Document:

10.2 Advisory Agreement

Exhibit 10.2

 
ADVISORY AGREEMENT
 
BY AND AMONG
 
PHILLIPS EDISON - ARC GROCERY CENTER REIT II, INC.,
 
PHILLIPS EDISON - ARC GROCERY CENTER OPERATING PARTNERSHIP II, L.P. and
 
AMERICAN REALTY CAPITAL PECO II ADVISORS, LLC 

 
Dated as of November 25, 2013
 

TABLE OF CONTENTS
 
	
						
	 
	 
	 
	 
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	1
	 
	DEFINITIONS
	 
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	2
	 
	APPOINTMENT
	 
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	3
	 
	DUTIES OF THE ADVISOR
	 
	6
	

	 
	 
	 
	 
	 

	4
	 
	AUTHORITY OF ADVISOR
	 
	8
	

	 
	 
	 
	 
	 

	5
	 
	FIDUCIARY RELATIONSHIP
	 
	8
	

	 
	 
	 
	 
	 

	6
	 
	NO PARTNERSHIP OR JOINT VENTURE
	 
	8
	

	 
	 
	 
	 
	 

	7
	 
	BANK ACCOUNTS
	 
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	8
	 
	RECORDS AND FINANCIAL STATEMENTS
	 
	9
	

	 
	 
	 
	 
	 

	9
	 
	LIMITATIONS ON ACTIVITIES
	 
	9
	

	 
	 
	 
	 
	 

	10
	 
	INVESTMENT OPPORTUNITIES AND ALLOCATIONS
	 
	9
	

	 
	 
	 
	 
	 

	11
	 
	FEES
	 
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	12
	 
	EXPENSES
	 
	12
	

	 
	 
	 
	 
	 

	13
	 
	OTHER SERVICES
	 
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	14
	 
	REIMBURSEMENT TO THE ADVISOR OR SUB-ADVISOR
	 
	13
	

	 
	 
	 
	 
	 

	15
	 
	OTHER ACTIVITIES OF THE ADVISOR
	 
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	16
	 
	VOTING AGREEMENT
	 
	14
	

	 
	 
	 
	 
	 

	17
	 
	THE AMERICAN REALTY CAPITAL NAME
	 
	14
	

	 
	 
	 
	 
	 

	18
	 
	THE PHILLIPS EDISON AND PECO NAMES
	 
	14
	

	 
	 
	 
	 
	 

	19
	 
	TERM OF AGREEMENT
	 
	15
	

	 
	 
	 
	 
	 

	20
	 
	TERMINATION BY THE PARTIES
	 
	15
	

	 
	 
	 
	 
	 

	21
	 
	ASSIGNMENT TO AN AFFILIATE
	 
	15
	

	 
	 
	 
	 
	 

	22
	 
	PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION
	 
	15
	

	 
	 
	 
	 
	 

	
						
	23
	 
	INCORPORATION OF THE ARTICLES OF INCORPORATION AND THE OPERATING PARTNERSHIP AGREEMENT
	 
	16
	

	 
	 
	 
	 
	 

	24
	 
	INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP
	 
	16
	

	 
	 
	 
	 
	 

	25
	 
	INDEMNIFICATION BY ADVISOR AND SUB-ADVISOR
	 
	17
	

	 
	 
	 
	 
	 

	26
	 
	NOTICES
	 
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	27
	 
	MODIFICATION
	 
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	28
	 
	SEVERABILITY
	 
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	29
	 
	GOVERNING LAW
	 
	18
	

	  
	 
	 
	 
	 

	30
	 
	ENTIRE AGREEMENT
	 
	18
	

	 
	 
	 
	 
	 

	31
	 
	NO WAIVER
	 
	19
	

	 
	 
	 
	 
	 

	32
	 
	PRONOUNS AND PLURALS
	 
	19
	

	 
	 
	 
	 
	 

	33
	 
	HEADINGS
	 
	19
	

	 
	 
	 
	 
	 

	34
	 
	EXECUTION IN COUNTERPARTS
	 
	19
	

	 
	 
	 
	 
	 

	35
	 
	THIRD PARTY BENEFICIARY
	 
	19
	

  

ADVISORY AGREEMENT
 
THIS ADVISORY AGREEMENT (this “Agreement”) dated as of November 25, 2013, is entered into among Phillips Edison - ARC Grocery Center REIT II, Inc., a Maryland corporation (the “Company”), Phillips Edison - ARC Grocery Center Operating Partnership II, L.P., a Delaware limited partnership (the “Operating Partnership”), and American Realty Capital PECO II Advisors, 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 (as defined below);
 
WHEREAS, the Company is the sole member of PE-ARC Grocery Center OP GP II LLC, 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 (as defined below) 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 fee payable to the Advisor or its Affiliates pursuant to Section 11(a).
 
“Advisor” means American Realty Capital PECO II Advisors, LLC, a Delaware limited liability company, any successor advisor to the Company and the Operating Partnership, or any Person to which American Realty Capital PECO II Advisors, LLC or any successor advisor subcontracts substantially all its functions.  Notwithstanding the foregoing, a Person hired or retained by American Realty Capital PECO II Advisors, 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 PECO II Advisors, 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. For the avoidance of doubt, none of the Company, the Operating Partnership, the Sub advisor, any subsidiary of the Company, any subsidiary of the Sub-advisor and any other Person controlled by, controlling or under common control with Phillips Edison & Company shall be an Affiliate of the Advisor or its Affiliates.
 
“Agreement” has the meaning set forth in the preamble, and such term shall include any amendment or supplement hereto from time to time.

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“Annual Subordinated Performance Fee” means the fees payable to the Advisor or its assignees pursuant to Section 11(e).
 
“Articles of Incorporation” means the charter of the Company, as the same may be amended from time to time.
  
“Average Invested Assets” has the meaning set forth in the Articles of Incorporation.  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.
 
“Bylaws” means the bylaws 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 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. 
 
“Common Stock” means the shares of the Company’s common stock, par value $0.01 per share.
 
“Company” has the meaning set forth in the preamble.
 
“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.
 
“Construction Fee” means a fee or other remuneration for acting as general contractor and/or construction manager to construct improvements, supervise and coordinate projects or to provide major repairs or rehabilitation on a Property.  
“Contract 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.
 
“Cost of Assets” means, with respect to a Real Estate Asset, the purchase price,

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Acquisition Expenses, capital expenditures and other customarily capitalized costs, but shall exclude Acquisition Fees associated with such Real Estate Asset.
 
“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 the fee 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 director of the Company.

“Disposition Fees” means the fees payable to the Advisor pursuant to Section 11(c).
 
“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.
 
“Excess Amount” has the meaning set forth in Section 14.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute thereto. Reference to any provision of the Exchange Act 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.
 
“Expense Year” has the meaning set forth in Section 14.
  
“Financing Coordination Fee” means the fee payable to the Advisor or its Affiliates pursuant to Section 11(d).
  
“FINRA” means the Financial Industry Regulatory Authority, Inc.
 
“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, any marketing support and due diligence expense reimbursement or Organization and Offering Expenses.  
  
“Indemnitee” has the meaning set forth in Section 24.
 
“Independent Director” has the meaning set forth in the Articles of Incorporation.
  
“Independent Valuation Advisor” means a firm that is (i) engaged in the business of conducting appraisals on real estate properties, (ii) not an affiliate of the Advisor or the Sub-advisor and (iii) engaged by the Company with the Board’s approval to appraise the Real Properties and other Investments pursuant to the Valuation Guidelines.
 
“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, limited liability company member, limited partner or general partner, which are established to acquire or hold Investments.
 
“Listing” means the listing of the Common Stock on a national securities exchange, or the inclusion of the Common Stock for trading in the over-the-counter-market.
 

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“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.
 
“Master Property Management Agreement” means the Master Property Management and Leasing Agreement, dated as of November 25, 2013, among the Company, the Operating Partnership and Phillips Edison & Company Ltd., as the same may be amended from time to time.
  
“NASAA REIT Guidelines” means the Statement of Policy Regarding Real Estate Investment Trusts as revised and adopted by the North American Securities Administrators Association on May 7, 2007, as the same may be amended from time to time.
  
“NAV” means the Company’s net asset value, calculated pursuant to the Valuation Guidelines.
 
“NAV Pricing Start Date” means the first date on which the Company calculates NAV.
 
“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. 

“Net Sales Proceeds” has the meaning set forth in the Articles of Incorporation.
  
“Notice” has the meaning set forth in Section 25.
 
“Offering” means any public offering and sale of Shares pursuant to an effective registration statement filed under the Securities Act.
 
“Operating Partnership” has the meaning set forth in the preamble.
  
“Operating Partnership Agreement” means the Agreement of Limited Partnership of the Operating Partnership, dated as of November 25, 2013, among the Company, PE-ARC Grocery Center OP GP II LLC and PE - ARC Special Limited Partner II LLC,, as the same may be amended from time to time.
 
“OP Units” means units of limited partnership interest in the Operating Partnership.
 
“Organization and Offering Expenses” means all expenses (other than the Selling Commissions and the Dealer Manager Fee) to be paid by the Company in connection with an Offering, including, but not limited to, legal, accounting, printing, mailing and filing fees, charges of the escrow holder and transfer agent, charges of the Advisor or other Person for administrative services related to the issuance of Shares in an Offering, reimbursement of the Advisor or other Person 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.
 
“Person” has the meaning set forth in the Articles of Incorporation.
  
“Primary Offering” means the portion of an Offering other than the Shares offered pursuant to the Company’s distribution reinvestment plan.

“Primary Target Investments” means well-occupied, grocery-anchored neighborhood and community shopping centers each containing a maximum of 250,000 rentable square feet with a tenant-mix of retailers selling necessity-based goods and services in strong demographic markets throughout the United States.  For purposes of the foregoing, “well-occupied” means 80% or more of the rentable square feet at a property is occupied at the time of purchase.  For purposes of the foregoing, “occupied” means that a tenant is operating and open for business in its respective leased premises.
 
“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. 
 

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“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 (i) land, (ii) rights in land (including leasehold interests), and (iii) any buildings, structures, improvements, furnishings, fixtures and equipment located on or used in connection with land and rights or interests in land.
  
“Registration Statement” means the Company’s registration statement on Form S-11 (File No. 333-          ), as amended from time to time, and the prospectus contained therein.
 
“REIT” means a corporation, trust, association or other legal entity (other than a real estate syndication) that is engaged primarily in investing in equity interests in real estate (including fee ownership and leasehold interests) or in loans secured by real estate or both, as defined pursuant to Sections 856 through 860 of the Code and any successor or other provisions of the Code relating to real estate investment trusts (including provisions as to the attribution of ownership of beneficial interests therein) and the regulations promulgated thereunder.
 
 “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, Loans or other Investments 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.
 
 “Securities Act” means the Securities Act of 1933, as amended from time to time, or any successor statute thereto. Reference to any provision of the Securities Act 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. 
 
“Selling Commission” means the fee payable to the Dealer Manager and reallowable to Soliciting Dealers with respect to Shares sold by them in a Primary Offering.
 
“Shares” means the shares of beneficial interest or of common stock of the Company of any class or series, including Common Stock, that has the right to elect the Directors of the Company.
 
“Soliciting Dealers” means broker-dealers that are members of FINRA, or that are exempt from broker-dealer registration, and that, in either case, have executed soliciting dealer or other agreements with the Dealer Manager to sell Shares.
 
“Sponsors” means AR Capital, LLC, a Delaware limited liability company, and Phillips Edison Limited Partnership, a Delaware limited partnership, with each such entity acting as a Sponsor of the Company.
 

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“Stockholders” means the holders of record of the Shares as maintained on the books and records of the Company or its transfer agent.

“Sub-advisor” means Phillips Edison NTR II LLC, a Delaware limited liability company.

“Sub-advisory Agreement” means that certain Sub-advisory agreement between the Advisor and Sub-advisor, dated as of November 25, 2013, as amended from time to time. 
 
“Subordinated Participation Interest” means a profits interest in the Operating Partnership designated as a Class B Unit in accordance with the terms of the Operating Partnership Agreement. 
  
“Termination Date” means the date of termination of this Agreement.
 
“Total Operating Expenses” has the meaning set forth in the Articles of Incorporation.  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.
 
“Valuation Guidelines” means the valuation guidelines adopted by the Board, as may be amended from time to time. 
 
“2%/25% Guidelines” has the meaning set forth in Section 14.
 
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, Bylaws and the Operating Partnership Agreement, the Advisor will either directly or by engaging an Affiliate, the Sub-advisor or a third-party, perform the following duties:  
 
(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, property managers, 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, Sub-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);
 
(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 

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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 or Sub-advisor shall be acting as broker-dealer or underwriter; provided, however, that any fees and costs payable to third parties incurred by the Advisor or Sub-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, the Sub-advisor or their 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, Sub-Advisor or any of their 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;
  
(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;
 
(r)           do all things reasonably necessary to assure its ability to render the services described in this Agreement;
 
(s)           at the end of each quarter, calculate the NAV as provided in the Registration Statement, and in connection therewith, obtain appraisals performed by the Independent Valuation Advisor;
 

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(t)           supervise one or more Independent Valuation Advisors and, if and when necessary, recommend to the Board the replacement of such Independent Valuation Advisors.

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

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

(w)    Manage and coordinate with the transfer agent the monthly distribution process and payments to Stockholders;

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

(y)    Consult with the Company’s officers and the Board relating to the corporate governance structure and appropriate policies and procedures related thereto; and
 
(z)    Perform all reporting, record keeping, internal controls and similar matters in a manner that allows the Company to comply with applicable law, including federal and state securities laws and the Sarbanes Oxley Act of 2002.
  
Notwithstanding the foregoing or anything else that may be to the contrary in this Agreement, the Advisor may delegate any of the foregoing duties to any Person so long as the Advisor or its Affiliates remain 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 or its Affiliates or assignees, as applicable, 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, has a fiduciary responsibility and duty to the Company, the Stockholders, the Operating Partnership and the partners of the Operating Partnership. 
 
6.            NO PARTNERSHIP OR JOINT VENTURE.   Except as provided in Section 11(g), 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 

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request, the Advisor shall render appropriate accountings of such collections and payments to the Board and to the auditors of the Company. 
 
8.            RECORDS AND FINANCIAL STATEMENTS.   The Advisor, in the conduct of its responsibilities to the Company and the Operating Partnership, shall maintain adequate and separate books and records for the Company’s and the Operating Partnership’s operations in accordance with GAAP, which shall be supported by sufficient documentation to ascertain that such books and records are properly and accurately recorded.  Such books and records shall be the property of the Company and the Operating Partnership and shall be available for inspection by the Board and by counsel, auditors and other authorized agents of the Company and the Operating Partnership, at any time or from time to time during normal business hours.  Such books and records shall include all information necessary to calculate and audit the fees or reimbursements paid under this Agreement.  The Advisor shall utilize procedures to attempt to ensure such control over accounting and financial transactions as is reasonably required to protect the Company’s and the Operating Partnership’s assets from theft, error or fraudulent activity.  All financial statements that the Advisor delivers to the Company and the Operating Partnership shall be prepared on an accrual basis in accordance with GAAP, except for special financial reports that by their nature require a deviation from GAAP.  The Advisor shall liaise with the Company’s officers and independent auditors and shall provide such officers and auditors with the reports and other information that the Company so requests.
 
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, (c) require the Advisor to register as a broker-dealer with the Securities and Exchange Commission or any state, (d) violate the Articles of Incorporation or Bylaws of the Company, or (e) 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 Bylaws, except if such action shall be ordered by the Board, in which case the Advisor shall notify promptly the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board.  In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given.

10.    INVESTMENT OPPORTUNITIES AND ALLOCATIONS

(a)    The Advisor shall use commercially reasonable efforts to present investment opportunities to the Company that are consistent with the investment policies and objectives of the Company set forth in the “Investment Objectives and Criteria” section of the Prospectus.

(b)    So long as the Advisor is acting in its capacity as advisor under this Agreement, the Advisor will not (and will cause its Affiliates to not) (i) pursue any opportunity to acquire a Primary Target Investment from any third-party, or (ii) act as a finder’s agent or otherwise source the opportunity to acquire a Primary Target Investment for a third party (each such opportunity in clause (i) or (ii) being a “First Offer Opportunity”) without first offering such First Offer Opportunity to the Company in writing (the “Offer Notice”).  The Offer Notice shall set forth the terms on which the seller is willing to sell such First Offer Opportunity together with any other material details customarily set forth in the acquisition materials for an asset similar to the asset that is the subject of the First Offer Opportunity.  The Company shall have 30 days from the date of its receipt of the Offer Notice to notify the Advisor of the Company's decision as to whether or not to pursue such First Offer Opportunity.  If the Company fails so to notify the Advisor of its election within such 30-day period, then the Company shall be deemed to have rejected such First Offer Opportunity.  If the Company rejects (or is deemed to have rejected) such First Offer Opportunity, then the Advisor and/or any of its Affiliates shall be free to pursue such First Offer Opportunity (on its own or with other third-party investors), or offer such First Offer Opportunity to a third-party, in each case, for a period of 180 days on terms and conditions (including price) that are not materially different from the terms and conditions set forth in the Offer Notice to the Company.  If, at the expiration of such 180-day period, such First Offer Opportunity is not the subject of a binding contract or letter of intent, then the provisions of this Section 10(b) shall once again apply to such First Offer Opportunity. For the avoidance of doubt, this Section 10(b) shall not be interpreted or construed as applying to the sale or disposition of any Primary Target Investment by the Company to any third party.

(c)    Notwithstanding anything to the contrary in this Agreement, the Advisor or any of its Affiliates shall be permitted to pursue any opportunity or to offer any opportunity to a third party in respect of: 

(1) any net leased retail or distribution or other property consistent with the investment policies of 
American Realty Capital Trust V, Inc., American Realty Capital Daily Net Asset Value Trust, Inc., 
American Realty Capital Properties, Inc. or any successor REIT sponsored directly or indirectly 

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by AR Capital, LLC with the same or similar investment objectives;

(2) any commercial real estate or other real estate investments that relate to office, retail, multi-family 
residential,  industrial and hotel property types, located primarily in the New York metropolitan 
area or other property consistent with the investment policies of American Realty Capital New York 
Recovery REIT, Inc. or any successor REIT sponsored directly or indirectly by 
AR Capital, LLC with the same or similar investment objectives; 

(3) any net leased office, industrial or special purpose real estate or other real estate investments
located in the United States which are consistent with the domestic focus of American Realty
Capital Global Trust, Inc. or any successor REIT sponsored directly or indirectly by 
AR Capital, LLC with the same or similar investment objectives; 

(4) any existing anchored, stabilized core retail properties, including power centers, lifestyle centers 
and other need-based shopping centers located in the United States consistent with the 
investment objectives of American Realty Capital - Retail Centers of America, Inc.
or any successor REIT sponsored directly or indirectly by AR Capital, LLC with the 
same or similar investment objectives, but excluding grocery-anchored shopping centers which 
are consistent with our investment objectives and those of Phillips Edison - ARC Shopping
Center REIT Inc.; and

(5) healthcare-related assets including medical office buildings, seniors housing and 
other healthcare-related facilities consistent with the investment objectives of American
Realty Capital Healthcare Trust II, Inc. or any successor REIT sponsored directly 
or indirectly by AR Capital, LLC with the same or similar investment objectives.

(d)    This Section 10 shall terminate and cease to be effective upon (i) any termination of this Agreement or (ii) the later of (y) termination of the Offering and (z) the date on which all equity raised in the Offering has been substantially invested or committed to investment, whether contemplated in the “Investment Objectives and Criteria” section of the Prospectus or otherwise.

(e)    Except as provided in this Section 10, none of the Advisor nor any of its Affiliates shall be obligated generally to present any particular investment opportunity to the Company.  

11.         FEES.
 
(a)            Acquisition Fee.  Subject to Section 11(b), the Company shall pay an Acquisition Fee to the Advisor, its Affiliates or assignees as compensation for services rendered in connection with the investigation, selection, development, construction and acquisition (by purchase, investment or exchange) of Investments. If the Advisor is terminated without Cause pursuant to Section 20(a), the Advisor or its Affiliates 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 Affiliates shall equal one percent (1.0%) of the Contract Purchase Price of each Investment.  The purchase price allocable for an Investment held through a Joint Venture shall equal the product of (i) the Contract Purchase Price of the Investment 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 11(a), “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 Affiliates 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 the Advisor or its Affiliates one percent (1.0%) of the Contract Purchase Price of the Investments.  
 
(b)            Limitation on Total Acquisition Fees, Financing Coordination Fees and Acquisition Expenses.  
(i) The total of all Acquisition Fees (as defined in the Articles of Incorporation), Financing Coordination Fees and Acquisition Expenses payable in connection with the Company’s total portfolio of Investments and reinvestments, if any, shall be reasonable and shall not exceed an amount equal to four and one-half percent (4.5%) of the Contract Purchase Price of the Company’s total portfolio of Investments or four and one-half percent (4.5%) of the amount advanced for the Company’s total portfolio of Investments; provided, however, that once all the proceeds from the 

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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.

(ii) In accordance with the Articles of Incorporation, the total of all Acquisition Fees, Financing Coordination Fees and Acquisition Expenses payable in connection with any Investment or any reinvestment shall be reasonable and shall not exceed an amount equal to four and one-half percent (4.5%) of the Contract Purchase Price of the Investment or four and one-half percent (4.5%) of the amount advanced for any Investment; provided, however, that a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in the transaction may approve fees and expenses in excess of these limits if they determine the transaction to be commercially competitive, fair and reasonable to the Company.
 
(c)            Disposition Fees.  In connection with a Sale in which the Advisor, Sub-advisor or any of their Affiliates provides a substantial amount of services, as determined by the Independent Directors, the Company shall pay to the Advisor or its assignees a Disposition Fees up to the lesser of (i) two percent (2.0%) of the Contract Sales Price and (ii) one-half of the Competitive Real Estate Commission paid if a non-Affiliate broker is also involved; provided, however, that in no event may the Disposition Fees 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)            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 (i) 0.75% of the amount made available and/or outstanding under any such Loan, including any assumed Loan and (ii) 0.75% of the portion that is attributable to the Company’s or the Partnership’s direct or indirect investment in a Joint Venture or partnership in which the Company or the Partnership is, directly or indirectly, a co-venturer or partner. The Advisor may reallow some or all of this Financing Coordination Fee to reimburse third parties with whom it may subcontract to procure any such Loan.
  
(e)            Annual Subordinated Performance Fee. The Company may pay the Advisor, its Affiliates or its assignees an Annual Subordinated Performance Fee calculated on the basis of the total return to Stockholders, payable annually in arrears in any year in which the Company’s total return on Stockholders’ capital contributions exceeds six percent (6%) per annum, in an amount equal to fifteen percent (15%) of the excess total return, provided, that the Annual Subordinated Performance Fee shall not exceed ten percent (10%) of the aggregate total return for such year.  The Annual Subordinated Performance Fee may only be paid from Net Sales Proceeds.
  
(f)           Payment of Fees.   In connection with the Acquisition Fee, Disposition Fees, Annual Subordinated Performance Fee and Financing Coordination Fee, the Company shall pay such fees to the Advisor or its Affiliates in cash, 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 any fees in Shares, (i) if at the applicable time an Offering is underway, (a) prior to the NAV Pricing Start Date, each Share shall be valued at the per-share offering price of the Shares in such Offering minus the maximum Disposition Fees and Dealer Manager Fee allowed in such Offering, and (b) after the NAV Pricing Start Date, each Share shall be valued at the then-current NAV per Share; and (ii) at all other times, each Share shall be valued by the Board in good faith (A) at the estimated value thereof, calculated in accordance with the provisions of NASD Rule 2340(c)(1) (or any successor or similar FINRA rule), or (B) if no such rule shall then exist, at the fair market value thereof.

(g)            Exclusion of Certain Transactions. 
 
(i)            If the Company or the Operating Partnership shall propose to enter into any transaction in which the Advisor or Sub-advisor, any Affiliate of the Advisor or Sub-advisor or any of the Advisor’s or Sub-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)          Neither the Company nor the Operating Partnership shall make Loans to the Advisor, Sub-advisor or any Affiliate thereof or certain of the Stockholders except Mortgages (as defined in the Articles of Incorporation) pursuant to Section 9.3(iii) of the Articles of Incorporation (or any successor provision) or loans to wholly owned subsidiaries of the Company. None of the Advisor nor any Affiliate thereof, or certain of the Stockholders shall make loans to the Company or the Operating Partnership, or to Joint Ventures, unless approved by a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction as fair, competitive, and commercially reasonable, and no less favorable to the Company or Operating Partnership, as applicable, than comparable loans between unaffiliated parties.
 

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(iii)           The Company and the Operating Partnership may enter into Joint Ventures with the Advisor, Sub-advisor or its Affiliates provided that (a) a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction approves the transaction as being fair and reasonable to the Company or Operating Partnership, as applicable, and (b) the investment by the Company or Operating Partnership, as applicable, is on substantially the same terms as those received by other joint venturers.
 
(iv)           If the Board elects to internalize any management services provided by the Advisor or Sub-advisor, neither the Company nor the Operating Partnership shall pay any compensation or other remuneration to the Advisor, the Sub-advisor or their Affiliates in connection with such internalization of management services.
 
(h)            Subordinated Participation Interests.   The Company shall cause the Operating Partnership to periodically issue Subordinated Participation Interests in the Operating Partnership to the Advisor or its assignees, pursuant to the terms and conditions contained in the Operating Partnership Agreement, in connection with the Advisor’s (its Affiliates’ or its assignees’) management of the Operating Partnership’s assets. 

(i)    Internalization.    For the avoidance of doubt, any compensation paid or payable by the Company to employees of the Company in connection with their employment by the Company (which employees were formerly employed by the Advisor or the Sub-advisor or any of their Affiliates) shall not be deemed to be compensation or other remuneration in connection with any internalization transaction for purposes of Section 11(g)(iv) hereof.  This provision shall not limit any other consideration or distributions that the Company or the Operating Partnership may pay the Advisor or the Sub-advisor in accordance with this Agreement or the Sub-advisory Agreement (in each case, as such agreement may be amended, restated or modified from time to time) or any other agreement.  This provision shall in no way obligate the Advisor or the Sub-advisor to facilitate an internalization transaction with the Advisor, the Sub-advisor or any of their Affiliates.
 
12.           EXPENSES.
 
(a)           In addition to the compensation paid to the Advisor pursuant to Section 11, the Company or the Operating Partnership shall pay directly or reimburse the Advisor and the Sub-advisor for the expenses paid or incurred by the Advisor, Sub-advisor or their Affiliates in connection with the services they provide to the Company and the Operating Partnership pursuant to this Agreement, as set forth below:
 
(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, the Sub-advisor or their assignees 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 two percent (2.0%) in the aggregate, as incurred by such parties, of the Gross Proceeds raised in all Primary Offerings measured at the completion of such Primary Offering;
 
(ii)           Acquisition Expenses, subject to the limitation set forth in Section 11(b) ;
 
(iii)          the actual out-of-pocket 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;
 

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(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, Bylaws 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 costs and expenses incurred by the Advisor, the Sub-advisor or their Affiliates in fulfilling their duties hereunder, including reasonable salaries and wages, benefits and overhead of all employees of the Sub-advisor or its Affiliates directly involved in the performance of such services; provided , however , that no reimbursement shall be made for costs of such employees of the Sub-advisor or its Affiliates to the extent that such employees perform services for which the Sub-advisor receives a separate fee; and
 
(xiv)        audit, accounting and legal fees.
 
(b)           Commencing upon the earlier to occur of the fifth fiscal quarter after (i) the Company makes its first Investment and (ii) six (6) months after the commencement of the initial Offering, expenses incurred by the Advisor and the Sub-advisor on behalf of the Company and the Operating Partnership or in connection with the services provided by the Advisor and the Sub-advisor hereunder and payable pursuant to this Section 12 shall be reimbursed, no less than monthly, to the Advisor and the Sub-advisor in the manner and proportion directed by the Advisor and the Sub-advisor.
  
13.          OTHER SERVICES.    Should the Board request that the Advisor or any director, officer, employee or assignee 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, as applicable, 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.
 
14.          REIMBURSEMENT TO THE ADVISOR OR SUB-ADVISOR.    Commencing upon the earlier to occur of the fifth fiscal quarter after (i) the Company makes its first Investment and (ii) six (6) months after the commencement of the initial Offering, the Company shall not reimburse the Advisor or Sub-advisor at the end of any fiscal quarter in which Total Operating Expenses incurred by the Advisor and Sub-advisor, in the aggregate, 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 and Sub-advisor, in the aggregate, 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 (or the Company shall disclose such fact to the Stockholders in the next quarterly report of the Company or by filing a Current Report on Form 8-K with the SEC within 60 days of such quarter end), together with an explanation of the factors the 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.
 
15.          OTHER ACTIVITIES OF THE ADVISOR.   Except as set forth in this Section 15 , 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.

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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.  

16.    VOTING AGREEMENT. 
(a)     The Company agrees that it will take such actions that are necessary to cause William M.  Kahane, Nicholas Schorsch or another representative of the Advisor reasonably satisfactory to the Company and Sub‐advisor to be a member of the initial Board of the Company if such representative executes an advance letter of resignation to become effective upon such time that the Advisor is no longer serving as the advisor to the Company.  
(b)      The Advisor agrees that, with respect to any Shares now or hereinafter owned by it, the Advisor will not vote or consent on matters submitted to the stockholders of the Company regarding (i) the removal of the Advisor or any Affiliate of the Advisor or (ii) any transaction between the Company and the Advisor or any of its Affiliates.  This voting restriction shall survive until such time that the Advisor is no longer serving as such.
 
17.          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.”

18.    THE PHILLIPS EDISON AND PECO NAMES.  The Sub‐advisor and its Affiliates have or may have a proprietary interest in the names “Phillips Edison” and “PECO.”  The Sub‐advisor hereby grants to the Company, to the extent of any proprietary interest the Sub‐advisor may have in the names “Phillips Edison” and “PECO,” a non‐transferable, non‐assignable, non‐exclusive royalty‐free right and license to use the names “Phillips Edison” and “PECO” during the term of this Agreement.  The Company and the Advisor agree that the Sub‐advisor and its Affiliates will have the right to approve of any use by the Company of the names “Phillips Edison” or “PECO,” such approval not to be unreasonably withheld or delayed.  Accordingly, and in recognition of this right, if at any time the Advisor ceases to retain the Sub‐advisor or one of its Affiliates to perform advisory services for the Company, the Company will, promptly after receipt of written request from the Sub‐advisor, cease to conduct business under or use the names “Phillips Edison” and “PECO” or any derivative thereof and the Company shall change its name and the names of any of its subsidiaries to a name that does not contain any of the names 

14

“Phillips Edison” and “PECO” or any other word or words that might, in the reasonable discretion of the Sub‐advisor, be susceptible of indication of some form of relationship between the Company and the Sub‐advisor or any its Affiliates.  At such time, the Company will also make any changes to any trademarks, servicemarks or other marks necessary to remove any references to any of the names “Phillips Edison” or “PECO.”  Consistent with the foregoing, it is specifically recognized that the Sub‐advisor or one or more of its Affiliates has in the past and may in the future organize, sponsor or otherwise permit to exist other investment vehicles (including vehicles for investment in real estate) and financial and service organizations having the names “Phillips Edison” or “PECO” as a part of their name, all without the need for any consent (and without the right to object thereto) by the Company.  Neither the Sub‐advisor nor any of its Affiliates makes any representation or warranty, express or implied, with respect to the names “Phillips Edison” or “PECO” licensed hereunder or the use thereof (including without limitation as to whether the use of the name “Phillips Edison” or “PECO” will be free from infringement of the intellectual property rights of third parties).  Notwithstanding the preceding, the Sub‐advisor represents and warrants that it is not aware of any pending claims or litigation or of any claims threatened in writing regarding the use or ownership of the names “Phillips Edison” or “PECO.”   
19.          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. The Board (including a majority of the Independent Directors) will evaluate the performance of the Advisor annually before renewing this Agreement.
 
20.          TERMINATION BY THE PARTIES.   This Agreement may be terminated upon sixty (60) days’ prior 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; provided, that termination of this Agreement with Cause shall be upon forty-five (45) days’ prior written notice.  The provisions of Sections 17, 18 and 22 through 35 (inclusive) of this Agreement shall survive any expiration or earlier termination of this Agreement. 
 
21.          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.
 
22.          PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.
 
(a)             Amounts Owed.  After the Termination Date, the Advisor or Sub-advisor, as applicable, shall be entitled to receive from the Company or the Operating Partnership within thirty (30) days after the Termination Date all amounts then accrued and owing to the Advisor or Sub-advisor, including all their 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 or Sub-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.
 
(c)    Sub-advisor’s Duties. 

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(i)    After the termination of the Sub‐advisory Agreement, to the extent payments are not provided for by this Section 22 (i.e., if the Sub‐advisory Agreement is terminated independently of the Advisory Agreement), the Sub‐advisor shall be entitled to receive from the Company, within 30 days after the effective date of such termination, all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Sub‐advisor prior to the termination of the Sub‐advisory Agreement.
(ii)    Promptly upon the termination of the Sub‐advisory Agreement, the Sub‐advisor shall promptly upon such termination:
(A)    pay over to the Company all money, if any, collected and held on behalf of the Company     pursuant to the Sub‐advisory Agreement after deducting any accrued compensation and     reimbursement for its expenses to which it is then entitled;
(B)    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;
(C)    deliver to the Board all assets and documents of the Company then in the custody of the     Sub‐advisor; and
(D)    cooperate with the Company to provide an orderly transition of advisory or sub‐advisory     functions.
23.         INCORPORATION OF THE ARTICLES OF INCORPORATION AND THE OPERATING PARTNERSHIP AGREEMENT.  To the extent that the Articles of Incorporation or the Operating Partnership Agreement as in effect on the date hereof 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.
 
24.          INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP. 
 
(a)           The Company and the Operating Partnership, jointly and severally, shall indemnify and hold harmless the Advisor, the Sub-advisor and their 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 and against all losses, claims, damages, losses, joint or several, expenses (including reasonable attorneys’ fees and other legal fees and expenses), judgments, fines, settlements, and other amounts (collectively, “Losses,” and each, a “Loss”) arising in the performance of their duties hereunder, including reasonable attorneys’ fees, to the extent such Losses 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 suffered by such Indemnitee, nor shall they provide that an Indemnitee be held harmless for any Loss 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 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 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; 
 

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(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.
 
25.          INDEMNIFICATION BY ADVISOR AND SUB-ADVISOR.   The Advisor or Sub-Advisor, as applicable, shall indemnify and hold harmless the Company and the Operating Partnership from Losses, including reasonable attorneys’ fees to the extent that such Losses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s or Sub-Advisor’s bad faith, fraud, willful misfeasance, intentional misconduct, gross negligence or reckless disregard of its duties; provided, however, that the Advisor or Sub-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 or Sub-Advisor.
 
26.          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 Bylaws, 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:            Phillips Edison - ARC Grocery Center REIT II, Inc.
11501 Northlake Drive
Cincinnati, Ohio 45249
Attention: R. Mark Addy, Co-President and Chief Operating Officer

with a copy to:

Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Attention: Peter M. Fass, Esq.
Attention: James P. Gerkis, Esq.

To the Operating Partnership:    Phillips Edison - ARC Grocery Operating Partnership II, L.P.
11501 Northlake Drive
Cincinnati, Ohio 45249
Attention: R. Mark Addy

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with a copy to:

Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Attention: Peter M. Fass, Esq.
Attention: James P. Gerkis, Esq.

To the Advisor:            American Realty Capital PECO II Advisors, LLC
405 Park Avenue
New York, New York 10022
Attention:  Nicholas S. Schorsch

with a copy to:

Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Attention: Peter M. Fass, Esq.
Attention: James P. Gerkis, Esq

To the Sub-advisor:        Phillips Edison NTR II LLC
11501 Northlake Drive
Cincinnati, Ohio 45249
Attention: R. Mark Addy

with a copy to:

DLA Piper LLP (US)
4141 Parklake Drive, Suite 300
Raleigh, North Carolina 27612
Attention: Robert Bergdolt, Esq.
                    

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 26.
 
27.          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; provider, however, that no modification that impacts the right or obligations of the Sub-advisor may be made without the Sub-advisor’s consent and signature. 
 
28.          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.
 
29.         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.
 
30.          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.  
 

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31.          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.
 
32.         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.
 
33.          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. 
 
34.          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.

35.    Third Party Beneficiary.  The Sub-advisor is intended to be a third party beneficiary of the Company’s and the Operating Partnership’s payment and indemnification obligations hereunder.  Except as set forth in the immediately preceding sentence and except for those Persons entitled to indemnification under Section 24 who shall be third party beneficiaries of this Agreement, no other Person is a third party beneficiary of this Agreement.

 
[Remainder of page intentionally left blank]
     
    

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

                        
	
			
	 
	 
	Phillips Edison – ARC Grocery Center REIT II, Inc.

	 

	 By:  /s/ R. Mark Addy                                                                     

	              R. Mark Addy, Co-President and Chief Operating Officer

	 
	 
	 

	Phillips Edison – ARC Grocery Center Operating Partnership II, L.P.

	 

	By: Phillips Edison – ARC Grocery Center REIT II, Inc., its general partner

	 

	 By:  /s/ R. Mark Addy                                                                     

	       R. Mark Addy, Co-President and Chief Operating Officer

	 
	 
	 

	American Realty Capital PECO II Advisors, LLC

	 

	 By:  /s/ Nicholas S. Schorsch                                                          

	       Nicholas S. Schorsch, Chief Executive Officer

	 
	 

	With respect to Sections 11(g), 18, 21, 22(c), and 24 through 35.
	Phillips Edison NTR II LLC

	 
	 

	 
	 By:  /s/ John B. Bessey                                                                     

	 
	John B. Bessey, Co-President

2010.3 Master Property Management, Leasing and Construction Management Agreement

Exhibit 10.3

  
MASTER PROPERTY MANAGEMENT, LEASING
AND CONSTRUCTION MANAGEMENT AGREEMENT

THIS MASTER PROPERTY, LEASING AND CONSTRUCTION MANAGEMENT AGREEMENT (“Agreement”) is made and entered into as of November 25, 2013, by and among PHILLIPS EDISON - ARC GROCERY CENTER REIT II INC., a Maryland corporation (“REIT”), PHILLIPS EDISON - ARC GROCERY CENTER OPERATING PARTNERSDHIP II, L.P., a Delaware limited partnership (“OP”), and PHILLIPS EDISON & COMPANY LTD., an Ohio limited liability company (“PECO”). 
 
R E C I T A L S:

A.    OP is a newly formed limited partnership whose limited partner is REIT, and was formed to acquire, own, operate, lease, finance and manage shopping center properties throughout the continental United States.  For purposes of this Agreement, OP and REIT, as well as any of their direct and indirect subsidiaries and any joint ventures into which any of the foregoing may enter and which are controlled by the OP or REIT, are individually or collectively referred to herein as “Owner.”

B.    PECO operates, manages, leases and manages construction with respect to shopping center properties located throughout the continental Unites States.

C.    Owner desires to engage PECO, and PECO desires to accept such engagement, to manage the shopping center properties hereafter acquired by Owner under the terms and conditions set forth herein. 

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 

1.    Definitions.  Except as otherwise specified or as the context may otherwise require, the following terms have the respective meanings set forth below for all purposes of this Agreement, and the definitions of such terms are equally applicable both to the singular and plural forms thereof:

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

(b)    “Major Lease” means a lease of premises containing 5,000 square feet of leasable area or more.

(c)    “Management Fees” means the fees and expenses payable to PECO pursuant to Section 6, “Compensation” hereof.

(d)    “On-Site Personnel” means persons hired or retained as employees of PECO to perform services at the Properties 

(e)    “Owner” has the meaning set forth in Recital A.

(f)    “PECO” has the meaning set forth in the introductory paragraph above.

(g)    “Property” means an individual real estate asset owned by Owner and all tracts acquired by Owner related to that asset subject to this Agreement as more fully described in a Property Addendum (as defined below).

(h)    “Properties” means all of the real estate assets of Owner covered by this Agreement, collectively.

(i)    “Property Addendum” means an addendum (as the same may be modified, amended or supplemented in writing, from time to time) which shall be attached to this Agreement and incorporated herein by reference as each Property is purchased and made subject to this Agreement describing the Property, including its real estate and the improvements thereon.  If any Property is sold by Owner, the Property Addendum with respect to such Property may, at Owner’s election, be deemed of no further force or effect from and after the closing of any such sales, except to the extent of post-closing management and accounting functions thereafter to be performed.

2.    Appointment of PECO.

(a)    Owner hereby engages and retains PECO as the sole and exclusive manager of each Property for which a Property Addendum is executed with respect to the property management function to perform such functions as are specified herein and/or on the Property Addendum related to each such Property.  PECO hereby accepts such appointment.

(b)    Owner hereby engages and retains PECO as the sole and exclusive leasing agent for the leasing of all space in each Property for which a Property Addendum is executed with respect to the leasing agent function as well as for obtaining ground leases on any outparcels.  PECO shall perform such functions as are specified herein and/or on the Property Addendum related to each such Property.  PECO hereby accepts such appointment.

(c)    Owner hereby engages and retains PECO as the sole and exclusive construction manager of each Property for which a Property Addendum is executed with respect to the construction management function to perform such functions as are specified herein and/or on the Property Addendum related to such Property.  PECO hereby accepts such appointment.  

(d)    PECO shall act under this Agreement as an independent contractor and not as the Owner’s agent or employee. PECO shall not have the right, power or authority to enter into agreements or incur liability on behalf of the Owner except as expressly set forth herein or in a Property Addendum. Any action taken by PECO which is not expressly permitted by this Agreement shall not bind the Owner.

3.    Standards.    PECO shall in good faith, with due diligence and in accordance with generally accepted management and construction management standards in the shopping center industry within the geographical areas of the Properties, perform its management, leasing and construction management duties and obligations described herein.  In all events, such standards of performance shall be consistent with the standards of management, leasing and construction management to which PECO performs with respect to its own portfolio of properties.  PECO shall devote its commercially reasonable efforts to performing its duties hereunder to manage, operate, maintain and lease the Properties in a diligent, careful and professional manner to maximize all potential revenues to the Owner and to minimize expenses and losses to the Owner. The services of PECO are to be of a scope and quality not less than those generally performed by first class, professional managers of properties similar in type and quality to the Properties and located in the same market area as the Properties. PECO will make available to the Owner the full benefit of the judgment, experience and advice of the members of PECO’s organization. PECO will at all times act in good faith, in a commercially reasonable manner and in a fiduciary capacity with respect to the proper protection of and accounting for the Owner’s assets.

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4.    Term.    This Agreement shall commence upon full execution of this Agreement and shall continue until terminated in accordance with Section 10.

5.    Duties of PECO.  

(a)    PECO’s duties as property manager for the Properties include the following for each of the Properties (as may be supplemented with additional duties as detailed in the applicable Property Addendum for each Property) and for Owner, as applicable:
            
(i)    For Accounting:  

(A)    Calculate, bill and collect rental payments and other charges due to the Owner from tenants in the Properties under the respective tenant leases or otherwise with regard to the Properties.  To the extent tenant leases affecting any Property so require, PECO shall timely make or verify any calculations that are required to determine the amount of rent due from tenants, including without limitation calculating percentage rent, operating expense “pass-throughs” and consumer price index adjustments and, where required, shall give timely notice thereof to tenants.

(B)    Cash Management.  

(1)    PECO will establish on behalf of the OP a concentration account (a “Concentration Account”) at a bank to be specified in writing by Owner, which such Concentration Account will be tied into each Operating Account (as defined below) via a daily automated two-way sweep.  This automated two-way sweep shall work in the following manner: all checks or wires presented on behalf of each Property’s Operating Account will be funded by having the cash automatically pulled down from the Concentration Account to fund the check or wire, and all cash deposited into each Property’s Operating Account or lockbox accounts will be automatically swept up to the Concentration Account on a daily basis.

(2)    Notwithstanding the preceding, if (a) an Owner is not a wholly owned subsidiary of the REIT or OP and its governing documents so require, or (b) the payments in respect of a Property are required by a lender to be made into a lockbox account, or (c) if the payments in respect of a Property are required to be handled otherwise by a contractual restriction agreed to by Owner, then such requirements shall be followed by PECO following written notice thereof by Owner.  Funds released from any such lockbox account or other arrangement to the custody of the Owner shall otherwise follow the above procedures.

(3)    PECO will establish on behalf of the Owner for each Property an operating account (an “Operating Account”) at a bank to be agreed upon in writing by Owner upon receipt of a fully-executed Property Addendum and a W-9 completed by the Owner.  The signature card for the Operating Account shall indicate that PECO is dealing with the Operating Account as a fiduciary of the Owner.  The Operating Account and all funds therein shall at all times be the property of the Owner.  The Owner shall have electronic banking system access to the Operating Account which shall permit it to obtain account information and make withdrawals from the Operating Account.  

(4)    Notwithstanding anything to the contrary contained herein, the Owner may direct payments or deposits received by PECO or payments or transfers from the Operating Account for a Property to deviate from the above procedures by a written request to PECO.  In such event, PECO shall provide the Owner with all information necessary to effect such deposits, transfers or payments.

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(5)    If required by state law, PECO will deposit security deposits and/or advance rentals in separate accounts in the name of the Owner at the financial institution designated by Owner with respect to the applicable Property.  

(6)    PECO agrees to pay all invoices directly from the Operating Account unless directed otherwise by the Owner.

(7)    On or before the 25th day of each month, PECO shall prepare and submit an invoice to the Owner accompanied by a computation of the fees and expense reimbursements due to PECO in accordance with this Agreement.  The Owner shall have the right to review such invoice and obtain any supporting documentation with respect thereto from PECO.  To the extent that the Owner believes the computation provided by PECO is inconsistent with the computation permitted hereunder, the Owner and PECO shall work together in good faith to reach a computation of such fees which is reasonably agreeable to both parties.

(8)    Without in any way limiting the foregoing, (i) PECO shall not commingle its funds or property or the funds or property of any other entities for which it provides services with any other funds or property of Owner, and (ii) PECO shall deposit amounts relating to a Property in the respective Property’s Operating Account within one (1) business day of receipt.  PECO shall have no proprietary interest in the Clearing Account or any Operating Account, or in any other account authorized hereby, and all sums collected by PECO relating to the Properties and all sums placed in such account or accounts will be the property of the Owner and to the extent not yet deposited shall be held in trust by PECO for the Owner.  

(C)    Subject to the terms of this Agreement relating to allocation of expenses, pay fees, charges, expenses and commissions of independent contractors, architects, engineers, subcontractors, suppliers which contract with PECO and PECO utilized in the management, operation, maintenance or repair of the Properties, subject to the PECO’s review of same to confirm accuracy and agreement with same.

(D)    Owner expressly authorizes PECO to promptly and diligently enforce the Owner’s rights under any tenant leases affecting any Property, including without limitation taking the following actions where appropriate: (i) with the Owner’s prior written consent: (a) terminating tenancies, (b) instituting and prosecuting actions, and evicting tenants, (c) settling, compromising and releasing such actions or suits or re-instituting such tenancies, and (d) recovering rents and other sums due by legal proceedings in a court of general jurisdiction; and (ii) without the Owner’s prior written consent:  (a)  in a magistrates court or other court of special jurisdiction as applicable, signing and serving such notices as are deemed necessary by PECO, and (b) recovering rents and other sums due by legal proceedings in a magistrates court or similar jurisdiction, in each case PECO shall promptly notify the Owner of such action in writing. If authorized by the Owner, PECO shall consult an attorney for the purpose of enforcing the Owner’s rights or taking any such actions and the Owner shall have the right to designate counsel for any matter and to control all litigation affecting or arising out of the operation of any Property. PECO shall keep the Owner informed of any dissatisfaction with the law firm or such services or the reasonableness of the cost thereof.

(E)    Prepare and maintain routine and customary financial and business books and records for Owner and the Properties and to employ and supervise outside accountants for preparation of income and other tax returns and specialty accounting services for Owner and the Properties.  The preparation of income and other tax returns and the performance of such specialty accounting services shall be supervised by PECO but will be completed at Owner’s expense.  PECO will use the accrual method of accounting in accordance with GAAP, with such policies as are to be determined by management subject 

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to Owner’s determination (including without limitation, capitalization policies, depreciation and amortization policies, and such other accounting policies as Owner may direct from time to time).

(F)    Maintain fixed asset accounting detail and related depreciation.

(G)     PECO shall prepare and submit to Owner a proposed operating and capital budget, including an itemized statement of the estimated receipts and disbursements in reasonable detail, which shall include, without limitation, reasonable detail as to employee expenses to be reimbursed to PECO for the operation, repair and maintenance of the Properties (the “Budget”) and a marketing and leasing plan on the Properties (a “Plan”) (assuming PECO is retained as leasing agent), in each case for the calendar year immediately following such submission.  Each Budget and Plan will be in the form approved by the Owner prior to the date thereof.  A draft Budget and, as applicable, Plan for each Property shall be submitted to Owner on or prior to October 31 of the year preceding the January 1 of the year to which such budget shall apply.  Owner shall have 21 days after receipt thereof within which to approve or reject in writing such Budget and, as applicable, Plan, any such rejection to be accompanied by a reasonably detailed explanation of such rejection.  PECO shall then submit a revised draft Budget and, as applicable, Plan to Owner within 10 days thereafter.  Owner shall have 10 days after receipt thereof to approve or reject the same in writing, any such rejection to be accompanied by a reasonably detailed explanation of such rejection.  The foregoing process shall then repeat with 10 days between receipt and revision, on PECO’s end, and receipt and acceptance or rejection on Owner’s end, until each Budget and, as applicable, Plan has been approved.  If the parties cannot come to agreement on a Budget and, as applicable, Plan for a Property, PECO shall operate the applicable Property on the Budget and, as applicable, Plan most recently approved by Owner.  To the extent any expenditure to be made by PECO shall exceed the applicable line item in such prior year’s Budget by 5% or more, the same shall require Owner’s prior written consent, provided that, excluded from the foregoing expenditures requiring such consent shall be expenditures related to snow and ice removal, electricity, insurance premiums and emergency items outside of the control of PECO.  PECO shall provide supporting information reasonably requested by the Owner in connection with their review of any Budget or Plan submitted by PECO for their review.

PECO shall implement the Budget and Plan and use its commercially reasonable efforts to ensure that the actual cost of operating the Properties shall not exceed the Budget.  The Budget shall constitute an authorization for PECO to expend necessary monies to manage and operate the Properties in accordance with the Budget and subject to the provisions of this Agreement until a subsequent Budget is approved.  The approval of non-recurring costs and capital improvements in the Budget and Plan shall constitute an authorization for PECO to collect bids for the expenditure and present a final recommendation to the Owner for expenditure of monies to implement such items called for in the Budget and Plan.

Without affecting any other limitation imposed by this Agreement and except as may be expressly provided to the contrary elsewhere in this Agreement, PECO shall secure the prior written approval of the Owner prior to incurring any liability or obligation for any item in excess of $10,000 not reflected on the Budget or the Plan approved in writing by the Owner except with respect to emergency items as described in this subsection (G) or unless another threshold with respect to any matter is specified elsewhere in this Agreement or in a written directive or authorization of Owner, in which case the threshold for such matter shall be as so set forth.

(H)    Pay wages, salaries, commissions and employee benefits of all On-Site Personnel including, without limitation, workers’ compensation insurance, social security taxes, unemployment insurances and other taxes or levies now in force or hereafter imposed with respect to any such On-Site Personnel, all of which shall be deemed an operating expense of the Properties and shall be in accordance with approved Budgets.

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(I)    Deliver to Owner, within 15 days after the end of each month during the term hereof, the monthly reporting package detailed on Exhibit A attached hereto which shall relate to the Properties and the immediately preceding calendar month or any portion thereof.  Such reporting package shall be made on an accrual basis and shall include all such transactions, whether or not reimbursable pursuant to the provisions hereof.  

(J)    Deliver to Owner, within 15 days after the end of each calendar quarter during the term hereof, the quarterly reporting package detailed on Exhibit B attached hereto which shall relate to the Properties and the immediately preceding calendar quarter or any portion thereof.  Such reporting package shall be made on an accrual basis and shall include all such transactions, whether or not reimbursable pursuant to the provisions hereof.  

(K)    Deliver to Owner, within 30 days after the end of each calendar year during the term hereof, the annual reporting package detailed on Exhibit C attached hereto which shall relate to the Properties and the immediately preceding calendar year or any portion thereof.  Such reporting package shall be made on an accrual basis and shall include all such transactions, whether or not reimbursable pursuant to the provisions hereof. 

(L)    File real, personal and ad valorem (real or personal) property tax returns required to be filed by Owner with respect to the Properties and pay all such ad valorem taxes and assessments out of the operating accountants of each of the Properties.  PECO shall also utilize, on Owner’s behalf, the services of independent tax consultants and attorneys to appeal or challenge any real, personal and ad valorem (real or personal) property taxes and PECO shall manage such process on Owner’s behalf by supplying needed information and making required payments out of the operating funds for each Property or the separate funds of Owner.  

(ii)    For Operations. PECO shall use commercially reasonable efforts to operate in accordance with the Budget and Plan unless otherwise specifically approved in writing by Owner and except in the case of emergencies:  

(A)    PECO will investigate, hire, train, pay, supervise and discharge the On-Site Personnel necessary to maintain and operate the Properties including, without limitation, property managers who shall have experience and education satisfactory to the Owner.  Such personnel shall in every instance be agents or employees of PECO and not of the Owner, but Owner shall have the right to approve via the annual budget process, the compensation of PECO’s personnel for which PECO has the right to be reimbursed hereunder. PECO has the right to be reimbursed for (i) On-Site Personnel that are employed at the Properties or at management field offices or corporate offices, should there be no office located on site.  The management field office and corporate office employees shall be charged to the respective Property on the basis of the percentage of time spent attending to such Property based on actual wages and fringe benefits, unless the Owner and PECO agree in writing to another basis; and (ii) roving maintenance personnel to the extent needed at the Properties from time to time, and these employees shall be charged to the respective Properties at a reasonable hourly or monthly rate pre-approved by the Owner and only for the actual and reasonably necessary time spent on such Property by such personnel.  The Owner shall have no right to supervise or direct such agents or employees.  

PECO, at PECO’s sole cost and expense, shall maintain during the term of this Agreement a bond or applicable insurance covering PECO and all persons who handle, have access to or are responsible for the Owner’s monies, in an amount and form reasonably acceptable to the Owner.  PECO shall provide the Owner with a certificate or other satisfactory documentation evidencing the existence and terms of such 

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bond(s) upon execution of this Agreement.

PECO, shall supervise and at Owner’s cost and expense, shall retain, to the extent such services are not sufficiently provided by On-Site Personnel, but in accordance with the Budget,  independent contractors, subcontractors, and suppliers to provide for the management, maintenance, repair and operation of the Properties as well as security functions.  

(B)    If commercially reasonable within the geographic area in which a Property is located, to obtain not less than three (3) competing bids for, contract with and supervise onsite management of, contractors.

(C)    Assist in coordinating the opening and closing of the businesses of tenants, including but not limited to obtaining of insurance and signage approval.

(D)    In accordance with the operating budget, purchase necessary supplies and equipment required for the proper operation, maintenance, repair and restoration of the Properties.

(E)    Make or cause to be made repairs, replacements, renovations and capital improvements on the Properties.

(F)    Contract and pay charges for utilities used in the operation of the Properties, including without limitation water, electricity, gas, telephone and sewerage services unless carried or covered under the respective tenant’s name.

(G)    Contract for and maintain such policies of commercial general liability and bodily injury and property damage insurance with respect to the Properties as are acceptable to Owner.  

(H)    Advertise the Properties by such means and media and at such costs as are in accordance with the Budget and Plan and as PECO shall deem appropriate (and at PECO’s expense, except as set forth in the last sentence of this subsection (H)) to implement an effective leasing program for the Properties on a local and national basis, with no less effort and professionalism than that used for the advertising programs employed by PECO with respect to its own portfolio of properties.  This advertising shall include attendance and facilities for ICSC and related leasing events.  Notwithstanding the foregoing, to the extent Owner shall request specific advertising that differs from or is in addition to PECO’s planned approach, the incremental cost of such specific advertising shall be borne by Owner.

(I)    Assist in securing leases with temporary tenants or licensees for use of the Properties.

(J)    Actively promote and market the Properties to potential tenants, current tenants and the general community.

(K)    Conduct complete inspections of the Properties as is prudent to determine that the same are in good order and repair, but no less frequently than once per calendar quarter during the term of this Agreement.  

(L)    Forward to Owner promptly upon receipt all notices of violation or other notices from any governmental authority, and board of fire underwriters or any insurance company, and shall make such recommendations regarding compliance with such notice as shall be appropriate.  

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(M)    Maintain business-like relations with the tenants of the Properties and respond promptly to tenant complaints in a prudent, businesslike manner.  PECO shall maintain a record of all written tenant complaints for no less than one year and PECO’s response to such complaints which record shall be available for review by Owner.

(N)    Analyze all bills received for services, work and supplies in connection with the maintaining and operating the Properties, pay all such bills and any other amount payable in respect to the Properties.  PECO shall use reasonable commercial efforts to pay all bills within the time required to obtain discounts, if any.  Owner may from time to time request that PECO forward certain bills to Owner promptly after receipt, and PECO shall comply with any such request.  PECO will ensure timely 1099 reporting to the IRS, with 1099’s filed under PECO’s name and PECO’s taxpayer identification number (TIN), listing PECO as the “payer”.  PECO will provide annually a signed declaration indicating compliance with 1099 reporting; PECO will provide this declaration to Owner with the February Reporting Package.  Penalties for misfilings as a result of PECO’s negligence are not to be charged to the property, but are payable by PECO.  

(iii)    Other:

(A)    In accordance with the Budget or as otherwise approved in writing by Owner, employ, in-house or outside attorneys, at Owner’s expense, to handle any legal matters involving the Properties.  It is understood that PECO employs an in-house lease administration staff which will perform some or all of the legal services described herein.  To the extent any of such lease administration staff performs any of such services, the cost of such lease administration staff, based upon approved Budgets and Plans and consistent with the hourly rates charged internally by PECO to the other property funds for which it performs management and leasing services, shall be deemed an operating expense of the Properties and shall be reimbursable by Owner.  

(B)    Perform leasing analysis and credit underwriting with respect to prospective tenants (and subtenants and assignees); prepare leases and other tenant related documents; and engage in a competitive construction bidding process for lease-related construction projects expected to exceed $25,000 not otherwise within the duties of a construction manager (as, for example, pursuant to Section 5(c) below).

(C)    Take such other action and perform such other functions as PECO reasonably deems advisable or necessary for the efficient and economic management, operation and maintenance of the Properties.

(b)    PECO’s duties as leasing agent for any of the Properties indicated on a Property Addendum as being subject to the leasing agent services as provided herein and subject to the Budget and Plan include the following:

(i)    Leasing Functions.  PECO will coordinate and negotiate the leasing of the Properties using reasonable commercial efforts to secure executed leases (both new and renewal) from qualified tenants for available space in the Properties.  Such leases must be consistent with form and terms approved by Owner unless a tenant requires use of its own lease form.  PECO shall be responsible for the hiring of all leasing agents  as necessary for the leasing of the Properties, to work with outside brokers and leasing agents, and otherwise to oversee and manage the leasing process on behalf of Owner.  PECO’s duties in this regard shall include, without limitation, (1) the preparation and distribution of listings to potential tenants and/or their representatives and to reputable and active real estate agents; (2) the supplying of sufficient information to cooperating brokers and agents to enable them to promote the rental of the Properties, (3) to 

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market and promote the Properties, (4) at all times to maintain and update a merchandising and leasing plan for each Property, and (5) to provide an updated leasing budget and leasing reforecast for the following twelve (12) month period.  Additionally, in connection with the budgeting process referred to above, PECO shall submit a yearly leasing budget for approval in accordance (and simultaneously) with the procedure set forth above for the approval of each Property’s budget by Owner.

(ii)    Advertising.    Owner authorizes PECO to advertise and to place signage on the Properties regarding the leasing, provided that such signage complies with all applicable governmental laws, regulations and requirements. PECO will provide a marketing package, aerial photographs, demographic reports, site plans, signage and a two-sided flyer for each Property at PECO’s expense consistent with Section 5(a)(ii)(H). Any additional advertising and promotion requested by Owner will be done at Owner’s expense pursuant to a program and budget agreed upon by Owner and PECO.

(iii)    Other Actions.      PECO will take such other action and perform such other functions as PECO or Owner deems reasonably advisable or necessary for the efficient and economic leasing of the Properties.  

(c)    PECO’s duties as construction manager for the Properties shall be in accordance with a capital budget established by Owner and PECO prior to the commencement of construction activities and shall include the following:

(i)    General.    PECO shall secure or assist in securing licenses, registrations, or permits required by law and shall comply with ordinances, laws, orders, codes, rules, and regulations pertaining to building improvements and/or the services described herein.  PECO shall secure lien waivers and affidavits and properly file, to the extent required, terminations of notices of commencement prior to payment to contractors.

(ii)    Bidding.    For all projects estimated to cost more than $25,000.00, PECO shall obtain bids from at least three outside contractors.  PECO shall select the low bid unless it has supplied Owner with a reasonable justification in writing for the selection of a bidder other than the low bidder (e.g., PECO determines in its reasonable discretion that the bidder to be selected is more likely to complete the job on time, with commercially reasonable workmanship and in the most efficient manner).  PECO shall manage the bidding process consistent with the manner in which it manages bidding for projects within its own portfolio of properties.  

(iii)    New Construction, Tenant Improvements, and Redevelopments.  PECO will perform the following duties for construction of Improvements on undeveloped land (“New Construction”) and for construction of Improvements that are to be made at the direction of, or in conformity with lease obligations to, tenants (“Tenant Improvements”) or for the improvement to Improvements that change the size or nature of such Improvements or for the redevelopment of Improvements (collectively, “Redevelopments”):

(A)    Provide updated and detailed project budgets to Owner.

(B)    Arrange for, coordinate, supervise and advise Owner with respect to the selection of architects, contractors, design firms and consultants, and the execution of design, construction and consulting contracts.

(C)    Review design documents, and drafts thereof, submitted by the architect or other consultants, and notify Owner in writing of any mistakes, errors or omissions that PECO 

9

observes in the documents and any recommendations it may have with respect to such mistakes, errors or omissions, provided PECO shall not in any manner be responsible for the accuracy, adequacy or completeness of such documents.

(D)    Evaluate and make recommendations to Owner concerning cost estimates prepared by others.

(E)    Review and evaluate proposed schedules for construction.

(F)    Procure subcontractors through a minimum of three quotes for any jobs estimated to involve in excess of $25,000.

(G)    Coordinate the work of subcontractors.

(H)    Monitor the progress of construction. 

(I)    Endeavor to work with the general contractor to identify any deficiencies in the work performed by subcontractors.

(J)    Provide Owner with monthly written status reports.

(K)    Advise Owner with respect to alterations and modifications in any design documents submitted by the architect or other consultants that may be in Owner’s interest, including obtaining advantages in terms of cost savings, scheduling, leasing, operation and maintenance issues and other matters affecting the overall benefit of the project.

(L)    Review and advise Owner on change order proposals and requests for additional services submitted to Owner.

(M)    Schedule, coordinate, and attend necessary or appropriate project meetings.

(N)    Monitor and coordinate punch list preparation and resolution by the subcontractors.

(O)    Make recommendations to Owner concerning, and monitor, the use of the site by subcontractors, particularly as it relates to staging and storage, ingress and egress, temporary signage, fencing, barricades, restrictions on hours of operation, safety considerations and similar considerations.

(P)    Coordinate, monitor, supervise and advise Owner with respect to preparation, execution, completion and filing of project-related documents, including, but not limited to, contracts, permit applications, licenses, certifications, zoning requirements, land use restrictions, governmental filings applicable to the project and any other similar documents.

(Q)    Review and advise Owner with respect to draw requests submitted on the project.

(R)    Upon completion of construction, walk the completed New Construction, Tenant Improvements, or Redevelopments with Owner to ensure that everything has been 

10

completed in accordance with the specifications.  PECO shall cause the subcontractors to repair or replace any items that are determined to be deficient during this walk.

(S)    As instructed by Owner, perform additional related project management functions.

(T)    Collect warranties and operation manuals, certificates, guarantees, as-builts and any similar documentation for the benefit of Owner.

(iv)    New Construction and Redevelopments.  In addition, PECO will perform the following duties with respect to New Construction and Redevelopments:

(A)    Provide Owner with a budget for each Improvement to be built prior to beginning construction of the respective Improvement.  

(B)    Meet on a regular basis with Owner’s leasing agents and representatives of prospective tenants.

(C)    Arrange for, coordinate, supervise and advise Owner with respect to various development services prior to design and construction of the Project, including due diligence, site investigations, land use and zoning matters, and similar development services.

(v)    Tenant Improvements.  In addition, PECO will perform the following duties related to Tenant Improvements:

(A)    Arrange for and supervise the performance of all installations and improvements in space leased to any tenant which are either expressly required under the terms of a Lease of such space or which are customarily provided to tenants.

(B)    Meet with tenants and prospective tenants and their architects, engineers, consultants and contractors to facilitate design and construction of leasehold improvements.

(C)    Maintain separate files as to each tenant, and thereby document the entire design and construction process for each tenant.

(D)    Compile and disseminate such data regarding each tenant as Owner may reasonably require.

(vi)    Duties with Respect to Tenant Directed Improvements.    PECO will supervise and facilitate tenant installations performed by the tenant and/or tenant’s contractors, including:

(A)    Review and evaluate lease exhibit language that identifies the scope and nature of tenant construction of the improvements.

(B)    Review tenant construction documents for compliance with landlord criteria and requirements applicable to the improvements.

(C)    Review and evaluate proposed schedules for tenant construction.

(D)    Coordinate delivery of shell space to tenants as required by the tenant’s lease.

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(E)    Monitor the progress of tenant construction including but not limited to compliance with scheduling requirements, compliance with rules and regulations of the Property, verify that tenant has obtained proper permits, etc., coordinating requests for tenant improvement allowance draws

(F)    Maintain appropriate files and records as to each project documenting the design and construction process for each tenant in a manner consistent with PECO’s record retention guidelines.

(vii)    Duties with Respect to All Improvements.    PECO will supervise all Improvement projects, such supervision to include, but not be limited to, preparation of budgets, plans, bidding, subcontractor selection, material selection, job supervision, collection of lien waivers, sworn statements, affidavits and the like.  PECO shall require such lien waivers, sworn statements, affidavits and similar documentation as a condition to disbursement.

(d)    Other.    PECO shall in all events comply with the reasonable requests of Owner related to property management of, leasing of, and construction management of the Improvements to be made to, the Properties.  Owner shall maintain sufficient funds in an account or accounts so that PECO will have funds available to pay all obligations contemplated hereunder when due.  Under no circumstances shall PECO have any obligations or duty to advance funds to or for the account of Owner.

(e)    Ownership Agreements.  Owner agrees to obtain and review copies of all (1) agreements of limited partnership, joint venture partnership agreements and operating agreements of Owner and its affiliates as well as the articles of incorporation, bylaws, and registration statement on Form S-11 (no. 333-190588) of REIT, including all prospectus supplements and post-effective amendments thereto (collectively, the “Ownership Agreements”) and (2) mortgages on all Properties and inform PECO of any restrictions relating to property use arising therefrom.  PECO will use reasonable care to avoid any act or omission which, in the performance of its duties hereunder, in any way conflicts with the terms of the Ownership Agreements or the mortgages in the absence of the express direction of the REIT’s board of directors, and PECO shall promptly notify Owner if any such conflict arises.

(f)    Periodic Meetings.  As reasonably required by Owner, PECO its personnel or contractors engaged or involved in the management, operation, leasing or construction management of the Properties shall meet to discuss the historical results of operations, to consider deviations from any budget, and to discuss any other matters so requested by the Owner upon reasonable notice from Owner.

6.    Compensation and Expense Reimbursement.  

(a)    For each Property for which PECO provides property management services, Owner shall pay PECO a monthly management fee equal to four and one/half percent (4.5%) of the Gross Receipts (as defined below) for that given month, payable from that month’s receipts.  “Gross Receipts” means (i) all fixed and minimum rent, percentage rent and license fees paid by tenants and other occupants of each Property, (ii) the profit of Owner derived from the sale of electricity (i.e., the spread between the wholesale and retail prices of electricity that is re-sold to tenants of the Properties), utilities and heating, ventilation and air conditioning to tenants and other occupants of each Property, (iii) all amounts paid by tenants and other occupants of each Property for common area maintenance, real estate taxes, insurance, interest and any other payments of any nature (including attorneys’ fees and late fees) made by any such tenants or other occupants, and (iv) proceeds of rent insurance  

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(b)    For each Property for which PECO provides leasing services, Owner shall pay PECO leasing fees at market rates for the geographic area in which the applicable Property is located as specified on the Property Addendum for such Property.

(c)    For each Property for which PECO provides construction management services, PECO shall be entitled to fees for tenant and tenant directed improvements, capital improvements and construction management services, all at market rates for the geographic area in which the applicable Property is located, as may be more fully set forth on the applicable Property Addendum or another writing executed by PECO and Owner.  

(d)    PECO will pay such other reimbursable expenses and costs as Owner has approved and deems advisable or necessary for the efficient and economic management and leasing of the Properties through its annual budgets or as otherwise provided for in this Agreement (e.g., for marketing or leasing programs that exceed in scope that which PECO would normally utilize for its own properties), as provided for in Sections 5(a)(ii)(H) and 5(b)(ii).  Owner shall reimburse PECO for such expenses, which shall include, to the extent included in the applicable Property budgets or a general property management and leasing budget to be agreed upon, personnel costs for On-Site Personnel providing direct services for the Properties, cost of travel and entertainment, printing and stationery, advertising, marketing, signage, long distance phone calls and other direct expenses.  

7.    Insurance.    PECO shall obtain and keep in full force and effect at Owner’s expense insurance (1) on the Properties, and (2) on activities at the Properties against such hazards as Owner and PECO shall deem appropriate and as may be required under any mortgage or other loan documents binding upon Owner. In any event, PECO shall procure, for the Properties for which PECO is property manager, insurance sufficient to comply with the leases and the Ownership Agreements.  All liability policies shall provide sufficient insurance satisfactory to both Owner and PECO and shall contain waivers of subrogation for the benefit of PECO and the applicable Owner.

(a)    PECO shall obtain and keep in full force and effect, in accordance with the laws of the state in which each Property is located, worker’s compensation insurance covering all employees of PECO at the Properties and all persons engaged in the performance of any work required hereunder.  PECO shall also obtain and keep in full force and effect, in accordance with the laws of the state in which each Property is located, employer’s liability, employee theft, commercial general liability, and umbrella insurance, and PECO shall furnish Owner certificates of insurers naming Owner as co-insureds and evidencing that such insurance is in effect and that insurer will provide directly to Owner no less than 30 days’ notice of any cancellation or non-renewal.  If any work under this Agreement is subcontracted as permitted herein, PECO shall include in each subcontract a provision that the subcontractor shall also furnish Owner, as appropriate, with such a certificate evidencing coverage (and any other coverage PECO deems appropriate in the circumstances) and the naming of Owner as co-insured and evidencing that such insurance is in effect and that insurer will provide directly to Owner no less than 30 days’ notice of any cancellation or non-renewal, as well as indemnification as is customary.  The cost of such insurance procured by PECO shall be reimbursable to the same extent as provided in this Agreement.

(b)    PECO shall cooperate with and provide reasonable access to the Properties to representatives of insurance companies and insurance brokers with respect to insurance which is in effect or for which application has been made.  PECO shall use its good faith efforts in a commercially reasonable manner to comply with all requirements of insurers.

(c)    PECO shall promptly investigate and shall report in detail to Owner and the applicable insurance carriers all accidents, claims for damage relating to the ownership, operation or maintenance of 

13

the Properties, and any damage or destruction to the Properties and the estimated costs of repair thereof, and shall prepare for approval by Owner all reports required by the applicable insurance company in connection with any such accident, claim, damage, or destruction.  Owner shall reimburse PECO’s third party costs in connection therewith.  Such reports shall be given to Owner promptly and any report not so given within 10 days after the occurrence of any such accident, claim, damage or destruction shall be noted in the monthly reports delivered to Owner.  PECO is authorized to settle any claim against an insurance company arising out of any policy and, in connection with such claim, to execute proofs of loss and adjustments of loss and to collect and provide receipts for loss proceeds using commercially reasonable good faith efforts.

8.    Liability of PECO.    PECO shall not be liable for any errors in judgment or for mistakes of fact or of law or for anything which it may in good faith do or refrain from doing, except in the case of gross negligence, fraud or willful misconduct.

9.    Indemnity.    Owner shall indemnify PECO and its managers, employees and officers against and agrees to defend, protect, hold and save them free and harmless from any liability or expenses (including reasonable attorney’s fees and court costs) arising out of injuries or damages to persons or property by reason of any cause relating to the Properties, except to the extent caused by the gross negligence, fraud or willful misconduct and which is not otherwise covered by insurance held by Owner.  Owner shall name PECO as an “additional insured” or “co-insured” on any and all liability insurance policies for the Properties.  PECO shall indemnify Owner and its employees and officers against and agrees to defend, protect, hold and save them free and harmless from any liability or expenses (including reasonable attorney’s fees and court costs) arising out of injuries or damages to persons or property by reason of any cause relating to the Properties caused by the gross negligence, fraud or willful misconduct, which is not otherwise covered by insurance held by Owner.

10.    Termination.    This Agreement may be terminated by either party upon thirty (30) days’ written notice, in toto or only with respect to any Property, provided such termination shall not affect any rights or obligations accrued to either party prior to termination (subject to any offsetting claims for damages), including, but not limited to payment of property management fees, leasing fees and construction management fees earned to the date of termination (provided that, if termination occurs before a construction project is completed, the construction management fee to be earned shall be prorated based upon the reasonably estimated portion of the applicable project that had been completed up to the date of termination).  If this Agreement is terminated, only commissions and management fees with respect to any Properties that are subject to such termination and that have accrued prior to the termination date shall be due to PECO.  Notwithstanding anything to the contrary contained in this Agreement, if either Owner or PECO defaults in performing any of its obligations under this Agreement, the other party may terminate this Agreement effective upon delivery of notice of such default.  The indemnification obligations of the parties hereunder shall survive the expiration or termination of this Agreement.  PECO’s obligations under this Agreement for physical property management, leasing and construction management may, at Owner’s election, terminate as to any particular Property upon its sale, provided that PECO’s obligations for the performance of accounting and other so-called “back office functions” shall terminate only at such time as a final tax return with respect to the applicable Property has been prepared and filed and such customary and ordinary information related to the Property or Properties has been provided to Owner.  PECO shall cooperate subsequent to any termination of this Agreement as to a particular Property to provide final property reconciliations and other reports as reasonably requested by Owner.

11.    PECO’S Obligations After Termination.    Upon the termination of this Agreement, PECO shall have the following duties:

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(a)    PECO shall deliver to Owner, or its designee, all books and records (including data files in magnetic or other similar storage media but specifically excluding any licensed software) with respect to the Properties.

(b)    PECO shall transfer and assign to Owner, or its designee, or terminate upon Owner’s direction, all service contracts (designated by Owner for transfer and assignment) and personal property relating to or used in the operation and maintenance of the Properties, except personal property paid for and owned by PECO. PECO shall also, for a period of sixty (60) days immediately following the date of such termination (with respect to this entire Agreement or any Property terminated as being subject to this Agreement), make itself available to consult with and advise Owner, or its designee, regarding the operation, maintenance and leasing of the Properties at no additional cost to Owner.

(c)    PECO shall render to Owner an accounting of all funds of Owner in its possession and shall deliver to Owner a statement of Management Fees claimed to be due PECO and shall cause funds of Owner held by PECO relating to the Properties to be paid to Owner or their designees and shall assist in the transferring of approved signatories on all Accounts.

12.    No Obligation to Third Parties.    None of the obligations and duties of PECO under the Agreement shall in any way or in any manner be deemed to create any obligations of PECO to any third party with the exception of Owner.

13.    Additional Services.    The services contemplated hereunder are normal and customary property management, leasing and general and construction management services.  If PECO is required or requested to perform additional services beyond the scope of this Agreement, then Owner shall pay PECO fees for these additional services at market rates as mutually agreed upon in advance by the parties.

14.    PECO'S Action on Tenant’s Default.    If the reasonably expected costs are less than a threshold to be agreed upon by PECO and Owner with respect to each Property (or with respect to leases or contracts less than certain thresholds with respect to each Property), PECO shall have the right, in its own name or in the name of Owner, to take any and all actions, including distraint, which PECO deems advisable and which Owner shall have the right to take, in the event of any tenant's breach of any covenant, provision or condition binding upon such tenant under its lease with Owner.  Nothing in this paragraph shall be deemed to require PECO to institute legal action against any tenant.  If the reasonably expected costs exceed the agreed upon thresholds, then Owner shall only be responsible for such costs if it pre-approves such actions.  In addition, if Owner desires to commence legal action notwithstanding PECO’s recommendation to the contrary, it shall pay for all costs and reasonable attorneys' fees in connection therewith.

15.    Binding Effect.    This Agreement and all the provisions hereof shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

16.    Entire Agreement.    This Agreement supersedes all agreements previously made between the parties relating to its subject matter.  There are no other understandings or agreements between them.

17.    Assignment.    PECO may delegate partially or in full its duties and rights under this Agreement but only with the prior written consent of Owner. Except as provided in the immediately preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns.

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

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19.    Other Business.    Nothing herein contained shall prevent PECO from engaging in other activities or business ventures, whether or not such other activities or ventures are in competition with Owner or the business of Owner, including, without limitation, property management activities for other parties (including other REITs) and the provision of services to other programs advised, sponsored or organized by PECO or its affiliates or third parties; nor shall this Agreement limit or restrict the right of any director, officer, employee, or stockholder of PECO or its affiliates to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association. PECO may, with respect to any investment in which the Owner is a participant, also render advice and service to each and every other participant therein. PECO shall report to the board of directors of REIT 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 PECO’s obligations to Owner and its obligations to or its interest in any other partnership, corporation, firm, individual, trust or association.

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

OP:            Phillips Edison - ARC Grocery Center Operating Partnership II, L.P.,
11501 Northlake Drive
Cincinnati, OH 45249
Attention:  Co-President

REIT:            Phillips Edison - ARC Grocery Center REIT II, Inc.
11501 Northlake Drive
Cincinnati, OH 45249
Attention:  Co-President

With a copy to:    Proskauer Rose LLP
Eleven Times Square
New York, New York 10036-8299
Attention:  Peter M. Fass, Esq.

PECO:            Phillips Edison & Company Ltd.
11501 Northlake Drive
Cincinnati, OH 45249
Attention:  President

With a copy to:    Phillips Edison & Company Ltd.
11501 Northlake Drive
Cincinnati, Ohio 45249
Attention:  Legal Department - General Counsel

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21.    Non-Waiver.    No delay or failure by either party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein.

22.    Headings.    Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.

23.    Severability.    If any term, covenant or condition of this Agreement or the application thereof to any Person or circumstance shall, to any extent, be held to be invalid or unenforceable, then the remainder of this Agreement, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held to be invalid or unenforceable, shall not be affected thereby, and each term, covenants or condition of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law.

24.    Governing Law.    This Agreement shall be construed in accordance with and governed by the laws of the State of Ohio. Any action to enforce this Agreement or an action for a breach of this Agreement shall be maintained in a binding arbitration proceeding before the American Arbitration Association in Cincinnati, Ohio.

25.    Counterpart.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

26.    Audit Right.  PECO shall cooperate with the REIT’s independent auditors with respect to the annual audit of the REIT for the purpose of expressing an opinion on the financial statements of the REIT (the “Annual REIT Audit”).  In addition, the REIT shall have the right to conduct an audit of PECO’s books and records solely with respect to the fees and expense reimbursements relating to the services provided pursuant to this Agreement (the “Fee Audit”).   The REIT may conduct the Fee Audit by using its own internal auditors or by employing independent auditors no more than once per year.  Costs associated with conducting such Fee Audits by internal or independent auditors, and costs of the Annual REIT Audit, shall be borne by REIT.  If any Fee Audit conducted by or on behalf of REIT reveals a discrepancy in excess of ten percent (10%), and greater than $10,000, for the aggregate fees and expense reimbursements payable during the period under audit pursuant to the Fee Audit, PECO shall be responsible for the reasonable expenses of such audit.

Signatures on next page.

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

On behalf of “OWNER”:

OP:

PHILLIPS EDISON - ARC GROCERY CENTER OPERATING PARTNERSHIP II, L.P.,
a Delaware limited partnership

By:    PE-ARC GROCERY CENTER OP GP II LLC,
a Delaware limited liability company
General Partner

By:  /s/ R. Mark Addy                       
Name:  R. Mark Addy                  
Title:  Co-President                      

REIT:

PHILLIPS EDISON - ARC GROCERY CENTER REIT II, INC.
a Maryland corporation

By:  /s/ R. Mark Addy                          
Name:  R. Mark Addy                     
Title:  Co-President                         

PECO:
 
PHILLIPS EDISON & COMPANY LTD.,
an Ohio limited liability company

By:  /s/ Robert F. Myers                         
Name:  Robert F. Myers                    
Title:  COO, President & Secretary   

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EXHIBIT A

MONTHLY REPORTING PACKAGE

For the current month and year to date, statements presenting, on a comparative basis, actual to budget (and/or forecast or other projections), including variance explanations for material variances: 
 
		
	•
	Executive Summary (operations, leasing, capital, tenant/market issues, other)

		
	•
	Balance Sheet

		
	•
	Income Statement

		
	•
	Aged Receivables and Delinquencies Report

		
	•
	Rent Rolls (as requested in writing by Owner)

		
	•
	Month to date and year to date variance report with explanations (budget to actual and actual to previous year actual)

		
	•
	List of any material accrual adjustment that may have been missed on the last business day of each month

		
	•
	Leasing Update

		
	•
	Consolidated Financial Statements

		
	•
	Reforecast operating projections and cash flow

		
	•
	Any additional reports that Owner shall reasonably request

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EXHIBIT B

QUARTERLY REPORTING PACKAGE

		
	•
	All items in the monthly reporting package.

		
	•
	Quarter to date variance reports with explanations compared to budget and same period prior year.

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

		
	•
	The originals (or copies, as Owner may request) of all contracts entered into by PECO on behalf of Owner during such period, if requested.

		
	•
	Consolidated financial statements.

		
	•
	Such other reports as may be required by Owner.

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EXHIBIT C

ANNUAL REPORTING PACKAGE

•All items in the quarterly reporting package which shall include annual operating statements 
and a list of variances and explanations of material variances (budget to actual and actual to previous year actual).
•All information required for tax filings, as determined by Owner.
•Certifications of assessment, testing and compliance with internal controls.
Any other reports reasonably requested by Owner.

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Form of Property Addendum
 
PROPERTY DESCRIPTION:

Property Name:

Street Address:

City, State, Zip Code:

County:

Owner Name:

Owner Tax ID#:

Tax Parcel ID#:

SERVICES TO BE PROVIDED:

□     Property Management Services as specified in this Agreement with:

     _____    No changes

_____    Changes as follows:  ________________________________________________
_________________________________________________________________
_________________________________________________________________
Threshold pursuant to Section 14:  _________________________________________________
_________________________________________________________________
_________________________________________________________________

Property Management Fees:
		
	□ 
	Property Management Fee: 4.5% of Gross Receipts, as specified in Section 6(a).

		
	□ 
	Property Management Fee (other calculation): __________________________________

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

		
	□ 
	Leasing Agreement duties as specified in Section 5(b) of the Agreement except as specified below:

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
		
	□ 
	Leasing Agreement Fees:

		
	□ 
	New Lease Commission Percentage: ______ percent (____%) of the gross amount of all base rent under the first _______ (__) years of the primary term of said leases, plus ______ percent (____%) of the gross amount of all base rent under the next _______ (__) years of 

22

the primary term, payable [e.g., one-half] upon the full execution of the lease and [one-half] upon tenant opening for business.  
		
	□ 
	Notwithstanding the foregoing, for any new lease for over _________ square feet, the leasing commission shall be at a fixed rate of _______ Dollars ($______) per square foot of leasable area.  

		
	□ 
	Renewals:  PECO shall not be paid a fee for any renewal or extension for which an option exists in the initial lease, provided that if, in connection with a lease renewal or extension, an outside, third party broker is owed a commission, Owner shall pay to PECO such commission for delivery to such broker.  If a renewal or extension is not provided for in the initial lease and PECO negotiates, on behalf of Owner, a renewal or extension, PECO shall be paid: _______________________

__________________________________________________________________
__________________________________________________________________
		
	□ 
	Expansions:    For each lease amendment or modification in which the tenant expands its premises, Owner will pay PECO a leasing commission of ______ percent (____%) of the gross amount of the base rent represented by such additional space under the balance of the then current term of the lease, payable [one-half] upon execution of the amendment or modification document and [one-half] upon the tenant opening for business from the expansion space.

		
	Co-Brokers:
	As leasing agent for the Properties, PECO may cooperate with independent real estate brokers or agents.  If PECO hires a co-broker in order to assist PECO in securing a tenant or if an opportunity is brought to PECO by an independent broker, PECO shall be paid in accordance with this Agreement and the co-broker’s commission will be the responsibility of PECO.  If the co-broker’s fee would exceed what PECO would otherwise be entitled to pursuant to the above fee schedule, such co-broker’s commission may be paid only upon written approval of Owner.  

		
	□ 
	Notwithstanding the preceding, in the event of the use of a co-broker, regardless of the amount of fee co-broker shall be entitled to, PECO shall be entitled to a fee of not less than ______ percent (____%) of the gross amount of all base rent under the first ___________ (___) years of the primary term of any applicable lease for which a co-broker was used, plus ______ percent (____%)of the gross amount of all base rent under the next ___________ (___) years of the primary term of any such lease, even if such fee plus the co-broker’s fee exceeds the percentage otherwise provided for above under “New Lease Commission Percentage.” 

		
	□ 
	Payment terms (if other than specified above):  ____________________

		
	□ 
	Construction Management Services as specified in Section 5(c) of the Agreement except as specified below.  In particular, the construction management will include the following (add attachments as necessary):

    
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________

23

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Fees
		
	□ 
	Construction management Fees:

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________

Examples: 

□     The Owner agrees to pay PECO a management fee in the amount of $                     within fifteen (15) 
days of acceptance of the Improvement by the Owner. 

□     As payment for the services to be performed by the PECO hereunder, Owner shall pay the PECO a 
fee of                          ($                    ), to be paid on the first day of each month of the term of the 
project in equal monthly installments of                          ($                    ), plus reimbursable expenses 
referenced in this Agreement. 

□     PECO agrees to collect and provide the Owner with invoices for the work completed on the 
Improvement on a monthly basis unless the Owner and PECO agree to a more frequent basis. Upon 
delivery of such invoices, the Owner will be solely responsible for promptly paying the company or 
companies performing the work. The contract form used by the Owner shall specify that PECO has 
no responsibility for payment. Reimbursable expenses as described in this Agreement shall be 
reimbursed to the PECO at cost plus ten percent (10%) and shall be billed on a monthly basis. 

24

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