INDEMNITY AGREEMENT

 

This INDEMNITY AGREEMENT (this “Agreement”) is made and entered into as of
December 28, 2012, by and among the individuals set forth on the signature page
attached hereto (each an “Indemnitor”), in favor of ARC Real Estate Partners,
LLC, a Delaware limited liability company (the “Company”).

 

RECITALS

 

WHEREAS, in connection with that certain Credit Agreement, dated as of September
7, 2011, by and among ARC Properties Operating Partnership, L.P., a Delaware
limited partnership, as borrower (the “OP”), American Realty Capital Properties,
Inc., a Maryland corporation (the “REIT”), RBS Citizens, N.A., a national
banking association (“RBS Citizens”), Capital One, National Association, and
Bank of America, N.A., as lenders (the “Lenders”), and RBS Citizens in its
respective capacities as “Administrative Agent” for itself and the other Lenders
and as “L/C Issuer” and “Lead Arranger” (as such terms are defined in the Credit
Agreement, with the Lenders, Administrative Agent, L/C Issuer and Lead Arranger,
together with their respective successors and assigns, are collectively the
“Credit Parties”), as amended by that certain First Amendment to Credit
Agreement, dated as of December 6, 2011 (the “First Amendment”), as further
amended by that certain Second Amendment to Credit Agreement, dated as of May
21, 2012 (the “Second Amendment”), as further amended by that certain Third
Amendment to Credit Agreement, dated as of August 16, 2012 (the “Third
Amendment”), as further amended by that certain Fourth Amendment to Credit
Agreement, dated as of September 28, 2012 (the “Fourth Amendment”), as further
amended by that certain Fifth Amendment to Credit Agreement, dated as of
December 7, 2012 (the “Fifth Amendment”) (said Credit Agreement, as so amended
by the First Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment, and as from time to time may be further amended,
modified, or restated, the “Credit Agreement”), the Lenders have agreed to
provide the OP a revolving credit loan facility in the amount of up to
$145,000,000, pursuant to which the OP has borrowed at least $111,750,000 (the
“Loan”).

 

WHEREAS, in connection with that certain Parent Guaranty Agreement, executed as
of September 7, 2011, by the REIT for the benefit of the Credit Parties, the
REIT guaranteed, as a guaranty of payment and not merely as a guaranty of
collection, the prompt payment when due of all obligations under the Credit
Agreement, including the Loan (the “Parent Guaranty”).

 

WHEREAS, in connection with that certain Subsidiary Guaranty Agreement, executed
as of September 7, 2011, by each subsidiary identified therein (collectively,
the “Subsidiary Guarantors”; the REIT and the Subsidiary Guarantors, each a
“Guarantor” and collectively, the “Guarantors”) for the benefit of the Credit
Parties, the Subsidiary Guarantors guaranteed, as a guaranty of payment and not
merely as a guaranty of collection, the prompt payment when due of all
obligations under the Credit Agreement, including the Loan (the “Subsidiary
Guaranty”).

 

WHEREAS, in connection with that certain Indemnity Agreement, made and entered
into as of December 28, 2012, by the Company in favor of the REIT, the Company
has agreed to indemnify the Guarantors for their obligations with respect to the
collectability of the Loan (the “Company Indemnity”) pursuant to the terms
therein.

 

 

 

 

 

WHEREAS, in connection with that certain Fourth Amendment to Amended and
Restated Agreement of Limited Partnership of the OP, dated as of December 28,
2012, the Company agreed to restore a deficit balance in its capital account
with respect to its interest in the OP, if any, upon a liquidation of the OP (a
“DRO”) as set forth in that certain Amended and Restated Agreement of Limited
Partnership of the OP, dated as of September 6, 2011, as amended.

 

WHEREAS, the Indemnitors are the members of the Company and have received
substantial economic benefits from the Company.

 

NOW, THEREFORE, in consideration of the promises contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Indemnitors and Company hereby agree as follows:

 

1. Subject to Section 4 hereof, if the Company shall make a payment (or be
required to make a payment) pursuant to the Company Indemnity (any such payment,
a “Payment”), the Company shall promptly deliver written notice thereof (a
“Payment Notice”) to each Indemnitor, which Payment Notice shall (a) state the
amount of such Payment (the “Payment Amount”) and (b) provide evidence of
payment of same (or, provide evidence of obligation to make such payment).

 

2. Subject to Section 5 hereof, if the Company shall be required to make a
payment pursuant to the DRO (any such payment, a “DRO Payment”), the Company
shall promptly deliver written notice thereof (a “DRO Payment Notice”) to each
Indemnitor, which DRO Payment Notice shall (a) state the amount of such DRO
Payment (the “DRO Payment Amount”) and (b) provide evidence of obligation to
make such DRO Payment.

 

3. Subject to Section 4 hereof, each Indemnitor shall be required, within
fifteen (15) days after receipt of a Payment Notice or a DRO Payment Notice, as
the case may be, (i) in the case of a Payment Notice, to reimburse the Company
for such Indemnitor’s proportionate share, as set forth in Schedule A attached
hereto, of the Payment Amount (such proportionate amount, each Indemnitor’s
“Indemnity Amount”), or (ii) in the case of a DRO Payment Notice, to the extent
the assets of the Company are insufficient to satisfy the DRO Payment Amount, to
pay to the Company such Indemnitor’s proportionate share, as set forth in
Schedule A attached hereto, of the amount by which the DRO Payment Amount
exceeds the fair market value (the “FMV”) of the assets of the Company (the “DRO
Indemnity Amount”).

 

4. Notwithstanding anything in this Agreement to the contrary, in the event that
the Company shall make (or be required to make) a Payment at a time when the OP
has assets available to satisfy the Loan, no payment of the Indemnity Amount
shall be required under this Agreement to the extent of the FMV of such assets
determined at the time such Payment is made (or required to be made).

 

5. Any Indemnity Amount or DRO Indemnity Amount paid pursuant to this Agreement
shall be treated as a capital contribution by the Indemnitor to the Company
under the Company’s operating agreement. Any DRO Indemnity Amount paid to the
Company pursuant to Paragraph 3 shall be paid to the OP immediately after
receipt thereof by the Company.

 

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6. Each Indemnitor’s obligation hereunder is several and not joint and, if any
Indemnitor shall at any time make payments to the Company in excess of such
Indemnitor’s Indemnity Amount, the other Indemnitors shall reimburse such
Indemnitor proportionately in respect of such excess.

 

7. If any Indemnitor shall fail to make a payment of any amount due under this
Agreement within the period set forth herein, such Indemnitor shall indemnify
and hold harmless the Company from and against any actual cost or actual damage
or liability suffered by the Company in connection therewith (including, without
limitation, reasonable legal fees and expenses). Any amount paid by an
Indemnitor under this Section 7 that relates to the Payment Amount set forth in
the Payment Notice delivered to the Indemnitor (and not to other damages, costs,
etc.) shall be applied as a reduction to the Indemnity Amount owed by the
Indemnitor under this Agreement.

 

8. The obligations of each Indemnitor under this Agreement are independent of
the obligations of the Company under the Company Indemnity and the DRO. Each
Indemnitor’s liability for any amount payable hereunder shall be limited to such
Indemnitor’s Indemnity Amount, subject to Section 4 hereof, and the DRO
Indemnity Amount, respectively.

 

9. Each Indemnitor hereby warrants and represents to the Company and agrees with
the Company that this Agreement constitutes the legal, valid and binding
obligation of each Indemnitor, and is fully enforceable against such Indemnitor
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights generally and to principles of
equity.

 

10. Each Indemnitor waives notice of acceptance of this Agreement and all
presentment, demand, protest, notice of protest and notices of default or
dishonor of any obligation indemnified hereby and all other suretyship defenses
generally. Except as otherwise provided herein, no extensions of time or other
indulgence by the Company granted to an Indemnitor will release or affect the
obligations of such Indemnitor hereunder and no act, omission or delay on the
part of the Company in exercising any rights hereunder or in taking any action
to collect or enforce this Agreement shall be a waiver of any such right or
affect the obligation of an Indemnitor hereunder.

 

The obligations under this Agreement shall not be impaired by any bankruptcy,
insolvency, arrangement, assignment for the benefit of creditors, reorganization
or other debtor relief proceedings under any federal or state law, whether now
existing or hereafter enacted with respect to the Company.

 

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11. (a) Unless terminated sooner, as provided in this Section 11, this Agreement
shall terminate upon the termination of the Company Indemnity (the “Termination
Date”) pursuant to the terms therein. The Termination Date shall be accelerated,
with respect to an individual Indemnitor, to the time such Indemnitor disposes,
directly or indirectly, of its entire interest in the Company in a taxable
transaction.

 

(b) If, as of the Termination Date, the FMV of the Entity Assets (as defined in
the Company Indemnity) available for satisfaction of the Loan shall be less than
the amount of the Company’s obligation under the Company Indemnity (the
“Obligation”), each Indemnitor shall pay the Company its proportionate share, as
set forth in Schedule A attached hereto, of the amount by which the Obligation
exceeds the FMV of the Entity Assets.

 

(c) For purposes of this Agreement, any dispute respecting the FMV of the Entity
Assets shall be resolved as follows: the Company and such Indemnitor each shall
pick an appraiser qualified to value the Entity Assets. If the lower of the two
appraisals is at least 90% of the higher appraisal, then (i) the two appraisers
shall select a third appraiser qualified to value the Entity Assets, (ii) such
third appraiser shall select from the two existing appraisals the one that is
closer to the third appraiser’s determination of the FMV of the Entity Assets,
and (iii) the FMV of the Entity Assets shall equal the amount of such selected
appraisal.

 

(d) Notwithstanding anything in this Agreement to the contrary, the termination
of this Agreement pursuant to this Section 11 shall not release such Indemnitor
from any payment obligations it incurred under this Agreement prior to the
Termination Date.

 

(e) Each Indemnitor’s liability under this Agreement shall be extinguished upon
the payment in full of all obligations under this Agreement.

 

12. If an Indemnitor is required to pay any amount hereunder, such Indemnitor
shall have no, and hereby waives any, (a) rights of subrogation that it might
otherwise have at law or in equity or otherwise on account of such payment, and
(b) rights of contribution or other rights it might have at law or in equity or
otherwise on account of such payment.

 

13. The Company shall have all rights available to it in law or in equity. No
delay or failure by the Company to exercise any right or remedy against any
Indemnitor will be construed as a waiver of that right or remedy. All remedies
of the Company against any Indemnitor are cumulative.

 

14. The whole of this Agreement is set forth herein, and there is no verbal or
other written agreement, and no understanding or custom affecting the terms
hereof. This Agreement can be modified only by a written instrument signed by
the parties with respect to whom the modification is made.

 

15. This Agreement may be executed in multiple counterparts, and each such
counterpart shall be considered an original, but all of which together shall
constitute one and the same instrument.

 

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16. If any provision of this Agreement shall be held to be prohibited or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement. This Agreement shall be
governed and construed pursuant to laws of the State of New York and shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto.

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties acknowledge their agreement with the foregoing
by executing this Agreement in the space provided below.

 

  INDEMNITORS:           /s/ Nicholas S. Schorsch   Nicholas S. Schorsch,
individually and as attorney-in-fact for his immediate family members          
/s/ William M. Kahane   William M. Kahane           /s/ Peter M. Budko   Peter
M. Budko           /s/ Edward M. Weil, Jr.   Edward M. Weil, Jr.           /s/
Brian S. Block   Brian S. Block           INDEMNITEE:       ARC REAL ESTATE
PARTNERS, LLC           By: /s/ Nicholas S. Schorsch   Name: Nicholas S.
Schorsch   Title: Manager           By: /s/ William M. Kahane   Name: William M.
Kahane   Title: Manager

 

 

[Signature Page to Indemnity Agreement by Members of ARC Real Estate Partners,
LLC]