanings:

       

      “Affiliate”
means, with respect to any person, any person directly or indirectly
controlling, controlled by or under common control with, such other person. For
purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of
such person, whether through the ownership of voting securities, by contract or
otherwise or for purposes of the Bank Holding Company Act of 1956, as amended or
the Change in Bank Control Act of 1978, as amended.

       

      “Holder”
means any Shareholder and any other holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been transferred in
compliance with Section 2.8
hereof.

       

      “Holders’
Counsel” means one counsel for the selling Holders chosen by Holders
representing a majority interest in the Registrable Securities being
registered.

       

      “Register,”
“registered,”
and “registration”
shall refer to a registration effected by preparing and filing (a) a
registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of
effectiveness of such registration statement or (b) a prospectus and/or
prospectus supplement in respect of an appropriate effective registration
statement on Form S-3 or other form approved by the holders of a majority of
Registrable Securities available for sales of securities pursuant to Rule 415
under the Securities Act.

      
        
           

        

        
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      “Registrable
Securities” means (A) all Common Stock held by the Holders from time to
time, and (B) any equity securities issued or issuable directly or indirectly
with respect to the securities referred to in the foregoing clause (A) by way of
conversion, exercise or exchange thereof or stock dividend or stock split or in
connection with a combination of shares, recapitalization, reclassification,
merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once issued,
such securities will not be Registrable Securities when (i) they are sold
pursuant to an effective registration statement under the Securities Act, (ii)
they shall have ceased to be outstanding; or (iii) they have been sold in a
private transaction in which the transferor’s rights under this Agreement are
not assigned to the transferee of the securities. No Registrable Securities may
be registered under more than one registration statement at one
time.

       

      “Registration
Expenses” means all expenses incurred by the Company in effecting any
registration pursuant to this Agreement (whether or not any registration or
prospectus becomes effective or final) or otherwise complying with its
obligations under this Agreement, including, without limitation, all
registration, filing and listing fees (including filings made with the Financial
Industry Regulatory Authority), printing expenses (including printing of
prospectuses and certificates for the securities), the Company’s expenses for
messenger and delivery services and telephone, fees and disbursements of counsel
for the Company, blue sky fees and expenses, expenses incurred by the Company in
connection with any “road show,” the fees and disbursements of Holders’ Counsel,
and expenses of the Company’s independent accountants in connection with any
regular or special reviews or audits incident to or required by any such
registration, but shall not include Selling Expenses and the compensation of
regular employees of the Company, which shall be paid in any event by the
Company.

       

      “Rule 144,”
“Rule
144A,” “Rule 158,”
“Rule
159A,” “Rule 405”
and “Rule
415” mean, in each case, such rule promulgated under the Securities Act
(or any successor provision), as the same shall be amended from time to
time.

       

      “Scheduled
Black-out Period” means the period from and including the last day of a
fiscal quarter of the Company to and including the business day after the day on
which the Company publicly releases its earnings for such fiscal
quarter.

       

      “SEC” means
the Securities and Exchange Commission.

       

      “Securities
Act” means the Securities Act of 1933, as amended, or any successor
statute.

       

      “Selling
Expenses” means all discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of Holders’ Counsel included in Registration Expenses), other than $25,000 of
fees and disbursements of Holders’ Counsel, which shall be reimbursed by the
Company pursuant to Section 2.2.

      
        
           

        

        
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      SECTION
2

       

      REGISTRATION

       

      2.1        Registration. Subject to the terms and
conditions of this Agreement, the Company covenants and agrees that as promptly
as practicable after the date of this Agreement (and in any event no later than
the date that is 30 days after the date hereof (the “Registration
Deadline”)), the Company shall have prepared and filed with the SEC a
Shelf Registration Statement (defined below) covering all Registrable Securities
(or otherwise designate an existing Shelf Registration Statement filed with the
SEC to cover the Registrable Securities), and, to the extent the Shelf
Registration Statement has not theretofore been declared effective or is not
automatically effective upon such filing, the Company shall use reasonable best
efforts to cause such Shelf Registration Statement to be declared or become
effective not later than the Registration Deadline and to keep such Shelf
Registration Statement continuously effective and in compliance with the
Securities Act and usable for resale of such Registrable Securities for a period
from the date of its initial effectiveness until such time as there are no
Registrable Securities remaining (including by refiling such Shelf Registration
Statement (or a new Shelf Registration Statement) if the initial Shelf
Registration Statement expires). If the Company is a well-known seasoned issuer
(as defined in Rule 405 under the Securities Act) at the time of filing of the
Shelf Registration Statement with the SEC, such Shelf Registration Statement
shall be designated by the Company as an automatic Shelf Registration
Statement.

       

      (a)        Any
registration pursuant to this Section 2.1 shall be effected by means of a shelf
registration under the Securities Act (a “Shelf
Registration Statement”) in accordance with the methods and distribution
set forth in the Shelf Registration Statement and Rule 415. If the Shareholders
or any other Holder of Registrable Securities to whom the registration rights
conferred by this Agreement have been transferred in compliance with this
Agreement intends to distribute any Registrable Securities by means of an
underwritten offering it shall promptly so advise the Company and the Company
shall take all reasonable steps to facilitate such distribution, including the
actions required pursuant to Section 2.3; provided, that the Company
shall not be required to facilitate an underwritten offering of Registrable
Securities unless the expected gross proceeds from such offering exceed
$1,000,000. The lead underwriters in any such distribution shall be selected by
the holders of a majority of the Registrable Securities to be distributed and be
reasonably acceptable to the Company.

       

      (b)        The
Company shall not be required to effect a registration (including a resale of
Registrable Securities from an effective Shelf Registration Statement) or an
underwritten offering pursuant to this Section 2: (i) with
respect to securities that are not Registrable Securities; (ii) during any
Scheduled Black-out Period; or (iii) if the Company has notified the
Shareholders and all other Holders that in the good faith judgment of the Board
of Directors, it would be materially detrimental to the Company or its security
holders for such registration or underwritten offering to be effected at such
time, in which event the Company shall have the right to defer such registration
or underwritten offering for a period of not more than 30 days after receipt of
the request of the Shareholders or any other Holder; provided that such right to
delay a registration or underwritten offering shall be exercised by the Company
(A) only if the Company has generally exercised (or is concurrently exercising)
similar black-out rights against holders of similar securities that have
registration rights and (B) not more than twice in any 12-month period and not
more than 60 days in the aggregate in any 12-month period.

      
        
           

        

        
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      (c)        After
the Closing Date, whenever the Company proposes to register any of its equity
securities, other than a registration pursuant to Section 2.1 or a Special
Registration, and the registration form to be filed may be used for the
registration or qualification for distribution of Registrable Securities, the
Company will give prompt written notice to the Shareholders and all other
Holders of its intention to effect such a registration (but in no event less
than 15 days prior to the anticipated filing date) and (subject to Section
2.1(e)) will include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within ten business days after the date of the Company’s notice (a “Piggyback
Registration”). Any such person that has made such a written request may
withdraw its Registrable Securities from such Piggyback Registration by giving
written notice to the Company and the managing underwriter, if any, on or before
the fifth day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this
Section 2.1(c)
prior to the effectiveness of such registration, whether or not the Shareholders
or any other Holders have elected to include Registrable Securities in such
registration. “Special
Registration” means the registration of (i) equity securities and/or
options or other rights in respect thereof solely registered on Form S-4 or Form
S-8 (or successor form) or (ii) shares of equity securities and/or options or
other rights in respect thereof to be offered to directors, members of
management, employees, consultants, customers, lenders or vendors of the Company
or its subsidiaries or in connection with dividend reinvestment
plans.

       

      (d)        If
the registration referred to in Section 2.1(c) is proposed to
be underwritten, the Company will so advise the Shareholders and all other
Holders as a part of the written notice given pursuant to Section 2.1(c). In such event,
the right of the Shareholders and all other Holders to registration pursuant to
this Section 2 will be conditioned upon such persons’ participation in such
underwriting and the inclusion of such persons’ Registrable Securities in the
underwriting, and each such person will (together with the Company and the other
persons distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. If any participating person
disapproves of the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the managing underwriter and the
Holders.

       

      (e)        The
Company represents and warrants that it has not granted to any holder of its
securities and agrees that it shall not grant “piggyback” registration rights to
one or more third parties to include their securities in the Shelf Registration
Statement or in an underwritten offering under the Shelf Registration Statement
pursuant to Section 2.1(a). If a Piggyback
Registration under Section 2.1(c) relates to an
underwritten primary offering on behalf of the Company, and the managing
underwriters advise the Company that in their reasonable opinion the number of
securities requested to be included in such offering exceeds the number which
can be sold without adversely affecting the marketability of such offering
(including an adverse effect on the per share offering price), the Company will
include in such registration or prospectus only such number of securities that
in the reasonable opinion of such underwriters can be sold without adversely
affecting the marketability of the offering (including an adverse effect on the
per share offering price), which securities will be so included in the following
order of priority: (i) first, in the case of a Piggyback Registration under
Section 2.1(c),
the securities the Company proposes to sell, (ii) second, Registrable Securities
of the Shareholders and all other Holders who have requested registration of
Registrable Securities pursuant to Section 2.1(a) or 2.1(c) of this Agreement,
as applicable, pro rata
on the basis of the aggregate number of such securities or shares proposed to be
sold by each such Holder and (iii) third, any other securities of the Company
that have been requested to be so included, subject to the terms of this
Agreement.

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      2.2        Expenses
of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
hereunder shall be borne by the Company. The Company shall bear its internal
expenses (including, without limitation, all salaries and expenses of their
officers and employees performing legal, accounting or other duties) and
expenses of any person, including special experts, retained by the Company. The
Company shall also reimburse the Shareholders for the reasonable fees and
disbursements of legal counsel to the Shareholders in an amount not to exceed
$25,000 per registration. All Selling Expenses incurred in connection with any
registrations hereunder shall be borne by the holders of the securities so
registered pro rata on
the basis of the aggregate offering or sale price of the securities so
registered.

       

      2.3        Obligations
of the Company. The Company shall use its
reasonable best efforts for so long as there are Registrable Securities
outstanding, to take such actions as are under its control to remain a
well-known seasoned issuer (as defined in Rule 405 under the Securities Act) if
it becomes eligible for such status in the future (and not become an ineligible
issuer (as defined in Rule 405 under the Securities Act)). In addition, whenever
required to effect the registration of any Registrable Securities or facilitate
the distribution of Registrable Securities pursuant to an effective Shelf
Registration Statement, the Company shall, as expeditiously as reasonably
practicable:

       

      (a)     
   Prepare and file with the SEC a prospectus supplement with
respect to a proposed offering of Registrable Securities pursuant to an
effective registration statement, subject to this Section 2.3, and keep such
registration statement effective or such prospectus supplement current until the
securities described therein are no longer Registrable Securities.

       

      (b)     
   Prepare and file with the SEC such amendments and supplements
to the applicable registration statement and the prospectus or prospectus
supplement used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration
statement.

       

      (c)     
   Furnish to the Holders and any underwriters such number of
copies of the applicable registration statement and each such amendment and
supplement thereto (including in each case all exhibits) and of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned or to be
distributed by them.

      
        
           

        

        
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      (d)   
     Use its reasonable best efforts to register and
qualify the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders or any managing underwriter(s), to keep such
registration or qualification in effect for so long as such registration
statement remains in effect, and to take any other action which may be
reasonably necessary to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such Holder; provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.

       

      (e)    
    Notify each Holder at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the applicable prospectus, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.

       

      (f)      
   Give written notice to the Holders:

       

      (i)           When
any registration statement filed pursuant to Section 2 or any amendment
thereto has been filed with the SEC (except for any amendment effected by the
filing of a document with the SEC pursuant to the Securities Exchange Act of
1934 (the “Exchange
Act”)) and when such registration statement or any post-effective
amendment thereto has become effective;

       

      (ii)          of
any request by the SEC for amendments or supplements to any registration
statement or the prospectus included therein or for additional
information;

       

      (iii)         of
the issuance by the SEC of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that
purpose;

       

      (iv)         of
the receipt by the Company or its legal counsel of any notification with respect
to the suspension of the qualification of the Common Stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;

       

      (v)          of
the happening of any event that requires the Company to make changes in any
effective registration statement or the prospectus related to the registration
statement in order to make the statements therein not misleading (which notice
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made); and

       

      (vi)         if
at any time the representations and warranties of the Company contained in any
underwriting agreement contemplated by Section 2.3(j) cease to be true
and correct.

      
        
           

        

        
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      (g)         Use
its reasonable best efforts to prevent the issuance or obtain the withdrawal of
any order suspending the effectiveness of any registration statement referred to
in Section 2.3(f)(iii) at the
earliest practicable time.

       

      (h)         Upon
the occurrence of any event contemplated by Section 2.3(e) or 2.3(f)(v),
promptly prepare a post-effective amendment to such registration statement or a
supplement to the related prospectus or file any other required document so
that, as thereafter delivered to the Holders and any underwriters, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with Section 2.3(f)(v) to suspend
the use of the prospectus until the requisite changes to the prospectus have
been made, then the Holders and any underwriters shall suspend use of such
prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file
copies then in such Holder’s or underwriter’s possession. The total number of
days that any such suspension may be in effect in any 180-day period shall not
exceed 30 days.

       

      (i)          Use
best efforts to procure the cooperation of the Company’s transfer agent in
settling any offering or sale of Registrable Securities, including with respect
to the transfer of physical stock certificates into book-entry form in
accordance with any procedures reasonably requested by the Holders or any
managing underwriter(s).

       

      (j)          If
an underwritten offering is requested pursuant to Section 2.1(a), enter into an
underwriting agreement in customary form, scope and substance and take all such
other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition
of such Registrable Securities, and in connection therewith in any underwritten
offering (including making members of management and executives of the Company
available to participate in “road shows,” similar sales events and other
marketing activities), (i) make such representations and warranties to the
Holders that are selling shareholders and the managing underwriter(s), if any,
with respect to the business of the Company and its subsidiaries, and the Shelf
Registration Statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in customary form,
substance and scope, and, if true, confirm the same if and when requested, (ii)
furnish the underwriters with opinions of counsel to the Company, addressed to
the managing underwriter(s), if any, covering the matters customarily covered in
such opinions requested in underwritten offerings, (iii) obtain “comfort”
letters from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any business
acquired by the Company for which financial statements and financial data are
included in the Shelf Registration Statement) who have certified the financial
statements included in such Shelf Registration Statement, addressed to each of
the managing underwriter(s), if any, such letters to be in customary form and
covering matters of the type customarily covered in “comfort” letters, (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures customary in underwritten offerings,
and (v) deliver such documents and certificates as may be reasonably requested
by the Holders of a majority of the Registrable Securities being sold in
connection therewith, their counsel and the managing underwriter(s), if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      (k)         Make
available for inspection by a representative of Holders that are selling
shareholders, the managing underwriter(s), if any, and any attorneys or
accountants retained by such Holders or managing underwriter(s), at the offices
where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors and employees of the Company to supply all information
in each case reasonably requested (and of the type customarily provided in
connection with due diligence conducted in connection with a registered public
offering of securities) by any such representative, managing underwriter(s),
attorney or accountant in connection with such Shelf Registration
Statement.

       

      (l)          Cause
all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed or, if no similar
securities issued by the Company are then listed on any securities exchange, use
its reasonable best efforts to cause all such Registrable Securities to be
listed on the New York Stock Exchange or NASDAQ, as determined by the
Company.

       

      (m)        If
requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, or the managing underwriter(s),
if any, promptly include in a prospectus supplement or amendment such
information as the Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith or managing underwriter(s), if
any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus
supplement or such amendment as soon as practicable after the Company has
received such request.

       

      (n)         Timely
provide to its Shareholders earning statements satisfying the provisions of
Section 11(a) of
the Securities Act and Rule 158 thereunder.

       

      2.4        Suspension
of Sales. During any Scheduled
Black-out Period and upon receipt of written notice from the Company that a
registration statement, prospectus or prospectus supplement contains or may
contain an untrue statement of a material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that circumstances exist that make inadvisable use of
such registration statement, prospectus or prospectus supplement, each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities until termination of such Scheduled Black-out Period or until such
Holder has received copies of a supplemented or amended prospectus or prospectus
supplement, or until such Holder is advised in writing by the Company that the
use of the prospectus and, if applicable the prospectus supplement may be
resumed. The total number of days that any such suspension may be in effect in
any 180-day period shall not exceed 30 days.

       

      2.5        Termination
of Registration Rights. A Holder’s registration
rights as to any securities held by such Holder (and its Affiliates, partners,
members and former members) shall not be available unless such securities are
Registrable Securities.

      
        
           

        

        
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      2.6        Free
Writing Prospectuses. No Holder shall use any free
writing prospectus (as defined in Rule 405) in connection with the sale of
Registrable Securities without the prior written consent of the
Company.

       

      2.7        Indemnification.

       

      (a)         The
Company agrees to indemnify each Holder and, if a Holder is a person other than
an individual, such Holder’s officers, directors, members, managers, employees,
agents, representatives and Affiliates, and each person, if any, that controls a
Holder within the meaning of the Securities Act (each, an “Indemnitee”),
against any and all Losses, joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto or any documents
incorporated therein by reference or contained in any free writing prospectus
(as such term is defined in Rule 405) prepared by the Company or authorized by
it in writing for use by such Holder (or any amendment or supplement thereto);
or any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the Company
shall not be liable to such Indemnitee in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon (i) an untrue statement or omission
made in such registration statement, including any such preliminary prospectus
or final prospectus contained therein or any such amendments or supplements
thereto or contained in any free writing prospectus (as such term is defined in
Rule 405) prepared by the Company or authorized by it in writing for use by such
Holder (or any amendment or supplement thereto), in reliance upon and in
conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished in writing to the
Company by such Indemnitee for use in connection with such registration
statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto, or (ii) offers
or sales effected by or on behalf such Indemnitee “by means of” (as defined in
Rule 159A) a “free writing prospectus” (as defined in Rule 405) that was not
authorized in writing by the Company.

       

      (b)         If
the indemnification provided for in Section 2.7(a) is unavailable
to an Indemnitee with respect to any Losses or is insufficient to hold the
Indemnitee harmless as contemplated therein, then the Company, in lieu of
indemnifying such Indemnitee, shall contribute to the amount paid or payable by
such Indemnitee as a result of such Losses in such proportion as is appropriate
to reflect the relative fault of the Indemnitee, on the one hand, and the
Company, on the other hand, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of the Company, on the one hand, and of the Indemnitee, on
the other hand, shall be determined by reference to, among other factors,
whether the untrue statement of a material fact or omission to state a material
fact relates to information supplied by the Company or by the Indemnitee and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; the Company and each Holder agree
that it would not be just and equitable if contribution pursuant to this
Section 2.7(b)
were determined by pro
rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 2.7(a). No Indemnitee
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from the Company if the Company was not
guilty of such fraudulent misrepresentation.

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      2.8        Assignment
of Registration Rights. The rights of a Holder to
registration of Registrable Securities pursuant to Section 2 may be assigned by
such Holder to a transferee or assignee of Registrable Securities to which there
is transferred to such transferee no less than $1,000,000 in Registrable
Securities; provided,
however, that the
transferor shall, within ten days after such transfer, furnish to the Company
written notice of the name and address of such transferee or assignee and the
number and type of Registrable Securities that are being assigned.

       

      Notwithstanding
the foregoing, the rights of a Shareholder to registration of Registrable
Securities pursuant to Section 2 may be assigned to any Affiliate of the
Shareholder (including without limitation any Affiliated fund) under common
control with the Shareholder's ultimate parent, general partner or investment
advisor or (B) any limited partner or shareholder of the Shareholder or
limited partner or shareholder of the Shareholder's Affiliates to which
there is transferred any Registrable Securities, regardless of amount; provided, however, that the transferor
shall, within ten days after such transfer, furnish to the Company written
notice of the name and address of such transferee or assignee and the number and
type of Registrable Securities that are being assigned.

       

      2.9        Holdback. With respect to any
underwritten offering of Registrable Securities by the Shareholders or other
Holders pursuant to Section 2.1, the Company agrees not to effect (other than
pursuant to such registration or pursuant to a Special Registration) any public
sale or distribution, or to file any Shelf Registration Statement (other than
such registration or a Special Registration) covering any of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the period not to exceed 30 days prior and 90 days
following the effective date of such offering or such longer period up to 180
days as may be requested by the managing underwriter. The Company also agrees to
cause each of its directors and senior executive officers to execute and deliver
customary lockup agreements in such form and for such time period up to 180 days
as may be requested by the managing underwriter.

       

      2.10      Rule
144; Rule 144A Reporting. With a view to making
available to the Shareholders and other Holders the benefits of certain rules
and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees
to:

       

      (a)         make
and keep public information available, as those terms are understood and defined
in Rule 144(c)(1) or any similar or analogous rule promulgated under the
Securities Act, at all times after the effective date of this
Agreement;

       

      (b)         file
with the SEC, in a timely manner, all reports and other documents required of
the Company under the Exchange Act, and if at any time the Company is not
required to file such reports, make available, upon the request of any Holder,
such information necessary to permit sales pursuant to Rule 144A (including the
information required by Rule 144A(d)(4) and the Securities
Act);

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

      (c)         so
long as any Shareholders or other Holders own any Registrable Securities,
furnish to the Shareholders or such other Holders forthwith upon request: a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 under the Securities Act, and of the Exchange Act; a
copy of the most recent annual or quarterly report of the Company; and such
other reports and documents as the Shareholders or other Holders may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration; and

       

      (d)         take
such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act.

       

      2.11       Forfeiture. At any time, any Holder may
elect in writing to forfeit its rights set forth in this Section 2 from that
date forward; provided,
that a Holder forfeiting such rights shall nonetheless be entitled to
participate under Section 2.1 in any Pending Underwritten Offering to the same
extent that such Holder would have been entitled to if the Holder had not
withdrawn; and provided, further, that no such
forfeiture shall terminate a Holder’s rights or obligations under Section 2.7
with respect to any prior registration or Pending Underwritten Offering. “Pending
Underwritten Offering” means, with respect to any Holder forfeiting its
rights pursuant to this Section 2.11, any underwritten offering of Registrable
Securities in which such Holder has advised the Company of its intent to
register its Registrable Securities either pursuant to Section 2.1(a) or Section
2.1(c) prior to the date of such Holder’s forfeiture.

       

      SECTION
3

       

      MISCELLANEOUS

       

      3.1         Governing
Law. This Agreement will be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State. The
parties hereto irrevocably and unconditionally agree that any suit or proceeding
arising out of or relating to this Agreement and the transactions contemplated
hereby will be tried exclusively in the U.S. District Court for the Southern
District of New York or, if that court does not have subject matter
jurisdiction, in any state court located in The City and County of New York and
the parties agree to submit to the jurisdiction of, and to venue in, such
courts.

       

      3.2         Waiver
of Jury Trial. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

       

      3.3         Successors
and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.

      
        
           

        

        
          -11-

          
            

          

        

        
           

        

      

      3.4         Entire
Agreement; Amendment; Waiver. This Agreement
constitutes the full and entire understanding and agreement among the parties
with regard to the subjects hereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written instrument
signed by the Company and the Holders of two-thirds of the Registrable
Securities and each Holder of at least 10% of the Company’s securities;
provided, that no amendment shall by its terms diminish or negatively affect a
Holders’ rights in a manner differently from any other Holder without such
Holder’s consent. Any such amendment, waiver, discharge or termination shall be
binding on all the Holders of Registrable Securities, but in no event shall the
obligation of any Holder of Registrable Securities hereunder be materially
increased, except upon the written consent of such Holder of Registrable
Securities.

       

      3.5         Additional
Parties. Any person that acquires
Registrable Securities pursuant to the terms of this Agreement and upon
execution of a signature page to this Agreement shall be deemed a Holder
hereunder. The addition of such other Holders shall not be deemed an amendment
under Section 3.4 of this Agreement and no approval of any existing Shareholder
or party to this Agreement other than the Company shall be required to effect
such action. All Shareholders consent to the provisions of this Section
3.5.

       

      3.6         Notices,
Etc. All notices and other
communications hereunder shall be in writing and shall be deemed duly given (i)
on the date of delivery if delivered personally, or if by facsimile, upon
written confirmation of receipt by facsimile, e-mail or otherwise, (ii) on the
first (1st)
business day following the date of dispatch if delivered utilizing a next-day
service by a recognized next-day courier service or (iii) on the earlier of
confirmed receipt or the fifth (5th)
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered, (x) if to a Holder, as indicated on the signature page
attached hereto, or at such other address as such Holder or permitted assignee
shall have furnished to the Company in writing, or (y) if to the Company, at
1100 NW Wall Street, Bend, Oregon 97701, Attention: Greg Newton, or at such
other address as the Company shall have furnished to each Holder in
writing.

       

      3.7         Delays
or Omissions. No failure or delay of
any party in exercising any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power, or
any course of conduct, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the parties
hereunder are cumulative and are not exclusive of any rights or remedies which
they would otherwise have hereunder. Any agreement on the part of any party to
any such waiver shall be valid only if set forth in a written instrument
executed and delivered by a duly authorized officer on behalf of such
party.

       

      3.8         Rights;
Separability. Unless otherwise
expressly provided herein, a Holder’s rights hereunder are several rights, not
rights jointly held with any of the other Holder. In case any provision of the
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

       

      3.9         Information
Confidential. Each Holder acknowledges
that the information received by them pursuant hereto is confidential and for
its use only on behalf of the Company, and it will not use such confidential
information in violation of the Exchange Act or reproduce, disclose or
disseminate such information to any other person (other than its partners,
parent, subsidiaries, employees or agents having a need to know the contents of
such information, and its attorneys), except in connection with the exercise of
rights under this Agreement, unless the Company or some other party other than
the Holder has made such information available to the public generally, or such
Holder is required to disclose such information by a governmental body (or order
thereof) or pursuant to any law, statute, rule or regulation.

      
        
           

        

        
          -12-

          
            

          

        

        
           

        

      

      3.10       Expenses. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.

       

      3.11       Legend
on Certificates. Each certificate
representing any Registrable Securities shall be endorsed by the Company with a
legend reading substantially as follows:

       

      “The
Shares evidenced hereby are subject to a Registration Rights Agreement by and
among the Company and the Holders (as defined therein) (the “Agreement”) (a copy
of which may be obtained upon written request from the issuer), and by accepting
any interest in such Shares the person accepting such interest shall be deemed
to agree to and shall become bound by all the provisions of the
Agreement.”

       

      3.12       Captions. The article, section,
paragraph and clause captions herein are for convenience of reference only, do
not constitute part of this Agreement and will not be deemed to limit or
otherwise affect any of the provisions hereof.

       

      3.13       Counterparts;
Facsimile. This Agreement may be
executed by facsimile and in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument. Such
facsimile signatures shall be deemed original signatures for all
purposes.

       

      [Signatures
Begin On Next Page]

      
        
           

        

        
          -13-

          
            

          

        

        
           

        

      

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

       

      
        
          	 
      	
                  CASCADE
      BANCORP

                
	 
      	 
      
	 
      	
                  By: 

                	
                  /s/ Patricia L. Moss

                
	 
      	
                  Name:  Patricia
      L. Moss

                
	 
      	
                  Title:  Chief
      Executive Officer

                

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          
            	 
      	
                    GREEN
      EQUITY INVESTORS V, L.P.

                  
	 
      	 
      
	 
      	
                    By:
      GEI Capital V, LLC, its General Partner

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/ Michael Connolly

                  
	 
      	 
      	
                    Name:
      Michael Connolly

                  
	 
      	 
      	
                    Title:
      Vice President

                  

          

        

      

      

      
        
          	 
      	
                  Shareholder’s
      Address

                
	 
      	 
      
	 
      	
                  Green
      Equity Investors V, L.P.

                
	 
      	
                  c/o
      Leonard Green & Partners, L.P.

                
	 
      	
                  11111
      Santa Monica Boulevard, Suite 2000

                
	 
      	
                  Los
      Angeles, CA  90025

                
	 
      	
                  Attn:    Michael
      Connolly

                
	 
      	
                  Facsimile:    (310)
      954-0404

                

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          	 
      	
                  GREEN
      EQUITY INVESTORS SIDE V, L.P.

                
	 
      	 
      
	 
      	
                  By:
      GEI Capital V, LLC, its General Partner

                
	 
      	 
      	 
      
	 
      	
                  By: 

                	
                  /s/ Michael Connolly

                
	 
      	 
      	
                  Name:
      Michael Connolly

                
	 
      	 
      	
                  Title:
      Vice President

                

        

      

      

      
        
          	 
      	
                  Shareholder’s
      Address

                
	 
      	 
      
	 
      	
                  Green
      Equity Investors Side V, L.P.

                
	 
      	
                  c/o
      Leonard Green & Partners, L.P.

                
	 
      	
                  11111
      Santa Monica Boulevard, Suite 2000

                
	 
      	
                  Los
      Angeles, CA  90025

                
	 
      	
                  Attn:    Michael
      Connolly

                
	 
      	
                  Facsimile:   (310)
      954-0404

                

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          
            	 
      	
                    WLR
      CB ACQUISITIONCO LLC

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    WLR
      Recovery Fund IV, L.P.,

                  
	 
      	 
      	
                    Its
      Sole Manager

                  
	 
      	 
      	 
      
	 
      	
                    By:  

                  	
                    WLR
      Recovery Associates IV LLC,

                  
	 
      	 
      	
                    Its
      General Partner

                  
	 
      	 
      	 
      
	 
      	
                    By:

                  	
                    WL
      Ross Group, L.P.,

                  
	 
      	 
      	
                    Its
      Managing Member

                  
	 
      	 
      	 
      
	 
      	
                    By:

                  	
                    El
      Vedado, LLC,

                  
	 
      	 
      	
                    Its
      General Partner

                  
	 
      	 
      	 
      
	 
      	
                    By:

                  	
                    /s/ Michael Gibbons

                  
	 
      	 
      	
                    Name:
      Michael Gibbons

                  
	 
      	 
      	
                    Title:
      Authorized Person

                  

          

        

      

      

      
        
          	 
      	
                  Shareholder’s
      Address:

                
	 
      	 
      
	 
      	
                  WLR
      CB AcquisitionCo LLC

                
	 
      	
                  c/o
      WL Ross & Co. LLC

                
	 
      	
                  1166
      Avenue of the Americas

                
	 
      	
                  New
      York, NY  10036

                
	 
      	
                  Attn:
      Michael Gibbons, Chief Financial Officer

                
	 
      	
                  Facsimile:
      (212) 278-9645

                
	 
      	 
      
	 
      	
                  with
      a copy to

                
	 
      	 
      
	 
      	
                  WL
      Ross & Co. LLC

                
	 
      	
                  1166
      Avenue of the Americas

                
	 
      	
                  New
      York, NY  10036

                
	 
      	
                  Attn:
      Benjamin Gruder, Esq.

                
	 
      	
                  Facsimile:
      (212) 278-9811

                

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          
            	 
      	
                    LIGHTYEAR
      FUND II, L.P.

                  
	 
      	 
      
	 
      	
                    By:
      LIGHTYEAR FUND II GP, L.P., its

                    general
      partner.

                  
	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/ Timothy J. Kacani

                  
	 
      	
                    Name:   
      Timothy J. Kacani

                  
	 
      	
                    Title:      
      Authorized Person

                  
	 
      	 
      
	 
      	
                    Shareholder’s
      Address

                  
	 
      	 
      
	 
      	
                    BOTC
      Holdings LLC

                    c/o
      Lightyear Capital LLC

                    375
      Park Avenue, 11th
      Floor

                    New
      York, NY 10152

                  
	 
      	
                    Attn:
      Lori J. Forlano

                    Facsimile:  (212)
      328-0516

                  

          

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          	 
      	
                  LIGHTYEAR
      CO-INVEST

                  PARTNERSHIP
      II, L.P.

                
	 
      	 
      
	 
      	
                  By:
      LIGHTYEAR FUND II GP HOLDINGS,

                  LLC,
      its general partner.

                
	 
      	 
      
	 
      	
                  By: 

                	
                  /s/ Timothy J. Kacani

                
	 
      	
                  Name:   
      Timothy J. Kacani

                
	 
      	
                  Title:      
      Authorized Person

                
	 
      	 
      
	 
      	
                  Shareholder’s
      Address

                    

                  BOTC
      Holdings LLC

                  c/o
      Lightyear Capital LLC

                  375
      Park Avenue, 11th
      Floor

                  New
      York, NY 10152

                  Attn:
      Lori J. Forlano

                  Facsimile:  (212)
      328-0516

                

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          	 
      	
                  DAVID
      F. BOLGER

                
	 
      	 
      
	 
      	
                  /s/ David F. Bolger

                
	 
      	 
      
	 
      	
                  TWO-FORTY
      ASSOCIATES LLC

                
	 
      	 
      
	 
      	
                  By: 

                	
                  /s/ J.T. Bolger

                
	 
      	
                  Name:
      J. T. Bolger

                
	 
      	
                  Title:
      Managing Member

                
	 
      	 
      
	 
      	
                  THE
      DAVID F. BOLGER 2008 GRANTOR

                  RETAINED
      ANNUITY TRUST

                
	 
      	 
      
	 
      	
                  By: 

                	
                  /s/ David F. Bolger

                
	 
      	
                  Name:
      David F. Bolger

                
	 
      	
                  Title:
      Trustee

                
	 
      	 
      
	 
      	
                  THE
      DAVID F. BOLGER 2008

                  NONGRANTOR
      CHARITABLE LEAD

                  ANNUITY
      TRUST

                
	 
      	 
      
	 
      	
                  By: 

                	
                  /s/ Thomas M. Wells

                
	 
      	
                  Name:
      Thomas M. Wells

                
	 
      	
                  Title:
      Trustee

                
	 
      	 
      
	 
      	
                  Shareholders’
      Address

                    

                  David
      F. Bolger

                  c/o
      Bolger & Co., Inc.

                  79
      Chestnut Street

                  Ridgewood,
      New Jersey 07450

                  Facsimile:  (201)
      670-9685

                

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          
            	 
      	 
      	
                    WEICHERT
      ENTERPRISE LLC

                  
	 
      	 
      	 
      
	 
      	
                    By:  

                  	
                    /s/
      Gerald C. Crotty

                  
	 
      	 
      	
                    Name: 

                  	
                    Gerald
      C. Crotty

                  
	 
      	 
      	
                    Title:

                  	
                    President

                  
	 
      	 
      	 
      	 
      
	 
      	
                    Shareholder’s
      Address

                  
	 
      	
                     

                    Weichert
      Enterprise LLC

                    1625
      State Route 10

                    Morris
      Plains, NJ  07950

                    Attn:
      Gerald C. Crotty,
President

                  

          

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        
          
            	 
      	 
      	
                    KEEFE
      VENTURES FUND LP

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    KEEFE
      VENTURES, LLC

                  
	 
      	
                    Its:

                  	
                    General
      Partner

                  
	 
      	 
      	 
      
	 
      	
                    By:

                  	
                    /s/
      John J. Lyons

                  
	 
      	 
      	
                    Name: 

                  	
                    John
      J. Lyons

                  
	 
      	 
      	
                    Title:

                  	
                    President

                  
	 
      	 
      	 
      	 
      
	 
      	
                    Shareholder’s
      Address

                  
	 
      	
                     

                    Keefe
      Ventures Fund LP

                    c/o
      Keefe Ventures, LLC

                    310
      South Street, 3rd
      Floor

                    Morristown,
      NJ  07960

                    Attn:
      John J. Lyons,
President

                  

          

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          
            	 
      	 
      	
                    ALDEN
      GLOBAL VALUE RECOVERY

                    MASTER
      FUND, L.P.

                  
	 
      	 
      	 
      
	 
      	 
      	
                    By:
      AGVRF Master GP, LLC

                  
	 
      	 
      	
                    By:
      Alden Global Capital, its Service Provider

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/
      Jason Pecora

                  
	 
      	 
      	
                    Name:  

                  	
                    Jason
      Pecora

                  
	 
      	 
      	
                    Title:

                  	
                    Authorized
      Signatory

                  
	 
      	 
      	 
      	 
      
	 
      	
                    Shareholder’s
      Address

                      
      

                    Alden
      Global Value Recovery Master Fund, L.P.

                    c/o
      Alden Global Capital

                    885
      Third Avenue, 34th Floor

                    New
      York, NY 10022

                    Attn:
      Jim Plohg, Vice
President

                  

          

        

      

      

      [Signature
Page to Registration Rights Agreement]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          
            	 
      	 
      	
                    COUGAR
      TRADING, LLC

                  
	 
      	 
      	 
      
	 
      	
                    By: 

                  	
                    /s/
      Emanuel E. Geduld

                  
	 
      	 
      	
                    Name:  

                  	
                    Emanuel
      E. Geduld

                  
	 
      	 
      	
                    Title:

                  	
                    Sr.
      Managing Member

                  
	 
      	 
      	 
      	 
      
	 
      	
                    Shareholder’s
      Address

                  
	 
      	
                     

                    Cougar
      Trading, LLC

                    1370
      Avenue of the Americas, 30th
      Floor

                    New
      York, NY  10019

                    Attn:
      Carl J. Bennett

                  

          

        

      

      

      [Signature
Page to Registration Rights Agreement]Unassociated Document

    Exhibit
10.2

     

    FORM
OF

     

    ADVISORY
AGREEMENT

     

    BY
AND AMONG

     

    AMERICAN
REALTY CAPITAL TRUST III, INC.,

     

    AMERICAN
REALTY CAPITAL OPERATING PARTNERSHIP III, L.P.,

     

    AND

     

    AMERICAN
REALTY CAPITAL ADVISORS III, LLC

     

    Dated
as of    
    , 2011

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

     

    
      	 
      	 
      	 
      	 
      	
              Page

            
	
               
      1.

            	 
      	
              DEFINITIONS

            	 
      	
              1

            
	 
      	 
      	 
      	 
      	 
      
	
               
      2.

            	 
      	
              APPOINTMENT

            	 
      	
              5

            
	 
      	 
      	 
      	 
      	 
      
	
               
      3.

            	 
      	
              DUTIES
      OF THE ADVISOR

            	 
      	
              5

            
	 
      	 
      	 
      	 
      	 
      
	
               
      4.

            	 
      	
              AUTHORITY
      OF ADVISOR

            	 
      	
              7

            
	 
      	 
      	 
      	 
      	 
      
	
               
      5.

            	 
      	
              FIDUCIARY
      RELATIONSHIP

            	 
      	
              7

            
	 
      	 
      	 
      	 
      	 
      
	
               
      6.

            	 
      	
              NO
      PARTNERSHIP OR JOINT VENTURE

            	 
      	
              7

            
	 
      	 
      	 
      	 
      	 
      
	
               
      7.

            	 
      	
              BANK
      ACCOUNTS

            	 
      	
              7

            
	 
      	 
      	 
      	 
      	 
      
	
                8.

            	 
      	
              RECORDS;
      ACCESS

            	 
      	
              7

            
	 
      	 
      	 
      	 
      	 
      
	
               
      9.

            	 
      	
              LIMITATIONS
      ON ACTIVITIES

            	 
      	
              7

            
	 
      	 
      	 
      	 
      	 
      
	
               10.

            	 
      	
              FEES

            	 
      	
              8

            
	 
      	 
      	 
      	 
      	 
      
	
               11.

            	 
      	
              EXPENSES

            	 
      	
              9

            
	 
      	 
      	 
      	 
      	 
      
	
               12.

            	 
      	
              OTHER
      SERVICES

            	 
      	
              10

            
	 
      	 
      	 
      	 
      	 
      
	
               13.

            	 
      	
              REIMBURSEMENT
      TO THE ADVISOR

            	 
      	
              10

            
	 
      	 
      	 
      	 
      	 
      
	
               14.

            	 
      	
              OTHER
      ACTIVITIES OF THE ADVISOR

            	 
      	
              10

            
	 
      	 
      	 
      	 
      	 
      
	
               15.

            	 
      	
              THE
      AMERICAN REALTY CAPITAL NAME

            	 
      	
              10

            
	 
      	 
      	 
      	 
      	 
      
	
               16.

            	 
      	
              TERM
      OF AGREEMENT

            	 
      	
              11

            
	 
      	 
      	 
      	 
      	 
      
	
               17.

            	 
      	
              TERMINATION
      BY THE PARTIES

            	 
      	
              11

            
	 
      	 
      	 
      	 
      	 
      
	
               18.

            	 
      	
              ASSIGNMENT
      TO AN AFFILIATE

            	 
      	
              11

            
	 
      	 
      	 
      	 
      	 
      
	
               19.

            	 
      	
              PAYMENTS
      TO AND DUTIES OF ADVISOR UPON TERMINATION

            	 
      	
              11

            
	 
      	 
      	 
      	 
      	 
      
	
               20.

            	 
      	
              INCORPORATION
      OF THE ARTICLES OF INCORPORATION AND THE OPERATING PARTNERSHIP
      AGREEMENT

            	 
      	
              12

            
	 
      	 
      	 
      	 
      	 
      
	
               21.

            	 
      	
              INDEMNIFICATION
      BY THE COMPANY AND THE OPERATING PARTNERSHIP

            	 
      	
              12

            
	 
      	 
      	 
      	 
      	 
      
	
               22.

            	 
      	
              INDEMNIFICATION
      BY ADVISOR

            	 
      	
              13

            
	 
      	 
      	 
      	 
      	 
      
	
               23. 

            	 
      	
              NOTICES

            	 
      	
              13

            
	 
      	 
      	 
      	 
      	 
      
	
               24.

            	 
      	
              MODIFICATION

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      
	
               25.

            	 
      	
              SEVERABILITY

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      
	
               26.

            	 
      	
              GOVERNING
      LAW

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      
	
               27.

            	 
      	
              ENTIRE
      AGREEMENT

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      
	
               28.

            	 
      	
              NO
      WAIVER

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      
	
               29.

            	 
      	
              PRONOUNS
      AND PLURALS

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      
	
               30.

            	 
      	
              HEADINGS

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      
	
               31.

            	 
      	
              EXECUTION
      IN COUNTERPARTS

            	 
      	
              14

            
	 
      	 
      	 
      	 
      	 
      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    FORM OF

    ADVISORY
AGREEMENT

     

    THIS
ADVISORY AGREEMENT (this “Agreement”) dated as
of           , 2011, is
entered into among American Realty Capital Trust III, Inc., a Maryland
corporation (the “Company”), American
Realty Capital Operating Partnership III, L.P., a Delaware limited partnership
(the “Operating
Partnership”), and American Realty Capital Advisors III, LLC, a Delaware
limited liability company.

     

    WITNESSETH

     

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

    

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

    

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

    

    WHEREAS,
the Advisor is willing 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, intending to be legally bound,
hereby agree as follows:

     

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

     

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

     

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

     

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

    

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

     

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

     

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “ 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
Investments before deducting depreciation, bad debts or other non-cash reserves,
computed by taking the average of such values at the end of each month during
such period.  For an equity interest owned in a Joint Venture, the
calculation of Average Invested Assets shall take into consideration the
underlying Joint Venture’s aggregate book value for the equity
interest.

     

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

     

    “By-laws”
means the by-laws of the Company, as amended and as the same are in effect from
time to time.

     

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

    

    “ Change of
Control ” means a change of control of the Company of a nature that would
be required to be reported in response to the disclosure requirements of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”), as
enacted and in force on the date hereof, whether or not the Company is then
subject to such reporting requirements; provided, however , that,
without limitation, a Change of Control shall be deemed to have occurred
if:  (i) any “person” (within the meaning of Section 13(d) of the
Exchange Act, as enacted and in force on the date hereof) is or becomes the
“beneficial owner” (as that term is defined in Rule 13d-3, as enacted and in
force on the date hereof, under the Exchange Act) of securities of the Company
representing 9.8% or more of the combined voting power of the Company’s
securities then outstanding; (ii) there occurs a merger, consolidation or other
reorganization of the Company which is not approved by the Board of Directors;
(iii) there occurs a sale, exchange, transfer or other disposition of
substantially all the assets of the Company to another Person, which disposition
is not approved by the Board of Directors; or (iv) there occurs a contested
proxy solicitation of the Stockholders that results in the contesting party
electing candidates to a majority of the Board of Directors’ positions next up
for election.

     

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

     

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

     

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

    

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

     

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

     

    “Dealer Manager
Fee” means three percent (3.0%) of Gross Proceeds from the sale of Shares
in a Primary Offering, payable to the Dealer Manager for serving as the dealer
manager of such Primary Offering.

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    
      “FFO” means
funds from operations, as defined by the National Association of Real Estate
Investment Trusts.

    

     

    “Financing
Coordination Fee” means the fees payable to the Advisor pursuant to
Section 10(e).

     

    “GAAP”
means United States generally accepted accounting principles, consistently
applied.

     

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

     

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

     

    “Included
Assets” has the meaning set forth in Section 19(b)(ii).

     

    “Indemnitee”
has the meaning set forth in Section 21.

     

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

     

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

     

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

     

    “Listing” means (i) the listing
of the Shares on a national securities exchange, or (ii) the receipt by the
Stockholders of securities that are listed on a national securities exchange in
exchange for Shares in a merger or any other type of transaction.

     

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

     

    “Management
Agreement” means the Property Management Agreement, dated as
of             
, 2011, among the Company, the Operating Partnership and American Realty Capital
Properties III, LLC, as the same may be amended from time to time.

      

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

     

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

      

    “Notice”
has the meaning set forth in Section
23.

     

    “Offering”
means the public offering of Shares pursuant to a Prospectus.

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

    “Organization and
Offering Expenses” means all expenses (other than the Selling Commission
and the Dealer Manager Fee) to be paid by the Company in connection with an
Offering, including legal, accounting, printing, mailing and filing fees,
charges of the escrow holder and transfer agent, charges of the Advisor for
administrative services related to the issuance of Shares in an Offering,
reimbursement of the Advisor for costs in connection with preparing supplemental
sales materials, the cost of bona fide training and education meetings held by
the Company (primarily the travel, meal and lodging costs of the registered
representatives of broker-dealers), attendance and sponsorship fees and cost
reimbursement for employees of the Company’s Affiliates to attend retail
seminars conducted by broker-dealers and, in special cases, reimbursement to
soliciting broker-dealers for technology costs associated with an Offering,
costs and expenses related to such technology costs, and costs and expenses
associated with facilitation of the marketing of the Shares and the ownership of
Shares by such broker-dealer’s customers.

     

    “Other Liquidity
Event” means a liquidation or the sale of all or substantially all the
Investments (regardless of the form in which such sale shall
occur).  For clarification purposes, a transaction of the type
described in clause (ii) of the definition of Listing shall not be an Other
Liquidity Event.

     

    “Person”
means an individual, corporation, partnership, joint venture, association,
company (whether of limited liability or otherwise), trust, bank or other
entity, or any government or any agency or political subdivision of a
government.

      

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

      

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

     

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

    

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

     

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

     

    “Real
Property” means real property owned from time to time by the Company or
the Operating Partnership, directly, through one or more subsidiaries or through
a Joint Venture, which consists of (i) land only, (ii) land, including
the buildings located thereon, (iii) buildings only, or (iv) such
investments the Board or the Advisor designate as Real Property to the extent
such investments could be classified as Real Property.

     

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

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

     “Securities
Act” means the Securities Act of 1933, as amended. 

    

    “Selling
Commission” means seven percent (7.0%) of Gross Proceeds from the sale of
Shares in a Primary Offering payable to the Dealer Manager and reallowable to
Soliciting Dealers with respect to Shares sold by them. 

     

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

     

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

     

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

     

    “Stockholders”
means the registered holders of the Shares.

      

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

     

    “ Total Operating
Expenses” of a Person means the aggregate of all costs and expenses paid
or incurred by such Person, but excluding Organization and Offering Expenses,
interest payments, taxes, non-cash expenditures, any Acquisitions Fees,
Acquisition Expenses or Financing Coordination Fees.  The definition
of “Total Operating Expenses” set forth above is intended to encompass only
those expenses which are required to be treated as Total Operating Expenses
under the NASAA REIT Guidelines.  As a result, and notwithstanding the
definition set forth above, any expense of the Company which is not part of
Total Operating Expenses under the NASAA REIT Guidelines shall not be treated as
part of Total Operating Expenses for purposes hereof.

     

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

     

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

     

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

    

    (a)           serve
as the Company’s and the Operating Partnership’s investment and financial
advisor;

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

     

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

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (o)           perform
investor-relations and Stockholder communications functions for the
Company;

     

    
      
        
        

      

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

    

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

     

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

     

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

     

    4.           
AUTHORITY OF ADVISOR.

     

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

     

    (b)           Notwithstanding
anything herein to the contrary, all Investments will require the prior approval
of the Board, any particular Directors specified by the Board or any committee
of the Board specified by the Board, as the case may be.

     

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

     

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

     

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

     

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

     

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

    

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

     

    9.           
LIMITATIONS ON ACTIVITIES   Notwithstanding anything herein to
the contrary, the Advisor shall refrain from taking any action which, in its
sole judgment, or in the sole judgment of the Company, made in good faith, would
(a) adversely affect the status of the Company as a REIT, unless the Board
has determined that REIT qualification is not in the best interests of the
Company and its Stockholders, (b) subject the Company to regulation under
the Investment Company Act of 1940, as amended, or (c) violate any law,
rule, regulation or statement of policy of any governmental body or agency
having jurisdiction over the Company, the Operating Partnership or the Shares,
or otherwise not be permitted by the Articles of Incorporation or By-laws,
except if such action shall be ordered by the Board, in which case the Advisor
shall notify promptly the Board of the Advisor’s judgment of the potential
impact of such action and shall refrain from taking such action until it
receives further clarification or instructions from the Board.  In
such event, the Advisor shall have no liability for acting in accordance with
the specific instructions of the Board so given.

     

    
      
        
        

      

      
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    10.         FEES.

     

    (a)           
Acquisition
Fees.  The Company shall
pay an Acquisition Fee to the Advisor or its assignees as compensation for
services rendered in connection with the investigation, selection and
acquisition (by purchase, investment or exchange) of Investments. If the Advisor
is terminated without cause pursuant to Section 17(a), the Advisor or its
assignees shall be entitled to an Acquisition Fee for any Investments
acquired after the Termination Date for which a contract to acquire any
such Investment had been entered into at or prior to the Termination Date. The
total Acquisition Fee payable to the Advisor or its assignees shall equal one
percent (1.0%) of the purchase price of Real Estate Assets and one percent
(1.0%) of the amount advanced for Real Estate Related Loans or other Investments
(other than Real Estate Assets), along with reimbursement of acquisition
expenses.  The purchase price of the Real Estate Assets shall
equal the amount paid or allocated to the purchase, development or improvement
of the Real Estate Assets inclusive of expenses related thereto and the amount
of debt associated with such Investment.  The purchase price allocable
for an Investment held through a Joint Venture shall equal the product of
(i) the purchase price of, or the amount advanced for, the Investment, as
applicable, and (ii) the direct or indirect ownership percentage in the
Joint Venture held directly or indirectly by the Company or the Operating
Partnership.  For purposes of this section, “ownership percentage”
shall be the percentage of capital stock, membership interests, partnership
interests or other equity interests held by the Company or the Operating
Partnership, without regard to classification of such equity
interests.  The Company shall pay to the Advisor or its assignees the
Acquisition Fee promptly upon the closing of the Investment.  In
addition, if during the period ending two years after the close of the initial
Offering, the Company sells an Investment and then reinvests in other
Investments, the Company will pay to American Realty Capital Advisors III, LLC
one percent (1.0%) of the purchase price of Real Estate Assets and one percent
(1.0%) of the amount advanced for Real Estate Related Loans or other Investments
(other than Real Estate Assets), along with reimbursement of acquisition
expenses. 

    

    (b)           
Limitation
on Total Acquisition Fees, Financing Coordination Fees and Acquisition
Expenses.  The total of all
Acquisition Fees, Financing Coordination Fees and Acquisition Expenses payable
in connection with any Investment or any reinvestment shall not exceed four
and one-half percent (4.5%) of the Contract Purchase Price of the
Investment acquired or four and one-half percent (4.5%) of the amount advanced
for an Investment; provided,
however, that once all the proceeds from the initial Offering have been
fully invested, the total of all Acquisition Fees and Financing Coordination
Fees shall not exceed one and one-half percent (1.5%) of the Contract Purchase
Price of all the Investments acquired.

     

    (c)           
Property
Disposition Fee.  In connection
with a Sale of a Real Estate Asset in which the Advisor or any Affiliate of the
Advisor provides a substantial amount of services, as determined by the
Independent Directors, the Company shall pay to the Advisor or its assignees a
Property Disposition Fee up to the lesser of (i) two percent (2.0%) of the
Contract Sales Price of such Real Estate Asset or (ii) one-half of the total
brokerage commission paid if a brokerage commission or other disposition fee is
paid to a non-Affiliate broker in addition to the Property Disposition Fee paid
to the Advisor or its assignees; provided, however, that in no
event may the Property Disposition Fee paid to the Advisor, its Affiliates and
non-Affiliates exceed the lesser of six percent (6.0%) of the Contract Sales
Price and a Competitive Real Estate Commission.

     

    (d)           
Asset
Management Fee.   The Company
shall pay an Asset Management Fee to the Advisor or its assignees as
compensation for services rendered in connection with the management of the
Company’s assets in an amount equal to 0.75% per annum of Average Invested
Assets; provided, however, that the Asset
Management Fee Shall be reduced by any amounts payable as an Oversight Fee (as
defined in the Management Agreement), such that the aggregate of the Asset
Management Fee and the Oversight Fee does not exceed 0.75% per annum of Average
Invested Assets. The Asset Management Fee is payable semiannually in
advance, on January 1 and July 1, in the amount of 0.375% of Average Invested
Assets for the preceding semiannual period. The Asset
Management Fee will be reduced to the extent that funds from operations FFO, as
adjusted, during the six months ending on the last day of the calendar quarter
immediately preceding the date that such Asset Management Fee is payable, is
less than the Distributions declared with respect to such six month period. For
purposes of this determination, FFO, as adjusted, is FFO adjusted to (i) include
acquisition fees and related expenses which is deducted in computing FFO; (ii)
include non-cash restricted stock grant amortization, if any, which is deducted
in computing FFO; and (iii) include impairments of real estate related
investments, if any (including properties, loans receivable and equity and debt
investments) which is deducted in computing FFO.

     

    (e)           
Financing
Coordination Fee.   The Company
shall pay a Financing Coordination Fee to the Advisor or its assignees in
connection with the financing of any Investment, assumption of any Loans with
respect to any Investment or refinancing of any Loan in an amount equal to one
percent (1.0%) of the amount made available and/or outstanding under any such
Loan, including any assumed Loan.  The Advisor may reallow some of or
all this Financing Coordination Fee to reimburse third parties with whom it may
subcontract to procure any such Loan.

      

    (f)           
Payment
of Fees.   In connection
with the Acquisition Fee, Property Disposition Fee, Asset Management Fee and
Financing Coordination Fee, the Company shall pay such fees to the Advisor or
its assignees in cash or in Shares, or a combination of both, the form of
payment to be determined in the sole discretion of the Advisor. For the purposes
of the payment of such fees in Shares, each Share shall be valued at the per
share offering price of our Shares in the initial Offering minus the maximum
selling commissions and dealer manager fee allowed in the initial
Offering.

     

    
      
        
        

      

      
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    (g)         
   Exclusion
of Certain Transactions. 

     

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

     

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

     

    11.        
  EXPENSES.

     

    (a)           In
addition to the compensation paid to the Advisor pursuant to Section 10, the
Company or the Operating Partnership shall pay directly or reimburse the Advisor
for all the expenses paid or incurred by the Advisor or its Affiliates in
connection with the services it provides to the Company and the Operating
Partnership pursuant to this Agreement, including, the following:

     

    (i)             Organization
and Offering Expenses, including third-party due diligence fees related to the
Primary Offering, as set forth in detailed and itemized invoices; provided, however, that the
Company shall not reimburse the Advisor to the extent such reimbursement would
cause the total amount of Organization and Offering Expenses paid by the Company
and the Operating Partnership to exceed one and one-half percent (1.5%) of the
Gross Proceeds raised in all Primary Offerings;

     

    (ii)           Acquisition
Expenses incurred in connection with the selection and acquisition of
Investments, subject to the aggregate four and one-half percent (4.5%)
cap on Acquisition Fees, Financing Coordination Fees and Acquisition Expenses
set forth in Section 10(b)
;

     

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

     

    (iv)           interest
and other costs for Loans, including discounts, points and other similar fees; 

    

    (v)           taxes
and assessments on income of the Company or Investments;

     

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

     

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

     

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

     

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

     

    (x)           expenses
connected with payments of Distributions;

     

    (xi)           expenses
of organizing, revising, amending, converting, modifying or terminating the
Company, the Operating Partnership or any subsidiary thereof or the Articles of
Incorporation, By-laws or governing documents of the Operating Partnership or
any subsidiary of the Company or the Operating Partnership;

     

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

     

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

     

    (xiv)          audit,
accounting and legal fees.

     

    
      
        
        

      

      
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    (b)           Commencing
upon the earlier to occur of (i) the fifth fiscal quarter after the Company
makes its first Investment or (ii) six (6) months after the commencement of the
initial Offering, expenses incurred by the Advisor on behalf of the Company and
the Operating Partnership or in connection with the services provided by the
Advisor hereunder and payable pursuant to this Section 11 shall
be reimbursed, no less than monthly, to the Advisor.

     

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

    

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    17.         
TERMINATION BY THE PARTIES.   This Agreement may be terminated
upon sixty (60) days’ written notice (a) by the Independent Directors of
the Company or the Advisor, without Cause and without penalty, (b) by the
Advisor for Good Reason, or (c) by the Advisor upon a Change of
Control.  The provisions of Sections 19
through 31 of
this Agreement shall survive termination of this Agreement. 

    

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

     

    19.         
PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.

     

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

      

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

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

     

    21.         
INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP. 

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

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

     

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

     

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

     

    
      
        
        

      

      
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    22.         
INDEMNIFICATION BY ADVISOR.   The Advisor shall indemnify and
hold harmless the Company and the Operating Partnership from contract or other
liability, claims, damages, taxes or losses and related expenses, including
reasonable attorneys’ fees, to the extent that such liability, claims, damages,
taxes or losses and related expenses are not fully reimbursed by insurance and
are incurred by reason of the Advisor’s bad faith, fraud, willful misfeasance,
intentional misconduct, gross negligence or reckless disregard of its duties;
provided, however, that
the Advisor shall not be held responsible for any action of the Board in
following or declining to follow any advice or recommendation given by the
Advisor.

     

    23.         
NOTICES.   Any notice, report or other communication (each a “
Notice ”)
required or permitted to be given hereunder shall be in writing unless some
other method of giving such Notice is required by the Articles of Incorporation,
the By-laws, and shall be given by being delivered by hand, by courier or
overnight carrier or by registered or certified mail to the addresses set forth
below: 

     

    
      	
              To
      the Company:

            	 
      	
              American
      Realty Capital Trust III, Inc.

            
	 
      	 
      	
              405
      Park Avenue

            
	 
      	 
      	
              New
      York, New York 10022

            
	 
      	 
      	
              Attention:  William
      M. Kahane,

            
	 
      	 
      	
                              
        President

            
	 
      	 
      	 
      
	 
      	 
      	
              with
      a copy to:

            
	 
      	 
      	 
      
	 
      	 
      	
              Proskauer
      Rose LLP

            
	 
      	 
      	
              Eleven
      Times Square

            
	 
      	 
      	
              New
      York, New York 10036

            
	 
      	 
      	
              Attention:  Peter
      M. Fass, Esq.

            

    

    

    
      	
              To
      the Operating Partnership:

            	 
      	
              American
      Realty Capital Operating Partnership III, L.P.

            
	 
      	 
      	
              405
      Park Avenue

            
	 
      	 
      	
              New
      York, New York 10022

            
	 
      	 
      	
              Attention:  William
      M. Kahane

            
	 
      	 
      	 
      
	 
      	 
      	
              with
      a copy to:

            
	 
      	 
      	 
      
	 
      	 
      	
              Proskauer
      Rose LLP

            
	 
      	 
      	
              

                Eleven
      Times Square

              

            
	 
      	 
      	
              New
      York, New York 10036

            
	 
      	 
      	
              Attention:  Peter
      M. Fass, Esq.

            
	 
      	 
      	 
      

    

    

    
      	
              To
      the Advisor:

            	 
      	
              American
      Realty Capital Advisors III, LLC

            
	 
      	 
      	
              405
      Park Avenue

            
	 
      	 
      	
              New
      York, New York 10022

            
	 
      	 
      	
              Attention:  William
      M. Kahane

            
	 
      	 
      	 
      
	 
      	 
      	
              with
      a copy to:

            
	 
      	 
      	 
      
	 
      	 
      	
              Proskauer
      Rose LLP

            
	 
      	 
      	
              

                Eleven
      Times Square

              

            
	 
      	 
      	
              New
      York, New York 10036

            
	 
      	 
      	
              Attention:  Peter
      M. Fass, Esq.

            
	 
      	 
      	 
      

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    Any party
may at any time give Notice in writing to the other parties of a change in its
address for the purposes of this Section 23
..

     

    24.         
MODIFICATION.   This Agreement shall not be amended,
supplemented, terminated, or discharged, in whole or in part, except by an
instrument in writing signed by the parties hereto, or their respective
successors or assignees.

     

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

     

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

     

    27.         
ENTIRE AGREEMENT.   This Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter
hereof.  The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.  

    

    28.         
NO WAIVER.   Neither the failure nor any delay on the part of a
party to exercise any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege preclude any other or further exercise of
the same or of any other right, remedy, power or privilege, nor shall any waiver
of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence.  No waiver shall be effective unless it is in
writing and is signed by the party asserted to have granted such
waiver.

     

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

     

    30.         
HEADINGS.   The titles of sections and subsections contained in
this Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation
hereof.

     

    31.         
EXECUTION IN COUNTERPARTS.   This Agreement may be executed
(including by facsimile transmission) with counterpart signature pages or in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument.

     

    [Remainder
of page intentionally left blank]

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

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

     

    
      
        
          	 	
                  AMERICAN
      REALTY CAPITAL TRUST III, INC.

                
	 	 	 	 
	
                   

                	
                  By:
      

                	 	 
	 	 	Name: 	 
	 	 	Title:	 
	 	 	 	 
	 	
                  AMERICAN
      REALTY CAPITAL OPERATING PARTNERSHIP III, L.P.

                
	 	 	 	 
	 	By: 
      	
                  American
      Realty Capital Trust III, Inc.

                	 
	 	 	 	 
	 	 	
                  its
      General Partner

                	 
	 	 	 	 
	 	By: 
      	 	 
	 	 	Name: 	 
	 	 	Title: 	 
	 	 	 	 
	 	
                  AMERICAN
      REALTY CAPITAL ADVISORS III, LLC

                
	 	 	 	 
	 	By: 
      	
                  American
      Realty Capital Trust III Special Limited Partner, LLC

                
	 	 	 	 
	 	 	
                  its
      Member

                	 
	 	 	 	 
	 	By: 
      	
                  American
      Realty Capital II, LLC

                	 
	 	 	 	 
	 	 	
                  its
      Managing Member

                	 
	 	 	 	 
	 	By:
      	 	 
	 	 	Name:	 
	 	 	Title:	 

        

      

    

     

    
    

    
      
         

      

      
        15

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