AMERICAN REALTY CAPITAL NEW YORK RECOVERY REIT, INC. UP TO 175,000,000 SHARES OF COMMON STOCK EXCLUSIVE DEALER MANAGER AGREEMENT
AMERICAN
REALTY CAPITAL NEW YORK RECOVERY REIT, INC.
UP
TO 175,000,000 SHARES OF COMMON STOCK
, 2010
Realty
Capital Securities, LLC
Three
Xxxxxx Place, Suite 3300
Xxxxxx,
Xxxxxxxxxxxxx 00000
Ladies
and Gentlemen:
American
Realty Capital New York Recovery REIT, Inc. (the “Company”)
is a Maryland real estate investment trust 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, 2010, or the first year during which the Company begins material
operations. The Company proposes to offer (a) up to 150,000,000
shares of common stock, $.01 par value per share (the “Shares”),
for a purchase price of $10.00 per Share, 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 New York Recovery Advisors, 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) the
Registration Statement, the Prospectus and any amendments or supplements thereto
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 or omitted from the Registration Statement
or the Prospectus that are based upon written information furnished to the
Company by the Dealer Manager expressly for use in the Registration Statement or
Prospectus.
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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, 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 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.
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.
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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, 2010, 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 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 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 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)
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 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 or is required for the
performance of the Advisory Agreement by the Advisor. The Advisor 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 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 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 received any notice of proceedings
relating to the revocation or modification of any such certificate, authority or
permit.
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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 date following the initial
Effective Date; and (5) the liquidation or dissolution of the Company (such
period being the “Offering
Period”).
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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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(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. 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.
(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”). 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. The
Dealer Manager will expend the portion of the Dealer Manager Fee retained by the
Dealer Manager and not re-allowed substantially in accordance with an
expenditure budget approved by the Company, such approval not to be unreasonably
withheld or delayed. If the Dealer Manager desires to expend any
portion of the Dealer Manager Fee retained by the Dealer Manager in a manner
that is in material variance from such agreed-upon expenditure budget, then the
Dealer Manager shall obtain the prior approval of the Company, such approval not
to be unreasonably withheld or delayed.
(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.
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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 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.
(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.
The
parties hereto acknowledge that, as of the date of this Agreement, the Company
has advanced $25,000 to the Dealer Manager as an advance against the
reimbursement obligation of the Company in respect of certain reasonable bona fide due diligence
expenses incurred or to be incurred by the Dealer Manager, the incurrence of
which up to $25,000 hereby is deemed approved by the Company for purposes of
this Agreement and for which no further approval from the Company hereunder
shall be required. The Dealer Manager shall not seek any further
reimbursement from the Company for any reasonable bona fide due diligence
expenses unless and until such $25,000 amount has been expended by the Dealer
Manager on reasonable bona
fide due diligence expenses. Upon the termination of this
Agreement for any reason, then the Dealer Manager will return to the Company the
excess (if any) of such $25,000 amount over the amount of reasonable bona fide due diligence
expenses theretofore incurred by the Dealer Manager. It is understood
and agreed that the Company shall be responsible for the payment or
reimbursement of all approved reasonable bona fide due diligence
expenses incurred by the Dealer Manager or any Soliciting Dealer on or prior to
the Termination Date.
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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,
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:
(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 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, 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.
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(e) 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 and other than the post-effective amendment referred to in Section 4(d)), the
Dealer Manager shall have received from Xxxxx Xxxxxxxx LLP, 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 letter furnished by them 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 such
letter.
(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.
(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 any prescribed document which is part of the
Registration Statement 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. The use of any other sales material is expressly
prohibited.
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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 Section
7(b)(iii), 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;
(iii) to
reimburse the Dealer Manager and Soliciting Dealers for approved or deemed
approved reasonable bona fide due diligence expenses in accordance with Section
3(e);
(iv) fees
and expenses incurred in connection with any required filing with the
FINRA;
(v) 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
(vi) 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.
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8. INDEMNIFICATION.
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Notwithstanding
the foregoing, as required by Section II.G. of the NASAA REIT 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.
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(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 REIT 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.
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.
25
(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 prorata 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.
(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.
26
(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.
(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;
27
(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.
(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;
28
(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.
(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 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.
29
11. MISCELLANEOUS.
thereof
as set forth below:
If to the
Company: American
Realty Capital New York Recovery REIT, Inc.
000 Xxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxxxxx
X. Xxxxxx
with a
copy to:
Proskauer
Rose LLP
0000
Xxxxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxxx
X. Xxxx, Esq.
Xxxxx X.
Gerkis, Esq.
If to the
Dealer
Manager:
Realty Capital Securities, LLC
Three
Xxxxxx Place, Suite 3300
Xxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxxxx
Xxxxxx
Managing
Director
30
with a
copy to:
Proskauer
Rose LLP
0000
Xxxxxxxx
Xxx Xxxx,
XX 00000
Facsimile
No: (000) 000-0000
Attention: Xxxxx
X. Xxxx, Esq.
Xxxxx X.
Gerkis, Esq.
If to the
Advisor:
New York Recovery Advisor, LLC
000 Xxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxxxxx
X. Xxxxxx
with a
copy to:
Proskauer
Rose LLP
0000
Xxxxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Facsimile
No.: (000) 000-0000
Attention: Xxxxx
X. Xxxx, Esq.
Xxxxx X.
Gerkis, Esq.
Any party
may change its address specified above by giving each party notice of such
change in accordance with this Section
11(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.
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(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 and entities 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 or entity 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 and entities 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 and entities referred to in Section 8 and Section 9 shall be a
third party beneficiary of this Agreement.
32
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.
33
[Signatures
on following page]
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AMERICAN
REALTY CAPITAL NEW YORK RECOVERY REIT, INC.
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By:
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Name:
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Title:
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NEW
YORK RECOVERY ADVISORS, LLC
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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:
REALTY
CAPITAL SECURITIES, LLC