AMERICAN REALTY CAPITAL TRUST III, INC. UP TO 125,000,000 SHARES OF COMMON STOCK EXCLUSIVE DEALER MANAGER AGREEMENT
Exhibit
1.1
UP
TO 125,000,000 SHARES OF COMMON STOCK
,
2011
Realty
Capital Securities, LLC
Three
Xxxxxx Place, Suite 3300
Xxxxxx,
Xxxxxxxxxxxxx 00000
Ladies
and Gentlemen:
American
Realty Capital Trust III, Inc. (the “Company”)
is a Maryland corporation that intends to qualify to be taxed as a real estate
investment trust (a “REIT”)
for federal income tax purposes beginning with the taxable year ending December
31, 2011, or the first year during which the Company begins material operations.
The Company proposes to offer (a) up to 100,000,000 shares of its common stock,
$.01 par value per share (the “Shares”),
for a purchase price of $10.00 per Share (subject in certain circumstances to
discounts based upon the volume of shares purchased), in the primary offering
(the “Primary
Offering”), and (b) up to 25,000,000 Shares for a purchase price of $9.50
per Share for issuance through the Company’s distribution reinvestment plan (the
“DRP”
and together with the Primary Offering, the “Offering”)
(subject to the right of the Company to reallocate such Shares between the
Primary Offering and the DRP), all upon the other terms and subject to the
conditions set forth in the Prospectus (as defined in Section
1(a)).
The
Company will be managed by American Realty Capital Advisors III, LLC (the “Advisor”)
pursuant to the advisory agreement to be entered into between the Company and
the Advisor (the “Advisory
Agreement”) substantially in the form included as an exhibit to the
Registration Statement (as defined in Section
1(a)).
Upon the
terms and subject to the conditions contained in this Exclusive Dealer Manager
Agreement (this “Agreement”),
the Company hereby appoints Realty Capital Securities, LLC, a Delaware limited
liability company (the “Dealer
Manager”), to act as the exclusive dealer manager for the Offering, and
the Dealer Manager desires to accept such engagement.
1. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY AND THE ADVISOR. The Company and the Advisor
hereby represent, warrant and agree during the term of this Agreement as
follows:
(i) on
(A) each applicable Effective Date, (B) the date of the preliminary Prospectus,
(C) the date of the Prospectus and (D) the date any supplement to the Prospectus
is filed with the Commission, the Registration Statement, the Prospectus and any
amendments or supplements thereto, as applicable, have complied, and will
comply, in all material respects with the Securities Act, the Securities Act
Rules and Regulations, the Exchange Act and the Exchange Act Rules and
Regulations; and
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(ii) the
Registration Statement does not, and any amendment thereto will not, in each
case as of the applicable Effective Date, include any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and the Prospectus
does not, and any amendment or supplement thereto will not, as of the applicable
filing date, include any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are made, not
misleading; provided,
however, that the
foregoing provisions of this Section 1(c) will not
extend to any statements contained in, incorporated by reference in or omitted
from the Registration Statement, the Prospectus or any amendment or supplement
thereto that are based upon written information furnished to the Company by the
Dealer Manager expressly for use therein.
The
execution and delivery of this Agreement and the performance of this Agreement,
the consummation of the transactions contemplated herein and the fulfillment of
the terms hereof, do not and will not conflict with, or result in a breach of
any of the terms and provisions of, or constitute a default under: (i) the
Company’s or any of its subsidiaries’ charter, bylaws, or other organizational
documents, as the case may be; (ii) any indenture, mortgage, stockholders’
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their properties is bound except, for purposes of this
clause (ii) only, for such conflicts, breaches or defaults that do not result in
and could not reasonably be expected to result in, individually or in the
aggregate, a Company MAE (as defined below in this Section 1(f));
or (iii) any statute, rule or regulation or order of any court or other
governmental agency or body having jurisdiction over the Company, any of its
subsidiaries or any of their properties. No consent, approval, authorization or
order of any court or other governmental agency or body has been obtained or is
required for the performance of this Agreement or for the consummation by the
Company of any of the transactions contemplated hereby (except as have been
obtained under the Securities Act, the Exchange Act, from the Financial Industry
Regulatory Authority (the “FINRA”)
or as may be required under state securities or applicable blue sky laws in
connection with the offer and sale of the Shares or under the laws of states in
which the Company may own real properties in connection with its qualification
to transact business in such states or as may be required by subsequent events
which may occur). Neither the Company nor any of its subsidiaries is in
violation of its charter, bylaws or other organizational documents, as the case
may be.
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As used
in this Agreement, “Company
MAE” means any event, circumstance, occurrence, fact, condition, change
or effect, individually or in the aggregate, that is, or could reasonably be
expected to be, materially adverse to (A) the condition, financial or
otherwise, earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, or (B) the ability of the
Company to perform its obligations under this Agreement or the validity or
enforceability of this Agreement or the Shares.
(h) ESCROW
AGREEMENT. The Company will enter into an escrow agreement (the “Escrow
Agreement”) with the Dealer Manager and Xxxxx Fargo Bank, National
Association (the “Escrow
Agent”), substantially in the form included as an exhibit to the
Registration Statement, which will provide for the establishment of an escrow
account (the “Escrow
Account”) for the purpose of holding subscription funds in respect of
Shares of the Company. Once a minimum of $2,000,000 of subscription funds has
been deposited in the Escrow Account, upon determination by the Company that it
intends to break escrow, the Company shall deposit (or cause to be deposited)
all subscription funds to a designated deposit account in the name of the
Company (the “Deposit
Account”) at a depository bank (the “Depository
Bank”) which shall be subject to the reasonable prior approval of the
Dealer Manager, subject to any higher or continuing escrow obligations imposed
by certain states as described in the Prospectus. The Deposit Account shall be
subject to a deposit account control agreement executed by the Depositary Bank,
the Company, and the Dealer Manager, which shall be substantially in the form
included as an exhibit to the Escrow Agreement (the “Control
Agreement”). As used herein, “Person”
or “Persons”
means any individual, firm, corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, limited
liability company, governmental authority or agency or other entity of any kind.
If the
minimum amount has not been obtained prior to the Termination Date (as defined
in Section 10(a)), the Escrow Agent shall, promptly following the Termination
Date, but in no event more than thirty (30) days after the Termination Date,
refund to each investor by check funds deposited in the Escrow Account, or shall
return the instruments of payment delivered to Escrow Agent if such instruments
have not been processed for collection prior to such time, directly to each
investor at the address provided in the list of investors.
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(n) REIT
QUALIFICATIONS. The Company will make a timely election to be subject to tax as
a REIT pursuant to Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the “Code”)
for its taxable year ended December 31, 2011, or the first year during
which the Company begins material operations. The Company has been organized and
operated in conformity with the requirements for qualification and taxation as a
REIT. The Company’s current and proposed method of operation as described in the
Registration Statement and the Prospectus will enable it to continue to meet the
requirements for qualification and taxation as a REIT under the
Code.
The
Company and its subsidiaries each maintains a system of internal accounting and
other controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles as applied in the United States (“GAAP”)
and to maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management’s general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the Registration Statement, since the end of
the Company’s most recent audited fiscal year, there has been (A) no material
weakness in the Company’s internal control over financial reporting (whether or
not remediated), and (B) no change in the Company’s internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
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(i)
The Advisor is a limited liability company duly formed and validly existing
under the laws of the State of Delaware, with all requisite power and authority
to enter into this Agreement and to carry out its obligations
hereunder.
(ii)
Each of this Agreement and the Advisory Agreement is duly and validly
authorized, executed and delivered by or on behalf of the Advisor and
constitutes a valid and binding agreement of the Advisor enforceable in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of the
United States, any state or any political subdivision thereof which affect
creditors’ rights generally or by equitable principles relating to the
availability of remedies or except to the extent that the enforceability of the
indemnity and contribution provisions contained in this Agreement may be limited
under applicable securities laws).
(iii)
The execution and delivery of each of this Agreement and the Advisory Agreement
and the performance hereunder and thereunder by the Advisor do not and will not
conflict with, or result in a breach of any of the terms and provisions of, or
constitute a default under: (i) the Advisor’s or any of its subsidiaries’
charter or bylaws, or other organizational documents; (ii) any indenture,
mortgage, stockholders agreement, note, lease or other agreement or instrument
to which the Advisor or any of its subsidiaries is a party or by which the
Advisor or any of its subsidiaries or any of their properties is bound except,
for purposes of this clause (ii) only, for such conflicts, breaches or defaults
that could not reasonably be expected to have or result in, individually or in
the aggregate, (A) a material adverse effect on the condition, financial or
otherwise, earnings, business affairs or business prospects of the Advisor, or
(B) a Company MAE; or (iii) any statute, rule or regulation or order of any
court or other governmental agency or body having jurisdiction over the Advisor
or any of its properties. No consent, approval, authorization or order of any
court or other governmental agency or body has been obtained nor is required for
the performance of the Advisory Agreement by the Advisor. The Advisor is not in
violation of its limited liability company agreement or other organizational
documents.
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(iv)
There is no action, suit, proceeding, inquiry or investigation before or brought
by any court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Advisor, threatened against or affecting the
Advisor.
(v)
The Advisor possesses such certificates, authorities or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by it, other than those which the failure to
possess or own would not have or result in, individually or in the aggregate,
(A) a material adverse effect on the condition, financial or otherwise,
earnings, business affairs or business prospects of the Advisor, (B) a Company
MAE, or (C) a material adverse effect on the performance of the services under
the Advisory Agreement by the Advisor, and the Advisor has not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit.
2. REPRESENTATIONS AND
WARRANTIES OF THE DEALER MANAGER. The Dealer Manager represents and
warrants to the Company, during the term of this Agreement, that:
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3. OFFERING AND SALE OF THE
SHARES. Upon the terms and subject to the conditions set forth in this
Agreement, the Company hereby appoints the Dealer Manager as its agent and
exclusive distributor to solicit and to retain the Soliciting Dealers (as
defined in Section
3(a)) to solicit subscriptions for the Shares at the subscription price
to be paid in cash. The Dealer Manager hereby accepts such agency and exclusive
distributorship and agrees to use its reasonable best efforts to sell or cause
to be sold the Shares in such quantities and to such Persons in accordance with
such terms as are set forth in this Agreement, the Prospectus and the
Registration Statement. The Dealer Manager shall do so during the period
commencing on the initial Effective Date and ending on the earliest to occur of
the following: (1) the later of (x) two years after the initial Effective Date
of the Registration Statement and (y) at the Company’s election, the date on
which the Company is permitted to extend the Offering in accordance with the
rules of the Commission; (2) the acceptance by the Company of subscriptions for
175,000,000 Shares; (3) the termination of the Offering by the Company, which
the Company shall have the right to terminate in its sole and absolute
discretion at any time, provided that if such termination shall occur at any
time during the 180-day period following the initial Effective Date, the Company
shall not commence or undertake any preparations to commence another offering of
Shares or any similar securities prior to the 181st date following the initial
Effective Date; (4) the termination of the effectiveness of the
Registration Statement, provided that if such termination shall occur at any
time during the 180-day period following the initial Effective Date, the Company
shall not commence or undertake any preparations to commence another offering of
Shares or any similar securities prior to the 181st day following the initial
Effective Date; and (5) the liquidation or dissolution of the Company (such
period being the “Offering
Period”).
The
number of Shares, if any, to be reserved for sale by each Soliciting Dealer may
be determined, from time to time, by the Dealer Manager upon prior consultation
with the Company. In the absence of such determination, the Company shall,
subject to the provisions of Section 3(b), accept
Subscription Agreements based upon a first-come, first accepted reservation or
other similar method. Under no circumstances will the Dealer Manager be
obligated to underwrite or purchase any Shares for its own account and, in
soliciting purchases of Shares, the Dealer Manager shall act solely as the
Company’s agent and not as an underwriter or principal.
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Until the
minimum offering of $2,000,000 in Shares has been sold, payments for Shares
shall be made by checks payable to “XXXXX FARGO BANK, NA, ESCROW AGENT FOR
AMERICAN REALTY CAPITAL TRUST III, INC.” During such time, the
Selected Dealer shall forward original checks together with an original
Subscription Agreement, executed and initialed by the subscriber as provided for
in the Subscription Agreement, to the Escrow Agent at the address provided in
the Subscription Agreement.
When a Soliciting Dealer’s internal
supervisory procedures are conducted at the site at which the Subscription
Agreement and check were initially received by the Soliciting Dealer from the
subscriber, the Soliciting Dealer shall transmit the Subscription Agreement and check to the Escrow Agent by
the end of the next business day following receipt of the check and Subscription
Agreement. When, pursuant to Soliciting Dealer’s internal
supervisory procedures, the Soliciting Dealer’s final
internal supervisory procedures are conducted at a different
location (the “Final Review
Office”), the Soliciting Dealer shall
transmit the check and Subscription Agreement to the Final Review Office by the
end of the next business day following the Soliciting Dealer’s receipt of the
Subscription Agreement and check. The Final Review Office will, by the end of
the next business day following its receipt of the Subscription Agreement and
check, forward both the Subscription Agreement and check to the Escrow Agent.
If any
Subscription Agreement solicited by the Soliciting Dealer is rejected by the
Dealer Manager or the Company, then the Subscription Agreement and check will be
returned to the rejected subscriber within ten (10) business days from the date
of rejection.
(i) Subject
to the volume discounts and other special circumstances described in or
otherwise provided in the “Plan of Distribution” section of the Prospectus or
this Section
3(d), the Company agrees to pay the Dealer Manager selling commissions in
the amount of seven percent (7.0%) of the selling price of each Share for which
a sale is completed from the Shares offered in the Primary Offering.
Alternatively, if the Soliciting Dealer elects to receive selling commissions
equal to seven and one-half percent (7.5%) in accordance with the Soliciting
Dealers Agreement, the Company agrees to pay the Dealer Manager selling
commissions in the amount of seven and one-half percent (7.5%) of the selling
price of each Share for which a sale is completed from the Shares offered in the
Primary Offering, two and one-half percent (2.5%) of which selling commissions
shall be payable at the time of such sale and one percent (1%) of which shall be
paid on each anniversary of the closing of such sale up to and including the
fifth anniversary of the closing of such sale. The Company will not pay selling
commissions for sales of Shares pursuant to the DRP, and the Company will pay
reduced selling commissions or may eliminate commissions on certain sales of
Shares, including the reduction or elimination of selling commissions in
accordance with, and on the terms set forth in, the Prospectus. The Dealer
Manager will reallow all the selling commissions, subject to federal and state
securities laws, to the Soliciting Dealer who sold the Shares, as described more
fully in the Soliciting Dealers Agreement. In no
event shall the Dealer Manager be entitled to payment of any compensation in
connection with the Offering that is not completed according to this Agreement;
provided, however, that the reimbursement of out-of-pocket accountable expenses
actually incurred by the Dealer Manager or person associated with the Dealer
Manager shall not be presumed to be unfair or unreasonable and shall be payable
under normal circumstances.
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(ii) Subject
to the special circumstances described in or otherwise provided in the “Plan of
Distribution” section of the Prospectus or this Section 3(d), as
compensation for acting as the dealer manager, the Company will pay the Dealer
Manager, a dealer manager fee in the amount of three percent (3.0%) of the
selling price of each Share for which a sale is completed from the Shares
offered in the Primary Offering (the “Dealer
Manager Fee”). Notwithstanding,
the Dealer Manager Fee will be reduced to two and one-half percent (2.5%) if the
selling commission is 7.5% as described above. The Dealer Manager may
retain or re-allow all or a portion of the Dealer Manager Fee, subject to
federal and state securities laws, to the Soliciting Dealer who sold the Shares,
as described more fully in the Soliciting Dealers Agreement. No
Dealer Manager Fee will be paid in connection with Shares sold pursuant to the
DRP. The Dealer Manager may retain or re-allow all or a portion of the Dealer
Manager Fee, subject to federal and state securities laws, to the Soliciting
Dealer who sold the Shares, as described more fully in the Soliciting Dealers
Agreement.
(iii) All
sales commissions payable to the Dealer Manager will be paid within thirty (30)
days after the investor subscribing for the Share is admitted as a shareholder
of the Company, in an amount equal to the sales commissions payable with respect
to such Shares.
(iv) In
no event shall the total aggregate compensation payable to the Dealer Manager
and any Soliciting Dealers participating in the Offering, including, but not
limited to, selling commissions and the Dealer Manager Fee exceed ten percent
(10.0%) of gross offering proceeds from the Primary Offering in the
aggregate.
In
connection with the minimum amount offered by the Company pursuant to the
Prospectus and FINRA’s 10% underwriting compensation limitation under FINRA Rule
2310 (“FINRA’s
10% cap”), the Dealer Manager shall advance all of the fixed expenses,
including, but not limited to, wholesaling salaries, salaries of dual employees
allocated to wholesaling activities, and other fixed expenses, (including, but
not limited to, wholesaling expense reimbursements and the Dealer Manager’s
legal expenses associated with filing the Offering with FINRA), that are
required to be included within FINRA’s 10% cap to ensure that the aggregate
underwriting compensation paid in connection with the Offering does not exceed
FINRA’s 10% cap.
The
Dealer Manager shall repay to the Company any excess amounts received over
FINRA’s 10% cap if the Offering is abruptly terminated after receiving the
minimum amount offered by the Company pursuant to the Prospectus and before
reaching the maximum amount of offered by the Company pursuant to the
Prospectus.
No
compensation in connection with the offering may be paid to the Dealer Manager,
the Soliciting Dealers or their affiliates out of the proceeds of the offering
prior to the release of such proceeds from escrow. However, if any
such payments are made from sources other than proceeds of the Offering, they
shall be made only on the basis of bona fide transactions.
(v) Notwithstanding
anything to the contrary contained herein, if the Company pays any selling
commission to the Dealer Manager for sale by a Soliciting Dealer of one or more
Shares and the subscription is rescinded as to one or more of the Shares covered
by such subscription, then the Company shall decrease the next payment of
selling commissions or other compensation otherwise payable to the Dealer
Manager by the Company under this Agreement by an amount equal to the commission
rate established in this Section 3(d),
multiplied by the number of Shares as to which the subscription is rescinded. If
no payment of selling commissions or other compensation is due to the Dealer
Manager after such withdrawal occurs, then the Dealer Manager shall pay the
amount specified in the preceding sentence to the Company within a reasonable
period of time not to exceed thirty (30) days following receipt of notice by the
Dealer Manager from the Company stating the amount owed as a result of rescinded
subscriptions.
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4. CONDITIONS TO THE DEALER
MANAGER’S OBLIGATIONS. The Dealer Manager’s obligations hereunder shall
be subject to the following terms and conditions, and if all such conditions are
not satisfied or waived by the Dealer Manager on or before the initial Effective
Date or at any time thereafter until the Termination Date (as defined in Section 10(a)), then
no funds shall be released (1) from the Escrow Account if the Dealer Manager
provides notice to this effect to the Company and the Escrow Agent, and (2) from
the Deposit Account if the Dealer Manager provides notice to this effect to the
Company and Xxxxx Fargo Bank, National Association:
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(a) The
representations and warranties on the part of the Company and the Advisor
contained in this Agreement hereof shall be true and correct in all material
respects and the Company and the Advisor shall have complied with their
covenants, agreements and obligations contained in this Agreement in all
material respects;
(b) The
Registration Statement shall have become effective and no stop order suspending
the effectiveness of the Registration Statement shall have been issued by the
Commission and, to the best knowledge of the Company and the Advisor, no
proceedings for that purpose shall have been instituted, threatened or
contemplated by the Commission; and any request by the Commission for additional
information (to be included in the Registration Statement or Prospectus or
otherwise) shall have been complied with to the reasonable satisfaction of the
Dealer Manager.
(c) The
Registration Statement and the Prospectus, and any amendment or any supplement
thereto, shall not contain any untrue statement of material fact, or omit to
state a material fact is required to be stated therein or is necessary to make
the statements therein not misleading.
(d) On
the initial Effective Date and at or prior to the fifth business day following
the Effective Date of each post-effective amendment to the Registration
Statement that includes or incorporates by reference the audited financial
statements for the preceding fiscal year, the Dealer Manager shall have received
from Xxxxx Xxxxxxxx LLP or such other independent registered public accountants
for the Company, (i) a letter, dated the applicable date, addressed to the
Dealer Manager, in form and substance satisfactory to the Dealer Manager,
containing statements and information of the type ordinarily included in
accountant’s “comfort letters” to placement agents or dealer managers, delivered
according to Statement of Auditing Standards No. 72 (or any successor bulletin),
with respect to the audited financial statements and certain financial
information contained in the Registration Statement and the Prospectus, and (ii)
confirming that they are (A) independent registered public accountants as
required by the Securities Act, and (B) in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X.
(e) At
or prior to the fifth business day following (i) the request by the Dealer
Manager in connection with any third party due diligence investigation, and
(ii) the Effective Date of each post-effective amendment to the
Registration Statement (other than post-effective amendments filed solely
pursuant to Rule 462(d) under the Securities Act and other than the
post-effective amendments referred to in Section 4(d)), the
Dealer Manager shall have received from Xxxxx Xxxxxxxx LLP or such other
independent public or certified public accountants for the Company, a letter,
dated such date, in form and substance satisfactory to the Dealer Manager, to
the effect that they reaffirm the statements made in the most recent letter
furnished pursuant to Section 4(d), except
that the specified date referred to therein for the carrying out of procedures
shall be no more than three business days prior to the date of the letter
furnished pursuant to this Section
4(e).
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(f) On
the Effective Date the Dealer Manager shall have received the opinion of
Proskauer Rose LLP acting as counsel for the Company, and a supplemental
“negative assurances” letter from such counsel, dated as of the Effective Date,
and in the form and substance reasonably satisfactory to the Dealer
Manager.
(g) At
or prior to the Effective Date and at or prior to the fifth business day
following the effective date of each post-effective amendment to the
Registration Statement (other than post-effective amendments filed solely
pursuant to Rule 462(d) under the Securities Act), the Dealer Manager shall have
received a written certificate executed by the Chief Executive Officer or
President of the Company and the Chief Financial Officer of the Company, dated
as of the applicable date, to the effect that: (i) the representations and
warranties of the Company and the Advisor set forth in this Agreement are true
and correct in all material respects with the same force and effect as though
expressly made on and as of the applicable date; and
(ii) the Company and the Advisor have complied in all material respects with all
the agreements hereunder and satisfied all the conditions on their part to be
performed or satisfied hereunder at or prior to the applicable
date.
5. COVENANTS OF THE COMPANY AND
THE ADVISOR. The Company and the Advisor covenant and agree with the
Dealer Manager as follows:
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(g) QUALIFICATION
TO TRANSACT BUSINESS. The Company will take all steps necessary to ensure that
at all times the Company will validly exist as a Maryland corporation and will
be qualified to do business in all jurisdictions in which the conduct of its
business requires such qualification and where such qualification is required
under local law.
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(i) abide
by and comply with (A) the privacy standards and requirements of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999 (the “GLB
Act”), (B) the privacy standards and requirements of any other applicable
federal or state law, and (C) its own internal privacy policies and procedures,
each as may be amended from time to time;
(ii) refrain
from the use or disclosure of nonpublic personal information (as defined under
the GLB Act) of all customers who have opted out of such disclosures except as
necessary to service the customers or as otherwise necessary or required by
applicable law; and
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(iii) determine
which customers have opted out of the disclosure of nonpublic personal
information by periodically reviewing and, if necessary, retrieving an
aggregated list of such customers from the Soliciting Dealers (the “List”)
to identify customers that have exercised their opt-out rights. If either party
uses or discloses nonpublic personal information of any customer for purposes
other than servicing the customer, or as otherwise required by applicable law,
that party will consult the List to determine whether the affected customer has
exercised his or her opt-out rights. Each party understands that it is
prohibited from using or disclosing any nonpublic personal information of any
customer that is identified on the List as having opted out of such
disclosures.
(m) DEALER
MANAGER’S REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS. Prior to amending or
supplementing the Registration Statement, any preliminary prospectus or the
Prospectus (including any amendment or supplement through incorporation of any
report filed under the Exchange Act), the Company shall furnish to the Dealer
Manager for review, a reasonable amount of time prior to the proposed time of
filing or use thereof, a copy of each such proposed amendment or supplement, and
the Company shall not file or use any such proposed amendment or supplement
without the Dealer Manager’s consent, which consent shall not be unreasonably
withheld or delayed.
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6. COVENANTS OF THE DEALER
MANAGER. The Dealer Manager covenants and agrees with the Company as
follows:
In
addition, the Dealer Manager shall, in accordance with applicable law or as
prescribed by any state securities administrator, provide, or require in the
Soliciting Dealer Agreement that the Soliciting Dealer shall provide, to any
prospective investor copies of the Prospectus and any supplements thereto during
the course of the Offering and prior to the sale. The Company may provide the
Dealer Manager with certain Approved Sales Literature to be used by the Dealer
Manager and the Soliciting Dealers in connection with the solicitation of
purchasers of the Shares. The Dealer Manager agrees not to deliver the Approved
Sales Literature to any Person prior to the initial Effective Date. If the
Dealer Manager elects to use such Approved Sales Literature after the initial
Effective Date, then the Dealer Manager agrees that such material shall not be
used by it in connection with the solicitation of purchasers of the Shares and
that it will direct Soliciting Dealers not to make such use unless accompanied
or preceded by the Prospectus, as then currently in effect, and as it may be
amended or supplemented in the future. The Dealer Manager agrees that it will
not use any Approved Sales Literature other than those provided to the Dealer
Manager by the Company for use in the Offering.
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(i) COORDINATION.
The Company and the Dealer Manager shall have the right, but not the obligation,
to meet with key personnel of the other on an ongoing and regular basis to
discuss the conduct of the officers.
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7. EXPENSES.
(a) Subject
to Sections
7(b) and 7(c), the Dealer
Manager shall pay all of its own costs and expenses incident to the performance
of its obligations under this Agreement.
(b) The
Company agrees to pay all costs and expenses related to:
(i) the
Commission’s registration of the offer and sale of the Shares with the
Commission;
(ii) expenses
of printing the Registration Statement and the Prospectus and any amendment or
supplement thereto as herein provided;
22
(iii) fees
and expenses incurred in connection with any required filing with the
FINRA;
(iv) all
the expenses of agents of the Company, excluding the Dealer Manager, incurred in
connection with performing marketing and advertising services for the Company;
and
(v) expenses
of qualifying the Shares for offering and sale under state blue sky and
securities laws, and expenses in connection with the preparation and printing of
the Blue Sky Survey.
(c) The
Company shall reimburse the Dealer Manager and Soliciting Dealers for approved
or deemed approved reasonable bona fide due diligence
expenses in accordance with Section
3(e).
8. INDEMNIFICATION.
23
Notwithstanding
the foregoing, as required by the Company’s Charter and Section II.G. of the
NASAA Guidelines, the indemnification and agreement to hold harmless provided in
this Section
8(b) is further limited to the extent that no such indemnification by the
Company of a Soliciting Dealer or the Dealer Manager, or their respective
Indemnified Parties, shall be permitted under this Agreement for, or arising out
of, an alleged violation of federal or state securities laws, unless one or more
of the following conditions are met: (a) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular Indemnified Party; (b) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular Indemnified Party; or (c) a court of competent jurisdiction
approves a settlement of the claims against the particular Indemnified Party 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 Commission and of the published position of any state
securities regulatory authority in which the securities were offered or sold as
to indemnification for violations of securities laws.
24
25
(i) In
the case of the Company indemnifying the Dealer Manager, the advancement of
Company funds to the Dealer Manager for legal expenses and other costs incurred
as a result of any legal action for which indemnification is being sought shall
be permissible (in accordance with Section II.G. of the NASAA Guidelines) only
if all of the following conditions are satisfied: (A) the legal action relates
to acts or omissions with respect to the performance of duties or services on
behalf of the Company; (B) the legal action is initiated by a third party who is
not a shareholder of the Company or the legal action is initiated by a
shareholder of the Company acting in his or her capacity as such and a court of
competent jurisdiction specifically approves such advancement; and (C) the
Dealer Manager undertakes to repay the advanced funds to the Company, together
with the applicable legal rate of interest thereon, in cases in which the Dealer
Manager is found not to be entitled to indemnification.
(ii) In
any case of indemnification other than that described in Section 8(f)(i)
above, the indemnifying party shall pay all legal fees and expenses reasonably
incurred by the Indemnified Party in the defense of such claims or actions;
provided, however, that the
indemnifying party shall not be obligated to pay legal expenses and fees to more
than one law firm in connection with the defense of similar claims arising out
of the same alleged acts or omissions giving rise to such claims notwithstanding
that such actions or claims are alleged or brought by one or more parties
against more than one Indemnified Party. If such claims or actions are alleged
or brought against more than one Indemnified Party, then the indemnifying party
shall only be obliged to reimburse the expenses and fees of the one law firm (in
addition to local counsel) that has been participating by a majority of the
indemnified parties against which such action is finally brought; and if a
majority of such indemnified parties is unable to agree on which law firm for
which expenses or fees will be reimbursable by the indemnifying party, then
payment shall be made to the first law firm of record representing an
Indemnified Party against the action or claim. Such law firm shall be paid only
to the extent of services performed by such law firm and no reimbursement shall
be payable to such law firm on account of legal services performed by another
law firm.
26
9. CONTRIBUTION.
(a) If
the indemnification provided for in Section 8 is for any
reason unavailable to or insufficient to hold harmless an Indemnified Party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
Indemnified Party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Dealer Manager and
the Soliciting Dealer, respectively, from the proceeds received in Primary
Offering pursuant to this Agreement and the relevant Soliciting Dealer
Agreement, or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Dealer Manager and the Soliciting Dealer, respectively, in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
(b) The
relative benefits received by the Company, the Dealer Manager and the Soliciting
Dealer, respectively, in connection with the proceeds received in the Primary
Offering pursuant to this Agreement and the relevant Soliciting Dealer Agreement
shall be deemed to be in the same respective proportion as the total net
proceeds from the Primary Offering pursuant to this Agreement and the relevant
Soliciting Dealer Agreement (before deducting expenses), received by the
Company, and the total selling commissions and dealer manager fees received by
the Dealer Manager and the Soliciting Dealer, respectively, in each case as set
forth on the cover of the Prospectus bear to the aggregate offering price of the
Shares sold in the Primary Offering as set forth on such cover.
(c) The
relative fault of the Company, the Dealer Manager and the Soliciting Dealer,
respectively, shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact related to information supplied by the
Company, by the Dealer Manager or by the Soliciting Dealer, respectively, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
(d) The
Company, the Dealer Manager and the Soliciting Dealer (by virtue of entering
into the Soliciting Dealer Agreement) agree that it would not be just and
equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
contributions referred to above in this Section 9. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an Indemnified Party and referred to above in this Section 9 shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission or alleged omission.
27
(e) Notwithstanding
the provisions of this Section 9, the Dealer
Manager and the Soliciting Dealer shall not be required to contribute any amount
by which the total price at which the Shares sold in the Primary Offering to the
public by them exceeds the amount of any damages which the Dealer Manager and
the Soliciting Dealer have otherwise been required to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission.
(f) No
party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any party
who was not guilty of such fraudulent misrepresentation.
(g) For
the purposes of this Section 9, the Dealer
Manager’s officers, directors, employees, members, partners, agents and
representatives, and each Person, if any, who controls the Dealer Manager within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act shall have the same rights to contribution of the Dealer Manager, and each
officers, directors, employees, members, partners, agents and representatives of
the Company, each officer of the Company who signed the Registration Statement
and each Person, if any, who controls the Company, within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution of the Company. The Soliciting Dealers’ respective
obligations to contribute pursuant to this Section 9 are several
in proportion to the number of Shares sold by each Soliciting Dealer in the
Primary Offering and not joint.
28
(i) For
Cause (as defined below);
(ii) A
court of competent jurisdiction enters a decree or order for relief in respect
of the Dealer Manager in any involuntary case under the applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoints a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Dealer Manager or for any substantial part of its property or
orders the winding up or liquidation of the Dealer Manager’s
affairs;
(iii) The
Dealer Manager commences a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consents to the
entry of an order for relief in an involuntary case under any such law, or
consents to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the Dealer
Manager or for any substantial part of its property, or makes any general
assignment for the benefit of creditors, or fails generally to pay its debts as
they become due;
As used
above, “Cause”
shall mean fraud, criminal conduct, willful misconduct or willful or grossly
negligent breach of the Dealer Manager’s obligations under this Agreement which
materially adversely affects the Dealer Manager’s ability to perform its duties;
or a material breach of this Agreement by the Dealer Manager which materially
affects adversely affects the Dealer Manager’s ability to perform its duties,
provided that (A) Dealer Manager does not cure any such material breach within
thirty (30) days of receiving notice of such material breach from the Company,
or (B) if such material breach is not of a nature that can be remedied within
such period, the Dealer Manager does not diligently take all reasonable steps to
cure such breach or does not cure such breach within a reasonable time
period.
29
(i) For
Good Reason (as defined below);
(ii) A
court of competent jurisdiction enters a decree or order for relief in respect
of the Company or any of its subsidiaries in any involuntary case under the
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appoints a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or any of its subsidiaries or
for any substantial part of its property or orders the winding up or liquidation
of the Company’s or any of its subsidiaries’ affairs;
(iii) The
Company or any of its subsidiaries commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
under any such law, or consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or any of its subsidiaries or for any substantial part
of their property, or makes any general assignment for the benefit of creditors,
or fails generally to pay its debts as they become due;
(iv) There
shall have been a material change in the nature of the business conducted or
contemplated to be conducted as set forth in the Registration Statement at the
initial Effective Date by the Company and its subsidiaries, considered as one
entity;
(v) There
shall have occurred a Company MAE, whether or not arising in the ordinary course
of business;
(vi) A
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the Commission and is not rescinded within 10 business days after
the issuance thereof; or
(vii) A
material action, suit, proceeding or investigation of the type referred to in
Section 1(g)
shall have occurred or arisen on or after the initial Effective
Date.
As used
above, “Good
Reason” shall mean fraud, criminal conduct, willful misconduct or willful
or grossly negligent breach of the Company’s obligations under this Agreement,
or a material breach of this Agreement by the Company, provided that (i) the
Company does not cure any such material breach within thirty (30) days of
receiving notice of such material breach from the Dealer Manager, or (ii) if
such material breach is not of a nature that can be remedied within such period,
the Company does not diligently take all reasonable steps to cure such breach or
does not cure such breach within a reasonable time period.
30
(d) DELIVERY
OF RECORDS UPON EXPIRATION OR EARLY TERMINATION. Upon the expiration or early
termination of this Agreement for any reason, the Dealer Manager shall (i)
promptly forward any and all funds, if any, in its possession which were
received from investors for the sale of Shares into the Escrow Account for the
deposit of investor funds, (ii) to the extent not previously provided to the
Company, provide a list of all investors who have subscribed for or purchased
shares and all broker-dealers with whom the Dealer Manager has entered into a
Soliciting Dealer Agreement, (iii) notify Soliciting Dealers
of such termination, and (iv) promptly deliver to the Company copies of any
sales literature designed for use specifically for the Offering that it is then
in the process of preparing. Upon expiration or earlier termination of this
Agreement, the Company shall pay to the Dealer Manager all compensation to which
the Dealer Manager is or becomes entitled under Section 3(d) at such
time as such compensation becomes payable.
11. MISCELLANEOUS.
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If
to the Company:
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000
Xxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention:
Xxxxxxx X. Xxxxxx
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with
a copy to:
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||
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Xxxxxxxxx
Xxxx XXX
Xxxxxx
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention:
Xxxxx X. Xxxx, Esq.
Xxxxx
X. Gerkis, Esq.
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|
If
to the Dealer Manager:
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Realty
Capital Securities, LLC
Three
Xxxxxx Place, Suite 3300
Xxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
Attention:
Xxxxxx Xxxxxx
Managing
Director
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with
a copy to:
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||
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Proskauer
Rose LLP
Xxxxxx
Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Facsimile
No: (000) 000-0000
Attention:
Xxxxx X. Xxxx, Esq.
Xxxxx
X. Gerkis, Esq.
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|
If
to the Advisor:
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American
Realty Capital Advisors III, LLC
000
Xxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention:
Xxxxxxx X. Xxxxxx
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with
a copy to:
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||
|
Xxxxxxxxx
Xxxx XXX
Xxxxxx
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention:
Xxxxx X. Xxxx, Esq.
Xxxxx
X. Gerkis, Esq.
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Any party
may change its address specified above by giving each party notice of such
change in accordance with this Section
11(b).
32
(e) APPLICABLE
LAW. This Agreement and any disputes relative to the interpretation or
enforcement hereto shall be governed by and construed under the internal laws,
as opposed to the conflicts of laws provisions, of the State of New
York.
(f) WAIVER.
EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT. The parties hereto each
hereby irrevocably submits to the exclusive jurisdiction of the courts of the
State of New York and the Federal courts of the United States of America located
in the Borough of Manhattan, New York City, in respect of the interpretation and
enforcement of the terms of this Agreement, and in respect of the transactions
contemplated hereby, and each hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation or enforcement
hereof, that it is not subject thereto or that such action, suit or proceeding
may not be brought or is not maintainable in said courts or that the venue
thereof may not be appropriate or that this Agreement may not be enforced in or
by such courts, and the parties hereto each hereby irrevocably agrees that all
claims with respect to such action or proceeding shall be heard and determined
in such a New York State or Federal court.
(i) THIRD
PARTY BENEFICIARIES. Except for the Persons referred to in Section 8 and Section 9, there
shall be no third party beneficiaries of this Agreement, and no provision of
this Agreement is intended to be for the benefit of any Person not a party to
this Agreement, and no third party shall be deemed to be a beneficiary of any
provision of this Agreement. Except for the Persons referred to in Section 8 and Section 9, no third
party shall by virtue of any provision of this Agreement have a right of action
or an enforceable remedy against any party to this Agreement. Each of the
Persons referred to in Section 8 and Section 9 shall be a
third party beneficiary of this Agreement.
33
34
If the
foregoing is in accordance with your understanding of our agreement, kindly sign
and return it to us, whereupon this instrument will become a binding agreement
between you and the Company in accordance with its terms.
[Signatures
on following page]
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| AMERICAN REALTY CAPITAL TRUST III, INC. | |||
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By:
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| Name : | |||
| Title : | |||
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AMERICAN
REALTY CAPITAL ADVISORS III, LLC
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By:
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| Name : | |||
| Title : | |||
Accepted
as of the date first above written:
REALTY
CAPITAL SECURITIES, LLC
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By:
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Name:
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Title:
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