AMERICAN REALTY CAPITAL TRUST, INC. 150,000,000 SHARES OF COMMON STOCK $.01 PAR VALUE PER SHARE DEALER MANAGER AGREEMENT
150,000,000
SHARES
OF
COMMON
STOCK
$.01
PAR
VALUE PER SHARE
__________,
2008
American
Realty Capital Securities, LLC
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▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies/Gentlemen:
American
Realty Capital Trust, Inc. (the “Company”), a Maryland corporation, intends to
qualify as a real estate investment trust (a “REIT”) under federal income tax
laws. The Company was formed on _______, 2007, and is governed by the By-Laws
(the “By-Laws”) and the Articles of Incorporation, (the “Articles”) in the form
included as Exhibits to the Registration Statement, as described in
Section 1(a) hereof (such By-Laws and Articles being hereinafter referred
to as the “Organizational Documents”). The advisor to the Company is Lightstone
Value Plus REIT LLC, a Delaware limited liability company (the “Advisor”).
Unless otherwise defined, capitalized terms used herein shall have the same
meaning as in the Articles.
The
Company is offering (i) on a “best efforts” basis up to 150,000,000 shares
of common stock, $.0l par value per share (the “Shares”) for a purchase price of
$10.00 per Share with a minimum initial investment of $2,500, and (ii) up
to 25,000,000 Shares for a purchase price of $9.50 per Share for issuance
through the Company’s Distribution Reinvestment Program, all upon the other
terms and conditions set forth in the Prospectus, as described in
Section 1(a) hereof. The subscribers, each of whom will be required to
enter into a subscription agreement substantially similar to the form of
Subscription Agreement (the “Subscription Agreement”) attached as Appendix C to
the Prospectus, will, upon acceptance of their subscriptions by and in the
discretion of the Company, become stockholders of the Company (the
“Stockholders”).
1. REPRESENTATION
AND WARRANTIES OF THE COMPANY. The Company hereby represents, warrants and
agrees with you that:
(a) REGISTRATION
STATEMENT AND PROSPECTUS. A registration statement (File No. ___________)
on Form S-11 with respect to an aggregate of 175,000,000 Shares. Such
175,000,000 Shares include 25,000,000 Shares issuable pursuant to the Company’s
Distribution Reinvestment Program, has been prepared by the Company pursuant
to
the Securities Act of 1933, as amended (the “Act”), and the rules and
regulations (the “Rules and Regulations”) of the Securities and Exchange
Commission (the “Commission”) thereunder and has been filed with the Commission
under the Act; one or more amendments to such registration statement have been
or may be so prepared and filed. As used in this Agreement, the term
“Registration Statement” means such registration statement in the form in which
it becomes effective, the term “Effective Date” means the date upon which the
Registration Statement is or was first declared effective by the Commission
and
the term “Prospectus” means the prospectus in the form constituting a part of
the Registration Statement as well as in the form first filed with the
Commission pursuant to its Rule 424 after the Registration Statement
becomes effective. The Commission has not issued any stop order suspending
the
effectiveness of the Registration Statement and no proceedings for that purpose
have been instituted or are pending before or threatened by the Commission
under
the Act.
(b) COMPLIANCE
WITH THE ACT. From the time the Registration Statement becomes effective and
at
all times subsequent thereto up to and including the Termination Date (as
defined in Section 2(c) hereof):
(i) the
Registration Statement, the Prospectus and any amendments or supplements thereto
will contain all statements which are required to be stated therein by the
Act
and the Rules and Regulations and will comply in all material respects with
the
Act and the Rules and Regulations; and
(ii) neither
the Registration Statement nor the Prospectus nor any amendment or supplement
thereto will at any such time 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
were
made, not misleading.
(c) NO
SUBSEQUENT MATERIAL EVENTS. Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus and prior
to
the Termination Date, except as contemplated in the Prospectus or as disclosed
in a supplement or amendment thereto or in the periodic financial statements
of
the Company, the Company has not and will not have:
(i) incurred
any material liabilities or obligations, direct or contingent; or
(ii) entered
into any material transaction, not in the ordinary course of business and,
except as so disclosed, there has not been and will not be any material adverse
change in the financial position or results of operations of the
Company.
(d) CORPORATION
STATUS. The Company is a corporation duly formed and validly existing under
the
General Corporation Law of Maryland.
2
(e) AUTHORIZATION
OF AGREEMENT. This Agreement has been duly and validly authorized, executed
and
delivered by or on behalf of the Company and constitutes the valid and binding
agreement of the Company 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). The performance
of this Agreement, the consummation of the transactions contemplated herein
and
the fulfillment of the terms hereof, do not and will not result in a breach
of
any of the terms and provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, voting trust agreement, note, lease or
other
agreement or instrument to which the Company is a party or by which the Company
or its property is bound, or under any rule or regulation or order of any court
or other governmental agency or body with jurisdiction over the Company or
any
of its properties; and no consent, approval, authorization or order of any
court
or governmental agency or body has been or is required for the performance
of
this Agreement or for the consummation of the transactions contemplated hereby
(except as have been obtained under the Act, from the National Association
of
Securities Dealers, Inc. (the “NASD”) or as may be required under state
securities or 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).
(f) PENDING
ACTIONS. There is no material action, suit or proceeding pending or, to the
knowledge of the Company, threatened, to which the Company is a party, before
or
by any court or governmental agency or body which adversely affects the offering
of the Shares.
(g) REQUIRED
FILINGS. There are no contracts or other documents required to be filed by
the
Act or the Rules and Regulations of the Commission thereunder as exhibits to
the
Registration Statement which have not been so filed.
(h) FEDERAL
INCOME TAX LAWS. The Corporation has obtained an opinion of Proskauer Rose
LLP
stating that, under existing federal income tax laws and regulations, assuming
the Company acts as described in the “Federal Income Tax Considerations” section
of the Prospectus and timely files the requisite elections, counsel is of the
opinion that the Company has been organized in conformity with the requirements
for qualification as a REIT beginning with its taxable year ending
December 31, 2008, and that its prior, current and anticipated methods of
operation (as described in the Prospectus and represented by management) has
enabled and should enable it to satisfy the REIT Requirements (as defined in
the
Prospectus).
(i) INDEPENDENT
PUBLIC ACCOUNTANTS. To the best of the Company’s knowledge, the accountants who
have certified certain financial statements appearing in the Prospectus are
independent public accountants within the meaning of the Act and the Rules
and
Regulations.
3
(j) ESCROW
AGREEMENT. The Company has entered into an escrow agreement (the “Escrow
Agreement”) with American Realty Capital Securities, LLC (the “Dealer Manager”),
and ________________________ (the “Escrow Agent”), in the form included as an
exhibit to the Registration Statement, which provides for the establishment
of
an escrow account (the “Escrow Account”). During the period commencing with the
Effective Date and ending on the Termination Date, the Company will deposit
subscribers’ funds in the Escrow Account as described in Section 2
below.
(k) SALES
LITERATURE. In addition to and apart from the Prospectus, the Company may use
certain supplemental sales material in connection with the offering of the
Shares. This material, prepared by the Advisor, would consist of a brochure
describing the Advisor and its Affiliates and the objectives of the Company
and
may also contain pictures and summary descriptions of properties similar to
those to be acquired by the Company that Affiliates of the Company have
previously acquired. This material may also include pictures and summary
descriptions of properties similar to those to be acquired by the Company,
as
well as a brochure, audio-visual materials and tape presentations highlighting
and explaining various features of the Offering, properties of prior real estate
programs and real estate investments in general; and articles and publications
concerning real estate. Business reply cards, introductory letters and seminar
invitation forms may be sent to Soliciting Dealers (as hereinafter defined)
and
prospective investors. These materials shall be hereinafter referred to
collectively as the “sales literature.” No person has been authorized to prepare
for, or furnish to, a prospective investor, any sales literature other than:
(i) that described herein; and (ii) so-called “tombstone” newspaper
advertisements/solicitations of interest, limited to identifying the Offering
and the location of sources of further information. Use of any sales literature
is conditioned upon filing with and, if required, clearance by appropriate
regulatory agencies (including, without limitation, the NASD and any state
securities regulator or commissioner). Such clearance (if provided), however,
does not indicate that the regulatory agency allowing the use of the materials
has passed on the merits of the Offering or the adequacy or accuracy of the
sales materials. Except as described herein, the Company has not authorized
the
use of other supplemental literature or sales material in connection with this
Offering.
Although
it is believed that the information contained in the sales literature or sales
material will not conflict with any of the information set forth in the
Prospectus, the sales literature will not purport to be complete, and should
not
be considered as a part of the Prospectus, or as incorporated in the Prospectus
by reference, or as forming the basis of the Offering.
(l) AUTHORIZATION
OF THE SHARES. The Company has an authorized and outstanding capitalization
as
set forth in the Registration Statement and Prospectus. The sale of the Shares
has been duly and validly authorized by the Company, and when subscriptions
for
the Shares have been accepted by the Company as contemplated in the Prospectus
and the Shares have been issued to the respective subscribers, the Shares will
represent ownership in the Company and will conform to the description thereof
contained in the Prospectus. Stockholders have no preemptive rights to purchase
or subscribe for securities of the Company, and the Shares are not convertible
or subject to redemption at the option of the Company. The Shares are entitled
to one vote per Share and do not have cumulative voting rights. Subject to
the
rights of the holders of any class of capital stock of the Company having any
preference or priority over the Shares, the Stockholders are entitled to
distributions in such amounts as may be declared by the Board of Directors
from
time to time out of funds legally available for such payments and, in the event
of liquidation, to share ratably in any assets of the Company remaining after
payment in full of all creditors and provisions for any liquidation preferences
on any outstanding preferred stock ranking prior to the Shares.
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2. OFFERING
AND SALE OF THE SHARES. On the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein
set
forth, the Company hereby appoints you as its exclusive Dealer Manager to
solicit and to cause other dealers (as described in Section 2(a) hereof) to
solicit subscriptions for the Shares at the subscription price to be paid and
otherwise upon the other terms and conditions set forth in the Prospectus and
in
the Subscription Agreement, and you agree to use your best efforts as such
Dealer Manager to procure subscribers for the Shares, during the period
commencing with the Effective Date and ending on the Termination Date (the
“Offering Period”). The number of Shares, if any, to be reserved for sale by
each Soliciting Dealer may be decided by the mutual agreement, from time to
time, of you and the Company. In the absence of such mutual agreement, the
Company shall, subject to the provisions of Section 2(b) hereof accept
Subscription Agreements based upon a first-come, first accepted reservation
or
other similar method.
(a) SOLICITING
DEALERS. The Shares offered and sold through you under this Agreement shall
be
offered and sold only by you and, at your sole option, any other securities
dealers whom you may retain (collectively the “Soliciting Dealers”), each of
whom are members of the NASD, executing agreements with you substantially in
the
form of the Soliciting Dealers Agreement attached hereto as Exhibit
A.
(b) SUBSCRIPTION
AGREEMENTS AND SUBSCRIBERS’ FUNDS. Each person desiring to purchase Shares
through you or any other Soliciting Dealer will be required to complete and
execute the Subscription Agreement and to deliver such document to you or such
Soliciting Dealer, together with a check payable to the order of
“____________________, Escrow Agent for American Realty Capital Trust, Inc.” in
the amount of $10 per Share. Each Soliciting Dealer shall forward any such
Subscription Agreement and check to you not later than noon of the next business
day after receipt of such Subscription Agreement, if the Soliciting Dealer
conducts its internal supervisory procedures at the location where the
Subscription Agreement and check were initially received. When such internal
supervisory procedures are to be performed at a different location (the “Final
Review Office”), the Subscription Agreement and check must be transmitted to the
Final Review Office by the end of the next business day following receipt of
the
Subscription Agreement and check by the Soliciting Dealer. The Final Review
Office will, by the next business day following receipt of the Subscription
Agreement and check, forward both the Subscription Agreement and check to you
as
processing broker-dealer in order that you may complete your review of the
documentation and process the Subscription Agreement and check. The Company
will
have representatives available to review the Subscription Agreement at your
location in order to determine whether it wishes to accept the proposed
purchaser as a Stockholder, it being understood that the Company reserves the
unconditional right to reject the tender of any Subscription Agreement and
check
(exclusive of the Company’s Distribution Reinvestment Program). Any check
received by you directly or as processing broker-dealer from the Soliciting
Dealers will, in all cases, be forwarded to the Escrow Agent as soon as
practicable, but in any event by the end of the second business day following
receipt by you of the Subscription Agreement and check. The Company will
promptly notify you or the Soliciting Dealer, as appropriate, of any rejection,
and you shall send the check and the Subscription Agreement to the Escrow Agent
with directions to promptly return both the Subscription Agreement and check
to
the rejected subscriber. All subscription funds must be deposited in the Escrow
Account.
5
Nothing
contained in this Section 2 shall be construed to impose upon the Company
the responsibility of assuring that prospective purchasers meet the suitability
standards contained in the Prospectus or to relieve you or any of the Soliciting
Dealers of the responsibility of complying with the Rules of the
NASD.
(c) TERMINATION
OF THE OFFERING. The Offering Period will terminate on a date on or before
one
year from the date of the Prospectus (subject to requalification in certain
states, the Company may extend the Offering Period from time to time, but in
no
event for longer than two years from the date of the original Prospectus),
subject in any event to the Company’s right to terminate the Offering at any
time (the “Termination Date”) and the proceeds will be applied as set forth in
the Prospectus.
(d) DEALER-MANAGER
COMPENSATION.
(i) The
Company agrees to pay to you a sales commission of 6.5% of the sales price
for
each Share sold (except for Special Sales) from the 150,000,000 Shares offered
on a “best efforts” basis, as set forth in the Prospectus under the caption
“Plan of Distribution.” In lieu of reimbursement of specific expenses, and as
compensation for acting as the managing dealer, you will also receive, subject
to the limitations described herein and in the Prospectus, a managing dealer
fee
equal to 3.5% of the sale price from the 150,000,000 Shares offered on a “best
efforts” basis, of which such fee may be retained or reallowed by you, subject
to federal and state securities laws, to the Soliciting Dealer who sold the
Shares, as described more fully in the Soliciting Dealers Agreement. No sales
commissions or dealer manager fees will be paid in connection with common stock
sold under the Company’s distribution reinvestment plan.
Single
Purchasers (as defined below) purchasing more than $250,000 worth of Shares
(25,000 Shares) will be entitled to a reduced Share purchase price and a
reduction in selling commissions payable in connection with the purchase of
such
Shares in accordance with the following schedule:
6
|
Amount
of Single
Purchaser’s
Investment
|
Purchase
price per Share for incremental
Share
in discount range
|
Maximum
Commission
Per
Share
|
|
$1,000
- $250,000
|
$10.00
|
$0.65
|
|
$250,001
- $500,000
|
$9.85
|
$0.55
|
|
$500,001
- $750,000
|
$9.70
|
$0.40
|
|
$750,001
- $1,000,000
|
$9.60
|
$0.30
|
|
$1,000,001
- $5,000,000
|
$9.50
|
$0.20
|
Any
reduction from the amount of selling commissions otherwise payable to you and
reallowable to a Soliciting Dealer in respect of a purchaser’s subscription will
be credited to the purchaser in the form of additional whole Shares purchased
net of commissions. No fractional Shares will be issued. As to sales of Shares
which are entitled to the above described volume discounts, the Company will
pay
the reduced selling commissions set forth above.
Selling
commissions for purchases of $5,000,000 or more will, in the Company’s sole
discretion, be reduced to $0.20 per Share or less, but in no event will the
proceeds to the Company from the sale of such Shares be less than $9.20 per
Share (except for Shares sold to affiliates of the Company at a price of $9.10
per share, which is the purchase price per Share net of any selling commissions
and organization and offering expenses). In the event of a sale of $5,000,000
or
more, the Company will supplement the Prospectus in the manner described in
the
Prospectus under the section “Volume Discounts”.
Certain
subscriptions may be combined for the purpose of crediting a purchaser or
purchasers with additional Shares for the above described volume discount and
for determining commissions payable to you and reallowable to Soliciting Dealers
so long as all such combined purchases are made through the same Soliciting
Dealer and approved by the Company. As used herein, the term “Single Purchaser”
will include (i) any person or entity, or persons or entities, acquiring
Shares as joint purchasers; (ii) all profit-sharing, pension and other
retirement trusts maintained by a given corporation, partnership or other
entity; (iii) all funds and foundations maintained by a given corporation
partnership or other entity; and (iv) all profit-sharing, pension and other
retirement trusts and all funds or foundations over which a designated bank
or
other trustee, person or entity (except an investment advisor registered under
the Investment Advisors Act of 1940) exercises discretionary authority with
respect to an investment in the Company.
The
investor must ▇▇▇▇ the “Additional Investment” space on the Subscription
Agreement Signature Page, and set forth the basis for the discount and identity
the orders to be combined in order for subscriptions to be combined. The Company
is not responsible for failing to combine subscriptions, where the investor
fails to ▇▇▇▇ the “Additional Investment” space.
7
If
the
Subscription Agreements for the subscriptions to be combined are submitted
at
the same time, then the additional Shares to be credited to the purchasers
as a
result of such combined purchases will be credited on a pro-rata basis. If
the
Subscription Agreements for the subscriptions to be combined are not submitted
at the same time, then any additional Shares to be credited as a result of
such
combined purchases will be credited to the last component purchase, unless
the
Company is otherwise directed in writing at the time of such submission; except
however, the additional Shares to be credited to any Tax-Exempt Entities whose
subscriptions are combined for purposes of the volume discount will be credited
only on a pro-rata basis based on the amount of the investment of each
Tax-Exempt Entity and their combined purchases.
In
the
event the dollar amount of commissions paid for such combined purchases exceeds
the maximum commissions for such combined purchases (taking the volume discount
into effect), you will be obligated to forthwith return to the Company any
excess commissions received. The Company may adjust any future commissions
due
to you for any such excess commissions that have not been returned.
Notwithstanding
the foregoing, it is understood and agreed that no commission shall be payable
with respect to particular Shares if the Company rejects a proposed subscriber’s
Subscription Agreement, which it may do for any reason or for no reason, as
set
forth in the form of Subscription Agreement. In addition, no selling commission
shall be payable in connection with the sale of Shares to employees and
associates of the Company and its Affiliates, the Advisor, affiliates of the
Advisor, the Dealer Manager or the Soliciting Dealers.
Volume
discounts will not be available to California residents to the extent that
such
discounts do not comply with the provisions of Rule 260.145.51 adopted
pursuant to the California Corporate Securities Law of 1968, which provides
that
volume discounts can be made available to California residents only in
accordance with the following conditions: (i) there can be no variance in
the net proceeds to the Company from the sale of the Shares to difference
purchasers of the same offering; (ii) all purchasers of the Shares must be
informed of the availability of quantity discounts; (iii) the same volume
discounts must be allowed to all purchasers of Shares which are part of the
offering; (iv) the minimum amount of shares as to which volume discounts
are allowed cannot be less than $10,000; (v) the variance in the price of
the shares must result solely from a different range of commissions, and all
discounts must be based on a uniform scale of commissions; and (vi) no
discounts are allowed to any group of purchasers. Accordingly, volume discounts
for California residents will be available in accordance with the foregoing
table of uniform discount levels based on dollar volume of shares purchased,
but
no discounts are allowed to any group of purchasers, and no subscriptions may
be
aggregated as part of a combined order for purposes of determining the number
of
Shares issued.
(ii) All
sales
commissions payable to you will be paid on a monthly basis, substantially
concurrently with the acceptance of a subscriber as a Stockholder by the
Company, in an amount equal to the sales commissions payable with respect to
such Shares; provided however, the Company reserves the right, at its sole
discretion, to change the frequency of the payment of such commissions to a
monthly basis.
8
3. COVENANTS
OF THE COMPANY. The Company covenants and agrees with you as
follows:
(a) REGISTRATION
STATEMENT. The Company will use its best efforts to cause the Registration
Statement and any subsequent amendments thereto to become effective as promptly
as possible and will not, at any time after the Effective Date, file any
amendment to the Registration Statement or supplement to the Prospectus of
which
you shall not previously have been advised and furnished a copy at a reasonable
time prior to the proposed filing or to which you shall have reasonably objected
or which is not, to the best of the Company’s knowledge in compliance with the
Act and the Rules and Regulations. The Company will prepare and file with the
Commission and will use its best efforts to cause to become effective as
promptly as possible:
(i) any
amendments to the Registration Statement or supplements to the Prospectus which
may be required pursuant to the undertakings in the Registration Statement;
and
(ii) upon
your
reasonable request any amendments to the Registration Statement or supplements
to the Prospectus which, in the opinion of you or your counsel, may be necessary
or advisable in view of the requirements of the Act and the Rules and
Regulations in connection with the offer and sale of the Shares during the
Offering Period.
(b) SEC
ORDERS. As soon as the Company is advised or obtains knowledge thereof, it
will
advise you of any request made by the Commission for amending the Registration
Statement, supplementing the Prospectus or for additional information, or of
the
issuance by the Commission of any stop order or of any other order preventing
or
suspending the use of the Prospectus or the institution of any proceedings
for
that purpose, and will use its best efforts to prevent the issuance or any
such
order and, if any such order is issued, to obtain the removal thereof as
promptly as possible.
(c) BLUE
SKY
QUALIFICATIONS. The Company will use its best efforts to qualify the Shares
for
offering and sale under the securities or blue sky laws of such jurisdictions
as
you may reasonably request and to make such applications, file such documents
and furnish such information as may be reasonably required for that purpose.
The
Company will, at your request, furnish you copies of all material documents
and
correspondence sent to or received from such jurisdictions (including, but
not
limited to, summaries of telephone calls and copies of telegrams) and will
promptly advise you as soon as the Company obtains knowledge thereof to the
effect that the Shares are qualified for offering and sale in each such
jurisdiction. The Company will promptly advise you of any request made by the
securities administrators of each such jurisdiction for revising the
Registration Statement or the Prospectus or for additional information or 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 best efforts to prevent the issuance of
any
such order and if any such order is issued, to obtain the removal thereof as
promptly as possible. The Company will furnish you with a Blue Sky Survey dated
as of the Effective Date, which will be supplemented to reflect changes or
additions to the information disclosed in such survey.
9
(d) AMENDMENTS
AND SUPPLEMENTS. If at any time when a Prospectus relating to the Shares is
required to be delivered under the Act, any event shall have occurred to the
knowledge of the Company as a result of which the Prospectus as then amended
or
supplemented would include any untrue statement of a material fact, or omit
to
state a material fact necessary to make the statements therein not misleading
in
light of the circumstances existing at the time it is so required to be
delivered to a subscriber, or if it is necessary at any time to amend the
Registration Statement or supplement the Prospectus relating to the Shares
to
comply with the Act, the Company will promptly notify you thereof and will
prepare and file with the Commission an amendment or supplement which will
correct such statement or effect such compliance.
(e) COPIES
OF
REGISTRATION STATEMENT. The Company will furnish you copies of the Registration
Statement (only one of which need be signed and need include all exhibits),
the
Prospectus and all amendments and supplements thereto, including any amendment
or supplement prepared after the Effective Date, and such other information
with
respect to the Company as you may from time to time reasonably request, in
each
case as soon as available and in such quantities as you may reasonably
request.
(f) QUALIFICATION
TO TRANSACT BUSINESS. The Company will take all steps necessary to ensure that
at all times the Company will be validly existing 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.
(g) AUTHORITY
TO PERFORM AGREEMENTS. The Company undertakes to obtain all consents, approvals,
authorizations or orders of any court or governmental agency or body which
are
required for the performance of this Agreement and under the Organizational
Documents or the consummation of the transactions contemplated hereby and
thereby, respectively, or the conducting by the Company of the business
described in the Prospectus.
(h) COPIES
OF
REPORTS. The Company will use its best efforts to furnish to you as promptly
as
shall be practicable the following:
(i) a
copy of
each report or general communication (whether financial or otherwise) sent
to
the Stockholders;
(ii) a
copy of
each report (whether financial or otherwise) filed with the Commission;
and
10
(iii) such
other information as you may from time to time reasonably request regarding
the
financial condition and operations of the Company including, but not limited
to,
copies of operating statements of properties acquired by the
Company.
(i) USE
OF
PROCEEDS. The Company will apply the proceeds from the sale of the Shares as
stated in the Prospectus or, if for any reason whatsoever all or a portion
of
the proceeds of the Offering are not applied or committed for use as stated
within 36 months of the Termination Date, or if at least 200,000 Shares are
not
sold within one year from the effective date of the Prospectus, the Company
shall promptly return those proceeds from the sale of the Shares not so applied
or committed, or from the sale of the Shares below 200,000, as stated in the
Prospectus, with interest, to the subscribers, each subscriber sharing in the
return in the ratio that the number of the Shares owned by such subscriber
bears
to the total number of the Shares owned by all subscribers.
(j) ORGANIZATION
AND OFFERING EXPENSES. In no event shall the total of the organizational
expenses and expenses of the Offering to be paid directly by the Company exceed
1.5% of the gross proceeds of the Offering.
4. COVENANTS
OF THE DEALER MANAGER. You covenant and agree with the Company on your behalf
and on behalf of the Soliciting Dealers as follows:
(a) COMPLIANCE
WITH LAWS. With respect to your participation and the participation by each
Soliciting Dealer in the offer and sale of the Shares (including, without
limitation any resales and transfers of Shares), you agree, and each Soliciting
Dealer agrees, to comply and shall comply with any applicable requirements
of
the Act, the Securities Exchange Act of 1934, as amended, and the published
rules and regulations of the Commission thereunder, and the applicable state
securities or blue sky laws, and the Rules of the NASD, specifically including,
but not in any way limited to, Rules 2420, 2440, 2730, 2740, and 2750
therein. In particular, you agree not to deliver the sales literature (as
defined above) to any person prior to the Effective Date and, after the
Effective Date, not to deliver the sales literature to any person unless the
sales literature is accompanied or preceded by the Prospectus. In addition,
you
shall, in accordance with applicable law or as prescribed by any state
securities administrator, provide or cause Soliciting Dealers to provide to
any
prospective investor copies of any prescribed document which is part of the
Registration Statement.
With
respect to your and each Soliciting Dealer’s participation in any resales or
transfers of the Shares, you agree, and each Soliciting Dealer agrees, to comply
and shall comply with any applicable requirements as set forth above. In
addition, you and each Soliciting Dealer agree that should you or they assist
with the resale or transfer of the Shares, you and each Soliciting Dealer will
fulfill the obligations pursuant to Sections 3(b) and 4(d) of
Rule 2810 of the Rules of the NASD.
(b) NO
ADDITIONAL INFORMATION. In offering the Shares for sale, you and each Soliciting
Dealer shall not give or provide any information or make any representation
other than those contained in the Prospectus, the sales literature or any other
document provided to you for such purpose by the Company.
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(c) SALES
OF
SHARES. You and each Soliciting Dealer shall solicit purchases of the Shares
only in the jurisdictions in which you and such Soliciting Dealer are legally
qualified to so act and in which you and each Soliciting Dealer have been
advised by the Company that such solicitations can be made.
(d) SUBSCRIPTION
AGREEMENT. Subscriptions will be submitted by you and each Soliciting Dealer
to
the Company only on the form which is included as Appendix C to the Prospectus.
You and each Soliciting Dealer understand and acknowledge that the Subscription
Agreement must be executed and initialed by the subscriber.
(e) SUITABILITY.
In offering the Shares to any person, you and each Soliciting Dealer shall
have
reasonable grounds to believe (based on such information as the investment
objectives, other investments, financial situation and needs of the person
or
any other information known by you after due inquiry) that: (i) such person
has the capability of understanding the fundamental aspects of the Company,
which capacity may be evidenced by the following: (A) the nature of
employment experience; (B) educational level achieved; (C) access to
advice from qualified sources, such as attorneys, accountants and tax advisors;
and (D) prior experience with investments of a similar nature;
(ii) such person has apparent understanding of: (A) the fundamental
risks and possible financial hazards of this type of investment; (B) the
lack of liquidity of this investment; (C) the Advisor’s role in directing
or managing the investment; and (D) the tax consequences of the investment;
and (iii) such person has the financial capability to invest in the Company
and you or each Soliciting Dealer (as the case may be) shall maintain records
disclosing the basis upon which you and each Soliciting Dealer determined the
suitability of any persons offered Shares. Notwithstanding the foregoing, you
and each Soliciting Dealer shall have reasonable grounds to believe that such
person has either: (a) a minimum annual gross income of $70,000 and a
minimum net worth (exclusive of home, home furnishing and automobiles) of
$70,000; or (b) a minimum net worth (determined with the foregoing
exclusions) of $250,000. Suitability standards are higher in certain states
as
set forth in the Subscription Agreement and the Prospectus. You and/or the
Soliciting Dealers shall maintain, for at least six years, a record of the
information obtained to determine that an investor meets the suitability
standards imposed on the offer and sale of the Shares (both at the time of
the
initial subscription and at the time of any additional subscriptions) and a
representation of the investor that the investor is investing for the investor’s
own account or, in lieu of such representation, information indicating that
the
investor for whose account the investment was made met the suitability
standards.
(f) DUE
DILIGENCE. Prior to offering the Shares for sale, you and each Soliciting Dealer
shall have conducted an inquiry such that you have reasonable grounds to
believe, based on information made available to you by the Company through
the
Prospectus or other materials, that all material facts are adequately and
accurately disclosed and provide a basis for evaluating the purchase of the
Shares. In determining the adequacy of disclosed facts pursuant to the
foregoing, you and each Soliciting Dealer may obtain, upon request, information
on material facts relating at a minimum to the following:
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(1) items
of
compensation;
(2) Company
properties, if any;
(3) tax
aspects;
(4) conflicts
and risk factors; and
(5) appraisals
and other pertinent reports.
Notwithstanding
the foregoing, you and each Soliciting Dealer may rely upon the results of
an
inquiry conducted by another Soliciting Dealer, provided that:
(i) such
Soliciting Dealer has reasonable grounds to believe that such inquiry was
conducted with due care;
(ii) the
results of the inquiry were provided to you with the consent of the Soliciting
Dealer conducting or directing the inquiry; and
(iii) no
Soliciting Dealer that participated in the inquiry is an affiliate of the
Company or the Advisor.
(g) OFFERING
PRICE ADJUSTMENT. If, after the Effective Date, the Company shall adjust the
initial purchase price of $10.00 per Share for the 150,000,000 Shares to be
offered for sale on a “best efforts” basis in the Offering, you agree (and each
Soliciting Dealer agrees) that the total of all compensation payable to the
Dealer Manager as provided in Section 2(d) above, shall be adjusted
proportionally. In no event shall the total of all such compensation paid to
you
and to all Soliciting Dealers (i.e., the aggregate of the sales commission
exceed six and a half percent (6.5%)
of the
total of all subscription proceeds received by the Company.
(h) NOTIFICATION
OF CONFERENCES AND SEMINARS. So that we may comply with NASD requirements,
we
will require all Soliciting Dealers to notify us of any educational seminars
or
conferences that they conduct not in connection with us.
Prior
to
the sale of the Shares, you and each Soliciting Dealer shall inform the
prospective purchaser of all pertinent facts relating to the liquidity and
marketability of the Shares during the term of the investment.
5. EXPENSES.
The Company agrees with you that, whether or not the transactions contemplated
in this Agreement are consummated, the Company will pay all fees and expenses
incident to the performance of its obligations under this Agreement, including,
but not limited to:
13
(a) the
Commission’s registration fee;
(b) expenses
of printing the Registration Statement, the Prospectus and any amendment or
supplement thereto and the expense of furnishing to you copies of the
Registration Statement, the Prospectus and any amendment or supplement thereto
as herein provided;
(c) fees
and
expenses of its and your accountants and counsel in connection with the Offering
contemplated by this Agreement;
(d) fees
and
expenses incurred in connection with any required filing with the
NASD;
(e) all
of
your expenses in connection with the Offering, subject to the limitations
contained in the Prospectus, including, but not limited to, the salaries, fringe
benefits, travel expenses and similar expenses of your employees and personnel
incurred in connection with the Offering; and
(f) 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.
In
no
event, however, will the total of the selling commissions paid to you (which
you
may reallow to the Soliciting Dealers) exceed 6.5% of the gross proceeds of
the
Offering.
6. CONDITIONS
OF OBLIGATIONS. Your obligations hereunder shall be subject to the accuracy
of
the representations and warranties on the part of the Company contained in
Section 1 hereof, the accuracy of the statements of the Company made
pursuant to the provisions hereof, to the performance by the Company of its
covenants, agreements and obligations contained in Sections 3 and 5 hereof,
and to the following additional conditions:
(a) EFFECTIVENESS
OF REGISTRATION STATEMENT. The Registration Statement shall have become
effective not later than 5:00 p.m., New York, New York time, on the day
following the date of this Agreement, or such later time and date as you and
the
Company shall have agreed; 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 or you, 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 you or your counsel.
(b) ACCURACY
OF REGISTRATION STATEMENT. You shall not have advised the Company that the
Registration Statement or the Prospectus, or any amendment or any supplement
thereto, in the reasonable opinion of you or your counsel, contains any untrue
statement of fact which is material, or omits to state a fact which is material
and is required to be stated therein or is necessary to make the statements
therein not misleading.
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7. INDEMNIFICATION.
(a) Subject
to the limitations set forth below, the Company agrees to indemnify and hold
harmless you, each Soliciting Dealer and each person, if any, who controls
you
or any Soliciting Dealer within the meaning of the Act (collectively, the
“Indemnified Parties”), against any and all loss, liability, claim, damage and
expense whatsoever caused by any untrue statement or alleged untrue statement
of
a material fact contained in the Registration Statement, the Prospectus or
any
amendment or supplement thereto, or the omission or alleged omission therefrom
of a 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. Such indemnification shall be subject to the provisions of
Sections 7(b) and (c) of this Agreement.
The
Company shall not provide indemnification for any liability or loss suffered
by
you, nor shall it provide that you be held harmless for any liability suffered
by the Company unless all of the following conditions are met: (i) the
party seeking indemnification has determined, in good faith, that its course
of
conduct, if such course of conduct caused the loss or liability, was in the
best
interests of the Company; (ii) the person seeking indemnification was
acting on behalf of or performing services on behalf of the Company;
(iii) such liability or loss was not the result of gross negligence or
willful misconduct on the part of the party seeking indemnification or the
Indemnified Party; and (iv) such indemnification or agreement to be held
harmless is recoverable only out of the assets of the Company and not from
the
Stockholders.
In
no
case shall the Company be liable under this indemnity agreement with respect
to
any claim made against any of the Indemnified Parties unless the Company shall
have been notified in writing (in the manner provided in Section 10 hereof)
of the nature of the claim within a reasonable time after the assertion thereof;
but the failure to so notify the Company shall not relieve the Company from
any
liability which the Company would have incurred otherwise than on account of
this indemnity agreement. The Company shall be entitled to participate, at
its
own expense, in the defense of, or if it so elects within a reasonable time
after receipt of such notice, to assume the defense of any claim or suit for
which any of the Indemnified Parties seek indemnification hereunder. If the
Company elects to assume said defense, such defense shall be conducted by
counsel chosen by it and reasonably satisfactory to the Indemnified
Parties.
In
the
event that the Company elects to assume the defense of any such suit and retains
such counsel, the Company shall not be liable under this Section 7 to the
Indemnified Parties in the suit for any legal or other expenses subsequently
incurred by the Indemnified Parties, and the Indemnified Parties shall bear
the
fees and expenses of any additional counsel retained by the Indemnified Parties
unless: (A) the employment of counsel by the Indemnified Party has been
authorized by the Company; or (B) the Company shall not in fact have
employed counsel to assume the defense of such action, in either of which events
such fees and expenses shall be borne by the Company.
The
Company may advance amounts to the Indemnified Parties for legal and other
expenses and costs incurred as a result of any legal action for which
indemnification is being sought only if all of the following conditions are
satisfied: (i) the legal action relates to acts or omissions with respect
to the performance of duties or services by one or more Indemnified Parties
for
or on behalf of the Company; (ii) the legal action is initiated by a third
party who is not a Stockholder or is initiated by a Stockholder acting in his
or
her capacity as such and a court of competent jurisdiction specifically approves
such advancement; and (iii) the Indemnified Parties receiving such advances
undertake to repay the advanced funds to the Company, together with the
applicable legal rate of interest thereon, in cases in which such Indemnified
Parties are thereafter found not to be entitled to indemnification.
15
Notwithstanding
the foregoing provisions of this Section 7, the Company will not be liable
in any such case to the extent that any loss, liability, claim, damage or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of
you or any Soliciting Dealer for use in the preparation of the Registration
Statement (or any amendment thereof) or the Prospectus (or any supplement
thereto). The foregoing indemnity agreement is subject to the further condition
that, insofar as it relates to any untrue statement, alleged untrue statement,
omission or alleged omission made in the Prospectus but eliminated or remedied
in any amendment or supplement thereto, such indemnity agreement shall not
inure
to your benefit or to any Soliciting Dealer from whom the person asserting
any
loss, liability, claim, damage or expense purchased the Shares which are the
subject thereof (or to the benefit of any person who controls you or any
Soliciting Dealer), if a copy of the Prospectus as so amended or supplemented
was not sent or given to such person at or prior to the time the subscription
of
such person was accepted by the Company; but only if a copy of the Prospectus
(as so amended or supplemented) had been supplied by the Company to you or
any
Soliciting Dealer prior to such acceptance. This indemnity agreement will be
in
addition to any liability which the Company may otherwise have.
(b) The
indemnification and agreement to hold harmless provided in subparagraph (a)
of this Section 7 is further limited to the extent that no such
indemnification by the Company of you or a Soliciting Dealer 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:
(i) there has been a successful adjudication on the merits of each count
involving alleged securities law violations by you or any Soliciting Dealer
and
a court of competent jurisdiction has approved indemnification of the litigation
costs; (ii) such claims against you or any Soliciting Dealer have been
dismissed with prejudice on the merits by a court of competent jurisdiction
as
to the particular indemnitee and the court has approved indemnification of
the
litigation costs; or (iii) a court of competent jurisdiction approves a
settlement of the claims against you or any Soliciting Dealer and finds that
indemnification of the settlement and related costs should be made and the
court
considering the request has been advised of the position of the Commission
and
of any state securities regulatory authority in which securities of the Company
were offered and sold as to indemnification for securities law
violations.
16
(c) You
and
each Soliciting Dealer agree to indemnify and hold harmless the Company, and
each person, if any, who controls the Company within the meaning of the Act
and
any controlling person of the Company: (i) to the same extent as in the
foregoing indemnity from the Company to you and each Soliciting Dealer, but
only
with reference to statements or omissions based upon the information relating
to
you or any Soliciting Dealer furnished in writing by you or such Soliciting
Dealer or on your or their behalf for use in the Registration Statement or
the
Prospectus, or any amendment or supplement thereto; and (ii) for any
violation by you or any Soliciting Dealer in the sale of the Shares of any
applicable state or federal law or any rule, regulation or instruction
thereunder, provided that such violation is not committed in reliance on any
violation by the Company of such law, rule, regulation or instruction. You
and
each Soliciting Dealer further agree to indemnify and hold harmless the Company
and any controlling person of the Company against any losses, liabilities,
claims, damages or expenses to which the Company or any such controlling person
may become subject under the securities or blue sky laws of any jurisdiction
insofar as such losses, liabilities, claims, damages or expenses (or actions,
proceedings or investigations in respect thereof) arise by reason of a sale
of
the Shares through the efforts of you (with respect to sales effected without
the assistance of a Soliciting Dealer) or a Soliciting Dealer (with respect
to
sales effected by such Soliciting Dealer) which is effected other than in
accordance with the Blue Sky Survey supplied to you by the Company (a
“Non-Permitted Sale”), whether such Non-Permitted Sale is caused by a sale in a
jurisdiction other than those specified in the Blue Sky Survey, by a sale in
a
jurisdiction in which you or the Soliciting Dealer is not registered to sell
the
Shares or which results in a sale in a jurisdiction in excess of the number
of
Shares permitted to be sold in such jurisdiction, and will reimburse the Company
or any such controlling person for any legal fees, monetary penalties or other
expenses reasonably incurred by any of them in connection with investigating,
curing or defending against any such losses, liabilities, claims, damages,
actions, proceedings or investigations. This indemnity agreement will be in
addition to any liability which you or any Soliciting Dealer may otherwise
have.
(d) The
notice provisions contained in Section 7(a) hereof, relating to notice to
the Company, shall be equally applicable to you and each Soliciting Dealer
if
the Company or any controlling person of the Company seeks indemnification
pursuant to Section 7(c) hereof. In addition, you and each Soliciting
Dealer may participate in the defense, or assure the defense, of any such suit
so sought under Section 7(c) hereof and have the same rights and privileges
as the Company enjoys with respect to such suits under Section 7(a)
hereof.
8. TERMINATION
OF THIS AGREEMENT. This Agreement may be terminated by you in the event that
the
Company shall have materially failed to comply with any of the material
provisions of this Agreement on its part to be performed at or prior to the
Effective Date or if any of the representations, warranties, covenants or
agreements of the Company herein contained shall not have been materially
complied with or satisfied within the times specified.
In
any
case, this Agreement shall terminate at the close of business on the Termination
Date. Termination of this Agreement pursuant to this Section 8 shall be
without liability of any party to any other party other than as provided in
Sections 5 and 7 hereof, which shall survive such termination.
17
9. REPRESENTATIONS,
WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties
and agreements contained in this Agreement or contained in certificates of
the
Company submitted pursuant hereto shall remain operative and in full force
and
effect, regardless of any investigation made by or on behalf of you or any
person who controls you, or by or on behalf of the Company, and shall survive
the Termination Date.
10. NOTICES.
All communications hereunder shall be in writing and, if sent to you, shall
be
mailed by registered mail or delivered, telefacsimilied or telegraphed and
confirmed in writing to American Realty Capital Securities, LLC, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and, if sent to the Company, shall be mailed
by
registered mail or delivered, telefacsimilied or telegraphed and confirmed
in
writing to American Realty Capital Trust, Inc., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇
▇▇▇▇▇.
11. REFERENCE
TO LIGHTSTONE
SECURITIES, LLC.
All
references herein to American Realty Capital Securities, LLC or the Dealer
Manager hereunder shall be deemed to include all successors and assigns of
American Realty Capital Securities, LLC.
12. PARTIES.
This Agreement shall inure to the benefit of and be binding upon you, the
Company and the successors and assigns of you and the Company. This Agreement
and the conditions and provisions hereof, are intended to be and shall be for
the sole and exclusive benefit of the parties hereto and their respective
successors and controlling persons, and for the benefit of no other person,
firm
or corporation, and the term “successors and assigns,” as used herein, shall not
include any purchaser of Shares as such.
13. 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
Pennsylvania.
14. EFFECTIVENESS
OF AGREEMENT. This Agreement shall become effective at 5:00 p.m., Jenkintown,
PA
time, on the Effective Date, or at such earlier time as you and the Company
agree.
15. NOT
A
SEPARATE ENTITY. Nothing contained herein shall constitute you and/or the
Soliciting Dealers or any of them an association, partnership, limited liability
company, unincorporated business or other separate entity.
18
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.
a
Maryland corporation
By:
_________________________________
Name:
Title:
Accepted
as of the date first above written:
AMERICAN
REALTY CAPITAL SECURITIES, LLC
By:
_________________________________
Name:
Title:
19