Document:

ARC NYCR 06.30.2014 10-Q 10.2

Exhibit 10.2

ADVISORY AGREEMENT 
 
BY AND AMONG 
 
AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC., 
 
NEW YORK CITY OPERATING PARTNERSHIP, L.P., 
 
AND 
 
NEW YORK CITY ADVISORS, LLC 
 
Dated as of April 24, 2014

	
				
	 
	TABLE OF CONTENTS
	 

	 
	Page
	 

	1.
	DEFINITIONS
	1
	

	2.
	APPOINTMENT
	7
	

	3.
	DUTIES OF THE ADVISOR
	7
	

	4.
	AUTHORITY OF ADVISOR
	9
	

	5.
	FIDUCIARY RELATIONSHIP
	9
	

	6.
	NO PARTNERSHIP OR JOINT VENTURE
	9
	

	7.
	BANK ACCOUNTS
	9
	

	8.
	RECORDS; ACCESS
	10
	

	9.
	LIMITATIONS ON ACTIVITIES
	10
	

	10.
	FEES
	10
	

	11.
	EXPENSES
	12
	

	12.
	OTHER SERVICES
	14
	

	13.
	REIMBURSEMENT TO THE ADVISOR
	14
	

	14.
	OTHER ACTIVITIES OF THE ADVISOR
	14
	

	15.
	THE AMERICAN REALTY CAPITAL NAME
	14
	

	16.
	TERM OF AGREEMENT
	15
	

	17.
	TERMINATION BY THE PARTIES
	15
	

	18.
	ASSIGNMENT TO AN AFFILIATE
	15
	

	19.
	PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION
	15
	

	20.
	INCORPORATION OF THE ARTICLES OF INCORPORATION AND THE OPERATING PARTNERSHIP AGREEMENT
	16
	

	21.
	INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP
	16
	

	22.
	INDEMNIFICATION BY ADVISOR
	17
	

	23.
	NOTICES
	17
	

	24.
	MODIFICATION
	18
	

	25.
	SEVERABILITY
	18
	

	26.
	GOVERNING LAW
	18
	

	27.
	ENTIRE AGREEMENT
	18
	

	28.
	NO WAIVER
	18
	

	29.
	PRONOUNS AND PLURALS
	18
	

	30.
	HEADINGS
	18
	

	31.
	EXECUTION IN COUNTERPARTS
	19
	

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ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (this “Agreement”) dated as of April 24, 2014, is entered into among American Realty Capital New York City REIT, Inc., a Maryland corporation (the “Company”), New York City Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”), and New York City 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 general partner of the Operating Partnership;
WHEREAS, the Company and the Operating Partnership desire to avail themselves of the experience, sources of information, advice, assistance and certain facilities of the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board of Directors of the Company, all as provided herein; and
WHEREAS, the Advisor is willing to render such services, subject to the supervision of the Board of Directors of the Company, on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:
1.DEFINITIONS.  As used in this Agreement, the following terms have the definitions set forth below:
“Acquisition Expenses” means any and all expenses, exclusive of Acquisition Fees, incurred by the Company, the Operating Partnership, the Advisor or any of their Affiliates in connection with the selection, evaluation, acquisition, origination, making or development of any Investments, whether or not acquired, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses and title insurance premiums.
“Acquisition Fee” means the fee payable to the Advisor or its Affiliates pursuant to Section 10(a).
“Advisor” means New York City Advisors, LLC, a Delaware limited liability company, any successor advisor to the Company and the Operating Partnership, or any Person to which New York City Advisors, LLC or any successor advisor subcontracts substantially all its functions.  Notwithstanding the foregoing, a Person hired or retained by New York City 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 New York City 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.

“Agreement” has the meaning set forth in the preamble, and such term shall include any amendment or supplement hereto from time to time.
“Annual Subordinated Performance Fee” means the fees payable to the Advisor or its assignees pursuant to Section 10(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.
“By-laws” means the by-laws of the Company, as amended and as the same are in effect from time to time.
“Cause” means (i) fraud, criminal conduct, willful misconduct or illegal or negligent breach of fiduciary duty by the Advisor, or (ii) if any of the following events occur:  (A) the Advisor shall breach any material provision of this Agreement, and after written notice of such breach, shall not cure such default within thirty (30) days or have begun action within thirty (30) days to cure the default which shall be completed with reasonable diligence; (B) the Advisor shall be adjudged bankrupt or insolvent by a court of competent jurisdiction, or an order shall be made by a court of competent jurisdiction for the appointment of a receiver, liquidator, or trustee of the Advisor, for all or substantially all its property by reason of the foregoing, or if a court of competent jurisdiction approves any petition filed against the Advisor for reorganization, and such adjudication or order shall remain in force or unstayed for a period of thirty (30) days; or (C) the Advisor shall institute proceedings for voluntary bankruptcy or shall file a petition seeking reorganization under the federal bankruptcy laws, or for relief under any law for relief of debtors, or shall consent to the appointment of a receiver for itself or for all or substantially all its property, or shall make a general assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts, generally, as they become due.
“Change of Control” means a change of control of the Company of a nature that would be required to be reported in response to the disclosure requirements of Schedule 14A of Regulation 14A promulgated under the 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.

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“Competitive Real Estate Commission” means a real estate or brokerage commission for the purchase or sale of an asset which is reasonable, customary and competitive in light of the size, type and location of the asset.
“Contract Purchase Price” has the meaning set forth in the Articles of Incorporation.
“Contract Sales Price” means the total consideration received by the Company for the sale of an Investment.
“Dealer Manager” means Realty Capital Securities, LLC, or such other Person selected by the Board of Directors to act as the dealer manager for the Offering.
“Dealer Manager Fee” means 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.
“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 13.
“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 13.
“Financing Coordination Fee” means the fee payable to the Advisor or its Affiliates pursuant to Section 10(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, volume discounts, any marketing support and due diligence expense reimbursement or Organization and Offering Expenses.  For the purpose of computing Gross Proceeds, the purchase price of any Share for which reduced Selling Commissions are paid to the Dealer Manager or a Soliciting Dealer (where net proceeds to the Company are not reduced) shall be deemed to be the full amount of the offering price per Share pursuant to the Prospectus for such Offering without reduction.
“Indemnitee” has the meaning set forth in Section 21.
“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 and (iii) engaged by the Company with the Board’s approval to appraise the Real Properties and other Investments pursuant to the Valuation Guidelines.

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“Insourced Acquisition Expenses” means Acquisition Expenses incurred in connection with services performed by the Advisor or any of its Affiliates.
“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.
“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.
“Market Check” means an analysis comparing (a) the amount of Insourced Acquisition Expenses paid in the previous calendar year to the Advisor or any of its Affiliates with (b) the projected amount of Acquisition Expenses for the following calendar year assuming that a Person other than the Advisor or its Affiliates performs substantially similar services for a substantially similar amount of Investments.
“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, impairments or other similar non‐cash reserves and excluding any gain from the sale of the Company’s assets.
“Notice” has the meaning set forth in Section 23.
“Offering” means 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 April 24, 2014, among the Company, New York City Special Limited Partnership, LLC, and the Advisor, 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 Commission and the Dealer Manager Fee) to be paid by the Company in connection with an Offering, including legal, accounting, printing, mailing and filing fees, charges of the escrow holder and transfer agent, charges of the Advisor for administrative services related to the issuance of Shares in an Offering, reimbursement of the Advisor for costs in connection with preparing supplemental sales materials, the cost of bona fide training and education meetings held by the Company (primarily the travel, meal and lodging costs of the registered representatives of broker-dealers), attendance and sponsorship fees and cost reimbursement for employees of the Company’s Affiliates to attend retail 

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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‐dealers’ 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.
“Prospectus” means a final prospectus of the Company filed pursuant to Rule 424(b) of the Securities Act, as the same may be amended or supplemented from time to time.
“Real Estate Assets” means any investment by the Company or the Operating Partnership in unimproved and improved Real Property (including fee or leasehold interests, options and leases), directly, through one or more subsidiaries or through a Joint Venture.
“Real Estate Commission” means the fees payable to the Advisor pursuant to Section 10(c).
“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. 333‐194135) 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 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 

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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.
“Sponsor” means American Realty Capital III, LLC, a Delaware limited liability company.
“Stockholders” means the holders of record of the Shares as maintained on the books and records of the Company or its transfer agent.
“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.
“Total Return to Stockholders” means receipt by Stockholders of an annual cumulative, pre-tax, non‐compounded return on the capital contributed by Stockholders in excess of a return of capital contributions to Stockholders.
“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 13.
2.    APPOINTMENT.  The Company and the Operating Partnership hereby appoint the Advisor to serve as their advisor to perform the services set forth herein on the terms and subject to the conditions set forth in this Agreement and subject to the supervision of the Board, and the Advisor hereby accepts such appointment.
3.    DUTIES OF THE ADVISOR.  The Advisor will use its reasonable best efforts to present to the Company and the Operating Partnership potential investment opportunities and to provide a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board.  In performance of this undertaking, subject to the supervision of the Board 

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and consistent with the provisions of the Articles of Incorporation, By-laws and the Operating Partnership Agreement, the Advisor, directly or indirectly, will:
(a)    serve as the Company’s and the Operating Partnership’s investment and financial advisor;
(b)    provide the daily management for the Company and the Operating Partnership and perform and supervise the various administrative functions necessary for the day-to-day management of the operations of the Company and the Operating Partnership;
(c)    investigate, select and, on behalf of the Company and the Operating Partnership, engage and conduct business with and supervise the performance of such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder (including consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, 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 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 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 

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any of their subsidiaries, but in no event in such a manner so that the Advisor shall be acting as broker-dealer or underwriter; provided, however, that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company, the Operating Partnership or any of their subsidiaries;
(i)    obtain reports (which may, but are not required to, be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of Investments or contemplated investments of the Company and the Operating Partnership;
(j)    from time to time, or at any time reasonably requested by the Board, make reports to the Board of its performance of services to the Company and the Operating Partnership under this Agreement, including reports with respect to potential conflicts of interest involving the Advisor or any of its Affiliates;
(k)    provide the Company and the Operating Partnership with all necessary cash management services;
(l)    deliver to, or maintain on behalf of, the Company copies of all appraisals obtained in connection with the investments in any Real Estate Assets as may be required to be obtained by the Board;
(m)    notify the Board of all proposed material transactions before they are completed;
(n)    effect any private placement of OP Units, tenancy-in-common (TIC) or other interests in Investments as may be approved by the Board;
(o)    perform investor-relations and Stockholder communications functions for the Company;
(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;
(t)    supervise one or more Independent Valuation Advisor and, if and when necessary, recommend to the Board its replacement;
(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 or any of its Affiliates, as well as any investments that have been made by the Advisor or any of its 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;

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(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 Affiliate remains responsible for the performance of the duties set forth in this Section 3.
4.    AUTHORITY OF ADVISOR.
(a)    Pursuant to the terms of this Agreement (including the restrictions included in this Section 4 and in Section 9), and subject to the continuing and exclusive authority of the Board over the supervision of the Company, the Company, acting on the authority of the Board of Directors, hereby delegates to the Advisor the authority to perform the services described in Section 3.
(b)    Notwithstanding anything herein to the contrary, all Investments will require the prior approval of the Board, any particular Directors specified by the Board or any committee of the Board specified by the Board, as the case may be.
(c)    If a transaction requires approval by the Independent Directors, the Advisor will deliver to the Independent Directors all documents and other information reasonably required by them to evaluate properly the proposed transaction.
(d)    The Board may, at any time upon the giving of Notice to the Advisor, modify or revoke the authority set forth in this Section 4; provided, however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company or the Operating Partnership prior to the date of receipt by the Advisor of such notification.
5.    FIDUCIARY RELATIONSHIP.  The Advisor, as a result of its relationship with the Company and the Operating Partnership pursuant to this Agreement, has a fiduciary responsibility and duty to the Company and its Stockholders.
6.    NO PARTNERSHIP OR JOINT VENTURE.  Except as provided in Section 10(h), the parties to this Agreement are not partners or joint venturers with each other and nothing herein shall be construed to make them partners or joint venturers or impose any liability as such on either of them.
7.    BANK ACCOUNTS.  The Advisor may establish and maintain one or more bank accounts in the name of the Company or the Operating Partnership and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company or the Operating Partnership, under such terms and conditions as the Board may approve; provided, that no funds shall be commingled with the funds of the Advisor; and, upon request, the Advisor shall render appropriate accountings of such collections and payments to the Board and to the auditors of the Company.
8.    RECORDS; ACCESS.  The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Directors and by counsel, auditors and authorized agents of the Company, at any time and from time to time.  The Advisor shall at all reasonable times have access to the books and records of the Company and the Operating Partnership.

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9.    LIMITATIONS ON ACTIVITIES.  Notwithstanding anything herein to the contrary, the Advisor shall refrain from taking any action which, in its sole judgment, or in the sole judgment of the Company, made in good faith, would (a) adversely affect the status of the Company as a REIT, unless the Board has determined that REIT qualification is not in the best interests of the Company and its Stockholders, (b) subject the Company to regulation under the Investment Company Act of 1940, as amended, or (c) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, the Operating Partnership or the Shares, or otherwise not be permitted by the Articles of Incorporation or By-laws, except if such action shall be ordered by the Board, in which case the Advisor shall notify promptly the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board.  In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given.
10.    FEES.
(a)    Acquisition Fee.  Subject to Section 10(b), the Company shall pay an Acquisition Fee to the Advisor or its Affiliates as compensation for services rendered in connection with the investigation, selection and acquisition (by purchase, investment or exchange) of Investments.  If the Advisor is terminated without Cause pursuant to Section 17(a), the Advisor or its 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 and one-half percent (1.5%) 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 10(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.  The Acquisition Fee shall cover services rendered by the Advisor or its Affiliates until such time as a letter of intent to purchase such Investment has been submitted to the seller by the Advisor and the Advisor has presented a detailed investment memorandum to the Board of Directors for approval.  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 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)    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, further, 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.

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(c)    Real Estate Commission.  In connection with a Sale of a Real Estate Asset in which the Advisor or any Affiliate or agent of the Advisor provides a substantial amount of services, as determined by the Independent Directors, the Company shall pay to the Advisor or its assignees a Real Estate Commission up to the lesser of (i) two percent (2.0%) of the Contract Sales Price of such Real Estate Asset or (ii) one-half of the Competitive Real Estate Commission paid if a non-Affiliate broker is also involved; provided, however, that in no event may the Real Estate Commission 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 0.75% of the amount made available and/or outstanding under any such Loan, including any assumed Loan.  The Advisor may reallow some of or all this Financing Coordination Fee to reimburse third parties with whom it may subcontract to procure any such Loan.
(e)    Annual Subordinated Performance Fee.  The Company may pay the Advisor an Annual Subordinated Performance Fee calculated on the basis of the Total Return to Stockholders, payable monthly in arrears in any year in which the Company’s Total Return to Stockholders exceeds six percent (6%) per annum, in an amount equal to fifteen percent (15%) of the excess Total Return to Stockholders, provided, that the Annual Subordinated Performance Fee shall not exceed ten percent (10%) of the aggregate Total Return to Stockholders for such year.
(f)    Payment of Fees.  In connection with the Acquisition Fee, Real Estate Commission, Annual Subordinated Performance Fee and Financing Coordination Fee, the Company shall pay such fees to the Advisor or its assignees 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 Selling Commissions 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, any Affiliate of the Advisor or any of the Advisor’s directors or officers has a direct or indirect interest, then such transaction shall be approved by a majority of the Board not otherwise interested in such transaction, including a majority of the Independent Directors.
(ii)    Neither the Company nor the Operating Partnership shall make Loans to the Advisor or any Affiliate thereof or any officers of the Company or Directors 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 any officers of the Company or Directors, 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.
(iii)    The Company and the Operating Partnership may enter into Joint Ventures with the 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 

11

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, neither the Company nor the Operating Partnership shall pay any compensation or other remuneration to the Advisor or its 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 (or its assignees’) management of the Operating Partnership’s assets.
(i)    Limitation on Insourced Acquisition Expenses.
(i)    The total of all Insourced Acquisition Expenses with respect to any Investment shall initially be fixed at, and shall not exceed, 0.50% of the Contract Purchase Price of the Investment or 0.50% of the amount advanced for an Investment, which the Company shall pay to the Advisor or its Affiliate at the closing of each Investment.
(ii)    The total of all Insourced Acquisition Expenses for any calendar year shall initially be fixed at, and shall not exceed, 0.50% of the Contract Purchase Price of the Investments acquired during such period or 0.50% of the amounts advanced for the Investments made during such period (to be prorated for any partial calendar year); provided, however, within a reasonable period of time following the end of each such calendar year, the Company shall perform a Market Check and provide the results thereof to the Advisor within a reasonable period of time and, if the result of the Market Check is that the projected amount of Acquisition Expenses that would be incurred if substantially similar services with respect to a substantially similar amount of properties were to be provided by a Person other than the Advisor or any of its Affiliates during the subsequent calendar year is lower than the amount of Insourced Acquisition Expenses paid to the Advisor or its Affiliates during the previous calendar year, either (A) the Advisor shall agree to reduce the cap on the Insourced Acquisition Expenses until the next Market Check such that the cap on Insourced Acquisition Expenses does not exceed the projected amount of Acquisition Expenses that would be incurred if substantially similar services with respect to a substantially similar amount of properties were to be provided by a Person other than the Advisor or any of its Affiliates during the subsequent calendar year or (B) the Company may outsource to a Person other than the Advisor or its Affiliate certain services previously provided by the Advisor or its Affiliates until the next Market Check.
11.    EXPENSES.
(a)    In addition to the compensation paid to the Advisor pursuant to Section 10, the Company or the Operating Partnership shall pay directly or reimburse the Advisor for all the expenses paid or incurred by the Advisor or its Affiliates in connection with the services it provides to the Company and the Operating Partnership pursuant to this Agreement, including, the following:
(iii)    Organization and Offering Expenses, including third-party due diligence fees related to the Primary Offering, as set forth in detailed and itemized invoices; provided, however, that the Company shall not reimburse the Advisor to the extent such reimbursement would cause the total amount of Organization and Offering Expenses paid by the Company and the Operating Partnership to exceed two percent (2.0%) of the Gross Proceeds raised in all Primary Offerings;

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(iv)    Acquisition Expenses, subject to the limitations set forth in Section 10(b), and a specific reimbursement to the Advisor not to exceed 0.10% of the Contract Purchase Price of an Investment for legal expenses it or its Affiliates incur in connection with the selection, evaluation and acquisition of an Investment, also subject to the limitations set forth in Section 10(b);
(v)    the actual cost of goods and services used by the Company and obtained from entities not Affiliated with the Advisor;
(vi)    interest and other costs for Loans, including discounts, points and other similar fees;
(vii)    taxes and assessments on income of the Company or Investments;
(viii)    costs associated with insurance required in connection with the business of the Company or by the Board;
(ix)    expenses of managing and operating Investments owned by the Company, whether payable to an Affiliate of the Company or a non-affiliated Person;
(x)    all expenses in connection with payments to the Directors for attending meetings of the Board and Stockholders;
(xi)    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;
(xii)    expenses connected with payments of Distributions;
(xiii)    expenses of organizing, revising, amending, converting, modifying or terminating the Company, the Operating Partnership or any subsidiary thereof or the Articles of Incorporation, By-laws or governing documents of the Operating Partnership or any subsidiary of the Company or the Operating Partnership;
(xiv)    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;
(xv)    administrative service expenses, including all costs and expenses incurred by the Advisor or its Affiliates in fulfilling its duties hereunder, including reasonable salaries and wages, benefits and overhead of all employees directly involved in the performance of such services; provided, however, that no reimbursement shall be made for costs of such employees of the Advisor or its Affiliates to the extent that such employees perform services for which the Advisor receives a separate fee and no reimbursement shall be made for salaries, bonuses or benefits to be paid to the Company’s executive officers; and
(xvi)    audit, accounting and legal fees.
(b)    Commencing upon the earlier to occur of (i) the fifth fiscal quarter after the Company makes its first Investment and (ii) six (6) months after the commencement of the initial Offering, expenses incurred by the Advisor on behalf of the Company and the Operating Partnership or in connection with the services provided by the Advisor hereunder and payable pursuant to this Section 11 shall be reimbursed (excluding Insourced Acquisition Expenses, which shall be paid as described in Section 10(i) of this Agreement), no less than monthly, to the Advisor.

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12.    OTHER SERVICES.  Should the Board request that the Advisor or any director, officer or employee thereof render services for the Company and the Operating Partnership other than those set forth in Section 3, such services shall be separately compensated at such customary rates and in such customary amounts as are agreed upon by the Advisor and the Board, including a majority of the Independent Directors, subject to the limitations contained in the Articles of Incorporation, and shall not be deemed to be services pursuant to the terms of this Agreement.
13.    REIMBURSEMENT TO THE ADVISOR.  The Company shall not reimburse the Advisor at the end of any fiscal quarter in which Total Operating Expenses incurred by the Advisor for the four (4) consecutive fiscal quarters then ended (the “Expense Year”) exceed (the “Excess Amount”) the greater of two percent (2%) of Average Invested Assets and twenty-five percent (25%) of Net Income (the “2%/25% Guidelines”) for such year.  Any Excess Amount paid to the Advisor during a fiscal quarter shall be repaid to the Company or, at the option of the Company, subtracted from the Total Operating Expenses reimbursed during the subsequent fiscal quarter.  If there is an Excess Amount in any Expense Year and the Independent Directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, then the Excess Amount may be carried over and included in Total Operating Expenses in subsequent Expense Years and reimbursed to the Advisor in one or more of such years, provided that there shall be sent to the Stockholders a written disclosure of such fact, together with an explanation of the factors the Independent Directors considered in determining that such excess expenses were justified.  Such determination shall be reflected in the minutes of the meetings of the Board.  All figures used in the foregoing computation shall be determined in accordance with GAAP applied on a consistent basis.
14.    OTHER ACTIVITIES OF THE ADVISOR.  Except as set forth in this Section 14, nothing herein contained shall prevent the Advisor or any of its Affiliates from engaging in or earning fees from other activities, including the rendering of advice to other Persons (including other REITs) and the management of other programs advised, sponsored or organized by the Sponsor or its Affiliates; nor shall this Agreement limit or restrict the right of any director, officer, member, partner, employee or stockholder of the Advisor or any of its Affiliates to engage in or earn fees from any other business or to render services of any kind to any other Person and earn fees for rendering such services; provided, however, that the Advisor must devote sufficient resources to the Company’s business to discharge its obligations to the Company under this Agreement.  The Advisor may, with respect to any Investment in which the Company is a participant, also render advice and service to each and every other participant therein, and earn fees for rendering such advice and service.  Specifically, it is contemplated that the Company may enter into Joint Ventures or other similar co-investment arrangements with certain Persons, and pursuant to the agreements governing such Joint Ventures or arrangements, the Advisor may be engaged to provide advice and service to such Persons, in which case the Advisor will earn fees for rendering such advice and service.
The Advisor shall report to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other Person.  If the Advisor, Director or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, the Advisor shall inform the Board of the method to be applied by the Advisor in allocating investment opportunities among the Company and competing investment entities and shall provide regular updates to the Board of the investment opportunities provided by the Advisor to competing programs in order for the Board (including the Independent Directors) to fulfill its duty to ensure that the Advisor and its Affiliates use their reasonable best efforts to apply such method fairly to the Company.
15.    THE AMERICAN REALTY CAPITAL NAME.  The Advisor and its Affiliates have or may have a proprietary interest in the names “American Realty Capital,” “ARC” and “AR Capital.”  The Advisor hereby grants to the Company, to the extent of any proprietary interest the Advisor may have in any of the names “American Realty Capital,” “ARC” and “AR Capital,” a non-transferable, non-assignable, non-exclusive, royalty‐free right and license to use the names “American Realty Capital,” “ARC” and “AR Capital” during the term of this Agreement.  The Company agrees that the Advisor and its Affiliates will have the right to approve of any use by the Company of the names “American Realty Capital,” “ARC” and “AR Capital,” such approval not to be unreasonably withheld or delayed.  Accordingly, and in recognition of this right, if at any time the Company ceases 

14

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.”
16.    TERM OF AGREEMENT.  This Agreement shall continue in force for a period of one year from the date hereof.  Thereafter, the term may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties.
17.    TERMINATION BY THE PARTIES.  This Agreement may be terminated upon sixty (60) days’ 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 15 and 19 through 31 (inclusive) of this Agreement shall survive any expiration or earlier termination of this Agreement.
18.    ASSIGNMENT TO AN AFFILIATE.  This Agreement may be assigned by the Advisor to an Affiliate with the approval of a majority of the Directors (including a majority of the Independent Directors).  The Advisor may assign any rights to receive fees or other payments under this Agreement to any Person without obtaining the approval of the Directors.  This Agreement shall not be assigned by the Company or the Operating Partnership without the consent of the Advisor, except in the case of an assignment by the Company or the Operating Partnership to a Person which is a successor to all the assets, rights and obligations of the Company or the Operating Partnership, and which the Board (including a majority of the Independent Directors) has determined possesses sufficient qualifications to perform the advisory function for the Company, in which case such successor Person shall be bound hereunder and by the terms of said assignment in the same manner as the Company or the Operating Partnership, as applicable, is bound by this Agreement.
19.    PAYMENTS TO AND DUTIES OF ADVISOR UPON TERMINATION.
(a)    Amounts Owed.  After the Termination Date, the Advisor shall be entitled to receive from the Company or the Operating Partnership within thirty (30) days after the effective date of such termination all amounts then accrued and owing to the Advisor, including all its interest in the Company’s income, losses, distributions and capital by payment of an amount equal to the then-present fair market value of the Advisor’s interest, subject to the 2%/25% Guidelines to the extent applicable.
(b)    Advisor’s Duties.  The Advisor shall promptly upon termination of this Agreement:
(i)    pay over to the Company and the Operating Partnership all money collected and held for the account of the Company and the Operating Partnership pursuant to this Agreement, 

15

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.
20.    INCORPORATION OF THE ARTICLES OF INCORPORATION AND THE OPERATING PARTNERSHIP AGREEMENT.  To the extent that the Articles of Incorporation or the Operating Partnership Agreement 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.
21.    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 and its Affiliates, as well as their respective officers, directors, equity holders, members, partners, stockholders, other equity holders and employees (collectively, the “Indemnitees,” and each, an “Indemnitee”), from 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;

16

(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.
22.    INDEMNIFICATION BY ADVISOR.  The Advisor 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 bad faith, fraud, willful misfeasance, intentional misconduct, gross negligence or reckless disregard of its duties; provided, however, that the Advisor shall not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Advisor.
23.    NOTICES.  Any notice, report or other communication (each a “Notice”) required or permitted to be given hereunder shall be in writing unless some other method of giving such Notice is required by the Articles of Incorporation or the By-laws, and shall be given by being delivered by hand, by courier or overnight carrier or by registered or certified mail to the addresses set forth below:
		
	To the Company:
	American Realty Capital New York City REIT, Inc. 
405 Park Avenue 
New York, New York 10022

		
	Attention:
	Michael A. Happel 
President

with a copy to:
Proskauer Rose LLP 
Eleven Times Square 
New York, New York 10036 
Attention:  Peter M. Fass, Esq.
		
	To the Operating Partnership:
	New York City Operating Partnership, L.P. 
405 Park Avenue 
New York, New York 10022 
Attention:  Michael A. Happel

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with a copy to:
Proskauer Rose LLP 
Eleven Times Square 
New York, New York 10036 
Attention:  Peter M. Fass, Esq.
		
	To the Advisor:
	New York City Advisors, LLC 
405 Park Avenue 
New York, New York 10022

		
	Attention:
	Michael A. Happel 
President

with a copy to:
Proskauer Rose LLP 
Eleven Times Square 
New York, New York 10036 
Attention:  Peter M. Fass, 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 23.
24.    MODIFICATION.  This Agreement shall not be amended, supplemented, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees.
25.    SEVERABILITY.  The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.
26.    GOVERNING LAW.  The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect, without regard to the principles of conflicts of laws thereof.
27.    ENTIRE AGREEMENT.  This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.
28.    NO WAIVER.  Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
29.    PRONOUNS AND PLURALS.  Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

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30.    HEADINGS.  The titles of sections and subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.
31.    EXECUTION IN COUNTERPARTS.  This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.
[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.
AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.
		
	By:
	/s/ Michael A. Happel     
Name:  Michael A. Happel 
Title:  President

NEW YORK CITY OPERATING PARTNERSHIP, L.P.
		
	By:
	American Realty Capital New York City REIT, Inc. 
its General Partner

		
	By:
	/s/ Michael A. Happel     
Name:  Michael A. Happel 
Title:  President

NEW YORK CITY ADVISORS, LLC
		
	By:
	New York City Special Limited Partner, LLC 
its Member

		
	By:
	American Realty Capital III, LLC 
its Managing Member

		
	By:
	/s/ Nicholas S. Schorsch     
Name:  Nicholas S. Schorsch 
Title:  Authorized Signatory

20ARC NYCR 06.30.2014 10-Q EX 10.3

Exhibit 10.3

PROPERTY MANAGEMENT AND LEASING AGREEMENT
This property management and leasing agreement (this “Management Agreement”) is made and entered into as of April 24, 2014, by and among AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC., a Maryland corporation (the “Company”), NEW YORK CITY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the “OP”), and NEW YORK CITY 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; and
WHEREAS, the Owner desires to retain the Manager to manage and coordinate the leasing of the real estate properties acquired by the Owner, and the Manager desires to be so retained, all under the terms and conditions set forth in this Management Agreement.
NOW, THEREFORE, in consideration of the 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 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    “Owner” means the Company, the OP and any Joint Venture that owns, in whole or in part, any Properties.
1.10    “Ownership Agreements” has the meaning set forth in Section 2.3(k) hereof.
1.11    “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.
1.12    “Plan” has the meaning set forth in Section 2.5(c) hereof.
1.13    “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 

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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).
		
	(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 

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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.

		
	(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:

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	(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

		
	(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 overruns 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 individuals 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 Management Agreement, the Manager may subcontract the performance of its duties hereunder to third parties, without the consent of the Owner, and pay all or a portion of its Management Fees to the third parties with whom it contracts for these services.

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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.  The Owner shall reimburse the Manager for property-level expenses that the Manager pays or incurs on Owner’s behalf, including reasonable salaries, bonuses and benefits of individuals employed by the Manager, except for the salaries, bonuses and benefits of individuals who also serve as one of the Owner’s executive officers or as an executive officer of the Manager or any of its Affiliates. 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. 
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 fees (the “Management Fees”), on a monthly basis, equal to:  (i) with respect to non-hotel Properties, four percent (4.0%) of Gross Revenues from the Properties managed, plus market-based leasing commissions applicable to the geographic location of the Property; and (ii) with respect to 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)    Notwithstanding the foregoing, the Manager may be entitled to receive higher fees in the event the Manager can demonstrate to the satisfaction of the board of directors of the Company (including a majority of the Independent Directors) through empirical data that a higher competitive fee is justified for the services rendered and the type of Property managed.  As described in Section 2.6 above, in the event that the Manager properly engages one or more third parties to perform the services described herein, the fees payable to such parties for such services will be deducted from the Management Fees, or paid directly by the Manager, at the Manager’s option.  The Manager’s compensation under this Section 4.1 shall apply to all renewals, extensions or expansions of leases which the Manager originally negotiated.

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

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

		
	(b)
	The Manager shall obtain and keep in full force and effect, in accordance with the laws of the state in which each Property is located, employer’s liability insurance applicable to and covering all employees of the Manager at the Properties and all individuals 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 individual 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 individuals 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 

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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:

		
	(iv)
	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

		
	(v)
	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

		
	(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 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.

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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 City REIT, Inc. 
405 Park Avenue 
New York, NY 10022 
Attention:  Michael A. Happel, President

with a copy to:
New York City Operating Partnership, L.P. 
405 Park Avenue 
New York, NY 10022 
Attention:  Michael A. Happel
with a copy to:
Proskauer Rose LLP 
Eleven Times Square 
New York, New York 10036 
Attention:  Peter M. Fass, Esq.
		
	To the Manager:
	New York City Properties, LLC 
405 Park Avenue 
New York, NY 10022 
Attention:  Michael A. Happel, President

with a copy to:
Proskauer Rose LLP 
Eleven Times Square 
New York, New York 10036 
Attention:  Peter M. Fass, Esq.
7.2    Governing Law.  This Management Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of law thereof.
7.3    Assignment.  Except as permitted in Section 2.6 hereof, this Management Agreement may not be assigned by the Manager, except to an Affiliate of the Manager, and then only upon the consent of the Owner and the approval of a majority of the Independent Directors.  Any assignee of the Manager shall be bound hereunder to the same extent as the Manager.  This Management 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.

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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.
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]

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IN WITNESS WHEREOF, the parties have executed this Management Agreement as of the date first above written.
AMERICAN REALTY CAPITAL NEW YORK CITY REIT, INC.
		
	By:
	/s/ Michael A. Happel     
Name:  Michael A. Happel 
Title:  President

NEW YORK CITY OPERATING PARTNERSHIP, L.P.
		
	By:
	American Realty Capital New York City REIT, Inc. 
its General Partner

		
	By:
	/s/ Michael A. Happel     
Name:  Michael A. Happel 
Title:  President

NEW YORK CITY PROPERTIES, LLC
		
	By:
	New York City Special Limited Partnership, LLC, its sole Member

		
	By:
	American Realty Capital III, LLC, its Managing Member

		
	By:
	/s/ Nicholas S. Schorsch     
Name:  Nicholas S. Schorsch 
Title:  Manager

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