Document:

Unassociated Document

    EXHIBIT 10.3

    FORM OF
AMENDED AND RESTATED
MANAGEMENT AGREEMENT

     

    This Amended and Restated Management Agreement is made and entered into as of the
   
day of            
, 2010
(this “Management Agreement”), by and among AMERICAN REALTY CAPITAL NEW
YORK RECOVERY REIT, INC., a Maryland corporation (the “Company”), NEW YORK
RECOVERY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “OP”), and NEW YORK
RECOVERY PROPERTIES, LLC, a Delaware limited liability company (the “Manager”).

     

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

     

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

     

    WHEREAS, the parties entered into the
Management Agreement on February 17, 2010 (the “Original Agreement”);
and

     

    WHEREAS, the parties have agreed to make certain amendments and
desire to amend and restate the Original Agreement;

     

    NOW, THEREFORE, in consideration of the
foregoing and of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree that the Original Agreement hereby is amended and restated in its entirety
to read as follows:

     

    ARTICLE
I.

     

    DEFINITIONS

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

    1.10          “Oversight Fees” has
the meaning set forth in Section 4.2
hereof.

     

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

     

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

     

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

     

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

     

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

     

    ARTICLE
II.

    APPOINTMENT
OF THE MANAGER; SERVICES TO BE PERFORMED

     

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

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

    
      	
               
      

            	
              (f)

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

            

    

     

    
      	
               
      

            	
              (g)

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

            

    

     

    
      	
               
      

            	
              (h)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

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

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

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

     

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

     

    
      	
               
      

            	
              (j)

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

            

    

       

    
      	
            	
              (k)

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

            

    

        

    
      	
               
      

            	
              (l)

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

            

    

     

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

     

    2.5           Accounting, Records and
Reports.

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (i)

            	
              Rental
      collection record;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Quarterly
      operating statement;

            

    

     

    
      	
               
      

            	
              (iii)

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

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
               
      

            	
              (v)

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

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (vi)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

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

            

    

     

    
      	
               
      

            	
              (iii)

            	
              expenditures
      for real estate taxes and assessments;
and

            

    

     

    
      	
               
      

            	
              (iv)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

     

    
      	
               
      

            	
              (e)

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

            

    

     

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

     

    ARTICLE
III.

    EXPENSES

     

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

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

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

     

    ARTICLE
IV.

    MANAGER’S
COMPENSATION

     

    4.1           Management
Fees.

     

    
      	
               
      

            	
              (a)

            	
              The
      Owner shall pay the Manager property management and leasing fees (the
      “Management
      Fees”), on a monthly basis, (i) for non-hotel Properties, equal to
      four percent (4.0%) of gross revenues collected from such properties, plus
      market-based leasing commissions applicable to the geographic location of
      the Property, and (ii) for all hotel Properties, a fee based on a
      percentage of gross revenues collected from such hotel at a market rate in
      light of the size, type and location of the hotel Property, plus a
      customary incentive fee based on performance.  Except as
      otherwise set forth herein, the Owner shall also reimburse the Manager for
      any costs and expenses incurred by the Manager in connection with managing
      the Properties.

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      4.2           Oversight
Fees.  If the Owner contracts directly with one or more third
parties for the services described in Section 2.3 above, the Owner will pay such
third parties customary market fees and shall pay the Manager oversight fees
(the “Oversight
Fees”) equal to 1.0% of the Gross Revenues
of the particular Property managed by such third parties. In no event shall the
Manager (including any Affiliate of the Manager) be entitled to both Management
Fees and Oversight Fees with respect to any particular
Property.

    

     

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

     

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

     

    ARTICLE
V.

    INSURANCE
AND INDEMNIFICATION

     

    5.1           Insurance to be
Carried.

     

    
      	
               
      

            	
              (a)

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

            

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (b)

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

            

    

     

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

     

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

     

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

     

    ARTICLE
VI.

    TERM;
TERMINATION

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

            	
              Immediately
      upon the occurrence of any of the
following:

            

    

     

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

     

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

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

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

     

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

     

    
      	
               
      

            	
              (a)

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

            

    

     

    
      	
               
      

            	
              (b)

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

            

    

     

    
      	
               
      

            	
              (c)

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

            

    

     

    
      	
               
      

            	
              (d)

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

            

    

    

    ARTICLE
VII.

    MISCELLANEOUS

     

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

    
      
        	 
      	 
      	 
      
	
                To
      the Owner:

              	 
      	
                American
      Realty Capital New York Recovery REIT, Inc.

              
	 
      	 
      	
                405
      Park Avenue

              
	 
      	 
      	
                New
      York, New York 10022

              
	 
      	 
      	
                Attention:
      William M. Kahane,

              
	 
      	 
      	
                                 President

              

      

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            	 
      	 
      	
                    with
      a copy to:

                  
	 
      	 
      	 
      
	 
      	 
      	
                    New
      York Recovery Operating Partnership, L.P.

                  
	 
      	 
      	
                    405
      Park Avenue

                  
	 
      	 
      	
                    New
      York, New York 10022

                  
	 
      	 
      	
                    Attention:
      William M. Kahane

                  
	 
      	 
      	 
      
	 
      	 
      	
                    with
      a copy to:

                  
	 
      	 
      	 
      
	 
      	 
      	
                    Proskauer
      Rose LLP

                  
	 
      	 
      	
                    1585
      Broadway

                  
	 
      	 
      	
                    New
      York, New York 10036

                  
	 
      	 
      	
                    Attention:
      Peter M. Fass, Esq.

                  
	 
      	 
      	
                                    
      James P. Gerkis, Esq. 

                  
	 	 	 
	
                    To
      the Manager:

                  	 
      	
                    New
      York Recovery Properties, LLC

                  
	 
      	 
      	
                    405
      Park Avenue

                  
	 
      	 
      	
                    New
      York, New York 10022

                  
	 
      	 
      	
                    Attention:
      William M. Kahane,

                  
	 
      	 
      	
                                     Chief
      Operating Officer

                  
	 
      	 
      	 
      
	 
      	 
      	
                    with
      a copy to:

                  
	 
      	 
      	 
      
	 
      	 
      	
                    Proskauer
      Rose LLP

                  
	 
      	 
      	
                    1585
      Broadway

                  
	 
      	 
      	
                    New
      York, New York 10036

                  
	 
      	 
      	
                    
                      Attention:
      Peter M. Fass, Esq.

                    

                  
	 	 	                
      James P. Gerkis, Esq.

          

        

      

    

     

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

     

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

     

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

     

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

     

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

     

    7.7           Counterparts.  This
Management Agreement may be executed (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.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    7.8           Entire
Agreement.  This Management Agreement contains the entire
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or written,
of any nature whatsoever with respect to the subject matter hereof.

     

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

     

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

     

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

     

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

     

    [Remainder
of page intentionally left blank]

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

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

    
      
        
          
            
              
                
                  
                    	 
      	 
      	 
      
	
                            AMERICAN
      REALTY CAPITAL NEW YORK RECOVERY REIT, INC.

                          
	 
      	 
      
	
                            By:

                          	 
      	 
      
	 
      	 
      	
                            Name:
      William M. Kahane

                          
	 
      	 
      	
                            Title:
      President

                          
	 
      
	
                            NEW
      YORK RECOVERY OPERATING PARTNERSHIP, L.P.

                          
	 
      	 
      
	
                            By:

                          	 
      	
                            American
      Realty Capital New York Recovery REIT, Inc.

                          
	 	 	 
	 
      	 
      	
                            its
      General Partner

                          
	 
      	 
      
	
                            By:

                          	 
      	
                            
                               

                            

                          
	 
      	 
      	
                            Name:
      William M. Kahane

                          
	 
      	 
      	
                            Title:
      President

                          
	 
      
	
                            NEW
      YORK RECOVERY PROPERTIES, LLC

                          
	 
      	 
      
	
                            By:

                          	 
      	
                            New
      York Recovery Special Limited Partnership, LLC

                          
	 	 	 
	 
      	 
      	
                            its
      Member

                          
	 
      	 
      
	
                            By:

                          	 
      	
                            American
      Realty Capital III, LLC

                          
	 	 	 
	 
      	 
      	
                            its
      Managing Member

                          
	 
      	 
      
	
                            By:

                          	 
      	 
      
	 
      	 
      	
                            Name:
      Nicholas S. Schorsch

                          
	 
      	 
      	
                            Title:
      Authorized
SignatoryUnassociated Document

    
      EXHIBIT
10.4

       

       

       

       

      FORM OF
EMPLOYEE AND DIRECTOR

      

      INCENTIVE
RESTRICTED SHARE PLAN

      

      OF

      

      AMERICAN
REALTY CAPITAL NEW YORK RECOVERY REIT, INC.

      

      
        SECTION 1.  PURPOSES
OF THE PLAN AND DEFINITIONS

      

      

      1.1  Purposes.  The
purposes of the Employee and Director Incentive Restricted Share Plan
(this “Plan”) of
American Realty Capital New York Recovery REIT, Inc. (the “Company”)
are to:

      

      (1)  provide
incentives to individuals chosen to receive share-based awards because of their
ability to improve operations and increase profits;

      

      (2)  encourage
selected persons to accept positions with or continue to provide services to the
Company, the Advisor and Affiliates of the Company; and

      

      (3)  increase
the interest of Directors in the Company’s welfare through their participation
in the growth in value of the Company’s Shares.

      

      To
accomplish these purposes, this Plan provides a means whereby employees of the
Advisor and Affiliates of the Company, officers of the Company, the Advisor and
Affiliates of the Company, Directors and other enumerated persons may receive
Awards.

      

      1.2  Definitions.  For
purposes of this Plan, the following terms have the following
meanings:

      

      “Advisor”
means the Person or Persons, if any, appointed, employed or contracted with by
the Company to be responsible for directing or performing the day-to-day
business affairs of the Company, including any Person to whom the Advisor
subcontracts substantially all such functions.  The initial Advisor is
New York Recovery Advisors, LLC.

      

      “Affiliate”
means any Person (other than an Advisor), whose employees, directors or officers
are eligible to receive Awards under this Plan.  The determination of
whether a Person is an Affiliate shall be made by the Board acting in its sole
and absolute discretion.

      

      “Applicable
Laws” means the requirements relating to the administration of Awards
under state corporation laws, U.S. federal and state securities laws, the Code,
any stock exchange or quotation system on which the Shares are listed or quoted
and the applicable laws of any foreign country or jurisdiction where Awards are,
or will be, granted under this Plan.

      

      “Articles of
Incorporation” means the articles of incorporation of the Company, as the
same may be amended from time to time.

      

      “Award”
means any award of Restricted Shares under this Plan.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Award
Agreement” means, with respect to each Award, the written agreement
executed by the Company and the Participant or other written document approved
by the Board setting forth the terms and conditions of the Award.

      

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

      

      “Code”
means the Internal Revenue Code of 1986, as amended from time to
time.

      

        “Committee” means the Board or a duly
appointed committee of the Board to which the Board has delegated its powers and
functions hereunder.

    

     

    
      “Company”
means American Realty Capital New York Recovery REIT, Inc.

      

      “Director”
means a person elected or appointed and serving as a member of the Board in
accordance with the Articles of Incorporation and the Maryland General
Corporation Law.

      

      “Director
Shares” means Shares issued under Section
6.

      

      “Effective
Date” has the meaning given it in Section
15.

      

      “Employment
Termination” means that a Participant has ceased, for any reason and with
or without cause, to be an employee or Director of, or a consultant to, the
Company, the Advisor or any Affiliate of the Company.  However, the
term “Employment Termination” shall not include a transfer of a Participant from
the Company to the Advisor or any Affiliate of the Company or the Advisor or
vice versa, or from any
such Affiliate to another, or a leave of absence duly authorized by the
Company unless the Board has provided otherwise.

      

      “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.

      

      “Fair Market
Value” means with respect to Shares:

      

      (i)  If
the Shares are listed on any established stock exchange or a national market
system, their Fair Market Value shall be the closing sales price for the Shares,
or the mean between the high bid and low asked prices if no sales were reported,
as quoted on such system or exchange (or, if the Shares are listed on more than
one exchange, then on the largest such exchange) for the date the value is to be
determined (or if there are no sales or bids for such date, then for the last
preceding business day on which there were sales or bids), as reported in The Wall Street
Journal.

      

      (ii)  If
the Shares are regularly quoted by a recognized securities dealer but selling
prices are not reported, or if there is no secondary trading market for the
Shares, their Fair Market Value shall be determined in good faith by the
Board.

      

      “Grant
Date” has the meaning set forth in Section
5.1(c).

      

      “Non-Employee
Director” means a person who is a Director of the Company, but who is not
also an employee or officer of the Company or the Advisor.

      

      “Participant”
means an eligible person who is granted an Award.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      “Person”
means an individual, a corporation, partnership, trust, association, or any
other entity.

      

      “Plan”
means this Employee and Director Incentive Restricted Share Plan.

      

      “Restricted
Shares” means an Award granted under Section
5.2.

      

      “Retainer”
has the meaning given it in Section
6.3.

      

      “Rule
16b-3” means Rule 16b-3 adopted under Section 16(b) or any successor
rule, as it may be amended from time to time, and references to paragraphs or
clauses of Rule 16b-3 refer to the corresponding paragraphs or clauses of Rule
16b-3 as it exists at the Effective Date or the comparable paragraph or clause
of Rule 16b-3 or successor rule, as that paragraph or clause may thereafter be
amended.

      

      “Section
16(b)” means Section 16(b) of the Exchange Act.

      

      “Section
409A
of the Code” means the
nonqualified deferred compensation rules under Section 409A of the Code and any
applicable Treasury regulation or other official guidance promulgated
thereunder.

      

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

      

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

      

      
        SECTION 2.  ELIGIBLE
PERSONS

      

      

      Every
person who, at or as of the Grant Date, is:

      

      (a)  a
full-time employee of the Advisor, the Company or any Affiliate of the
Company;

      

      (b)  an
officer of the Company, the Advisor or any Affiliate of the
Company;

      

      (c)  a
Director of the Company;

      

      (d)  a
director of the Advisor or any Affiliate of the Company; or

      

      (e)  someone
whom the Board designates as eligible for an Award because the
person:

      

      (i)  performs
bona fide consulting or advisory services for the Company, the Advisor or any
Affiliate of the Company pursuant to a written agreement (other than services in
connection with the offer or sale of securities in a capital-raising
transaction), and

      

      (ii)  has
a direct and significant effect on the financial development of the Company or
any Affiliate of the Company,

      

      shall be
eligible to receive Awards hereunder.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      Directors
of the Company who are not full-time employees are only eligible to receive
Director Shares under Section
6.

      

      
        SECTION 3.  SHARES
SUBJECT TO THIS PLAN

      

      

      The total
number of Shares that may be issued under Awards shall not exceed 5.0%
of the Company’s outstanding Shares on a fully diluted basis at any time and in
any event will not, exceed 7,500,00 Shares.  The number of Shares
reserved for issuance under this Plan is subject to adjustment in accordance
with the provisions for adjustment in Section
5.1.  If any Shares awarded under this Plan are forfeited for
any reason, the number of forfeited Shares shall again be available for purposes
of granting Awards under this Plan.

      

      
        SECTION 4.  ADMINISTRATION

      

      

      4.1  Administration.  This
Plan shall be administered by the Committee.

      

      4.2  Committee’s
Powers.  Subject to the express provisions of this Plan,
the Committee shall have the authority, in its sole
discretion:

      

      (a)  to
adopt, amend and rescind administrative and interpretive rules and regulations
relating to this Plan;

      

      (b)  to
determine the eligible persons to whom, and the time or times at which, Awards
shall be granted;

      

      (c)  to
determine the number of Shares that shall be the subject of each
Award;

      

      (d)  to
determine the terms and provisions of each Award (which need not be identical)
and any amendments thereto, including provisions defining or otherwise relating
to:

      

      (i)  the
extent to which the transferability of Shares issued or transferred pursuant to
any Award is restricted;

      

      (ii)  the
effect of Employment Termination on an Award;

      

      (iii)  the
effect of approved leaves of absence; and

      

      (iv)  to
construe the respective Award Agreements and this Plan.

      

        
(e)  to make determinations of the Fair Market Value of
Shares;

      

        
(f)  to waive any provision, condition or limitation set forth
in an Award Agreement;

      

        
(g)  to delegate its duties under this Plan to such agents as
it may appoint from time to time; and

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

        
(h)  to make all other determinations, perform all other acts
and exercise all other powers and authority necessary or advisable for
administering this Plan, including the delegation of those ministerial acts and
responsibilities as the Committee deems appropriate.

      

      The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan, in any Award or in any Award Agreement in the manner
and to the extent it deems necessary or desirable to implement this Plan, and
the Committee shall be the sole and final judge of that necessity or
desirability.  The determinations of the Committee on the matters
referred to in this Section 4.2 shall be
final and conclusive.  Notwithstanding any provision in this Plan to the
contrary, Awards will be made to Non-Employee Directors only under Section 6 of this
Plan.  In addition, except as provided in Section 5.1(b) herein, the
Committee may not in any manner exercise discretion under this Plan with respect
to any Awards made to Non-Employee Directors.

      

      4.3  Term of
Plan.  No Awards shall be granted under this Plan after 10
years from the Effective Date of this Plan.

      

      
        SECTION 5.  CERTAIN
TERMS AND CONDITIONS OF AWARDS

      

      

      5.1  All
Awards.  All Awards shall be subject to the following terms and
conditions:

      

      (a)  Changes in Capital
Structure.  If the number of outstanding Shares is increased by
means of a share dividend payable in Shares, a share split or other subdivision
or by a reclassification of Shares, then, from and after the record date for
such dividend, subdivision or reclassification, the number and class of Shares
subject to this Plan shall be increased in proportion to such increase in
outstanding Shares.  If the number of outstanding Shares is decreased
by means of a reverse share split or other combination or by a reclassification
of Shares, then, from and after the record date for such combination or
reclassification, the number and class of Shares subject to this Plan shall be
decreased in proportion to such decrease in outstanding Shares.

      

      (b)  Certain Corporate
Transactions.   In the event of any change in the capital
structure or business of the Company by reason of any recapitalization,
reorganization, merger, consolidation, split-up, subdivision, combination,
exchange of Shares or any similar change affecting the Company’s capital
structure or business, then the aggregate number and kind of Shares which
thereafter may be issued under this Plan shall be appropriately adjusted
consistent with such change in such manner as the Committee or the Board may
deem equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, Participants under this Plan, and any such
adjustment determined by the Committee or the Board in good faith shall be
binding and conclusive on the Company and all Participants and employees and
their respective heirs, executors, administrators, successors and
assigns.

      

      (c)  Grant
Date.  Each Award Agreement shall specify the date as of which
it shall be effective (the “Grant
Date”).

      

      (d)  Vesting.  Each
Award shall vest, and any restrictions thereunder shall lapse, as the case may
be, at such times and in such amounts as may be specified by the Committee in
the applicable Award Agreement.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      (e)  Nonassignability of
Rights.  Awards shall not be transferable other than with the
consent of the Committee or the Board or by will or the laws of descent and
distribution.

      

      (f)  Termination of Employment
from the Company, the Advisor or any Affiliate of the
Company.  The Committee shall establish, in respect of each
Award when granted, the effect of an Employment Termination on the rights and
benefits thereunder and in so doing may, but need not, make distinctions based
upon the cause of termination (such as retirement, death, disability or other
factors) or which party effected the termination (the employer or the
employee).

      

      (g)  Minimum Purchase
Price.  Notwithstanding any provision of this Plan to the
contrary, if authorized but previously unissued Shares are issued under this
Plan, such Shares shall not be issued for a consideration which is less than as
permitted under Applicable Law, and in no event, shall such consideration be
less than the par value per Share multiplied by the number of Shares to be
issued.

      

      (h)  Other
Provisions.  Each Award Agreement may contain such other terms,
provisions and conditions not inconsistent with this Plan, as may be determined
by the Committee.

      

      5.2  Restricted
Shares.  Restricted Shares shall be subject to the following
terms and conditions:

      

      (a)  Grant.  The
Committee may grant one or more Awards of Restricted Shares to any Participant
other than Non-Employee Directors.  Each Award of Restricted Shares
shall specify the number of Shares to be issued to the Participant, the date of
issuance and the restrictions imposed on the Shares including the conditions of
release or lapse of such restrictions.  Upon the issuance of
Restricted Shares, the Participant may be required to furnish such additional
documentation or other assurances as the Committee may require to enforce
restrictions applicable thereto.

      

      (b)  Restrictions.  Except
as specifically provided elsewhere in this Plan or the Award Agreement regarding
Restricted Shares, Restricted Shares may not be sold, assigned, transferred,
pledged or otherwise disposed of or encumbered, either voluntarily or
involuntarily, until the restrictions have lapsed and the rights to the Shares
have vested.  The Committee may in its sole discretion provide for the
lapse of such restrictions in installments and may accelerate or waive such
restrictions, in whole or in part, based on service, performance or such other
factors or criteria as the Committee may determine.

      

      (c)  Dividends.  Unless
otherwise determined by the Committee, cash dividends with respect to Restricted
Shares shall be paid to the recipient of the Award of Restricted Shares on the
normal dividend payment dates, and dividends payable in Shares shall be paid in
the form of Restricted Shares having the same terms as the Restricted Shares
upon which such dividend is paid.  Each Award Agreement for Awards of
Restricted Shares shall specify whether and, if so, the extent to which the
Participant shall be obligated to return to the Company any cash dividends paid
with respect to any Restricted Shares which are subsequently
forfeited.

      

      (d)  Forfeiture of Restricted
Shares.  Except to the extent otherwise provided in the
applicable Award Agreement, when a Participant’s Employment Termination occurs,
the Participant shall automatically forfeit all Restricted Shares still subject
to restriction.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        SECTION 6.  DIRECTOR
SHARES

      

       

      
        6.1 Automatic
Grant.  Non-Employee Directors shall receive 3,000 Restricted Shares
on the date of each annual stockholders’ meeting.

        

        6.2 Vesting. 
Notwithstanding the provisions of Section 5.1(d), Awards of Restricted
Shares made to Non-Employee Directors shall vest over a five-year period
following the first anniversary of the Grant Date in increments of 20% per
annum.

      

       

      6.3  Election.  The
Company shall pay to each individual who is a Non-Employee Director an annual
fee in the amount set from time to time by the Board (the “Retainer”).  Each
Non-Employee Director shall be entitled to receive his or her Retainer
exclusively in cash, exclusively in unrestricted Shares (“Director
Shares”) or any portion in cash and Director Shares.  Following
the approval of this Plan by the stockholders of the Company, each Non-Employee
Director shall be given the opportunity, during the month in which the
Non-Employee Director first becomes a Non-Employee Director, and during each
December thereafter, to elect among these choices for the balance of the
calendar year (in the case of the election made during the month the
Non-Employee Director first becomes a Non-Employee Director) and for the ensuing
calendar year (in the case of a subsequent election made during any
December).  If the Non-Employee Director chooses to receive at least
some of his or her Retainer in Director Shares, the election shall also indicate
the percentage of the Retainer to be paid in Director Shares.  If a
Non-Employee Director makes no election during his or her first opportunity to
make an election, the Non-Employee Director shall be assumed to have elected to
receive his or her entire Retainer in cash.

      

      6.4  Issuance.  The
Company shall make the first issuance of Director Shares to electing Directors
on the first business day following the last day of the full calendar quarter
following the approval of this Plan by the Company’s
stockholders.  Subsequent issuances of Director Shares shall be made
on the first business day of each subsequent calendar quarter and shall be made
to all persons who are Non-Employee Directors on that day except any
Non-Employee Director whose Retainer is to be paid entirely in
cash.  The number of Shares issuable to those Non-Employee Directors
on the relevant date indicated above shall equal:

      

      (% x
R/4)/P, where:

      

      % = the
percentage of the Non-Employee Director’s Retainer that the Non-Employee
Director elected or is deemed to have elected to receive in the form of Director
Shares, expressed as a decimal;

      

      R = the
Non-Employee Director’s Retainer for the year during which the issuance occurs;
and

      

      P = the
Fair Market Value.

      

      Director
Shares shall not include any fractional Shares.  Fractions shall be
rounded to the nearest whole Share (with one-half being rounded
upward).

      

      
        SECTION 7.  SECURITIES
LAWS

      

      

      Nothing
in this Plan or in any Award or Award Agreement shall require the Company to
issue any Shares with respect to any Award if, in the opinion of counsel for the
Company, that issuance could constitute a violation of any Applicable
Laws.  As a condition to the grant of any Award, the Company may
require the Participant (or, in the event of the Participant’s death, the
Participant’s legal representatives, heirs, legatees or distributees) to provide
written representations concerning the Participant’s (or such other person’s)
intentions with regard to the retention or disposition of the Shares covered by
the Award and written covenants as to the manner of disposal of such Shares as
may be necessary or useful to ensure that the grant or disposition thereof will
not violate the Securities Act, any other law or any rule of any applicable
securities exchange or securities association then in effect.  The
Company shall not be required to register any Shares under the Securities Act or
register or qualify any Shares under any state or other securities
laws.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      
        SECTION 8.  EMPLOYMENT
OR OTHER RELATIONSHIP

      

      

      Nothing
in this Plan or any Award shall in any way interfere with or limit the right of
the Company, the Advisor or any Affiliate of the Company to terminate any
Participant’s employment or status as a consultant or Director at any time, nor
confer upon any Participant any right to continue in the employ of, or as a
Director or consultant of, the Company, the Advisor or any Affiliate of the
Company.

      

      
        SECTION 9.  AMENDMENT,
SUSPENSION AND TERMINATION OF THIS PLAN

      

      

      The Board
may at any time amend, suspend or discontinue this Plan, provided that such
amendment, suspension or discontinuance meets the requirements of Applicable
Laws, including without limitation, any applicable requirements for
stockholder approval.  Notwithstanding the above, an amendment,
suspension or discontinuation shall not be made if it would impair the rights of
any Participant under any Award previously granted, without the Participant’s
consent, except to conform this Plan and Awards granted to the requirements of
Applicable Laws.  The provisions of this Plan relating to Awards for
Non-Employee Directors may not be amended more than once each six
months.  Notwithstanding any provision of the Plan to the
contrary, if the Board determines that any Award may be subject to
Section 409A of the Code, the Board may adopt such amendment to the Plan
and the applicable Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take
any other actions that the Board determines are necessary or appropriate,
without the consent of the Participant, to (a) exempt the Award from
Section 409A of the Code and/or preserve the intended tax treatment of the
benefits provided with respect to the Award, or (b) comply with the
requirements of Section 409A of the Code.

      

      
        SECTION 10.  LIABILITY
AND INDEMNIFICATION OF THE BOARD

      

      

      No person
constituting, or member of the group constituting, the Board shall be liable for
any act or omission on such person’s part, including but not limited to the
exercise of any power or discretion given to such member under this Plan, except
for those acts or omissions resulting from such member’s gross negligence or
willful misconduct.  The Company shall indemnify each present and
future person constituting, or member of the group constituting, the Board
against, and each person or member of the group constituting the Board shall be
entitled without further act on his or her part to indemnity from the Company
for, all expenses (including the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation)
reasonably incurred by such person in connection with or arising out of any
action, suit or proceeding to the fullest extent permitted by law and by the
Articles of Incorporation and Bylaws of the Company.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      
        SECTION 11.  SEVERABILITY

      

      

      If any
provision of this Plan is held to be illegal or invalid for any reason, that
illegality or invalidity shall not affect the remaining portions of this Plan,
but such provision shall be fully severable and this Plan shall be construed and
enforced as if the illegal or invalid provision had never been included in this
Plan.  Such an illegal or invalid provision shall be replaced by a
revised provision that most nearly comports to the substance of the illegal or
invalid provision.  If any of the terms or provisions of this Plan or
any Award Agreement conflict with the requirements of Applicable Laws, those
conflicting terms or provisions shall be deemed inoperative to the extent they
conflict with Applicable Law.

      

      
        SECTION 12.  SECTION
409A OF THE CODE

      

      

      Awards
granted under the Plan are intended to be exempt from Section 409A of the
Code.  To the extent that the Plan is not exempt from the requirements
of Section 409A of the Code, the Plan is intended to comply with the
requirements of Section 409A of the Code and shall be limited, construed and
interpreted in accordance with such intent.  Notwithstanding the
foregoing, in no event whatsoever shall the Company be liable for any additional
tax, interest or penalty that may be imposed on a Participant by Section 409A of
the Code or any damages for failing to comply with Section 409A of the
Code.

      

      
        SECTION 13.  WITHHOLDING

      

      

      The
Company shall have the right to deduct from any payment to be made to a
Participant, or to otherwise require, prior to the issuance or delivery of any
Shares or the payment of any cash hereunder, payment by the Participant of, any
federal, state or local taxes required by law to be withheld.  Upon
the vesting of Restricted Shares, or upon making an election under Section 83(b)
of the Code, a Participant shall pay all required withholding to the
Company.  The Board may permit any such statutory withholding
obligation with regard to any Participant to be satisfied by reducing the number
of Shares otherwise deliverable or by delivering Shares already
owned.

      

      
        SECTION 14.  GOVERNING
LAW

      

      

      This Plan
shall be governed and construed in accordance with the laws of the State of
Maryland (regardless of the law that might otherwise govern under applicable
principles of conflict of laws).

      

      
        SECTION 15.  EFFECTIVE
DATE AND PROCEDURAL HISTORY

      

      

      This Plan
was originally approved by the Company’s Board on
                ,
2010.  It was approved in that form by the holders of the Company’s
voting Shares on
                ,
2010 (the “Effective
Date”).

       

      
        
          
          

        

        
          9

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