AMERICAN REALTY CAPITAL PROPERTIES, INC. UP TO 8,800,000 SHARES OF COMMON STOCK DEALER MANAGER AGREEMENT
UP TO 8,800,000 SHARES OF COMMON STOCK
_____________, 2011
Realty Capital Securities, LLC
Three Xxxxxx Place, Suite 3300
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
American Realty Capital Properties, 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 up to 8,800,000 shares (the “Primary Shares”) of its common stock, $.01 par value per share (the “Common Stock”), for a purchase price of $12.50 per share (subject in certain circumstances to discounts), in its initial public offering (the “Offering”), (i) up to twenty-five percent (25%) of which may be offered and sold to the Company’s directors, officers, employees and other individuals associated with the Company and members of their families pursuant to the Company’s directed share program (the “Directed Share Program”) and (ii) up to 2,450,000 shares of which may be offered and sold to holders of interests in ARC Income Properties, LLC and ARC Income Properties III, LLC, which hold certain indebtedness that will be repaid in connection with the Offering, pursuant to the Company’s discounted share program (the “Discounted Share Program”), all upon the other terms and subject to the conditions set forth in the Prospectus (as defined in Section 1(a)). The Company also desires to xxxxx Xxxxxxxxx Xxxxxxxx & Co. Inc., a Delaware corporation (“Ladenburg”), an option to purchase up to fifteen percent (15%) of the number of Primary Shares sold in the Offering (the “Option Shares”, and together with the Primary Shares, the “Shares”) pursuant to the Offering on the terms and for the purposes set forth in Section 3(a).
The Company will conduct all its business activities through ARC Properties Operating Partnership, L.P., a Delaware limited partnership of which the Company is the general partner (the “Operating Partnership”).
Upon the terms and subject to the conditions contained in this Dealer Manager Agreement (this “Agreement”), the Company hereby appoints Realty Capital Securities, LLC, a Delaware limited liability company (“RCS”) and Ladenburg (collectively the “Dealer Managers”), to act as the exclusive dealer managers for the Offering, and the Dealer Managers desire to accept such engagement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING PARTNERSHIP. The Company and the Operating Partnership 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Exchange Act Rules and Regulations”); and
(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, in light of the circumstances under which they were made, 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(b) will not extend to any statements contained 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 Managers expressly for use therein.
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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, voting trust, 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(e)); 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, Inc. (“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.
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 (including, without limitation, the Operating Partnership), 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.
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(l) 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.
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The Company and its subsidiaries (including, without limitation, the Operating Partnership) each maintain 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.
(i) The Operating Partnership is a limited partnership 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) This Agreement is duly and validly authorized, executed and delivered by or on behalf of the Operating Partnership and constitutes a valid and binding agreement of the Operating Partnership 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).
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(iii) The execution and delivery of this Agreement and the performance hereunder by the Operating Partnership does 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 Operating Partnership’s or any of its subsidiaries’ agreement of limited partnership, or other organizational documents; (ii) any indenture, mortgage, stockholders’ agreement, voting trust, note, lease or other agreement or instrument to which the Operating Partnership or any of its subsidiaries is a party or by which the Operating Partnership 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 Operating Partnership, 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 Operating Partnership 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 this Agreement by the Operating Partnership. The Operating Partnership is not in violation of its agreement of limited partnership or other organizational documents.
(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 Operating Partnership, threatened against or affecting the Operating Partnership.
(v) The Operating Partnership 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 Operating Partnership or (B) a Company MAE, and the Operating Partnership has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit.
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(s) ENVIRONMENTAL LAWS. Except as described in the Prospectus and except as would not, singly or in the aggregate, result in a Company MAE, (i) with respect to the Company and its subsidiaries, the Company does not have any knowledge of any violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, “Hazardous Materials”) or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, “Environmental Laws”), (ii) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (iii) there are no pending or, to the Company’s knowledge, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (iv) the Company does not have any knowledge of any events or circumstances that would reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws.
2. REPRESENTATIONS AND WARRANTIES OF THE DEALER MANAGERS. Each Dealer Manager, severally (and not jointly) 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 Managers as its agents and exclusive distributors to solicit and, subject to Section 3(b), to retain the Soliciting Dealers (as defined in Section 3(b)) to solicit subscriptions for the Primary Shares at the subscription price to be paid in cash. The Dealer Managers hereby accept such agency and exclusive distributorship and agree to use their reasonable best efforts to sell or cause to be sold the Primary 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. Subject to Section 3(a), the Dealer Managers shall do so during the period commencing on the initial Effective Date and ending on the earliest to occur of the following: (1) sixty (60) days after the initial Effective Date of the Registration Statement, (2) the acceptance by the Company of subscriptions for 8,800,000 Primary 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; (4) the termination of the effectiveness of the Registration Statement; (5) the closing of the Offering following the acceptance by the Company of subscriptions for a minimum of 5,400,000 Primary Shares; and (6) the liquidation or dissolution of the Company (such period being the “Offering Period”).
The Company and the Dealer Managers agree that (i) up to 2,200,000 Primary Shares (the “Directed Share Program Reserved Shares”) shall be reserved for sale by the Dealer Managers to the Company’s directors, officers, employees and other individuals associated with the Company and members of their families (the “Directed Share Program Invitees”) pursuant to the Directed Share Program and (ii) up to 2,450,000 Primary Shares (the “Discounted Share Program Reserved Shares” and together with the Directed Share Program Reserved Shares, the “Reserved Shares”) shall be reserved for sale by the Dealer Managers to the holders of interests in ARC Income Properties, LLC and ARC Income Properties III, LLC (the “Discounted Share Program Invitees” and together with the Directed Share Program Invitees, the “Invitees”) pursuant to the Discounted Share Program, as part of the distribution of the Primary Shares by the Dealer Managers, subject to the terms of this Agreement, the applicable rules, regulations and interpretations of FINRA and all other applicable laws, rules and regulations. The Dealer Managers shall cause (a) each Directed Share Program Invitee that purchases Primary Shares pursuant to the Directed Share Program and (b) each Discounted Share Program Invitee that is an Affiliate of the Company or American Realty Capital II, LLC that purchases Primary Shares pursuant to the Discounted Share Program, prior to the closing of the Offering, to execute and deliver a lock-up letter, substantially in the form of Exhibit A hereto. To the extent that any Reserved Shares are not orally confirmed for purchase by the Invitees by the end of the twentieth (20th) Business Day after the initial Effective Date (or such earlier date determined by the Company as set forth in a notice to the Dealer Managers), such Reserved Shares may be offered to the public as part of the offering of Primary Shares contemplated by this Agreement. As used herein, (i) “Business Day” means a day on which banking institutions are not authorized or obligated by law, regulation or executive order to close in New York City and (ii) “Affiliate” means, with respect to any Person (as defined below), (i) any Person directly or indirectly controlling, controlled by, or under common control with such specified Person, (ii) any executive officer or general partner of such specified Person, (iii) any member of the board of directors or board of managers (or bodies performing similar functions) of such specified Person, and (iv) any legal entity for which such specified Person acts as an executive officer or general partner; for purposes of this definition, the terms “controlling”, “controlled by”, or “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 the ownership of voting securities, by contract or credit arrangement, as trustee or executor, or otherwise.
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The number of Primary Shares, if any, to be reserved for sale by each Soliciting Dealer may be determined, from time to time, by RCS, on behalf of the Dealer Managers, upon prior consultation with the Company. In the absence of such determination, the Company shall, subject to the provisions of Section 3(c), accept subscription agreements based upon a first-come, first accepted reservation or other similar method. All of the Option Shares shall be reserved for Ladenburg. Under no circumstances will the Dealer Managers be obligated to underwrite or purchase any Shares for their own account and, in soliciting purchases of Shares, the Dealer Managers shall act solely as the Company’s agents and not as underwriters or principals.
In the event that any or all of the Option Shares are purchased by Ladenburg, payment of the purchase price for, and delivery of certificates for, such Option Shares shall be made at such place as shall be agreed upon by Ladenburg and the Company, on each Date of Delivery as specified in the notice from Ladenburg to the Company. Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to Ladenburg of certificates for the Option Shares to be purchased by it.
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Subject to certain limited exceptions as set forth in Section 6(h), payments for Primary Shares shall be made by checks payable to “UMB BANK, NATIONAL ASSOCIATION, ESCROW AGENT FOR AMERICAN REALTY CAPITAL PROPERTIES, INC.” Each Dealer Manager or a Soliciting Dealer, as applicable, shall forward the original checks for the purchase of Primary Shares, together with an original subscription agreement, completed and executed 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 the check for the purchase of Primary Shares were initially received by the Soliciting Dealer from the subscriber, the Soliciting Dealer shall transmit the subscription agreement and the check for the purchase of Primary Shares to the Escrow Agent by the end of the next Business Day following receipt of the check for the purchase of Primary Shares and the subscription agreement. When, pursuant to the 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 for the purchase of Primary Shares and the 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 the check for the purchase of Primary Shares. The Final Review Office shall, by the end of the next Business Day following its receipt of the subscription agreement and the check for the purchase of Primary Shares, forward both the subscription agreement and the check for the purchase of Primary Shares to the Escrow Agent. If any subscription agreement solicited by the Soliciting Dealer is rejected by a Dealer Manager or the Company, then the subscription agreement and the check for the purchase of Primary Shares will be returned to the rejected subscriber within ten (10) Business Days from the date of rejection.
(i) Subject to the discounts under special circumstances described in or otherwise provided in the “Plan of Distribution” section of the Prospectus, Section 3(a) or this Section 3(e), the Company agrees to pay the Dealer Managers selling commissions in the amount of six percent (6.0%) of the selling price of each Primary Share for which a sale is completed from the Primary Shares offered in the Offering. The Company will pay the Dealer Managers selling commissions in the amount of three and one-half percent (3.5%) of the selling price of each Primary Share sold pursuant to the Discounted Share Program for which a sale is completed. The Company will not pay selling commissions for sales of Primary Shares pursuant to the Directed Share Program or in connection with the sale of Primary Shares to investors whose contracts for investment advisory and related brokerage services include a fixed or “wrap” fee feature. The Dealer Managers may re-allow all or any portion of the selling commissions, subject to federal and state securities laws, to the Soliciting Dealer who sold the Primary Shares, as described more fully in the Soliciting Dealer Agreement.
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(ii) Subject to the discounts under special circumstances described in or otherwise provided in the “Plan of Distribution” section of the Prospectus, Section 3(a) or this Section 3(e), as compensation for acting as the dealer managers, the Company will pay the Dealer Managers, a dealer manager fee (the “Dealer Manager Fee”) in the amount of two percent (2.0%) of the selling price of each Primary Share for which a sale is completed from the Primary Shares offered in the Offering. The Company will pay the Dealer Managers a Dealer Manager Fee in the amount of 0.985% of the selling price of each Primary Share sold pursuant to the Discounted Share Program for which a sale is completed. No Dealer Manager Fee will be paid in connection with Primary Shares sold pursuant to the Directed Share Program. The Dealer Managers may re-allow all or any portion of the Dealer Manager Fee, subject to federal and state securities laws, to the Soliciting Dealer who sold the Primary Shares, as described more fully in the Soliciting Dealer Agreement.
(iii) Sales commissions payable to the Dealer Managers will be paid as follows: (a) on the fifteenth (15th) day after the investor subscribing for the Primary Shares is admitted as a shareholder of the Company, in an amount equal to 66 2/3% of the sales commissions payable with respect to such Primary Shares and (b) on the thirtieth (30th) day after the investor subscribing for the Primary Shares is admitted as a shareholder of the Company, in an amount equal to 33 1/3% of the sales commissions payable with respect to such Primary Shares; provided, however, if, on or prior to the fifteenth (15th) day after the closing of the Offering, Ladenburg purchases or contracts to purchase for the account of Ladenburg in the open market or otherwise any Primary Shares which were sold by a Dealer Manager or a Soliciting Dealer in respect of which a Dealer Manager or a Soliciting Dealer is entitled to a sales commission (a “Ladenburg Repurchase”), then, to the extent permitted by the applicable rules and regulations of FINRA, such Dealer Manager or Soliciting Dealer shall not be entitled to receive any sales commission with respect to the sale of such Primary Shares which became the subject of a Ladenburg Repurchase.
(iv) In no event shall the total aggregate compensation payable to the Dealer Managers and all Soliciting Dealers participating in the Offering, including, but not limited to, selling commissions and the Dealer Manager Fee, exceed eight percent (8.0%) of gross offering proceeds from the Offering in the aggregate.
(v) Notwithstanding anything to the contrary contained herein, if the Company pays any selling commission to the Dealer Managers for sale by a Soliciting Dealer of one or more Primary Shares and the subscription is rescinded as to one or more of the Primary Shares covered by such subscription, then the Company shall decrease the next payment of selling commissions or other compensation otherwise payable to the Dealer Managers by the Company under this Agreement by an amount equal to the commission rate established in this Section 3(e), multiplied by the number of Primary Shares as to which the subscription is rescinded. If no payment of selling commissions or other compensation is due to the Dealer Managers after such withdrawal occurs, then the Dealer Managers 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 Managers from the Company stating the amount owed as a result of rescinded subscriptions.
(vi) In no event shall the Dealer Managers be entitled to payment of any compensation in connection with the Offering if the Offering is not completed according to this Agreement; provided, however, that the reimbursement of out-of-pocket accountable expenses actually incurred by the Dealer Managers or persons associated with the Dealer Managers shall not be presumed to be unfair or unreasonable and shall be payable under normal circumstances.
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(a) The representations and warranties on the part of the Company and the Operating Partnership contained in this Agreement shall be true and correct in all material respects and the Company and the Operating Partnership 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, 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 Managers.
(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 required to be stated therein, in light of the circumstances under which they were made, or 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 the audited financial statements for the preceding fiscal year, the Dealer Managers 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 Managers, in form and substance satisfactory to the Dealer Managers, 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.
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(e) At or prior to the fifth Business Day following (i) the request by the Dealer Managers 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 Managers 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 Managers, 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 (3) Business Days prior to the date of the letter furnished pursuant to this Section 4(e).
(f) On the initial Effective Date, the Dealer Managers shall have received the opinion of Proskauer Rose LLP, acting as counsel for the Company, and a supplemental “negative assurances” letter from such counsel, each dated as of the Effective Date, and each in the form attached hereto as Exhibit B and Exhibit C, respectively.
(g) On the initial Effective Date, the Dealer Managers shall have received the opinion of Xxxxxxx LLP, acting as special counsel for the Company, dated as of the Effective Date, and in the form attached hereto as Exhibit D.
(h) 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 Managers 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 Operating Partnership 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 Operating Partnership 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.
(i) At or prior to the initial Effective Date, the Common Stock (including the Shares) shall have been approved for listing on The NASDAQ Capital Market (“NASDAQ”), subject only to official notice of issuance.
(j) At or prior to the initial Effective Date, FINRA shall have confirmed that it has not raised any objection with respect to the fairness and reasonableness of the terms and arrangements of the distribution of Shares pursuant to the Offering.
5. CONDITIONS RELATED TO THE CALL OPTION. In the event that Ladenburg exercises its option provided in Section 3(a) to purchase all or any portion of the Option Shares, the representations and warranties of the Company and the Operating Partnership contained in Section 1 and of Ladenburg contained in Section 2, or in certificates of any officer of the Company, the Operating Partnership or Ladenburg delivered pursuant to the provisions hereof, shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, Ladenburg shall have received:
(a) 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 Ladenburg, 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 (3) Business Days prior to the date of the letter furnished pursuant to this Section 5(a);
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(b) the opinion of Proskauer Rose LLP, acting as counsel for the Company, and a supplemental “negative assurances” letter from such counsel, each dated as of such Date of Delivery, and each in the form attached hereto as Exhibit B and Exhibit C, respectively;
(c) the opinion of Xxxxxxx LLP, acting as special counsel for the Company, dated as of such Date of Delivery, and in the form attached hereto as Exhibit D;
(d) 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 of Delivery, to the effect that: (i) the representations and warranties of the Company and the Operating Partnership 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 of Delivery; and (ii) the Company and the Operating Partnership 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 of Delivery; and
(e) confirmation that the Common Stock is listed on NASDAQ.
6. COVENANTS OF THE COMPANY AND THE OPERATING PARTNERSHIP. The Company and the Operating Partnership covenant and agree with the Dealer Managers as follows:
(d) BLUE SKY QUALIFICATIONS. If required, the Company will use commercially reasonable efforts to qualify the Shares for offering and sale under the securities or blue sky laws of such jurisdictions as the Dealer Managers and the Company shall mutually agree upon and to make such applications, file such documents and furnish such information as may be reasonably required for that purpose. The Company will, at the Dealer Managers’ request, furnish the Dealer Managers with a copy of such papers filed by the Company in connection with any such qualification. The Company will promptly advise the Dealer Managers of the issuance by such securities administrators of any stop order preventing or suspending the use of the Prospectus or of the institution of any proceedings for that purpose, and will use its commercially reasonable efforts to prevent the issuance of any such order and if any such order is issued, to use its commercially reasonable efforts to obtain the removal thereof as promptly as possible.
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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
(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.
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7. COVENANTS OF THE DEALER MANAGERS. Each Dealer Manager covenants and agrees with the Company as follows:
In addition, such 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 such Dealer Manager with certain Approved Sales Literature to be used by such Dealer Manager and the Soliciting Dealers in connection with the solicitation of purchasers of the Shares. Such Dealer Manager agrees not to deliver the Approved Sales Literature to any Person prior to the initial Effective Date. If such Dealer Manager elects to use such Approved Sales Literature after the initial Effective Date, then such Dealer Manager agrees that such material shall not be used by it in connection with the solicitation of purchasers of the Primary 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. Such Dealer Manager agrees that it will not use any Approved Sales Literature other than those provided to such Dealer Manager by the Company for use in the Offering.
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8. EXPENSES.
(a) Subject to Sections 8(b) and 8(c), each 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;
(iii) fees and expenses incurred in connection with any required filing with FINRA;
(iv) all the expenses of agents of the Company, excluding the Dealer Managers, 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.
(c) The Company shall reimburse the Dealer Managers and Soliciting Dealers for approved or deemed approved reasonable bona fide due diligence expenses in accordance with Section 3(f).
9. INDEMNIFICATION.
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Notwithstanding the foregoing, as required by the Company’s Charter, the indemnification and agreement to hold harmless provided in this Section 9(b) is further limited to the extent that no such indemnification by the Company of a Soliciting Dealer or a 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.
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(i) In the case of the Company indemnifying a 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 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) such Dealer Manager undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, in cases in which such Dealer Manager is found not to be entitled to indemnification.
(ii) In any case of indemnification other than that described in Section 9(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.
10. CONTRIBUTION.
(a) If the indemnification provided for in Section 9 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, each Dealer Manager and each Soliciting Dealer, respectively, from the proceeds received in the 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, each Dealer Manager and each 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.
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(b) The relative benefits received by the Company, each Dealer Manager and each Soliciting Dealer, respectively, in connection with the proceeds received in the 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 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 such Dealer Manager and such 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 Offering as set forth on such cover.
(c) The relative fault of the Company, each Dealer Manager and each 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 such 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 Managers 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 10 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 10. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this Section 10 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.
(e) Notwithstanding the provisions of this Section 10, no Dealer Manager nor Soliciting Dealer shall be required to contribute any amount by which the total price at which the Primary Shares sold in the Offering to the public by it exceeds the amount of any damages which such Dealer Manager and such 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 10, a Dealer Manager’s officers, directors, employees, members, partners, agents and representatives, and each Person, if any, who controls a 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 such Dealer Manager, and the 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. Each Soliciting Dealer’s respective obligation to contribute pursuant to this Section 10 is several in proportion to the number of Shares sold by such Soliciting Dealer in the Offering and is not joint with any other party.
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(i) Cause (as defined below);
(ii) A court of competent jurisdiction enters a decree or order for relief in respect of such 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 such Dealer Manager or for any substantial part of its property or orders the winding up or liquidation of such Dealer Manager’s affairs; or
(iii) Such 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 such 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 such Dealer Manager’s ability to perform its duties; or a material breach of this Agreement by such Dealer Manager which materially adversely affects the Dealer Manager’s ability to perform its duties, provided that (A) such Dealer Manager does not cure any such material breach within ten (10) 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, such Dealer Manager does not diligently take all reasonable steps to cure such breach or does not cure such breach within a reasonable time period.
(i) 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;
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(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 ten (10) Business Days after the issuance thereof; or
(vii) A material action, suit, proceeding or investigation of the type referred to in Section 1(f) 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 ten (10) days of receiving notice of such material breach from the Dealer Managers, 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.
(d) DELIVERY OF RECORDS UPON EXPIRATION OR EARLY TERMINATION. Upon the expiration or early termination of this Agreement for any reason, each 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 such Dealer Manager has entered into a Soliciting Dealer Agreement, (iii) notify all the 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 each Dealer Manager all compensation to which such Dealer Manager is or becomes entitled under Section 3(e) at such time as such compensation becomes payable.
12. MISCELLANEOUS.
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If to the Company:
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000 Xxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Facsimile No.: (000) 000-0000
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Attention: Xxxxxxx X. Xxxxxx
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with a copy to:
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Xxxxxxxxx Xxxx XXX
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Xxxxxx Xxxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Facsimile No.: (000) 000-0000
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Attention: Xxxxx X. Xxxx, Esq.
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Xxxxxx X. Xxxxxxxxxxx, Esq.
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If to the Dealer Managers:
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Realty Capital Securities, LLC
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Three Xxxxxx Place, Suite 3300
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Xxxxxx, Xxxxxxxxxxxxx 00000
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Facsimile No.: (000) 000-0000
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Attention: Xxxxxx Xxxxxx
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Managing Director
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with a copy to:
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Xxxxxxxxx Xxxx XXX
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Xxxxxx Xxxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Facsimile No: (000) 000-0000
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Attention: Xxxxx X. Xxxx, Esq.
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Xxxxxx X. Xxxxxxxxxxx, Esq.
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and a copy to:
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Ladenburg Xxxxxxxx & Co. Inc.
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000 Xxxxxxx Xxxxxx, 0xx Xxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Attention: Xxxxxx Xxxxxx
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with a copy to:
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XxXxxxxxx Will & Xxxxx LLP
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000 Xxxxxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000-0000
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Attention: Xxxxxxx X. Older
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If to the Operating Partnership:
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ARC Properties Operating Partnership, L.P.
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000 Xxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Facsimile No.: (000) 000-0000
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Attention: Xxxxxxx X. Xxxxxx
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with a copy to:
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Xxxxxxxxx Xxxx XXX
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Xxxxxx Xxxxx Xxxxxx
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Xxx Xxxx, Xxx Xxxx 00000
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Facsimile No.: (000) 000-0000
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Attention: Xxxxx X. Xxxx, Esq.
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Xxxxxx X. Xxxxxxxxxxx, 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 12(b).
(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. Each party hereto 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 each party hereto 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.
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(i) THIRD PARTY BENEFICIARIES. Except for the Persons referred to in Section 9 and Section 10, 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 9 and Section 10, 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 9 and Section 10 shall be a third party beneficiary of this Agreement.
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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, the Company and the Operating Partnership in accordance with its terms.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have each duly executed this Dealer Manager Agreement as of the day and year first set forth above.
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By:
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Name:
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Title:
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ARC PROPERTIES OPERATING PARTNERSHIP, L.P.
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By:
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its General Partner
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By:
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Name:
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Title:
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Accepted as of the date first above written:
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REALTY CAPITAL SECURITIES, LLC
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By:
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Name:
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Title:
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LADENBURG XXXXXXXX & CO. INC.
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By:
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Name:
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Title:
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Exhibit A
Form of Lock Up Agreement
___________________, 2011
Realty Capital Securities, LLC
Three Xxxxxx Place, Suite 3300
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: American Realty Capital Properties, Inc. — Initial Public Offering of Common Stock
Ladies and Gentlemen:
This Agreement is being delivered to you in connection with the Dealer Manager Agreement (the “Dealer Manager Agreement”) among American Realty Capital Properties, Inc., a Maryland corporation (the “Company”), Realty Capital Securities, LLC (“RCS”) and Ladenburg Xxxxxxxx & Co. Inc. (“Ladenburg” and together with RCS, the “Dealer Managers”), relating to the offering of shares of the common stock, par value $0.01 per share (the “Common Stock”) of the Company pursuant to a registration statement (File No. 333-172205) on Form S-11 (the “Offering”).
In order to induce you and the Company to sell shares of Common Stock at a discount, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with the Dealer Managers that, during the period beginning on and including the date of the closing of the Offering through and including the date that is the 180th day after the date of the closing of the Offering (the “Lock-Up Period”), the undersigned will not, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, grant any option for the sale of or otherwise dispose of, or announce the intention to otherwise dispose of, any Common Stock (including, without limitation, Common Stock which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations promulgated under the Securities Act of 1933, as amended (the “Securities Act”) (such shares, the “Beneficially Owned Shares”)) or securities convertible into or exercisable or exchangeable for Common Stock; (ii) enter into any swap, hedge or similar agreement or arrangement that transfers in whole or in part, the economic risk of ownership of the Beneficially Owned Shares or securities convertible into or exercisable or exchangeable for Common Stock, whether now owned or hereafter acquired by the undersigned or with respect to which the undersigned has or hereafter acquires the power of disposition, or (iii) engage in any short selling of the Common Stock or securities convertible into or exercisable or exchangeable for Common Stock.
The restrictions set forth in the immediately preceding paragraph shall not apply to any transfers made by the undersigned (i) as a bona fide gift to any member of the immediate family (as defined below) of the undersigned or to a trust the beneficiaries of which are exclusively the undersigned or members of the undersigned’s immediate family, (ii) by will or intestate succession upon the death of the undersigned, or (iii) as a bona fide gift to a charity or educational institution; provided, however, that in the case of any transfer described in clauses (i) and (ii) above, it shall be a condition to the transfer that (A) the transferee executes and delivers to the Dealer Managers, not later than one business day prior to such transfer, a written agreement, in substantially the form of this agreement (it being understood that any references to “immediate family” in the agreement executed by such transferee shall expressly refer only to the immediate family of the undersigned and not to the immediate family of the transferee) and otherwise satisfactory in form and substance to the Dealer Managers, and (B) if the undersigned is required to file a report under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) reporting a reduction in beneficial ownership of Common Stock or Beneficially Owned Shares or any securities convertible into or exercisable or exchangeable for Common Stock or Beneficially Owned Shares during the Lock-Up Period, the undersigned shall include a statement in such report to the effect that such transfer is being made as a gift or by will or intestate succession. For purposes of this paragraph, “immediate family” shall mean a spouse, child, grandchild or other lineal descendant (including by adoption), father, mother, father-in-law, mother-in-law, brother or sister of the undersigned; and “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act.
Any Common Stock or Beneficially Owned Shares acquired by the undersigned in the open market after the date of this Agreement will not be subject to the restrictions set forth in this agreement. After the date of this agreement, the undersigned may at any time enter into a written plan meeting the requirements of Rule 10b5-1 under the Exchange Act relating to the sale of Common Stock or Beneficially Owned Shares, if then permitted by the Company, provided, however, that the shares subject to such plan shall be subject to the restrictions set forth in this agreement.
In order to enable this covenant to be enforced, the undersigned hereby consents to the placing of legends or stop transfer instructions with the Company’s transfer agent with respect to any Common Stock or securities convertible into or exercisable or exchangeable for Common Stock.
The undersigned further agrees that (i) it will not, during the Lock-Up Period, make any demand or request for or exercise any right with respect to the registration under the Securities Act of any Common Stock or other Beneficially Owned Shares or any securities convertible into or exercisable or exchangeable for Common Stock or other Beneficially Owned Shares, and (ii) the Company may, with respect to any Common Stock or other Beneficially Owned Shares or any securities convertible into or exercisable or exchangeable for Common Stock or other Beneficially Owned Shares owned or held (of record or beneficially) by the undersigned, cause the transfer agent or other registrar to enter stop transfer instructions and implement stop transfer procedures with respect to such securities during the Lock-Up Period.
The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this agreement and that this agreement has been duly executed and delivered by the undersigned and is a valid and binding agreement of the undersigned. This agreement and all authority herein conferred are irrevocable and shall survive the death or incapacity of the undersigned and shall be binding upon the undersigned and upon the heirs, personal representatives, successors and assigns of the undersigned.
This agreement shall be governed by, and construed in accordance with, the laws of the State of New York.
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Very truly yours,
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(Name of Stockholder — Please Print)
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(Signature)
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Address:
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Exhibit B
Form of Legal Opinion of Proskauer
Exhibit C
Form of Negative Assurances Letter of Proskauer
Exhibit D
Form of Legal Opinion of Xxxxxxx
Exhibit E
Form of Irrevocable Letter of Direction
________________, 2011
[Name of applicable ARC Entity]1
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to that certain Subscription Agreement, dated __________, 2011 (the “Subscription Agreement”), by and between the undersigned and American Realty Capital Properties, Inc. (the “Company”).
In connection with my rights as a member of ____________ (the “Fund”), you hereby are irrevocably instructed to pay to the Company from the liquidating distribution to which the undersigned is entitled as a member of the Fund, an amount equal to $_________2. The undersigned hereby represents and warrants that he, she or it owns and holds his, her or its interest in the Fund beneficially and of record, free and clear of any suit, proceeding, security interest, lien or any other encumbrance of any kind or nature. This irrevocable letter of direction shall automatically terminate if the undersigned receives notice from the Company that it has not accepted the Subscription Agreement on or before ____________, 20113. The Company agrees to promptly notify the Fund if it has accepted the Subscription Agreement. The Company shall be deemed a third party beneficiary of this letter.
[Signatures on following pages.]
1 Either ARC Income Properties, LLC or ARC Income Properties III, LLC.
2 Equal to the number of Primary Shares purchased multiplied by $12.04 per share.
3 60 days after the effective date of the Company’s registration statement.
Corporate/Limited Liability Company Signature Page to Irrevocable Letter of Direction.
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[Name of Corporation/LLC]
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By:
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Name:
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Title:
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Individual Signature Page to Irrevocable Letter of Direction.
Partnership Signature Page to Irrevocable Letter of Direction.
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[Name of LP]
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By:
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Name:
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Title:
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Acknowledged and agreed to as
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of the date first written above:
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By:
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Name:
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Title:
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Exhibit F
Form of Subscription Agreement